Law360, New York (February 19, 2015) — In American Broadcasting Company Inc. v. Aereo Inc., 134 S.Ct. 2498 (2014), the U.S. Supreme Court held that an Internet streaming service that allowed cord-cutting subscribers to watch broadcast television programming violated the broadcasters’ exclusive right to publicly perform their copyrighted content. Recognizing that its decision could have far-reaching and perhaps unintended implications for the technology sector, the court’s holding was explicitly limited to Aereo’s system and substantially similar technology. The majority reserved decision on how the Copyright Act would apply to questions involving cloud computing, remote storage digital video recorders, “and other novel issues not before the Court.” Several recent cases confirm that the reach of Aereo is indeed quite limited.

Aereo was found to infringe because its systems were highly similar to those of cable companies, which, pursuant to the 1976 amendments to the Copyright Act, are subject to the compulsory licensing scheme set out in Section 111. Using thousands of miniature antennas each dedicated to an individual subscriber, Aereo’s service picked up over-the-air broadcasts, translated the signals, saved the data in subscriber-specific folders on a hard drive, and streamed the saved copies to subscribers over the Internet. Aereo “performed” the works “publicly” within the meaning of the Copyright Act because its systems transmitted programming to multiple people who lacked prior possessory relationships to the works (i.e., were not licensed subscribers), despite the fact that it created user-specific copies.

The holding in Aereo was soon applied to another service provider with identical technology. One month after the Supreme Court’s decision, FilmOn.com Inc. was held in civil contempt for using mini-antenna technology to broadcast copyrighted content in violation of an injunction in CBS Broadcasting Inc. v. FilmOn.com Inc., (S.D.N.Y. July 24, 2014).

Referring to Aereo, the court said, “the holding of that decision could not have been clearer: the use of the mini-antenna technology to retransmit broadcast networks’ content without a license violated the Copyright Act.” Further, FilmOn could not rely on Aereo for the proposition that its technological equivalents qualify as cable systems and are “entitled to the benefits and responsibilities of the compulsory license scheme under Section 111 of the Copyright Act.” The issue presented in Aereo was whether Aereo publicly performed the copyrighted works, and any analogy to cable systems in answering that question did not amount to a holding that services like Aereo are cable systems under Section 111. The Second Circuit established in WPIX Inc. v. ivi Inc., 691 F.3d 275 (2d Cir. 2012) that Congress did not intend for Section 111 licenses to extend to Internet retransmissions, and Aereo did not disturb that precedent.

Capitol Records Inc. v. MP3tunes LLC, (S.D.N.Y. Sept. 29, 2014) involved two websites, MP3tunes.com and Sideload.com, which served as a search engine and an online storage “locker” for storing, streaming, and downloading pirated music. Although the plaintiffs were largely successful in that case, the Southern District of New York rejected their reliance on Aereo. The court distinguished the third-party domains at issue from the community antenna television providers referenced in Aereo, and accordingly held that the domains were “beyond Aereo’s reach.”

Copyright infringement through DVR technology, one of the questions explicitly excluded from Aereo’s holding, was squarely presented to the Central District of California in Fox Broadcasting Co. v. Dish Network LLC, No. 12-4529 (C.D. Cal. Jan. 12, 2015). Fox’s complaint centered on a number of features by which Dish enables its subscribers to record primetime programming shown on the major broadcast networks; access recorded programming from their set-top boxes (STBs) remotely on computers and mobile devices; copy recordings that are saved on their Hopper DVRs to their mobile devices; and skip commercials while playing back recorded shows.

In granting summary judgment to Dish on nearly all of Fox’s copyright infringement claims, Judge Dolly M. Gee distinguished Aereo on the basis that Aereo carried publicly released programs to additional viewers, whereas Dish merely transmits programming that is already rightfully in the possession of its subscribers. Dish has a license for the initial retransmission of programming to users via satellite, so its subscribers are “valid ‘possessors’ of the copyrighted works that are stored in the STB in their home.” Moreover, it is substantially dissimilar from traditional cable companies, so the narrow holding in Aereo did not extend to Dish’s services. The public performance right was not implicated because Dish subscribers transmit lawfully possessed programming to their other devices, not to a large number of people who are unknown to each other. While these aspects of the decision blessed the main features of Dish’s services with respect to liability under the Copyright Act, the court ruled in favor of Fox on some of its breach of contract claims and on its copyright infringement claim relating to Dish’s quality assurance copies.

This line of cases offers several valuable insights for practitioners. Dish Network teaches that DVR technology does not infringe copyright owners’ public performance rights, but representatives of programming distributors must nevertheless carefully negotiate to secure the necessary rights in retransmission consent and related agreements. Dish was held to have breached its contracts with Fox because those agreements expressly prohibited various forms of copying, and the court addressed Fox’s copyright and contract claims separately.

FilmOn.com reinforces the holding in WPIX v. ivi that compulsory licensing under Section 111 of the Copyright Act is not available for Internet retransmissions. If such a licensing scheme is ever going to be extended to Internet retransmitters, it will require an act of Congress. The court in FilmOn.com expressed doubt as to whether the defendant was “committed to complying with the letter of the law” because it did not even apply for a cable license until after litigation was commenced. If FilmOn.com were entitled to a compulsory license, it would have needed to engage in a mandatory administrative process and receive one from the copyright office before retransmitting the protected content.

The Supreme Court’s holding in Aereo that the online streaming service infringed broadcasters’ public performance rights does not extend to unrelated technologies. Aereo has been held inapplicable to a service that provided free music downloads and another that enables programs to be copied from DVRs to mobile devices. For innovators, this does not mean that dissimilar technologies will be free from claims of copyright infringement, only that potential plaintiffs will need to rely on separate authority to establish liability. Unless technologies are in effect highly similar to traditional cable companies, Aereo is, by its very language, inapposite.

—By Timothy J. Buckley, Powley & Gibson PC

Timothy J. Buckley was an associate at the law firm of Powley & Gibson, P.C. in New York. The views expressed herein are those of the author and do not necessarily reflect those of the Powley & Gibson firm or its clients.