The Stream Runs Downhill: Part 2

Last week’s post focused on the court’s rejection of Aereo’s motion to change venues. But that was all the good news that the Hearst Group would receive that day, as the court next denied its request for a preliminary injunction. As is mandated in these cases, the court looked through the four-part test for granting preliminary injunctions, and found that there were insufficient grounds to enjoin Aereo’s activities while the litigation was ongoing.

First, the court examined the likelihood of success on the merits, noting that, in the 1st Circuit, at least, this factor is the most important. At this point, the technological advancements of the past few years run headlong into the decades-old body of copyright law. The court first concedes that the 1st Circuit has never ruled whether the use of a DVR-like device infringes on the right of the copyright holder, more specifically, whether Aereo’s interception and conversion of the broadcast into a digital and recordable form infringes on the copyright holder’s exclusive right to control the public transmission of its works.

Lacking any direct precedent of its own, the court turned to the 2nd circuit, which had previously ruled that a DVR, in effect, created a personal recording of the broadcast, and then transmitted that personal copy to the viewer, meaning that it did not publicly re-transmit the broadcast, and so did not infringe on any copyright. Aereo, as the court noted, had already successfully defended its service in the 2nd circuit, and had won because the court found that its service was sufficiently similar to the earlier DVR case and that, therefore, no infringement had taken place. More specifically, that court had noted that Aereo only allowed viewers to view those digital copies that Aereo had specifically prepared for them at their request, and that each copy was unique.

In that decision, however, there had been a dissent, which argued that, due to advances in technology, it no longer made sense to determine whether a transmission was private by the nature of the copy, but instead whether or not the viewer saw what was, essentially, a public broadcast to begin with. They also noted that some district courts have appeared amenable to determining the nature of a broadcast by how it was originally transmitted rather than how it was ultimately received.

The court, however, found that attempting to use Hearst’s proffered interpretation would force an untenable construction of the Copyright Act, and so reverted to the 2nd Circuit’s ruling on the matter, finding that Hearst was not likely to prevail on its claim that Aereo had infringed on Hearst’s copyright through unauthorized retransmission.

The court next examined whether it was likely Hearst would prevail on a claim that Aereo had infringed on its copyright through unauthorized reproduction of Hearst’s broadcasts. The question here came down to a question of whether or not this type of copyright infringement could occur without volitional conduct by Aereo. As Aereo’s system automatically responds to user commands, Aereo itself lacks any sort of volitional conduct. According to Aereo’s argument, such a requirement is necessary in an infringement case, as otherwise innocent technology providers could be held liable for the wrongful acts of those using their products, such as a copy machine owner being held liable when a third party uses that machine to copy copyrighted material.

From its ruling, it is clear the court felt at least slightly uncomfortable with this aspect of the case, noting that the 1st Circuit has not yet ruled that volitional conduct is a necessary element, but other circuits have. The court ultimately decided that it was likely that some sort of volitional conduct element would be necessary in an infringement claim, but punted the issue, explaining that later discovery may change the contours of that particular claim, and it was a closer call than the unauthorized retransmission claim. That said, the court found that the likelihood of success on the merits was not high enough on this claim either to justify a preliminary injunction.

The court then quickly disposed of the final two claims made by Hearst on technical grounds. First, it claimed that, because Aereo was streaming the works rather than authorizing them for download, it is considered to be ‘performing’ rather than ‘distributing’ for the purposes of copyright law, and so cannot be found to have violated Hearst’s exclusive right to distribute its copyright works. Second, it ruled that although Aereo does convert its broadcasts into a different formats in order to allow it to be streamed, that act does not create a derivate work under the meaning of the Copyright Act, and so Hearst was also unlikely to prevail on a claim charging Aereo with infringing on Hearst’s exclusive right to create derivative works from its copyrighted material. In all, the court found that Hearst was unlikely to prevail on any of its claims on the merits, a crippling blow in its quest to gain a preliminary injunction.

 

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