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Fudging it on Aereo

Justice Stephen Breyer seemed genuinely distressed during oral arguments in the Aereo case yesterday over the knotty legal conundrum facing the court.

“I’m hearing everybody having the same problem,” Breyer remarked to former U.S. solicitor general Paul Clement, who was representing the broadcasters. “I will be absolutely prepared, at least for argument’s sake, to assume with you that if there were ever anything that should be held to fall within the public performance, [Aereo] should be. All right? I will assume that. But then the problem is in the words that do that — because we have to write words – are we catching other things that really will change life and shouldn’t, such as the cloud?”

As I noted in my previous post, squaring that circle — assessing the liability of Aereo without overturning the Cablevision precedent or implicating the broader cloud-storage industry — has become the pivotal legal issue in the case. About the only help Breyer and the other justices got came from deputy solicitor general Malcolm Stewart, who participated as a friend of the court.

“I think the basic distinction, the one that at least defines the extremes, is the distinction between the company, whether it be Internet-based or a cable transmitter, that provides content in the first instance and the company that provides consumers with access to content that they already have,” Stewart offered. “If you have a cloud locker service, somebody has bought a digital copy of a song or a movie from some other source, stores it in a locker and asks that it be streamed back, the cloud locker and storage service is not providing the content. It’s providing a mechanism for watching in.”

In contrast, he suggested, Aereo is providing subscribers with the content in the first instance, which should require a license.

It was a nice try, but it’s a reach at best.

For one thing, there’s nothing in the text of the statute regarding such a distinction. The statute’s definition of what it means to “perform” or “transmit” a work “to the public” says nothing about the provenance of the copy or performance being transmitted. If that’s the distinction the court tries to hang a decision on it won’t be able to point to anything in the letter of the law to support it.

Nor does the Second Circuit’s ruling in the Cablevision case, which formed the legal predicate for Aereo, make any such distinction. No one in that case disputed that Cablevision had a license to publicly perform the broadcasters’ content. The question was the scope of those licenses and whether they covered on-demand, internet retransmission.

The court answered that question by ruling that the design of Cablevision’s RS-DVR system was such that no public performance occurs when a user plays back an RS-DVR recording, and thus no license is required. Cablevision’s retransmission licenses, in other words, were irrelevant to the court’s analysis of the legality of its RS-DVR system. To argue now that Cablevision’s “first instance” retransmission licenses somehow conferred immunity from liability on its second-instance RS-DVR service that is not available to Aereo is, as the lawyers say, to assume facts not in evidence.

Further, Stewart was making what amounted to an argument from the first sale doctrine: users are entitled to store their own digital copies in online lockers. The problem is, it’s not at all clear the first sale doctrine applies to digital copies. The most recent ruling on the issue, by a U.S. district court in the ReDigi case, concluded pretty emphatically that it does not.

Should the Supreme Court hold that Aereo infringes but Google Drive does not because consumers are entitled to dispose of their own lawfully acquired digital copies it will, in effect, be creating a new digital first sale doctrine. There may be good reasons to create such a doctrine but they’re not really among the facts and issues presented in the Aereo case. (Aereo’s attorney David Frederick did at one point suggest “this case is really a reproduction right case masquerading as a performance case” but that argument was never really developed.)

That fact that Stewart’s argument was the best that anyone could come up is as good an indication as any of the difficulty confronting the court in this case.

In any case it seemed to do little to put Breyer’s mind at ease.

“The reason [this case] is very significant is because…what you apparently could do, even if you don’t, with the same kind of device, pick up every television signal in the world and send it into a person’s computer. And that sounds so much like what a [cable] system does or what a satellite system does that it looks as if somehow you are escaping a constraint that’s imposed upon them,” he told Aereo’s attorney toward the end of the proceeding. “And then what disturbs me on the other side is I don’t understand what the decision for you or against you when I write it is going to do to all kinds of other technologies. I’ve read the briefs fairly carefully, and I’m still uncertain that I understand it well enough. That isn’t your problem, but it might turn out to be.”

That drew a laugh from the courtroom, but it’s no laughing matter for the court.