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Utah District Court Issues First Preliminary Injunction Against Aereo

By Barry Werbin

In a marked turn of events for Aereo, the disruptive provider of dime-size antennae over-the-air rebroadcast services, on February 19, 2014, the Utah federal District Court (Judge Dale Kimball) became the first court to issue a preliminary injunction against Aereo, finding that it infringed the plaintiff broadcasters' public performance copyrights in the transmissions of their broadcasts under the Copyright Act's Transmit Clause. The court barred Aereo from operating within the Tenth Circuit, which covers the states of Utah, Colorado, Montana, New Mexico, Oklahoma and Wyoming. The case, which consolidates two separately filed actions in Utah by different sets of broadcasters, is Community Television Of Utah, LLC v. Aereo, Inc., No. 2:13CV910DAK. A copy of the decision can be accessed here: Aereo Utah.pdf.

Aereo was sued in the Utah cases after being victorious before the Second Circuit (albeit with a strong dissent from Judge Denny Chin) in WNET v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013), cert. granted sub nom ABC, Inc., et al, v. Aereo, Inc., Sup. Ct. (Jan. 10, 2014). The Supreme Court will hear argument on April 22nd and a decision is expected by June. Aereo also won before the District Court of Massachusetts in Hearst Stations Inc. v. Aereo, Inc., 2013 WL 5604284 (D. Mass. Oct. 8, 2013), which is on appeal to the First Circuit.

On the other hand, another Aereo-type tiny antenna service, FilmOnX (formerly Aereokiller), had a resounding defeat in the Central District of California, in a case now sub judice before the Ninth Circuit, where FilmOnX is presently subject to a preliminary injunction. FOX Television Stations, Inc. v. BarryDriller Content Systems PLC, 915 F.Supp. 2d 1138 (C.D. Cal. 2012), appeal pending. FilmOn also lost in the District of Columbia, where the court issued a nationwide preliminary injunction, excluding the Second Circuit. Fox Television Stations, Inc. v. FilmOn X LLC, 2013 U.S. Dist. LEXIS 126543 (D.D.C. Sept. 5, 2013).

In all these cases, including the new Utah decision, the core issue is whether these types of retransmission services violate the Transmit Clause under Section 101 of the Copyright Act, which defines a "public performance" -- one of the exclusive rights reserved to a copyright owner -- as the right "to transmit or otherwise communicate a performance or display of the work to a [public place] 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."

The Utah court characterized Aereo's retransmissions of over-the-air broadcasts as being "indistinguishable [to] a cable company" and that its services fall "squarely within the language of the Transmit Clause." The court examined the holdings of all these prior decisions, but because there is no existing Tenth Circuit law on the issue, it conducted its own analysis. In doing so, it concluded that "California and D.C. district court cases as well as Judge Chin's dissent in the Second Circuit case are the better reasoned and more persuasive decisions with respect to the proper construction of the Transmit Clause and its application to Aereo's operations."

In particular, the court examined the "plain language" of the Transmit Clause and the applicable definitions in the Copyright Act, and concluded that such "definitions in the Act contain sweepingly broad language and the Transmit Clause easily encompasses Aereo's process of transmitting copyright-protected material to its paying customers. Aereo uses 'any device or process' to transmit a performance or display of Plaintiff's copyrighted programs to Aereo's paid subscribers, all of whom are members of the public, who receive it in the same place or separate places and at the same time or separate times."

The court further examined the legislative history behind the Transmit Clause. In particular, it cited to Congress' intent in the 1976 Act to expressly overrule prior Supreme Court decisions, which had validated community antenna television systems (precursors to modern cable systems) under the 1909 Copyright Act and to "bring a cable television system's transmission of broadcast television programming within the scope of the public performance right."

Aereo relied on the Second Circuit's opinion and that decision's reliance, in turn, on the Second Circuit's earlier opinion in the Cablevision case, Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), which had upheld a remote DVR system made available to end-users who already subscribed to Cablevision's services (and where Cablevision was otherwise paying legally required retransmission fees to broadcasters). The Utah court, however, said "the Second Circuit [in Cablevision] proceeded to spin the language of the Transmit Clause, the legislative history, and prior case law into a complicated web" by focusing "on discerning who is 'capable of receiving' the performance to determine whether a performance is transmitted to the public." Judge Kimball noted that "such a focus is not supported by the language of the statute. The clause states clearly that it applies to any performance made available to the public," regardless of whether such performance was public or private, and "encompass all known or yet to be developed technologies." Judge Kimball also faulted the Second Circuit in Cablevision for effectively changing the wording of the Transmit Clause from "members of the public capable of receiving the performance" to "members of the public capable of receiving the transmission."

In assessing the legislative history, Judge Kimball also quoted freely from Judge Chin's dissent in the Second Circuit's decision, and concluded that "[b]ased on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs' programs. Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo's device or process transmits Plaintiffs' copyrighted programs to the public."

Despite a dispute as to whether any financial harm would befall the plaintiffs during the pendency of the action, the court held that preliminary injunctive relief was nevertheless warranted because, from the perspective of irreparable harm, "if Aereo were permitted to continue to infringe Plaintiffs' copyrights... Aereo's infringement will interfere with Plaintiffs' relationships and negotiations with legitimate licensees, impede and effect Plaintiff's negotiations with advertisers, unfairly siphon viewers from Plaintiffs' own websites, threaten Plaintiffs' goodwill and contractual relationships with Plaintiffs' licensed internet distributors, lose their position in the competitive marketplace for Internet content, and cause Plaintiffs to lose control of quality and potential piracy of its programming."

With respect to the balance of harm element, because the court limited the preliminary injunction only to the Tenth Circuit, "the harm to Aereo's business is limited only to its ability to expand into the geographic area of the Tenth Circuit. The harm to Aereo's business, therefore, will not put Aereo out of business, it merely impacts its expansion."

Finally, the court found its ruling was consistent with the public interest because "[t]he public has an interest in continuing to receive unique, local programming provided by the Plaintiffs. Original local programming, covering local news, sports, and other areas of interest, costs millions of dollars to produce and deliver to the public and the public interest plainly lies in enjoining copyright infringement that threatens the continued viability of such local programming."

Post-script: Aereo promptly moved to stay enforcement of the injunction pending its appeal to the Tenth Circuit, particularly in light of the pending Supreme Court proceeding. In a February 25th order, the court denied Aereo's motion to stay entry of the preliminary injunction but granted a 14-day temporary stay pending the Tenth Circuit's ruling on an emergency motion to stay.

More to come!

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This page contains a single entry from the blog posted on February 28, 2014 1:38 PM.

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