The full U.S. Court of Appeals for the Second Circuit on Tuesday refused to reconsider an April ruling for upstart TV streaming company Aereo Inc. in its closely-watched copyright battle with the broadcast television industry. At least one broadcaster immediately vowed to continue the fight as far as the U.S. Supreme Court.
The decision is the latest setback for a coalition of major television networks, including CBS, NBC, ABC, and Fox, which had hoped to revive their bid to shut down Aereo's operations. And it marks yet another victory for Aereo's lawyers at Fish & Richardson, Winston & Strawn, and Constantine Cannon, even as the company expands into new markets.
Back in April, a Second Circuit panel ruled 2-1 that Aereo doesn't violate the networks' copyrights because its transmissions to subscribers are not public performances, which would require a license. Lawyers for the networks at Jenner & Block and Debevoise & Plimpton quickly petitioned for en banc review.
The Second Circuit declined to revisit the case Tuesday, but at least one judge on the court was clearly disappointed. In a long and detailed dissent, Circuit Judge Denny Chin declared Aereo's business model to be a "sham, designed solely to avoid the reach of the Copyright Act," and he warned that it was harming the television industry. The nearly 30-page dissent, which was joined by Circuit Judge Richard Wesley, followed Chin's earlier objections when he strongly dissented from the Second Circuit's April decision. In that dissent, Chin called Aereo's system a "Rube Goldberg-like contrivance, overengineered in an attempt to avoid the reach of the Copyright Act."
Aereo, which is currently available in New York, Boston, and Atlanta, and which has plans to expand to other U.S. cities, uses tiny, individually-assigned antennas to pick up free over-the-air broadcast television signals, and then transmits the video to its customers over the Internet. The set-up, as Chin and others have noted, appears specifically designed to avoid copyright liability.
Chin argued in Tuesday's dissent that Aereo's transmissions constitute a "public performance" under copyright law, meaning it cannot legally broadcast the networks' content without permission. "No matter how Aereo's system functions as a technical matter, because its unlicensed retransmissions reach the public, it is surely engaging in copyright infringement as Congress intended the statute to be interpreted," he wrote.
Chin also wrote that that Aereo's reliance on Cartoon Network, LP v. CSC Holdings Inc., known as the Cablevision decision, was "misplaced because, in my view, Cablevision was wrongly decided." In that case, the Second Circuit ruled that a DVR storage service operated by the cable operator Cablevision didn't infringe on the rights of copyright holders. Chin was the district court judge in the Cablevision matter, and his ruling in the case was reversed by the Second Circuit.
Finally, Chin argued that that the court should have heard the case en banc because it raises "a question of exceptional importance."
Jenner & Block partner Steven Fabrizio, one of the lead attorneys for the broadcasters, could not be reached for comment. Aereo counsel R. David Hosp of Fish & Richardson said he was not authorized to speak for the company. In a statement, Fox said Tuesday's decision, while disappointing, was not unexpected. "We will now review our options and determine the appropriate course of action, which include seeking a hearing in the U.S. Supreme Court and proceeding to a full trial on the merits of the case," Fox said.
Aereo and the television broadcasters are engaged in legal battles on several fronts. Last week the broadcasters expanded their campaign, filing copyright infringement claims against Aereo in U.S. District court in Boston. And in May, Aereo sought a declaratory judgment of non-infringement against CBS Broadcasting Inc. and affiliates in New York.
The original case in U.S. District Court in Manhattan is expected to go to trial early next year.
