Is a broadcast to everyone private under the Copyright Act?

For the final post in my copyright series, I want to focus on another example in my series of discussions about formalism vs. policy in copyright. Today’s case is WNET v. Aereo, which allowed continued operation of a creative television streaming service. As I’ll discuss below, the case pretty clearly complies with the statutory scheme, much to the relief of those who believe content is overprotected and that new digital distribution methods should be allowed. This time, the policy opposition is best demonstrated by Judge Chin’s dissent in the case.

In the end, though, the case shows what all of the cases I’ve discussed show: copyright was not really developed with digital content storage and streaming in mind. While some rules fit nicely, others seem like creaky old constructs that can barely hold the weight of the future. The result is a set of highly formalistic rules that lead to services purposely designed inefficiently to either follow or avoid the letter of the law. This problem is not going to get any better with time, though my ownguess hope is that the pressure will cause providers to create some better solutions that leave everyone better off.

Here are the basic facts.  Aereo runs a system with thousands of dime size antennas. Each of these antennas can capture over-the-air broadcast television, but not cable or satellite signals. OTA signals are “free” – viewers don’t have to pay for access to them the way they do for cable.

Aereo then runs what is essentially a remote digital video recorder for each subscriber. That is, when a user wants to watch or record a program, the Aereo system tunes one of the antennas to the appropriate channel at the appropriate time, saves the resulting TV signal (a show) to disk, and then either streams it to the user over the internet or stores it for the user for later viewing.

Aereo does this for every single subscriber; if 10,000 people want to record a show, then 10,000 antennas store 10,000 copies of the program.  Why, you ask, would it do something so ridiculously costly and redundant? Because it’s the law, of course.  A prior case, called Cartoon Network stands for this proposition. Here’s the logic: a) a user can use DVRs to store recordings at home (relatively well settled law since the Supreme Court’s decision not to hold VCR makers liable back in 1984); b) a cable operator can store those DVRs at the cable site, because where a customer’s DVR is located does not change the nature of its use, but c) the cable operator must maintain each customer’s choices like a DVR, meaning that the customer chooses what to record, and that a separate copy must be maintained for each customer.

The question in Aereo, then, is whether this basic framework changes if the “cable provider” is now an “antenna farm” provider. There are some differences. The cable subscriber is paying a fee that allows for the rebroadcast of content from the cable operator to the subscriber. Without such a fee/license, such rebroadcast would be infringement. Aereo has no such license, and thus its service could be considered a rebroadcast, which is a no-no. Just ask the folks who tried to rebroadcast NFL games into Canada.

The Aereo Court agreed with the rationale in Cartoon Network, however; the license was not relevant.  Instead, the individualized copies were simply not “public” performances. They were private: selected by the user, recorded in the user’s disk quota, and shown in that form only to the user. As the court noted, it was as if the user had a private antenna, DVR, and Slingbox located at Aereo’s facility, and the fact that Aereo owned it and charged for the service was irrelevant.

Judge Chin dissented from the opinion, and took an opposite view, best described using the original dissent’s text:

Aereo’s “technology platform” is, however, a sham. The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.

Judge Chin’s dissent goes on to argue that the formalistic reading of the statute fails, and that we should see Aereo’s acts for what they are: a transmission of content to members of the public, which thus constitutes public performance.

This disagreement is a great ending illustration of the cases I’ve blogged about this month. The tension between formalistic statutory reading and policy based glosses is palpable.  In my last post, I made clear that I favor following the statute unless convinced otherwise.

But that doesn’t answer the fundamental question, which is: what do we make of all this? Sure, this case was rightly decided. Perhaps now this might lead to the formation of an efficient/licensed broadcast network streaming service that costs users less than Aereo because it is less resource intensive.

I’m not sure the Aereo ruling is the right one in the long run.  One of the thorny issues with broadcast television is range. Broadcasters in different markets are not supposed to overlap. Ordinarily, this is no issue because radio waves only travel so far.  When a provider sends the broadcast by other means, however, overlap is possible, and the provider keeps the overlap from happening. DirecTV, for example, only allows a broadcast package based on location.

Aereo is not so limited, however. Presumably, one can record broadcast shows from every market. Why should this matter? Imagine the Aereo “Sunday Ticket” package, whereby Aereo records local NFL games from every market and allows subscribers to stream them. Presumably this is completely legal, but something seems off about it. While Aereo’s operation seems fine for a single market, this use is a bit thornier. I’m reasonably certain that Congress will close that loophole if any service actually tries it.

Thus, dealing with what should be clearly legal under the statute is thornier than it appears at first.  While I believe that more and cheaper streaming options would be a good thing, I wonder whether the disruption to local broadcast markets is the right way to get there. One thing is clear: copyright law is ill equipped to answer the question.