SDNY Denies Copyright Infringement Preliminary Injunction Against AEREO

Practical Law Legal Update 2-520-3652 (Approx. 5 pages)

SDNY Denies Copyright Infringement Preliminary Injunction Against AEREO

by PLC Intellectual Property & Technology

Key Litigated Issues

In determining whether to grant the plaintiffs' preliminary injunction request the key litigated issues before the US District Court for the Southern District of New York were:

Whether the plaintiffs were likely to succeed on the merits of their claim that AEREO, Inc. (Aereo) infringed the plaintiffs' copyrights by its simulcast retransmission of these programs over the internet.
The applicability of the US Court of Appeals for the Second Circuit's decision in Cartoon Network LP v. CSC Holdings, Inc. (Cablevision), which held that a remote storage digital video recorder (DVR) did not infringe the plaintiff television broadcasting and production companies' public performance rights in their television programs under the Copyright Act where each remote storage DVR transmission:
- was made using a single unique copy of a television program;
- was selected and activated by a single, individual subscriber; and
- could be received and played only on the cable box of that subscriber.

Background

The plaintiffs are entities engaged in the broadcasting, production and marketing of television programs, including ABC, CBS, NBC and Disney. Aereo is a company that offers its subscribers access to over-the-air television broadcasts through its website. Through Aereo's service, subscribers use a programming guide to select and view current and future-scheduled television programs on their internet-connected devices, including internet-ready televisions, computers, laptops and mobile devices.

Aereo's playback technology operates like a remote DVR that uses antennas assigned only to one subscriber at a time, either on an assigned-as-needed or dedicated-unit basis. Each of these antennas functions separately to receive and transmit incoming broadcast signals. As a result, not more than one Aereo subscriber may select a television program for transmission by an Aereo antenna at any given time.

On learning of the intended public launch of Aereo's service, the plaintiffs filed two complaints against Aereo on March 1, 2012, alleging multiple theories of liability that included infringement of the plaintiffs' exclusive public performance and reproduction rights and contributory infringement. On March 13, 2012, the plaintiffs moved for a preliminary injunction based solely on their public performance claim, alleging that Aereo's service infringed the plaintiffs' copyrights in their television programs by retransmitting these programs to the public at the same time as their over-the-air broadcasts. After expedited discovery and briefing on the motion, the court held an evidentiary hearing.

Outcome

In its July 11, 2012 opinion, the SDNY denied the plaintiffs' motion for a preliminary injunction against Aereo, ruling that:

The plaintiffs failed to distinguish the facts of Cablevision.
The Second Circuit's reasoning in Cablevision precluded any likelihood that the plaintiffs could show that Aereo's one-to-one, private retransmissions of their television programs constituted a public performance in violation of the plaintiffs' copyrights.

The Second Circuit's Approach in Cablevision

In Cablevision, the Second Circuit construed the transmit clause of Section 101 of the Copyright Act (17 U.S.C. § 101). The transmit clause provides, in part, that to perform or display a work publicly means to transmit or otherwise communicate a performance of the work to the public by means of a device or process.

In Cablevision, Cablevision's remote storage DVR allowed subscribers who lacked at-home set-top DVRs to record a copy of cable programming on Cablevision's hard drives, which were housed at a remote location. Each Cablevision subscriber, by home-operated remote control, created a unique playback copy of the television program that was stored on Cablevision's hard drive for that subscriber. Cablevision would then transmit the program only to that subscriber and only when the subscriber (or another user of the subscriber's cable service) requested to watch the program. The Second Circuit ruled that:

The relevant performance of the recorded program was the discrete transmission of each subscriber's unique playback copy to that subscriber, resulting in an audience of one subscriber and, therefore, a private, not public, performance.
Cablevision's providing this one-to-one service to multiple remote-DVR subscribers did not convert these private playbacks into a public performance.

The SDNY's Application of Cablevision

In Aereo, the SDNY found that Aereo's activities were materially identical to those held lawful in Cablevision and that the Second Circuit's holding and analysis in that case controlled the facts at bar. The plaintiff companies argued that Aereo publicly performed their works because Aereo's intermediary copies of their programs merely facilitated its transmission of a single master copy, namely, the programs' initial broadcasts. The SDNY found that the copies that Aereo created, like those in Cablevision, did not merely retransmit the initial public broadcast, but rather, made individual, subscriber-requested copies of the broadcast program that it then retransmitted privately to each requesting subscriber.

Having determined that the plaintiffs failed to distinguish Cablevision and were, therefore, not likely to prevail on the merits, the court was not required to analyze the remaining preliminary injunction factors. However, anticipating the plaintiffs' interlocutory appeal of its decision, the court briefly analyzed the remaining factors to create a fully developed record. Addressing these other preliminary injunction factors, the court ruled that:

Although the plaintiffs showed a likelihood of suffering imminent irreparable harm, this showing was not overwhelming.
Given the severity of the potential harm to Aereo of being put out of business if an injunction was issued, the balance of hardships did not tip decidedly in the plaintiffs' favor.
The court's grant of preliminary injunction enjoining Aereo from providing internet simulcasts of the plaintiffs' television broadcasts would "not disserve" the public interest, which is vested in copyright holders' rights in their creative works.

Practical Implications

The Aereo decision adopts the Second Circuit's structural analysis in Cablevision, according to which a one-to-one, service provider-to-user retransmission of a public television broadcast does not infringe the copyright holder's performance rights in the broadcast program if:

The service provider's system creates a unique copy of the television program for each subscriber who requests that program.
The system saves the unique copy to a unique directory that is assigned to a unique user.
The unique copy's transmission is made only to the subscriber who requested it.
No other subscribers can receive and play that transmission.

In so reasoning, the SDNY's holding in Aereo:

Expressly extends the rule of Cablevision to simultaneous retransmissions of over-the-air broadcasts, not merely to time-delayed playbacks of these broadcasts.
Like Cablevision, addresses the applicability of performance, display and distribution rights under the Copyright Act to a communication platform that, similar to the file-sharing architecture addressed by the US Supreme Court in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., provides one-to-one access to copyrighted works.

Although the Supreme Court in Grokster ruled that the defendants' decentralized file-sharing service was not immune from copyright liability, this liability was not for direct infringement, but rather, for inducing the widespread infringement of their file-sharing end users. In contrast, there was no suggestion in Aereo or Cablevision that the defendants' subscribers infringed the plaintiffs' copyrights or that Aereo or Cablevision induced or otherwise contributed to such infringement.

SDNY Denies Copyright Infringement Preliminary Injunction Against AEREO | Practical Law