|Sirius XM Radio (which claims to be the largest radio broadcaster in the United States) features several niche “oldies” music stations, including those for the 40s, 50s, 60s and 70s. Sirius XM understands the nostalgic pull of classic tunes from days gone by and has programmed channels specifically to capture the audience of fans of music from those eras. However, a recent California decision soon may alter that.|
|Flo & Eddie, Inc. (“Flo & Eddie”) was formed and is owned by Howard Kaylan (aka “Flo”) and Mark Volman (aka “Eddie”), two of the founding members of the 60s and 70s band, The Turtles. Today, Flo & Eddie owns all of the rights to The Turtles’ master recordings, including their number one hit in 1967, Happy Together. Sirius XM routinely has broadcast and streamed The Turtles recordings on its 60s and 70s channels and has never paid any public performance royalties to Flo & Eddie with respect to those performances.
Flo & Eddie filed suit in Los Angeles Superior Court (a California state court) alleging that these performances violated the provisions of a California state statute. The case was removed to Federal District Court in California based on Federal diversity of citizenship jurisdiction. This is important to note because at issue is an interpretation of California state copyright law, not an issue of Federal copyright law. The Federal District court had to interpret the meaning of the California copyright statute.
A little background on music copyrights is in order. A recording of a song actually consists of two separately copyrighted works: (a) the “musical work” (i.e., the music and lyrics); and (b) the “sound recording”, (i.e., the actual performance of the song as captured on the record). Musical work copyrights normally are owned by music publishers (or songwriters, if unpublished). Sound recording copyrights normally are owned by record companies (or artists, if they self-release an album). The protection afforded to these two types of works differs under the U.S. Copyright Act. Specifically, there is a “public performance right” for musical works, but NOT for sound recordings (unless the public performance is a digital performance, such as internet radio). Even for digital performances, the Copyright Act provides NO protection for sound recordings first created prior to 1972. A 1971 amendment to the Copyright Act (which became effective on February 15, 1972) states specifically that recordings made prior to that date were not subject to Federal statutory copyright protection.
So, in the case of “Happy Together” (which was written in 1967), when the song is performed by a band live, or played on the radio, public performance royalties are payable to the music publishing owners. Public performance royalties with respect to musical compositions are paid through ASCAP, BMI or SESAC. However, when the Turtles’ original recording of that song is played on the radio, no royalties are paid to Flo & Eddie because they do NOT own the copyrights to the musical composition, only the recording of it. (While changes to the Copyright Act which were enacted in 1998 as part of the Digital Millennium Copyright Act provided some protection for digital performances of sound recordings, those changes had no impact whatsoever on pre-1972 recordings which still do not enjoy a public performance right, analog or digital, under the Copyright Act.)
The 1971 amendment made clear that, unlike most of US copyright law that DOES pre-empt any equivalent state laws on point, the Federal Copyright Act will not pre-empt state protection for sound recordings until 2047. So, state laws still matter in this one area. At the present time, 49 states have enacted or extended state law protections to pre-2/15/72 sound recordings. (Only Vermont has no state law in this area.) Most of these laws, however, are anti-piracy statutes, designed to prevent unauthorized copying of recordings. These state laws do not apply to the over-the-air broadcast performance of sound recordings. In fact, all but one of the 49 states offering protection to older sound recordings have explicit carve outs specifying that the laws do not create any public performance right in broadcasting. (Tennessee is the lone exception on this front.)
The primary issue in the Flo & Eddie cases is whether those state statutes protect any non-broadcast “public performances” of the recordings such as digital streaming services and other digital performances of the type provided by Sirius XM, Pandora, Spotify, etc.
Flo & Eddie (acting on their own and on behalf of a class they had certified) decided to file suit against Sirius XM alleging a violation of their rights under the California statute. Their argument is that the California law that granted them “exclusive ownership” of their pre-1972 sounds recordings includes the exclusive right to control and be paid for digital performances of those recordings. While the case eventually was removed to Federal District Court, it still was decided on the basis of California state law, not Federal law. Flo & Eddie also filed similar lawsuits in New York and Florida alleging violations of those states’ laws protecting pre-1972 sound recordings. On their heels, major record labels (who own the lions’ share of these pre-1972 recordings) also have filed suits against Sirius XM and against Pandora.
Two weeks ago, the U.S. District Court for the Central District of California granted Flo & Eddie’s motion for summary judgment on their California sound recording claims insofar as the digital public performances are concerned. The basis for the Court’s decision was its interpretation of Section 980(a)(2) of the California Civil Code. That section expressly vests “exclusive ownership” of any pre-2/15/72 recording in the recording’s copyright owner. Sirius XM had argued that since Section 980(a)(2) does not explicitly include a right of public performance they did not owe Flo & Eddie any money, even though they did not deny digitally broadcasting Flo & Eddie’s pre-1972 recordings. The Court disagreed with this position and held that the concept of “exclusive ownership” in this context includes the exclusive right to digitally perform those recordings, even though the digital public performance right is not explicitly listed in the statue. Consequently, the Court ruled that Sirius XM’s repeated playings misappropriated Flo & Eddie’s property interest in the sound recordings under California law and will entitle them to damages (which will be another phase of the case).
So what impact will this California case have? All of the Flo & Eddie cases, including those filed in New York and Florida, are class actions. It is likely that other similarly situated sound recording owners will jump into the fray to try to recover substantial damages for past royalties that should have been paid. It is important to keep in mind, however, that the Flo & Eddie Court’s ruling was by a Federal judge interpreting a California statute. So, for example, the Flo & Eddie Court’s opinion could be contradicted by a California state court hearing a similar case if it were to hold that the Federal court misinterpreted California law. Also, there is no assurance that courts in other states, including Florida and New York, will agree that the “exclusive ownership” language under their respective state statutes should be viewed as broadly as the California law has been interpreted. Further, Sirius XM has already prevailed in a separate but similar lawsuit, also in California, filed by record labels. So even this case could go away.
In the short run, however, the Flo & Eddie decision could have a major impact on digital broadcasters, such as Sirius XM, which have niche “oldies” channels that consist almost entirely of pre-1972 sound recordings. (Flo & Eddie have just filed suit against Pandora in California based on the Sirius XM decision there.) The number of recordings that potentially are impacted by this Flo & Eddie decision is huge, including not only the Turtles, but also the Beatles, the Rolling Stones, Jimi Hendrix, Led Zeppelin, the Beach Boys, Elvis Presley, Roy Orbison, the classic Motown acts, and the classic “British Invasion” bands, to name just a few. These artists, and their recordings, still are popular today, more than forty years after the initial release of their recordings. So, unless the case is overturned, at the very least, Sirius XM will now have to pay royalties when it has not been doing so. We’ll have to wait to see what impact this decision this will have on their willingness to continue to offer this programming, or on the costs that they try to pass along to their subscribers.
Finally, there is nothing stated in the Flo & Eddie decision that limits the scope of the California statue to violations of public performance by means of digital audio transmission (such as those made by Sirius XM and Pandora). Therefore, the Flo & Eddie ruling might be viewed broadly to give sound recording copyright owners a general public performance right in pre-February 15, 1972 sound recordings (i.e., analog, as well as digital public performances), a broad right that expressly is not recognized under current Federal copyright law. That means that traditional “over-the-air” radio and television broadcasters, who currently are expressly exempted under Federal copyright law from paying public performance royalties with respect to post-February 15, 1972 sound recordings, may be the next group targeted.
As the owners of iPhones know, the band U2’s latest album, Songs of Innocence, was recently loaded automatically and without charge on all Apple devices with iTunes accounts. U2’s decision to give away this music for free (we’ll discuss that notion in a second) has been met with a variety of reactions. Some people were angry that Apple could simply “load” the music onto their devices without their permission. Some in the music industry have reacted angrily to U2’s doing so as a sign that even they, as artists, placed no commercial value on recorded music. Still others see it as another sign of the slow and painful death of the recorded music industry. Finally, there are those who see U2’s decision as a clever way to create new income streams for themselves, notwithstanding, the “free” giveaway.
It is no secret that sales of recorded music, especially album (CD) sales, have been on a steady decline for many years. The reasons for the decline are varied. For instance, the 33 1/3 LP featured often beautiful artwork covers that were considered an integral part of the album. When CDs became popular, the smaller size seemed to lessen the importance of album artwork and that made the experience of owning an album less enjoyable for some people. Although some felt the sonic clarity of the CD format was a valuable tradeoff to the smaller and less elaborate album covers, others decried the sterile sound of the all-digital format.
A much more profound blow to the traditional “album” came with the advent of mp3s. This new format, which allowed a user to easily carry around hundreds and then thousands of recordings on a device no larger than a cell phone (and later, mostly ON a cell phone) came with some significant costs. For music purists, it spelled poorer quality music because the already sterile digital sound was being compressed in order to allow for larger and larger quantities to be stored and because music was now being played through tiny ear buds instead of large speakers. The digital download craze further diminished the importance of album artwork. From a musical standpoint, because the music could now be readily acquired one song at a time, much less emphasis was placed on creating a cohesive “album” as opposed to a mere aggregation of songs. Artistically, this was a major step backwards to the times before the mid-1960s when thematically cohesive albums (such as The Beach Boys’ Pet Sounds and The Beatles’ Sgt. Pepper’s Lonely Hearts Club Band) raised the album concept to new heights. Even classic jazz albums, like Miles Davis’ Kind of Blue, were built on the concept of an album as opposed to a mere aggregation of random compositions.
Digitizing music so that it was translated into a series of 1’s and 0’s not only made it easy to carry around in large quantities, it made it easier to steal. Many people who would never steal a physical object because it was morally wrong saw nothing wrong with downloading and swapping music with their friends without paying the record companies or artists. Gene Simmons, the self-promoting but often astute bass player in the band Kiss, recently proclaimed that “rock music is dead,” blaming it on illegal downloading and file sharing.
Record companies also bear their share of blame. The emphasis on great creative masterworks (think of albums like Stevie Wonder’s Songs in the Key of Life, Michael Jackson’s Thriller and Donald Fagen’s The Nightfly) was greatly reduced. Nurturing the development of new and existing artists creatively was de-emphasized. For these reasons, many – myself included – feel that the quality of recorded music has declined greatly. Simmons blames record executives for focusing on “mindless, synthetic dance/pop” and claims that the industry’s focus on that formula has discouraged musicians from learning their craft and advancing the art form. Certainly, in the case of the major labels, there is a lot of truth in what he says. Even the so-called “indie labels” are full of releases featuring artists and songs that are indistinguishable from one another.
While illegal downloading still remains a serious problem, even legitimate, legal downloading services, such as iTunes, have continued to erode sales of albums.
On the heels of both illegal and then legal downloading (which failed to generate the same type of artist royalties that had been earned from albums and CDs), the next blow came from streaming music services such as Pandora and Spotify which pay artists even less. These advertiser supported subscription services have become very popular with music fans because of the ready access to enormous variety and quantity of music on any device that connects to the Internet. Unfortunately, the royalties that are paid to recording artists from streaming (as opposed to album sales) are miniscule. The services claim that they cannot afford to pay larger royalties either to the songwriters/music publishers or artists/record labels.
While this ready access to music may seem like the “golden era of recorded music” to fans, I fear that there eventually will be a price to be paid: if artists are no longer fairly compensated for their artistic works, they will cease to produce them.
This brings me back to U2. Bono and company publicly claimed that they were not making money on the sale of physical CDs anyway, so why not just give it away to their fans for free? First, U2’s position is misleading, if not outright deceptive. True, those with the iOS (at least through mid-October) are receiving the album for free. However, the New York Times has reported that in order to obtain the right to release U2’s album free, Apple paid the band and Universal Music an unspecified fee as a blanket royalty and committed to a marketing campaign for the band worth up to $100 million, according to several people briefed on the deal. Considering the very lackluster sales of U2’s previous album and its desire to once again seek to market itself to music fans, perhaps U2 will make a great deal more money on this deal. Even apart from that huge payday, the band hopes that the widespread distribution of the album will serve as a springboard for another mega-tour in which they will make many times that amount from live performances.
The real issue, however, is that the recorded music industry is still struggling to find a sustainable revenue model in the new digital era, and many in the industry are very unhappy with this U2/Apple “Fremium” giveaway. Labels routinely require that recording artists sign so-called “360 Deals” in which the labels share in the artists’ revenues from live touring, merchandising and music publishing—three areas that traditionally were outside of the earnings reach of record labels. They also charge management fees because the labels now claim to be taking a more active role in the overall handling of their artists’ careers. They justify this new position by stating that they are doing more than ever to manage their artists and that the economics of the modern recording business demand it. Many artists have responded to this by self-releasing albums or doing indie releases that are with labels which don’t insist on this type of a 360 deal.
The music business certainly looks dramatically different today than it did twenty or even ten years ago. How things will shake out over the next ten years is anybody’s guess.
Last week, numerous media outlets reported that British nature photographer, David Slater, had asked the Wikimedia Foundation (the editors of Wikipedia and owners of Wikimedia Commons, a website featuring a collection of images free for public use), to remove from the site “his” photos of a monkey that were uploaded without his permission. However, the Wikimedia Foundation refused to do so. According to the Wikimedia Foundation, since monkeys can’t hold copyrights, the images are in the public domain. (We are not told WHO actually first uploaded the photo to Wikimedia. Presumably, it was not the monkey.) While it may seem like a silly thing to be fighting about, Slater claims that he has lost tens of thousands of dollars in revenue.
As a result of the refusal to remove the image, Mr. Slater now plans legal action, saying that the photo is his because he supplied and set up the camera. According to Slater, under copyright law “if I have an assistant then I still own the copyright…. I believe there’s a case to be had that the monkey was my assistant.”
The photo was snapped by the primate in 2011 in Indonesia. The facts surrounding the event appear to be somewhat in dispute. According to a story that first appeared in The Telegraph in 2011, “the crested black macaque hijacked the camera and started snapping away.” However, in a new video uploaded to that same publication’s website, Slater said “I wanted that one shot full in the face…but it wasn’t going to happen, not unless they took the photograph themselves. And I did that by setting it up on a tripod with a cable release, walking a few meters away, allow them to come in, watch their own reflections, play with the camera, play with the cable release, and bingo, they took their own shots.”
The legal issue at hand is whether or not Slater owns any copyright interest in the photos, even if the animal pressed the shutter on his camera.
Under the Copyright Act of 1976, copyright subsists in “original works of authorship.” That term is not defined in the statute. However, the legislative history to the Copyright Act says that phrase is “intended to incorporate without change the standard of originality established by the courts under the present copyright statute [the 1909 Copyright Act]. This standard does not include requirements of novelty, ingenuity, or esthetic merit, and there is no intention to enlarge the standard of copyright protection to require them.”
The Copyright Act contemplates ownership of copyright by individuals, groups of individuals and entities. There is nothing in the statute to suggest that it was designed to cover works created by animals, or machines acting alone. So, a painting “created” by an artistically-inclined dog would not protected by copyright, but the very same painting “created” by a two month old baby would be so protected.
In this case, to the extent that Slater created enough of a copyrightable interest (for example, setting the angle and lighting, composing the foreground and background of the photo, etc.) there could be a copyrightable interest owned by him. Under the Copyright Act, the work need only be an original work of authorship, and that is a fairly low hurdle to clear. If that turns out to have been the case, and the monkey’s aping of the photographer’s snapping of photos with the camera (sorry, I couldn’t resist) by pushing the remote camera button was nothing more than the equivalent of using a remote control to turn on a movie camera, then Slater may prevail. On the other hand, if Slater’s contribution to the process of capturing the monkey photo consisted purely of providing the equipment that was then “used” by the monkeys, no copyright interest was created.
Say “cheese” and pass the bananas.
What do former UCLA Bruin basketball star Ed O’Bannon, troubled actress Lindsay Lohan and deposed former Panamanian dictator and convicted drug lord Manuel Noriega have in common? All three are suing video game developers (and, in O’Bannon’s case, also the NCAA) alleging that their names and/or likenesses, i.e., their “rights of publicity,” have been unlawfully commercialized as part of a video game.
Five years ago, Ed O’Bannon, who was a star on UCLA’s 1995 national championship basketball team, filed a lawsuit against the NCAA and the Collegiate Licensing Company, alleging violations of the Sherman Antitrust Act and of actions that deprived him of his right of publicity. He agreed to be the lead plaintiff after seeing his likeness from the 1995 championship team used in a video game without his permission. Other notable athletes (such as Bill Russell and Oscar Robertson) later joined in the class action suit. In addition to the NCAA, the original defendants in the suit included video game giant Electronic Arts. EA and another original defendant, The Collegiate Licensing Company, agreed to a $40 million settlement to be dismissed from the case. The O’Bannon suit against the NCAA finally went to trial and recently concluded and is awaiting the judge’s verdict on the anti-trust claims.
Within the past month, actress Lindsay Lohan filed a lawsuit against the makers of the very successful “Grand Theft Auto” video games. In her suit, she claims the latest installment in the “GTA” series used her image for a character without her permission.
Just last week, it was reported that former Panamanian military strongman Noriega filed suit against Activision Blizzard, Inc. for using his name and depicting him as a “kidnapper, murderer and enemy of the state” in the top selling video game, Call of Duty: Black Ops II. Noriega’s lawsuit claims that the game’s portrayal of him and use of his name “translates directly into heightened sales” for Activision.
I should point out here that, despite Noriega’s allegations that his “reputation” has been damaged, he served 17 years in prison in the US on a drug-trafficking conviction and several years following that in French jails for drug trafficking and money laundering. He currently faces two 20-year sentences in Panama for the slayings of two political opponents in the 1980s.
So, this lawsuit really is NOT about his reputation. Like the O’Bannon and Lohan suits, it IS about the unauthorized commercialization of a famous person’s name and likeness—his “right of publicity.”
So what IS the “right of publicity?” In very broad terms, it is the right to prevent the commercial exploitation of one’s name, likeness and image. However, unlike copyright law, there is no single Federal law governing the right of publicity. Rather, it is a right that exists under various state laws. Right now, twenty-eight states recognize some form of the right of publicity, either by statue of under common law (“common law” is a term used for those laws which are laws or principles which derive their authority not from statutes but from historical precedents and the judgments and decrees of the courts recognizing, affirming and enforcing such laws). The following states have right of publicity statutes that superseded any common law right of publicity in those states: Indiana, Massachusetts, Nebraska, Nevada, New York, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Virginia and Washington. The following states do not have a right of publicity statute, but recognize the existence of the law under common law: Alabama, Arizona, Connecticut, Georgia, Hawaii, Michigan, Minnesota, Missouri and New Jersey. The following states have both right of publicity statutes and common law rights: : California, Florida, Illinois, Kentucky, Ohio, Texas, Utah and Wisconsin. Pennsylvania enacted a right of publicity statute in 2002, but the statute does not state whether or not its enactment superseded existing common law in that state.
It is important to keep in mind that these laws are NOT uniform and vary in several key areas: what aspects of identity are protected?; does protection extend after death of the personality?; how long does such protection last?; what remedies are available for misappropriation of the right of publicity?; does the individual have to be “famous” to have a right of publicity?; and is prior exploitation of the right of publicity a prerequisite for protection against others’ usage?
Because the law in this area varies from state to state, where the suits are brought can be very important. Most of these laws state that the protection afforded is for legal residents of that state, but even that is not uniformly applied. For example, New York’s right of publicity law states that it does NOT survive the death of an individual. On the other hand, under California law, the right of publicity survives for fifty years. Then there is Tennessee law, where the right of publicity survives in perpetuity (as long as the right continues to be exercised). So, one may choose to bring suit in Tennessee after the death of the celebrity because the law is more favorable in that state if there is some connection to Tennessee in the case (for example, the defendant is there or a substantial number of sales took place there), as opposed to a state that does not have a survivable right of publicity. If the celebrity is alive, they would attempt to bring such a suit only in a state that recognizes the right of publicity. This practice of filing where the law is more favorable is referred to as “forum shopping.”
Another key issue with all of these right of publicity laws is the legal balancing act between enforcing this property rights vs. allowing for free speech under the First Amendment. For example, if a use of a person’s name and likeness is in connection with news reporting or research or parody, the First Amendment would weigh very heavily in favor of allowing the use. Oftentimes, the courts are forced to weigh the competing interests of these two critical factors in determining whether or not to find a misappropriation of the right of publicity. What if, for example, a video game is a form of social commentary about a newsworthy individual such as Noriega?
Pennsylvania is a good example of the confusing state of this property right.
Pennsylvania’s right of publicity statute, which became effective in 2003, provides for a cause of action for any person whose name or likeness has commercial value and is used for any commercial or advertising purpose without the written consent of such person. Under Pennsylvania law, a “Commercial or Advertising Purpose” means the public use of a person’s name or likeness: a) on or in connection with offering for sale of a product, merchandise, goods, services or businesses; b) for the purpose of advertising or promoting products, merchandise, goods or services of a business; or c) for the purpose of fundraising. The right of publicity under Pennsylvania’s statute lasts during person’s lifetime and for 30 years following death. The rights can be enforced by: the person, the parent/guardian of the person, if a minor; or if deceased, by any party (including an entity) authorized in writing to license the commercial or advertising use of the person’s name and likeness during the person’s lifetime or by the person’s heirs.
Under Pennsylvania’s law, the right of publicity applies only to natural persons. For example, a CEO of a company has a cause of action if his name/likeness is misappropriated, but his corporate employer does not. Also, it does not apply to fictional characters. For example, there is no right of publicity recourse for taking the Lone Ranger image (although there may be copyright claims). Since Pennsylvania’s law only applies if the name or likeness used has “commercial value,” it might not protect the use of the name or likeness of people who are not famous. It is not clear from statute if “commercial value” must exist prior to the use of the name/likeness or can arise in context of the fame-creating event. No reported decisions interpreting this law exist yet.
There are also several key exceptions to Pennsylvania’s right of publicity statute. No action can be brought if: a person appears only as a member of the public and is not identified by name; the use is in connection with a news report (1st Amendment Issue); used for an “expressive work” which is defined as “a literary, dramatic, fictional, historical, audiovisual or musical work regardless of the communication medium by which it is exhibited, displayed, performed or transmitted” unless used for commercial or advertising purpose; a person’s name/likeness is used in connection with “an original work of fine art.” “Original work of fine art” is NOT defined under the statute. I call this the “Andy Warhol Exception” in honor of Pittsburgh’s native son who became famous for creating lithographs of famous people (ranging from Marilyn Monroe to Chairman Mao) without seeking permission to do so. Under many states’ laws, works such as this would be deemed to be right of publicity infringements, but not under Pennsylvania law.
Pennsylvania’s right of publicity statute, like the other states’ statues, is unique to Pennsylvania. Because the laws regarding the right of publicity vary so widely from state to state, this area of the law remains one of the most muddled in the entire area of intellectual property.
In a 6 to 3 decision, the United States Supreme Court, in the case of American Broadcasting Cos., Inc., et al. v Aereo, Inc., has just ruled that Aereo, an Internet service that allows customers to watch free broadcast TV programs on mobile devices, violates U.S. copyright laws. This case was closely watched by those in both the broadcasting and technology industries. At issue for the Court was whether or not the Aereo service constituted infringing ”public performances” of the Broadcasters’ copyrighted content or, instead, was an innovative technological end run around existing copyright law.
Among the rights owned by copyright owners under the Copyright Act of 1976, is the “public performance right.” The Act states that one of the ways to perform a work publicly is to “transmit…the work…to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”
Aereo, which started about two years ago and now offers its service in eleven cities in the United States, is a service that allows its subscribers to watch television programs over the Internet at about the same time the programs are broadcast over the air. While cable television providers pay very large licensing fees to broadcasters to allow their content to be provided to their cable subscribers, Aereo does not pay the broadcasters any license fees. This enables Aereo to sell the service to its subscribers for as little as $8 per month, far less than what the cable TV services charge.
Shortly after the service was launched, the nation’s major broadcast networks filed a lawsuit claiming that Aereo illegally retransmitted their programs without paying for them. Lower federal courts issued contradictory rulings on Aereo’s legality.
Aereo argued that it was not engaged in the unauthorized public performance of the works because of the unique way its system was designed (which Aereo executives admitted was designed to take a technological end run around the public performance provision of the Copyright Act). Essentially, Aereo works this way: when a user chooses a broadcast program to watch, a single micro antenna, about the size of a dime, is assigned to receive the chosen station. The signal then is sent to a sector of a video recorder dedicated to that choice and then streamed to the individual Aereo customer. Aereo claimed that this technological arrangement did not create “public performances” of the works. Aereo argued that even if thousands of users were watching the same program, it merely created thousands of individual performances, not a public performance.
In response to this, the broadcasters argued that the proper test of a “public performance” under Copyright Act was “whether an alleged infringer is transmitting a performance to the public, not whether multiple people are capable of receiving each transmission.” They further argued that even if the use of thousands of individual antennas, as utilized by Aereo, might not clearly be a public performance, the clear intent of Congress when it enacted the copyright act was clear.
Prior to the enactment of the Copyright Act, community access television (CATV), the forerunner of today’s cable TV systems, in a series of ruling by the Court, was held not to be publicly performing broadcast television programs. However, Congress made it clear, when the Copyright Act was revamped in 1976, that cable television providers were publicly performing works and would have to pay license fees. This statutory change negated the Court’s prior rulings. The broadcasters in the Aereo case argued that the Aereo service, despite its technological distinction, is no different than the services offered by a cable television provider which Congress clearly has stated must involve the payment of a license fee to the broadcasters.
The 6-3 majority of the Court agreed with the broadcasters and held that Aereo performs the works publicly within the meaning of the Copyright Act. The Court cited Congress’ intent regarding CATV systems and said that “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the [Copyright] Act to amend.”
In a lengthy dissent, Justice Scalia argued that the Aereo service is, from a legal analysis standpoint, akin to a copy service where one takes materials to a place like Kinko’s and chooses which copies to make, without the control of Kinko’s. This, he argued, is different from a video-on-demand service (like Netflix—which pays licensing fees), which arranges and offers a menu of available content (and is considered to be “publicly performing” such works). Scalia stated that, while the Court may not like what Aereo is doing, it appears to fall within the technological loophole in the current Copyright Act which requires a “public performance” in order to be prohibited. As such, Scalia and the other two dissenting Justices felt that it is up to Congress, not the Court, to remedy that situation.
As a result of this decision, which the Court stated should be read narrowly (there was concern that a decision adverse to Aereo could impact the legality of other cutting edge technologies such as cloud storage services), Aereo likely will shut down. Justice Breyer, writing for the majority, stressed that it was a limited decision that will not “discourage the emergence or use of different kinds of technologies.”
Billions of dollars were at stake in this case. For Aereo, it truly was a “bet the business” case. Its very future was at stake. Broadcasters feared a ruling in favor of Aereo could undercut the legal foundation that currently obligates cable and satellite services to pay very substantial copyright fees to carry network programs, a key source of revenue for the broadcasters.
Had the decision gone the other way, the broadcasters had threatened to remove much of the content that is now available as free over the air broadcasts (such as major sporting events) and would have moved broadcasts exclusively to pay cable services.
Given the ideological makeup of the Court, I thought that there was a good chance that the Court would have sided 5-4 with Aereo, on the theory that the Copyright Act loophole should be closed by legislative branch, not by the Court. However, this decision shows that it is never a safe bet to assume how this Court will rule on any case before it.