Two months after broadcasters failed to convince a judge to shut down the streaming television service Aereo for violating copyright law, they are about to embark on the next phase of their battle. On Friday, they are expected to file briefs in the U.S. Court of Appeals for the Second Circuit. Much is riding on the outcome of the appeal, filed by the Fox Broadcasting Company, Disney/ABC Television Group, CBS Broadcasting Inc., and others. The broadcasters’ failure to stop the company—which delivers local and network TV signals to consumers in New York City over the Internet and is backed by media baron Barry Diller—is not only an issue for them in New York, but also in Los Angeles, where billionaire entrepreneur Alki David has started an Aereo copycat company called BarryDriller.com. The broadcasters have also sued David’s company for copyright infringement. Both cases, and several that have come and gone before it in the past few years, demonstrate how state and federal law, which is expected to be reasoned and considered and therefore moves slowly, cannot keep up with the rapid pace of technological innovation. The broadening battle stems from District Judge Alison Nathan’s opinion, issued in July, in which she refused to grant a preliminary injunction to stop Aereo from offering its online streaming service. Her decision hinged on her interpretation of a 2008 decision by the U.S. Court of Appeals for the Second Circuit, Cartoon Network LP v. CSC Holdings Inc. (a case often known as Cablevision). In that case, the court ruled that a Cablevision remote digital video recording (DVR) service did not “publicly perform” TV shows for purposes of the U.S. Copyright Act and therefore did not infringe the networks’ copyrights. Cablevision’s remote DVR service allowed consumers to make an individual copy of a TV show, store it on Cablevision servers, and then view it at a later time. The court found that because Cablevision streamed each individual copy of a show directly to the subscriber who copied it, infringement did not take place. Aereo, in an effort to skirt copyright claims, carefully applies the Cablevision ruling in its business model. Rather than just one antenna, it uses thousands of tiny, dime-size individual antennas to capture the TV signals that it streams. When a user is logged in, Aereo designates one of the antennas to that user and starts recording the chosen channel as a unique copy on a hard drive, Cablevision-style. The user can then stream the stored content over the Internet. Aereo’s strategy has worked—at least so far. Lawyers for Aereo, represented by Goodwin Procter and Winston & Strawn, applied a Cablevision defense in court. And Judge Nathan was convinced, making it clear in her opinion that she was “constrained” by the Second Circuit’s Cablevision decision. The decision prompted Alki David, known as a somewhat eccentric media personality, to make his move. Three years ago, David launched a streaming television service called FilmOn, but was promptly sued by broadcasters. In July, he reached a confidential settlement with the broadcasters in which he agreed to pay them $1.6 million to end the FilmOn lawsuit and accepted a permanent injunction. But almost immediately, he decided the Aereo decision gave him a green light to copy the Aereo model and start another streaming company, BarryDriller.com. That company, which David has said he named to both honor and “drill” Aereo’s Barry Diller, prompted the broadcasters to once again sue. They have a hearing regarding discovery scheduled this week and are seeking a preliminary injunction. Back in New York, the Second Circuit will again decide a case that could have repercussions for broadcasters for years to come. Lawyers for the broadcasters are likely to argue in their briefs that Judge Nathan took too narrow a view, looking solely at the back-end transmission aspect of Aereo’s service. And if the complaint against BarryDriller.com is any guide, they may also stress that Cablevision was a licensed transmitter of broadcasts, whereas Aereo does not hold a license. “No amount of technological gimmickry by Defendants changes the fundamental principle of copyright law that those who wish to retransmit Plaintiffs’ broadcasts may do so only with Plaintiffs’ authority,” lawyers for Fox, represented by Jenner & Block, wrote in the complaint filed in Los Angeles. If the three-judge panel on the Second Circuit doesn’t buy the broadcasters’ arguments and agrees with the District Court ruling, the broadcasters still have another avenue available: They can ask to have the case heard en banc, before a larger panel of the Second Circuit. The broadcasters are hopeful that the appellate court will make this new threat go away—a sentiment made evident when Disney/ABC issued a statement after the District Court ruling: “The main event in this case has always been a decision by the Appeals Court, the company said. ”We remain confident in our position and look forward to the opportunity to present our argument to that Court.”
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