Copyright and Web-DVR Broadcasting: The Latest Aereo and FilmOn X Decisions

Two recent decisions have added more discord among federal courts as to the question of whether technology that allows users to record copies of over-the-air broadcasts on remote servers for later web viewing violates broadcasters’ exclusive public performance rights under the Copyright Act.  On October 8, 2013 the US District Court for the District of Massachusetts aligned itself with the Second Circuit, holding that such services do not violate broadcasters’ performance rights in Hearst Stations v. Aereo (Aereo).  Reaching the exact opposite conclusion back on September 5, 2013, was the US District Court for the District of Columbia in Fox Television v. FilmOn X (FilmOn X).

The split among District Courts on this issue will likely lead to further appeals and decisions by the respective Court of Appeals.  Ultimately, the issue could be heard by the Supreme Court in the coming years, depending on whether the Courts of Appeals continue to be similarly split.

Before going to the current state of the law, this post will describe the technology that is at the heart of these copyright disputes by using Aereo as the example platform.

What is Aereo?

According to Aereo’s website, “Aereo is a technology platform that you can use to watch live broadcast television at home or on the go.” A potential Aereo user purchases a subscription from Aereo, which, in exchange, provides the user with a remote, cloud-based DVR to set and watch recordings.  The benefit to users is that the service only requires a compatible internet-enabled device, without the need to purchase antennas, boxes, or cables.  The concept is extremely simple:

Aereo

Once a potential user becomes an Aereo member, the user logs in and is assigned a miniaturized, private, remote antenna and DVR.  Aereo offers technology to give consumers access to their antenna and DVR via a web browser and supported internet-enabled devices.  Once the user has connected to his remote Aereo antenna, the user can then access the Aereo platform to view all major broadcast networks live in HD.  Alternatively, the user can enable their remote DVR to set recordings and watch the broadcasts later whenever the user wants.

How does Aereo Work?

When Aereo decides to enter a particular geographic region or market, it installs an array of mini antennas.  Each of these mini antennas are no larger than the size of a dime.  A large number of mini antennas are aggregated on a circuit board, which also contains other electronic components essential to Aereo’s Internet broadcast system.Antenna

While the antenna may be assigned to an individual user, they are generally available for dynamic allocation by the tuner server.  Essentially, this means that a specific antenna is assigned to one specific individual user only when that user is watching television via Aereo, but is then assigned to a different user when the first user is done.  Nevertheless, no single antenna is used by more than one user at a single time, and all dynamic antennas are shared. The antennas are networked to a tuner router and server, which in turn link to a video encoder. The encoder converts the signals from the antennas into a digital video format for viewing on computers and mobile devices.

When a user selects a channel to watch through Aereo’s web or mobile app, the user’s request is sent to Aereo’s web server. The server sends a command to the tuner router, which then identifies an available antenna and encoder slot.  Once the antenna begins receiving the signal, data for the requested channel flows from the antenna to the antenna router and then to the video encoder, where it is stored on an Aereo remote hard drive in a unique directory created for the specific user.  The data then goes through the distribution endpoint, over the Internet to the web or mobile app for the user’s consumption.

The Dispute

In the recent Aereo case, Hearst claimed that Aereo’s services violate its exclusive rights under Section 106 of the Copyright Act to: (1) publicly perform, (2) reproduce, (3) distribute, and (4) prepare derivative works based on its copyrighted programming.  The Court’s analysis focused on the first claim relating to public performance, which will be discussed below.

The Court quickly rejected Hearst’s claim that Aereo infringed its exclusive right to reproduce its works, stating that “holding a media company directly liable just because it provides technology that enables users to make copies of programming would be the rough equivalent of holding the owner of a copy machine liable because people use the machine to illegally reproduce copyrighted materials.”  Similarly, with respect to its distribution right, the Court sided with Aereo, relying heavily on the fact that Aereo’s technology does not allow users to download (only stream) the copyrighted content.  Likewise, with respect to Hearst’s exclusive right to make derivative works, the Court quickly disposed of Hearst’s argument that by reformatting intercepted programming Aereo violated the broadcaster’s right to prepare derivative works.  As the Court reasoned, “Hearst has presented no legal authority nor is the Court aware of any for the proposition that Aereo’s technology creates a derivative work merely by converting programs from their original digital format to a different digital format compatible with internet streaming.”

Public Performance Right

Quickly dismissing the above claims, the Court focused its discussion on Hearst’s first claim regarding its exclusive right to publicly perform its copyrighted works.  The Copyright Act gives copyright owners of audiovisual works the exclusive right, among others, to “perform the copyrighted work publicly.”  Section 101 of the Act provides that “to perform” an audiovisual work means “to show its images in any sequence or make the sounds accompanying it audible.”  To make matters more confusing, the statute distinguishes between public and private performances.  Having become known as the “Transmit Clause”, Section 101 provides that “to perform a work publicly” means to transmit a performance of the work to the public, “by means of any device or process, whether the members of the public capable of receiving the performance […] receive it in the same place or in separate places and at the same time or at different times.”  For additional insight – or perhaps more confusion – the House Committee on the Judiciary’s Report to the Copyright Act (revised 1976) provides a discussion on the intended meaning of “perform” and “public performance”:

“Concepts of public performance and public display cover not only the initial rendition or showing, but also any further act by which that rendition or showing is transmitted or communicated to the public. Thus, for example: a singer is performing when he or she sings a song; a broadcasting network is performing when it transmits his or her performance (whether simultaneously or from records); a local broadcaster is performing when it transmits the network broadcast; a cable television system is performing when it retransmits the broadcast to its subscribers; and any individual is performing whenever he or she … communicates the performance by turning on a receiving set.”

The Decision

The District Court for the District of Massachusetts in Aereo relied on the Second Circuit’s holding that similar DVR technology does not infringe a copyright holder’s exclusive right to perform its work publicly.  In the 2008, the Second Circuit decided the Cablevision case, which held RS–DVR technology non-infringing of the original broadcaster’s public performance right because the technology’s manner of transmitting a recorded program to the viewer who recorded it did not constitute a public performance.  The Cablevision opinion concluded:

“In sum, we find that the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons “capable of receiving” it, to determine whether that transmission is made “to the public.” Because each RS–DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances “to the public,” and therefore do not infringe any exclusive right of public performance.”

Likewise, earlier this year, the Second Circuit applied its reasoning from Cablevision in WNET, Thirteen v. Aereo (WNET) to the very Aereo service that was before the District of Massachusetts Court.  In WNET, the Second Circuit affirmed their Cablevision decision and found that Aereo’s transmissions to subscribers also did not infringe.  The court described Cablevision’s holding as resting on two essential facts:

1)      The RS–DVR system created unique copies of each program a customer wished to record; and

2)      A customer could only view the unique copy that was generated on his behalf.

Adopting the Second Circuit’s rationale, the Massachusetts court found that Aereo’s system is consistent with the two key factors above because it (1) employs individually-assigned antennas to create copies unique to each user and (2) only at the user’s request.

The Split: FilmOn X

Not persuaded by the Second Circuit’s Cablevision or WNET decisions, the District Court for the District of Columbia came out the other way in the FilmOn X case.  Quite simply, its decision rested on a different, and not unreasonable, statutory interpretation of the Transmit Clause.  The FilmOn X court reasoned that what makes a transmission public is not the intended audience of any given copy of the program, but the intended audience of the initial broadcast.

At the end of the day, this battle of statutory interpretations may need to be settled by the Supreme Court, or – don’t hold your breath – an Act of Congress.