Today, the federal Second Circuit Court of Appeals affirmed by a 2-1 decision the district court’s decision declining to issue a preliminary injunction against Aereo’s broadcast television streaming service.  The plaintiffs had requested a preliminary injunction on the basis that Aereo allegedly infringes their exclusive right to publicly perform their copyrighted works. 

Aereo argued that because its system provides each subscriber a separate copy of the programs streamed, it is not “publicly” performing the works.  The plaintiffs argued that Aereo publicly performs copyrighted works because many subscribers may simultaneously view the same program using Aereo’s system.  Relying on its earlier decision affirming the legality of Cablevision’s remote digital video recorder (RS-DVR) service, a two-judge majority of the Second Circuit accepted Aereo’s argument. 

In the earlier Cablevision decision, the Circuit considered whether Cablevision’s RS-DVR service constituted a public performance of the works played by the remote video record.  The court focused on the statutory definition of “publicly,” which includes “to transmit . . . a performance or display of the work . . . to the public, by means of any device or process . . . .”  This provision is called the “transmit clause.”  The court held that to determine whether a work is performed publicly, “the transmit clause directs us to examine who precisely is ‘capable of receiving’ a particular transmission of a performance.”  The court held that because each Cablevision RS-DVR transmits a recorded program only to a single subscriber, it does not engage in a public performance.

The copyright holders in Aereo attempted to distinguish Cablevision on a number of grounds.  They argued that while Cablevision paid necessary licensing and retransmission consent fees to transmit programs in the first instance, Aereo possesses no license at all.  They also contended that discrete performances of the same program should be aggregated, so that in sum it is clear that Aereo is transmitting the same program (often simultaneously) to many people, i.e. performing it publicly.  Further, they asserted that while the Cablevision RS-DVR is analogous to a typical VCR or DVR, Aereo is more analogous to a cable service, which must obtain a license to perform programming publicly.  The plaintiffs also raised arguments concerning differences in the way Aereo and Cablevision transmit programming.  Finally, the plaintiffs argued that affirming Aereo’s service would place form ahead of substance because Aereo’s many-antenna system was designed not for any sound engineering reason but instead solely to fit within the scope of the Cablevision decision.

The majority opinion, written by Judge Christopher Droney, rejected all of these contentions.  The majority found that “just as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded” and that “the signal received by each antenna is used to create an individual copy of the program” that is accessible only to the viewer who requested it. The majority found many of the plaintiffs’ arguments to be foreclosed by the Cablevision decision, stating that “many of Plaintiffs’ arguments really urge us to overrule Cablevision.”  The majority relied in part on the principle of “stare decisis” (deference to earlier judicial decisions) to support its determination, as well as evaluation of the language of the statute and legislative intent.

Judge Denny Chin dissented from the majority opinion, taking the position that Aereo’s service is “copyright infringement in clear violation of the Copyright Act.”  He stated that Aereo’s service is “a sham” and “a Rube Goldberg-like contrivance, overengineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”  While the majority discounted the plaintiffs’ arguments distinguishing Cablevision, Judge Chin found the arguments persuasive, particularly the contention that Aereo – unlike Cablevision – never pays any licensing or retransmission consent fees.  Sharply disagreeing with majority, Judge Chin stated that accepting Aereo’s argument “elevates form over substance” and “conflicts with the text of the Copyright Act, its legislative history, and our case law.” 

 The plaintiffs may seek en banc rehearing or Supreme Court review as to the denial of the preliminary injunction or resume the case at the district court, where the parties will litigate not only infringement of the public performance right but also a number of other copyright theories of liability. 

Currently, another case concerning a system similar to Aereo’s is on appeal to the Ninth Circuit.  In that case, the trial court declined to adopt the Cablevision test and issued a preliminary injunction against Aereo-like service provider “Aereokiller,” holding that Aereokiller’s system likely infringes copyright holders’ public performance rights. 

News reports suggest that Aereo may expand to 22 new cities this year.