After losing in court earlier this month, the broadcasters trying to shut down TV streaming startup Aereo are asking for another chance to make their case. This time, their aims are broader. They warn of dire economic consequences if a broader panel of judges from the Second Circuit Court of Appeals doesn't reconsider the previous decision, which was decided by a narrow 2-1 margin.
Aereo's technology is designed to take advantage of a landmark 2008 ruling by the Second Circuit, based in New York. It held that a "remote DVR" service designed by Cablevision was legal because it kept a separate copy of a program for each user who recorded it. Reasoning that the same principle should apply to broadcast television, Aereo built a television streaming service with thousands of tiny antennas. Aereo claims that because it assigns each active user an individual antenna, and stores separate copies of recorded programs, it isn't infringing copyright holders' public performance rights.
On April 1, two judges from the Second Circuit accepted Aereo's argument, ruling that its service was no different, legally speaking, from renting a TV tuner with a really long cable. But Judge Denny Chin dissented, described Aereo's technology as "a Rube Goldberg-like contrivance, over-engineered in an attempt to to avoid the reach of the Copyright Act."
Now broadcasters are asking for the case to be reheard by an "en banc" panel consisting of all Second Circuit judges. The broadcasters hope that Judge Chin's argument will carry the day on the larger panel.
The company's existence, and the future of many other cloud-based businesses, hangs in the balance. Aereo's entire business strategy relies on Cablevision's 2008 legal victory, and the broadcasters are asking the appeals court to overturn it.
High stakes
Right now, cable and satellite companies pay broadcasters for licenses to re-transmit their content. The broadcasters warn that the Aereo ruling "will swallow the entire retransmission licensing regime. Cable and satellite companies like Time Warner Cable and Dish Network are already threatening to partner with Aereo or use Aereo-like set-ups. And broadcasters, faced with losing a revenue stream critical to supporting free, over-the-air television, have been forced to consider converting their broadcast networks to subscription-based cable channels."
The broadcasters believe that the fundamental problem with Aereo can be traced back to reasoning of the Cablevision decision. Broadcasters say that when a company like Cablevision or Aereo transmits multiple copies of the same work to different customers, that should be considered a public performance regardless of whether the content was received by different antennas, stored as separate copies, or transmitted to customers at different times.
The broadcasters couldn't directly attack the Cablevision ruling during its earlier appeal because only a full en banc panel has the power to overturn earlier precedents. The three-judge panel that handed down this month's decision was bound to apply the Cablevision ruling whether they agreed with it or not. But the full Second Circuit has the option to overturn earlier precedents.
"Cablevision’s statutory analysis was plainly wrong," the broadcasters now argue. They say it would make no sense for Congress to set up a scheme for licensing retransmission of broadcast television content while allowing companies like Aereo to circumvent that licensing regime with a technical gimmick.
A coalition of major studios, unions, and other groups connected to the film industry also filed an amicus brief in the case to encourage the Second Circuit to re-hear the case. They don't urge the Second Circuit to overturn Cablevision, but they argue for a narrower interpretation of the ruling.
"The Majority could have found that Cablevision’s examination of the legality of the RS-DVR functionality as part of an otherwise licensed service was factually distinguishable, since Aereo’s mass retransmission activities are conducted without any authorization from copyright owners," Hollywood said in its brief.
"A weird result"
Ars talked to James Grimmelmann, a visiting professor at Georgetown Law School, about the broadcasters' request. He agreed with the broadcasters that "we're getting into a weird result that it's not clear Congress intended."
However, he said, "you have to work with the definitions Congress actually gives you." The fundamental problem, in his view, is that Congress's definition of a public performance is "not really susceptible to any coherent interpretation. The unique copy rule [from Cablevision] at least gives you a coherent rule."
In the last five years, the Cablevision decision has become the legal foundation for cloud storage services such as Google Music and Amazon Cloud Player. Many different users of those services upload copies of the same song. If transmitting the same song to multiple users constitutes a "public performance," then Google and Amazon would need licenses from the publisher of any song that more than one user uploaded. In practice, that would mean music locker sites couldn't exist.
Overruling Cablevision could be "tremendously disruptive," Grimmelmann told us. And according to Grimmelmann, even Hollywood's narrower interpretation of Cablevision could prevent online locker services from offering streaming capabilities.
Grimmelmann is ambivalent about the possibility that Aereo could undermine free, over-the-air television. "One might question whether free over-the-air television is a good use of spectrum," he told us.
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