“Internet Companies Streaming Copyrighted Television Broadcasts to Subscribers Must Pay Retransmission Fees”

June 26, 2014
Marshall Gerstein Alert

Yesterday, the Supreme Court issued its 6-3 decision in American Broadcasting Cos., Inc., et al. v. Aereo, Inc., f/k/a Bamboom Labs, Inc., holding that Aereo’s recording and transmission of the copyrighted works of petitioning television producers, distributors, and broadcasters constitutes public performance in violation of the Copyright Act of 1976, 17 U.S.C. § 101. American Broadcasting Cos., Inc. et. al. v. Aereo, Inc., f/k/a Bamboom Labs, Inc., No. 13-461, slip op. at 2 (June 25, 2014). In particular, the court held both that Aereo "performs" the copyrighted works by "transmit[ting] . . . a performance of the work" and that Aereo’s communications are delivered "to the public," despite Aereo’s use of individual, discrete communications and creation of personal copies of each broadcast for each subscribing viewer. Id. at 2-4. While the Court expressly refrained from assessing copyright infringement liability outside of television broadcast technologies, providers of cloud-computing and remote data storage services should review their content delivery mechanisms to assess whether they may be charged with public performance of copyrighted information.

In this case, Aereo alleged that its uniquely-designed system of individually-assigned antennas, which transmits user-specific broadcast copies in direct response to a subscriber’s program request, was created to comply with the Transmit Clause of the Copyright Act. Because users must interact with the system to determine which broadcasts are recorded, Aereo argued, the transmissions are private performances.

Reversing the Second Circuit, the Supreme Court largely accepted ABC’s argument that Aereo’s service is analogous to a cable subscription, and thus Aereo must pay retransmission fees as stipulated by the 1976 Copyright Act amendments. These amendments, which include the addition of the Transmit Clause, indicate that an entity performs when it "transmit[s] . . . a performance . . . to the public" and requires that cable systems comply with Congressional licensing schemes and pay compulsory fees to retransmit broadcasts to the subscribing public. These stipulations were created largely in response to the Supreme Court decisions Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968), and Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974), which held that the activities of community antenna television (CATV) providers did not constitute public performance, and thus fell outside of the Act’s scope. In his majority opinion, Justice Stephen Breyer wrote that Aereo’s practices are largely equivalent to those at issue in Fortnightly and Teleprompter and are therefore within the scope of the Copyright Act: "Insofar as there are differences, those differences . . . are not adequate to place Aereo’s activities outside the scope of the Act." Id. at 17.

Although Justice Breyer stressed the limited application of the Aereo holding and his belief that the decision will not "discourage the emergence or use of different kinds of technologies," the Aereo decision may have implications for the cloud computing industry, especially for those services where individuals are able to access public information they have not personally saved to the cloud.

If you have any questions or concerns related to the ramifications of Aereo on your portfolio, please contact Richard LaBarge or an attorney in the trademark practice group.

The information contained in this alert is for informational purposes only and is not legal advice or a substitute for obtaining legal advice. Under applicable rules of professional conduct, this communication may constitute Attorney Advertising. © 2014 MARSHALL, GERSTEIN & BORUN LLP, Chicago, Illinois. All rights reserved.

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