Utah Court’s Aereo Decision: A Preview of Supreme Court Outcome?

by Lee Gesmer on February 21, 2014

Utah Court's Aereo Decision: A Preview of Supreme Court Outcome?

It’s difficult to believe that so many judges and lawyers could disagree over what would appear, at first blush, to be a straightforward issue of copyright law. Can a company legally copy over-the-air TV broadcasts and transmit them to subscribers over the Internet, as long as it stores and transmits a separate copy for each customer?

Two companies have adopted this technology,, Aereo and FilmOn X (fka “BarryDriller.com”). Two federal courts have held that this does aereo_2not violate the copyright rights of broadcasters (New York’s Second Circuit and a Massachusetts district court), and three courts have held it does (the California, D.C. and Utah district courts). Thus far, all of the rulings have arisen in the context of preliminary injunction motions, and until the Utah court’s ruling on February 19, 2014, Aereo had survived two challenges (New York and Massachusetts).  FilmOn X had suffered the two losses (California and D.C.). Before the Utah decision, the Supreme Court had accepted review of the New York case, an unusual development given the fact that none of these cases involved a final judgment on the merits.

The Utah decision may prove to have tipped the balance, in more ways than one. Not only is the count now 3-2 in favor of the broadcasters in judging the legality of the “individual copies” technology, but Utah Federal District Court Judge Dale Kimball — a 17 year judicial veteran and former law professor — may have finally cut through the massive volume of verbiage surrounding this issue.

The section of the Copyright Act at issue, the “Transmit Clause,” states:

To perform or display a work “publicly” means—

to transmit or otherwise communicate a performance or display of the workby means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

When confronted with the same issue that had been presented to four federal district courts and the Second Circuit, and which will be decided by the Supreme Court this term, Judge Kimball  made short work of the local broadcaster’s motion for a preliminary injunction:

The plain language of the 1976 Copyright Act support Plaintiffs’ position. The definitions in the Act contain sweepingly broad language and the Transmit Clause easily encompasses Aereo’s process of transmitting copyright-protected material to its paying customers. Aereo uses “any device or process” to transmit a performance or display of Plaintiff’s copyrighted programs to Aereo’s paid subscribers, all of whom are members of the public, who receive it in the same place or separate places and at the same time or separate times.

After recapping the legislative history of the Transmit Clause, Judge Kimball stated:

Aereo’s retransmission of Plaintiffs’ copyrighted programs is indistinguishable from a cable company and falls squarely within the language of the Transmit Clause. It is undisputed that Plaintiffs license its programming to cable and satellite television companies and through services such as Hulu and iTunes. These companies and services are providing paying customers with retransmissions of copyrighted works. Similarly, Aereo uses “any device or process” to transmit a performance or display of Plaintiff’s copyrighted programs to Aereo’s paid subscribers, all of whom are members of the public.

Judge Kimball was not impressed with the reasoning of the Second Circuit in the Cablevision case (Cartoon Network v. CSC Holdings), the 2008 case that created the copyright “loophole” on which Aereo and FilmOn X have built their businesses:

To reach its conclusion that the recorded copies for later playback did not require an additional license as a separate public performance, the Second Circuit proceeded to spin the language of the Transmit Clause, the legislative history, and prior case law into a complicated web. The court focused on discerning who is “capable of receiving” the performance to determine whether a performance is transmitted to the public.  However, such a focus is not supported by the language of the statute. The clause states clearly that it applies to any performance made available to the public. Paying subscribers would certainly fall within the ambit of “a substantial number of persons outside of a normal circle of a family and its social acquaintances” and within a general understanding of the term “public.”

However, the Cablevision court appears to discount the simple use of the phrase “to the public” because it concludes that the final clause within the Transmit Clause – “whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times”– was intended by Congress to distinguish between public and private transmissions. This court disagrees. The entire clause “whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times” appears to actually be Congress’ attempt to broaden scope of the clause, not an effort to distinguish public and private transmissions or otherwise limit the clause’s reach. The term “whether” does not imply that the ensuing clause encompasses a limitation. Rather, the introduction of the clause with the word “whether” implies an intent to explain the broad sweep of the clause and the many different ways it could apply to members of the public. Reading this final clause expansively is consistent with Congress’ intent to have the entire Transmit Clause apply to all technologies developed in the future.

Judge Kimball challenged an interpretation of the law that lies at the very heart of the Cablevision decision:

The Cablevision court’s analysis also appears to have changed the wording of the Transmit Clause from reading “members of the public capable of receiving the performance” to “members of the public capable of receiving the transmission.”  Therefore, instead of examining whether the transmitter is transmitting a performance of the work to the public, the Cablevision court examined who is capable of receiving a particular transmission.  This court agrees with Plaintiffs that the language of the Transmit Clause does not support such a focus.

Judge Kimball concluded that:

Based on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs’ programs. Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo’s device or process transmits Plaintiffs’ copyrighted programs to the public.

Based on this analysis the court enjoined Aereo from providing its service in the six states in the Tenth Circuit (Colorado, Kansas, New Aereo-FilmOnX-infographic-Dec-2013-721x1024Mexico, Oklahoma, Utah and Wyoming). He declined to stay the injunction pending the Supreme Court’s review of the issue, ordering that the preliminary injunction go into force at once.

This case, and the fact that it is Aereo’s first courtroom loss, just adds to the drama over the upcoming Supreme Court hearing and decision on this issue. Will the Supreme Court perceive the issue to be a simple as Judge Kimball, or will it, to use Judge Kimball’s phrase, “spin the language” of the Transmit Clause to come out the same way as the Second Circuit ?

And, while this line of cases may be of academic interest to copyright lawyers, it is of immense practical interest to untold numbers of consumers who may want to use the Aereo/FilmOn X services to help them “cut the cord” of the expensive cable services. For this reason, pressure on the Supreme Court from consumer rights advocates in favor of Aereo’s technology is likely to be intense. The extent to which this will influence the Supreme Court may never be known, but few will deny that it will be a factor.

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