In the latest, but not unexpected, development in the ongoing Aereo saga, the United States District Court for the Southern District of New York last week rejected Aereo’s contention that it is a “cable system” eligible for the Copyright Act’s cable compulsory license and has granted the broadcast plaintiffs’ request that a nationwide preliminary injunction be entered against Aereo’s retransmission of over-the-air television programming while that programming is still being broadcast. In a separate, but potentially related development, Aereo recently urged the FCC to find that Internet-based services are “multichannel video programming distributors” (“MVPDs”) for purposes of the Communications Act. However, it is unclear how Aereo would benefit from such a ruling.
The conventional wisdom is that the Judge Nathan’s decision is unassailable and will be the final nail in Aereo’s coffin absent Congressional action amending the Copyright Act to provide Aereo with a compulsory license. Although Congress is likely to take up “must pass” legislation reauthorizing the satellite compulsory license before the end of the year, most observers believe that Aereo has little chance of persuading Congress to address its issues in that legislation. Moreover, even if the decision leaves the door slightly ajar for Aereo to provide a remote storage DVR service, it is questionable whether such a broadcast-only RS-DVR service would have much consumer appeal – for example, it would mean viewers could not watch a live sporting event or other live programming (e.g., the Academy Awards) before the program was over.
Judge Nathan gave Aereo and the broadcasters two weeks to submit a joint letter outlining how the case should proceed. There already has been extensive pre-trial discovery and the court indicated that it would set a rapid schedule for completing discovery so that the case could proceed to a final determination as to whether Aereo should be permanently enjoined from operating its live/near live service. Thus, we should learn relatively quickly what Aereo’s next move will be.
Lastly, an additional development that should be mentioned is the acknowledgment by the FCC that it is considering issuing a Notice of Proposed Rulemaking that would recommend treating Internet-based “linear” video programming distribution services as “multichannel video programming distributors” under the Communications Act. Despite the fact that this would mean a service such as Aereo would need to obtain retransmission consent from the broadcasters (separate and apart from needing a copyright license), Aereo has made the rounds at the FCC urging the adoption of such a rule. At first blush, it seems odd that Aereo would support the characterization of its service as an MVPD, but it may be that Aereo believes, based on a letter written by the Copyright Office after the Supreme Court decision was issued, that a decision by the FCC treating an Aereo-like service as an MVPD would improve its chances of being deemed a cable system for copyright purposes. But notwithstanding the Copyright Office’s somewhat perplexing reference to the FCC’s MVPD proceeding, there is no compelling reason for either the Office or any court to find that Aereo is entitled to the cable compulsory license simply because it has been held to be an MVPD by the FCC. Other services, most notably DBS, are MVPDs under the Communications Act but not cable systems for purposes of the Copyright Act.
While Aereo apparently supports the adoption of a rule under which it would be deemed an MVPD when it provides live/near live broadcast retransmissions, Aereo also has argued to the FCC that the MVPD definition should not apply to services that offer consumers access to programming on an on-demand or “non-linear” channel format. This might suggest that Aereo has not ruled out continuing its operations in a purely remote storage DVR format. If it does so, however, it is likely to face a new copyright infringement complaint asserting, among other things, that it is unlawfully making copies of the broadcasters’ programming. A case raising that issue could reopen the question, resolved in favor of Cablevision in the RS-DVR case, as to whether the copies of copyrighted programming made in connection with the operation of a “cloud” type service are made by the service provider or by the user of the service.
Seth Davidson and Arthur Harding are partners in the Washington office of Edwards Wildman Palmer LLP, specializing in communications issues for the law firm. Glenn Pudelka is counsel in the intellectual property department of the Boston office.