Aereo fails to turn lemons into lemonade – TV retransmission service blocked by preliminary injunction

In June, the Supreme Court of the United States found that the Aereo TV service, which allowed subscribers to stream free-to-air television broadcasts over the internet, infringed copyright in television programs.

Following the Supreme Court’s decision, Aereo has attempted unsuccessfully (in the words of Judge Nathan) “to turn lemons into lemonade” by using the Supreme Court’s characterisation of the Aereo service to argue that it is entitled to a compulsory license for internet retransmissions. Last week, the US District Court of the Southern District of New York issued a preliminary injunction against the Aereo service, rejecting Aereo’s argument that it is a “cable system”. You can read Judge Nathan’s decision here.

By way of background for those that are not familiar with the case, the Aereo TV service allowed a subscriber to select a program from an online programming guide. Using an antenna allocated to the subscriber, Aereo’s system would record the TV program and after a few seconds, begin streaming that program over the internet to the subscriber. The majority of the Supreme Court found that Aereo “performed” the copyrighted works publicly and therefore infringed copyright. The majority of the Supreme Court rejected Aereo’s argument that it was merely an equipment provider, in the same way as a digital video recorder. Rather, the majority found that Aereo’s activities were substantially similar to CATV companies (a bit like cable services). (You can read our full summary of the Supreme Court’s decision here).

After losing the infringement case, Aereo applied in the US Copyright Office for a compulsory license for the transmission under section 111 of the US Copyright Act, arguing that it qualified as a “cable system”. This argument was an about-turn from its arguments before the Supreme Court on copyright infringement, instead relying on the Supreme Court’s characterisation of its service as substantially similar to CATV companies.

In July, the US Copyright Office rejected Aereo’s claim for a compulsory licence. The Copyright Office stated that internet retransmissions did not fall within the scope of the compulsory license. The Copyright Office rejected Aereo’s argument that the Supreme Court’s decision effectively overturned a previous decision which had found that online video firms were not entitled to compulsory licenses.

On 23 October 2014, Judge Nathan of the US District Court of the Southern District of New York issued a preliminary nation-wide injunction, preventing Aereo from retransmitting programs while the programs were still being broadcast.   Judge Nathan rejected Aereo’s three arguments:

  • On the compulsory license argument, Judge Nathan said: “Doing its best to turn lemons into lemonade, Aereo now seeks to capitalize on the Supreme Court’s comparison of it to a (cable) system”.  Judge Nathan found that while the Supreme Court found that Aereo performed publicly in much the same way as a cable system, it did not deem Aereo to be a cable system for all other purposes of the Copyright Act. Existing binding precedent had concluded that the compulsory license did not extend to internet transmissions.
  • Aereo also argued that it was entitled to the s 512 safe harbor for “transitory digital network communications”, as it merely retransmitted material of the user’s choosing, without modification. However, Aereo failed to assert that it had satisfied all the eligibility requirements for the safe harbor (eg the implementation of a repeat infringer policy).
  • Aereo argued that it would suffer hardship if an injunction issued. In light of the Supreme Court’s conclusion on infringement, Judge Nathan found that Aereo could not claim harm from its inability to continue infringing.

The question of whether Aereo’s time shifting service infringed copyright (where the recording was played back at a late time) was not before the Supreme Court. Judge Nathan therefore limited the preliminary injunction to retransmitting programs while the programs were still being broadcast. The question of whether the delayed retransmissions infringed was left to be decided by later proceedings on a permanent injunction.

We will keep monitoring the Aereo-space and keep our readers up to date with the key developments.