Networks Say Cable, Satellite Companies See Aereo As "Road Map" to Avoid Retrans Fees
Broadcasters filed a petition to the Supreme Court on Friday asking the court to put a halt to Aereo, the service that offers digital streams of station signals.
A Fox spokesman said that the petition “underscores our resolve to see justice done.”
Earlier this week, a group of broadcasters decided that they would seek a Supreme Court review of lower court decisions that have denied them the injunction that would have stopped Aereo, which began offering streams of station signals in New York in March 2012. Aereo has since expanded to other cities, including Boston, where a federal judge on Thursday also declined to issue an injunction.
Aereo has contended that its service is legal, as it utilizes thousands of dime-sized antennas, one assigned to each subscriber. Stations have contended that such transmission of their signal still represents a public performance and is thus in violation of the Copyright Act. But citing a 2008 2nd Circuit decision that upheld Cablevision’s ability to offer a remote DVR service, Aereo contends that its service is a private transmission, akin to any consumer buying an antenna for his own home use.
The broadcasters’ petition, which spanned 209 pages, calls on the high court to decide whether the digital retransmission of station signals to paying subscribers is a public performance. All of the broadcast networks, along with Univision, Telemundo and PBS, signed on to the petition. Also signing on to the case are WNJU-TV, WNET-TV and WPIX-TV.
“Make no mistake, Aereo is stealing our broadcast signal,” a Fox spokesman said. “As do so many businesses both large and small, broadcasters rely on enforcement of the law to receive fair value for the high quality news, sports and entertainment we create and in turn deliver to millions of Americans each day.”
Virginia Lam, a spokeswoman for Aereo, said, “We will respond. as appropriate, in due course.”
In their brief, the broadcasters said that what was at stake were “questions of copyright law that profoundly affect, and potentially endanger, over-the-air broadcast television.” They have contended that Aereo undercuts their ability to collect retransmission fees from cable, satellite and other multichannel video providers. They also argue that Aereo “offers precisely the kind of service Congress sought to prohibit when it revised the Copyright Act to define ‘public performance’ to include retransmissions of over-the-air broadcast transmissions to the public.”
The 2nd Circuit Court of Appeals, in a 2-1 decision in April, concluded that Aereo was not violating the Copyright Act, siding with U.S. District Court Judge Alison Nathan’s refusal to issue an injunction to stop the service. The appellate court said that because individual subscribers were receiving their own digital copies of the broadcasts, via the transmissions from their assigned antennas, the performance is “private.” The broadcasters called it “nonsensical reasoning.”
“In the Second Circuit’s view, this technical detail renders Aereo’s simultaneous transmissions to thousands of paying subscribers ‘private,’” the broadcasters said in their brief. “Thus, for example, when tens of thousands of Aereo subscribers all simultaneously watch the same broadcast of the Super Bowl using Aereo, Aereo is not publicly performing the Super Bowl. It is merely making tens of thousands of simultaneous ‘private’ performances to its subscribers.”
The broadcasters contend that the Copyright Act spells out that services that transmit their signals by means of a “device or process” are public performances and not private. They argue that the transmit clause of the Copyright Act is “technology neutral and applies whether the public is gathered in a public place or in individual homes.”
Arguing that the high court’s intervention is “urgently needed,” the broadcast networks say that the impact of Aereo already has been felt, noting that copycat services have sprung up, and that “certain cable and satellite companies have responded by threatening to use the decision …as a road map for re-engineering their own delivery systems so they too can retransmit broadcast signals without obtaining the broadcasters’ permission.”
The odds are usually against the Supreme Court taking a case, but the broadcasters attempted to appeal to the justices by noting that they have “repeatedly recognized the important public interest in protecting the vitality of over-the-air broadcast television.” They also attempt to make the case that the 2nd Circuit is an outlier, noting that other district courts have rejected “copycat” services. Although it wasn’t named, FilmOn X, which also offers digital streams of broadcast signals, has been halted in district courts in Los Angeles and Washington, D.C., the latter court even issuing an injunction that applied everywhere except the 2nd Circuit.
What could increase the chances that the Supreme Court will take a case is whether there is, indeed, a circuit split on the issue of digital broadcast streams. The 9th Circuit is considering FilmOn X’s appeal, and if it sides with broadcasters, the networks are likely to make the case that the 9th Circuit and the 2nd Circuit are in conflict.
Jonathan Steinsapir, partner at Kinsella, Weitzman, Iser, Kump & Aldisert, said that if such a circuit split develops, “There is a very good chance the Supreme Court will take this issue.” He said that it presented “a very important issue of statutory construction that really should be decided by the Supreme Court.” Under Chief Justice John Roberts, the court also has been more interested in taking cases involving intellectual property, he noted.
The next step in the case is for Aereo to follow with a response, and then for the broadcasters to file their reply. It could be months before the petition makes its way before the justices at a judicial conference, and even then they could ask Solicitor General Donald Verrilli for his opinion, Steinsapir noted. They also could hold a decision until a 9th Circuit ruling, or even until the litigation plays out further in the courts.
Update: Cablevision issued a statement on Friday afternoon in which it suggests that by taking this case to the Supreme Court, broadcasters risk establishing a decision that could have implications well beyond their own business. The 2nd Circuit decision in 2008 that upheld Cablevision’s remote DVR also had implications for cloud-based storage services, Cablevision says, and its concern is that the Supreme Court could render a decision that could limit that ruling. “We are dismayed by the broadcasters’ brazen attempt, in a case about Aereo, to go after the legal underpinning of all cloud-based services, everything from digital lockers to Cablevision’s own RS-DVR service. Given that there are much narrower — and more persuasive — legal grounds for invalidating Aereo that do not threaten such underpinnings, the broadcasters’ approach can only be seen as a willful attempt to stifle innovation. If Aereo ends up prevailing, it will serve the broadcasters right.”
Alki David, the founder of FilmOn X, said that he was happy to see his company included in the petition. “The networks petitioning the Supreme Court is a shortcut to liberating the free to air channels back to the consumer and to services like FilmOn.”