BY ERIN SALES — The area of law that governs the entertainment industry will soon find itself in the legal limelight. On January 10, 2014, the Supreme Court of the United States granted certiorari to hear a case between television broadcasters that own copyrighted programs and Aereo, a commercial retransmission enterprise. This case presents the question of the proper interpretation of the Copyright Act’s Transmit Clause and its application to Aereo’s advanced “unique copy to each user” technology. Undoubtedly, the Court’s upcoming decision has the potential to change the television broadcast landscape.
In 1976, Congress amended the Copyright Act, adding the Transmit Clause to its definition of “publicly perform” in Section 101. Used to interpret Section 106(4)’s exclusive public performance right granted to copyright holders, the Transmit Clause drew cable system broadcast retransmissions within the scope of the public performance right. Prior to the Clause’s addition, cable systems were able to retransmit over-the-air broadcasts to viewers without the retransmissions being deemed “public performances,” thus escaping copyright liability and avoiding the requirement to compensate copyright holders for their works. Legislative history explains that the Transmit Clause “makes clear that the concept of public performance . . . include[s] not only performances . . . that occur initially in a public place, but also acts that transmit or otherwise communicate a performance . . . to the public by means of any device or process.” Essentially, if a transmission carrying a performance reaches the public in any form, the performance is a “public performance” under the Copyright Act. The Transmit Clause also renders similar satellite retransmissions “public performances,” thus requiring satellite companies to compensate the copyright holders via a statutory license for their works. With technological advancement and creative thinking, several companies, including Aereo, discovered a potential loophole within the Transmit Clause and created systems that send unique copies to each user, arguing that the transmissions transmit private performances under the Copyright Act.
The Transmit Clause states that “[t]o perform . . . a work ‘publicly’ means . . . to transmit . . . a performance . . . 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.” Companies like Aereo have followed the precedent set by the United States Court of Appeals for the Second Circuit’s decision in Cartoon Network LP v. CSC Holdings, Inc. (“Cablevision”), which determined that the Transmit Clause requires the court to determine who is capable of receiving a particular transmission of a performance. Under Cablevision’s interpretation, when only one person can receive the specific copy, and no other person receives the same copy of the performance, the transmissions are not “public performances.”
The Second Circuit’s Aereo decision turned mainly on the system’s architecture, which utilizes thousands of dime-sized antennas assigned to one subscriber at a time, creating individual copies of the requested program for each user. In following the Second Circuit’s Transmit Clause analysis outlined in Cablevision, the Second Circuit in Aereo noted that only one subscriber is capable of receiving the performance communicated by each transmission. Thus, because only one user received each performance, the Second Circuit held that Aereo’s transmissions were not “to the public” and therefore did not constitute “public performances.”
However, one important point of distinction must be made regarding Cablevision and Aereo. The Cablevision service was merely a “supplemental service” from which subscribers could make DVR-like copies of programs that the subscriber could already lawfully receive. In Cablevision, the cable system split the transmission stream for which it paid statutory licenses to receive. The stream then either went directly to the cable system’s subscribers or to a DVR-like system that saved a copy of the program for later viewing by the particular subscriber. The Second Circuit even articulated in the Cablevision opinion that its holding “does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of content and associating one unique copy with each subscriber to the network, or by giving their subscribers the capacity to make their own individual copies.” In fact, in regards to Aereo, Cablevision has argued that Aereo’s position is not akin to its own because “[t]he critical legal difference is that Cablevision pays statutory licensing and retransmission consent fees for the content it retransmits,” while “Aereo does not.”
Other jurisdictions have declined to follow the Second Circuit’s Transmit Clause interpretation. For example, in Fox Television Stations, Inc. v. FilmOn X, LLC, the District Court for the District of Columbia granted an injunction against FilmOn X, a service that transmits broadcast programs to subscribers via the same “unique copy” service utilized by Aereo. The court there determined that FilmOn X transmits performances to members of the public, and pursuant to the second half of the Transmit Clause, although the members of the public receive the performance in separate places and at separate times, the transmissions are still “public.” Specifically, the FilmOn X court determined that the Transmit Clause encompasses systems like FilmOn X’s, due to Congress’s broad language regarding its application to transmissions by means of “any device or process,” defined as “one now known or later developed.” Moreover, the FilmOn X court agreed with Judge Chin’s dissent in Aereo that the Second Circuit erred in substituting the word “transmission” for “performance” in its analysis. Likewise, in Fox Television Stations Inc. v. BarryDriller Content Systems, PLC, the District Court for the Central District of California followed the same reasoning as the District of Columbia and held that BarryDriller’s “unique copy” transmissions were “public performances” in violation of the Copyright Act.
While the Second Circuit’s interpretation makes sense at first glance because a transmission is ultimately a “performance,” a more in-depth analysis suggests that it erred in substituting the word “transmission” for “performance” in its Transmit Clause analysis. First, Congress used the word “performance” in the Transmit Clause, while it used the word “transmission” in six other places within the same section of the Copyright Act. The Second Circuit’s focus on the individual transmission’s performance renders a much narrower interpretation and significantly different result than an analysis focused on the overall performance of the copyrighted work pursuant to the statute’s clear language. Indeed, the Aereo case exemplifies how this substitution essentially alters the statute’s effect: had the analysis considered whether the members of the public were capable of receiving the performance of the copyrighted work, Aereo’s transmissions would likely have been considered “pubic performances.” Second, as Judge Chin pointed out in his Aereo dissent, the later part of the Transmit Clause, regarding reaching members of the public in separate places and at separate times, would not have been included had Congress meant for the analysis to focus on the performance by the individual transmission. No individual transmission can reach people in different places and at different times. Third, Congress added the Transmit Clause to pull cable retransmissions within the scope of the public performance right, and noted that the definition of “transmit” is “broad enough to include all conceivable forms and combinations of wired or wireless communications media.” Aereo’s system is merely another retransmission system that transmits verbatim copies of copyrighted programs to the public. Fourth, although a one-to-one transmission system such as Aereo’s may provide a unique copy to each user, that user is nonetheless a member of the public. Finally, the Second Circuit’s focus on the uniqueness of the copy transmitted by the individual transmission is not commanded by the statute’s text or legislative history.
The Supreme Court’s grant of certiorari comes at a vital time for the broadcasting industry. A surprising number of amicus curiae briefs were filed, all in support of the broadcasters and copyright holders. Although Aereo was the victor in the Second Circuit, Aereo even noted its belief that the Supreme Court should review the decision because the copyright holders have indicated their intention to relitigate the issue in every jurisdiction that Aereo expands to. Most recently, a federal Utah court initially issued a temporary injunction against Aereo in six states, but then granted a 14-day stay on the injunction, suggesting that Aereo sign a rebroadcasting agreement with copyright holders to avoid being shut down. Copyright holders argue that Aereo is merely trying to take advantage of a loophole, contrary to Congress’s clear intent for the Transmit Clause to prevent retransmissions from one place to another without permission, regardless of whether only one person receives the transmission. Should the Supreme Court side with Aereo and determine the transmission are not “public performances,” the decision will have significant impact on the broadcast industry.
Copyright holders Fox, Univision Communications, and WNET argue that this fight “has never been about stifling new video distribution technologies, but has always been about stopping a copyright violator who redistributes television programming without permission or compensation.” Broadcast networks such as Fox and CBS indicated that should the Supreme Court rule in Aereo’s favor, they might simply abandon their broadcast signals and become cable networks, which would mean those networks would no longer be available for free to users without cable or satellite subscriptions. Meanwhile current cable companies like DirecTV and Charter Communications indicated that should the Supreme Court rule in Aereo’s favor, they might follow in Aereo’s footsteps and simply retransmit broadcast signals to avoid paying retransmission fees under current copyright law. Clearly, regardless of how the Supreme Court rules, the decision will have a significant impact on the broadcast industry and on how consumers receive broadcast programs.