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Court Denies Broadcasters Prelim Injunction in the Aereo Case

In a ruling that some interpret as a very bad portent for the plaintiffs’/broadcasters’ claims, a panel of judges from the Second Circuit Court of Appeals has upheld a lower court’s decision declining the plaintiffs a preliminary injunction in the consolidated cases WNET 13 v. Aereo and ABC v. Aereo.

Relying heavily on a decision in a previous case (Cartoon Network v. CSC Holdings, AKA the “Cablevision case”), the majority found that Aereo’s service does not infringe on the plaintiffs’ public performance right under the Copyright Act.

As the majority stated in its ruling “In evaluating [the plaintiffs’] claims, we do not work from a blank slate. Rather, this Court in Cablevision…. closely analyzed and construed the Transmit Clause in a similar factual context. Thus the question of whether Aereo’s transmissions are public performances under the Transmit Clause must begin with a discussion of Cablevision.”

In the Cablevision case, the central issue was the cable company’s RS-DVR system, which “created unique copies of every program a Cablevision customer wished to record.” The court found it significant in that case that the RS-DVR’s “transmission of the recorded program to a particular customer was generated from that unique copy; no other customer could view a transmission created by that copy…. Given these two features, the potential audience of every RS-DVR transmission was only a single Cablevision subscriber, namely the subscriber who created the copy.”

This reasoning is crucial to the court’s finding in the Aereo case, because Aereo’s service functions in a similar way.

“When an Aereo customer elects to watch or record a program using either the ‘Watch’ or ‘Record’ features, Aereo’s system creates a unique copy of that program on a portion of a hard drive assigned only to that Aereo user,” the majority writes in the Aereo decision. “And when an Aereo user chooses to watch the recorded program, whether (nearly) live or days after the program has aired, the transmission sent by Aereo and received by that user is generated from that unique copy. No other Aereo user can ever receive a transmission from that copy. Thus, just as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded.”

The above fact, according to the majority, renders Aereo’s service to be the same (legally speaking) as Cablevision’s RS-DVR. Given that the “performances” rebroadcast by the RS-DVR were not found to be “public,” it follows that Aereo’s transmissions aren’t “public performances” under the law, either.

Dissenting Judge Denny Chin, however…. well, let’s just say he doesn’t find the reasoning employed by the majority in this case to be persuasive.

“The Copyright Act confers upon owners of copyrights in audiovisual works the exclusive right “to perform the copyrighted work publicly.,” Chin wrote in his dissent. “This exclusive right includes the right ‘to transmit or otherwise communicate a performance…. to the public, by means of any device or process.’ In my view, by transmitting (or retransmitting) copyrighted programming tothe public without authorization, Aereo is engaging in copyright infringement in clear violation of the Copyright Act.”

Chin also described Aereo’s technology platform as “a sham.”

“The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna,” Chin wrote. “[I]ndeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”

Another point of departure between Chin’s dissent and the majority’s ruling involves the question of licensing; in the Cablevision case, the cable company had a license to broadcast the content in question, so the issue was whether that license included the sort of functionality and service offered by the RS-DVR. In this case, Aereo has no such license.

The majority found this fact to be irrelevant, because “the question is whether Aereo’s transmissions are public performances of the Plaintiffs’ copyrighted works. If so, Aereo needs a license to make such public performances; if they are not public performances, it needs no such license. Thus whether Aereo has a license is not relevant to whether its transmissions are public and therefore must be licensed.”

Judge Chin, on the other hand, found the lack of licensing to be a “critical difference.”

“Cablevision involved a cable company that paid statutory licensing and retransmission consent fees for the content it retransmitted, while Aereo pays no such fees,” Chin wrote. “Moreover, the subscribers in Cablevision already had the ability to view television programs in real-time through their authorized cable subscriptions, and the remote digital video recording service at issue there was a supplemental service that allowed subscribers to store that authorized content for later viewing. In contrast, no part of Aereo’s system is authorized. Instead, its storage and time-shifting functions are an integral part of an unlicensed retransmission service that captures broadcast television programs and streams them over the Internet.”

In any event, the case is not over. The plaintiffs could simply allow the case to proceed to trial, where they might still prevail on the merits of their claims, or they could ask for the panel’s decision to be reviewed en banc.