Introduction

While in the UK the law in relation to the live streaming of free-to-view television channels has been resolved, following the reference to the CJEU and the High Court decision in the TVCatchUp (TVC) litigation, in favour of the free-to-view broadcasters, the same issue is still very much a live one in the United States.

Much like TVCatchUp, Aereo and FilmOn X are technology platforms that allow subscribers to stream broadcast network programming over the Internet to their computers and mobile devices. The Networks believe that the technology infringes their exclusive right to publicly perform a work in which copyright subsists under § 106(4) of the U.S. Copyright Act, and that Aereo and FilmOn X should be required to pay the statutory retransmission fee under § 111 of the Act. Aereo and FilmOn X argue that their technology only captures broadcast programming that consumers are already entitled to free-of-charge, and gives them access to it on Internet capable devises. This was broadly the same argument unsuccessfully run by TVCatchUp in the UK litigation.

The issue in the United States turns on the definition of “public performance,” and the interpretation of the “Transmit Clause” in the U.S. Copyright Act. As things stand, there is a split among district and circuit courts in the United States as to whether this sort of streaming is a lawful activity.

The Relevant Language in the U.S. Copyright Act

Public Performance Right

17 U.S.C. § 106 confers on copyright holders the exclusive right to public performance by providing that the owner of a copyright under this title has the exclusive right to do and to authorize any of the following, including: “(4) in the case of… motion pictures and other audiovisual works, to perform the copyrighted work publicly” (emphasis added).

The Act defines “perform” as “to recite, render, play, dance, or act [a work], either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.” 17 U.S.C. § 101 (emphasis added).

The same provision also states:

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 a place specified by clause (1) or 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.

The second clause, which is analogous to the EU “communication to the public” right¹, is commonly referred to as the “Transmit Clause.” To “transmit” a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent, and a “devise”, “machine”, or “process” is one now knows or later developed.

The Compulsory License Regime

U.S. Congress limited a copyright holder’s exclusive rights under § 106 by adding a compulsory license scheme in § 111 for the secondary transmission of broadcast television by cable companies, and in 1998, U.S. Congress codified a separate statutory license for satellite carries under § 119. Under § 111(c): “secondary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission… shall be subject to statutory licensing.” Accordingly, all cable and satellite companies in the United States currently pay a license fee to retransmit broadcast television over their system.

Interpreting the Transmit Clause: Cartoon Network, LP v. CSC Holdings, Inc. (“Cablevision”)

In the 2008 Second Circuit case Cablevision, broadcasters issued proceedings against a cable company over its Remote Storage DVR System (“RS-DVR”), which allowed its subscribers to record programmes onto Cablevision’s hard drives, and then play back those programmes at a later time. The broadcasters argued that their copyright was infringed in the following ways: (1) brief storing of the work in the RS DVR’s data buffers; (2) storing a copy of the works on the RS-DVR hard drive; and (3) transmitting the data from the Cablevision remote server to subscribers’ RS-DVRs in response to a “playback request”.

The Appeals Court held that: (1) the embodiments of the programmes in the buffers were not “fixed” and did not therefore qualify as a “copy”; (2) it was Cablevision’s subscribers, rather than Cablevision, who were responsible for storing the copy of the works on the RS-DVR; and (3) the playback function did not involve any “public performance” of the works because the RS-DVR system, as designed, only makes transmissions to one subscriber using a copy made by that subscriber. Because each RS-DVR transmission is made using a unique copy of a work made by an individual subscriber that can only be decoded exclusively by that subscriber’s cable box, only the subscriber is capable of receiving any given transmission, and thus, the transmission is not made to the “public”.

Accordingly, under Cablevision, the capture, recording and retransmission of a broadcast signal is not a “public performance” as long as an individually recorded signal is only accessible by one subscriber. The Second Circuit Court’s position appears to be in direct contrast to the UK position in TVCatchUp (albeit that the Cablevision case dealt with capturing the signal for subsequent on-demand viewing), where the court held that where the recipients had access to the same work at the same time, it was held to be irrelevant that each user accessed the content individually.

The Technology of Aereo

In 2012, Aereo began streaming broadcast television over the Internet, but instead of seeking a compulsory license, Aereo has sought to take advantage of the exception created by the Second Circuit Court in Cablevision. Aereo’s system employs thousands of individual antennas and digital video recording technology to transmit broadcast programming over the Internet to its fee-paying subscribers. When a subscriber elects to view a program, an antenna is assigned exclusively to that user to capture the signal as the programme is broadcast over the air, convert it into a digital format, and then make it available to its subscriber as a live stream over the Internet or to be saved for viewing at a later time. If the subscriber chooses to watch it “live,” a copy of it is stored in a user-specific directory, which allows the subscriber to pause and rewind the programme. If the subscriber elects to record the programme, three copies, each recorded at a different quality rate, are stored on Aereo’s hard drive.

Shortly after Aereo’s launch in New York, ABC brought a lawsuit against Aereo alleging that the service infringed its exclusive right to perform its content publicly by retransmitting its works without paying the statutory licensing fee. ABC sought a preliminary injunction to shut Aereo down. Aereo argued that: (1) there is nothing to prevent it from capturing free network broadcast signals over the air, and (2) by creating individual, unique recordings of those broadcasts for personal use, it is, as in the Cablevision case, transmitting private rather than public performances.

In July 2012, the Southern District of New York denied the preliminary injunction against Aereo, finding that ABC did not have a likelihood of success on the merits, given the Cablevision precedent. ABC appealed the decision. The Second Circuit Court of Appeals affirmed the District Court’s analysis on the basis that the case was analogous to Cablevision in two key respects: (1) like Cablevision, Aereo’s system created unique copies of every programme an Aereo subscriber wished to watch or record, and (2) like Cablevision, Aereo’s transmission of the live or recorded program to a particular subscriber was generated from a unique copy (and no other subscriber could view the transmission created by that copy).

FilmOn X and a Split in the Courts

At the same time, on the West Coast, Alki David launched a site called “BarryDriller,” but now rebranded as FilmOn X. FilmOn X factually employs the same retransmission architecture as Aereo. The Broadcast Networks issued proceedings against FilmOn X for copyright infringement and sought a preliminary injunction.

Not constrained by the decision in Cablevision, a District Court in the Central District of California rejected Cablevision’s analysis as resting on a misinterpretation of the 1976 Copyright Act, and granted a preliminary injunction against FilmOn X. The court reasoned that “Cablevision erroneously focused on whether an individual copy of the copyrighted work was made for each individual user, and thus whether ‘the transmission itself is public’ as opposed to whether the copyrighted work was being transmitted to the public.” The California Court’s thinking on this appears to be aligned with the conclusion reached by the CJEU in TVCatchUp.

The Central District of California Court had the power to grant a nationwide injunction, but the court decided to limit its decision to regions within the jurisdiction of the Ninth Circuit as its decision conflicted with precedent in the Second Circuit, and the issue had not been settled in other Circuits.

The limited injunction allowed FilmOn X to expand into other regions, including Washington, D.C. However, the Broadcast Networks initiated another set of proceedings against FilmOn X in a District of Columbia (“DC”) District Court. The DC District Court agreed with the Central District of California Court’s reasoning, and on September 5, 2013, granted a preliminary injunction against FilmOn X in all regions of the United States except the Second Circuit.

The D.C. District Court held that by making the Broadcast Networks’ performance available to any member of the public who accesses the FilmOn X service, FilmOn X “transmit[s]…a performance…of the work…to the public, by means of any device or process,” and therefore performs the copyrighted work publicly as defined by the Transmit Clause. The D.C. District Court held that by making the Broadcast Networks’ performance available to any member of the public who accesses the FilmOn X service, FilmOn X “transmit[s]…a performance…of the work…to the public, by means of any device or process,” and therefore performs the copyrighted work publicly as defined by the Transmit Clause.

The table below summaries the litigation history described above:

Recent Developments and Outlook

While the Broadcast Networks were successful in their proceedings against FilmOn X, on October 10, 2013, a United States District Court in Massachusetts refused to grant a preliminary injunction against Aereo in Boston. The court’s decision is significant because it was the first lawsuit against Aereo outside the Second Circuit, and the court elected to follow the Second Circuit’s reasoning in Cablevision. Buoyed by its success in the First and Second Circuits, Aereo is expanding rapidly to other cities including Chicago, Los Angeles, Houston, and Denver, and has announced an Android app that will allow subscribers in those cities to view broadcast television on their mobile devices. In addition, some cable and satellite companies have responded by threatening to use the decision in Aereo to re-engineer their own delivery systems to retransmit broadcast signals without paying a licensing fee.

Immediately following the decision in Massachusetts, Disney, CBS, NBCUniversal, WNET, Fox, and Univision filed a Petition for Writ of Certiorari asking the Supreme Court to review the Second Circuit Court’s decision. The likelihood of the Supreme Court granting the petition is uncertain as there is currently no split among Circuit Courts. However, the FilmOn X decision in the Central District of California was appealed to the Ninth Circuit Court of Appeals, where a decision is expected in the next few months. If the Ninth Circuit upholds the Central District Court’s injunction against FilmOn X, the issue will likely head to the Supreme Court.

1. The analogous EU “communication to the public” right is found in Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 which provides that “member states shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.”
2. The Second Circuit consists of the Second Circuit Court of Appeals and the District Courts in Connecticut, New York and Vermont.
3. The Ninth Circuit consists of the Ninth Circuit Court of Appeals and District Courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.
4. The First Circuit consists of the First Circuit Court of Appeals and the District Courts in Maine, Massachusetts, New Hampshire, and Rhode Island.

Client Alert 2013-324