SDNY: Aereo need not halt operations

There were a couple of firecracker developments in the eagerly anticipated Aereo case last week. The Southern District of New York denied the broadcasters’ motion for a preliminary injunction, which they immediately appealed to the Second Circuit – clearly the plaintiffs were prepared for a negative outcome of their motion. As we previously reported, broadcasters such as NBC, CBS, ABC, FOX, PBS and Univision, sued Brooklyn-based Aereo for re-transmitting their content via an army of mini antennas to Aereo’s subscribers’ digital gadgets. This case presents an interesting stress test of the copyright framework in the context of a copyright owner’s exclusive right to public performance. In a nutshell, Aereo argued that its antennas do not publicly perform plaintiffs’ content because its system stores a unique copy of the content and then individually performs it for each subscriber. This, Aereo contends, amounts to a private and not public performance of plaintiffs’ content.

Aereo’s second defense to copyright infringement of the exclusive right to public performance was that the performance occurs not at Aereo’s will, but at the will of the viewer – it is he/she who controls the operation of Aereo’s system and initiates the performances. In its decision denying the broadcasters’ request for preliminary injunction, the court went into a very detailed analysis of whether Aereo’s technological setup and transmission of plaintiffs’ content, amounts to a public performance and did not reach Aereo’s “willful performance” argument.

At stake in this stage of the litigation was whether the court should pull Aereo’s plug before the conclusion of the case to prevent any further copyright infringement of plaintiffs’ content. The broadcasters’ motion for a preliminary injunction was based on the part of Aereo’s functionality which allows contemporaneous viewing of copyrighted programs – in other words – the service allowing Aereo subscribers to view programs at the same time as viewers watching them on their televisions.

A major disputed point was the tiny antennas’ ability to function independently of each other, which is essential to showing that every Aereo transmission to a subscriber is unique, and therefore private. The broadcasters contended that the antennas are too small to be able to handle the bandwidth necessary to provide the service and their expert claimed that the antennas function in unison and multiple antennas need to be engaged to deliver content to each subscriber. Aereo’s expert, on the other hand, insisted that each time a subscriber uses its service, a dedicated antenna is ascribed and that antenna alone is doing all the heavy lifting necessary.

The court was not persuaded by the broadcasters’ expert witness who performed a number of experiments on the antennas concluding that they could not function independently. For the court, Aereo’s proposition that a sufficiently strong signal may overcome the obstacles associated with the size of the antennas was more persuasive. The seemingly insignificant factual finding in Aereo’s favor, that its antennas function independently, may prove quite important because it would affect not only the decision on the preliminary injunction but, if it stands on appeal, but it may also strongly tilt the outcome of the ultimate question – whether Aereo is engaging in unauthorized public performance of copyrighted content.

To determine whether it should grant a preliminary injunction for the broadcasters, the court also looked to its controlling precedent – Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision“). In Cablevision, the technology in question allowed customers who did not have DVRs to record cable programs at Cablevision’s remote facilities and view them at times and locations of their choosing. Similarly to Aereo’s position, Cablevision’s argument was that each of its customers wishing to record a program had a unique copy of that program created and only that customer could play the program back from that copy. Like Aereo, Cablevision also argued that its technological setup privately performed the copyrighted content and did not infringe the copyright owner’s exclusive right to public performance.

In Cablevision, the Second Circuit clearly defined how it interprets the meaning of “public performance” within the copyright framework. The court reasoned that it did not matter that the same copy of the content broadcasted was then transmitted to multiple viewers because each such transmission was a separate performance of the content.  Thus, the inquiry as to whether that performance was public should be focused on the manner in which the re-transmission reaches the viewer and not on the manner in which the content reaches the re-transmitter. In other words, the relevant question is: who is capable of receiving the re-transmitted performance? If it is multiple people, then the performance is public, if it is one person, then it is private. In the Cablevision context, the court concluded that a performance of a unique copy of a program sitting on the Cablevision system, which may only be viewed by one customer was a private performance and did not infringe the copyright owners’ exclusive right to publicly perform it.

The broadcasters in Aereo’s case argued that Cablevision should not apply because Aereo is merely using a “technological gimmick” to re-transmit the very copy the broadcasters are transmitting because the customers are able to watch the content at “real-time” – with minimal or no delay. The court rejected this argument stating that Aereo’s transmissions, like Cablevision’s, are of a unique copy on Aereo’s system and the viewer’s ability to watch the program contemporaneously with its broadcast was not legally significant. To reach this conclusion, the court distinguished the process of “buffering,” which merely serves as a fleeting repository for the copyrighted content, with Aereo’s storing of the content, even when the “watch” function is engaged. The significance of this is that Aereo’s system makes a copy from which the content is separately performed for the viewer, as opposed to a “buffer” which would effectively retransmit the “master” copy broadcasted by the plaintiffs.

The court further rejected plaintiffs’ contention that, for Aereo to be effectuating a performance separate from the broadcasted performance, there needs to be a “break in the chain of transmission” or “complete” time-shifting (meaning that a complete copy of the program must be stored before it is performed for the viewer). Even if this was an inquiry relevant to other issues, such as  Aereo’s use amounted to fair use or whether it copied copyrighted content without permission, it was not an inquiry relevant to the determination whether there was an unauthorized public performance of copyrighted content. Finally, the ability to view Aereo’s transmissions on a number of different devises, such as smart phones and iPads, as opposed to a television set or a single devise was immaterial to the discussion.

Having concluded that plaintiffs would not likely prevail on the merits of the public performance claim, the court runs through the remaining preliminary injunction factors to facilitate the anticipated appeal of its decision which promptly followed. Once again the the stakes in this case have been raised – it not only gives the federal courts an opportunity to precisely define the meaning of “public performance” within the copyright framework, but it is also representative of the times we live in – another battle between the technological titans of yesterday with those of tomorrow.