As Expected, Aereo Pleads Its Case For Survival
from the cable-company dept
Aereo is back in a district court trying its “okay, fine, you say we look like a duck, we’ll act like a duck” explanation so that it can stay in business and pay the statutory rates for a cable company. As you hopefully know by now, this is in response to the Supreme Court’s “you’re a cable company!” ruling. The broadcasters, of course, just want Aereo to die, so they claim that even if the Supreme Court declared it a cable company, the company still can’t pay statutory rates. Aereo tried to skip the district court and go straight to the appeals court, but that attempt was (probably rightfully) rejected recently, so now it’s back at the district court, once again making the case for it being a cable company.
Its key argument is, basically that, during oral arguments, Justice Sotomayor more or less said if the Court finds Aereo to be a cable company, then it could just pay Section 111 statutory fees and be legal.
JUSTICE SOTOMAYOR: . . . But I look at the definition of a cable company, and it seems to fit. . . . [Aereo] [m]akes secondary transmissions by wires, cables, or other communication channels. It seems to me that a little antenna with a dime fits that definition. To subscribing members of the public who pay for such service. I mean, I read it and I say, why aren’t they a cable company?
MR. CLEMENT: Well, Justice Sotomayor, a couple of things. First of all, I mean, I think if you’re?if you?re already at that point, you?ve probably understood that just like a cable company, they?re public?they?re publicly performing and maybe they qualify as a cable company and maybe they could qualify for the compulsory license that’s available to cable companies under Section 111 of the statute.
JUSTICE SOTOMAYOR: But it just gets it mixed up. Do we have to go to all of those other questions if we find that they?re a cable company? We say they?re a cable company, they get the compulsory license.
At the time, most folks kinda wondered why Sotomayor was going off on this tangent, rather than on the key issues related to the case, concerning the public performance right. What people didn’t expect was that the Court would come up with its wacky “looks like a duck” test. But since it did, it certainly seemed to imply that Aereo could just get the compulsory license — which it’s now seeking to do. The company further argues that Justice Breyer, who authored the majority decision, fretted during oral arguments that it would be problematic if Aereo were not allowed to get a compulsory license:
JUSTICE BREYER: Once you take them out of the compulsory licensing system, they’re going to have to find copyright owners, who owns James Agee’s pictures? Who owns something that was written by?like a French silent film in 1915? I mean, the problem is that they might want to have perfectly good things that people want to watch and they can’t find out how to get permission. That is a problem that worries me and it worries me again once you kick them out of the other systems.
Aereo also counters the broadcasters argument that the ivi ruling says that online streaming services can’t qualify as cable companies for statutory rates doesn’t apply here. Earlier, Aereo argued that the Supreme Court ruling effectively overturned the ivi ruling — an argument that makes a lot of sense. But here, Aereo goes even further, noting some key differences between ivi and Aereo, including a pretty big one: ivi was “geographically unbounded.” That was a key part of why ivi lost, and Aereo notes that its service is different, in that it offered a geographically-specific service.
First, the technology at issue in ivi involved geographically unbounded transmissions, which the Second Circuit noted was ?vastly different? from the technology in Fortnightly and Teleprompter…. By contrast, the Supreme Court found that, with respect to ?Watch Now,? Aereo is ?overwhelming[ly] like? and ?highly similar? to the technology in Fortnightly and Teleprompter…. As a result, this case is factually distinguishable from ivi on the very point that drove the Second Circuit?s decision. Indeed, the unrestricted nature of ivi?s transmissions was the determinative fact for the Second Circuit, which noted that Section 111?s compulsory license scheme was intended to support local market?rather than national market?systems…. As a result, the court found that ivi?s nationwide retransmission did not seek to address the important issues of availability of local over-the-air television signals, and it was therefore not the type of service Congress intended the compulsory license to cover…. Because Aereo?s ?Watch Now? technology does not give its subscribers access to broadcasts outside of their home DMA, and instead gives only geographically-restricted access (with and through corresponding local physical antenna facilities), and because (as the Supreme Court found) the technology is ?virtually identical? to the technology Congress addressed in the 1976 Amendments, Aereo?s ?Watch Now? technology is not governed by ivi.
Aereo makes another interesting argument for survival as well. Even if it doesn’t qualify for Section 111 compulsory rates, it should still be allowed to keep its “Watch Now” feature working, because of the DMCA. Basically, it’s saying that even if the DVR functionality is deemed infringing, it has a stronger argument around the live streaming, based on the DMCA. All the parenthetical quotes supporting this are from the Supreme Court’s ruling…
If the Court concludes that Aereo is not entitled to a Section 111 license, a preliminary injunction should still not enter because Aereo is entitled to the 17 U.S.C. § 512(a) [DMCA] safe harbor because its ?Watch Now? function is a ?transitory digital network communication.? Each of the Section 512(a) elements is satisfied and undisputed. First, the transmissions of the material are initiated by or at the direction of a person other than Aereo…. (?Aereo?s system remains inert until a subscriber indicates that she wants to watch a program.?). Second, the transmission, routing, and storage of material are carried out through an automatic process, without selection of the material by Aereo…. (?in automatic response to the subscriber?s request?); … (agreeing with dissent that Aereo does not ?select? the content). Third, Aereo does not select the recipients of the material, except as an automated response to the user…. (?When an Aereo subscriber selects a program to watch, Aereo streams the program over the Internet to that subscriber.?). Fourth, no copy of the material transmitted is made accessible to anyone but the user who made it, and no ?Watch Now? copy is kept for a longer period than is reasonably necessary…. (?It streams the content of the copy to the same subscriber and to no one else.?); … (?If the user does not press ?Record? before the program ends, the copy of the program created for and used to transmit the program to the user is automatically deleted when it has finished playing.?);… (?The file saved to the hard disk using the ?Watch [Now]? function is not automatically retained unless the user clicks ?Record? while the show is still open on the user?s web browser.?). Fifth, the material is transmitted without modification of its content….
As a result of satisfying this safe harbor provision, Aereo cannot be liable for the claimed ?public performance? of Plaintiffs? claimed copyrighted works. And, Plaintiffs? requested preliminary injunction cannot be entered because it is outside the scope of a permitted injunction under the DMCA.
That could lead to some interesting legal questions going forward.
Finally, Aereo argues that no injunction is necessary, because there’s no evidence of “irreparable harm.” Here it probably hurts that CBS and other networks more or less admitted that even if Aereo had won the “harm” would be minimal.
The Section 111 arguments about whether or not it’s a cable company will continue to make the headlines, but the DMCA argument here may be the most interesting one of all (and one that the broadcasters will most freak out about).