Published by LawTechie - July 1, 2013 - LawTechie

Last month Fox Television Stations (among a host of other studios) lost its bid to prevent startup company Aereo from rebroadcasting content to users on the basis of alleged copyright infringement. Yet despite a flood of adverse decisions, Fox remains undeterred to make Aereo illegal.

Last April, the Second Circuit (New York’s highest court) ruled that Fox’s claim against Aereo was not strong enough to keep Aereo from operating pending the resolution of the claim. In that decision, the court used pretty clear language unfavorable to Fox’s claim, holding that Aereo’s use of one antenna per one user successfully avoids violating the studios’ right of public performance because 1 antenna broadcasting to 1 user is not technically a public performance.

Unyielding, Fox has now filed a motion stating that Aereo’s recording feature directly infringes on its copyrights because it is not the same type of feature as available in Cablevision’s DVR (which back in 2008 was ruled non-infringing).

The Cablevision Decision.

Back in 2008, in Cablevision, one key issue was who of Cablevision or its subscribers is the one making a copy. If Cablevision is the one, then Cablevision would be liable for copyright infringement. If, however, the subscriber was the one making a copy, Cablevision would be free of direct liability – for reasons beyond the scope of this article, subscribers found to be the one making the copies would not get into trouble either.

The Second Circuit held that the subscribers were the one making copies. The court reasoned that Cablevision was not the one making the copies because it lacked the   required element of volition (i.e choice) to be responsible for the copyright infringement. As a result, Cablevision’s ingenious DVR-like system was found Kosher.

Aereo was “designed around the Cablevision holding.”

Fast forward to 2012, and a new Internet company, Aereo offers a streaming DVR for over-the-air channels (broadcast TV). Subscribers are able to watch and record broadcast TV on their computers, tablets and smartphones.

Interestingly, Aereo’s system is overtly complicated. For instance, Aereo stores in downtown Brooklyn as many tiny antennas as it has customers, and indeed for good cause. You see, Aereo did its homework. It carefully studied the Cablevision opinion and internalized its lessons so as to operate without having to pay copyright licenses to the Fox, PBS and other free channel transmitting over the air (the attribution of one antenna per customer enables Aereo to say that each performance is “private” and thus outside the scope of public performance licenses.)

Now, Fox is arguing that, unlike in Cablevision, the subscriber is no longer the one making the volitional choice, Aereo is.

Indeed, Fox argues that because a copy is made even when a subscriber watches TV on Aereo, Aereo is the one choosing to make a copy.

And, Aereo counters that, from the get-go, subscribers are told that a copy is made when they choose to watch TV. Before a subscriber decides to watch or record, the following message shows up:

intellectual property

In this writer’s opinion, Aereo’s position is the stronger because:

  1. Aereo’s technology is indistinguishable from Cablevisions’.
  2. Overruling Cablevisions would be too disruptive.
  3. The highest court (safe the U.S. Supreme Court) has already found that Cablevision applied to the case.
  4. Holding for Fox would considerably diminish the prestige of the Court as an institution dispensing justice.

First, Aereo knows what it is doing. Their technology was not created in a vacuum. Instead, they meticulously built their technology to fit within the bound of the Cablevision decision.

Second, key Internet players have heavily relied on the Cablevision decision to order their activities. For instance, Apple iCloud, Google Play, and Dropbox all relied on Cablevision to stream user content without securing authorization from the applicable copyright holders. For a court to put the Cablevision holding in doubt would simply be too disruptive for a court to cast doubts on its conclusion.

Third, in this same case, the highest court (the Second Circuit) has already held that the volition element was met. Unless Fox can credibly show that unprecedented facts came to light (which Fox probably cannot do, see reason one above), no lower court judge is likely to hold for Fox. It would be a long shot to expect a lower court to act otherwise because lower court are bound by the decision of the highest courts. So if a decision just came down saying one thing, you can bet that the lower court will be eager to show its institutional superior that it got the message.

Lastly, the question of volitional conduct has already been decided, on similar facts, in Cablevision, just five years ago. The probability that a court would go out of its way to, in effect, overrule it appears pretty unlikely. The law should be stable, as without predictability managing one’s affairs becomes impossible. And, maybe even more important, a court that holds one way in 2008 and changes its mind merely five years later gives the impression of institutional dissonance, which in turn weakens the court’s own prestige and legitimacy.

Fox’s timing is not great, or rather, Aereos’ fast implementation in light of the lessons learned from the Cablevision decision appears pretty well-executed.

On this one, I would not bet against the court’s own prestige, that is, against Aereo.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.


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