Why Isn’t Aereo a Cable System?

Aereo antennaThe Aereo case was argued this morning, and before Paul Clement could even get rolling on his introduction on behalf of the broadcaster plaintiffs, Justice Sotomayor hit him with this:

JUSTICE SOTOMAYOR: Why aren’t [companies like Aereo] cable companies?

MR. CLEMENT: They’re not ­­–

JUSTICE SOTOMAYOR: I’m looking at the — everybody’s been arguing this case as if for sure they’re not. But I look at the definition of a cable company, and it seems to fit.

I’ve been wondering this too. The question presented in Aereo is whether Aereo is engaged in a “public performance” when its servers automatically save and transmit recorded broadcast television programs to subscribers at their request, or whether that activity is properly understood as only the users’ activity.

In debating that issue, both the broadcasters and Aereo have at separate points analogized Aereo to a cable system — the broadcasters in the course of claiming that Congress intended to define what Aereo is doing as a “public performance,” just as it did with cable retransmission; Aereo in claiming that it is engaged in disruptive innovation, just as the early cable operators did. But that raises a somewhat different question: why isn’t Aereo subject to Section 111 of the Copyright Act? If it is, then the Court could avoid the entire debate over public performances; the text of Section 111 provides a direct route to liability for certain retransmissions without even mentioning the words “public performance.” And yet, as far as I can tell, it has not been raised by the broadcaster plaintiffs as a basis for a preliminary injunction.

Section 111(c)(1) provides in relevant part that:

Subject to the provisions of paragraphs (2), (3), and (4) of this subsection . . . , secondary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission . . . shall be subject to statutory licensing upon compliance with the requirements of subsection (d) . . . .

A “primary transmission” is just an FCC-licensed broadcast, and a “secondary transmission” is “the further transmitting of a primary transmission simultaneously with the primary transmission . . . .” Subsections (2) and (3) provide that failure to file the necessary paperwork and pay the necessary licensing fees, or editing the content of the broadcast in any way, is “actionable as an act of infringement.” These provisions appear to include Aereo, which files no paperwork and pays no fees.

Furthermore, nonsimultaneous secondary transmissions by a cable system are also “actionable as an act of infringement under section 501” unless “the program on the videotape is transmitted no more than one time to the cable system’s subscribers,” the program is transmitted without deletion or editing, steps are taken to prevent duplication, and certain recordkeeping requirements are met. The appeal of Section 111 for the broadcaster plaintiffs in this case is that, if Aereo is a “cable system,” then its liability can be determined without any reference to whether the retransmissions are a “public performance” or not. Section 111 defines a violation purely in terms of “further transmitting . . . a primary transmission,” and there is no question that Aereo is doing that.

So this would appear to be a promising argument for the plaintiffs, except for the fact that almost everyone involved agrees that Aereo is not a “cable system,” including some of my co-bloggers here. I don’t think this is apparent from the text, however. “Cable system” is defined as:

a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

Aereo has “facilities” located in particular locations that receive FCC-licensed broadcasts, which it then retransmits by wire, cable, or similar communications channels to its subscribers. So it’s a cable system, and it is engaged in a secondary transmission without complying with Section 111’s restrictions. End of case.

The primary authority for the contrary conclusion is the Copyright Office. The Copyright Office long ago concluded in a rulemaking proceeding that “cable systems” are limited to FCC-regulated operations that retransmit television through coaxial cables. There’s two problems with that conclusion. First, it’s not clear to me that the Copyright Office has any administrative authority over the question of who is a cable system under Section 111, and thus it should have no authority to rule on the issue. Section 111 gives to the Register of Copyrights the authority to determine the form and content of reports to be filed with the Copyright Office under Section 111(d), but it does not give the Register any authority to adopt regulations governing who is liable under Sections 111(c) or (e). The D.C. Circuit, in Cablevision Sys. Dev. Co. v. Motion Picture Ass’n of Am., Inc., 836 F.2d 599, 608 (D.C. Cir. 1988), held that “the Office’s construction of at least that section is due deference,” but the issue in that case involved only payments due under 111(d), over which the Copyright Office clearly does have authority.

Even if the Copyright Office does get deference on Section 111, I do not believe it has addressed the precise situation here, but that argument will have to wait until tomorrow.

[Cross-posted at the Marquette University Law Faculty Blog.]

10 thoughts on “Why Isn’t Aereo a Cable System?

  1. Bruce-

    It may be useful to look at the 6th Circuit’s Ivi decision from (WPIX v. Ivi; https://www.courtlistener.com/ca2/591W/wpix-v-ivi/). Ivi had based its business model on being a Internet-based cable company, eligible for the s.111 compulsory license. The 6th Circuit affirmed the lower court finding that it wasn’t (this was for a PI), extending Chevron deference (actually, Skidmore) to the Copyright Office’s finding that internet-based retransmission did not fall under s.111. I personally think the Copyright Office’s construction is wrong; but I expect the Court would likely allow it. (Though, I reserve the right to change my view as I write something on this tonight.)

    I very much agree, however, that the parties whiffed on these questions today.


  2. I tend to agree with you. It seems to fit right into the statutory definition. However, in early 2013, the 2d Cir. directly disagreed in WPIX v. ivi. ivi had attempted to pay the compulsory license.

    The 2d Cir. seemed to think that internet was NOT cable system under the statute- even reading facility as unclear, and THEN piled on by giving Chevron deference to the copyright office. I think ivi did not help its case by transmitting without geographic restriction, which the FCC rules would have required. I think the 2d Cir is wrong, and we may see this question again. Quite frankly, I think THIS is the real question about innovation and the copyright act, much more so than 10000 little antennas.

  3. I think that WPIX v. ivi is at least a plausible reading of the statute: a “facility” is a thing or a place; the “Internet” is neither. And the court’s deference to the Copyright Office is consistent with the modern history of copyright revision: extremely open-ended, inclusive definitions at the front end (106/107), narrowly-defined and technology-specific carveouts at the back end.(108, 110, 114, 114, 116, 118, 119). Congress might decide that broadcasters’ exclusive rights extend to Internet distribution and performance by default, but it strikes me as reasonable to expect that Congress should be more explicit about that decision than it has been so far. The music example shows that Congress knows how to do that.

  4. Aereo isn’t a “Cable system” because it doesn’t receive “signals transmitted or programs broadcast by one or more television broadcast stations”… it rents out antennas to it’s users and thus *the users* are the ones receiving the signals (& choosing which to store on rented recording systems – like renting a VCR) 😉

  5. I’ll tackle the ivi case in the next post. Mike, on the Copyright Office issue, I’m not sure if you are suggesting the Copyright Office should get deference, or just that their decision happens to be the correct one, but if the former I disagree. My (admittedly incomplete) understanding of admin law is that administrative agencies do not get deference on subjects where they have no authority to regulate. The Copyright Office doesn’t have general authority to implement the provisions of Title 17, they have just been given very narrow tasks to perform in certain areas. The Copyright Office should not get any deference for determining, say, whether a given use is fair or not. And I don’t see any grant of authority to determine who is a cable system or not under 111.

  6. My point was (is) that what the court concluded is reasonable, not that the court was proper in deferring to the Copyright Office. I have no special insight on the latter question.

    The section 111 argument does turn on whether the secondary transmission is “to the public” “of a performance or display of a work embodied in a primary transmission.” Leaving section 106(4) to the side, a section 111 argument still has to wrestle with Cablevision, doesn’t it?

  7. I agree the questions are not entirely distinct. But I don’t think the “to the public” part of 111(c)(2) (“the willful or repeated secondary transmission to the public by a cable system of a primary transmission . . . embodying a performance or display of a work is actionable as an act of infringement . . . “) is the difficult part. For one thing, with respect to Aereo in particular, the operative part of 111 is not so much (c)(2), but (e)(1), which doesn’t mention “to the public”:

    Notwithstanding those provisions of the subsection (f)(2) relating to nonsimultaneous secondary transmissions by a cable system, any such transmissions are actionable as an act of infringement under section 501, and are fully subject to the remedies provided by sections 502 through 506 andsection 510, unless—

    (A) the program on the videotape is transmitted no more than one time to the cable system’s subscribers;

    (B) the copyrighted program, episode, or motion picture videotape, including the commercials contained within such program, episode, or picture, is transmitted without deletion or editing;

    (C) an owner or officer of the cable system

    (i) prevents the duplication of the videotape while in the possession of the system . . . . [etc.]

    Even for simultaneous transmissions, I think the transmission is either clearly to the public or the Cablevision interpretation is unworkable. First of all, it’s not straightforwardly evident the 101 definition of “perform publicly” should apply to 111’s references to transmissions to the public. But assuming it does, then for simultaneous retransmissions you either look at the head end or you look at the full transmission path to the receiving units.

    If you look at the signal coming out of the head end, then it is going to all of Aereo’s subscribers currently tuned to that channel. Even under Cablevision, that’s public.

    If the “transmission” is the particular signal or stream of data that travels the entire transmission path from head end to individual subscriber, then Cablevision’s interpretation is unworkable, not just for 111 but for any transmission of a performance, even under 1976 technology. Obviously no one else can get into my house and receive the particular transmission that is ending at my cable box. So that would be a private transmission, if that’s the way Cablevision is to be read for simultaneous retransmission, and there would be no such thing as a transmission to the public.

  8. Got it. But 111(e)(1) requires that Aereo be classified as a “cable system.” And the definition of “cable system” incorporates some concept of transmission to the public, even if the 106(4) “public performance” definition is not used in 111. One way or another, I think that “public” is implicated in all of this, and I think that Cablevision’s manipulation of that concept is in the way of a straightforward application of 111.

    I agree that Cablevision’s analysis is unsatisfying, to say the least, even if I like the result. You’re right that read literally, Cablevision undermines almost the entirety of the “transmit” side of public performance. You’re right that the public/private divide is not represented consistently throughout the statute.

    It still seems to me that conceptually, the public/private distinction rather than the mechanics of transmission and identification of headends, a public/private distinction was driving (and is still driving) both the question of “when are copyright owners entitled to claim control and/or compensation for re-use of ‘their’ content?” and the question of “when and how are consumers who are legally entitled to store and watch copyrighted content at times (and perhaps at places) of their choose entitled further to use technological agents — and to pay technological agents — to help them do that?”

    Either copyright law needs to develop and apply a defensible and consistent “public/private” distinction (something it does not do now, and something that will likely continue to be challenged as Internet and related technologies evolve), or copyright needs to abandon that distinction. The latter alternative reminds me of early digital copyright debates, from the mid- and late-1990s; in part what we’re seeing now is technology catching up to some of the more extreme Chicken Little-ish claims from that era. Industry observers argued back that that digital copyright innovations (the doctrine of RAM copies and the DMCA and related things) were needed because “private” consumption was functionally the equivalent of “public” consumption. That wasn’t really true then, at least not at any meaningful scale. But seems increasingly plausible today.

    I doubt very much that the Court intends to address this in Aereo. Mike Risch’s argument strikes me descriptively as perhaps the best prediction of what the Court will do. But I signed the Post/Grimmelmann brief.

  9. The “public” in the definition of “cable system” is purchasing service from the company, not receiving a transmission, so it’s pretty clearly satisfied here I think. I think there is no way in this statute or any other statute you are not selling to the public just because you make the sales one at a time.

    But I agree that the intuition about whether Aereo or Cablevision are mere agents for their users’ bidding is probably the central driving factor of this debate. So I’m curious about your intuition that Aereo is a mere passive agent for its users. It does not seem any more of an agent to me than a traditional cable company. The cable company only sends television signals after you ask for them. It then sends them as one big feed. It’s your box that actually does the work of tuning to a particular channel, in response to your input. The cable company is pulling down broadcast and pay television signals with a bigger antenna and a fancier satellite dish, but its not anything that would be impossible for the average consumer to replicate. (Or at least that was true in the 80s.)

    So what if anything distinguishes the cable company? Aereo obviously includes a DVR feature, but some of its subscribers watch live, and I’d be surprised if the publicness of what a service does is altered by whether it offers a service not currently being used.

    I think Dropbox and other cloud services are mere passive agents, somewhat like the carriers in 111(a)(3) (to borrow from the CyberProfs thread) — they don’t choose the content, they store whatever you tell them to, without any input on what sort of content it is, and return it when you want it. They are a digital safe deposit box. The bank doesn’t need to keep capital reserves based on what it holds in its safe deposit boxes, only what it holds (and uses) in its depository accounts.

  10. I didn’t and wouldn’t use the phrase “mere passive agents.” I just wonder about the scope of some kind of agency relationship — and I’m using “agency” in a casual sense, not in a legal/term of art sense — in this and related situations.

    It’s pretty well established, for example, that consumers have the right under copyright law to record and store broadcast TV signals in order to watch the related programming at their convenience. It’s also pretty well established that consumers have the right to buy equipment that enables them to do that. They don’t have to build their own receiver/recorders. And companies that make those receiver/recorders have the legal right to do that, to profit by doing so, and to be excused from any duty to pay royalties to the owners of copyrights in the recorded programming.

    That’s 30-year-old law.

    Sony was the viewing public’s “agent” in the loose sense that Sony offered the public what turned out to be legitimate technological assistance in consumers’ pursuit of what turned out to a a lawful objective. Sony’s machines were passive, I guess, but Sony itself was hardly neutral. We all know that Sony actively encouraged the public to buy and use its machines. Sony and its ilk made a ton of money doing that, all over the broadcasters’ loud and angry objection.

    My intuition begins with the sense that Aereo is no different than Sony.

    Maybe, given the structure of the statute, there is a “device v. service (or system)” sort of distinction that should lead us away from Sony. Maybe Aereo doesn’t have the range of “legitimate noninfringing uses” that VCRs had. Maybe Aereo isn’t really a cable system; Aereo is really more like the original Napster, or like Grokster: a system (to which the Sony rule may not apply) that consumers use, and are encouraged to use. primarily for infringing purposes.

    FWIW, I also wouldn’t use the phrase “traditional cable system.” Comcast and TimeWarner today are not the same creatures as the cable companies that I represented in the late 1980s, and those companies in the late 1980s were not the same companies that prompted the TelePrompter and Fortnightly cases. The technology is similar but not the same; the business is a distant cousin. Metaphorically speaking, they are all part of what I’d call a “family resemblance”; it is plausible to try to speak in terms of who is “asking” for signals and who is “pulling” them. I don’t think that my personal sense of the history of cable matters at all, however.

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