JURIST Guest Columnist Antonio Del Mastro, Northeastern University School of Law, Class of 2014, discusses the possible interpretations of the Copyright Act that the US Supreme Court is tasked with choosing in American Broadcasting Companies, Inc. v. Aereo, Inc., which will determine whether or not Aereo’s business model is a clever innovation or a patent infringement of copyright …

The case

The Supreme Court recently surprised many when, on January 10, 2014, it granted review to a particularly thorny copyright case coming out of the Second Circuit: ABC, Inc. v. Aereo, Inc. The surprise stems from the relatively undeveloped case history behind the issues at hand. Typically, the Supreme Court will wait for a split in the circuits before granting review to a particular matter&#8212allowing an opportunity for the lower courts to develop multiple analyses of the underlying issues&#8212but the stakes in this case may have prompted faster action. Certainly Aereo’s equally surprising move to agree [PDF] to the review encouraged the court’s decision.

Aereo

Aereo, the respondent, is an upstart technology service company based in New York City. It offers its paying subscribers the capability to view local broadcast television stations through the Internet. The manner in which it achieves this, however, is the core subject matter of the litigation.

Aereo’s service works by linking its subscribers to an array of antennas on a motherboard. Importantly (for reasons seen below), each subscriber is only linked to a single antenna at any time; although each assignment to an antenna is both dynamic and temporary. The antennas themselves are small, zig-zagged structures about the size of a dime. This allows Aereo to house thousands of inter-connected antennas and antenna arrays in a relatively small area of space.

The Dispute

According to Aereo, its service model is akin to facilitating the connection between a user and the user’s own, private television antenna for the authorized reception of local broadcasts. The petitioners in this case, the American Broadcasting Company (ABC) and its affiliates, disagree. They say that Aereo’s service is directly analogous to the retransmission of a broadcast signal by a television provider, an act which&#8212under the provisions of the Cable Television Comsumer Protection and Competition Act&#8212requires permission from the broadcaster. As one might guess, the “permission” in question is granted in the form of a license and is conditioned upon the payment of an appropriate fee. In fact, retransmission fees can account for a sizeable portion of a broadcaster’s revenue.

It’s not just that broadcasters are concerned about losses of potential revenue, however. What is actually at stake in Aereo is the entire compensation model for the broadcast television industry. In other words, broadcasters are not solely concerned with fees that Aereo might be avoiding, but with the consequences that any green-light to Aereo’s business model might have on their means of generating revenue.

The prime basis for a broadcaster’s revenue stream is the bundle of intellectual property rights vested in the content that it provides. Not only do broadcasters use the exclusivity of these rights to charge retransmission fees, but they also leverage the control of these rights when negotiating fees with advertisers. Under the Copyright Act, a broadcaster’s content is classified as an “audio visual work” and § 106 of the act protects the broadcaster’s exclusive right to “publicly perform” that work. ABC and its affiliates claim that Aereo’s service is a violation of the exclusive right to publicly perform their proprietary content. Aereo claims that it is not publicly performing anything; it is merely facilitating each individual subscriber’s lawful viewing of the broadcast transmission. Therefore, the key question before the Supreme Court is: “Does Aereo’s service constitute a ‘public performance’?” Even though the question seems simple, the answer is not.

“Public Performance” . . . Right?

According to § 101 of the Copyright Act, the performance of a work “publicly” means:

(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or 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.

Although Aereo’s service model avoids the type of public performance described in clause (1), the petitioners assert that the model is nonetheless a violation of clause (2). This clause is known as the Transmit Clause.

The Transmit Clause is the fulcrum of dispute in the Aereo case and the source of its uncertainty. On the surface, it seems that Aereo’s system does indeed “transmit” the broadcaster’s “performance or display” to “members of the public,” even though they are in “separate places” and at “same [or] different times.” However, Aereo points out that this conflates the term “performance or display of the work” with the work itself (rendering the phrase redundant). Because courts must seek to avoid “surplusage” [PDF] in matters of statutory interpretation, such an interpretation is impermissible. The only way to properly make sense of the Transmit Clause, says Aereo, is to understand the term “performance or display” (that “the public” is “capable of receiving”) as the actual “transmission” of the work. In this technical reading of the statute, Aereo is in the clear because each actual transmission of the broadcast content is only received by an individual antenna and transmitted separately to an individual user. No public performance occurs.

“Wait a minute,” rejoin the petitioners [PDF], “it would be a miscarriage of justice to arrive at such an economically devastating conclusion merely due to a linguistic technicality!” (paraphrasing). They urge the Supreme Court to look at the functionality of Aereo’s service. According to ABC, the purpose of the Transmit Clause was to protect legitimate copyright holders from unauthorized retransmissions of their works. And doesn’t the technical argument indeed seem a little ridiculous when one takes a step back to see that Aereo’s arrays of little antennas are actually functioning similarly to a single, giant transmitter? Especially so if one considers that one single transmitter connected to multiple recipients would indeed constitute a violation of the Copyright Act? According to this view, the term “performance or display” refers to the content of the transmission. Because the content is transmitted to the public, the performance is “public” under the statute.

A Line In the Sand

Ultimately, the dispute between the parties boils down to the appeal of either the technical or functional argument, which makes the whole question seem a bit like a Gestalt image. Both interpretations make sense and have a supportive rationale, so other factors must necessarily contribute to the court’s determination in order to break the stalemate.

It is hard, then, to even guess how the Supreme Court will approach Aereo. As mentioned above, the issues in this case have not been fully developed in the lower courts. For example, the petition for certiorari doesn’t even challenge the digital reproductions necessary for Aereo to transmit the broadcast signal to its users; a potentially literal violation of the petitioners’ copyright.

On the one hand, Aereo seems to have the better argument regarding the letter of the law. Indeed, commentators have pointed out the paradoxical fact that the petitioners have cited Aereo’s attempts to follow the law as evidence of its intent to bypass the law. On the other hand, the petitioners’ functional argument is compelling because of how potentially disruptive Aereo’s model is to the broadcast industry.

If the Supreme Court gives precedence to the principals of statutory interpretation (as the US District Court for the District of Massachusetts did in Hearst v. Aereo) then Aereo’s technical argument will likely win the day. But this leaves the annoyance of the functional argument, and the real economic fallout pressing in from the periphery. History has shown that the court is not blind to significant public policy considerations. Even if the Supreme Court finds in Aereo’s favor, ABC and other broadcasters have indicated (in the petition and elsewhere) that such a finding will force cable providers to make the economically rational choice of creating their own Aereo-type service to continue offering broadcast programming without the obligation of paying the retransmission fee. As this and related revenue streams dry up, the broadcasters claim, it will no longer be economically viable to even provide broadcast television at all. If these assertions are true, a victory for Aereo might erode the very service it hopes to provide.

There is reason to believe, however, that these claims are merely puffed-up speculation. In either case, the Supreme Court will have to draw a line in the sand somewhere. In fact, this is likely why they have chosen to review the case in the first place. The issues in Aereo are, at bottom, the progeny of ambiguities or inadequacies in the Copyright Act. Because copyright is so fundamental to intellectual-property-based industries, this fact inextricably links the policy considerations in Aereo to the technical issues of statutory interpretation. The court may turn a blind eye to these considerations, but it is not likely to do so. In the end, these extraneous factors will undoubtedly determine the angle from which the court will view the textual arguments.

Antonio Del Mastro holds a B.A. in Italian Studies in Tufts University. He has worked for the Massachusetts Attorney General, General Counsel of Northeastern University, and the Technology Department of Northeastern University, and is working in the legal department for BJ’s Wholesale Club.

Suggested citation: Antonio Del Mastro, Quagmire of Statutory Interpretation at Center of ABC v. Aereo Copyright Case, JURIST – Dateline, Mar. 1, 2014, http://jurist.org/dateline/2014/03/antonio-del-mastro-copyright.php