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Attorney Argue Aereo Legality ~ NO
2/28/2014

Scott Flick
WASHINGTON—The major argument you hear in support of Aereo is “if a viewer can do it, then the viewer should be allowed to hire Aereo to do it for them.” That logic is flawed for a number of legal reasons too complex to address in this short space, but it is also factually flawed—a truism that isn’t true (i.e., a person can have sex with their spouse, but if they hire someone else to do it, that’s prostitution, and it’s illegal in most places).

More specifically though, Aereo isn’t doing what viewers otherwise do on their own, it is doing what no viewer in their right mind would do—renting a building near the Empire State Building to place their antenna and the equipment necessary to transcode the signal for relay over the Internet, signing up for broadband Internet access at that leased site so the signal can be transmitted over the Internet, paying for electricity at that site to power the equipment, making regular maintenance visits to keep the equipment operational, and paying higher fees for both the antenna site and home broadband connections because of the broadband speeds and capacity needed to relay nonstop HD broadcast programming.

The reason no consumer has ever done this is obvious—installing a window antenna, buying basic cable service, or just watching Internet video sources like Hulu is both simpler and cheaper. The difference between a home viewer and Aereo is akin to the difference between a recreational fisherman and a commercial fisherman— for good reason, the commercial fisherman is subject to many more regulations, and if the recreational fisherman starts using commercial trawlers and drift nets for fishing, he is no longer a recreational fisherman.

HIGHER STAKES FOR AEREO
The Supreme Court is not, however, considering Aereo’s general legality at this early stage, but only the narrow question of “whether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.” The stakes are markedly higher for Aereo than for broadcasters at the Supreme Court, as a ruling against Aereo would pave the way for an injunction against its service while simultaneously making it very difficult for Aereo to demonstrate in various courts around the country that its service does not infringe copyright.

In contrast, a ruling in favor of Aereo, while a significant boost, would still leave Aereo with major legal and factual obstacles to overcome at trial (e.g., does each Aereo subscriber actually have their own antenna and DVR as promised?; do the copies of programs made at the request of subscribers qualify as fair use under copyright policy?). In other words, the Supreme Court’s ruling on this one issue could be devastating to Aereo, but a ruling to the opposite effect won’t resolve Aereo’s other legal issues.

Copyright law can be arcane in the extreme, but to oversimplify the transmission issue a bit, it boils down to this: if Aereo transmits the same content to a thousand subscribers, there is no dispute that each subscriber counts as a public performance of the content and infringes the rights of the copyright holder. Aereo argues however that it is not transmitting the same content to a thousand subscribers, but is transmitting unique content to each of those subscribers, leading to a thousand private performances that do not trigger copyright infringement. Stated in this way, the key question becomes “what is the ‘content’, and how can it be unique for each subscriber?”

Aereo’s argument is that since each subscriber is assigned (at least temporarily) its own antenna and hard drive, a transmission of program content from that particular hard drive is unique. This conclusion is counterintuitive at best, since every hard drive copy and transmission of this week’s episode of “The Big Bang Theory” will be bit-for-bit identical with every other one, undercutting the notion that these transmissions are in any way unique private performances. As Judge Chin pointed out in his Second Circuit dissents in this proceeding, the relevant “content” has to be the program itself, not the bits on a particular hard drive, and since the same program is being distributed to those thousand subscribers, Aereo is transmitting a public performance that infringes copyright. Asserting that “this string of bits is different than that string of bits because they come from different hard drives, even though they are bit-for-bit identical” is just one more reason people make fun of lawyers.

Aereo’s Rocky Rollout

NEW YORK—As if the legal challenges to its very existence are not enough to deal with, the fledgling Aereo streaming service has experienced several recent hiccups to its service which raise questions about the scalability of its technology.

Launched in New York nearly two years ago, Aereo is currently available in 11 cities from Boston on the east coast to as far west as Salt Lake City with plans to launch in San Antonio later this month. In all, Aereo and had hoped to expand to a total of 22 cities by the end of 2014.

But the company announced at the beginning of this month that it was no longer taking on new customers in New York because of “high subscriber demand.” This was followed by an announcement several days later that it had outstripped capacity in Atlanta. Company spokesperson Virginia Lam told TV Technology sister publication Multichannel News that Aereo would notify people who had signed up for the service in the Atlanta area when fresh capacity was available. Several days after the New York suspension, the company announced that it had added new capacity in New York and was once again accepting new customers.

Aereo has not indicated what is causing the problem and has yet to release subscriber figures. The company recently announced that it had raised an additional $34 million in funding.

Tom Butts

A ‘LOOPHOLE CREATED OUT OF WHOLE CLOTH’
While Aereo asserts that this illogical result is a loophole left by Congress in copyright law, it is not. Instead, it is a loophole created out of whole cloth by an overenthusiastic extension of the sometimes tortured logic found in the Second Circuit’s earlier decision in the Cablevision case. Cablevision, however, is a good example of that maxim we learned in law school that “good facts make bad law.” In that case, the subscriber had paid for the content, and the cable operator had paid for the right to retransmit that content.

Setting aside its legal reasoning to get there, it was not difficult for the Second Circuit to conclude, in effect, that if everyone in the process has been compensated anyway, and the proposed use isn’t undercutting the market for that content, then what’s the harm of letting a subscriber have their DVR located at the cable head-end rather than at their house?

However, whenever the law is contorted to achieve a factually attractive outcome, the inevitable result is other parties seeking to apply that same tortured logic to situations with far less attractive facts. Aereo is that case, and the Supreme Court hopefully will be the solution.

Mr. Flick is a partner in Pillsbury Winthrop Shaw Pittman LLP’s Communications practice and is located in the Washington, D.C. office. He focuses on legal matters impacting mass media, programming, telecommunications, and technology companies, as well as non-communications companies faced with issues in the communications and entertainment fields.

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