Recently, the US Supreme Court held that Aereo Inc’s innovative business model of airing cable signals through tiny personal antennae to individual subscribers over the internet violated the copyright of broadcasters. We have previously carried a Guest Post by Mr. Manoj Menda summarising the decision, here. Along the same lines, in Hyderabad, the police busted what the media has called a “satellite TV piracy racket” operating under the name Jadoo TV. In this post I look at the Aereo decision and its implications, and compare it to the Jadoo TV incident, asking whether they both can be treated similarly. The key question in the Aereo decision was whether Aereo’s activities amounted to a ‘public performance’ of the broadcasters’ copyrighted material.
The Technology in Aereo
Aereo’s operating model is that it lets users each subscribe to a tiny antenna that is about the size of a large coin, for a small monthly ‘rent’. These antennae are located conveniently close to New York’s biggest transmission tower, allowing it to pick up broadcasted signals emitted by services such as ABC, NBC, Fox, etc. Aereo then transcodes and relays these signals through the antennae to the subscribers, over the internet It must be noted that unlike a cable service provider, the signals are not transmitted to the subscribers all the time; the subscribers must log in and can opt for what they want to view. Further, Aereo also offers the service of ‘recording’ TV shows and storing them in the cloud, which the subscribers can watch later (the technology lovers reading this can read a more detailed overview of how Aereo works, here).
Is this ‘Public Performance’?
A bit of US Cable-and-Copyright-Law history is due here. Prior to 1976, the US Supreme Court had held that re-transmitting broadcast signals did not infringe on copyright as it did not constitute a performance. In order to prevent cable companies from broadcasting content for free, the law was amended in 1976 to make the definition of ‘perform’ broader- to ensure that cable companies had to pay a license fee to broadcast content (the cost obviously being transferred to consumers). Further, for performance to be infringing, it had to be transmitted to the public. So the key question in the Aereo case is whether the technology used by it amounted to a ‘public performance’.
Aereo argued that this was not a public performance because any one antenna was only transmitting to one person. There is essentially no difference between a person purchasing an antenna and catching the (free) over-the-air signals by themselves, and a person allowing Aereo to make the investment in the antenna for a fee and serving the same purpose. By using millions of tiny antennae, Aereo has innovatively found a way to comply with copyright law.
However, the Supreme Court did not look at it this way. They looked at the totality of ‘facts and circumstances’ to conclude that Aereo’s function was essentially the same as that of a cable company. Hence, if a cable company has to license the copyrighted content in order to lawfully broadcast it, so must Aereo. As Techdirt put it , the Court has used the classic logic of ‘If it looks like a duck and quacks like a duck, it must be a duck’. That is, if you generalise enough, Aereo is cable company.
The implications of this decision are stark. One implication is that the Court’s superficial analyses in relation to technical issues such as in this case may create a chilling effect for innovators who rely on exceptions and creative interpretations of the law in order to innovate. This decision takes us back to the time when Napster was ruled illegal; Napster was clearly a response to the outdated and oppressive models of copyright that recording companies exploited at the cost of both consumers and artists. The USA’s cable companies today are notorious for forming an oligopolistic system which forces consumers to overpay for bundled services that most of them will never buy were they unbundled. Aereo is ( or should I say was) a response to this system. Interestingly, it was the more conservative of the SCOTUS judges (namely Justice Scalia) who warned against the chilling effect on innovation by virtue of this judgment.
A more immediate concern is the implication of this decision on Cloud Computing. If a million people uploaded a (legally downloaded) movie on to the cloud and each played it back to their systems, would the Cloud be liable for copyright infringement? After all, using Aereo decision’s logic, copyrighted content is being played back to the public (notwithstanding that each viewer is personally accessing it through an individual account) and is therefore a ‘public performance’. In the judgment, it is mentioned that the reasoning above applies only to the Aereo case, but we cannot ignore the dangerous effects of the precedent it is setting.
The Case of Jadoo TV
Recently, the Hyderabad police arrested a few persons involved in a “Satellite TV piracy racket”. Jadoo TV’s owners would supply set-top boxes to mainly to NRIs who wanted to watch Indian television. Jadoo TV would subscribe to various satellite DTH TV services , decrypt them and transmit them to the Jadoo TV web portal, which could be streamed on TV through the set-top box. Jadoo TV was evidently not an authorised licensee of the content it was broadcasting. This is exactly the kind of service that would be illegal and can be likened to cable service provider that Aereo was likened to. One may argue that Aereo is doing exactly what Jadoo did but with separate antennae and they must not be allowed to take advantage of such a ‘trick’. However, an important distinction between the two is that apart from using separate antennae, Aereo’s users had to ‘tune in’ to the service themselves in order to catch the signals. Another major distinction is that Jadoo TV did not even allegedly pay for the DTH TV Services that were broadcasted over the website, while Aereo’s antennae picked up signals that were free to pick up.
Aereo’s operations must be understood in the context of the oligopolistic behaviour of cable companies in the USA. American Cable Companies have been receiving very low consumer ratings as the companies bundle together unnecessary services and charge an exorbitant fee for it. Further, the lack of competition (with the proposed Time Warner-Comcast merger potentially reducing competition further) gives these companies leeway to get away with bad service. Aereo, by providing customers antennae to catch signals from, was essentially doing away with the ‘middle man’ (Cable Company). Copyright Law is supposed to incentivise innovation and Aereo’s efforts had to be commended for innovating within the bounds of the law. On the other hand, Jadoo TV’s activities not only took place under different circumstances, it was also a direct case of infringement by broadcasting content in an unauthorised manner.
(I thank Swaraj for his comments on this post)