Am. Broad. Cos. v. Aereo, Inc.

• Decision Date: 11 July 2012
• Docket Number: Nos. 12 Civ. 1540 (AJN), 12 Civ. 1543.,s. 12 Civ. 1540 (AJN), 12 Civ. 1543.
• Citation: 874 F.Supp.2d 373
• Parties: AMERICAN BROADCASTING COMPANIES, INC., et al., Plaintiffs, v. AEREO, INC., Defendant. WNET, et al., Plaintiffs, v. AEREO, Inc., Defendant.
• Court: U.S. District Court — Southern District of New York

874 F.Supp.2d 373

103 U.S.P.Q.2d 1774

40 Media L. Rep. 2245

56 Communications Reg. (P&F) 440

AMERICAN BROADCASTING COMPANIES, INC., et al., Plaintiffs,

v.AEREO, INC., Defendant.

WNET, et al., Plaintiffs,

v.AEREO, Inc., Defendant.

Nos. 12 Civ. 1540 (AJN), 12 Civ. 1543.

United States District Court,

S.D. New York.

July 11, 2012.

Bruce P. Keller, Michael R. Potenza, Debevoise & Plimpton, LLP, New York, NY, for Plaintiffs, American Broadcasting Companies, Inc., et al.

David J. Bradford, Jenner & Block LLP, Chicago, IL, Julie A. Shepard, Richard L. Stone, Jenner & Block LLP, Los Angeles, CA, Scottt Block Wilkens, Steven R. Englund, Steven Bernard Fabrizio, Jenner & Block, LLP, Washington, DC, for Plaintiffs, WNET, et al.

Jennifer A. Golinveaux, Winston & Strawn LLP, San Francisco, CA, John Clifford Englander, Mark S. Puzella, R. David Hosp, Yvonne W. Chan, Goodwin Procter, L.L.P., Boston, MA, Michael S. Elkin, Thomas Patrick Lane, Winston & Strawn LLP, New York, NY, Seth D. Greenstein, Constantine Cannon LLP, Washington, DC, for Defendant.

OPINION

ALISON J. NATHAN, District Judge:

Plaintiffs, a group of corporate entities engaged in the production, marketing, distribution, and transmission of broadcast television programs, move to enjoin Defendant AEREO, Inc., (“Aereo”) from engaging in those aspects of its service that allow its users to access “live” copyrighted content over the internet. Aereo claims that its conduct does not violate copyright law, relying on Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.2008) (“Cablevision ”). But for Cablevision's express holding regarding the meaning of the provision of the Copyright Act in issue here—the transmit clause—Plaintiffs would likely prevail on their request for a preliminary injunction. However, in light of that decision, this Court concludes that it is bound to DENY Plaintiffs' request.

I. PROCEDURAL POSTURE

On March 1, 2012, Plaintiffs filed two Complaints against Aereo alleging that its service unlawfully captures broadcast television signals in the New York City area, including at least some corresponding to television programs on which Plaintiffs hold the copyright (Pls. Ex. 83), and provides them over the internet to Aereo subscribers.¹ ( E.g., Hrg. Tr. at 132:7–141:13, 292:3–25; Pls. Br. at 4–5; Aereo Br. at 6). Although Plaintiffs' Complaints assert multiple theories of liability, including infringement of the right of public performance, infringement of the right of reproduction, and contributory infringement (Complaint at ¶¶ 28–38, ABC, Inc. v. AEREO, Inc., No. 12–cv–01540, Docket Entry 1; Complaint at ¶¶ 142–58, WNET v. AEREO, Inc., No. 12–cv–01543, Docket Entry 1), the issue presently before the Court is quite limited. On March 13, 2012, Plaintiffs moved for a preliminary injunction, asserting that Aereo was directly liable for copyright infringement by publicly performing Plaintiffs' copyrighted works.² (3/13/12 Tr. at 7:23–8:5, 28:12–29:5). This motion was further limited in scope, challenging only the aspects of Aereo's service that allow subscribers to view Plaintiffs' copyrighted television programs contemporaneously with the over-the-air broadcast of these programs. (Hrg. Tr. 255:6–18, 267:14–23). After a roughly eleven week period of expedited discovery and briefing on the preliminary injunction motion, the Court held a two-day evidentiary hearing on May 30 and 31, 2012, to establish the record for deciding the motion.

II. PRELIMINARY INJUNCTION STANDARD

A preliminary injunction is an extraordinary remedy, granted only if the plaintiff establishes “that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. NRDC, Inc., 555 U.S. 7, 20, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). Even if a plaintiff has not demonstrated a likelihood of success on the merits, a preliminary injunction may still be granted if the plaintiff shows “a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in the plaintiffs favor.” Metro. Taxicab Bd. of Trade v. City of New York, 615 F.3d 152, 156 (2d Cir.2010).

III. FACTSA. Aereo's System

The facts surrounding the operation of Aereo's system are largely—though not entirely—undisputed. ( See, e.g., Hrg. Tr. at 14:12–15, 23:6–15, 309:8–22). Even if not disputing facts, the parties are significantly at odds as to how Aereo's service should be properly characterized.

1. The Audience Perspective

Aereo's system allows users to access free, over-the-air broadcast television through antennas and hard disks located at Aereo's facilities. ( See infra Section II.A.2). A user of Aereo's system, after logging into their account on Aereo's website, may navigate through a programming guide to select television programs that are currently being aired or that will be aired at a later time. (Hrg. Tr. at 133:2–134:24). If the user selects a program that is currently being aired, the user is given two options, “Watch” and “Record.” (Hrg. Tr. at 73:2–19; Kelly Decl. ¶¶ 38–39; Horowitz Rep. ¶ 64). Selecting “Watch” causes Aereo's system to transmit a web page to the user in which the program starts after a short delay, allowing the user to view the program “live,” i.e., roughly contemporaneous with its over-the-air broadcast. (Hrg. Tr. at 73:9–19; Kelly Decl. ¶¶ 39, 41). While viewing the program, the user may pause or rewind it, increasing the disparity between the time at which the program is initially broadcast and the time at which the user watches it. (Hrg. Tr. at 107:9–18, 111:20–112:12). If enough time has passed, a user may end up watching the program “live” after it has been fully broadcast. If the user presses the “Record” button after having begun watching a program using the “Watch” feature, the Aereo system retains the copy that the user has been watching, and the user may watch that program again later; if “Record” is not selected, the copy is not retained and cannot be viewed again later. (Hrg. Tr. at 88:15–90:9, 112:22–114:17; 121:15–25, 141:7–13; Kelly Decl. ¶¶ 42–43).

Instead of selecting the “Watch” function at the outset, the user may press the “Record” button to schedule a recording of a program that will be broadcast at a later time or that is currently being aired. (Hrg. Tr. at 73:15–74:6, 134:11–24, 136:8–15). However, the “Record” feature can also be used, like the “Watch” feature, to view programs “live”: users can direct Aereo's system to begin a recording and then immediately begin playback of the recording as it is being made. (Hrg. Tr. at 121:15–25, 138:3–139:3, 140:18–141:6).

Thus, from the user's perspective, Aereo's system is similar in operation to that of a digital video recorder (“DVR”) ( See, e.g., Hrg. Tr. 290:11–291:10, 298:16–23, 305:9–306:12), particularly a remotely located DVR, although Aereo users access their programming over the internet rather than through a cable connection. One further difference is that Aereo allows users to view the programming on their computers, laptops, or mobile devices, whereas to watch television on these devices using a standard DVR, the user might need to purchase an additional device, such as a Slingbox. (Hrg. Tr. at 132:16–20; 306:16–308:25; Lipowski Decl. ¶ 6). Slingbox allows users to stream video, including live broadcast television, over the internet to their mobile devices. (Hrg. Tr. at 306:23–307:4). Plaintiffs do not appear to contend in this litigation that services such as Slingbox are unlawful, instead claiming that they are “irrelevant” and that Aereo's service is distinguishable because Slingbox consumers themselves set up the Slingbox in their homes. (Def. Ex. 41; Pls. Obj. to Aereo's Proposed FOF ¶¶ 24, 26).

2. Behind the Scenes

Behind the scenes, the process is more complicated. When a user clicks on the “Watch” button, the web browser sends a request to Aereo's Application Server, which in turn sends a request and certain information about the user and the requested television program to Aereo's Antenna Server. (Hrg. Tr. at 74:10–21; Kelly Decl. ¶¶ 44–45; see also Lipowski Decl. ¶ 35). The Antenna Server allocates resources to the user, including an antenna and transcoder, depending on whether the user is a “static” or “dynamic” user, a distinction based on the user's subscription plan with Aereo. (Hrg. Tr. at 74:22–78:2; Kelly Decl. ¶¶ 45–46; Lipowski Decl. ¶¶ 32, 35). Static users have a set of previously selected antennas that have been assigned to them, whereas dynamic users—the vast majority of Aereo's subscribers—are randomly assigned an antenna each time they use Aereo's system. (Hrg. Tr. at 74:22–78:2; Kelly Decl. ¶¶ 47–49; see also Lipowski Decl. ¶¶ 32, 35). No two users are assigned a single antenna at the same time. (Hrg. Tr. at 104:20–105:1, 234:3–15).

Thus, although any particular antenna can be used by only one user at a time, dynamic users “share” antennas in that a given antenna may be assigned to different users at different times.³ (Hrg. Tr. at 74:22–78:2, 104:20–106:24,234:3–15). Static users may similarly “share” antennas in the event that the antennas permanently assigned to them are unavailable, in which case the Aereo system will randomly assign them another unused antenna that may at some other time be allocated to another user. (Hrg. Tr. at 74:22–78:2, 104:20–106:24; Kelly Decl. ¶¶ 47–49). However, just as the antennas are not shared when they are in use, the data obtained by a particular antenna while allocated to a particular user is not “shared” with or accessible by any other Aereo user. (Hrg. Tr. at 104:20–106:24, 137:1–7, 139:12–16; Pozar Decl. ¶¶ 10–14, 19; Pozar Rep. at 6; Horowitz Rep. ¶ 59; Volakis Decl. ¶ 66).

Once these resources are allocated, the Antenna Server sends a “tune” request that directs the user's antenna to “tune into” a...