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Judge Allows Aereo to Continue Providing Broadcast Television over the Internet
By Brittany Horth – Edited by Charlie Stiernberg

American Broadcasting Companies, Inc. v. Aereo, Inc., 12 Civ. 1540 (AJN) (S.D.N.Y. July 11, 2012)
Slip opinion

Judge Alison J. Nathan of the United States District Court for the Southern District of New York denied a request for a preliminary injunction made by a group of broadcast television companies against Barry Diller’s Aereo, a system exclusively available in New York City that allows subscribers to watch and record live broadcast television over the Internet.

Judge Nathan held that the plaintiffs did not show a likelihood of success on the merits in their claim that Aereo is liable for copyright infringement for publicly performing the plaintiffs’ copyrighted works but did show that they would suffer irreparable harm. Am. Broad. Co., slip op. at 36, 44. She explained that the plaintiffs likely would have been granted a preliminary injunction “but for” the Second Circuit’s reading of “the transmit clause” in 17 U.S.C. § 101 in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”). Id. at 1. (JOLT Digest has previously reported on Cablevision and its continuing significance.) Instead, she rejected all of the plaintiffs’ attempts to distinguish Aereo from the service at issue in Cablevision and concluded that the Second Circuit’s analysis in Cablevision was equally applicable to the present case. Id. at 21, 52.

A brief summary of the continuing situation is available at the New York Times. The Los Angeles Times features an analysis of the denial as well as the relevant precedent, including Cablevision and Sony Corp. of Am.  v. Universal City Studios, Inc., 464 U.S. 417 (1984) (“Sony Betamax”). CNNMoney provides a more detailed overview of Judge Nathan’s reasoning. CNBC offers Aereo CEO Chet Kanojia’s thoughts on the future of Aereo now that they have received this favorable ruling.

Aereo enables subscribers to watch and record live broadcast television over the Internet by assigning each subscriber to one of several tiny remote antennas and a unique directory on Aereo’s servers. Id. at 5–7. In March, one month after Aereo announced that it was going to publicly launch in New York, the plaintiffs filed two complaints against Aereo alleging copyright infringement and moved for a preliminary injunction. Id at 2. In her opinion, Judge Nathan stated that the primary issue was how Cablevision applies to the present case. Id. at 12.

In Cablevision the RS-DVR system enabled customers to record cable programming without owning a DVR in their homes by creating and storing unique “playback copies” of television programs on portions of remote hard disks assigned to each customer. Id. at 13-14. In holding that Cablevision was not engaged in public performances of copyrighted works, the Second Circuit explained that, under the transmit clause, the transmission of a customer’s unique playback copy was not a public performance because the potential audience “capable of receiving” the playback copy was limited to that customer. Id. at 16.

Judge Nathan concluded that Cablevision controlled because “Aereo’s system is materially identical to that in Cablevision, suggesting that the copies Aereo creates are as significant as those created in Cablevision.” Id. at 19. The plaintiffs primarily argued that, unlike Cablevision, Aereo’s copies are not fully “time-shift[ed]” because they can be viewed contemporaneously with the initial broadcast of these television programs and thus fail to “break of chain of transmission.” Id. at 18. But Judge Nathan countered that the Second Circuit never mentioned time-shifting in Cablevision and “[w]hether a user watches a program through Aereo’s service as it is being broadcast or after the initial broadcast does not change that the transmission is made from a unique copy.” Id. at 23, 25.

Judge Nathan consequently denied the request for a preliminary injunction even though she acknowledged that the plaintiffs could suffer irreparable harm—artificially deflated Nielsen ratings, damaged ability to negotiate retransmission fees, canceled cable subscriptions—as a result. Id. at 38–42. She nonetheless thought it was unlikely that the plaintiffs would suffer all of their claimed irreparable harm before the end of the case, whereas Aereo might cease to exist as the result of a preliminary injunction. Id. at 43, 47.

The continued operation and potential expansion of Aereo as well as the impending litigation could significantly change current business models in television.

Brittany Horth is a 2L at Harvard Law School.

Posted On Jul - 23 - 2012 Comments Off

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