Aereo Wins Another One

Aereo Wins Another One

by Jerry Glover
October 14, 2013

A federal district court in Massachusetts handed Aereo another win against a local broadcaster alleging copyright infringement of various original programs produced and broadcast by the broadcaster. The Aereo technology allows users to download over-the-air television station signals for viewing (and, perhaps, saving) on their Internet-connected devices. Hearst Stations, Inc. v. Aereo, Inc., #13-CA-11649 (D. Mass. October 8, 2013). Three other courts have also reviewed claims of copyright infringement against Aereo technology (or Aereo-like technology). See WNET, Thirteen v. Aero, Inc., 722 F.3d 676 (2d Cir. 2013) (ruling for Aereo); Fox Television Stations, Inc. v. FilmOn X LLC, 2013 WL 4763414 (D.D.C. September 5, 2013) (ruling for broadcasters); and Fox Television Stations, Inc. v. FilmOn X LLC v. BarryDriller Content System, PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012) (ruling for broadcasters).

The Aereo technology is being marketed by media mogul Barry Diller and his company IAC. This device captures broadcast television signals from television stations located in the area of the Aereo user and retransmits them over the Internet to Aereo subscribers to one or more digital devices under the subscriber’s control. When an Aereo customer elects to watch a television show, a dime-sized antenna is assigned exclusively to that user for that time period. Along the way, Aereo converts the signal from its original format to a different digital format that allows the user to access the program over the internet. Once the format conversion occurs, Aereo generates three copies of the program to enable recording and rewinding and to allow the user to choose the copy most compatible with their internet connection.  A subscriber cannot download a permanent copy of the program to his/her hard drive. Copies of program always remain on Aereo’s devices.

The television station plaintiff in this case claimed that Aereo threatened the station’s business model at risk since the station did not receive any additional advertising revenues for programs downloaded by Aereo and Aereo did not pay fees similar to those paid to the station by cable systems in the area that transmitted the station’s program under federal retransmission consent rules. Aereo, however, argued that it only provided technology that allowed subscribers to create their own unique recordings of television programs for personal use (akin to the fondly remembered VCR’s) for play on their personal devices.

Hearst demanded that the court issue a preliminary injunction stopping the use of Aereo technology. To obtain the injunction, an extraordinary remedy, Hearst had to show that it is likely to succeed on the merits of its copyright claims, that it is likely to suffer irreparable harm without injunctive relief and the balance of equities tips in Hearst’s favor. Finally, Hearst had to establish that an injunction would be in the public interest.

Hearst based its copyright infringement claim on an exclusive right granted to copyright owners by the U. S. Copyright Act: the exclusive right to publicly perform the work found in 17 U.S.C. Sec. 106(4). The so-called transmit clause found in Sec. 101 defines public performance as follows: “To transmit or otherwise communicate a performance … to a [public place] 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.” In another part of Section 101, “transmit” is defined as “to communicate [something] by any device or process whereby images or sounds are receive beyond the place from which they are sent.”

Hearst claimed that Aereo transmitted a performance of Hearst’s television programs to members of the public since more than one subscriber could be viewing a Hearst program at the same time or at different times. Aereo claimed its transmissions were private, not public.

The court sided with Aereo. The court noted that an Aereo subscriber creates, through his or her own “volitional conduct,” a copy of a Hearst program they have selected. The court stated that its governing appellate court had never decided whether a plaintiff in a copyright infringement action has to show volitional conduct on the part of the defendant, but it added that other federal appellate courts have required such a showing. The court explained that holding Aereo responsible for its subscribers’ conduct (i.e., choosing and making a copy of a Hearst program) would be akin to holding the owner of a copy machine liable because others use it to illegally reproduce copyrighted materials.

Contrary to Hearst’s argument that Aereo’s technology violates Hearst’s exclusive right to distribute its programming, the court noted that the distribution right is infringed only when copies of a work are disseminated to the public. In this case, Aereo subscribers can only stream and cannot download programming. No copies are separately made and distributed.

So the court ruled that Hearst was unlikely to succeed on the merits of its claim. But what about irreparable harm to Hearst? Harm is not irreparable if it can be adequately compensated with money damages. Hearst argued that Aereo technology will harm its ability to profit through cable retransmission fees, advertising fees and new revenue streams that might result from Hearst’s exploitation of its programming through the internet. The court was sympathetic to Hearst’s argument but ruled that any irreparable harm was outweighed by Hearst’s inability to succeed on the merits of its copyright claims. The court added that any harm Hearst might suffer would not be immediate and, in fact, would probably take several years to occur fully, if at all. It added that Hearst’s plan to exploit its programming through the internet were not fully developed as of the date of the hearing.

Finally, the court ruled that the balance of hardships and interest of the public cut both ways so neither factor was controlling.

The court denied the request for injunction.

UP NEXT:  Probably an appeal of this case to the U.S. Court of Appeals for the First Circuit and/or a decision in the very near future from the U.S. Court of Appeals for the Ninth Circuit in one or more of the California cases noted above.  If the Ninth Circuit finds in favor of the broadcasters, it will set up a split among the circuits (the Second Circuit has found in favor of Aereo) and may set the stage for an appeal to the U.S. Supreme Court.

Share this post: