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U.S. Supreme Court May Decide to Review Second Circuit Ruling in Online TV Case

tv2On January 10, 2014, the U.S. Supreme Court is expected to decide whether to review the opinion of the U.S. Court of Appeals for the Second Circuit in American Broadcasting Companies, Inc. v. Aereo, Inc. (2d Cir. April 1, 2013). American Broadcasting Companies filed the writ of certiorari in October 2013, asking the Court to determine “whether a company publicly performs a copyrighted television program when it re-transmits a broadcast of that program to thousands of paid subscribers over the Internet.”

More specifically, the petitioners in the case are a group of broadcasting companies, including ABC, NBC, Fox, and CBS, that hold copyrights in programs broadcast on network television. They filed a copyright infringement complaint in the U.S. District Court for the Southern District of New York against Aereo, a New York-based company that streams broadcast television programs to its subscribers over mobile phones, laptops, and other internet-connected devices while the programs are airing or at a later time. Aereo does not have a license from the copyright holders to record or transmit their programs. The broadcasting companies moved for a preliminary injunction barring Aereo from transmitting the programs, alleging that the transmissions infringe their exclusive right to publicly perform the works. The district court denied the motion, however, finding that the plaintiffs were unlikely to prevail on the merits and did not demonstrate a balance of hardships tipping decidedly in their favor.

On appeal, the Second Circuit affirmed the district court’s denial because it found that Aereo had not infringed the plaintiffs’ public performance right in light of the court’s prior decision in Cartoon Network LP, LLLP v. CSC Holdings, Inc & Cablevision Systems, 536 F.3d 121 (2d Cir. 2008). As the court explained, a district court may issue a preliminary injunction if the plaintiff has demonstrated: (1) either a likelihood of success on the merits or  sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the plaintiff’s favor, (2) a likelihood of irreparable injury in the absence of the injunction, (3) that the balance of hardships tip in the plaintiff’s favor, and (4) that the public interest would not be disserved by the issuance of a preliminary injunction. The primary issues in this case were whether the plaintiffs had demonstrated a likelihood of success on the merits or that a balance of hardships tipped decidedly in the plaintiffs’ favor, which are both dependent on whether Aereo’s service infringes the broadcasters’ public performance right as defined by Sections 101 and 106 of the U.S. Copyright Act.

Particularly, the court found that Aereo’s system is materially indistinguishable from the RS-DVR system in Cablevision, which it held did not infringe on the copyright holder’s public performance right. Pursuant to Cablevision, the transmission of a program to an individual subscriber is not a public performance if each transmission is generated from a unique copy of a work and that particular transmission can be received by only one customer, specifically the customer who created the copy. In this case, the Second Circuit determined that Aereo’s transmission of the television programs are not public performances because the system creates a unique copy of a program at a user’s request and the transmission received by that user is generated from the unique copy. The potential audience is thereby the single user who requests the program be recorded.

Overall, the broadcasters want the Supreme Court to review the case because they believe that the Second Circuit misapplied the plain text and legislative history of the Copyright Act. Additionally, they argue that the ruling will allow for widespread copyright violations and affect their ability to charge re-transmission fees. Aereo has also asked the Court to hear the case. Notably, federal courts in the Ninth Circuit and the District of Columbia recently issued decisions disagreeing with the Second Circuit’s opinion in Aereo.

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