Why Isn’t Aereo a Cable System?

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Category: Intellectual Property Law, Public, U.S. Supreme Court
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Aereo tiny antennaThe Aereo case was argued this morning, and before Paul Clement could even get rolling on his introduction on behalf of the broadcaster plaintiffs, Justice Sotomayor hit him with this:

JUSTICE SOTOMAYOR: Why aren’t [companies like Aereo] cable companies?

MR. CLEMENT: They’re not ­­–

JUSTICE SOTOMAYOR: I’m looking at the — everybody’s been arguing this case as if for sure they’re not. But I look at the definition of a cable company, and it seems to fit.

I’ve been wondering this too. The question presented in Aereo is whether Aereo is engaged in a “public performance” when its servers automatically save and transmit recorded broadcast television programs to subscribers at their request, or whether that activity is properly understood as only the users’ activity. (Scotusblog has a good backgrounder on the case.)

In debating that issue, both the broadcasters and Aereo have at separate points analogized Aereo to a cable system — the broadcasters in the course of claiming that Congress intended to define what Aereo is doing as a “public performance,” just as it did with cable retransmission; Aereo in claiming that it is engaged in disruptive innovation, just as the early cable operators did. But that raises a somewhat different question: why isn’t Aereo subject to Section 111 of the Copyright Act? If it is, then the Court could avoid the entire debate over public performances; the text of Section 111 provides a direct route to liability for certain retransmissions without even mentioning the words “public performance.” And yet, as far as I can tell, it has not been raised by the broadcaster plaintiffs as a basis for a preliminary injunction.

Section 111(c)(1) provides in relevant part that:

Subject to the provisions of paragraphs (2), (3), and (4) of this subsection . . . , secondary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission . . . shall be subject to statutory licensing upon compliance with the requirements of subsection (d) . . . .

A “primary transmission” is just an FCC-licensed broadcast, and a “secondary transmission” is “the further transmitting of a primary transmission simultaneously with the primary transmission . . . .” Subsections (2) and (3) provide that failure to file the necessary paperwork and pay the necessary licensing fees, or editing the content of the broadcast in any way, is “actionable as an act of infringement.” These provisions appear to include Aereo, which files no paperwork and pays no fees.

Furthermore, nonsimultaneous secondary transmissions by a cable system are also “actionable as an act of infringement under section 501″ unless “the program on the videotape is transmitted no more than one time to the cable system’s subscribers,” the program is transmitted without deletion or editing, steps are taken to prevent duplication, and certain recordkeeping requirements are met. The appeal of Section 111 for the broadcaster plaintiffs in this case is that, if Aereo is a “cable system,” then its liability can be determined without any reference to whether the retransmissions are a “public performance” or not. Section 111 defines a violation purely in terms of “further transmitting . . . a primary transmission,” and there is no question that Aereo is doing that.

So this would appear to be a promising argument for the plaintiffs, except for the fact that almost everyone involved agrees that Aereo is not a “cable system,” including some of my co-bloggers over on Madisonian. I don’t think this is apparent from the text, however. “Cable system” is defined as:

a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

Aereo has “facilities” located in particular locations that receive FCC-licensed broadcasts, which it then retransmits by wire, cable, or similar communications channels to its subscribers. So it’s a cable system, and it is engaged in a secondary transmission without complying with Section 111’s restrictions. End of case.

The primary authority for the contrary conclusion is the Copyright Office. The Copyright Office long ago concluded in a rulemaking proceeding that “cable systems” are limited to FCC-regulated operations that retransmit television through coaxial cables. There’s two problems with that conclusion. First, it’s not clear to me that the Copyright Office has any administrative authority over the question of who is a cable system under Section 111, and thus it should have no authority to rule on the issue. Section 111 gives to the Register of Copyrights the authority to determine the form and content of reports to be filed with the Copyright Office under Section 111(d), but it does not give the Register any authority to adopt regulations governing who is liable under Sections 111(c) or (e). The D.C. Circuit, in Cablevision Sys. Dev. Co. v. Motion Picture Ass’n of Am., Inc., 836 F.2d 599, 608 (D.C. Cir. 1988), held that “the Office’s construction of at least that section is due deference,” but the issue in that case involved only payments due under 111(d), over which the Copyright Office clearly does have authority.

Even if the Copyright Office does get deference on Section 111, I do not believe it has addressed the precise situation here, but that argument will have to wait until tomorrow.

[Cross-posted at Madisonian.net.]

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3 Responses to “Why Isn’t Aereo a Cable System?”

  1. Jeffrey Morrell Says:

    Great article on this important case. As an exclusive user of internet-streaming services, this case was particularly interesting. Plus, it’s always fun to listen to the justices try to understand technology.

  2. Gus Hurwitz Says:

    Bruce-

    It may be useful to look at the 6th Circuit’s Ivi decision from (WPIX v. Ivi). Ivi had based its business model on being a Internet-based cable company, eligible for the s.111 compulsory license. The 6th Circuit affirmed the lower court finding that it wasn’t (this was for a PI), extending Chevron deference (actually, Skidmore) to the Copyright Office’s finding that internet-based retransmission did not fall under s.111. I personally think the Copyright Office’s construction is wrong; but I expect the Court would likely allow it. (Though, I reserve the right to change my view as I write something on this tonight.)

    I very much agree, however, that the parties whiffed on these questions today.

    –Gus

    (Note, I also tried to post this comment at Madisonian.net, but it appears it may not have worked.)

  3. Bruce, you can always be counted on to find your way through the labyrinth that is the statutory text of the copyright law and then guide the reader through the maze. I had been hung up on the idea that other than location an Aero user antenna didn’t seem any different than the Leaf antenna I have stuck to the window behind my TV. But, as you point out, the correct line of questioning may be is Aero a cable system.

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