For podcast release Monday, July 14, 2014
KENNEALLY: In one corner stood the leading US television broadcast companies together. And in the other, opposite corner, facing them alone, was Aereo, a startup offering paid subscribers the ability to watch broadcast television in almost real time over their Internet-connected devices. But because Aereo did not get permission from or pay royalties to the broadcast networks, the broadcasters sued it for copyright infringement.
On our program today, “The Aereo Decision: Exploring the Implications,” a special webinar sponsored by our On Copyright program from Copyright Clearance Center, we’ll be looking at what the recent Aereo ruling represents for copyright holders and TV viewers alike. We’ll review the recent Supreme Court decision and the legal framework within which the case was decided. To work our way through the program, joining us again is Lois Wasoff, attorney at law here in Massachusetts. Lois, welcome to our program.
WASOFF: Hi, Chris. It’s nice to be here.
KENNEALLY: It’s nice to have you back with us. We’ve had you for some other programs in the past, and it’s always been a pleasure to work with you on these. We’ll tell people briefly about your background before we get underway. Lois Wasoff has established a legal and consulting practice specializing in copyright and trademark matters, with a particular focus on issues related to publishing. Her areas of expertise include copyright law and policy and contractual, legal, and business issues related to development and distribution of content in traditional and electronic media.
Before we get started, I’ll make a point, Lois, that I think is important to our program today. That is that the copyright infringement case we’ll discuss is only the latest in a recent series of legal disputes where technology and innovation find themselves at loggerheads with the law, at least when it comes to copyright.
In the US federal constitution, the purpose of copyright is “to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Yet when it comes to progress in digital media, breakthroughs in distribution often rely on copyrighted works for their value proposition. In this complicated, contentious choreography of content and copyright, the courts and Congress are charged with determining where the balance or the fault may lie.
When it comes to the case at hand here, American Broadcasting Companies v. Aereo, it’s received a great deal of attention, Lois, and it has been described in the media, bloggers, and elsewhere as a significant event in copyright law. Before we get into the details or the implications, let’s start with a quick overview. Who were the parties, and what was the question the Supreme Court was asked to decide?
WASOFF: In the simplest terms, Chris, the parties were the television broadcast companies on the one hand, as you described, and Aereo on the other. The plaintiffs in the case were all the major broadcast networks, and a few local broadcast stations as well. ABC, and its parent, Disney, CBS, NBC, Fox, PBS were all named plaintiffs.
Aereo, on the other hand, is a well-funded startup company that was offering paid subscribers the ability to watch broadcast television in almost real time over their Internet-connected devices. The case came to the Supreme Court on appeal from the Second Circuit, which had held in favor of Aereo and against the broadcast networks.
KENNEALLY: We’ve got quite a tale to tell, but for people to really understand what was going on and why we found ourselves in the Supreme Court on this case, how did the Aereo service work? What were they doing, exactly?
WASOFF: Aereo subscribers could pay a modest monthly fee, under $10 a month, to be able to watch broadcast television programs virtually live on any Internet-connected device. Virtually live, it was almost real time. The system had a seven-second delay built into it.
Aereo delivered the service by capturing the broadcast signal by capturing the broadcast signal and then retransmitting it to the subscriber. The technique it used to do this was putting together these huge batteries of tiny antennae. The pictures are really cute. The antennae are about the size of a dime. The antennae were installed in warehouses.
When a subscriber signed on to watch or record a broadcast program over the Internet, the subscriber would be assigned a specific antenna for the duration of that session. A separate copy of the program chosen by the subscriber was made for each user. If the user only wanted to watch the particular program, the copy was deleted when the user’s session was ended. If the subscriber chose to both watch and record, the copy was kept and could be played back at a time chosen by the user.
KENNEALLY: OK, then. So this one user, one dime-sized antenna, one copy model goes to the crux of the dispute between Aereo and the broadcasters. Explain that dispute. What was the legal issue here?
WASOFF: It goes to the underlying question of what constitutes a public performance, which we’re going to get into. The right to control public performance is a key exclusive right of the copyright holder. The private performance of a copyrighted work – a viewer watching a program in his or her own home, typically – isn’t an infringement. Very simply put, Aereo wanted to put itself in the shoes of its subscriber, the private viewer, and avoid making a public performance that would implicate copyright, hence the architecture of the system – one antenna, one copy, one user.
This gave rise to an important question that ultimately the Supreme Court was going to have to decide. That is, when is the retransmission of a copyrighted television broadcast over the Internet to paid subscribers a public performance? If what Aereo was doing was a public performance, its activities, absent a license, were infringement.
Both the federal district court in New York and the Second Circuit came down on Aereo’s side. Usually, a party in Aereo’s position, after it’s prevailed below, would want to avoid further appeals. But this case was different. When the broadcasters appealed the Second Circuit’s decision to the Supreme Court, Aereo joined in that request. Aereo wanted the Supreme Court to hear the case. Aereo had built its business around the legal theory that its retransmission of broadcast signals over the Internet did not implicate copyright. Aereo bet the company that the Supreme Court would agree with its position.
KENNEALLY: That’s fascinating, Lois. As you point out there, they were gambling the company on that particular appeal, and they lost. Because as we know now, the Supreme Court ruled in the favor of the broadcasters. Clearly, Aereo can’t have been surprised at the broadcasters’ response.
WASOFF: I certainly think Aereo expected to be sued. A major investor in Aereo, Barry Diller, has enormous amounts of experience in the broadcast industry. He understands the industry deeply and profoundly. Aereo’s actions were a direct and existential threat to broadcasters in both the short term and also in the long term.
Right now, an important source of revenue for broadcasters is the retransmission fees that they get from cable services. The broadcast model in the past was ad revenues. Programming was supported by the ad revenues. That model has been breaking down over time, but the retransmission fees are very important to the broadcast companies now. If the Aereo model was upheld, the cable services, the cable companies, that now pay retransmission fees would have had the option of changing their own technology to emulate the Aereo one user, one copy model, or at least to threaten to do so, which would have potentially undercut the broadcasters’ negotiating position.
Also, if Aereo had won, other Aereo-like services would undoubtedly have sprung up, and that brings up the longer-term implications. Because I think everyone’s aware that streaming is becoming, and really has become, a more and more common and important means of distribution of content. It’s really critical to broadcasters, to the owners and the developers of broadcast content, to establish and preserve their right to be compensated for the delivery of their works over the Internet. That was why it was so important to the broadcasters.
But as we’ll discuss, Aereo had some strong arguments to make in defense of its service, and it had made real efforts to comply with what it believed to be the law at the time. So the stakes were very, very high for both sides.
KENNEALLY: Indeed. I don’t think they get much higher. An existential threat was the way you put it, and I was thinking that in the world of Twitter, this would have been #doordie. Can you then summarize the holding for us? Who came out ahead?
WASOFF: I’m going to let Justice Breyer, who wrote the majority decision, summarize the holding for us, because he puts it pretty succinctly in the decision. The way he phrased the question presented to the court was that the Supreme Court had to decide whether Aereo infringes the exclusive public performance right when it sells its subscribers access to this particular technologically complex service. Justice Breyer and the majority of the court concluded that the public performance right is implicated, and that the service was therefore infringing.
In concluding that Aereo was performing protected works – actually, let me go back for one second. The way Justice Breyer approached this was really methodical. He looked at the question that was presented, and he parsed, is there a performance? If there’s a performance, is there a public performance? And if it’s a public performance, then does the fact that the users are watching separate copies matter?
He concluded that Aereo was performing the protected works, that it hadn’t succeeded in putting itself in the shoes of its subscribers. He looked at the public performance issue, and he concluded that the fact that each user watched a separate, user-specific copy of the work didn’t mean that the performances were private. In fact, he found that that technical structure, that one user, one copy model, was essentially irrelevant, and he focused on the result, which is that millions of individuals, potentially – thousands of individuals in light of the size of Aereo’s subscriber base – could watch the same work at the same time. That was what was important to him, not the particular means that was used to achieve that goal.
Quite importantly, and this has been a source of a lot of controversy since the case was decided, he went on to find that Aereo’s activities were “highly similar,” those are his words, to the activities of the cable companies, and the cable companies are subject to a congressional scheme that imposes copyright liability on them. In reaching that conclusion, he spent some significant time looking at the Supreme Court’s prior decisions dealing with cable transmission and on the actions that Congress had taken.
KENNEALLY: Right. Lois, I just want to take a moment to remind people that if you do have a question for Lois Wasoff today, you can use the chat box in the lower right-hand corner of the screen. Let us know what’s on your mind. If you’ve got a particular point that you would like clarified, if you have a question about the implications for this case, we’ll be happy to take as many of those as we can at the end of our program. If you are tweeting our program today, we ask you to use the hashtags #oncopyright and #cccaereo.
You were saying, Lois, that Justice Breyer – and it’s important. There are some phrases. There’s a phrase that we should probably do a hyperlink to that you just used, because it will come up later, that Aereo’s activities were highly similar to the activities of cable companies. You point out that the justice looked at prior decisions related to cable television and relevant aspects of the Copyright Act. You’re going to tell us more about those now.
WASOFF: It’s an interesting history. Before the passage of the 1976 act, there were a couple of cases that came to the Supreme Court that dealt with the predecessor of cable TV, and that was the old CATV technology.
KENNEALLY: Community antenna television.
WASOFF: Community antenna television. That was outsourced rabbit ears. If you lived in a place where you couldn’t get the signal, then a commercial entity would put a giant antenna up on a hill for you and get the signal down into the valley where you lived.
There were a couple of cases that came to the Supreme Court, one in 1968, the Fortnightly case, and another in 1974, the Teleprompter case, that involved technologies like that, and that talked about whether or not those technologies implicated the public performance right. In both of those cases, the court said no. The court said that the retransmission of broadcast signals through those kinds of systems were not public performances.
What the court held, in essence, was the companies were merely doing for the television viewers what the viewers could do for themselves, and that is watch broadcast signals in their homes without paying copyright royalties. The CATV, and later the cable companies, were really just equipment providers. That’s significant, because that’s really the argument Aereo was making. Aereo was saying, we’re an equipment provider. We just have this little antenna, and we keep it in our warehouse, and we’re just providing the equipment for our subscribers to use.
But significantly, in the case of these old CATV technologies, and in relation to cable companies, Congress did not agree with the Supreme Court holding. So when the 1976 act was passed, it reversed the law in this area. It changed the law in this area. Congress did two important things. First, it made it very clear in its definition of what a public performance is that a transmission can be a public performance. We’ll talk about that in a second. The other thing that it did was create a compulsory licensing mechanism for cable companies. That’s in Section 111 of the act, and that describes the terms upon which cable companies can get licenses, or entitled to get licenses to rebroadcast broadcast signals to the cable company subscribers.
But to look at the transmit clause for a minute, because that’s relevant here, the transmit clause says that a work is being performed publicly if it is transmitted or otherwise communicated, and there’s three factors. One, to the public – and who the public is isn’t specifically defined here. The word public isn’t defined in the act, which is potentially an ambiguity. Secondly, by means of any device or process. Clearly the intent was to make this as technology-neutral as possible. Thirdly, without regard to whether the members of the public capable of receiving the performance receive it in the same or separate places, or at the same or different times. The idea here is that you define public by the potential recipients. Is the transmission being offered to the public? Not necessarily how many people are receiving the transmission at any given moment, and whether they’re in the same place, a different place, or together in that moment or separated in time.
Judge Chin picked up on this language and discussed it at some length when he wrote a dissenting opinion in the Second Circuit. You and I have reviewed Judge Denny Chin’s decisions in some depth when we were talking about the Google case a couple years ago.
KENNEALLY: Yes, indeed. A very well-known jurist to those of us in this room, at least, and to many on our call today.
WASOFF: In this dissent, Judge Chin pointed out that under Aereo’s interpretation of the transmission clause, and in his view, the interpretation adopted by the Second Circuit when it upheld Aereo’s position and said these weren’t public performance, that would mean that a transmission of the same program being watched at the same time by – he chose a number of 50,000 people – was nevertheless a private transmission, because each viewer, in the Aereo model, was watching, in theory, a different copy delivered through his or her separate antenna.
The example he used was everybody tuning in to see the Super Bowl game using the transmissions they received through Aereo. He felt that interpreting that as private rather than public performance gutted the transmit clause and made much of its language meaningless. Ultimately, his view was vindicated by the Supreme Court, because that’s consistent with the interpretation that Justice Breyer and the majority on the court applied when they looked at the transmit clause.
As Justice Breyer did that review and looked at the transmit clause, the cable provisions, and the kinds of activities that Congress intended to implicate copyright, he looked at what Aereo does and said that Aereo’s activities were highly similar to the activities of cable TV companies. Given that similarity between Aereo’s services and those offered by the cable companies, Justice Breyer and the majority concluded that Aereo should be required to pay royalties in the way that the cable companies are.
KENNEALLY: Indeed. Of course, the compensation for the use of copyrighted works is an important point for this program, and for obviously much of what we do here at Copyright Clearance Center. The background you just gave is for the ruling itself, the majority decision in the ruling. But the court was not unanimous, at least this time, although it often was in this particular session. Justice Antonin Scalia wrote the opinion for the three dissenting justices. Why did they feel there should have been a different outcome?
WASOFF: Justice Scalia focused on a few different aspects of the case. First, he saw Aereo as merely an automated service provider that was not itself performing the work. He reached that conclusion because the choices about what to watch and what to record were made entirely by the user. He was also very troubled by the majority opinion’s use of what he called a looks like cable TV standard for imposing liability. He warned that that approach, at least in his view, could result in confusion about what rules would apply to future services.
He acknowledged that the majority opinion had explicitly stated that the intention of the court was to make a limited holding based on Aereo’s particular facts, and that it wasn’t purporting to opine on cloud storage services or remote DVR services, just on Aereo’s watch function, just on its streaming of almost-live TV. But Justice Scalia was very, very skeptical about that. He said that he didn’t believe the court could deliver on that promise, given what he called the imprecision of its result-driven rule.
But that doesn’t mean that Aereo should take much comfort from the dissenting opinion, because Justice Scalia didn’t think what Aereo was doing was appropriate. He actually stated specifically that he shared the majority view that what Aereo is doing or enabling to be done to the networks’ copyrighted programming ought not to be done. His disagreement was really with the reasoning. He really felt that presenting the case to the Supreme Court only on the theory that Aereo was directly liable for infringement, instead of secondarily liable, was wrong. He didn’t see Aereo as directly liable, but he felt that they could easily be held to be secondarily liable under copyright.
The other thing that really troubled him was that he saw, as did the majority decision, as did Judge Chin, a certain gimmicky quality to the dime-sized antennas and the one user, one antenna rule. But he felt that if Aereo had located a loophole in the copyright law, it wasn’t up to the Supreme Court to fix it. The Supreme Court should interpret the law as Congress wrote it. If Congress left a loophole, Congress should fill the loophole. That was the basis on which he dissented, but it wasn’t a terribly favorable dissent for Aereo or its business model.
KENNEALLY: What’s fascinating to me, there, Lois, in that two very careful, very close readings of the same case law yield two very different results. Indeed, Aereo had some reason to think that that big bet it was making could prove a winner, because it had already prevailed twice in courts below the Supreme Court, first in the southern district of New York, and then on appeal to the Second Circuit. Those courts, as I said, were looking at the same service and considering the claims of the same broadcasters who had sued. I think it’s important to stop for a moment and ask, why did Aereo prevail in the Second Circuit? What arguments had they made in support of their position that worked there, but were rejected by the majority of the Supreme Court?
WASOFF: The answer to that question is now going to get us into the reasons why this case has attracted so much attention, and why the outcome may have implications beyond the specific issues decided by the Supreme Court. In 2008, the Second Circuit decided a very significant copyright case, Cartoon Network v. CSC Holdings, which is known universally as the Cablevision decision. In that decision, the Second Circuit was looking at a service that was offered by the cable TV provider Cablevision to its subscribers that let the subscriber record content that he or she received through Cablevision on a remote DVR maintained by Cablevision for playback at a later time.
KENNEALLY: That remote DVR service that allowed subscribers to time-shift, as the phrase is now used in the legal terms, it was a key issue in that Supreme Court 1984 decision in Sony v. Universal, the old Betamax case. In that case, Sony was held not liable for contributory infringement because the Betamax video recorders it manufactured were being used to record copyrighted television programs. Part of the court’s reasoning was that it deemed the recording of programs for this time-shifting purposes, for later viewing, to be fair use.
WASOFF: That’s correct. The Sony case established a number of important principles, but the fair use holding was, and remains, particularly important. By 2008, when the Second Circuit was considering the issues in the Cablevision remote DVR case, there really was no doubt that Cablevision’s customers could have recorded these programs on set-top equipment located in their home. The question was whether they could do essentially the same thing if they used remote equipment provided by Cablevision, and the Second Circuit said that they could. The reasons were because the user was initiating the copying, there was a separate copy for each user, and the user’s playback was not a public performance.
That reasoning in the Cablevision case, in particular the court’s reliance on the fact that the remote DVR service provided and maintained separate, user-specific copies, helped remove some of the uncertainty around cloud-based services like storage services for music, media, and documents. But the Cablevision decision has importance beyond the question of recording and replaying television programs.
Remember that Cablevision’s a Second Circuit case. The Supreme Court declined to hear an appeal from that ruling. One of the things that attracted a great deal of attention to the Aereo case was the possibility that the Supreme Court might overrule Cablevision or render a decision that undercut the reasoning of the case, and that was a matter of great concern to entities other than Aereo.
KENNEALLY: Right. In fact, I think this particular point is one that is a reason for why we have so many people on the call today, why this case has generated so much interest not only for the immediate question around Aereo itself, but the implications for all manner of digital distribution. Indeed, one of our listeners today was asking about this very point with regard to the notorious Megaupload. They’re sort of an outlier here, but on the slide, we’ve got the logos for various companies in the same general area of business – Dropbox, iCloud, Google Music, and so forth. Clearly, the discussion in court and outside the court is of importance, and complying with the Cablevision decision, Aereo believed that that would give it a free pass, essentially.
WASOFF: Yeah. I don’t know about a free pass, but certainly Aereo’s service, by its own admission, was very specifically designed to fall squarely within the confines of Cablevision. That’s why there’s no single large antenna to receive the broadcast signals that it intended to retransmit – the one user, one antenna structure that we’ve discussed.
Whether any of those decisions made sense from a purely technological point of view is a matter of some dispute. Aereo did argue that its use of many tiny antennae would make it easier, for example, for it to scale up its system to meet increased demand. But Judge Chin, in his dissent in the Second Circuit, and really both the majority and the dissenting opinions at the Supreme Court level, both regarded the one antenna, one user, one copy structure as more of a gimmick designed to avoid paying royalties for delivering content than as a technological choice driven by other considerations.
KENNEALLY: At least in the view of the Supreme Court, that reliance on Cablevision wasn’t going to protect Aereo, and it has now in fact said that Aereo’s service infringes on copyright. Where does that leave the Cablevision opinion? We’re talking today about the implications of this decision. That’s an important question. In addition, where does it leave other types of services that have also relied on the holding in Cablevision? Does the SCOTUS decision in this case threaten cloud computing, whether it’s the notorious outliers such as Megaupload, or a legitimate service like Dropbox?
WASOFF: That’s about three questions, so I’ll break it down. First, with respect to the impact of the Aereo decision on the Cablevision case, I think there’s a few things to keep in mind. One is that the Supreme Court was really quite explicit in labeling its decision as narrow. During the oral argument of the Aereo case before the Supreme Court back in April, it was an interesting argument. It was a hot bench. The judges were engaged and were asking a lot of questions of counsel.
Several justices who subsequently voted with the majority to overturn the Second Circuit, who voted against Aereo, began questions to the counsel arguing before them with the phrase, assuming Cablevision is settled law, and then fill in the next clause to get to the specific point the justice was asking for. In other words, it was an indication that the justices wanted to find a way to rule on this case without overturning the Cablevision case. I think that comes across in the language of the majority opinion.
Secondly, there are some very important differences between the facts underlying the Cablevision case and those in Aereo. Justice Breyer really emphasized those in his decision. He drew a distinction that had to do with the relationship – these are his words now – the relationship or lack of relationship between the user of a service and the underlying work. He emphasized that the users of Aereo’s service had no prior relationship to the works in question.
Unlike a cable subscriber using a remote DVR service or an Internet user storing copies of music and videos already on his or her hard drive in a cloud locker, the Aereo subscriber wasn’t already – and again, these are Justice Breyer’s words – an owner or a possessor of a copy of the relevant work. This factor didn’t even come up in Cablevision. It wasn’t discussed, because it was really obvious that the users of the remote DVR service had gotten access to the content legally as subscribers to Cablevision.
Justice Breyer drew a contrast. He wasn’t specifically talking about this in terms of the Cablevision decision, but there is a contrast in Justice Breyer’s mind, and I think it’s a fair distinction. The Aereo service subscribers really didn’t otherwise have access to the content, except through the Aereo streaming service. He saw that as significant.
KENNEALLY: I just want to pause you there, Lois, remind people that you are on a special program from Copyright Clearance Center today, an On Copyright webinar looking at the Aereo court decision and its implications for copyright holders and for TV viewers, which is pretty much all of us on the call. We’ll remind you that if you would like to tweet today’s program, your comments and what you think as the high points of our discussion, I’m going to ask you to follow us @CopyrightClear and use the hashtags #cccaereo and #oncopyright. If you have any questions for us here in Copyright Clearance Center’s offices, use the chat box in the lower right-hand corner of the screen and let us know what’s on your mind.
People have been following along pretty closely, Lois, because the kinds of questions have kind of anticipated your points. They asked us about Megaupload, and Keith was asking us about the potential broad applicability. The point you were just making there, I think, was that the Supreme Court did its best to keep things as narrow and in a clearly defined area as they possibly could. Tell us more about this potential threat, though, to what is generally known as cloud computing and cloud storage.
WASOFF: There’s a lot of debate going on about whether or not the Aereo decision will have that effect. It’s a legitimate question, and we don’t know yet what the full impact of the decision will be. But I think you have to look at it from a couple of different perspectives.
First of all, I think you have to realize that the Aereo case has really been a lightning rod. A lot of the commentators, Aereo itself, a lot of the amici supporting it, have really characterized the cases that were brought by the broadcasters as attacks on innovation generally. That theme continued in a lot of the reactions to the decision.
But I think it’s good to keep in mind that the Supreme Court really did not overrule Cablevision. The majority opinion went to some pains to anticipate and refute in an anticipatory way any interpretation of its opinion that would give it wide application to other kinds of technology and approaches to content delivery. The court was very clear that it wasn’t opining on the legality of remote DVR services or cloud storage services, but there are examples given in the majority opinion of certain kinds of activities and functionalities, and they’re given as examples of legal, non-infringing behavior, and they include the kinds of services that are provided by remote DVRs and by cloud storage lockers.
There may be some exposure, it’ll remain to be seen, for cloud storage services whose users may not have lawfully acquired all the copies they are storing. One could imagine that that could be the case. But the majority opinion was really careful about that. Remember, I highlighted that Breyer talked about that prior relationship with the underlying work, that the user was either an owner or a possessor of a copy of the work. He didn’t say the user had to be a licensee of the copyrighted work. It would be hard to read the decision as intending to impose liability on the cloud storage service for pirated works that are uploaded to it by users.
There’s another point that really isn’t made very specifically in the Supreme Court opinion, but I think it’s a context, and I think it’s worth keeping in mind. Aereo sold its service by promising to deliver broadcast television programs over the Internet in virtually real time for a price lower than a typical cable bill. The key value that Aereo was offering to its subscribers was really based on the delivery of copyrighted content owned by others for which it wasn’t paying. That was a business model. Courts have generally been pretty unsympathetic to that business model. Cloud computing storage services, they’re based on a very different business model. It’ll play out over time, but I think there’s an argument to be made that some of the concern about threats to those businesses are perhaps being overstated.
There’s also been a lot of concern expressed that the Aereo decision is going to interfere with innovation generally by creating legal uncertainty that will limit investment. I think it’s certainly likely that the investors in Aereo itself may sustain some significant losses. There have been questions raised about whether or not the company’s going to be able to stay in business. How significant those general concerns about an impact on innovation really are is going to depend partly on how unclear the reasoning of the holding really, truly is. Certainly Justice Scalia saw the decision as ambiguous. But the majority of the court didn’t, and the majority of the court tried to be very clear about the reasoning and the intended breadth of applicability of the decision.
Then, I think just as a two-second aside, maybe we should look at the innovation that was at issue here. I think it’s worth noting that a lot of Aereo’s innovation was really driven not by a desire to necessarily produce the most efficient and effective service, but by an attempt to design a system around a court opinion for the purpose of avoiding paying royalties. I think it’s a reasonable question to ask whether that’s truly innovative, and whether there might be other places that we as a society could spend our intellectual capital.
KENNEALLY: Certainly, the idea of innovation that relies on teeny-tiny antennas is something that my Irish grandmother would’ve said was too cute by half. It leaves a number of questions, as you point out, that are open on the side of the cloud storage functionalities and the implications for that. Yet it makes the point, too, that this contentious dance, choreography between innovators and copyright holders is one that has been going on for some time, and we can almost anticipate will continue.
In fact, we’ve got a point made by somebody on the call today, Joseph, who is asking about, as limited as Aereo is, whether or not we can anticipate that there will be another effort by “innovators” to find an end run or a way around loopholes, and whether or not we’ll all be back in court. If history is any kind of guide, we probably will be.
But I wonder if you can address now, Lois, before we get to the end of our program, and perhaps one or two questions from our audience, about the implications of the victory for the broadcasters. If they had lost, where would that have left the broadcasters? Now that they have won, how can they feel about the decision and about their own future?
WASOFF: I’ll speak to the specific first, and then the general that’s raised by Joseph’s question that you were just mentioning. The immediate impact for broadcasters, as I mentioned at the beginning of the program, is that a key source of revenue for them has been preserved. An adverse decision would really have undercut their ability to continue to negotiate for those retransmission fees that are so important to broadcasters.
KENNEALLY: #doordie, as we said, right?
WASOFF: Pretty much. The decision preserves part of the broadcasters’ business model for now, but we know, and the broadcasters know, that streaming is the future. So in the short term, the business model’s preserved. Maybe that buys the industry time to evolve into new platforms and new ways of approaching content.
Also, I think a very important aspect of the case is that it preserves an underlying principle of copyright, and that really is that copyright creators are entitled to seek payment and to be paid for their work when that work is distributed within that area of exclusive rights that the act reserves to copyright creators. I think the fact that Aereo was not paying content providers, when others offering analogous services were, clearly bothered the majority and really underlay the decision.
KENNEALLY: As a copyright holder, I can say that would bother me. I think that’s a good point, because in this battle, firefight, whatever you want to call it, between the copyright holders and the innovators, the technologists, there are two sources for some kind of rulings, decisions, refereeing, if you will. That is the court as well as Congress. Congress has a key, in fact, a sort of primary role when it comes to copyright.
In the case of the Aereo decision, some Congress members have already weighed in. House Judiciary Committee Chairman Bob Goodlatte said the decision “reinforces the importance” of the comprehensive review of copyright law that his House Judiciary Committee has already begun. As you know, Lois, and as many on the call will know, several hearings have been held on key aspects of copyright law, and more are planned. I guess the question there is do we think a legislative response to the Aereo decision may come anytime soon, just as a congressional response came in the early ’70s to some of those decisions around the early cable systems?
WASOFF: Aereo took the position that it wanted that to happen. They have an advocacy site called protectmyantenna.org, and have been encouraging subscribers and supporters to contact Congress and seek changes in the law. Aereo was, at least, looking for a specific fix to the law. It seems, on one hand, that as you said, given the do-nothing Congress in other issues, a quick fix does seem a little unlikely.
Secondly, we had some news over the last day or two that Aereo may be changing its focus, because Aereo is, at the same time as it’s seeking changes in the law, at least asking its supporters to seek changes in the law, Aereo is also asking the district court to treat it as a cable company, and seems to be adopting the Supreme Court’s position to some extent, or at least wanting to explore that.
What I think is more likely to happen legislatively, but this won’t happen fast, is that the Aereo decision and the principles underlying it, and the issues that it raises, those should all be fed into this larger copyright reform effort. The extent to which the Aereo decision affects what happens in copyright reform is going to depend on what happens now – how the decision is actually used in other cases, how it’s actually interpreted, what the longer-term implications of it are. That’s difficult to predict. We can speculate, but it’s very difficult to predict.
But I hope that the influence of this decision legislatively is in that larger context and not in the form of some quick, one-off fix, because I don’t think that’s the direction things should be going right now. These issues need to be looked at in a more global way, and a quick fix isn’t going to do that. Though if it could happen, it might be of some comfort to Aereo.
KENNEALLY: I probably wouldn’t hold my breath for that. But it is, I think, an important point to tell people on the call and with us today on the program that they should really pay as much attention as they can give time to when it comes to legislative reform or efforts in that direction around copyright and intellectual property law. Do watch the papers for developments there, and we will help inform our audience about that here at Copyright Clearance Center with future programs along this line in our On Copyright series.
We’re coming to the end here, Lois. We have time for, I think, one quick question, and then I want to pick up a point that Adam has brought up, which is about the users here. But before we get to that point, to the viewers in the case of Aereo, let’s just ask one quick technical question that seems important which comes to us. People were asking about this notion of the delay that Aereo had in place in the recordings. It was notoriously seven seconds long. Would anything have been different – would in the outcome in the Supreme Court have been any different, do you think, if that delay was longer than seven seconds?
WASOFF: It’s an interesting question. The Supreme Court was able to issue a fairly narrow, specific opinion because it was asked a narrow, specific question, and focused on a particular issue before it, which had to do with the preliminary injunction that was being sought by the broadcasters that had been denied by the district court and the Second Circuit. That preliminary injunction went to the watch function. It went to the streaming service. It didn’t go to the record service.
Justice Scalia, in his dissent, pointed out that that was probably one of the major issues that was going to come up when that issue went back on remand. We’ll see what happens. His feeling was that the Supreme Court’s approach muddied the outcome on that, would make it harder to predict whether or not the record function, the time delay piece of it, would be significant. What Scalia said was that he felt that the majority rule gave Aereo the option of just building in a time-shifting delay, not letting you see it until an hour it was initially broadcast, and that Aereo might be able to protect itself by doing that.
It’s not significant to the Supreme Court decision, because that wasn’t the issue in the Supreme Court. It’ll be interesting to see what happens to that if and when lower courts go back through that issue and have to make a decision.
KENNEALLY: Yeah, what’s interesting there is whatever else we know about Justice Antonin Scalia, we know he’s no fan of ambiguity. He wants things clear.
WASOFF: Oh yeah. Oh yeah.
KENNEALLY: To the point that Adam has made here about users and what users want, 30 seconds’ reflection, Lois, on where this leaves us, the viewers. Viewers today have a greater choice than they’ve ever had before when it comes to television content, film content, and they’re clearly frustrated by the situation. Probably many of them are frustrated by this decision. What are your thoughts on what this means to those of us sitting on the couch at home?
WASOFF: I think it takes us back to the way you introduced the program, Chris, and the complexity that we’re running into in this area where technology and copyright intersect. Copyright used to be easier. In the old days, when the idea that the work could travel separate from the pages it was printed on, the VCR tape it was transferred to, it used to be theoretical. Now, they’re not. Now, the works travel completely independently of the media and can be received and reviewed and used and copied in myriad different ways. There’s a lot of tension about that.
I think that in some ways, this is a frustration for the users who would like to cut the cord and would like to have more flexibility about where and when and how they receive their content, and I can see that frustration. On the other hand, if the content that is of value is content that requires investment to create, then there has to be a mechanism for compensating the creators and the entities that fund the creation. Aereo’s approach might have considered the user piece of it, but it didn’t really take into consideration how you feed that pipeline, how you create those works that require investment.
Not all works do, and not everyone who is circulating a copyrighted work cares about getting a return. Sometimes the benefits are other than financial, and that’s all fine. The law should be able to accommodate all of those different intentions, ideally. But there are works that require substantial investment in order to create. Those works have value. People want them. They want to get access to them. They want to get convenient access to them. Hopefully the Aereo decision, which may be frustrating for some now and comforting for others, will turn out to be a step on the road toward resolving those conflicts in a way that works.
KENNEALLY: Indeed. A great way to end there. Speaking of investments, we want to thank everyone on the call, on the webinar today, for their investment of just under an hour, for joining us on a program with Lois Wasoff on the Aereo decision and its implications for copyright holders and TV viewers alike. Thank you all. Thank you, Lois.
WASOFF: Thank you, Chris.
KENNEALLY: We’ll, by the way, direct everybody to our On Copyright education program section of our website at copyright.com/education. CCC’s On Copyright education program is an extensive resource if you’re interested in copyright issues. Last year, we hosted 280 educational events. We reached 5,400 institutions around the world and about 500,000 individuals. We have quite an audience. We want to add you to it. So please check us out at copyright.com/education, where you’ll find all sorts of training videos, white papers, tutorials, and much more.
I want to thank my colleagues here at Copyright Clearance Center for helping out with the program today – Alison Anderton, Michele Ayers, Joanna Murphy Scott, and especially, again, Lois Wasoff, our guest here for this program. For all of us here at Copyright Clearance Center, my name is Chris Kenneally. Thank you for joining us. Join us on the conversation, #oncopyright.