US Supreme Court Rules Aereo Business Model Does Not Get Around US Copyright Law : American Broadcasting Cos Inc et al V Aereo Inc 26/06/2014
In an important decision handed down overnight, the US Supreme Court has held, by majority, that the Aereo TV streaming service is a “public performance” within the meaning of US Copyright law and therefore amounts to an infringement of copyright in the underlying content.
The case concerns Aereo, a US company which retransmits TV programs to its subscribers via the internet without the permission of the owners of copyright in the broadcasts or their underlying content. The service is described in the summary of the decision as follows:
“When a subscriber wants to watch a show that is currently airing, he selects the show from a menu on Aereo’s website. Aereo’s system, which consists of thou- sands of small antennas and other equipment housed in a centralized warehouse, responds roughly as follows: A server tunes an antenna, which is dedicated to the use of one subscriber alone, to the broadcast carrying the selected show. A transcoder translates the signals received by the antenna into data that can be transmitted over the Internet. A server saves the data in a subscriber-specific folder on Aereo’s hard drive and begins streaming the show to the subscriber’s screen once several seconds of programming have been saved. The streaming continues, a few seconds behind the over-the-air broadcast, until the subscriber has received the entire show. “
The business model has been controversial, as the use of antennas has been clearly designed to overcome the public performance right in US copyright law. In this way, it is analogous to the Optus TV Now litigation in Australia. This is an issue Giblin and Ginsburg have examined in a recent article. 
PUBLIC PERFORMANCE RIGHT
The exclusive rights of the copyright owner under US Copyright law includes “the right to perform the copyrighted work publicly”. This includes the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.” By contrast, under Australian Copyright law, the right to perform in public and to communicate to the public are separate rights.
The majority’s decision was delivered by Breyer J. Scalia J delivered a separate dissenting judgment. The two issues dealt with by the majority judges were whether Aereo’s service amounted to a “performance” within the meaning of the Copyright Act and secondly, whether it was “public”.
The majority held that by operating its service, Aereo was not merely supplying equipment, as it contended, but was “performing” within the meaning of the Copyright Act. In reaching this conclusion, Breyer J and the other majority judges were influenced by the fact that the legislature’s intent in drafting the current public performance right in the Copyright Act was to overcome an earlier decision of the US Supreme Court which found that community antenna television systems fell outside the scope of the Copyright Act.
TO THE PUBLIC
In order to answer the question whether Aereo’s service amounted to a public performance, the majority first had to identify the relevant performance. For example, was it the underlying broadcast being retransmitted by Aereo or did the transmission of the television programs by Aereo amount to performance in itself? The majority proceeded on the basis that “to transmit a performance of (at least) an audiovisual work means to communicate contemporaneously visible images and contemporaneously audible sounds of the work. “  It therefore held that Aereo transmits a performance whenever its subscribers watch a program.
The majority then turned to consider whether the fact that each transmission was to a single Aereo subscriber preceded it from being “public”.
“As we have said, an Aereo subscriber receives broadcast television signals with an antenna dedicated to him alone. Aereo’s system makes from those signals a personal copy of the selected program. It streams the content of the copy to the same subscriber and to no one else. One and only one subscriber has the ability to see and hear each Aereo transmission.” Having considered the facts, the majority stated:
“Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens.” 
The Court therefore held that Aereo’s service did amount to a public performance.
THE ROLE OF THE USER
In reaching its conclusion, the majority did note that a difference between the Aereo business model and the earlier cable cases. That is, rather than transmit programs constantly, the Aereo system is activated by a subscriber.
In the majority’s view:
“[g]iven Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here.” 
By contrast, the minority saw this as a crucial difference. They instead looked at whether Aereo was liable for the infringements of their subscribers, likening Aereo to a copy shop that provides its patrons with a library card. This line of reasoning may be seen as consistent with previous decisions in the US, such as Cartoon Network, LP v. CSC Holdings, Inc. However, in the view of the majority, this argument made “too much out of too little”.
WHAT DOES THIS MEAN FOR CLOUD COMPUTING?
Part of the interest in this case stems from what implications, if any; it would have for the development of cloud computing technologies. The majority addressed this concern:
“We agree that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will have that effect. “ 
The majority went on to make several relevant points:
1. They had not considered whether h the public performance right would be infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.
2. An entity does not transmit to the public it does not transmit to a substantial number of people outside of a family and its social circle.
Relevantly for Australian readers, the Court also noted that the doctrine of fair use can help to overcome inappropriate or inequitable applications of the Copyright Act. While fair use is not part of current Australian copyright law, this writer queries whether this can be seen as having a chilling effect on cloud computing technologies in this country. 
The Australian Copyright Council was part of a “friend of the court’” brief which argued that the decision of the court below was likely to amount to a breach of the US’ international treaty obligations. While the Supreme Court did not deal with the international law issues raised in the brief, the majority’s analysis is consistent with the views put by the Council and its friends. For more information, see our previous media release. 
A copy of the decision is available here http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf
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 See Australian Copyright Council submission to the ALRC http://www.copyright.org.au/admin/cms-acc1/_images/161535485950b829ad9111c.pdf
Australia signs the Marrakesh Treaty 24/06/2014
Overnight in Geneva at the World Intellectual Property Organization, the Australian Government signed the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired or otherwise Print Disabled, which was concluded in Marrakesh in June 2013. Fiona Phillips, the Executive Director of the Australian Copyright Council was present at the negotiations in Marrakesh.
Signing the Marrakesh Treaty does not mean the Australian Government has taken any binding treaty action, but indicates that the Government will not act in any way contrary to the spirit of the text.
We welcome the Government’s first step towards becoming a party to the Marrakesh Treaty. As the Copyright Act 1968 already contains exceptions for persons with a print disability largely consistent with the Marrakesh Treaty text, in our view, this should not be a complicated exercise.
Authors Guild Inc v Hathitrust : Does transformative use = fair use? 11/06/2014
Yesterday, the United States Court of Appeals for the Second Circuit rejected the appeal in the long-running dispute between the Authors Guild and the Hathitrust Digital Library.
In 2004 a number of universities allowed Google to scan millions of books in their collections. This was done without the permission of the owners of copyright in the books. These scanned books were later used as the basis for a consortium known as the Hathitrust Digital Library (HDL). HDL allows three uses of its database:
1. The general public may perform a full-text search, however, the results only provide page references rather than snippets of text;
2. Member libraries may provide full-text copies to people with a print disability;
3. Members may create a replacement copy where their original copy is lost destroyed or stolen.
In 2011, the Authors’ Guild and other authors’ organisations including the Australian Society of Authors issued proceedings against HDL for copyright infringement. In a controversial decision in 2012, Justice Baer of the United States District Court held that the mass digitisation of copyrighted books in the HDL collection was a fair use and did not constitute an infringement of copyright.  The current case is an appeal from that decision.
The Court held that the full text search and print disability uses of the HDL amounted to fair use. It did not make a determination in relation to use for the purposes of preservation.
In reaching its decision, the Second Circuit analysed each of the four fair use factors:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or
value of the copyrighted work.
In relation to search, the Court concluded that “the creation of a full‐text searchable database is a quintessentially transformative use”. However, in relation to the print disability use it held that “providing access to the print‐disabled is still a valid purpose under Factor One even though it is not transformative”.
Having found that both uses satisfied the first factor, it followed that the Court decided that both the search and the print disability uses of the HDL amounted to fair use.
The Court’s decision confirms the primacy of the first factor, and in particular, “transformative use” in recent fair use jurisprudence. Perhaps this is easier to understand in the context of the copyright power in the US Constitution. This seems to have very much been in the mind of the Second Circuit which prefaced its decision by noting that “the overriding purpose of copyright [t]o promote the Progress of Science and useful Arts”. As we have noted before, this is but one reason why the Australian Government should think carefully about whether it is appropriate to introduce a fair use defence into Australian copyright law.
Secondly, while some commentators have suggested that the Cariou case is at the penumbra of fair use jurisprudence, it is worth noting that the Second Circuit has referred to it as an example of fair use:
“An artist may employ copyrighted photographs in a new work that uses a fundamentally different artistic approach, aesthetic, and character from the original.
See Cariou v. Prince, 714 F.3d 694, 706 (2d Cir. 2013)”
This recent trend in fair use jurisprudence leaves us to wonder about the United States compliance with its international treaty obligations in relation to copyright exceptions.
The full decision is available here
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