The Aereo Case Is Argued Before the U.S. Supreme Court: The Problem Is the Cloud, and How to Make Sure It’s Always Fair Weather

Apr 22, 2014  •  Post A Comment

Oral arguments for ABC vs. Aereo have now been argued before the United States Supreme Court.

You can find a full transcript of the oral arguments made today, April 22, 2014, if you click here. The entire 55-page transcript is full of a very lively argument on both sides and we urge anyone interested in this fascinating case to take the time to read the entire transcript.

There appear to be two major issues that the Supreme Court justices were interested in talking about. One concerned whether or not what Aereo does is just a scheme to avoid U.S. copyright law.

The other major issue was twofold: How can one differentiate this case from the Second Circuit’s decision several years ago that allows Cablevision to basically use a headend as a VCR? And what implications does the Aereo case have on storage on the “cloud,” which is basically many computers connected on the Internet.

Some highlights from the transcript of the oral arguments in the Aereo case:

PAUL CLEMENT [a lawyer for the broadcasters]: … [N]ot all cloud computing is created equal, and there are some cloud computing services that use cloud computing technology to get new content to people that don't have it, and they get licenses. And there is other cloud computing that just has locker services and they don't think they need a license, and so I'm not saying that you have to bless what the market has done, but I think it's a profound indication.

JUSTICE KAGAN: But what if, Mr. Clement, it's not so simple as a company that just allows you yourself to put something up there? What if how about there are lots of companies where many, many thousands or millions of people put things up there, and then they share them, and the company in some ways aggregates and sorts all that content. Does that count?

CLEMENT: That, Justice Kagan, is precisely why I'm asking you not to decide the cloud computing question once and for all today, because not all cloud computing is created equal. The details of it might matter. If I can take my valet parking service one more time. If a valet parking service starts renting [cars] out and sort of has a little Zipcar service on the side and says, hey, while we have your car, if somebody else needs a car, we're going to rent it out to them, I think that's different from the pure valet parking service.

Here's another exhange from today's oral arguments:

DEPUTY SOLICITOR GENERAL MALCOLM STEWART [also a lawyer for the broadcasters]: If you look, for instance, at the extremes of a person putting a rooftop antenna at his own home, everybody agrees that the rooftop antenna manufacturer is not performing at all and the individual is engaged in a solely private performance.

The other extreme is the cable company, one big antenna, makes transmissions to a lot of people; Congress clearly intended to define that as a [public] performance. Somewhere in there you could come up with lots of hypotheticals that look more or less like one of the other extremes, they are somewhere in the middle.

It's an authentically hard call as to where to draw the line. So I don't have a good answer for you.

JUSTICE BREYER: How do we get out of the example? I mean, how do we get out, what words do I write to get out of this, throwing into this clause a music store that distributes via Federal Express, a  device, or the U.S. Postal Service or even someone over the counter, distributes to 10,000 people a copy of a record which they then will take and play it? They have, to the same degree, transmitted something that will electronically make a performance of the music. So are they when they sell the record violating the display clause?

STEWART: No, they're not.

JUSTICE BREYER: Because? Because?

STEWART: Because the definition of 'to transmit' goes on: 'To transmit a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent.'

JUSTICE BREYER: Of course they are. The sounds are received beyond the place. It requires the person to take the record, put it on a machine, and then play it.

STEWART: Well, there is a separate exclusive right.

JUSTICE BREYER: Of course there is. And that separate exclusive right has such things as first sale doctrine is attached. But if they also flow here, if they, if this covers them, which is why NMPA wrote the paragraph that was quoted, if this covers it, there is no first sale doctrine, and that has a lot of consequences. I think so. Anyway, if you don't know and you haven't got something right there and you haven't thought about it, you're not going to think about it in two minutes, nor will I.

STEWART: No. No. I have thought about it. And I think the answer is that the word 'transmit' is being used in a particular sense. You are correct that there are some contexts in which we would say that a person who sends CDs or vital albums over the mails is transmitting those. That's not the sense in which the term 'transmit' is used here. It's talking about transmitting in a way that causes the sights and sounds to be received, transmission through radio waves, through cable, et cetera. And if there were any doubt about the word 'transmit,' remember that it's part of the definition of the word 'perform.' And ambiguities in the definition should be construed in light of the defined term. And nobody would say, in ordinary parlance, that a person who transferred a copy of a record was performing it.

And finally, there was this exchange:

DAVID FREDERICK [a lawyer for Aereo]: … [T]he person who sells an antenna to me at the local Radio Shack doesn't pay copyright royalties either. And a company that provides a rental service for me to put an antenna in my home and install it, they don't pay copyright royalties either. And the question that it really boils down in this case is how significant should it be how long the cord is between the antenna and the DVR being –

JUSTICE BREYER: The answer is very significant. And the reason it's very significant is because what the local antenna person doesn't do but you apparently could do, even if you don't, is with the same kind of device pick up every television signal in the world and send it, almost, and send it into a person's computer. And that sounds so much like what a CATV system does or what a satellite system does that it looks as if somehow you are escaping a constraint that's imposed upon them. That's what disturbs everyone.

And then what disturbs me on the other side is I don't understand what the decision for you or against you when I write it is going to do to all kinds of other technologies. I've read the briefs fairly carefully, and I'm still uncertain that I understand it well enough. That isn't your problem, but it might turn out to be.

(Laughter.)

FREDERICK: Well … let me try to make it their problem.

(Laughter.)

FREDERICK: I think I've addressed the distant signal, and I think you can reserve that case to say that might raise a different issue, but on the facts here would not entitle the company to an injunction enjoining Aereo from providing the service.

Now, with respect to the second aspect of this, the reason why their interpretation of the transmit clause causes so much problem, so many problems for the cloud computing industry, is that is twofold.

Number one, they are conflating performance with work in the transmit clause. What they are saying is that, so long as the work is always perceived in some fashion through a performance that is privately done through the playback of a recording, that that because the initial work was disseminated to the public, that implicates the public performance right.

What that does is it means that every time somebody stores something in the cloud, whether it's a song, a video image or or the like, if it happens to be something that somebody else has stored in the cloud, the act of one person initiating it and perceiving it is going to implicate the public performance right. And that's why the cloud computing industry is freaked out about this case because they've invested tens of billions of dollars on the notion that in user-specific, user-initiated copy when perceived by that person is a private performance and not a public performance.

The second thing that they do that's wrong with the statute is they aggregate performances. Instead of where the statute says 'transmit a performance,' they say 'transmit performances.' Because they acknowledge that the way the technology works for them together, you can aggregate that to become a public performance.

That's the end of our oral argument excepts. Again, please click here to read the entire transcript.

As we here at TVWeek previously reported, “Aereo captures over-the-air television broadcasts and, without obtaining authorization from or compensating anyone, retransmits that programming to tens of thousands of members of the public over the Internet for a profit.

“According to the Second Circuit, because Aereo sends each of its subscribers an individualized transmission of a performance from a unique copy of each copyrighted program, it is not transmitting performances ‘to the public,’ but rather is engaged in tens of thousands of ‘private’ performances to paying strangers.

“The question presented [before the Supreme Court] is:

“Whether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.”

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