Law & Technology

Internet TV and Copyright Law
(or Aereo vs. the TV-Industrial Complex)
Massachusetts Institute of Technology
3.371 3.S171
Lee Gesmer
Gesmer Updegrove LLP
gesmer.com, MassLawBog.com

Professor Stephen Lyons
March 13, 2015

2

Copyright’s Six Exclusive Rights
1. Reproduce (i.e., copy)
2. Display Publicly
3.
4.
5.
6.

Prepare Derivative Works
Distribute Copies
Perform Publicly
Digital audio transmission of sound recordings

3

Three cases:
• Sony Corp. v. Universal City Studios (1984)
(the “Sony” or “Betamax” case”)
• Cartoon Networks v. CSC Holdings (2008)
(the “Cablevision case”)
• American Broadcasting Co. v. Aereo (2014)
(“Aereo”)

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Legal Background

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Concept 1: The “Fair Use” Privilege
Acts that would otherwise be infringing are excused for
policy reasons
Common examples:




Quotations in reviews/criticism
Parodies
News reporting
Biographies, scholarly research
Small portion/reasonable purpose
m

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Fair Use
• “Time shifting”
• “Format shifting”
• “Space/location” shifting

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Concept 2: “Contributory Infringement”
Conduct that intentionally induces or encourages
infringing acts by others
Examples:
• Online service that encourages uploads of
copyrighted content
• Online directory that encourages users to
link to copyrighted content

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Contributory Infringement

However: “contributory” infringement
requires that first there have been a “direct”
infringement

Concept 3: “Volition” or
“Who Made the Copy?”
Examples:

• ISP computers automatically create an
infringing copy at the direction of users/
posters = no infringement
• Copy shop/course pack created by shop
employees at request of teacher =
infringement

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10

Sony Corp. v. Universal City Studios (1984)
(the “Sony case”)

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Betamax Video Tape Recorder, circa 1980
Contributory infringement?

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Jack Valenti, President MPAA, 1982
A VCR lobbyist “has said that the VCR is the
greatest friend that the American film producer
ever had.
I say to you that the VCR is to the American film
producer and the American public as the Boston
strangler is to the woman home alone.”

13

The Sony Case
First key holding:

Sony not liable for creating a device that
some customers may use for infringing
purposes, so long as the technology is capable
of “substantial” or “commercially significant”
non-infringing uses.

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The Sony Case
Second key holding:
Private, non-commercial time-shifting of
television programs — recording programs to
watch at a more convenient time — is “fair
use,” and therefore does not infringe the
networks’ copyrights

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Sony
1. A copyright owner cannot establish
contributory infringement based on a
device that has a substantial noninfringing use
2. Non-commercial, in-home timeshifting is fair use

1960s - Community Antenna
Television (CATV)

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17

Copyright Act:
The owner of copyright under this title has the
exclusive rights to do and to authorize any of the
following:
… in the case of . . . motion pictures and other
audiovisual works, to perform and display the
copyrighted work publicly;

17 U.S. Code § 106

18

Copyright Act:
To perform or display a work “publicly” means—
(1) to perform or display it at a place open to the public or at
any place where a substantial number of persons outside of a
normal circle of a family and its social acquaintances is
gathered; or
(2) to transmit or otherwise communicate a performance or
display of the work . . . to the public, by 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.
17 U.S. Code § 101

“to perform it . . . at any place where a substantial number
of persons outside of a normal circle of a family and its
social acquaintances is gathered”

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“to perform it . . . at any place where a substantial number
of persons outside of a normal circle of a family and its
social acquaintances is gathered”

Jimi Hendrix performing Hey Joe at
Woodstock (copyright Billy Roberts)

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“members of the public . . . receiving the performance or
display . . . in the same place . . . and at the same time . . ..”

“members of the public . . . capable receiving the
performance or display . . . in separate places and at . . .
different times” (Transmit Clause)

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• Cable
• Satellite
• VOD

7:00 p.m. Monday, Boston
3:00 p.m. Saturday, Portland
10:00 p.m. Tuesday, New York

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Cartoon Networks v. CSC Holdings (2008) (the
“Cablevision" case)

Cablevision Remote DVR Service
ABC/NBC/CBS

Cablevision retransmits
with permission

ABC/NBC/CBS/Fox

1

46

Remote DVR Server With “n” Subdirectories
25

Cust
1

24

Cust
25

Transmission of
personal copy

“n”

Cust
46

Cust
“n”

Why Did Broadcasters Care?
• Impacted Nielsen ratings
• Made ad-skipping easier

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Cablevision - Public Performance Right
In determining whether a transmission is “to the
public” the court should consider the particular
transmission, not the underlying work.
“Because each [remote DVR] playback
transmission is made to a single subscriber using a
single unique copy produced by that subscriber,
we conclude that such transmissions are not
performances to the public and therefore do not
infringe any exclusive right of public
performance”

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Cablevision - Reproduction Right
Volition - Who makes the copy?
No infringement of reproduction rights
because subscribers, not Cablevision,
controlled what TV programs to record.
Cablevision only provided the hardware
that subscribers used.

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Cablevision - Reproduction Right
“In determining who actually "makes" a
copy, a significant difference exists
between making a request to a human
employee, who then volitionally operates
the copying system to make the copy,
and issuing a command directly to a
system, which automatically obeys
commands and engages in no volitional
conduct.”

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American Broadcasting Co. v. Aereo (2014)
(“Aereo”)

Aereo Service

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Over-the-air
TV broadcast
Aereo records
without permission

1

46

Server With “n” Subdirectories
25

Cust
1

Cust
25

Transmission of
personal copy

“n”

Cust
46

Devices: smart phones, tablets, iTV boxes ….

Cust
“n”

Aereo Mini-Antennas

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Chet Kanojia, Aereo Founder

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Barry Diller and 6+ VC investors

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Aereo
Broadcaster law suits:
• New York
• Boston
• Utah
• District of Columbia
• California

Why Do Broadcasters Care?

• “Retransmission” fees ~ $4 billion/year
• “Cut the wire”
• “Aereo business model”

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"the very existence of broadcast
television as we know it" is at stake.

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Aereo
Aereo argued:

• We are a rental service no different than
Radio Shack - we rent the antenna and
DVR, and the consumer controls the
operation. (volition)

• Unique, individual antennas and copies

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Aereo at Second Circuit (2013)
Under Cablevision Aereo does not violate
public performance right:
“just as in Cablevision, the potential audience of
each Aereo transmission is the single user who
requested that a program be recorded”

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Aereo at Supreme Court (2014)
Justice Breyer:

“In light of the purpose and text of the Transmit
Clause, we conclude that when an entity
communicates the same contemporaneously
perceptible images and sounds to multiple
people, it transmits a performance to them
regardless of the number of discrete
communications it makes”

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Aereo at Supreme Court (2014)
“Viewed in terms of Congress' regulatory objectives,
why should any of these technological differences
matter? They concern the behind-the-scenes way in
which Aereo delivers television programming to its
viewers' screens. . . .”

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Aereo Supreme Court Decision
“An entity that transmits a performance to individuals
in their capacities as owners or possessors does not
perform to "the public," whereas an entity like Aereo
that transmits to large numbers of paying subscribers
who lack any prior relationship to the works does so
perform”

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Dissenting Justices (Scalia, Thomas, Alito)
“Guilt by Resemblance” The networks’ claim “fails at the very outset because
Aereo does not ‘perform' at all. The Court manages to
reach the opposite conclusion only by disregarding
widely accepted rules for service-provider liability and
adopting in their place an improvised standard
("looks-like-cable-TV") that will sow confusion for
years to come.”

Dissent . . .
“Making matters worse, the Court provides no
criteria for determining when its cable-TV-lookalike
rule applies.”
“It will take years, perhaps decades, to determine
which automated systems now in existence are
governed by the traditional volitional-conduct test
and which get the Aereo treatment. (And
automated systems now in contemplation will have
to take their chances.)”

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Aereo - Consequences?

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Immediate Consequences



Bankruptcy late 2014
>100 jobs lost
Broadcaster stocks surged

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Aereo - The “Take Away”

•Where is the equip. located?
•Who owns it?
• Creates incentive to design products
owned by consumers and based in their
homes

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Aereo and the “Cloud” - Dropbox
“All your stuff, anywhere”

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CW: Dropbox is different:

Aereo was built to stream
broadcast television without
permission

DropBox doesn’t know what its
streaming

Dropbox users are already
“possessors” of the files they
store

First Case to Apply Aereo: Fox v. Dish
Network (C.D. Cal. 2015)
“Dish Anywhere With Sling”

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Fox v. Dish
• Aereo: its own equipment housed in a
centralized warehouse outside
consumers’ homes
• Dish w/Sling: programming does not
originate on external servers; consumers
access their own set-top boxes

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Fox v. Dish
• User (not Dish) initiates the “space
shifting”; subscribers engage in the
volitional conduct necessary for direct
infringement
• Subscribers space shifting does not
infringe, so Dish not liable for
contributory infringement

53

Evasion Through Automation vs. ???
Technological cat and
mouse? - Who owns the
equip., where is it
based,? Should
copyright law be
structured so that laws
can be circumventable
by clever architectural
design and technological
workarounds, as Aereo
attempted?

A more flexible
standard that would
evolve in the courts (vs.
Congress)?
vs.

E.g.: Focus on whether
the use is something in
which the copyright
owner could reasonably
expect a royalty?