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Second Circuit Affirms Streaming Broadcast TV Not Copyright Infringement

Copyright Patent Telecommunications
WNET, Thirteen v. Aereo, Inc. By Natalie Kim – Edited by Samantha Rothberg WNET, Thirteen v. Aereo, Inc. 12-2786-cv, 12-2807-cv (2d Cir. Apr. 1, 2013) Slip opinion [caption id="attachment_3030" align="alignleft" width="150"] Photo By: Luis Alberto Martinez Riancho - CC BY 2.0[/caption] Last Wednesday, the U.S. Court of Appeals for the Second Circuit affirmed the Southern District of New York’s July 2012 denial of a preliminary injunction motion filed against Aereo by several broadcast TV networks. Aereo is an Internet-based streaming service that allows users to watch broadcast TV shows live or record them for future viewing. A group of broadcast networks, including Fox and Univision, sued Aereo for allegedly violating their public performance rights under § 106(4) of the Copyright Act and demanded a preliminary injunction to prevent Aereo from continued operation. Aereo, slip op. at 5 In a 2–1 decision, the Second Circuit applied its own precedent, Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”), to find that Aereo did not infringe plaintiffs’ copyright and therefore no preliminary injunction was warranted. Aereo, slip op. at 32–35. The New York Times summarizes the holding, giving a pessimistic outlook on the broadcasters’ prospects of rooting out Aereo and other like services. TVNewsCheck takes a spirited position against the district court’s July 2012 ruling, warning of the “havoc this travesty will wreak.” Aereo released a statement regarding the decision. Aereo is an Internet startup that launched in February 2012. It provides live streaming of broadcast TV network shows and, for a fee, allows subscribers to play back selected portions or entire shows for later viewing using its “watch” and “record” functions. Each Aereo user is assigned an individual antenna, which is used to record individual copies of programs on a remote hard drive. Aereo, slip op. at 6. While Aereo currently only serves users in the New York metropolitan area, the New York Times reports that company plans to expand to 22 other major cities in 2014. A preliminary injunction requires the satisfaction of four factors: (1) the plaintiff is likely to succeed on the merits; (2) the plaintiff is likely to suffer irreparable injury in the absence of an injunction; (3) the balance of hardships tips in the plaintiff’s favor; (4) the public interest is not disserved by injunction. The court held that under the Cablevision precedent,the plaintiffs were unlikely to succeed on the merits because Aereo’s individual-antenna method of operation does not fall into public performance under § 106(4) and thus does not constitute infringement. Aereo, slip op. at 22–31. Furthermore, the court found that since infringement had not occurred, the balance of harms did not tip decisively in the plaintiff’s favor. While the plaintiffs would likely suffer an irreparable injury without an injunction, the issuance of an injunction would likely devastate Aereo’s business. Id., 34–35. This holding follows in the footsteps of the Second Circuit’s well-known Cablevision case, which also dealt with devices that allow users to record broadcast television for later viewing. The Court ruled in Cablevision that because the devices recorded individual copies for each user, the defendant cable provider did not violate plaintiff Cartoon Network’s and other rights-holders’ exclusive § 106 rights to publicly perform their content. Ruling against Aereo’s preliminary injunction, the 2-1 majority of the panel held that the facts of Aereo were sufficiently similar to Cablevision for that precedent to control, stating that because Aereo streamed individual copies of programs to subscribers through individual antennas, the transmissions did not constitute “public performances” and thus the broadcasters’ copyright infringement claims were not likely to “prevail on the merits.” Aereo, slip op. at 33–34. Judge Chin dissented, claiming the facts in Aereo departed markedly from Cablevision, and thus Cablevision did not serve as a precedent. Aereo, slip op., 18–21 (Chin, J., dissenting). This case may have broader implications for “cloud media services” as a whole, such as Amazon Cloud Player and Google Music. Detractors of the April 1 ruling are particularly apprehensive about circumvention of the licensing fees currently charged by broadcasters, who in turn are threatening to move to cable. While Aereo and fellow “cord-cutters” can continue their planned expansions, the April 1 ruling is unlikely to be the end of this fight, and litigation is likely to continue for years. Accompanying the rise of Internet-only shows like Netflix’s “House of Cards,” the profit base of broadcast TV seems to be increasingly under threat. With consumers tired of compulsory packages of dozens or even hundreds of channels offered by broadcasters, the tailored service that these cloud-based companies offer will continue to fill a niche yet unfulfilled by the broadcasters. Natalie Kim is a 1L at Harvard Law School.