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12-2786-cv(Related case No. 12-2807-cv)
United States Court of Appeals for the
Second Circuit
WNET, THIRTEEN, FOX TELEVISION STATIONS, INC., TWENTIETH
CENTURY FOX FILM CORPORATION, WPIX, INC., UNIVISION
TELEVISION GROUP, INC., THE UNIVISION NETWORK LIMITEDPARTNERSHIP and PUBLIC BROADCASTING SERVICE,
Plaintiffs-Counter-Defendants-Appellants,
– v. –
AEREO, INCORPORATED, f/k/a BAMBOOM LABS, INCORPORATED,
Defendant-Counter-Claimant-Appellee.
––––––––––––––––––––––––––––––ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
BRIEF FOR PLAINTIFFS-COUNTER-DEFENDANTS-
APPELLANTS
Richard L. Stone
Amy M. Gallegos
JENNER & BLOCK LLP633 West 5th Street, Suite 3600
Los Angeles, California 90071(213) 239-5100
Paul M. Smith
Steven B. Fabrizio
Scott B. WilkensMatthew E. Price
JENNER
& B
LOCKLLP1099 New York Avenue, NW, Suite 900
Washington, DC 20001(202) 639-6000
Attorneys for Plaintiffs-Counter-Defendants-Appellants
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i
CORPORATE DISCLOSURE STATEMENT
1. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant WNET is a non-profit education corporation
chartered by the Board of Regents of the University of the State of New York, has
no parent corporation, and there is no publicly-held corporation that owns more
than 10% of its stock.
2. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant THIRTEEN (formerly Educational
Broadcasting Corporation) is a non-profit education corporation chartered by the
Board of Regents of the University of the State of New York. It is wholly-owned
by its parent corporation, WNET, a non-profit education corporation chartered by
the Board of Regents of the University of the State of New York.
3. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant Fox Television Stations, Inc. is a subsidiary of
News Corporation, a publicly traded U.S. corporation. No publicly held company
owns 10% or more of News Corporation stock.
4. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant Twentieth Century Fox Film Corporation is a
wholly-owned subsidiary of Fox Entertainment Group, Inc. The parent of Fox
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ii
Entertainment Group, Inc. is News Corporation, a publicly traded U.S. corporation.
No publicly held company owns 10% or more of News Corporation stock.
5. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant WPIX, Inc. is a wholly-owned subsidiary of
Tribune Broadcasting Company, which in turn is a wholly-owned subsidiary of
Tribune Broadcasting Holdco, LLC, which in turn is a wholly-owned subsidiary of
Tribune Company, which is privately held.
6. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant Univision Television Group, Inc. is wholly-
owned by PTI Holdings, Inc., which is itself wholly owned by Univision Local
Media, Inc. Univision Local Media, Inc. is wholly-owned by Univision
Communications Inc. Univision Communications Inc. is wholly owned by
Broadcast Media Partners Holdings, Inc., which is itself wholly owned by
Broadcasting Media Partners, Inc. None of the above entities are publicly traded.
7. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure,
the undersigned certifies that Appellant The Univision Network Limited
Partnership is owned by Univision Communications Inc. and Univision Networks
& Studios, Inc. Univision Networks & Studios, Inc., is itself wholly-owned by
Univision Communications Inc. Univision Communications Inc. is wholly owned
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iii
by Broadcast Media Partners Holdings, Inc., which is itself wholly owned by
Broadcasting Media Partners, Inc. None of the above entities are publicly traded.
8. Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the
undersigned certifies that Appellant Public Broadcasting Service is a non-profit
District of Columbia corporation with no parent corporation and that there is no
publicly held corporation that owns more than 10% of its stock.
/s/ Paul M. SmithPaul M. Smith
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TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT ......................................................... i TABLE OF CONTENTS ......................................................................................... iv TABLE OF AUTHORITIES ................................................................................... vi JURISDICTIONAL STATEMENT .......................................................................... 1 STATEMENT OF THE ISSUES............................................................................... 1 INTRODUCTION ..................................................................................................... 3 STATEMENT OF THE CASE ..................................................................................7 STATEMENT OF FACTS ........................................................................................8
A. Public Performance Rights Under The Copyright Act. ...............................8 B.
The Aereo System ...................................................................................... 11
1. The Aereo Business Model ..................................................................... 11 2. The Technical Design of the Aereo System ........................................... 13 3. Aereo and Cablevision ............................................................................ 15
C. The District Court’s Decision .................................................................... 17 SUMMARY OF ARGUMENT ............................................................................... 19 ARGUMENT ...........................................................................................................22
I. Standard of Review........................................................................................ 22 II. The District Court Erred in Concluding That the Broadcasters
Are Not Likely to Succeed on the Merits. .....................................................23 A. Aereo Publicly Performs the Broadcasters’ Copyrighted
Programs When It Retransmits Them to Its Subscribers. .......................... 23 B. Aereo’s Argument That It Only Enables Consumers to
Receive, Record, and Retransmit Broadcast Programming IsWithout Merit. ............................................................................................ 26
C. Cablevision Does Not Control This Case. ................................................. 30 1. The District Court Misinterpreted the Significance of
Cablevision. ............................................................................................31 2. The District Court’s Reading of Cablevision Cannot Be
Squared With the Statute, Which Requires the Aggregationof Discrete Transmissions to Particular Members of thePublic. .....................................................................................................34
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D. If Upheld, the District Court’s Ruling Will Threaten theEconomic Viability of Broadcast Television, Contrary toCongress’s Intent. .......................................................................................42
III. The District Court Correctly Found That Aereo’s Service
Causes the Broadcasters to Suffer Irreparable Harm. ...................................44 IV. The Balance of Hardships Favors a Preliminary Injunction. ......................... 49 V. The Public Interest Favors a Preliminary Injunction. ..................................... 50
CONCLUSION ........................................................................................................51
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vi
TABLE OF AUTHORITIES
CASES
Arista Records, LLC v. Launch Media, Inc., 578 F.3d 148
(2d Cir. 2009) ........................................................................................................... 38
Cartoon Network LP, LLLP v. CSC Holdings, Inc.,536 F.3d 121 (2d Cir. 2008) ........................................ 2, 6, 17, 31, 32, 33, 36, 39, 40
Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984) .......................................... 9
CBS Broadcasting, Inc. v. FilmOn.com, Inc., No. 10-cv-07532, Orderto Show Cause for Prelim. Inj. With TRO (S.D.N.Y. Nov. 22, 2010),ECF No. 8 .................................................................................................. 4-5, 27, 38
Columbia Pictures Industries, Inc. v. Redd Horne, Inc., 749 F.2d 154(3d Cir. 1984) ..................................................................................................... 34-35
Columbia Pictures Industries, Inc. v. Aveco, Inc., 800 F.2d 59(3d Cir. 1986) ........................................................................................................... 35
County of Nassau v. Leavitt , 524 F.3d 408 (2d Cir. 2008) ...................................... 23
Fortnightly Corp. v. United Artists Television, Inc.,392 U.S. 390 (1968) ............................................................................................. 3, 30
Infinity Broadcast Corp. v. Kirkwood , 150 F.3d 104 (2d Cir. 1998) ................ 30, 37
Salinger v. Colting , 607 F.3d 68 (2d Cir. 2010) ................................................ 44, 48
Teleprompter Corp. v. Columbia Broadcasting Systems, Inc.,415 U.S. 394 (1974) ................................................................................................... 4
Twentieth Century Fox Film Corp. v. iCraveTV , No. Civ. A. 00-121,2000 WL 255989 (W.D. Pa. Feb. 8, 2000) .................................................... 5, 27, 39
United States v. American Society of Composers, Authors, &
Publishers, 627 F.3d 64 (2d Cir. 2010), cert. denied , 132 S. Ct. 366(2011) ....................................................................................................................... 38
Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc.,342 F. 3d 191 (3d Cir. 2003) .................................................................................... 39
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Warner Brothers Entertainment, Inc. v. WTV Systems, Inc.,824 F. Supp. 2d 1003 (C.D. Cal. 2011) ......................................................... 5, 27, 39
WPIX, Inc. v. ivi, Inc., No. 11-788-cv, __ F.3d __, 2012 WL 3645304(2d Cir. Aug. 27, 2012) ..................................................................................... passim
STATUTES
17 U.S.C. § 101 ...................................................... 5, 9, 10, 11, 23-24, 25, 26, 34, 35
17 U.S.C. § 106(4) ..................................................................................................... 9
17 U.S.C. § 111 ................................................................................................ 5, 9, 28
28 U.S.C. § 1292(a) ................................................................................................... 1
28 U.S.C. § 1331 ........................................................................................................ 1
LEGISLATIVE MATERIALS
H.R. Rep. No. 94-1476 (1976), reprinted in 1976 U.S.C.C.A.N. 5659 .. 4, 25, 43, 44
S. Rep. No. 94-473 (1975) ....................................................................................... 25
OTHER AUTHORITIES
Eriq Gardner, TV Broadcasters Settle Digital Lawsuit, but ‘Aereo-like’ Service Won’t Die (Exclusive), The Hollywood Reporter, Aug. 1,2012, available at http://www.hollywoodreporter.com/thr-esq/lawsuit-alki-david-barry-diller-filmon-357288 .................................................................... 42
II Paul Goldstein, Goldstein on Copyright § 7.7.2.2 (3d ed. Supp.2012), available on LEXIS ...................................................................................... 41
Aereo CEO plans pricing changes, expansion, Radio and Television
Business Report , RBR.comTVBR.com (July 27, 2012),
http://rbr.com/aereo-ceo-plans-pricing-changes-expansion/ (lastvisisted Aug. 13, 2012) ............................................................................................ 42
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JURISDICTIONAL STATEMENT
Plaintiffs-Appellants WNET, THIRTEEN, Fox Television Stations, Inc.,
Twentieth Century Fox Film Corporation, Inc., WPIX, Inc., Univision Television
Group, Inc., The Univision Network Limited Partnership, and Public Broadcasting
Service (collectively, “Plaintiffs” or “Broadcasters”) brought suit alleging, among
other things, a violation of the Copyright Act of 1976. The district court had
jurisdiction under 28 U.S.C. § 1331 (federal question).
The district court entered an order denying the Broadcasters’ application for
a preliminary injunction on July 11, 2012. The Broadcasters filed a notice of
appeal on July 12, 2012. This Court has jurisdiction under 28 U.S.C. § 1292(a).
STATEMENT OF THE ISSUES
1. Under the 1976 Copyright Act, retransmitting copyrighted broadcast
programming to the public without a license is copyright infringement. Congress
enacted this statute to overturn cases holding that it was not infringement for a
commercial enterprise to retransmit over-the-air broadcasts that viewers could
lawfully have accessed with their own equipment. Did the district court err in
finding that because viewers can lawfully access broadcast television on mobile
Internet devices using equipment available for purchase, Aereo’s unlicensed
Internet retransmission service is non-infringing?
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2. Under the Copyright Act, the transmission of a copyrighted work to
the public is a public performance, regardless of the device or process used to
make the transmissions, and regardless of whether members of the public receive
the performance in the same or separate places, or at the same or different times.
Thus, the statute requires that, in analyzing whether a performance is to the public,
individual transmissions must be aggregated. Did the district court err in holding
that because Aereo’s system uses hundreds of antennas and unique intermediate
copies to make the same broadcast programs available to any or all of its paying
subscribers – albeit through “individual” transmissions – Aereo does not publicly
perform the programming?
3. This Court held in Cartoon Network LLLP v. CSC Holdings, Inc
(“Cablevision”),1 that Cablevision, a licensed retransmitter, could offer a remote
DVR service without obtaining an additional license because, under the facts
presented, the transmission of a unique copy of a program from the remote DVR
server to the viewer’s home was not a public performance under the Copyright
Act. Did the district court err in holding that, under that decision, Aereo – which
has no license to retransmit whatsoever – is immune from copyright liability for its
unauthorized retransmissions of copyrighted broadcast programming simply
1 536 F.3d 121 (2d Cir. 2008).
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because it routes the retransmissions to its subscribers through “unique”
intermediate copies?
INTRODUCTION
Viewers can receive broadcast television programs over the airwaves for
free. Under the Copyright Act of 1976, however, a business engaged in the
commercial retransmission of those programs – for example, a cable company – is
deemed to engage in a “public performance” of that programming and must obtain
a license from the programs’ copyright owners. Defendant-Counter-Claimant-
Appellee Aereo, Inc. (“Aereo”) retransmits broadcast television to its subscribers
over the Internet. For $12.90 a month, an Aereo subscriber can receive any show
broadcast in the New York market on a smartphone, iPad, or other Internet-enabled
device, either watching “live” as the original broadcast is still airing or recording
the program for later viewing. Yet Aereo has no license whatsoever to engage in
such retransmissions.
One of Aereo’s justifications is that it is merely enabling its subscribers to
do what they would be able to do themselves with technology already on the
market – i.e., receive broadcast television shows on home antennas and transmit
those programs to themselves over the Internet using a device known as a
“Slingbox.” Yet that is exactly the argument that Congress rejected in the 1976
Act, which overturned a pair of Supreme Court cases premised on that very
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reasoning. See Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390,
398-99 (1968), and Teleprompter Corp. v. Columbia Broad. Sys., Inc., 415 U.S.
394, 413-14 (1974). Before the 1976 Act, the Court had ruled that a cable
company did not need a license to capture over-the-air broadcasts and retransmit
them to subscribers, because it was simply doing what viewers could have done for
themselves. Congress rejected that equivalency, reasoning that unlike individual
viewers, “cable systems are commercial enterprises whose basic retransmission
operations are based on the carriage of copyrighted program material and . . .
copyright royalties should be paid by cable operators to the creators of such
programs.” See H.R. Rep. No. 94-1476, at 88-89 (1976), reprinted in 1976
U.S.C.C.A.N. 5659, 5703-04. Thus, in the 1976 Act, Congress mandated that a
retransmission service engages in a public performance, requiring copyright
licenses, when it retransmits broadcast programming to subscribers, even if
separate retransmissions go to different people at different places and at different
times.
Applying that mandate, numerous courts have held that services that
transmit video, including broadcast programming, over the Internet without a
license infringe on the rights of copyright owners. See, e.g., WPIX, Inc. v. ivi, Inc.,
No. 11-788-cv, --- F.3d ---, 2012 WL 3645304 (2d Cir. Aug. 27, 2012) (“ivi”);
CBS Broad., Inc. v. FilmOn.com, Inc., No. 10-cv-07532, Order to Show Cause for
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Prelim. With TRO (S.D.N.Y. Nov. 22, 2010), ECF No. 8; Warner Bros. Ent’mt,
Inc. v. WTV Sys., Inc., 824 F. Supp. 2d 1003 (C.D. Cal. 2011); Twentieth Century
Fox Film Corp. v. iCraveTV , No. Civ. A. 00-121, 2000 WL 255989 (W.D. Pa. Feb.
8, 2000). In ivi, for example, this Court recently addressed a service that, like
Aereo, retransmitted broadcast signals over the Internet. In that case, ivi conceded
it was engaged in public performance requiring a license; its argument was that it
could exploit the statutory license provided by law to cable companies. See 17
U.S.C. § 111. The Court disagreed, ruling that the ivi service was infringing.
The district court here reached a contrary conclusion regarding Aereo based
primarily on the fact that, just prior to retransmitting a show to subscribers, Aereo
first makes a unique copy of at least several seconds of that show for each
subscriber, and then transmits to its many subscribers from those unique copies.
According to the district court, by interposing these intermediate copies in its chain
of retransmission, Aereo makes “private” what otherwise indisputably would have
been public performances requiring a license. That reasoning, however, ignores
the statute, which by its terms requires the aggregation of individual transmissions
to particular recipients, “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.” 17 U.S.C. § 101 (emphasis added).
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The district court was clear that its ruling was entirely driven by Cartoon
Network LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)
(“Cablevision”), explaining: “But for Cablevision’s express holding regarding the
meaning of the provision of the Copyright Act in issue here – the transmit clause –
Plaintiffs would likely prevail.” SPA 1 (Slip Op. at 1). At issue in Cablevision
was the legality of a cable company’s Remote Storage DVR system (“RS-DVR”),
which allowed cable subscribers to record a program on the company’s servers and
watch it later. Crucially, the cable company already was licensed to retransmit the
programming to subscribers in the first instance. The Court’s holding simply
meant that no additional license was needed for the subsequent transmission of the
recorded copy, treating the recording and playback process as the equivalent of a
subscriber using an in-home DVR to record and replay a show on his home
television set. Noting that each copy on the server was a unique copy available
only to one subscriber, the Court concluded that a transmission from the RS-DVR
to the subscriber was no different from a user’s playback from an in-home DVR in
the den to a television set in the bedroom, and, accordingly, held that a
transmission using that copy is private rather than public. Cablevision thus
represents an exception to the general rule, grounded in the statutory text, that
separate retransmissions – to different people, at different times and to different
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places – should be aggregated and viewed collectively as public performances that
are infringing if unlicensed.
Nothing in Cablevision holds that an unlicensed commercial retransmitter of
broadcast shows may avoid obtaining any license at all by interposing unique
copies into its chain of transmission to subscribers. Indeed, if such an argument
were accepted, it would obliterate copyright owners’ right of public performance.
As Aereo illustrates, it is now cheap and easy to interpose countless digital copies
of video content in a retransmission stream to a subscriber. Cable companies, for
example, could begin doing the same thing. However, Congress wrote the relevant
provisions of the Act broadly, with the intent of preventing technological advances
from undermining the copyright owner’s exclusive right of public performance.
Accordingly, the Cablevision decision cannot save Aereo from liability for
copyright infringement.
STATEMENT OF THE CASE
The Broadcasters sued Aereo for copyright infringement on March 1, 2012,
and moved for a preliminary injunction barring Aereo from retransmitting any
broadcast program to its subscribers either simultaneously with the broadcast or
while any portion of that show was still being broadcast.2 After expedited
2 As we make clear here, the Broadcasters contend that all the unlicensedretransmissions of broadcast works by Aereo are infringing, regardless of any timedelay. The preliminary injunction motion sought somewhat narrower relief, but
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discovery and briefing, the district court (Nathan, J.) held a two-day evidentiary
hearing on the preliminary injunction motion on May 30-31, 2012.3 On July 11,
2012, the court denied the Broadcasters’ motion despite finding that they had
established irreparable harm.
The Broadcasters filed a notice of appeal the next day and sought an
expedited schedule before this Court, in light of the ongoing irreparable harm they
are suffering due to Aereo’s service. The motion for an expedited appeal was
granted on July 30, 2012.
STATEMENT OF FACTS
A. Public Performance Rights Under The Copyright Act.
The Broadcasters own the copyrights to a large number of the programs
broadcast by television stations over the air to viewers. Although those programs
are made available to viewers for free over the airwaves, that does not mean that a
business may retransmit the same programs to other viewers without a license.
Copyright owners of “motion pictures and other audiovisual works” possess the
the permanent relief that the Broadcasters seek is an injunction against allunlicensed retransmissions.
3 The preliminary injunction motion was filed jointly with the plaintiffs in a
parallel action filed by the American Broadcasting Companies, Inc. et al., DistrictCourt Case No. 12-cv-1540-AJN (S.D.N.Y.). The court ultimately issued a singleopinion applicable to both cases. See SPA 1 (Slip Op. 1). Plaintiffs in both caseshave appealed to this Court, Case Nos. 12-2786-cv and 12-2807-cv, and this Courthas ordered that the appeals be heard in tandem, Dkt. 78.
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exclusive right “to perform the copyrighted work[s] publicly.” 17 U.S.C. § 106(4).
Under the so-called “Transmit Clause,” that exclusive right of public performance
includes the right “to transmit or otherwise communicate a performance or display
of the work . . . 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.” Id.
§ 101.
Legitimate retransmission services such as cable and satellite companies –
which take over-the-air broadcasts and retransmit those broadcasts to their
subscribers – comply with the law by obtaining licenses to do so, often paying
substantial royalties.4 The requirement that they do so was deliberately imposed
by Congress, which disagreed with the Fortnightly and Teleprompter cases in
which the Supreme Court had treated cable companies as non-infringers on the
ground that they merely assisted their subscribers to receive the same free
broadcast programming that the subscribers could have received on their own
using antennas. See Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 709-10
(1984) (“Prior to the 1976 revision, the [Supreme] Court had determined that the
retransmission of distant broadcast signals by cable systems did not subject cable
4 The statute carves out a narrow exception for certain “secondary transmissions.”
17 U.S.C. § 111. That exception is not at issue in this case.
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operators to copyright infringement liability because such retransmissions were not
‘performances’ within the meaning of the 1909 Act. In revising the Copyright Act,
however, Congress concluded that cable operators should be required to pay
royalties to the owners of copyrighted programs retransmitted by their systems on
pain of liability for copyright infringement.”) (citing Teleprompter , 415 U.S. 394,
and Fortnightly, 392 U.S. 390).
Under the Transmit Clause, a retransmission service engages in public
performance even if it divides its transmissions to subscribers into individual
streams, sending them to “separate places . . . at different times.” 17 U.S.C. § 101
The statutory language establishes that the separate streams, sent by a commercial
service profiting from retransmissions, must be viewed in the aggregate as a public
performance. Congress also recognized that technology would evolve and
therefore wrote the statute to be explicitly technology-neutral, so that infringement
analysis would not turn on the particular technical characteristics of the device or
process used to retransmit the programming. The Transmit Clause encompasses
transmissions made via “any device or process,” id. (emphasis added), and the
statute defines “device or process” to include those “now known or later
developed.” See 17 U.S.C. § 101 (defining “to perform . . . ‘publicly’” as
“transmit[ting] or otherwise communicat[ing] a performance . . . of the work . . . to
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the public, by means of any device or process”); id . (defining “device” and
“process” to include “one now known or later developed”).
B. The Aereo System.
Aereo retransmits broadcast television programming over the Internet to
subscribers’ wireless and other Internet-enabled devices such as personal
computers, smartphones, and iPads. Subscribers pay Aereo a monthly fee to have
access to the Aereo website, where they can scroll through Aereo’s guide of
television programs that are being aired currently or that will be aired at a later
time, and select programming either to watch in real time (called the “Watch Now”
service) or to record for later viewing (called the “Record” service). Unlike cable
and satellite companies, however, Aereo has not obtained a license for the right to
retransmit broadcast television programming to its subscribers. JA 246-47 (Aereo
Am. Answer ¶ 34).5
1. The Aereo Business Model.
Aereo’s main selling point is its retransmission of live broadcast
programming to subscribers’ Internet-enabled devices. Indeed, Aereo’s ability to
provide Internet access to live broadcast television is a key differentiating factor
between Aereo and other online video services. See JA 302 (Potenza Decl. Ex. 1);
5 “JA” refers to Joint Appendix. Two versions have been made available to theCourt – a public version, using the numbering A-###, and a confidential version,using the numbering CA-###.
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see also, e.g., JA 466 (Potenza Decl. Ex. 25) (“[L]ive sports is a core part of our
value proposition.”); JA 443 (Potenza Decl. Ex. 23). Aereo’s advertising to the
public confirms that its business model is built around the retransmission of the
Broadcasters’ programming to its subscribers. Aereo’s market strategy was live
television online anywhere in New York. JA 301 (Potenza Decl. Ex. 1); JA 1573
(5/30 Tr. 197-98 (Kanojia)). The website advertises “All the broadcasts – NBC,
ABC, CBS, PBS, FOX, CW & over 20 local channels!”, JA 357 (Potenza Decl.
Ex. 5), and a “core” message on Aereo’s website is “Live broadcast TV meets the
Internet. Finally.” JA 302 (Potenza Decl. Ex. 1); JA 1570 (5/30 Tr. 188
(Kanojia)) (Aereo’s “core message” is “live TV meets the Internet, finally”).
Aereo competes directly with cable companies and licensed Internet video
providers, such as Hulu. As Aereo’s web homepage puts it, “With Aereo you can
now watch live, broadcast television online. On devices you already have. No
cable required.” JA 355 (Potenza Decl. Ex. 4). Aereo’s business plan is to use
“[b]roadcast to bring [subscribers] in,” JA 401 (Potenza Decl. Ex. 12), and then
sell access to additional programming that Aereo will acquire through negotiated
agreements with cable networks and other media content owners. Id.; see JA
1573-74 (5/30 Tr. 200-01 (Kanojia)). Aereo’s own surveys conclude that
approximately 30% of its subscribers will terminate their cable, satellite, or
Internet video subscriptions. JA 1573-74 (5/30 Tr. 209 (Kanojia)); see also SPA
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42 (Slip Op. at 42). The district court found that “part of the idea behind Aereo
was to allow customers to bypass cable companies to watch broadcast television,
including live television, and the record is replete with other evidence that Aereo
recognizes that its service will likely prompt cable subscribers to cancel their
subscriptions.” SPA 42 (Slip Op. at 42).
2. The Technical Design of the Aereo System.
At Aereo’s site of operations in Brooklyn, Aereo receives over-the-air
broadcast television with its antennas, converts that programming into digital
format appropriate for Internet transmissions, and then transmits the programming
over the Internet to its subscribers.
Antennas. The most efficient design for Aereo’s system would involve a
single antenna structure, but Aereo designed its system in a far more complicated
manner. Rather than use a single antenna, Aereo instead uses hundreds of
miniature antennas, each the size of a dime. JA 1543 (5/30 Tr. 77 (Kelly)); JA 396
(Potenza Decl. Ex. 10); see also JA 1830 (Plaintiffs’ Hr. Ex. 75, ¶ 60); JA 1898
(Plaintiffs’ Hr. Ex. 76, ¶ 54); JA 1529 (5/30 Tr. 23-24 (Englander)). It rotates the
use of the antennas among its thousands of subscribers as they log in to watch
broadcast programming. JA 1542 (5/30 Tr. 75, 76 (Kelly)); JA 1799, 1822
(Plaintiffs’ Hr. Ex. 75, ¶¶ 3(a), 48). When a subscriber accesses the system, Aereo
assigns a particular antenna from its pool of antennas to that subscriber for that
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received by Aereo’s antennas, copied to the hard drive, and read into RAM for
packaging and transmission to users over the Internet. See JA 2080-81 (Plaintiffs’
Hr. Ex. 85).
The intermediate disk copy continues to accumulate as a show is broadcast.
For subscribers using the “Watch Now” mode, the intermediate copy is
automatically deleted when the program or session ends. JA 1824 (Plaintiffs’ Hr.
Ex. 75, ¶ 53); JA 1551-52 (5/30 Tr. 112-114 (Kelly)). For subscribers using the
“Record” mode, the intermediate copy is retained on Aereo’s system rather than
being automatically deleted when the show ends, and the copy is not sent to the
RAM memory buffer or transmitted to the subscriber until the subscriber requests
it. See JA 1546, JA 1551-52 (5/30 Tr. 89, 112-14 (Kelly)); JA 2071-76, 2082
(Plaintiffs’ Hr. Ex. 85); JA 1819, 1824 (Plaintiffs’ Hr. Ex. 75, ¶¶ 43, 53).
Although “Watch Now” and “Record” are presented by Aereo as two separate
services, as a technical matter, an Aereo subscriber can watch live programming
through the “Record” mode, by first requesting a recording of a program and then
watching the program live as it is being recorded. JA 1554 (5/30 Tr. 121 (Kelly)).
3. Aereo and Cablevision .
Aereo’s system was specifically designed in an effort to make it superficially
resemble the RS-DVR service at issue in Cablevision. Before Aereo designed its
service, Aereo’s CEO directed his chief technology officer to study the
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Cablevision case. JA 1586 (5/30 Tr. 249 (Lipowski)). Aereo used Cablevision as
a blueprint for its system design, in the hope that it could engage in Internet
retransmission of broadcast programming without paying any license fee. JA 405-
06 (Potenza Decl. Ex. 13); cf. JA 1568 (5/30 Tr. 178-80 (Kanojia)). It is
undisputed that Aereo’s use of miniature antennas (as opposed to a shared antenna)
and creation of intermediate copies for each subscriber (as opposed to a shared
master copy that is read into the RAM memory buffer) are not necessary for
Aereo’s retransmission service, JA 1545 (5/30 Tr. 87-88 (Kelly)); JA 1640 (5/31
Tr. 314-315 (Horowitz)); JA 1837 (Plaintiffs’ Hr. Ex. 75, ¶ 71). Rather, Aereo
purposely designed its system in an inefficient manner solely to claim that its
retransmissions to subscribers constitute discrete private performances under
Cablevision and therefore do not infringe on the Broadcasters’ copyrights. JA 405-
06 (Potenza Decl. Ex. 13); JA 2097-99 (Plaintiffs’ Hr. Ex. 87) (Bingham instructed
by Kanojia to use multiple small antennas and to keep the antenna feeds separate in
designing the circuit boards in order to comply with copyright laws); see JA 372
(Potenza Decl. Ex. 8).
Aereo even limited its operations so as to remain solely within this Court’s
jurisdiction, knowing that this Circuit’s Cablevision ruling provided the only even
arguable basis for its being able to operate without a license. See JA 372 (Potenza
Decl. Ex. 8). Aereo chose to locate its antennas in Brooklyn, and although those
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antennas are capable of receiving broadcast television from New Jersey, Aereo has
refused to make those broadcast channels available to its subscribers. Id. Further,
Aereo has made its service available only to individuals with a New York address.
JA 1565 (5/30 Tr. 166-167 (Kanojia)). And, rather than expand to markets in other
Circuits with promising demographics for its service, such as Chicago or Boston,
Aereo instead focused on New York, Connecticut, and Vermont. JA 1586 (5/30
Tr. 250-51 (Lipowski)); JA 883 (Chan Decl. Ex. 6); see also JA 874-75 (Chan.
Decl. Ex. 6).
C. The District Court’s Decision.
The Broadcasters filed suit two weeks before the Aereo service was
launched in New York City, claiming (among other things) that it violated their
exclusive right of public performance. Their motion for a preliminary injunction
based on that claim was denied on July 11, 2012. In its opinion, the court found
that Aereo’s service caused the Broadcasters irreparable injury, but held that the
Broadcasters were not likely to succeed on the merits of their public performance
claim.
The district court’s decision turned entirely on its analysis of this Court’s
opinion in Cablevision, 536 F.3d 121. Despite recognizing that Aereo did not have
a license like Cablevision’s to transmit copyrighted works, the district court
nonetheless treated Cablevision as controlling. It reasoned that, like the RS-DVR
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system at issue in Cablevision, Aereo’s system “creates a unique copy of each
television program for each subscriber who requests to watch that program,” and
“each transmission that Aereo’s system ultimately makes to a subscriber is from
that unique copy.” SPA 20 (Slip Op. at 20). Further, “the transmission of the
unique copy is made solely to the subscriber who requested it; no other subscriber
is capable of accessing that copy and no transmissions are made from that copy
except to the subscriber who requested it.” Id. The court also derived from
Cablevision the principle that a service cannot be infringing if it merely does what
individual viewers could do for themselves using home equipment. Id. at 20-21
(Slip Op. at 20-21). Finally, the court also found it relevant that “each copy made
by Aereo’s system is created from a separate stream of data” received by an
antenna temporarily assigned to a particular user. Id. at 22 (Slip Op. at 22)
(emphasis in original).
Believing that it was constrained by Cablevision, the district court therefore
held that Aereo’s transmissions to its subscribers were not “public” performances.
The district court made clear that, “[b]ut for Cablevision’s express holding
regarding the meaning of the provision of the Copyright Act in issue here . . .
Plaintiffs would likely prevail on their request for a preliminary injunction.” SPA
1 (Slip Op. at 1).
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Finally, although recognizing that it was unnecessary to reach the remaining
preliminary injunction factors, the district court nonetheless found that “Plaintiffs
will suffer irreparable harm in the absence of a preliminary injunction.” SPA 39
(Slip Op. at 39). In so doing, the court explained the devastating hardships Aereo
imposes on appellants: “First, Aereo will damage Plaintiffs’ ability to negotiate
with advertisers by siphoning viewers from traditional distribution channels.” Id.
Second, “by poaching viewers from cable or other companies that license
Plaintiff’s content, Aereo’s activities will damage Plaintiffs’ ability to negotiate
retransmission agreements.” Id. at 40 (Slip Op. at 40). Third, by disrupting
appellants’ ability to capitalize on their own investments in internet streaming
architecture, Aereo’s activities will in turn undermine Plaintiffs’ own agreements
with their online transmission partners. Id. at 42 (Slip Op. at 42). However, the
district court concluded that these harms were nonetheless insufficient to overcome
what it perceived to be a controlling decision in Cablevision. Id. at 44 (Slip Op. at
44).
SUMMARY OF ARGUMENT
Aereo receives broadcast television signals on antennas it owns. It processes
those signals so that they are capable of retransmission over the Internet. It then
retransmits those signals to its subscribers’ Internet-enabled devices. And it
attracts subscribers to its service by selling access to the Broadcasters’
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programming – but without ever obtaining a license or paying the Broadcasters a
penny for the use of their works. That conduct is squarely prohibited by the
Copyright Act.
The district court erred in finding that Cablevision authorized this conduct.
Cablevision involved a remote DVR service offered by a cable company as an
adjunct to its licensed business of retransmitting broadcast programming. The case
did not overturn Congress’s determination that commercial retransmissions of
over-the-air broadcasts must be licensed even when consumers could receive the
same programming for free using their own equipment. Nor did it hold that an
unlicensed third party can transform an illegal retransmission business into legal
conduct merely by interposing unique copies of the programming just prior to its
retransmission.
The district court’s analysis ignores the nature of Aereo’s business and
instead focuses on each particular final transmission to a particular subscriber in
isolation. The plain language of the Copyright Act, however, makes clear that
separate transmissions that go to different people, at different times, and in
separate places, must be aggregated and treated collectively as a public
performance. Accordingly, courts applying the Copyright Act (in contexts other
than Cablevision) do not focus narrowly on the final transmission to the individual
user, but instead consider that final transmission in the context of the alleged
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infringer’s conduct as a whole. Cablevision represents an exception to the general
rule that separate transmissions must be aggregated, but that exception should not
be extended beyond the particular circumstances in that case.
Indeed, if one were to focus narrowly on each final transmission in isolation
from all other final transmissions, then the exception created in Cablevision would
swallow the rule created in the statute. The final link in any wire-based
retransmission could be regarded as private, because that final link is always to an
individual subscriber’s television or other viewing device, and that signal cannot
be received by any other subscriber. Moreover, it would do little good to confine
the exception to transmissions originating from individually assigned copies.
Because digital technology makes it effectively costless to create thousands of
copies of copyrighted works, such a rule would still allow retransmitters to
circumvent copyright law. Yet Congress drafted the public performance right in
order to prevent its erosion by technological advances. In sum, where it appears
that the alleged infringer has built a business around the unlicensed retransmission
of programming owned by others, courts must aggregate those final transmissions
and treat them as a public performance, as Congress directed, regardless of the
particular features of the system’s design.
Although the district court erred concerning the merits of the Broadcasters’
legal position, it correctly found that Aereo causes the Broadcasters irreparable
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2012 WL 3645304, at *2. “When reviewing a district court’s denial of a
preliminary injunction, [this Court] review[s] the district court’s legal holdings de
novo and its ultimate decision for abuse of discretion.” County of Nassau. v.
Leavitt , 524 F.3d 408, 414 (2d Cir. 2008) (quotation marks omitted). The district
court abuses its discretion when “its decision rests on an error of law or a clearly
erroneous factual finding.” ivi, 2012 WL 3645304, at *10.
II. The District Court Erred in Concluding That the Broadcasters Are Not
Likely to Succeed on the Merits.
A. Aereo Publicly Performs the Broadcasters’ Copyrighted
Programs When It Retransmits Them to Its Subscribers.
In retransmitting an over-the-air television broadcast to its subscribers,
Aereo is plainly engaging in a “public performance” that, under the Copyright Act,
must be licensed by the copyright owners. The Copyright Act gives copyright
owners “exclusive rights . . . to authorize the public display of [their] copyrighted
content, including the retransmission of [their] broadcast signal[s].” ivi, 2012 WL
3645304, at *2 (quoting EchoStar Satellite LLC v. FCC , 457 F.3d 31, 33 (D.C. Cir.
2006)) (alterations and ellipses in original; internal quotation marks omitted). The
Transmit Clause defines “to perform a work publicly” as:
[T]o transmit or otherwise communicate a performance or display ofthe work . . . to the public, by means of any device or process, whetherthe members of the public capable of receiving the performance . . .receive it in the same place or in separate places and at the same timeor at different times.
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17 U.S.C. § 101. In other words, one publicly performs a work when one
(1) transmits a performance of the work (2) to the public (3) by means of any
device or process. And a performance can be to the public regardless of
whether it is received by different members of the public at different places
and at different times. Here, Aereo (1) retransmits broadcast programming
over the Internet (2) to any member of the public who wishes to subscribe to
Aereo’s service (3) by means of its system for capturing over-the-air
broadcasts, transforming them to digital format appropriate for transmission
over the Internet, and transmitting them to subscribers.
Congress wrote the statute to ensure that the exclusive right of public
performance would not turn on the inner workings of the technology used to
transmit the performance. The term “transmit” is defined broadly to encompass
the communication of a “performance . . . by any device or process whereby
images or sounds are received beyond the place from which they are sent.” Id.
(emphasis added). And Congress understood that technologies would evolve and
accordingly defined the terms “device” and “process” flexibly to refer to a device
or process “now known or later developed .” Id. (emphasis added). The House
Report underscores that intent:
The definition of “transmit” . . . is broad enough to include all
conceivable forms and combinations of wires and wireless
communications media, including but by no means limited to radioand television broadcasting as we know them. Each and every
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method by which the images or sounds comprising a performance ordisplay are picked up and conveyed is a ‘transmission,’ and if the
transmission reaches the public in any form, the case comes withinthe scope of [the statute].
H.R. Rep. 94-1476 at 64, reprinted in 1976 U.S.C.C.A.N. at 5678 (emphasis
added).7
Because the statute is intended to cover “any device or process” for
transmitting copyrighted programming to the public, 17 U.S.C. § 101 (emphasis
added), it makes no difference that the “device or process” used by Aereo to send
the programming to its subscribers is a set of circuit boards with hundreds of little
antennas instead of one big antenna. Nor does it matter that Aereo interposes
intermediate copies for each user in its transmission stream, instead of simply
retransmitting a master copy of the broadcast.
7 See also H.R. Rep. 94-1476 at 63, reprinted in 1976 U.S.C.C.A.N. at 5677 (“A
performance may be accomplished ‘either directly or by means of any device or
process,’ includingall kinds of equipment
for reproducing or amplifying sounds orvisual images, . . . and any other techniques and systems not yet in use or even
invented.”) (emphasis added); S. Rep. No. 94-473, at 60 (1975) (“A performancemay be accomplished ‘either directly or by means of any device or process,’including all kinds of equipment for reproducing or amplifying sounds or visualimages, any sort of transmitting apparatus, any type of electronic retrieval system,and any other techniques and systems not yet in use or even invented.”).
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B. Aereo’s Argument That It Only Enables Consumers to Receive,
Record, and Retransmit Broadcast Programming Is Without
Merit.
Aereo designed its system not to achieve efficiency but to create the
impression that it is merely supplying equipment (i.e., individualized antennas and
copying devices) that is actually used by its subscribers. But there is no basis for
treating Aereo differently from any other unlicensed retransmission service just
because, instead of using a single antenna to capture broadcast signals, Aereo uses
hundreds of antennas that it rotates among its subscribers, and instead of
retransmitting a broadcast signal directly to its users, it first interposes an
intermediate copy for each user and then retransmits from the copy. These
technological nuances, which are largely invisible to users, cannot be outcome-
determinative because Aereo clearly remains a retransmission service. Congress
emphasized that the Transmit Clause applies to retransmissions through “any
device or process,” 17 U.S.C. § 101, and it further defined “device or process”
broadly and in a way that does not turn on technological details in order to prevent
just this kind of technical circumvention. See id.
Here, the fact that Aereo is transforming a broadcast signal into a digital
format for Internet distribution further underscores why Aereo cannot rely on its
hundreds of antennas as a basis for escaping copyright liability. Aereo is not
simply a passive intermediary between its antennas and its subscribers’ mobile
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devices. Even if one were to accept Aereo’s fiction that each of those antennas
really were “rented” to a particular individual subscriber – in actuality, the
antennas are part of a pool shared by Aereo’s subscribers – Aereo still processes
the signal received by the antennas into digital format for Internet distribution and
then retransmits the digitized data across the Internet. It cannot escape
responsibility for its retransmissions on the theory that it is merely providing an
antenna that the subscriber will then use to receive a broadcast signal for him or
herself.
Any other result would be untenable. If Aereo were able to circumvent the
Broadcasters’ exclusive right of public performance merely by multiplying the
number of antennas it uses or by interposing copies into its transmission stream,
technological developments would make that right a dead letter. Cf. JA 1674 (5/31
Tr. at 452) (district court stating that to accept Aereo’s argument would mean that
“technology has beat the public performance restriction”). Many courts, including
this one, have consistently assumed or held that unlicensed Internet video services
are prohibited by the Copyright Act. See ivi, 2012 WL 3645304, at *2, *8;
FilmOn.com, Inc., No. 10-cv-07532, ECF No. 8; Warner Bros. Ent’mt, Inc., 824 F.
Supp. 2d 1003; Twentieth Century Fox Film Corp., 2000 WL 255989. Yet Aereo
has provided a roadmap that could be replicated endlessly.
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Indeed, if Aereo’s logic were accepted, even cable companies – which were
the direct target of the Transmit Clause – could evade the statutory licensing
scheme set forth in 17 U.S.C. § 111 simply by erecting antenna farms and making
a unique copy for each subscriber of the broadcast programming they transmit to
subscribers across cable wire.8 A cable company’s retransmission of such a copy
would then no longer be a public performance, and no license would be required,
contrary to the unequivocal intent of Congress.
As a practical matter, Internet retransmission services like Aereo, freed of
the need to obtain retransmission licenses, would be even more harmful than
unlicensed cable services. Because Aereo uses the Internet for its retransmissions,
it not only competes with the original over-the-air broadcast and with licensed
retransmitters like cable companies, but also competes with, and seeks to supplant,
licensed Internet video services like Hulu, which pay for the privilege of presenting
the Broadcasters’ programming. ivi, 2012 WL 3645304, at *8-9. In so doing,
8 Indeed, most cable and satellite companies already provide subscribers with set-top receivers that use DVR functionality to automatically copy programs beforetransmitting them on to the television for “live” viewing. This automatic copying
is what allows viewers to pause and rewind shows that they are watching “live” –the same functionality that Aereo provides using server-based intermediate copies.If Aereo were to prevail here, cable and satellite companies might well claim thatthey are free to retransmit broadcast programming without a license because theautomatic copies made to enable viewers to pause and rewind live television arelegally indistinguishable from the server copies that were the linchpin of thedistrict court’s decision here.
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Aereo deprives the Broadcasters of all control over the time and place of
presentation of their copyrighted works, allowing viewing anywhere in the world
at any time, on any device.9 It is hard to imagine a clearer violation of the rights of
copyright owners under the Act.
Aereo also contends, and the district court seemed to agree, see SPA 20-21
(Slip Op. 20-21), that even if Aereo remains a retransmission service, it is doing
nothing more than allowing its subscribers to do what they could have done on
their own using separately purchased antennas, DVRs, and Internet transmission
equipment.
That argument, however, parallels the Supreme Court’s reasoning in
Fortnightly, which Congress deliberately overturned in enacting the Transmit
Clause. The Supreme Court had reasoned that a community access television
(“CATV”) service did not involve a public performance because it did no more
than its subscribers could have done on their own:
[A] CATV system no more than enhances the viewer’s capacity toreceive the broadcaster’s signals; it provides a well-located antennawith an efficient connection to the viewer’s television set . . . . If anindividual erected an antenna on a hill, strung a cable to his house,and installed the necessary amplifying equipment, he would not be
‘performing’ the programs he received on his television set. Theresult would be no different if several people combined to erect a
9 Despite Aereo’s purported attempts to impose geographical limitations, Aereo’s
own expert admitted that he was able to access Aereo’s service from as far away asthe Virgin Islands. JA 1644 (5/31 Tr. at 331 (Horowitz)).
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cooperative antenna for the same purpose. The only difference in thecase of CATV is that the antenna system is erected and owned not byits users but by an entrepreneur.
Fortnightly, 392 U.S. at 400-01 (footnotes and internal citations omitted).
Congress’s main purpose in enacting the Transmit Clause in 1976 was to
reject the Court’s equivalence between, on the one hand, a private individual using
his or her own equipment to receive broadcast television signals, and, on the other
hand, a commercial service retransmitting broadcast television signals to its
subscribers. See ivi, 2012 WL 3645304, at *4-5; supra pp. 8-11. And Congress’s
judgment that a license is required for the latter would not have been any different
if the retransmitter in Fortnightly had been able to place a thousand antennas on its
hilltop rather than one, and string a dedicated wire from each antenna to each one
of its subscribers. A commercial retransmitter may not avoid the need to obtain a
license by claiming to stand in the shoes of its subscribers. See Infinity Broad.
Corp. v. Kirkwood , 150 F.3d 104, 112 (2d Cir. 1998) (“[C]ourts have rejected
attempts by for-profit users to stand in the shoes of their customers.”) (citing
Princeton Univ. Press v. Mich. Document Svcs., 99 F.3d 1381, 1389 (6th Cir.
1996) (en banc)).
C. Cablevision Does Not Control This Case.
Rather than follow – or even analyze – the statutory language that Congress
wrote in light of a clearly expressed purpose, the district court instead rested its
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decision entirely on this Court’s opinion in Cablevision. See SPA 1 (Slip Op. at 1)
(“But for Cablevision’s express holding . . . Plaintiffs would likely prevail.”).
But there is no reason to extend the narrow decision in Cablevision,
involving a service that served the same function as an in-home DVR and was an
adjunct to a licensed cable service, to effectively eliminate the protections
Congress created in the Transmit Clause. Cablevision did not hold that a business
engaged in the retransmission of broadcast television to subscribers can circumvent
the need for a license by creating unique intermediate copies and then using the
copies rather than the original signal as the direct source of its retransmissions.
The district court erred in extending Cablevision’s logic beyond the circumstances
of that case.
1. The District Court Misinterpreted the Significance of
Cablevision .
At issue in Cablevision was the legality of a cable company’s RS-DVR,
which allowed cable subscribers (1) to record programming that the cable company
was already licensed to transmit to the public, (2) to store that recorded
programming remotely on the cable company’s server, and (3) to watch the
programming only after the original broadcast had finished airing and only on the
television connected to the same set-top box authorized to receive the original
transmission in the subscriber’s home. In essence, the RS-DVR mimicked the
operation of an in-home DVR or VCR from a remote location.
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Because the cable company was licensed to retransmit broadcast
programming to its subscribers, the only question was whether an additional
license was needed for the viewer to play back the programming that he or she had
recorded. See Cablevision, 562 F.3d at 123 (noting Cablevision’s “numerous
licensing agreements” to retransmit “copyrighted . . . television programs”). This
Court held that no additional license was needed, and added that it could reach that
conclusion “without analyzing the contours of [the] phrase [‘to the public’] in great
detail.” Id. at 138. The Court explained that it was “relevant” – not dispositive –
that an individual viewer played back a unique copy of programming that he
himself had made. Id. (“the use of a unique copy may limit the potential audience
of a transmission and is therefore relevant to whether that transmission is made ‘to
the public’”) (emphasis added). It reasoned that, because only the subscriber who
had requested a copy to be made was “capable of receiving” the transmission of
that copy, each transmission of recorded programming constituted a separate and
private performance:
[W]e find that the transmit clause directs us to identifythe potential audience of a given transmission, i.e., the
persons “capable of receiving” it, to determine whether
that transmission is made “to the public.” Because eachRS-DVR playback transmission is made to a singlesubscriber using a single unique copy produced by thatsubscriber, we conclude that such transmissions are not
performances “to the public,” and therefore do notinfringe [on] any exclusive right of public performance.
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Id. at 139.
The Court did not hold, however, that a business without a license to
retransmit programming in the first instance could avoid the need to obtain one
merely by interposing unique copies of the programming in its stream of
transmission. Nothing in the opinion suggests that unique copies inserted in a
stream of transmission are imbued with alchemical properties that transform an
unlawful retransmission into a lawful one or eliminate the statutory mandate to
aggregate retransmissions made to different people, at different times, in different
places. At a minimum, programming must be authorized to be retransmitted to the
point of copying or it is plainly part of an unauthorized public performance.
The district court nevertheless overlooked that crucial difference and read
Cablevision to hold that, in assessing whether a performance is “to the public,” a
court can look only to the final link in a chain of transmission, in isolation from
any other transmissions and without regard to the nature of the service being
offered. The district court concluded, based on that interpretation of Cablevision,
that if each particular final transmission could only be received by a single viewer
and came from a separate copy, then the transmission necessarily was a private
performance. SPA 16 (Slip Op. at 16) (“Because the Second Circuit considered
the relevant performance to be the discrete transmission of each user’s unique
playback copy of the television program to that user, the potential audience
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‘capable of receiving’ that performance was limited to that user, and each such
performance was private, not public.”). That was error.
2. The District Court’s Reading of Cablevision Cannot Be
Squared With the Statute, Which Requires the Aggregation
of Discrete Transmissions to Particular Members of the
Public.
The district court’s extension of Cablevision – to hold that an unlicensed
retransmitter of broadcast programming can transform a public performance into a
private one merely by interposing unique copies into its chain of transmission –
cannot be squared with the statute. Congress made clear that a transmission is not
necessarily “private” even when it can only be received by a particular individual;
to the contrary, the rule set forth in the statute is that discrete transmissions to
particular members of the public must be aggregated and viewed collectively as
constituting a public performance. See 17 U.S.C. § 101 (a performance is “public
. . . 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 case law applying this statutory provision – including that cited with
approval by this Court in Cablevision – makes clear that, in assessing whether
retransmissions constitute a public performance, courts should look to the nature of
the business at issue and to the audience for those retransmissions taken as a
whole. For example, in Columbia Pictures Industries, Inc. v. Redd Horne, Inc.,
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749 F.2d 154 (3d Cir. 1984) – a case cited favorably by Cablevision, 536 F.3d at
138 – the Third Circuit found a public performance when a video rental store
operator transmitted the content of a videotape to a television set housed in a
private viewing booth. The court could have concluded that, because only those
sitting in the private viewing booth were capable of receiving any particular
transmission, the store was engaged only in serial private performances. But the
court instead analyzed the case functionally, aggregating various individual
transmissions and treating them collectively as a public performance. See Redd
Horne, 749 F.2d at 159 (noting that a performance can be public “whether the
members of the public capable of receiving the performance . . . receive it in the
same place or in separate places and at the same time or at different times”
(quoting 17 U.S.C. § 101), and holding that “[a]lthough [the store] has only one
copy of each film, it shows each copy repeatedly to different members of the
public. This constitutes a public performance.”); see also Columbia Pictures
Indus., Inc. v. Aveco, Inc., 800 F.2d 59, 63 (3d Cir. 1986) (“Our opinion in Redd
Horne turned not on the precise whereabouts of the video cassette players, but on
the nature of [the] stores.”).
To be sure, Redd Horne placed some emphasis on the fact that the store
owner had replayed the same copy of each film to multiple viewers. 749 F.2d at
159. But that fact cannot be dispositive of the public performance analysis. After
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all, each time the film was played, the store owner engaged in a separate
transmission capable of being received only by those viewers who were at that
moment sitting in the private booth. The fact that those multiple transmissions all
stemmed from the same copy did not make any of those separate transmissions less
private, when viewed in isolation from one another. Nevertheless, the court chose
instead to view those separate transmissions in the aggregate.
Likewise, the case would not have come out any differently if, with the aid
of twenty-first century computer technology, the store owner had made a separate
copy of the movie on a computer for each customer viewing the video, and then
streamed the digital copy (instead of the master copy) into the private viewing
booth.10
In those circumstances, the unique digital copy would not in substance
limit the potential audience of the store owner’s performance, so it should be
disregarded. See Cablevision, 536 F.3d at 138 (“the use of a unique copy may
limit the potential audience of a transmission and is therefore relevant to whether
that transmission is made ‘to the public’”) (emphasis added).
10 Indeed, in the digital age, where copies are effectively costless (especially if the
copy is erased at the end of the transmission), Aereo’s copies do not serve anyaudience limiting role. Every Aereo subscriber is capable of receiving atransmission of the same programming at the same time. In that sense, the
physical copy in Redd Horne, which could only be viewed by one person at a time,limited the audience more than the multiple copies used by Aereo.
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Similarly, in Infinity Broadcast , there was no question that the defendant
was engaged in a public performance when it offered a dial-in system that allowed
subscribers to listen to radio broadcasts by telephone. Radio receivers were placed
in various cities and connected to telephone lines; each telephone line had a
dedicated receiver/tuner. Subscribers received a list of confidential telephone
numbers for the receivers, and upon calling one of the telephone numbers, the
subscriber could tune the associated receiver to a desired radio frequency using his
or her telephone keypad, and then receive a retransmission of the local radio
broadcast on that frequency. Although each particular retransmission could be
received only by the single subscriber on the other end of the telephone line, the
nature of the defendant’s business – which retransmitted copyrighted radio
broadcasts to any member of the public who wished to become a subscriber, 150
F.3d at 110 – made it sensible to aggregate those particular retransmissions and
treat them collectively. See id. at 111 (“Kirkwood is selling Infinity’s copyrighted
material in a market that Infinity, as the copyright owner, is exclusively entitled to
exploit. Kirkwood . . . replaces Infinity as the supplier of those broadcasts to meet
the demand of his customers.”); id. at 110 (describing defendant’s service as
“providing his subscribers with access to every radio station in the cities [it]
serves”).
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Other cases decided in this Circuit also confirm that a service involved in
retransmitting video programming, including broadcast television, over the Internet
to the public is engaged in a public performance. Indeed, in ivi, decided by this
Court only a few weeks ago, an Internet retransmission service materially identical
to Aereo did not even dispute that their retransmissions were public performances.
ivi, 2012 WL 3645304, at *2. Likewise, in United States v. American Society of
Composers, Authors, & Publishers, 627 F.3d 64 (2d Cir. 2010), cert. denied , 132
S. Ct. 366 (2011), this Court stated that “all parties agree” that Internet “stream
transmissions . . . constitute public performances.” Id. at 74. The fact that every
Internet transmission is by nature a one-to-one transmission from a unique buffer
copy did not change the analysis. In Arista Records, LLC v. Launch Media, Inc.,
578 F.3d 148 (2d Cir. 2009), the Court also recognized that individualized audio
streams on the Internet are public performances. Similarly, in FilmOn.com, Inc.,
the Southern District enjoined an Internet retransmission service from “streaming
over mobile telephone systems and/or the Internet . . . any of the broadcast
television programming in which any plaintiff owns a copyright.” FilmOn.com,
Inc., No. 10-cv-07532, ECF No. 8, at 2.
Courts in other Circuits likewise have treated Internet video streaming as a
public performance, even though each transmission was sent to a single recipient
and thus could have been regarded as “private.” In Warner Brothers, for example,
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the court considered a service that streamed movies over the Internet to subscribers
from a bank of DVD players operated by the defendants. Only a single subscriber
could view the DVD being played on a particular DVD player at the same time.
The court nonetheless held that “Defendants’ transmissions are ‘to the public’
because the relationship between Defendants, as the transmitter of the
performance, and the audience, which in this case consists of their customers, is a
commercial, ‘public’ relationship.” 824 F. Supp. 2d at 1010; see also Video
Pipeline, Inc. v. Buena Vista Home Entm’t, Inc., 342 F.3d 191 (3d Cir. 2003)
(affirming injunction against Internet video streaming service for, inter alia,
infringement of the public performance right); Twentieth Century Fox Film Corp.,
2000 WL 255989 (enjoining Internet video retransmission service).
Notwithstanding the statute’s default rule in favor of aggregating discrete
transmissions made to members of the public and treating those transmissions as a
public performance, this Court adopted a different approach in the unique
circumstances presented in Cablevision, where the RS-DVR service was offered as
an adjunct to licensed cable retransmissions and provided subscribers no more than
the functionality available using an in-home DVR or VCR. See Cablevision, 536
F.3d at 124 (noting that the RS-DVR service was tantamount to an in-home DVR
moved up the wire to Cablevision’s head-end); id. at 136 (comparing RS-DVR
subscriber to a “consumer who records a program” in his den and plays it back “to
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a television in his bedroom”). Analogizing the transmissions at issue to the replay
of a recording made using a VCR for time-shifting purposes, the Court deemed it
logical to treat the functionally identical replay of a program recorded through the
RS-DVR service as a private performance. Nothing in Cablevision, however,
requires that analysis to be applied beyond the facts of that case – and certainly not
to a service that never obtains any license to deliver programming in the first
instance.
According to the district court, aggregating particular transmissions would
require it to look “upstream,” rather than “downstream” as Cablevision requires.
SPA 21 (Slip Op. at 21). That is incorrect. In Cablevision, this Court held that in
assessing whether a performance is to the public, one should consider only the
defendant’s own transmissions constituting that performance and not “the potential
audience of an upstream transmission by a third party.” 536 F.3d at 136.
Otherwise, there could be no “purely private transmission,” and indeed, a “hapless
customer who records a program in his den and later transmits the recording to a
television in his bedroom would be liable for publicly performing the work simply
because some other party had once transmitted the same underlying performance to
the public.” Id.
That analysis, however, has no bearing on the Broadcasters’ argument here.
The Broadcasters are not asking the court to look to any upstream third party
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transmissions. Rather, the Broadcasters argue that it is contrary to the law and
makes no logical sense to focus only on each final link in the transmission chain in
isolation (i.e., the transmission from the intermediate copy to just one viewer), or
on each stream of transmission in isolation (i.e., the stream from a particular
antenna through Aereo’s system to a subscriber) to determine whether Aereo’s
transmissions are to the public. Rather, Aereo’s system – including its multiple
antennas and its intermediate copies – is the “device or process” it uses to
retransmit broadcast programming to its subscribers, and the audience for those
transmissions must be viewed as a whole. A contrary approach would lead to
absurd results and would take cable, satellite, and Internet retransmissions
completely out of the Copyright Act, as the final link in those transmissions is
always to a single user. See II Paul Goldstein, Goldstein on Copyright § 7.7.2.2
(3d ed. Supp. 2012), available on LEXIS (“Since Cablevision’s transmissions –
like On Command’s – were indisputably so individuated that no member of the
public likely would ever receive the single transmission in a place or time different
from the one in which he first received it, the result of the Cablevision court’s
approach, equating transmission with performance, is effectively to exclude from
the scope of the public performance right every instance of on demand
performance – for example, two people across the country from each other
watching the same film transmitted by an on-demand movie service at different
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times – that Congress intended to include by adding to the definition of public
performance ‘in the same place or in separate places and at the same time or at
different times.’”).
D. If Upheld, the District Court’s Ruling Will Threaten the
Economic Viability of Broadcast Television, Contrary to
Congress’s Intent.
Congress enacted the Transmit Clause in large part in order to protect free
and over-the-air television from the commercial free-riding and grave economic
harm threatened by the Supreme Court’s holdings in Fortnightly and Teleprompter .
See supra pp. 8-11. Yet, if upheld, the district court’s evisceration of the public
performance right will have precisely the devastating consequences that Congress
sought to avoid.
As found by the District Court and reaffirmed last month by this Court in ivi,
Aereo directly and irreparably harms the ability of over-the-air broadcasters to
collect compensation for their copyrighted works, and “[t]his harm is not
speculative.” SPA 41 (Slip Op. at 41). Already, Aereo has announced plans to
expand its service, and copy-cat services have already announced similar
ambitions.11
See ivi, 2012 WL 3645304, at *8-10. If Aereo and other services like
11 See, e.g., Aereo CEO plans pricing changes, expansion, Radio & Television
Business Report , RBR.comTVBR.com (July 27, 2012), http://rbr.com/aereo-ceo- plans-pricing-changes-expansion/ (last visited Sept. 13, 2012); Eriq Gardner, TVBroadcasters Settle Digital Lawsuit, but “Aereo-like” Service Won’t Die(Exclusive), The Hollywood Reporter , Aug. 1, 2012, available at
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it are permitted to engage in unlicensed retransmissions of broadcast television, the
result would be (as this Court recently found in ivi) the “destabiliz[ation of] the
entire industry.” ivi, 2012 WL 3645304, at *9.
First, Aereo competes with and seeks to replace licensed retransmission
services like cable companies. See SPA 41-42 (Slip Op. at 41-42). It thereby
threatens to eliminate a revenue stream that Congress specifically created in
recognition of the fact that commercial retransmitters derive substantial economic
value by marketing programming that is created and owned by others, and should
compensate the copyright owners for the use of that programming. See H.R. Rep.
94-1476, at 88-89, reprinted in 1976 U.S.C.C.A.N. at 5703-04.
Second, Aereo makes its retransmissions of copyrighted programming
across a different medium, the Internet, that the original broadcast was never
intended to reach. Consumers see Internet delivery as a different value proposition
and will pay separately for it. The Broadcasters are actively trying to
commercialize that distribution channel through licensed services such as Hulu,
Netflix, and Amazon. Aereo seeks to take for itself the economic value of Internet
delivery of the Broadcasters’ programming. By retransmitting the Broadcasters’
programming over the Internet without authorization, Aereo usurps the
http://www.hollywoodreporter.com/thr-esq/lawsuit-alki-david-barry-diller-filmon-357288 (last visited Sept. 13, 2012).
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In finding irreparable harm, the district court recognized that Aereo’s service
will harm the Broadcasters in numerous ways. Aereo’s service will damage the
Broadcasters’ ability to negotiate business with advertisers by “siphoning” viewers
away from traditional distribution channels measured by Nielsen ratings, SPA 39
(Slip Op. at 39), and will further harm the Broadcasters by “poaching” viewers
away from retransmission companies in the cable industry or otherwise that legally
retransmit the Broadcasters’ programming via negotiated licenses. Id. at 40 (Slip
Op. at 40). In fact, the crux of Aereo’s business model is to get viewers to “cut the
cord” and move away from cable and other companies that have legal licenses to
retransmit the Broadcasters’ content. See, e.g., JA 355 (Potenza Decl. Ex. 4).
Moreover, by wresting control over the Broadcasters’ content, then entering the
Internet streaming market in competition with the Broadcasters, Aereo’s service
undercuts the substantial financial resources, marketing and demographic research,
and goodwill invested by the Broadcasters in this emerging market. SPA 42 (Slip
Op. at 42).
The district court also correctly found that the Broadcasters did not unduly
delay in bringing an action to enjoin Aereo. While certain of the Broadcasters may
have been aware of Aereo’s existence during the year leading up to the filing of
Broadcasters’ claims, the evidence clearly showed, as the district court found, that
litigation was not necessary “until it became clear that Aereo posed a viable threat
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of harm,” and thus “it was not unreasonable for [the Broadcasters] to wait until
Aereo’s February 2012 announcement . . . to conclude that Aereo posed a
substantial and imminent threat of irreparable harm.” SPA 46 (Slip Op. at 46).
Until that point, Aereo’s service had only been available in beta testing to a limited
number of people. Id . at 45-46 (Slip Op. at 45-46). As the district court held, “[a]
contrary holding would require plaintiffs to rush to court at the first sign of
potential infringement, even if the prospect of harm is remote,” which would both
undermine the requirement that irreparable harm be imminent, and waste valuable
judicial resources. See id. at 47 (Slip Op. at 47).
The district court’s finding of irreparable harm is in direct accord with this
Court’s recent decision in ivi. In ivi, this Court upheld a finding of irreparable
harm resulting from ivi’s live retransmission of copyrighted programming over the
Internet because such retransmissions “would substantially diminish the value of
the programming,” and those losses would be difficult to measure and
insufficiently remedied by monetary damages. ivi, 2012 WL 3645304, at *8. ivi
confirms the district court’s finding in this case that the usurpation of broadcasters’
retransmission consent substantially and irreparably harms television broadcasters.
The ivi decision illuminates the full magnitude of the harm inflicted by a
service like Aereo – not only upon the Broadcasters, but to the industry writ large.
In assessing the harm caused by ivi’s service, this Court recognized that such a
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service “would drastically change the industry” if allowed to continue unabated.
ivi, 2012 WL 3645304, at *9. Specifically,
The absence of a preliminary injunction would encourage current and prospective retransmission rights holders, as well as other Internetservices, to follow ivi’s lead in retransmitting plaintiffs’ copyrighted
programming without their consent. The strength of plaintiffs’negotiating platform and business model would decline. The quantityand quality of efforts put into creating television programming,retransmission and advertising revenues, distribution models andschedules – all would be adversely affected. These harms wouldextend to other copyright holders of television programming.Continued live retransmission of copyrighted television programming
over the Internet without consent would thus threaten to destabilizethe entire industry.
Id. Moreover, precisely because the harms inflicted by ivi’s service would “affect
the operation and stability of the entire industry,” monetary damages would be
inadequate to remedy the injuries that would befall the broadcasters in that case
were ivi not enjoined. Id. at *10.
The Broadcasters in this case, like the ivi plaintiffs, derive value from
control over how their programming is distributed. They rely heavily on
advertising revenue, which is often determined by the number of viewers and their
demographic profiles, as tracked by Nielsen measurements of traditional
distribution channels. See ivi, 2012 WL 3645304, at *8-10. In addition,
retransmission consent agreements are a “substantial and growing revenue source.”
Id. Thus, just as ivi’s service threatened to dilute the value of the plaintiffs’
programming, Aereo’s retransmission of the Broadcasters’ copyrighted
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programming without their consent “devalue[s] the programming by reducing its
‘live’ value,” lessening the Broadcasters’ ad revenue, and “undermining existing
and prospective retransmission fees, negotiations, and agreements.” Id. at *9.
Aereo’s “retransmissions … dilute plaintiffs’ programming and their control over
their product” no less than ivi’s did. See id.
While the district court correctly held that Aereo’s service irreparably harms
the Broadcasters, it incorrectly found that such irreparable harm was not sufficient
to merit a preliminary injunction. As the district court itself acknowledged, “[t]he
showing of irreparable harm is perhaps the single most important prerequisite for
the issuance of a preliminary injunction.” SPA 39 (Slip Op. at 39) (citing Rex Med
L.P. v. Angiotech Pharms. (US), Inc., 754 F. Supp. 2d 616, 621 (S.D.N.Y. 2010)
(quoting Kamerling v. Massanari, 295 F.3d 206, 214 (2d Cir. 2002))). Moreover,
a finding of irreparable harm reflects that the Broadcasters are suffering harm to
their legal interests that cannot be remedied after a final adjudication. Salinger ,
607 F.3d at 81. “Courts must pay ‘particular attention to whether the remedies
available at law, such as monetary damages, are inadequate to compensate for [the]
injury.’” ivi, 2012 WL 3645304, at *8 (quoting Salinger , 607 F.3d at 80). As this
Court’s recent decision in ivi showed, the harm posed by Aereo’s service is
immense and potentially immeasurable, reaching beyond the Broadcasters’ own
businesses to wreak havoc on the industry as a whole. Indeed, Aereo has plainly
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V. The Public Interest Favors a Preliminary Injunction.
The district court correctly determined that the public interest favors
enjoining Aereo’s service. SPA 51-52 (Slip Op. at 51-52). As this Court has
explained, “[c]opyright law inherently balances the two competing public interests
presented in this case: the rights of users and the public interest in the broad
accessibility of creative works, and the rights of copyright owners and the public
interest in rewarding and incentivizing creative efforts.” ivi, 2012 WL 3645304, at
*11. But “[t]he service provided by [Aereo] is targeted more towards convenience
than access, and the public will still be able to access plaintiffs’ programs through
means other than [Aereo’s] Internet service.” Id .; accord SPA 51 (Slip Op. at 51)
(“There is a logical gap – one that Aereo and Amici fail to bridge – between any
public interest in receiving broadcast televisions signals generally and the public
interest in receiving them from Aereo’s particular service.”). As a result,
“[p]reliminarily enjoining defendants’ streaming of plaintiffs’ television
programming over the Internet, live, for profit, and without plaintiffs’ consent does
not inhibit the public’s ability to access the programs.” ivi, 2012 WL 3645304, at
*11. Nor, of course, does “[a] preliminary injunction . . . affect services that have
obtained plaintiffs’ consent to retransmit their copyrighted television programming
over the Internet.” Id. The public interest therefore overwhelmingly weighs in
appellants’ favor.
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CONCLUSION
For the foregoing reasons, the district court’s order denying a preliminary
injunction should be reversed.
September 14, 2012 Respectfully Submitted,
/s/ Paul M. SmithPaul M. Smith
Richard L. StoneAmy GallegosJENNER & BLOCK LLP
633 West 5th StreetSuite 3600Los Angeles, CA 90071-2054(213) 239-5100
Paul M. SmithSteven B. FabrizioScott B. Wilkens
Matthew E. PriceJENNER & BLOCK LLP1099 New York Ave. NW Suite 900Washington, DC 20001(202) 639-6000
Attorneys for Plaintiffs-Counter-Defendants-Appellants
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FEDERAL RULE OF APPELLATE PROCEDURE FORM 6.
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Dated: September 14, 2012 By: /s/ Scott B. WilkensScott B. Wilkens
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