Tuesday, January 6, 2015

Why the Aereo Court Got it Wrong and What it Means

Image Credit: Wikipedia Public Domain
The US Supreme Court got it wrong in the Aereo[i] Decision, and it exemplifies a problem in US courts today.  Judges with little or no understanding of technology are making decisions that have far-reaching impacts on future innovation.  As a general matter, the Federal court system, especially at the appeals level, is comprised of older judges, many of whom are technically illiterate.[ii]  Further, even at the circuit level the vast percentage of judges as a matter of educational background and experience are lacking in the most basic technical understanding to be minimally equipped to make sound decisions.[iii]  Yet, it is nearly universally acknowledged that that our economy has undergone a shift from manufacturing to a digital information economy, and it is the court system that adjudicates disputes and is often forced to make decisions either based on outdated laws or immature digital laws that require an appreciation of technical context and nuance.   Aereo is a classic failure to intelligently navigate the realities of new technology that appear to trespass on old laws.   

In brief, Aereo Inc., is an innovative internet based video distribution company that uses individual antennas to receive locally broadcast TV transmissions then retransmits them to subscribers over the internet one a one to one basis.  The content of the transmission is not altered and is merely passed on to an individual subscriber that elects to request and receive the retransmitted stream for his viewing.   ABC and other broadcasters sued Aereo alleging copyright infringement.  In June, 2014, the US Supreme Court ruled that Aereo violated the Copyright Act of 1976 because Aereo infringed on a copyright owner’s exclusive right to perform the copyrighted work.  The Court relied on amendments to the Copyright Act that were introduced nearly 40 years ago when Congress took aim at Community Access Television (CATV) providers.  CATV providers were organizations that erected large antennas clusters to capture weak TV signal transmissions and retransmit them to underserved viewers in communities.  The Congress revised the Copyright Act to specifically state that the act of retransmission is a right reserved to copyright owners, reversing an earlier line of court decisions that held that merely retransmitting a broadcast without altering its content was not a performance protected under copyright laws.  Making an analogy to CATV providers, the Court essentially found that Aereo was performing the same function and therefore the Congress must have meant to prohibit Aereo’s activities.  

In reality, the Supreme Court made a decision on gut feel, effectively concluding Aereo had created some kind of “infernal machine” that beat the system.  In so many words, the Court divined that a 1970s Congress would have been offended by the outcome of Aereo’s technology rather than its substance.

In making its decision, the Supreme Court rejected several Aereo arguments that sought to distinguish it from a CATV provider.  These arguments included that unlike a CATV provider, Aereo was a one antenna to one viewer retransmission.  Whereas a CATV provider essentially rebroadcasts to anybody within its reception range, an Aereo subscriber, if it chooses to watch a show, must request the show and then when it does, a single antenna is enlisted to pick up the signal which is then converted to IP, temporarily stored and then forwarded to the requesting viewer.  In essence, Aereo argued that a one to one retransmission was not a public performance.  Aereo further argued that it was not a transmission within the meaning of the Copyright Act because it was not a broadcast transmission, meaning that it was not simultaneously transmitted in a wide area or a large number of viewers.    Calling upon poor analogies, the court rejected these arguments, and, most importantly, stated it was deferring to Congress’s intent.

When interpreting a law, deferring to the lawmaker’s intent, that is- determining what lawmakers meant when they enacted a law, has been recognized as the standard of proper judicial review since our founding.  However, despite the appearance of deference in this case, the Supreme Court, in reality, did the opposite.   Essentially, the Court took a nearly forty year old law that could not possibly have conceived or foreseen the technology at issue and speculated what Congress’ intent would have been if it understood the technology.  At some point, extrapolating intent to new circumstances moves beyond reasonable assumptions to activist speculation. This is the case here.

One of the fundamental principles underpinning the validity of any law is its certainty and clarity.  When a law is vague, it deprives all citizens of substantive due process, because a citizen cannot reliably determine whether an act is lawful or unlawful. Not knowing which the case is, a citizen must either forbear from an activity in fear that it may subsequently be determined unlawful or engage in activity under the threat of potential future jeopardy.  This is often referred to in the law as having a “chilling” effect.        

When the Aereo defendants claimed that the Court, if it sided with the plaintiffs, would chill innovation, the Court cast aside this concern while gratuitously acknowledging that Congress does not want to dissuade innovation.  Rather than undertake any substantive analysis, however, the Court merely ordained that the decision would have no adverse impact.  In justifying its determination, the Court emphasized that its ruling was limited and pointed to legislative history that the “[transmit amendment] does not determine whether different kinds of providers in different contexts also ‘perform’.”  But, this precisely what Aereo is.  A different kind of provider in a different context.   To this point, It should not go unnoticed that Court employed used car analogies and “knobs” in its decision to elucidate its technology analysis.  To prop up its finding, the Court turned to legislative history and selectively chose the history which best suited its decision.  Yet, by its own admission, it recognized that Congressional history specifically cautioned that new technology would not necessarily fall within the strictures of the retransmission amendment.    

So, how did the Aereo Court get it wrong? [iv] I would argue it simply did not understand technology to a degree necessary to appreciate the substantive technology issues in question. The Court was fumbling with and failed to grasp the concept of transmission.  A digital broadcast signal is encoded and then decoded when it is received.  This is the case with every TV with a digital receiver.  Once the signal is received, it is decoded and then “retransmitted” across a bus (a carrier) to a processor that then runs an application or function to visually display the data on a screen.  Aereo is simply distributing the same functions over space.[v]  Instead of using an internal bus, it is using the internet to deliver the signal to a computer viewer.  It is as if Aereo removed the box around the TV, and then separated and spread its components over distance and then reconnected the components with very long wires.  Is their a substantive difference merely because a passive box encloses the retransmission function?   Or, is it that the retransmission occurs within some undefined proximity to a viewer that the Court intuitively senses but never articulated?  As for the antenna aspect, again by viewing the function, Aero is no different from a viewer that rents a TV with a digital antenna, except the viewer just rents the antenna component in the Aereo case.  Again, we come to not so much to function as much as packaging and form factor.

When viewed within a comparative functional analysis, the court is simply off base.  The only valid argument one could raise is that transmitting a signal beyond is natural extent (i.e., the receivable coverage area) is exercising a transmission right more broadly than what the content owner intended.   Considered in this light, the question must be put whether any content owner or broadcaster that permits or engages in a broadcast over licensed spectrum to the general public at large is, by the very act itself, waiving its right to select who and how viewers may receive a signal.  It is as if an author dumped an unlimited number of copies of his book into the public square with a “free as long as you don’t tear out or add pages” sign, and then complains if Mr. Smith picks a few up and delivers them to the convalescent home.   If the format is generally decodable and the medium is receivable in the public airwaves, it certainly defies logic that a one-to-one re-transmission does anything more than the original act itself, assuming the viewer had the ability to or ought to have received the signal to start with. But the Court never reaches this level of inquiry in its decision.

Even assuming that Aero was engaged in something analogous to CCTV, the next question is what substantive harm has occurred if the content is unchanged and the content is broadcast for free.  If anything, the act of retransmission in unadulterated form advances the commercial interests of the broadcaster and owner.  It could be argued that the broadcaster suffers harm because the presentation has a particular placement in a series of presentations whereby if the presentation in question is not seen in series it diminishes its value.  This argument would be specious at best, because viewers have the unfettered ability to change channels, nor has any broadcaster attempted to impose a license condition that requires a viewer to be tethered to a channel for a series of programs.  Quite the opposite.  Each “show” is advertised and promoted as a separate work or performance such that no broadcaster adds any transformative value by showing a series of shows in any particular combination.      

Further, to the extent retransmission reaches a larger set of eyes and delivers the original advertising, it seems inexplicable how any broadcaster can claim harm.  If anything, retransmission furthers the economic interests of the broadcaster, and thus the owner of the work.  If the answer is “just because the owner is the copyright holder”, then the question must be whether there is a legally and morally sufficient basis to warrant the chilling of innovation when there is no readily apparent harm.   To this point, it is granted that an artist can control the distribution of his works.  For example, a private painting made for a person or special viewing may very well warrant protection because it was created with the specific purpose of a limited distribution.  The limited or private distribution is part of the original work itself.  It has a creative intimacy in its purpose.   On the other hand, by allowing broad public dissemination of a work to any and all who might view it, the work has lost its intimacy with its creator and there can be no compelling reason why it should be controlled as long as it does not cause economic harm. 

As technology accelerates and provides increasingly more ways in which viewers may receive, view, interpret, interact and enhance works, the courts need to recognize that technology is forcing courts to dig deeper into the substantive nature of intellectual property and understand precisely what is protectable and why a work is protected.  Simply dithering and fudging around the edges with narrow holdings and vague notions does not advance the interests of society, and harms innovation and creativity because of uncertainty.   They create vast uncertainty, because it is impossible to distill any rational boundaries that can be applied by a technologist. 

Our judiciary is in desperate need of qualified jurists with a sound understanding of technology, otherwise the ingenuity and creativity that drives our economy will suffer in the morass of legal uncertainty. 

Disclosure:  The author has no direct or indirect interest in Aereo or any party related or affiliated with Aereo.

[i]  American Broadcasting Cos. v. Aereo, Inc., 134 S. Ct. 2498 (2014) (Web Link: http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf)
[iii] See, discussion of general expertise of judges:  http://www.libertylawsite.org/2014/02/05/posners-tyranny-of-expertise/
[iv] See, Copyright: ABC, Inc. v. Aereo, Inc., 128 Harv. L. Rev. 371 (Nov. 2014), for an interesting discussion of “purposivism and textualism”.
[v] Id. Some describe this as raising uncertainty with “cloud” implementations.  Again, it misses the point.  Even the NIST definition of what a cloud service is ambiguous at best.  See, NIST Special Publication 800-146 which contemplates hybrid implementations.  An understanding of how technology is doing a function is essential as what it is doing in any substantive analysis, because the "how" informs the "what." 

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