Aereo Stumbles in Utah on Its Way to the Supreme Court

I wrote a few weeks ago about Aereo’s Rocky Path Ahead, discussing the legal obstacles Aereo will need to overcome even if the Supreme Court should rule in its favor in the currently pending proceeding. Yesterday, that path became even rockier, when a federal judge in Utah dropped a boulder in Aereo’s path. The resulting sound was that of a thousand tiny antennas splintering against Utah red sandstone, with the judge granting a preliminary injunction prohibiting Aereo from operating in Utah, Colorado, Kansas, New Mexico, Oklahoma, and Wyoming.

The decision is Aereo’s first major defeat in court, although Aereo look-alike FilmOn X already has two preliminary injunctions against it. The most notable aspect of Judge Kimball’s decision, however, is that he had little difficulty concluding that Aereo’s service was exactly the type of copyright infringement Congress intended to prohibit in enacting the 1976 Copyright Act. Quotable quotes from the decision include “[t]he court … has carefully reviewed each of the prior decisions and has concluded that the California and D.C. district court cases [granting injunctions] as well as Judge Chin’s dissent in the Second Circuit case are the better reasoned and more persuasive decisions ….” and “[t]his court agrees with Judge Chin that ‘[b]y any reasonable construction of the statute, Aereo is engaging in public performances’ when it intercepts and retransmits copyrighted programs to paying strangers.”

As the language above indicates, broadcasters have much to like in Judge Kimball’s decision and really nothing to dislike. In fact, they surely hope that the Supreme Court decision will look a lot like the Utah decision. In that regard, I should mention that TV Technology this week published a pro/con article on how the Supreme Court should rule, and asked me to write the pro-broadcaster analysis. John Bergmayer of Public Knowledge ably handled the pro-Aereo portion of the article which, by coincidence, was published on the same day the Utah decision was released. In reading Judge Kimball’s decision, I was struck by how many of the pro-broadcaster arguments found their way into his decision. For those interested, reprinted below is my contribution to the TV Technology article. If you would like to see the entire article, including John Bergmayer’s pro-Aereo argument, it can be found here.

The Broadcaster Argument Against Aereo

The major argument you hear in support of Aereo is “if a viewer can do it, then the viewer should be allowed to hire Aereo to do it for them.” That logic is flawed for a number of legal reasons too complex to address in this short space, but it is also factually flawed–a truism that isn’t true (i.e., a person can have sex with their spouse, but if they hire someone else to do it, that’s prostitution, and it’s illegal in most places).

More specifically though, Aereo isn’t doing what viewers otherwise do on their own, it is doing what no viewer in their right mind would do–renting a building near the Empire State Building to place their antenna and the equipment necessary to transcode the signal for relay over the Internet, signing up for broadband Internet access at that leased sight so the signal can be transmitted over the Internet, paying for electricity at that site to power the equipment, making regular maintenance visits to keep the equipment operational, and paying higher fees for both the antenna site and home broadband connections because of the broadband speeds and capacity needed to relay nonstop HD broadcast programming.

The reason no consumer has ever done this is obvious–installing a window antenna, buying basic cable service, or just watching Internet video sources like Hulu is both simpler and cheaper. The difference between a home viewer and Aereo is akin to the difference between a recreational fisherman and a commercial fisherman–for good reason, the commercial fisherman is subject to many more regulations, and if the recreational fisherman starts using commercial trawlers and drift nets for fishing, he is no longer a recreational fisherman.

The Supreme Court is not, however, considering Aereo’s general legality at this early stage, but only the narrow question of “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.” The stakes are markedly higher for Aereo than for broadcasters at the Supreme Court, as a ruling against Aereo would pave the way for an injunction against its service while simultaneously making it very difficult for Aereo to demonstrate in various courts around the country that its service does not infringe copyright. In contrast, a ruling in favor of Aereo, while a significant boost, would still leave Aereo with major legal and factual obstacles to overcome at trial (e.g., does each Aereo subscriber actually have their own antenna and DVR as promised?; do the copies of programs made at the request of subscribers qualify as fair use under copyright policy?). In other words, the Supreme Court’s ruling on this one issue could be devastating to Aereo, but a ruling to the opposite effect won’t resolve Aereo’s other legal issues.

Copyright law can be arcane in the extreme, but to oversimplify the transmission issue a bit, it boils down to this: if Aereo transmits the same content to a thousand subscribers, there is no dispute that each subscriber counts as a public performance of the content and infringes the rights of the copyright holder. Aereo argues however that it is not transmitting the same content to a thousand subscribers, but is transmitting unique content to each of those subscribers, leading to a thousand private performances that do not trigger copyright infringement. Stated in this way, the key question becomes “what is the ‘content’, and how can it be unique for each subscriber?” Aereo’s argument is that since each subscriber is assigned (at least temporarily) its own antenna and hard drive, a transmission of program content from that particular hard drive is unique. This conclusion is counterintuitive at best, since every hard drive copy and transmission of this week’s episode of The Big Bang Theory will be bit-for-bit identical with every other one, undercutting the notion that these transmissions are in any way unique private performances. As Judge Chin pointed out in his Second Circuit dissents in this proceeding, the relevant “content” has to be the program itself, not the bits on a particular hard drive, and since the same program is being distributed to those thousand subscribers, Aereo is transmitting a public performance that infringes copyright. Asserting that “this string of bits is different than that string of bits because they come from different hard drives, even though they are bit-for-bit identical” is just one more reason people make fun of lawyers.

While Aereo asserts that this illogical result is a loophole left by Congress in copyright law, it is not. Instead, it is a loophole created out of whole cloth by overenthusiastic extension of the sometimes tortured logic found in the Second Circuit’s earlier decision in the Cablevision case. Cablevision, however, is a good example of that maxim we learned in law school that “good facts make bad law.” In that case, the subscriber had paid for the content, and the cable operator had paid for the right to retransmit that content. Setting aside its legal reasoning to get there, it was not difficult for the Second Circuit to conclude, in effect, that if everyone in the process has been compensated anyway, and the proposed use isn’t undercutting the market for that content, then what’s the harm of letting a subscriber have their DVR located at the cable headend rather than at their house? However, whenever the law is contorted to achieve a factually attractive outcome, the inevitable result is other parties seeking to apply that same tortured logic to situations with far less attractive facts. Aereo is that case, and the Supreme Court hopefully will be the solution.