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2193255.2
Nos. 13-55156, 13-55157, 13-55226, and 13-55228
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT ______________________
FOX TELEVISION STATIONS, INC., et al.,
Plaintiffs-Appellees / Cross-Appellants,
v.
AEREOKILLER, LLC, et al.,
Defendants-Appellants / Cross-Appellees
______________________
On Appeal from the United States District Court
for the Central District of California Case Nos. CV-12-6921-GW and CV-12-6950-GW
District Judge George H. Wu ______________________
BRIEF OF THE FOX APPELLEES/CROSS-APPELLANTS
______________________
Richard L. Stone Julie A. Shepard Amy M. Gallegos JENNER & BLOCK LLP 633 West 5th Street, Suite 3600 Los Angeles, CA 90071
Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW, Suite 900 Washington DC 20001
Attorneys for Plaintiff-Appellees and Cross-Appellants Fox Television Stations, Inc., Twentieth Century Fox Film Corp., and Fox
Broadcasting Company
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CORPORATE DISCLOSURE STATEMENT
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure,
and to enable the Court to evaluate possible disqualification or recusal, the
Fox Appellees and Cross-Appellants certify as follows: Fox Broadcasting
Company is an indirect, wholly-owned subsidiary of News Corporation, a
publicly traded company. No publicly held company owns 10% or more of
News Corporation stock. Twentieth Century Fox Film Corp. is also an
indirect, wholly-owned subsidiary of News Corporation, a publicly traded
company. No publicly held company owns 10% or more of News
Corporation stock. Fox Television Stations, Inc. is also an indirect, wholly-
owned subsidiary of News Corporation, a publicly traded company. No
publicly held company owns 10% or more of News Corporation stock.
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TABLE OF CONTENTS
Page
STATEMENT OF JURISDICTION.......................................................................... 1
STATEMENT OF THE ISSUES............................................................................... 1
PRELIMINARY STATEMENT ............................................................................... 2
STATEMENT OF THE CASE .................................................................................. 6
STATEMENT OF FACTS ........................................................................................ 6
A. Public Performance Rights Under The Copyright Act .................. 6
B. The Cablevision Case ..................................................................... 9
C. FilmOn, Aereo, And Aereokiller .................................................. 11
D. The District Court’s Ruling .......................................................... 13
E. The Aereo Appeal ......................................................................... 14
STANDARD OF REVIEW ..................................................................................... 16
SUMMARY OF ARGUMENT ............................................................................... 16
ARGUMENT ........................................................................................................... 20
I. The District Court Correctly Held That The Broadcasters Are Likely To Succeed On The Merits .................................................................. 20
A. Aereokiller Publicly Performs The Broadcasters’ Copyrighted Programs ................................................................................... 20
B. Systems Using Mini-Antennas And Individual Copies Are Not Exempt From The Transmit Clause .......................................... 22
C. The District Court Correctly Rejected Cablevision ..................... 25
1. The Cablevision Court Confused The Terms “Performance” And “Transmission.” ............................. 25
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2. The Reasoning That Led The Cablevision Court To Hold That Each Transmission Is A Separate Performance Was Flawed .................................................................... 29
3. Reading The Statute Correctly Would Not Make All Performances Public ....................................................... 33
4. A Public Performance Does Not Require A Master Copy .................................................................... 35
5. Cablevision Is Not Only Wrong, But Also Distinguishable ............................................................... 40
D. Aereokiller’s Subscribers Are Not Transmitting The Programming To Themselves Using “Remote Equipment.” .... 41
E. Aereokiller Does Not Have A Fair Use Defense .......................... 45
II. The District Court Correctly Concluded That Each Of The Relevant Factors Supported A Preliminary Injunction ...................................... 50
A. The District Court Correctly Found That Aereokiller’s Illegal Service Would Irreparably Harm The Broadcasters ................. 50
B. The District Court Correctly Found That The Balance Of Hardships Favored An Injunction ............................................. 56
C. The District Court Correctly Found That An Injunction Would Serve The Public Interest .......................................................... 58
JOINDER IN THE ABC PARTIES’ CROSS-APPEAL ARGUMENTS ............... 61
CONCLUSION ........................................................................................................ 61
STATEMENT REQUESTING ORAL ARGUMENT ............................................ 63
CERTIFICATE OF COMPLIANCE ....................................................................... 64
CERTIFICATE OF RELATED CASES ................................................................. 65
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TABLE OF AUTHORITIES
Page(s) CASES
Am. Broad. Cos., Inc. v. Aereo, 874 F. Supp. 2d 373 (S.D.N.Y. 2012) .........................................................passim
AMP Inc. v. Foxconn Int’l, Inc., No. 93-1162, 1994 WL 315889 (C.D. Cal. Mar. 7, 1994) ................................. 57
Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983) ............................................................................. 57
Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984) ........................................................................................ 7, 48
Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) ........................................................................passim
Columbia Pictures Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154 (3d Cir. 1984) ............................................................................... 35
Columbia Pictures Industries, Inc. v. Professional Real Estate Investors, Inc., 866 F.2d 278 (9th Cir. 1989) ........................................................................ 44, 45
Concrete Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600 (1st Cir. 1988) ............................................................................... 56
Cont’l Airlines, Inc. v. Intra Brokers, Inc., 24 F.3d 1099 (9th Cir. 1994) .............................................................................. 55
Corley v. United States, 556 U.S. 303 (2009) ............................................................................................ 28
Credit Bureau Connection, Inc. v. Pardini, 726 F. Supp. 2d 1107 (E.D. Cal. 2010) ............................................................. 55
Cuviello v. City of Oakland, No. 06-5517, 2007 WL 2349325 (N.D. Cal. Aug. 15, 2007) ............................. 57
Diamontiney v. Borg, 918 F.2d 793 (9th Cir. 1990) .............................................................................. 53
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eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058 (N.D. Cal. 2000) .............................................................. 54
Eldred v. Ashcroft, 537 U.S. 186 (2005) ............................................................................................ 58
Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989 (9th Cir. 2011) .............................................................................. 56
Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968) .....................................................................................passim
Fox Broadcasting Co. v. Dish Network, LLC, --- F. Supp. 2d ---, 2012 WL 5938563 (C.D. Cal. Nov. 7, 2012) ................. 49, 50
Gilder v. PGA Tour, Inc., 936 F.2d 417 (9th Cir. 1991) .............................................................................. 54
Girl Scouts of Manitou Council, Inc. v. Girl Scouts of U.S. of Am., Inc., 549 F.3d 1079 (7th Cir. 2008) ............................................................................ 52
Helene Curtis Indus. v. Church & Dwight Co., Inc., 560 F.2d 1325 (7th Cir. 1977) ............................................................................ 57
Infinity Broad. Corp. v. Kirkwood, 150 F.3d 104 (2d Cir. 1998) ............................................................................... 46
L.A. News Serv. v. Reuters Television Int’l, Inc., 149 F.3d 987 (9th Cir. 1998) .............................................................................. 46
L.A. News Serv. v. Tullo, 973 F.2d 791 (9th Cir. 1992) .............................................................................. 46
Marlyn Nutraceuticals, Inc. v. Muco Pharma Gmbh & Co., 571 F.3d 873 (9th Cir. 2009) .............................................................................. 16
McCormack v. Hiedeman, 694 F.3d 1004 (9th Cir. 2012) ............................................................................ 16
Metro One Telecomms., Inc. v. C.I.R., 704 F.3d 1057 (9th Cir. 2012) ............................................................................ 20
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MGM Studios, Inc. v. Grokster, 545 U.S. 913 (2005) ...................................................................................... 59, 60
Mullins v. City of N.Y., 626 F.3d 47 (2d Cir. 2010) ................................................................................. 53
Nat’l Football League v. TVRadioNow Corp., Nos. 00-120, 00-121, 2000 WL 34200602 (W.D. Pa. Feb. 29, 2000) ................. 3
On Command Video Corp. v. Columbia Pictures Indus., 777 F. Supp. 787 (N.D. Cal. 1991) ..............................................................passim
Princeton Univ. Press v. Mich. Document Servs. Inc., 99 F.3d 1381 (6th Cir. 1996) .............................................................................. 46
Rent-A-Center, Inc. v. Canyon Tel. & Appliance Rental, Inc., 944 F.2d 597 (9th Cir. 1991) .............................................................................. 54
Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009) ........................................................................ 21, 31
SoftMan Prods. Co. LLC v. Adobe Sys., Inc., 171 F. Supp. 2d 1075 (C.D. Cal. 2001) .............................................................. 61
Sony Corp. v. Universal Studios, Inc., 464 U.S. 417 (1984) ...................................................................................... 48, 49
Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) ........................................................................ 52, 54
Triad Sys. Corp. v. Se. Express Co., 64 F.3d 1330 (9th Cir. 1995) .............................................................................. 56
Twentieth Century Fox Film Corp. v. iCraveTV, Nos. 00-120, 00-121, 2000 WL 255989 (W.D. Pa. Feb. 8, 2000) ..... 3, 51, 52, 54
Video Pipeline, Inc. v. Buena Vista Home Entm’t, Inc., 192 F. Supp. 2d 321 (D.N.J. 2002) ..................................................................... 46
Warner Bros. Entm’t Inc. v. WTV Systems, Inc., 824 F. Supp. 2d 1003 (C.D. Cal. 2011) .......................................................passim
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Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) ................................................................................................ 16
WNET, Thirteen v. Aereo, Inc., --- F.3d ---, 2013 WL 1285591 (2d Cir. Apr. 1, 2013) ................................passim
WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir. 2012) ........................................................................passim
WPIX, Inc. v. ivi, Inc., 765 F. Supp. 2d 594 (S.D.N.Y. 2011) .......................................................... 51, 55
Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574 (6th Cir. 2007) .............................................................................. 46
STATUTES
17 U.S.C. § 101 .................................................................................................passim
17 U.S.C. § 106 .................................................................................................... 7, 21
17 U.S.C. § 111 .......................................................................................................... 8
OTHER AUTHORITIES
CBS Broad. Inc. v. FilmOn.com, Inc., No. 10-7532, ECF No. 49 (S.D.N.Y. Aug. 9, 2012) .............................. 51, 52, 54
H. Comm. on the Judiciary, 89th Cong., 1st Sess., Supplemental Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law, 13-14 (Comm. Print 1965) ......................................................................... 23
H.R. Rep. No. 94-1476 (1976), 1976 U.S.C.C.A.N. 5659 ........................................ 8
Jane C. Ginsburg, Recent Developments in US Copyright Law – Part II, Caselaw: Exclusive Rights on the Ebb?, Columbia Law Sch. Pub. Law & Legal Theory Working Paper Grp., Paper No. 08158, (2008) ........................... 27
Jane C. Ginsburg, WNET v. Aereo: The Second Circuit Persists In Poor (Cable)Vision, The Media Institute (Apr. 23, 2013) .......................................... 28
Jeffrey Malkan, The Public Performance Problem in Cartoon Network LP v. CSC Holdings, Inc., 89 Or. L. Rev. 505, 536 (2011) ......................................... 29
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Melville B. Nimmer & David Nimmer, Nimmer on Copyright (2012) ............. 37, 38
Paul Goldstein, Goldstein on Copyright § 7.7.2 (3d ed. 2008) ......................... 24, 28
Wright, Miller & Kane, Federal Practice & Procedure § 2948.1 (2d ed. 1995) ................................................................................................................... 53
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STATEMENT OF JURISDICTION
The Fox Parties agree with Aereokiller’s jurisdictional statement, and
join and incorporate by reference the ABC Parties’ jurisdictional statement
relating to the cross-appeal.
STATEMENT OF THE ISSUES
1. Under the Copyright Act, to publicly perform a copyrighted
television program means to transmit it to the public using “any device or
process” that is “now known or later developed.” Thus, cable, satellite, and
internet services must be licensed to retransmit broadcast television; if they
are not, they are infringing the copyright owners’ exclusive right to publicly
perform the programs. Aereokiller claims that due to a loophole in the law
created by the Second Circuit in Cablevision,1 the system of mini-antennas
and digital recording devices that it uses to retransmit live television
programs over the internet to thousands or millions of people does not result
in a public performance. Thus, Aereokiller contends, it is free to operate its
for-profit retransmission business without paying for a license. Was the
district court correct to enjoin Aereokiller’s service and reject this argument?
2. Every court to consider the issue has held that the unlicensed
retransmission of copyrighted broadcast programming over the internet
1 Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) .
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irreparably harms broadcasters by, among other things, damaging their
goodwill, damaging their ability to negotiate favorable license agreements
with cable and satellite companies, unfairly competing with their own
internet distribution channels, and harming negotiations with advertisers by
diverting viewers to a platform where viewership is not measured for the
purposes of advertising revenue calculation. The Broadcasters presented
uncontroverted evidence that the same harms would occur here. Was the
district court correct to find that the Broadcasters would suffer irreparable
harm if Aereokiller was not enjoined?
PRELIMINARY STATEMENT
Aereokiller is in the business of capturing live broadcast television
signals and retransmitting the programming over the internet. Anyone can
watch live television on Aereokiller simply by going to Aereokiller’s
website, or using its mobile application to watch television on a cell phone
or tablet. Aereokiller makes money by charging subscription fees to watch
television in high definition, and by displaying banner ads and running
commercials that play when the viewer selects a channel to watch (the
advertisers pay Aereokiller, not the broadcast networks, for these ads). ER
1070, 1076. Unlike the cable, satellite, and other authorized retransmission
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services with which it competes, Aereokiller is paying nothing for the
broadcast programming that it profits from.
This is illegal. Under a provision of the 1976 Copyright Act known as
the Transmit Clause, transmitting copyrighted television programs to the
public using “any device or process” is a public performance that infringes
the copyright owners’ exclusive rights if it is not licensed. 17 U.S.C. § 101;
id. § 106(4).
Companies that retransmit broadcast programming over the internet
without a license are commonly enjoined. E.g., WPIX, Inc. v. ivi, Inc., 691
F.3d 275, 288 (2d Cir. 2012), cert. denied, --- S. Ct. ---, 81 U.S.L.W. 3511
(Mar. 18, 2013); Twentieth Century Fox Film Corp. v. iCraveTV, Nos. 00-
120, 00-121, 2000 WL 255989, at *1 (W.D. Pa. Feb. 8, 2000); Nat’l
Football League v. TVRadioNow Corp., Nos. 00-120, 00-121, 2000 WL
34200602, at *1 (W.D. Pa. Feb. 29, 2000). In fact, Aereokiller’s sister
company, FilmOn, was enjoined from retransmitting live television over the
internet several years ago by a district court in New York. ER 1072, 1111-
12.
Aereokiller believes it has found a legal loophole that allows it to do
exactly what cable, satellite, and other authorized retransmission services do
– retransmit broadcast television to the public for a profit – yet without
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paying for the same licenses these other services pay for. In 2008, the
Second Circuit held in Cablevision that a cable provider licensed to
retransmit broadcast programming could offer a remote DVR service
without having to take a second license to cover the transmissions from the
cable company’s remote server that occurred when the subscribers played
back the recorded programs. See 536 F.3d at 140-41. The Cablevision
Court’s analysis was that these playback transmissions were private, because
they emanated from unique copies made by subscribers, and each
transmission could only be received by the subscriber who had copied the
program. Id. at 134-35.
Aereokiller designed its system to use thousands of miniature
antennas and digital copies to retransmit the programming, so it can claim
that its transmissions are “private” under Cablevision.2 In other words,
Aereokiller would contend that when one million people go on its website
Thursday night at 8:00 pm and watch Glee, there is no public performance
by Aereokiller – just one million private performances of Glee that
Aereokiller is making money from without paying a dime to the company
2 The Broadcasters do not know whether this is really how Aereokiller’s system works, since they were denied expedited discovery regarding the details of Aereokiller’s technology, ER 1948-50, but will assume for the purpose of this appeal that Aereokiller’s description of its system is accurate.
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that invested millions of dollars in creating and producing that copyrighted
work.
That is plainly not right. Cablevision and the doctrine of stare decisis
might have required the Second Circuit to bless Aereo (a similar service that
Aereokiller knocked off, hence the name “Aereokiller”). See WNET,
Thirteen v. Aereo, Inc., --- F.3d ---, 2013 WL 1285591 (2d Cir. Apr. 1,
2013); but see id. at *15-22 (Judge Chin dissenting on the ground that a
retransmission system consisting of miniature antennas and individual
copies is clearly a “device or process” that transmits copyrighted
programming to the public, and arguing that Cablevision should not have
been controlling because it involved a DVR, not an unlicensed
retransmission service). But Cablevision is not the law in this Circuit. And,
as leading scholars have noted, Cablevision’s interpretation of the Transmit
Clause was incorrect. Under the Transmit Clause, transmitting a
performance of a work to the public is a public performance. Whether the
performance is transmitted to the public simultaneously in a single
transmission, or seriatim in many transmissions, or whether the transmitter
uses one copy or many, is not relevant under the statute’s plain language.
Judge Wu’s careful analysis of the statutory language, legislative
history, and Cablevision’s reasoning led him to reject the Cablevision
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Court’s reading of the Transmit Clause and hold that Aereokiller was
infringing under the statute’s plain language. This analysis was correct, and
this Court should therefore affirm the preliminary injunction against
Aereokiller.
STATEMENT OF THE CASE
The Broadcasters sued Aereokiller for copyright infringement on
August 10 and 13, 2012, and jointly moved for a preliminary injunction on
November 8, 2012. The district court (Wu, J.) conducted three separate
hearings on that motion and, on December 27, 2012, preliminarily enjoined
Aereokiller from retransmitting the Broadcasters’ copyrighted television
programming over the internet, but limited the scope of the injunction to the
geographic boundaries of the Ninth Circuit. These consolidated appeals
followed.
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. For
example, Fox owns the copyrights in popular shows such as Glee, Family
Guy, Touch, and Bones. Broadcasters invest significant resources in the
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development, acquisition and production of their programming. E.g., ER
1456.
Although those programs are available to viewers for free over the
airwaves, this does not mean that a business can free-ride on the
Broadcasters’ investment by capturing broadcast signals and retransmitting
them to customers for a profit. Copyright law gives owners of “motion
pictures and other audiovisual works” the exclusive right “to perform the
copyrighted work[s] publicly.” 17 U.S.C. § 106(4). Under the Transmit
Clause, the 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.
By this language, it is copyright infringement for a service provider to
retransmit copyrighted television broadcasts without a license. In fact,
requiring cable companies and other retransmission services to pay royalties
under statutory or negotiated licenses was one of Congress’s express
purposes when it revised the Copyright Act in 1976. See Capital Cities
Cable, Inc. v. Crisp, 467 U.S. 691, 709-10 (1984) (“In revising the
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Copyright Act . . . 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.”); see also H.R. Rep. No. 94-1476, at 88-89 (1976), 1976
U.S.C.C.A.N. 5659, 5702-5704 (“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”) (the “1976 Report”).3
The Transmit Clause was enacted specifically to bring retransmission
of broadcast programming within the performance right, in response to prior
Supreme Court cases holding that cable systems did not “perform”
copyrighted television programs when they captured broadcast signals and
delivered them over cable wire to their subscribers. E.g. Fortnightly Corp.
v. United Artists Television, Inc., 392 U.S. 390, 399-400 (1968). The
rationale of these cases – which Congress rejected – was that cable systems
3 Section 111 of the Copyright Act creates a statutory license that permits cable services to retransmit broadcast signals to their subscribers, provided they pay royalties at government-regulated rates and abide by the statute’s procedures. ivi, 691 F.3d at 278. Services that retransmit broadcast programming over the internet are not entitled to take advantage of the statutory license; internet services must negotiate a license or incur liability for copyright infringement. Id. at 278-85.
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were merely enabling consumers to do what they could do anyway, i.e.,
receive over-the-air television broadcasts with an antenna. Id.
Congress also recognized that technology would evolve and therefore
wrote the Transmit Clause to be technology-neutral, so that the ability of
copyright owners to prevent infringing transmissions would not depend on
what technology the infringer used and would not be subject to technological
erosion. The Transmit Clause encompasses transmissions made via “any
device or process,” 17 U.S.C. § 101 (emphasis added), and the statute
defines “device or process” to include those “now known or later
developed.” See id.
B. The Cablevision Case.
Cablevision was decided by the Second Circuit in 2008. It involved a
cable company’s remote-storage DVR (“RS-DVR”) which, from the user’s
perspective, operated in all practical respects like a regular DVR, except that
the recorded programs were stored on a remote server instead of a set-top
box. 536 F.3d at 124-25. When a subscriber used her remote control to play
back a program, the program would be transmitted from the remote server to
her television. Id. The question in Cablevision was whether these playback
transmissions were a public performance. Id. at 134. Because the cable
company had a license to retransmit live broadcast programming to its
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subscribers, there was no issue involving unauthorized retransmission; the
only issue was whether an additional license was needed for the viewer to
play back the programming she had recorded. Id. at 123, 134.
The Cablevision Court held that the playback transmissions were not a
public performance. 536 F.3d at 136-38. Whatever one thinks of that
outcome, the important thing here is not the result but how it was reached.
The Cablevision Court held that when the Transmit Clause refers to
“members of the public capable of receiving the performance,” Congress
really meant “capable of receiving the transmission.” Thus, the Court
decided that a public performance occurs only if the transmitter makes a
single transmission that is capable of being received by multiple people. Id.
at 134-35. Under this reasoning, a transmitter could transmit a copyrighted
program to thousands or millions of subscribers by sending an individual
transmission to each subscriber – yet that would not count as a public
performance. See id.
The Cablevision Court also held that under the Transmit Clause it is
“relevant” whether each transmission of the same program emanates from
the same copy of the program or from unique, subscriber-associated copies,
as was the case with the RS-DVR. 536 F.3d at 138. Based on this
interpretation of the Transmit Clause, the Court held that “[b]ecause each
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RS-DVR playback transmission is made to a single subscriber using a single
unique copy produced by that subscriber,” there was no public performance.
Id. at 139.
C. FilmOn, Aereo, And Aereokiller.
FilmOn (Aereokiller’s sister company), Aereo, and Aereokiller are
services that retransmit live broadcast television programming over the
internet without a license. FilmOn launched in September 2010. ER 1071.
The Broadcasters immediately sued FilmOn for copyright infringement and
obtained a temporary restraining order. ER 1072.
Aereo took a different approach than FilmOn. It designed its system
to exploit the potential loopholes that the Cablevision decision created in the
Transmit Clause. Instead of using a single antenna to capture broadcast
signals, Aereo uses thousands of miniature antennas which it rotates among
its subscribers as they log in to watch broadcast programming. Aereo, 2013
WL 1285591 at *2. When a subscriber watches live television on Aereo, the
signal from the antenna temporarily assigned to her is routed to Aereo’s
server, which starts copying the program. Id. Once six or seven seconds of
programming have been saved on the server, Aereo streams the program
over the internet to the subscriber from this copy. Id.
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From the subscriber’s perspective, Aereo’s miniature antenna and
copying set-up is invisible: the subscriber simply logs on to Aereo, selects a
program that is currently being broadcast on network television from a
program guide, and then watches the program essentially live, albeit with a
six or seven second delay. 2013 WL 1285591 at *1-2. Aereo limited its
operations to the Second Circuit so that if it were sued, Cablevision would
be controlling. Id. at *21 (Chin, J., dissenting).
In March 2012, the Broadcasters sued Aereo in the Southern District
of New York. Because Aereo’s system was designed to map onto
Cablevision’s interpretation of the Transmit Clause, the court refused to
enjoin Aereo, holding that “[b]ut 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 on their request for a
preliminary injunction.” Am. Broad. Cos., Inc. v. Aereo, 874 F. Supp. 2d
373, 375 (S.D.N.Y. 2012).
On July 31, 2012, FilmOn settled with the Broadcasters and the court
entered a consent judgment permanently enjoining FilmOn from
retransmitting copyrighted broadcast programs without a license. See ER
1073, 1079-102. Days later, FilmOn resurfaced as “Aereokiller,” claiming
that it was now using an Aereo-like miniature antenna and copying system
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and therefore could “legally” retransmit broadcast programming over the
internet with no license. The Broadcasters immediately sued Aereokiller in
the Central District of California, and the case was assigned to the Hon.
George H. Wu.
D. The District Court’s Ruling.
Judge Wu granted the Broadcasters’ motion for a preliminary
injunction. ER 4-10. Assuming for the purpose of the motion that
Aereokiller was using the same system as Aereo, Judge Wu carefully parsed
the language of the Transmit Clause, analyzed Cablevision’s reasoning, and
concluded that Cablevision’s interpretation of the Transmit Clause was
incorrect. ER 5-7. Based on the statute’s plain language, legislative history,
and this Circuit’s law, Judge Wu held that Aereokiller was publicly
performing broadcast programming because it was transmitting a
performance of the work – i.e., the program – to the public. Id.
Judge Wu also rejected Aereokiller’s argument that its service was
non-infringing because it merely enabled its customers to do what they could
lawfully do for themselves with an antenna, DVR, and Slingbox. See ER
684-85. As Judge Wu explained, this was the very reasoning Congress
rejected when it revised the Copyright Act in 1976 and overruled
Fortnightly. ER 5-6.
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Judge Wu also found that the Broadcasters had demonstrated
irreparable harm because the evidence showed that Aereokiller’s service
threatens the Broadcasters’ ability to (i) preserve their goodwill with
licensees and negotiate retransmission agreements with cable, satellite, and
other telecommunications providers; (ii) develop their own internet
distribution channels; and (iii) negotiate with advertisers. ER 7-8. Judge
Wu also noted that Aereokiller would be unlikely to satisfy a statutory
damages award. ER 8. Judge Wu also found that the harm to the
Broadcasters outweighed any harm to Aereokiller, which has “no equitable
interest in continuing an infringing activity.” Id. And he concluded that the
public interest would be served by an injunction that “‘uphold[s] copyright
protections and correspondingly, prevent[s] the misappropriation of skills,
creative energies, and resources which are invested in the protected
work[s].’” Id. (citation omitted).
E. The Aereo Appeal.
When Judge Wu ruled in this case, the appeal of the order denying a
preliminary injunction against Aereo was pending in the Second Circuit. On
April 1, 2013, the Second Circuit issued a split opinion affirming the district
court. Aereo, 2013 WL 1285591 at *14. Because it was bound by its prior
decision in Cablevision, the Aereo majority did not apply the Transmit
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Clause based on its plain language but instead followed Cablevision’s
interpretation. Id. at *6, 13. Thus, the majority held that Aereo does not
publicly perform the Broadcasters’ copyrighted programming by streaming
it live over the internet to subscribers because every subscriber watching live
television on Aereo receives an individual transmission from a “unique
copy” of the program. Id. at *5-9.
Judge Chin filed a sharp dissent, characterizing Aereo’s system as a
“sham” and a “Rube Goldberg-like contrivance, over-engineered in an
attempt to avoid the reach of the Copyright Act and to take advantage of a
perceived loophole in the law.” 2013 WL 1285591 at *15. The dissent
explains why the plain language of the Transmit Clause compels the
conclusion that Aereo publicly performs broadcast programming:
It is apparent that Aereo’s system falls squarely within the plain meaning of the statute . . . . The statute is broadly worded, as it refers to “any device or process.” Aereo’s system of thousands of antennas and other equipment is clearly a “device or process.” Using that “device or process,” Aereo receives copyrighted images and sounds and “transmit[s] or otherwise communicate[s] them to its subscribers “beyond the place from which they are sent[.]” . . . The “performance or display of the work” is then received by paying subscribers “in separate places” and “at different times.”
Id. at *17 (internal citations omitted).
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STANDARD OF REVIEW
“‘A plaintiff seeking a preliminary injunction must establish that [s]he
is likely to succeed on the merits, that [s]he is likely to suffer irreparable
harm in the absence of preliminary relief, that the balance of equities tips in
[her] favor, and that an injunction is in the public interest.’” McCormack v.
Hiedeman, 694 F.3d 1004, 1010 (9th Cir. 2012) (quoting Winter v. Natural
Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)) (brackets in original).
This Court reviews “a district court’s grant of a preliminary injunction
for an abuse of discretion. ‘[O]ur inquiry is at an end once we determine
that the district court employed the appropriate legal standards which govern
the issuance of a preliminary injunction, and . . . correctly apprehended the
law with respect to the underlying issues in [the] litigation.’” Marlyn
Nutraceuticals, Inc. v. Muco Pharma Gmbh & Co., 571 F.3d 873, 876 (9th
Cir. 2009) (citation omitted, alterations in original). “The district court’s
interpretation of underlying legal principles is subject to de novo review.”
McCormack, 694 F.3d at 1010.
SUMMARY OF ARGUMENT
Judge Wu was correct to conclude that Aereokiller publicly performs
copyrighted broadcast programming when it streams it over the internet
where it can be received by anyone on a computer, cell phone, or tablet.
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Aereokiller’s miniature antenna and copying system is a “device or process”
that Aereokiller uses to transmit programming to members of the public.
Therefore, Aereokiller falls squarely within the Transmit Clause. There is
no reasonable reading of the Transmit Clause that would make Aereokiller’s
system exempt.
To the extent Cablevision’s interpretation of the Transmit Clause
would justify allowing Aereokiller to continue operating unlicensed, that
interpretation cannot be squared with the statute’s text or legislative history,
and Judge Wu was correct to reject it. Moreover, Cablevision is
distinguishable because it involved only a remote DVR service offered as an
adjunct to a legal, licensed cable television service. Cablevision did not hold
that an unlicensed service provider could avoid the need for a license
altogether by using unique copies and separate streams to retransmit the
programming.
Aereokiller characterizes its system as advanced “technology” that
allows consumers to remotely access antennas and related equipment they
can use to supposedly transmit broadcast programming to themselves. This
is not accurate. Aereokiller is a retransmission service. Viewers watching
television programming on Aereokiller do not use remote antenna equipment
to transmit programming to themselves any more than satellite television
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subscribers use remote satellite equipment to transmit programming to
themselves. Viewers use Aereokiller’s ad-sponsored website and mobile
applications to watch television over the internet, not to own and operate
remote antennas or any other technology platform. The experience is the
same as watching programs on a television. The viewer simply selects a
channel, and watches it:
25
ER 219
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ER 220.
Courts within this Circuit have squarely rejected attempts by service
providers to avoid copyright liability by claiming they are not transmitting
copyrighted works but instead simply providing remote equipment viewers
use to transmit the works to themselves. See, e.g., Warner Bros. Entm’t Inc.
v. WTV Systems, Inc., 824 F. Supp. 2d 1003, 1010-11 (C.D. Cal. 2011)
(enjoining internet movie streaming service, and rejecting argument that the
service was really just allowing viewers to rent and watch movies remotely);
On Command Video Corp. v. Columbia Pictures Indus., 777 F. Supp. 787,
789-90 (N.D. Cal. 1991) (granting summary judgment against service that
transmitted movies to hotel room televisions, and rejecting argument that the
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service was really offering “‘electronic rentals’ similar to patrons’ physical
borrowing of videotapes.”).
The Court should also reject Aereokiller’s claim that its infringing
activities are somehow protected by “fair use” principles. Just because
individuals can receive broadcast television using rooftop antennas does not
mean Aereokiller is entitled to act as a middleman and profit from capturing
and retransmitting programming for which it pays nothing. As Judge Wu
recognized, this is the same justification that Congress rejected when it
enacted the Transmit Clause and overruled Fortnightly. Moreover, no court
has ever held that a fair use defense could even theoretically apply in a
performance right claim against a commercial retransmission service.
ARGUMENT
I. The District Court Correctly Held That The Broadcasters Are Likely To Succeed On The Merits.
A. Aereokiller Publicly Performs The Broadcasters’ Copyrighted Programs.
The starting point for the Court’s analysis is the plain language of the
Transmit Clause. Metro One Telecomms., Inc. v. C.I.R., 704 F.3d 1057,
1061 (9th Cir. 2012). “The preeminent canon of statutory interpretation
requires us to presume that the legislature says in a statute what it means and
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21 2193255.2
means in a statute what it says there.” Satterfield v. Simon & Schuster, Inc.,
569 F.3d 946, 951 (9th Cir. 2009) (internal brackets omitted).
The Copyright Act grants copyright owners the exclusive right to
perform their copyrighted works publicly. 17 U.S.C. § 106(4). Section 101
of the Act defines what it means to perform a work “publicly.” Under the
Transmit Clause, “to perform a work publicly” is:
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.
A television program is performed when its images and sounds are
played. 17 U.S.C. § 101 (definition of “perform” an “audiovisual work”).
To “transmit a performance” is to “communicate it by any device or process
whereby images or sounds are received beyond the place from which they
are sent.” Id. And a “device or process” includes “one now known or later
developed.” Id.
Aereokiller publicly performs the Broadcasters’ programs within the
plain language of the statute. For example, Aereokiller performs the Fox
program Glee when it retransmits Glee by capturing Fox’s signal on its
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antennas, transcoding the signal for delivery over the internet, and streaming
Glee over the internet. Aereokiller’s “technology” – its system of miniature
antennas, copies, and the internet – is a “device or process.” The Aereokiller
“technology” transmits the program: Aereokiller viewers can receive and
watch Glee at any location on a computer or mobile device, which is a place
beyond the place from which the images and sounds of the program were
sent. And Aereokiller transmits the program to the public: viewers
watching Glee on Aereokiller are members of the public who receive the
performance of Glee in separate places. Thus, Aereokiller is publicly
performing the Broadcasters’ copyrighted programs under the plain
language of the Transmit Clause.
B. Systems Using Mini-Antennas And Individual Copies Are Not Exempt From The Transmit Clause.
Judge Wu was right to reject Aereokiller’s claim that its “technology”
is somehow exempt from the Transmit Clause. The Transmit Clause is
expressly technology-neutral. It clearly states that a work is performed
publicly if it is transmitted to the public “by means of any device or
process.” 17 U.S.C. § 101 (emphasis added). This broad language is
repeated in the definition of “transmit,” which can be done using “any
device or process.” Id. The fact that Congress intended to capture all
possible technologies within the definition of public performance is
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underscored by the statute’s definition of “device or process,” which
includes those “now known or later developed.” Id.
The legislative history further confirms Congress’s intent to include
all possible technologies within the Transmit Clause:
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 radio and television broadcasting as we know them. Each and every method by which the images or sounds comprising a performance or display are picked up and conveyed is a ‘transmission,’ and if the transmission reaches the public in any form, the case comes within the scope of clauses (4) or (5) of section 106.
1976 Report at 64 (emphasis added); see also id. at 63 (a “performance may
be accomplished ‘either directly or by means of any device or process,’
including all kinds of equipment for reproducing or amplifying sounds or
visual images, any sort of transmitting apparatus, any type of electronic
retrieval system, and any other techniques and systems not yet in use or even
invented”) (emphasis added); H. Comm. on the Judiciary, 89th Cong., 1st
Sess., Supplemental Report of the Register of Copyrights on the General
Revision of the U.S. Copyright Law, 13-14 (Comm. Print 1965) (“[T]he bill
should, we believe, adopt a general approach aimed at providing
compensation to the author for future as well as present uses of his work that
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materially affect the value of his copyright . . . . A real danger to be guarded
against is that of confining the scope of an author’s rights on the basis of the
present technology so that, as the years go by, his copyright loses much of
its value because of unforeseen technical advances.”).
Ignoring the statute’s plain language and legislative history,
Aereokiller and its amici argue that when Congress enacted the 1976
Copyright Act, it wrote the Transmit Clause narrowly to balance copyright
owners’ rights with the public’s right to access the copyrighted works
through “private performances.” E.g., Appellants’ Opening Brief (“AOB”)
at 13; Aereo Amicus Brief at 8-10. The only support they cite for this is
general language stating that only public performances are actionable, which
is of course not disputed.
This is revisionist history. The types of private performances
Congress had in mind were things like singing in the shower, listening to the
radio, or watching television in the home. E.g., 1976 Report at 63-64; see
also Paul Goldstein, Goldstein on Copyright § 7.7.2 (3d ed. 2008) (Congress
determined that the copyright owner’s “rights should not be extended to
situations, such as singing in the shower, where interests in privacy or the
small scale of the use will typically make it inappropriate or impracticable
for the copyright owner to detect the use and for the copyright owner and
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user to negotiate a license.”). There is nothing in the statute or legislative
history indicating Congress would have intended a commercial service
retransmitting live broadcast programming to thousands or millions of
people to be engaging in “private performances.”
C. The District Court Correctly Rejected Cablevision.
Aereokiller’s only argument that its service is non-infringing relies on
the Cablevision Court’s interpretation of the Transmit Clause, which it
asserts Judge Wu should have followed. As detailed below, Cablevision’s
reading of the Transmit Clause does violence to the plain language of the
statute and the intent of Congress, produces absurd results, has been roundly
criticized by leading scholars, and should not be adopted by this Court.
1. The Cablevision Court Confused The Terms “Performance” And “Transmission.”
As Judge Wu recognized, the basic, underlying mistake in
Cablevision was the Second Circuit’s conclusion that a “transmission of a
performance is itself a performance.” 536 F.3d at 134 (citation omitted); ER
5. This led the court to replace the term “performance” in the Transmit
Clause with the term “transmission,” thereby effectively – and improperly –
rewriting the clause to read:
to transmit or otherwise communicate a performance or display of the work . . . to the public, by means of any device or process, whether
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the members of the public capable of receiving the performance transmission or display receive it the transmission in the same place or in separate places and at the same time or at different times.
Applying its revised version of the Transmit Clause, the Second
Circuit reasoned that unless a single transmission is capable of being
received by multiple people, the transmitter has not infringed the public
performance right. 536 F.3d at 134-40.
This was wrong. As defined by the statute, a “transmission” and a
“performance” are not the same thing. To transmit a performance is to
“communicate it by any device or process whereby images or sounds are
received beyond the place from which they are sent.” 17 U.S.C. § 101. This
tells us that the “performance” is the thing that is communicated and the
transmission is the means of communicating the performance. As Judge Wu
correctly explained, the Transmit Clause, properly read, says that
“transmitting a performance to the public is a public performance.” ER 5. It
“does not by its express terms require that two members of the public
receive the performance from the same transmission.” ER 6.
Moreover, the fact that the Transmit Clause states that transmitting a
performance to the public is a public performance even if the members of
the public capable of receiving the performance receive it “at different
times” confirms that Congress envisioned multiple transmissions of the
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same work as being a public performance. This is because there is no such
thing as two people receiving the same transmission at different times.
People receiving transmissions at different times are necessarily receiving
separate transmissions. See Jane C. Ginsburg, Recent Developments in US
Copyright Law – Part II, Caselaw: Exclusive Rights on the Ebb?, Columbia
Law Sch. Pub. Law & Legal Theory Working Paper Grp., Paper No. 08158,
(2008), pub’d in 218 Revue Internationale du Droit d’Auteur (2008) (Fr.), 26
(“The [Cablevision] court’s construction clashes with the text of the Act in
another important way as well: it is not possible to transmit a performance
‘created by the act of transmission’ to members of the public ‘at different
times.’ While such a ‘performance’ could be transmitted to differently
located recipients, recipients differently situated in time cannot receive the
same transmission.”).4
By interpreting the Transmit Clause as requiring each separate
transmission to be treated as a distinct performance, the Cablevision Court
read the “different times” language out of the statute. Under Cablevision’s
interpretation, whenever a service transmits a performance of a work to
members of the public who receive it “at different times,” the performance
would necessarily be private, and never public, because each recipient
4 Available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1305270.=columbia_pllt
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would be receiving a separate transmission. See Jane C. Ginsburg, WNET v.
Aereo: The Second Circuit Persists In Poor (Cable)Vision, The Media
Institute (Apr. 23, 2013) (explaining that “at different places and different
times” is “the key language that should make clear that Congress was
covering both simultaneous, and ‘asynchronous’ transmissions,” and that
“the Second Circuit’s reading effectively deletes ‘different times’ from the
statute, thus defeating Congress’s clear intent to bring pay-per-view and
other individualized forms of transmission within the scope of the Copyright
Act”).5 By reading language out of the statute, the Cablevision Court
violated one of the most basic rules of statutory construction. See Corley v.
United States, 556 U.S. 303, 314 (2009) (“[O]ne of the most basic
interpretive canons [is] that a statute should be construed so that effect is
given to all its provisions, so that no part will be inoperative or superfluous,
void or insignificant.”) (internal quotation marks and alterations omitted)).
Leading scholars agree with Judge Wu that the Cablevision Court
misread the statute. See Paul Goldstein, Goldstein on Copyright § 7.7.2 (3d
ed. 2008) (“The error in the Second Circuit’s construction of the transmit
clause was to treat ‘transmissions’ and ‘performance’ as synonymous, where
the Act clearly treats them as distinct – and different – operative terms.”);
5 Available at http://www.mediainstitute.org/IPI/2013/042313.php.
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Ginsburg, supra, at 26 (“the court confused ‘performance’ and
‘transmission’”); Jeffrey Malkan, The Public Performance Problem in
Cartoon Network LP v. CSC Holdings, Inc., 89 Or. L. Rev. 505, 536 (2011)
(the court “thought that the words ‘performance’ and ‘transmission’ were
interchangeable . . . [but] a transmission and a performance remain,
technically and legally, two distinct things”); id. at 553 (“The principal error
in the court’s application of the transmit clause was that it substituted the
word ‘transmission’ for the word ‘performance’ in the phrase ‘capable of
receiving the performance[.]’”).
2. The Reasoning That Led The Cablevision Court To Hold That Each Transmission Is A Separate Performance Was Flawed.
Cablevision’s reading of the Transmit Clause is illogical and not
grounded in the statute’s text. This is how the Cablevision Court reached its
interpretation of the statute:
The statute itself does not expressly define the term “performance” or the phrase “to the public.” It does explain that a transmission may be “to the 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. This plain language instructs us that in determining whether a transmission is to the public it is of no moment that the potential recipients of the transmission are in different places, or that they may receive the transmission at different times. The implication
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from this same language, however, is that it is relevant, in determining whether a transmission is made to the public, to discern who is “capable of receiving” the performance being transmitted. The fact that the statute says “capable of receiving the performance” instead of “capable of receiving the transmission” underscores the fact that a transmission of a performance is itself a performance.
536 F.3d at 134 (emphasis added, internal citation omitted).
Each underlined word or phrase is a problem. First, the Transmit
Clause does not “explain that a transmission may be to the public . . . .” Nor
does the Transmit clause require us to “determin[e] whether a transmission
is to the public.” The Transmit Clause says it is a public performance to
“transmit” a “performance” of the work to the public. See 17 U.S.C. § 101.
This does not necessarily require a single transmission to the public, as the
Cablevision Court seemed to believe. Rather, one can transmit a television
program to the public either by transmitting it once to many people (like a
television broadcast) or by transmitting it numerous times to many different
people (like video-on-demand). Judge Wu recognized this. ER 6 (“The
statute provides an exclusive right to transmit a performance publicly, but
does not by its express terms require that two members of the public receive
the performance from the same transmission.”).
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Moreover, “[t]he fact that the statute says ‘capable of receiving the
performance’ instead of ‘capable of receiving the transmission’” does not
“underscore . . . that a transmission of a performance is itself a
performance.” 536 F.3d at 134. This statement by the Cablevision Court is
a non-sequitur. In actuality, the fact that the statute says “‘capable of
receiving the performance’ instead of ‘capable of receiving the
transmission’” tells us that a performance made available by transmission is
a public performance if members of the public are capable of receiving the
performance. After all, we are supposed to assume that Congress meant
what it said. Satterfield, 569 F.3d at 951.
The Cablevision Court attempted to support its reading of the statute
with language from the House Report on the 1976 Copyright Act, which
said:
Under the bill, as under the present law, a performance made available by transmission to the public at large is “public” even though the recipients are not gathered in a single place, and even if there is no proof that any of the potential recipients was operating his receiving apparatus at the time of the transmission. The same principles apply whenever the potential recipients of the transmission represent a limited segment of the public, such as the occupants of hotel rooms or the subscribers of a cable television service.
536 F.3d at 135 (emphases and brackets omitted).
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The Cablevision Court assumed that because the House Report used
the language “potential recipients of the transmission,” Congress must have
meant that courts should look at the potential recipients of each separate
transmission to determine whether a performance is public. But this is not
what Congress wrote in the statute. Moreover, this language from the House
Report is simply confirming that a transmission made available to a limited
segment of the public such as hotel room occupants or cable subscribers is
still public. It is not defining what it means to transmit a performance to the
public, and it does not state that a public performance can only occur if a
single transmission can be received by multiple people. Additionally, the
very next sentence of the House Report says that “Clause (2) of the
definition of ‘publicly’ is applicable ‘whether the members of the public
capable of receiving the performance or display receive it . . . at the same
time or at different times.’” 1976 Report at 65 (emphasis added). Because,
as explained above, a single transmission cannot be received at different
times, this language tells us that Congress understood a public performance
would occur if a performance was transmitted individually to members of
the public at different times.
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3. Reading The Statute Correctly Would Not Make All Performances Public.
The Cablevision Court attempted to support its interpretation of the
Transmit Clause by stating that any other interpretation would “obviate[]
any possibility of a purely private transmission.” 536 F.3d at 136. It used
two examples to illustrate this point:
Assume that HBO transmits a copyrighted work to both Cablevision and Comcast. Cablevision merely retransmits the work from one Cablevision facility to another, while Comcast retransmits the program to its subscribers. Under plaintiffs' interpretation, Cablevision would still be transmitting the performance to the public, solely because Comcast has transmitted the same underlying performance to the public. Similarly, 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.
In other words, the Cablevision Court presumed that if each
transmission was not viewed in isolation, then all transmissions of the same
program by everyone in the universe would be viewed collectively as a
public performance, making everyone who had ever transmitted that
program an infringer. This is bizarre. In the Cablevision-Comcast
hypothetical, Cablevision has not publicly performed the program because
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Cablevision only transmitted the program between its own facilities and
never transmitted it to the public. Likewise, in the “hapless customer”
hypothetical, the customer has not publicly performed the program because
he did not transmit it to the public, he transmitted it to himself in his
bedroom. Judge Wu addressed the “hapless customer” hypothetical in his
opinion, and correctly recognized “[t]here is nothing public about such a
performance.” ER 6 n.12.
Aereokiller echoes this fallacy in its brief, contending that if the
preliminary injunction is affirmed, it will mean that a homeowner engages in
a public performance if she receives a broadcast signal on a rooftop antenna
and delivers that signal throughout her house, or if she plays a song she has
stored on Apple’s iCloud service on multiple devices. AOB at 20. No. The
homeowner is not transmitting the broadcast signal to the public; she is
transmitting it to other rooms in her own house. And a person listening to a
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music file she owns is not publicly performing either; she is listening to her
own music in private.6
4. A Public Performance Does Not Require A Master Copy.
The Cablevision Court’s second critical error was its holding that if a
system transmits copyrighted programs from unique, subscriber-associated
copies, then each transmission is private. 536 F.3d at 138. This allowed the
Court to square its interpretation of the Transmit Clause with other cases
where courts found individualized transmissions to members of the public
from a master copy to be public performances. E.g., Columbia Pictures
6 Aereokiller and its amici insist that if the Transmit Clause is read properly, then companies which purportedly relied on Cablevision to design “cloud storage” or “cloud computing” services will be harmed. Aereokiller is not a cloud storage service (nor is Aereo, despite what it claims in its amicus brief). Aereo and Aereokiller are services that retransmit broadcast television over the internet. As far as the Broadcasters are aware, it is not possible for a consumer to upload a file she owns and store it on Aereo or Aereokiller. Moreover, as the briefs of Aereokiller’s amici demonstrate, “cloud computing,” “cloud service,” “cloud storage” and the like are amorphous terms that companies use to describe a wide variety of different types of internet services. Some companies that refer to themselves as “cloud services” publicly perform copyrighted works under the Transmit Clause (e.g., Aereo). Others do not. Some of these services are licensed; others are not. Holding that Aereokiller is committing copyright infringement under the plain language of the statute would not mean that all “cloud computing” would become illegal. Indeed, it would not even mean that the Cablevision RS-DVR would become illegal. A reasonable court might conclude that transmissions to individual cable subscribers of shows they had chosen to have recorded on the RS-DVR do not constitute public performances.
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Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154, 159 (3d Cir. 1984) (separate
transmissions of movies to private viewing booths were a public
performance); On Command, 777 F. Supp. at 789-90 (separate transmissions
of movies to separate hotel rooms was a public performance).
A rule that a performance is public if separate transmissions emanate
from a master copy but private if the transmissions emanate from individual
copies cannot be squared with the language of the Transmit Clause. The
Transmit Clause does not say anything about unique copies or master copies
– it says “any device or process.” The legislative history says nothing about
unique copies or master copies. And this makes sense. Copyright law
protects the copyrighted work, not any particular copy that work. A copy is
just a material object, like a DVD or computer file, in which the copyrighted
program is fixed. All copies of last week’s episode of Glee embody the
same copyrighted work. There is no logical reason why Congress would
have granted Fox, as the copyright owner, the exclusive right to stream Glee
to the public from a master copy only, leaving retransmitters free to stream
Glee without a license so long as they devise a device or process that first
makes individual, subscriber-associated copies before streaming the
programs. Judge Wu was plainly correct when he rejected this aspect of
Cablevision, holding that “the concern [under the Copyright Act] is with the
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performance of the copyrighted work, irrespective of which copy of the work
the transmission is made from.” ER 6 (emphasis added).
The idea that transmissions from a master copy are public and
transmissions from individual copies are private originated with the Nimmer
Copyright treatise. See Cablevision, 536 F.3d at 138. In that treatise, the
author editorialized that the “different times” language in the statute was
probably meant to cover situations where the same work was performed over
and over for members of the public – for example, an “old-fashioned penny
arcade, where a short motion picture sequence might be seen in a coin-
operated ‘peep show’ device.” 2 Melville B. Nimmer & David Nimmer,
Nimmer on Copyright § 8.14[C][3] (2012). The treatise cites no statutory
language or legislative history supporting the author’s view and cannot
override the plain language of the statute and Congress’s express intent that
it should be a public performance to transmit a performance to members of
the public using any device or process.
Moreover, Professor Nimmer himself acknowledged that deciding
whether a performance is public or private based on whether it involves
individual copies or a master copy produces absurd results. For example,
the treatise states that under this rule, a person who rents a movie from a
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video store is publicly performing the movie because other people rented
and watched that same copy:
In the abstract, it may be argued that the practice of renting a given videocassette of a motion picture to various members of the public gives rise to “public” performances of the work, although each such performance of the work on a home television set is received only by an individual or family group. Nevertheless, the same copy gives rise to numerous performances, which are received by the public “at different times.” Therefore, under the wording of the Act, and by reason of the underlying rationale of what constitutes a “public” performance, it may follow that each individual rental performance is a “public” performance.
Nimmer on Copyright § 8.14[C][3].
A person sitting in his living room watching a DVD of Braveheart
that he rented from Blockbuster is not publicly performing Braveheart. This
is because he is neither playing the DVD at a place open to the public nor
transmitting Braveheart to members of the public, as the statute requires.
See 17 U.S.C. § 101.
Under Professor Nimmer’s analysis, four people who happened to rent
the same DVD copy of Braveheart from Blockbuster would each be liable
for publicly performing Braveheart by virtue of the fact that they all
watched the same copy. Yet Aereokiller could retransmit the Super Bowl to
thousands of subscribers without a license, and these would be deemed
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“private” performances simply because it has built a “Rube Goldberg”
contraption that makes thousands of copies of the broadcast signal and
transmits from those copies. The fact that Professor Nimmer’s analysis
produces a result that conflicts with the statute and defies common sense
confirms that his reasoning was flawed.
Aereokiller contends that district courts in this Circuit have adopted
Cablevision’s “master copy” requirement, citing On Command and WTV
Systems. This is not accurate. On Command involved a system for
transmitting movies to hotel rooms from a central bank of VCRs. 777 F.
Supp. at 788-89. The court found that On Command was publicly
performing the movies – but the fact that the hotel guests were watching the
same copy was not part of the analysis. See id. at 789-90. Rather, the court
reasoned that On Command was publicly performing the movies because the
hotel guests were “members of the public” and the relationship between On
Command and the hotel guests “is a ‘public’ one regardless of where the
viewing takes place.” Id. This is a more logical way to analyze whether a
performance is to the public than by looking to whether the transmissions
emanate from one copy or many.
WTV Systems involved an internet service called Zediva that allowed
customers to watch movies streamed over the internet. 824 F. Supp. at
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1006-08. As with On Command, the court’s conclusion that Zediva was
publicly performing the movies when it transmitted them over the internet to
its customers was not based on the fact that Zediva had a master copy of
each movie that it used to make the transmissions. Instead, it was based on
the fact that Zediva’s customers were members of the public. Id. at 1010
(“Customers watching one of Plaintiffs’ Copyrighted Works on their
computer through Zediva’s system are not necessarily watching it in a
‘public place,’ but those customers are nonetheless members of ‘the
public.’”). The district court noted that Cablevision was inapplicable
because Cablevision’s RS-DVR used unique copies instead of the master
copies used by Zediva, but it did not analyze or approve of Cablevision’s
reasoning. See id. at 1011 n.7.
5. Cablevision Is Not Only Wrong, But Also Distinguishable.
Even if Judge Wu had followed Cablevision, the correct result still
would have been to enjoin Aereokiller’s unlicensed retransmission service.
Because Cablevision was licensed to retransmit broadcast programming in
the first instance, see 536 F.3d at 123, the court in that case did not consider
whether a service without a license could avoid the need to obtain one by
designing a system that used individual transmissions and unique copies to
retransmit the programming.
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The RS-DVR at issue in Cablevision was completely different than
Aereokiller’s unlicensed service. The RS-DVR was functionally the same as
a set-top DVR, and it existed only to allow subscribers to copy and watch
programming that Cablevision was licensed to provide to them. 536 F. 3d at
139; see also Aereo, 2013 WL 1285591 at *20 (Chin, J., dissenting). By
contrast, Aereokiller’s system – just like Aereo’s – makes copies solely to
argue that it can retransmit live programming without paying for the licenses
that cable and satellite companies pay for. See Aereo, 2013 WL 1285591, at
*20 (Chin, J., dissenting) (describing Aereo’s analogous system). As Judge
Chin explained in his Aereo dissent: “Aereo’s use of copies is essential to its
ability to retransmit broadcast television signals, while Cablevision’s copies
were merely an optional alternative to a set-top DVR. The core of Aereo’s
business is streaming broadcasts over the Internet in real-time; the addition
of the record function, however, cannot legitimize the unauthorized
retransmission of copyrighted content.” Id.
D. Aereokiller’s Subscribers Are Not Transmitting The Programming To Themselves Using “Remote Equipment.”
Aereokiller repeatedly mischaracterizes its service as merely allowing
subscribers to use remote technology – i.e., antennas and computer
equipment – to transmit programming to themselves. This characterization
is a sham. Aereokiller is a retransmission service, whereby consumers can
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log onto Aereokiller’s web site or mobile application and watch live
broadcast programming streamed over the internet. ER 1345-49, 1375-80,
1403-14; see also ER 933-34 (Aereokiller admitting its system receives,
encodes, and distributes programming over the internet). The only thing the
viewer does is choose a program to watch, just as she would on a television.
No court would seriously entertain an argument by a cable or satellite
provider that it does not need a license because it merely allows its
subscribers to use remote technology – i.e., antennas and cable wires, or a
satellite dish – to transmit television programming to themselves.
Aereokiller is no different.
Aereokiller is not the first service provider to try to skirt liability for
transmitting copyrighted works by pretending its customers are merely
controlling technology remotely. For example, the defendant in On
Command tried to argue that its system for transmitting movies from a
central bank of VCRs to hotel room televisions was not actually transmitting
movies to hotel rooms; instead, it characterized its service as merely
allowing guests to rent movies electronically. On Command, 777 F. Supp. at
789. The court found this argument to be “without merit,” holding that:
On Command transmits movie performances directly under the language of the definition. The system “communicates” the motion picture “images and sounds” by a “device or process” –
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the equipment and wiring network – from a central console in the hotel to individual guest rooms, where the images and sounds are received “beyond the place from which they are sent.” The fact that the hotel guests initiate this transmission by turning on the television and choosing a video is immaterial.
Id. at 789-90 (emphasis added, internal citations omitted).
Likewise, in WTV Systems, Zediva tried to argue that its system for
streaming movies over the internet from a central bank of DVD players was
not transmitting movies over the internet to its customers. 824 F. Supp. 2d
at 1009. Instead, according to Zediva, its customers were merely renting
DVDs remotely. Id. The court rejected this argument, holding that the
“Zediva service transmits performances of Plaintiffs’ Copyrighted Works
directly under the language of the statute . . . . As in On Command, the fact
that Zediva’s customers initiate the transmission by turning on their
computers and choosing which of Plaintiffs’ Copyrighted Works they wish
to view is immaterial.’” Id. at 1009-10.
As in On Command and WTV, Aereokiller is transmitting
performances of the copyrighted programs under the plain language of the
statute. Aereokiller communicates the images and sounds of the
copyrighted programs through the use of a “device or process” –
Aereokiller’s antenna farm, routers, transcoders, etc. The images and
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sounds are received beyond the place from which they were sent – they are
sent from Aereokiller and received on subscribers’ computers or mobile
devices. Under the plain language of the statute, Aereokiller is transmitting
television programming, not renting remote antennas, and the fact that
individual viewers choose which program to watch does not mean they are
transmitting the programs to themselves. On Command, 777 F. Supp. at
798-90; WTV, 824 F. Supp. 2d at 1009-1010.
Aereokiller cites Columbia Pictures Industries, Inc. v. Professional
Real Estate Investors, Inc., 866 F.2d 278 (9th Cir. 1989), for the proposition
that a “hotel was not a ‘retransmitter’ because the hotel was merely
providing the consumers equipment that allowed them to watch the videos in
private.” See AOB at 27 n.12. Professional Real Estate Investors was
completely different because the hotel in that case was renting guests
videodiscs that they could pick up, bring back to their rooms, and play on
videodisc players located in the hotel rooms. 866 F.2d at 279. The Court
held that the hotel was not transmitting the movies because there was no
performance being received from beyond the place it was sent; the guests
were just watching videodiscs that were physically located in their hotel
room disc players and played on their hotel room televisions. Id. at 282.
Here, by contrast, there is obviously a performance being received beyond
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the place it was sent: the Broadcasters’ programming is being sent over the
internet and being received by viewers watching Aereokiller on their
computers and mobile devices. ER 1345-49.
Moreover, the Court in Professional Real Estate Investors recognized
that a closed-circuit system for transmitting movies to individual hotel guest
rooms on-demand does publicly perform the movies. 866 F.2d at 282 n.7
(“Spectradyne’s closed circuit system falls squarely within the transmit
clause of the Act. It uses wires to transmit a signal, employs a central
transmission device, and the signal is received at places beyond the place
from which it is sent.”).
E. Aereokiller Does Not Have A Fair Use Defense.
Aereokiller argues that its service is legal under the “fair use”
doctrine, because it simply allows viewers to receive and record broadcast
programming that they would have the right to receive with a rooftop
antenna and record with a DVR. AOB at 21-25; see id. at 9 (“Through
Aereokiller’s technology, a user may remotely record and privately view
television programming the user indisputably has the right to record and to
view.”). This is wrong.
It is irrelevant that some of Aereokiller’s viewers could receive
broadcast programming using rooftop antennas. As Judge Wu correctly
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noted, copyright law recognizes a difference between what people can
legally do on their own, and what a commercial service provider can legally
do for a number of people. ER 6-7.
First, a commercial retransmitter cannot avoid the need to obtain a
license by claiming to stand in the shoes of its customers. See, e.g., L.A.
News Serv. v. Tullo, 973 F.2d 791, 797 (9th Cir. 1992); Zomba Enters., Inc.
v. Panorama Records, Inc., 491 F.3d 574, 582-83 (6th Cir. 2007)
(commercial karaoke CD maker could not stand in the shoes of its customers
or benefit from fair use arguments they might have); Infinity Broad. Corp. v.
Kirkwood, 150 F.3d 104, 112 (2d Cir. 1998) (en banc) (“[C]ourts have
rejected attempts by for-profit users to stand in the shoes of their
customers.”); Princeton Univ. Press v. Mich. Document Servs. Inc., 99 F.3d
1381, 1389 (6th Cir. 1996) (en banc) (same); accord L.A. News Serv. v.
Reuters Television Int’l, Inc., 149 F.3d 987, 994 (9th Cir. 1998) (“[T]he
question of whether defendants’ copying and transmission of the works
constitutes fair use is distinct from whether their subscribers’ broadcasts of
the works are fair use.”); Video Pipeline, Inc. v. Buena Vista Home Entm’t,
Inc., 192 F. Supp. 2d 321, 333 (D.N.J. 2002) (defendant “should not be able
to hide behind the lawful actions and privileges extended to its retailer
customers who have abided by the Copyright Act”).
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Second, as Judge Wu explained, Aereokiller’s position is exactly the
argument that Congress rejected in the 1976 Copyright Act, which
overturned the Fortnightly case. See 392 U.S. at 398-99; ER 7. Before the
1976 Act, the Supreme 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.
392 U.S. at 399-400. In Fortnightly, the Supreme Court had reasoned that
the community access television antenna in that case accomplished nothing
more than individuals were entitled to accomplish on their own: “If an
individual 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 . . . . The only difference in
the case of CATV is that the antenna system is erected and owned not by its
users but by an entrepreneur.” 392 U.S. at 400.
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 1976 Report at 89. Thus, in the 1976 Act,
Congress enacted the Transmit Clause and mandated that a retransmission
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service engages in a public performance, requiring a copyright license, when
it retransmits broadcast programming to subscribers. See Capital Cities
Cable, 467 U.S. at 709-10.
Amici argue that Congress could not have enacted the Transmit
Clause in response to Fortnightly because it drafted that provision in 1965
prior to the Supreme Court issuing the Fortnightly decision in 1968.
Congress, however, had been dealing with the “difficult problem” of
determining copyright liability of broadcast retransmission services such as
cable systems “since 1965.” 1976 Report at 89. The Fortnightly litigation
itself began in 1960. See 392 U.S. at 392. Early drafts of the copyright
revision legislation contained the same Transmit Clause language ultimately
enacted, reflecting that Congress determined early on that broadcast
retransmission services should incur copyright liability. Congress, however,
left no doubt that the basis for the Fortnightly decision was “completely
overturned” in the 1976 Act. See 1976 Report at 87.
Third, Aereokiller’s contention that its service is legal under Sony
Corp. v. Universal Studios, Inc., 464 U.S. 417 (1984) because it allows
viewers to record the programs Aereokiller illegally retransmits is truly off-
base. Contrary to Aereokiller’s contention, its “technology” does not
“perform[] exactly the same function as the Betamax in Sony.” AOB at 22.
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A Betamax VCR performs the function of allowing people to record
programming they receive on their televisions from authorized providers.
Aereokiller’s “technology” performs the function of allowing Aereokiller to
offer an internet retransmission service while claiming it somehow does not
need to pay for a license. This case has nothing to do with the time-shifting
found to be fair use in Sony – namely, recording a single program, watching
it one time, then erasing it. See 464 U.S. at 423 (defining time-shifting as
“the practice of recording a program to view it once at a later time, and
thereafter erasing it”); see also id. at 458 (Blackmun, J., dissenting) (time-
shifting is the process “whereby the user records a program in order to watch
it at a later time, and then records over it, and thereby erases the program,
after a single viewing”). No court has ever recognized a fair use defense for
a commercial retransmitter that retransmits entire live broadcasts to the
public, and Sony certainly does not support a fair use defense in this case.
Fourth, although Aereokiller seems to rely on Fox Broadcasting Co.
v. Dish Network, LLC, --- F. Supp. 2d ---, 2012 WL 5938563 (C.D. Cal.
Nov. 7, 2012) to support a fair use defense, that case is not on point and
Aereokiller has completely misrepresented its facts and holdings. By way of
example, (i) the motion resolved in that opinion sought only to enjoin Dish’s
unauthorized commercial-free video-on-demand service, not the Sling
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Adapter (id. at *5 n.10); (ii) the copyright claims at issue on that motion
involved reproduction and distribution rights only, not the performance right
(id. at *7-15); (iii) the opinion does not discuss whether any transmissions
are private or public, because transmissions were not at issue since it was a
reproduction right claim (see generally id.); and (iv) Cablevision’s
interpretation of the Transmit Clause was never even mentioned (see
generally id.).
II. The District Court Correctly Concluded That Each Of The Relevant Factors Supported A Preliminary Injunction.
A. The District Court Correctly Found That Aereokiller’s
Illegal Service Would Irreparably Harm The Broadcasters. Judge Wu found that in the absence of an injunction, Aereokiller’s
unlicensed internet retransmission service would irreparably harm the
Broadcasters in four ways: (i) it would damage the Broadcasters’ ability to
negotiate favorable retransmission consent agreements with cable, satellite,
and telecommunications providers; (ii) it would damage the Broadcasters’
goodwill with their licensees; (iii) it would unfairly compete with the
Broadcasters’ own internet distribution channels; and (iv) it would siphon
viewers from platforms where advertising is measured for the purposes of
advertising revenue calculation (e.g., Nielsen ratings), thereby harming the
Broadcasters’ negotiating positions with advertisers. ER 7-8.
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These findings were squarely in line with numerous other cases
holding unequivocally that the unauthorized retransmission of copyrighted
television broadcasts over the internet irreparably harms the copyright
owners. See, e.g., ivi, 691 F.3d at 285-87 (unauthorized streaming service
would irreparably harm broadcasters by undermining retransmission fees,
negotiations, and agreements, and reducing the value of advertisements);
Aereo, 874 F. Supp. 2d at 397-400 (same); WPIX, Inc. v. ivi, Inc., 765 F.
Supp. 2d 594, 617-620 (S.D.N.Y. 2011) (same), aff’d, 691 F.3d 275 (2d Cir.
2012); see also iCraveTV, 2000 WL 255989, at *8 (unauthorized streaming
service would irreparably harm broadcasters); CBS Broad. Inc. v.
FilmOn.com, Inc., No. 10-7532, ECF No. 49 (S.D.N.Y. Aug. 9, 2012)
(enjoining unauthorized streaming service); accord WTV Sys., 824 F. Supp.
2d at 1012-15 (unauthorized movie-streaming service would irreparably
harm content owners’ goodwill, relationships with licensees, and their
“overall ability to control the use and transmission of their Copyrighted
Works”).
Judge Wu correctly concluded that these harms were irreparable
because “they are ‘neither easily calculable, nor easily compensable.’” ER 8
(quoting WTV Sys., 824 F. Supp. 2d at 1013). Again, this holding was
squarely in line with numerous other cases. See ivi, 691 F.3d at 285-87;
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Aereo, 874 F. Supp. 2d at 397-400; FilmOn.com, No. 10-7532, ECF No. 49
(S.D.N.Y. Aug. 9, 2012); iCraveTV, 2000 WL 255989, at *8; accord WTV
Sys., 824 F. Supp. 2d at 1012-15.
Aereokiller has failed to demonstrate that these findings were clear
error. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of U.S. of Am.,
Inc., 549 F.3d 1079, 1087 (7th Cir. 2008) (courts review irreparable harm
“as [they] do any finding of fact, for clear error.”); see also Stuhlbarg Int’l
Sales Co. v. John D. Brush & Co., 240 F.3d 832, 841 (9th Cir. 2001)
(district court’s finding that plaintiff would suffer irreparable harm was “not
clearly erroneous”). Aereokiller’s primary argument is that the district court
should have found no infringement and therefore no irreparable harm. This
argument is a non-starter because, as explained above, the district court’s
conclusion that Aereokiller was infringing the Broadcasters’ copyrights was
correct.
As to the court’s actual findings on irreparable harm, Aereokiller
challenges only the district court’s conclusion that its illegal service would
harm the Broadcasters’ retransmission consent negotiations, and not the
other three types of irreparable harm found by the district court. Thus,
because the other three types of irreparable harm are sufficient to uphold the
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injunction, the Court can affirm without even considering Aereokiller’s
argument as to retransmission consent negotiations.
Either way, Aereokiller’s argument that the district court should not
have found irreparable harm to the Broadcasters’ retransmission consent
negotiations is without merit. Aereokiller contends that the Broadcasters’
evidence on this point was “speculative” because the Broadcasters did not
say exactly how much revenue they would lose if Aereokiller’s unlicensed
internet retransmission service became a factor in retransmission consent
negotiations. AOB at 32.
Aereokiller’s argument misses the point of the irreparable harm
inquiry. First, “[t]he standard for injunctive relief requires a threat of
irreparable harm, not that irreparable harm already have occurred.” Mullins
v. City of N.Y., 626 F.3d 47, 55 (2d Cir. 2010); 11A Wright, Miller & Kane,
Federal Practice & Procedure § 2948.1 (2d ed. 1995) (“injury need not have
been inflicted when application is made or be certain to occur; a strong
threat of irreparable injury before trial is an adequate basis”). Indeed,
“[r]equiring a showing of actual injury would defeat the purpose of the
preliminary injunction, which is to prevent an injury from occurring.”
Diamontiney v. Borg, 918 F.2d 793, 795 (9th Cir. 1990). For essentially this
reason, in each of the cases cited above that considered preliminary
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injunction challenges to services that retransmitted broadcast programming
over the internet, the courts based their findings of irreparable harm on the
threat of injury to the Broadcasters’ intellectual property and their
businesses without requiring them to wait for the challenged service to cause
(further) actual injury. See ivi, 691 F.3d at 285-87; Aereo, 874 F. Supp. 2d
at 397-400; FilmOn.com, No. 10-7532, ECF No. 49 (S.D.N.Y. Aug. 9,
2012); iCraveTV, 2000 WL 255989, at *8; accord WTV Sys., 824 F. Supp.
2d at 1012-15.
Second, irreparable harm is an injury that cannot be “remedied by a
damage award” alone. Rent-A-Center, Inc. v. Canyon Tel. & Appliance
Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991). This includes “damages
[that] would be difficult to valuate.” Id. The fact that damages are difficult
to quantify makes them irreparable, not unduly speculative. Gilder v. PGA
Tour, Inc., 936 F.2d 417, 423 (9th Cir. 1991). Accordingly, the Ninth
Circuit has long held that intangible injuries, such as “lost contracts and
customers, and harm to [a company’s] business reputation and goodwill”
qualify as irreparable harm. Stuhlbarg, 240 F.3d at 838; see also Rent-A-
Center, 944 F.2d at 603; eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d
1058, 1066 (N.D. Cal. 2000) (“Harm resulting from lost profits and lost
customer goodwill is irreparable because it is neither easily calculable nor
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easily compensable and is therefore an appropriate basis for injunctive
relief.”); accord Cont’l Airlines, Inc. v. Intra Brokers, Inc., 24 F.3d 1099,
1105 (9th Cir. 1994) (“The certain harm to Continental was to its power, not
its purse . . . . There is certain harm to Continental’s control of its own
business, even though the harm to its profitability is unproven or perhaps
immeasurable.”); Credit Bureau Connection, Inc. v. Pardini, 726 F. Supp.
2d 1107, 1123 (E.D. Cal. 2010) (irreparable injury shown by evidence of
“blocking CBC’s ability to form contracts with new customers” and
“divert[ing] CBC’s existing customers to Data Consultants for servicing”).
Indeed, when the district court in ivi found the exact same harms to be
irreparable, the court noted that it was “obvious” that the absence of
quantifiable injuries is precisely what makes them irreparable. 765 F. Supp.
2d at 620, aff’d 691 F.3d 275; see also id. at 618 (“These losses are
‘notoriously difficult’ to prove and nearly impossible to quantify, and
accordingly are considered irreparable.”); accord Aereo, 874 F. Supp. 2d at
398 (“Harm of this sort has been accepted as irreparable based, at least in
part, on the difficulty of proving or quantifying such damages[.]”). Further,
even if the injury inflicted on the Broadcasters were quantifiable, which it is
not, Judge Wu also expressly found that “given the extent of Defendants’
retransmissions, and the large statutory damages that may be available, it is
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unlikely that Defendants’ start-up companies would be likely to be able to
satisfy the damage award.” ER 8.7
B. The District Court Correctly Found That The Balance Of Hardships Favored An Injunction.
Judge Wu found that the balance of hardships favored an injunction
because Aereokiller was an infringer and therefore “cannot complain of the
harm that will befall it when properly forced to desist from its infringing
activities.” ER 8 (quoting Triad Sys. Corp. v. Se. Express Co., 64 F.3d
1330, 1338 (9th Cir. 1995)).
This was the correct analysis. If Aereokiller’s service is infringing,
then it cannot avoid an injunction on the ground that ceasing its infringing
activities would hurt its business. Triad, 64 F.3d at 1338; see also Concrete
Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 612 (1st Cir.
1988) (“Where the only hardship that the defendant will suffer is lost profits
from an activity which has been shown likely to be infringing, such an
7 The Broadcasters do not rely on any presumption of irreparable harm that may flow from their demonstrating a likelihood of success on the merits of their copyright claims. See Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 998 (9th Cir. 2011). To the contrary, the Broadcasters proved with uncontroverted evidence all of the harms identified in their preliminary injunction motion – including the impact on advertising and retransmission consent negotiations, damage to the Broadcasters’ efforts to develop a lawful internet distribution system through licensing, undermining the Broadcasters’ own web offerings – and each has been found irreparable in one or more of the cases that has addressed the issues being litigated here. ER 1457-69.
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argument in defense ‘merits little equitable consideration.’”) (quoting
Helene Curtis Indus. v. Church & Dwight Co., Inc., 560 F.2d 1325, 1333
(7th Cir. 1977); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d
1240, 1255 (3d Cir. 1983) (in motion for preliminary injunction, district
court should not consider the effect of the injunction on the infringer’s
business).
Aereokiller’s only argument on this issue is that it does not infringe,
so the court should have found that the losses to its business from an
injunction outweighed the irreparable harms to the Broadcasters that would
occur if no injunction issued. Although Aereokiller argued below that an
injunction would “cripple its business,” it submitted no evidence to the
district court to support that claim. Aereokiller’s failure to submit evidence
alone is fatal to Aereokiller’s “balance of hardships” arguments. See WTV
Sys., 824 F. Supp. 2d at 1014-15 (rejecting defendant’s balance of hardships
argument, in part, because it was made “without any evidence”); Cuviello v.
City of Oakland, No. 06-5517, 2007 WL 2349325, at *8 (N.D. Cal. Aug. 15,
2007) (“[T]he balance of hardship tips sharply in Plaintiffs’ favor given . . .
Defendants’ failure to provide evidence showing any real harm likely to
occur were the injunction granted.”); AMP Inc. v. Foxconn Int’l, Inc., No.
93-1162, 1994 WL 315889, at *4 (C.D. Cal. Mar. 7, 1994) (because
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defendant failed to provide evidence in support of its balance of hardships
argument, it was “impossible for the Court to discern the effect of the
preliminary injunction on its overall business operations.”).
Moreover, as the ivi court noted, the harm to the Broadcasters from
unauthorized retransmission of their copyrighted programming exceeds any
harm that Aereokiller would suffer from being forced to stop its infringing
activities. ivi, 691 F.3d at 287.
C. The District Court Correctly Found That An Injunction Would Serve The Public Interest.
The Supreme Court has made clear that upholding copyright
protection is in the public interest. Eldred v. Ashcroft, 537 U.S. 186, 212
n.18 (2005). Here, Judge Wu found that because Aereokiller likely
infringed the Broadcasters’ copyrights, an injunction would serve the public
interest. He explained, “‘it is virtually axiomatic that the public interest can
only be served by upholding copyright protections and correspondingly,
preventing the misappropriation of skills, creative energies, and resources
which are invested in the protected work.’” ER 8 (quoting WTV Sys., 824 F.
Supp. 2d at 1015)).
This conclusion is consistent with the Second Circuit’s careful
analysis of the policy concerns relating to unauthorized internet
retransmissions in ivi. As the ivi Court explained:
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Plaintiffs are copyright owners of some of the world’s most recognized and valuable television programming. Plaintiffs’ television programming provides a valuable service to the public, including, inter alia, educational, historic, and cultural programming, entertainment, an important source of local news critical for an informed electorate, and exposure to the arts. . . . Plaintiffs’ desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights.
691 F.3d at 288 (internal citation omitted).
Aereokiller contends that enjoining its illegal service undermines the
public interest in technological innovation. AOB at 36. This argument
misstates the facts. Aereokiller is not a technology innovator and the
injunction issued by Judge Wu does not ban any innovative technology.
Aereokiller did not invent miniature antennas, routers, servers, transcoders
and the like. This is not a case where the defendant is making a technology
available that others can use to infringe, and where the Court has to evaluate
whether holding the defendant secondarily liable for infringing acts by
others would chill innovation. See, e.g., MGM Studios, Inc. v. Grokster, 545
U.S. 913, 928-29 (2005). This is a case where Aereokiller is using (or
purports to be using) technology in a way it wrongly believes allows it to
circumvent copyright law and retransmit copyrighted programming to the
public without a license.
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Aereokiller posits a false choice when it argues that the public interest
will not be served if its service is enjoined – threatening (according to
Aereokiller) the consumer’s interest in viewing “broadcast programming in
an important new and convenient way.” AOB at 36. Copyright law
inherently balances “two competing public interests” – assuring the “broad
accessibility of public works” and “rewarding and incentivizing creative
efforts.” See ivi, 691 F.3d at 287. An injunction in this case would serve
both interests by protecting the “copyright owners’ marketable rights . . . and
the economic incentive to continue creating television programming[,]” (id.),
while also “encouraging the production of creative work [and] ultimately
serv[ing] the public’s interest in promoting the accessibility of such works.”
MGM Studios, 545 U.S. at 961; ivi, 691 F.3d at 287. Indeed, even in Aereo,
the court rejected the notion that the public interest is served by unfettered
access. 874 F. Supp. 2d at 404.
Moreover, enjoining Aereokiller’s unauthorized retransmissions
would not deprive the public of access to internet streaming of copyrighted
broadcasts. To the contrary, the evidence presented to Judge Wu
demonstrated that an injunction against Aereokiller’s unlawful service
would facilitate the development of a lawful market for licensed distribution
of the Broadcasters’ programming by cable and satellite providers and
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61 2193255.2
internet licensees, and over the Broadcasters’ own websites and internet
services. ER 1461-64. For all of these reasons, an injunction would serve
all of the public interests implicated by copyright law.8 See id.; WTV Sys.,
824 F. Supp. 2d at 1015.
JOINDER IN THE ABC PARTIES’ CROSS-APPEAL ARGUMENTS
The Fox Parties hereby join and incorporate by reference the
arguments presented by the ABC Parties in support of the cross-appeal
relating to the geographic scope of Judge Wu’s injunction.
CONCLUSION
For the reasons stated above, this Court should affirm the district
court’s decision to enjoin Aereokiller’s unauthorized broadcast
retransmission service pending a final judgment, and extend the preliminary
injunction nationwide.
8 Aereokiller’s purported reliance on SoftMan Prods. Co. LLC v. Adobe Sys., Inc., 171 F. Supp. 2d 1075 (C.D. Cal. 2001) is misplaced. In that case, Adobe attempted to characterize transactions involving its software products as licenses, rather than sales subject to the first use doctrine. See id. at 1088-89. The court was concerned about Adobe’s apparent attempt to expand its ability to control software prices through licensing. Id. at 1090-91. This case is vastly different. The Broadcasters make their broadcast television programming available over the internet and on-demand from a variety of licensed sources, and are working to expand consumer access to their content in these nascent markets.
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April 26, 2013 Respectfully Submitted,
By: ___/s Paul M. Smith___________ Paul M. Smith Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW, Suite 900 Washington, DC 20001
Richard L. Stone Julie A. Shepard Amy M. Gallegos JENNER & BLOCK LLP 633 West 5th Street, Suite 3600 Los Angeles, CA 90071
Attorneys for the Fox Appellees and Cross-Appellants
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63 2193255.2
STATEMENT REQUESTING ORAL ARGUMENT
Pursuant to Federal Rule of Appellate Procedure 34(a), the Fox
Appellees and Cross-Appellants request that oral argument of this appeal be
permitted. Oral argument will assist this Court in deciding the appeal.
April 26, 2013 Respectfully Submitted,
By: ___/s Paul M. Smith________ Paul M. Smith Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW, Suite 900 Washington, DC 20001
Richard L. Stone Julie A. Shepard Amy M. Gallegos JENNER & BLOCK LLP 633 West 5th Street, Suite 3600 Los Angeles, CA 90071 Attorneys for the Fox Appellees And Cross-Appellants
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64 2193255.2
CERTIFICATE OF COMPLIANCE
I certify that, pursuant to Federal Rule of Appellate Procedure
32(a)(7)(C) and Ninth Circuit Rule 32-1, the foregoing Brief is
proportionately spaced, has a typeface of 14 points or more, and contains
12,792 words.
April 26, 2013 Respectfully Submitted,
By: ___/s Paul M. Smith________ Paul M. Smith Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW, Suite 900 Washington, DC 20001
Richard L. Stone Julie A. Shepard Amy M. Gallegos JENNER & BLOCK LLP 633 West 5th Street, Suite 3600 Los Angeles, CA 90071 Attorneys for the Fox Appellees And Cross-Appellants
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65 2193255.2
CERTIFICATE OF RELATED CASES
Pursuant to Ninth Circuit Rule 28-2.6, counsel for the Fox Appellees
and Cross-Appellants states that other than the four consolidated appeals and
cross-appeals – Case Nos. 13-55156, 13-55157, 13-55226, and 13-55228 –
there are no related cases pending in this Court.
April 26, 2013 Respectfully Submitted,
By: ___/s Paul M. Smith________
Paul M. Smith Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW, Suite 900 Washington, DC 20001
Richard L. Stone Julie A. Shepard Amy M. Gallegos JENNER & BLOCK LLP 633 West 5th Street, Suite 3600 Los Angeles, CA 90071 Attorneys for the Fox Appellees And Cross-Appellants
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