Aereo: From Working Around Copyright to Thinking Inside the (Cable) Box

Abstract

On-demand, on-the-go programming is the new normal in the retail marketplace for digital entertainment. As mobile-device makers and other innovators jockey to meet consumer demand for maximum choice and flexibility, courts are continually challenged with figuring out how, if at all, the exclusive rights of copyright owners map onto new time- and space-shifting technologies. Several doctrinally difficult cases in this area have involved streaming-media technologies, which implicate the “Transmit Clause” of copyright law’s public performance right. The first of them to end up in the Supreme Court was American Broadcasting Co., Inc. v. Aereo, Inc., which pitted the owners of copyrights in over-the-air, local television broadcasts against a technology company that enabled retransmission of those broadcasts in near real time to individual Internet users. Aereo’s copyright odyssey took the company from the courts, to the Copyright Office, and back to the courts, including a last stop in federal bankruptcy court. What began for Aereo as an innovator’s story about the uncertainty of trying to work around copyright law’s technology-neutral definition of “perform publicly” became a story about the frustration of trying to work within copyright law’s technology-specific definition of “cable system.”

This article presents Aereo’s encounter with the copyright system as a parable about the system's need to strike a better balance between copyright owners and technology innovators. Thinking inside the box of the compulsory license for cable systems was no solution for Aereo in a legal framework that tempers elastic rights with inelastic exceptions. Given the rapid growth in “Zero-TV” households, it makes no sense to tie statutory copyright licenses to outmoded content delivery technologies. Copyrights are technology neutral, and so should copyright exceptions be. Absent greater symmetry between rights and exceptions in the legal architecture of copyright, the technologists who design cheaper, faster, and more user-friendly ways of delivering programming to viewers will be hobbled by high content acquisition costs. Under the current regime, it is the public that ultimately pays the price of the law’s failure to accommodate innovation.

Keywords: Aereo, Internet, copyright, public performance, broadcast, statutory licenses, cable system

JEL Classification: D45, K11, K19, L82, L96, L98, O34, O38