Wnet, Thirteen, Fox Television Stations, Inc. v. AEREO, Inc.

• Decision Date: 16 July 2013
• Docket Number: 12–2807.,Nos. 12–2786,s. 12–2786
• Parties: WNET, THIRTEEN, Fox Television Stations, Inc., Twentieth Century Fox Film Corporation, WPIX, Inc., Univision Television Group, Inc., The Univision Network Limited Partnership, and Public Broadcasting Service, Plaintiffs–Counter–Defendants–Appellants, v. AEREO, INCORPORATED, fka Bamboom Labs, Inc., Defendants–Counter–Claimants–Appellees. American Broadcasting Companies Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios Inc., NBCUniversal Media, LLC, NBC Studios, LLC, Universal Network Television, LLC, Telemundo Network Group LLC, WNJU–TV Broadcasting LLC, Plaintiffs–Counter–Defendants–Appellants, v. Aereo, Inc., Defendant–Counter–Claimant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

722 F.3d 500

WNET, THIRTEEN, Fox Television Stations, Inc., Twentieth Century Fox Film Corporation, WPIX, Inc., Univision Television Group, Inc., The Univision Network Limited Partnership, and Public Broadcasting Service, Plaintiffs–Counter–Defendants–Appellants,

v.AEREO, INCORPORATED, fka Bamboom Labs, Inc., Defendants–Counter–Claimants–Appellees.

American Broadcasting Companies Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios Inc., NBCUniversal Media, LLC, NBC Studios, LLC, Universal Network Television, LLC, Telemundo Network Group LLC, WNJU–TV Broadcasting LLC, Plaintiffs–Counter–Defendants–Appellants,

v.Aereo, Inc., Defendant–Counter–Claimant–Appellee.

Nos. 12–2786, 12–2807.

United States Court of Appeals,Second Circuit.

July 16, 2013.

Paul M. Smith, Steven B. Fabrizio, Scott B. Wilkens, Matthew E. Price, Jenner & Block LLP, Washington, DC; Richard L. Stone, Amy M. Gallegos, Jenner & Block LLP, Los Angeles, CA, for Plaintiffs–Appellants, WNET, Thirteen, et al.

Bruce P. Keller, Jeffrey P. Cunard, Michael R. Potenza, Debevoise & Plimpton LLP, New York, NY, for Plaintiffs–Appellants, AM. Broad. Cos., Inc., et al.

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

PRESENT: DENNIS JACOBS, Chief Judge, ROSEMARY S. POOLER, ROBERT A. KATZMANN, REENA RAGGI, RICHARD C. WESLEY, PETER W. HALL, DEBRA ANN LIVINGSTON, GERARD E. LYNCH, DENNY CHIN, RAYMOND J. LOHIER, JR., SUSAN L. CARNEY, CHRISTOPHER F. DRONEY, Circuit Judges.

ORDER

Following disposition of this appeal on April 1, 2013, Plaintiffs–Appellants filed petitions for rehearing in banc. An active judge of the Court requested a poll on whether to rehear the cases in banc. A poll having been conducted and there being no majority favoring in banc review, rehearing in banc is hereby DENIED.¹

DENNY CHIN, Circuit Judge, joined by RICHARD C. WESLEY, Circuit Judge, dissenting from the denial of rehearing en banc.

Aereo, Inc. (“Aereo”) captures over-the-air broadcasts of copyrighted television programs and retransmits them to subscribers by streaming them over the Internet. For a monthly fee, Aereo's customers—members of the public—may watch the programs live or record them for later viewing. Aereo retransmits the programming without authorization of the copyright holders and without paying a fee. The question is whether, by doing so, Aereo is infringing on the exclusive right of the copyright owners “to perform the copyrighted work publicly.” 17 U.S.C. § 106(4).

Aereo argues that its transmissions are not “public” performances. Rather, Aereo contends, its transmissions are “private” performances because its system uses thousands of individual, dime-sized antennas that enable subscribers to make their own purportedly “unique” copies of the programming for retransmission back to themselves. Under this theory, Aereo maintains that it may, for example, stream the Super Bowl “live” to 50,000 subscribers and yet, because each subscriber has an individual antenna and a “unique” copy of the broadcast, these are not “public” but “private” performances.

Based on this Court's decision in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.2008), cert. denied,557 U.S. 946, 129 S.Ct. 2890, 174 L.Ed.2d 595 (2009) (mem.) (“Cablevision ”), the panel majority in these tandem cases accepted this argument and held that Aereo is not engaging in copyright infringement. See WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir.2013). Now this Court has denied the petitions for rehearing en banc. I dissented from the majority's panel decision, 712 F.3d at 696, and I now dissent from the Court's denial of rehearing en banc.

First, we should consider the two cases en banc because they raise “a question of exceptional importance,” Fed. R.App. P. 35(a)(2), and because “en banc consideration is necessary to secure or maintain uniformity of the court's decisions,” id. R. 35(a)(1). Second, the text of the Copyright Act and its legislative history make clear that Aereo's retransmissions are public performances. Third, Aereo's reliance on Cablevision is misplaced because, in my view, Cablevision was wrongly decided. Finally, even assuming Cablevision was correctly decided, Cablevision has been misapplied by the majority and should not be extended to the circumstances of this case. I discuss each of these issues in turn.

I. En Banc Review

The petitions for rehearing should be granted because these cases merit en banc review.

A. Question of Exceptional Importance

Federal Rule of Appellate Procedure 35 provides that an en banc rehearing is appropriate if “the proceeding involves a question of exceptional importance.” Fed. R.App. P. 35(a)(2). These cases present such a question. Indeed, the panel majority's decision has already had a significant impact on the entertainment industry.

Industry observers predict that the decision will encourage other companies that retransmit public television broadcasts to seek elimination of, or a significant reduction in, their retransmission fees.¹ Time Warner Cable has already announced its intention to look into adopting an Aereo-like system to avoid these fees entirely,² and Dish Network is in talks to acquire Aereo itself.³ To protect their copyrighted material, FOX, Univision, and CBS have reportedly threatened to move their free public broadcasts to paid cable if Aereo is permitted to continue with its service. ⁴ CBS has already had discussions with cable companies about taking its local signals off the air in the New York metropolitan area to prevent Aereo from retransmitting its broadcasts for free.⁵

Meanwhile, Aereo has announced plans to expand to twenty-two cities in 2013, including Boston, Atlanta, Chicago, Washington, D.C., and Philadelphia. ⁶ In February 2013, while still awaiting the panel's decision, Aereo cautiously expanded from New York City to the entire New York metropolitan area, which includes some parts of New Jersey, Connecticut, and Pennsylvania. ⁷ Since the panel's decision was filed in April, Aereo has already expanded to the Boston and Atlanta markets and will expand to Chicago in September, making its services available to residents of Massachusetts, New Hampshire, Vermont, Georgia, Alabama, North Carolina, Illinois, and Indiana. ⁸

In recent years, with greater competition from cable and the Internet, television broadcasters have come to rely more heavily on retransmission fees, rather than advertising revenue, to make their free public broadcasts profitable.⁹ In fact, as with newspaper companies, broadcasters are relying increasingly on subscriber fees to fund the creation of content. The majority's decision, which permits Aereo to retransmit television broadcasts without paying a fee, undermines this model. Indeed, the filing of this Court's decision on April 1, 2013 caused the share price for major media firms to drop because of the threat it posed to a vital source of their revenue. ¹⁰

In a decision we issued last year, WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir.2012), cert. denied,––– U.S. ––––, 133 S.Ct. 1585, 185 L.Ed.2d 607 (2013), we addressed the harm that would result from permitting a company (in that case, ivi) to stream copyrighted television programming over the Internet without licenses:

Indeed, ivi's actions—streaming copyrighted works without permission—would drastically change the industry, to plaintiffs' detriment. The absence of a preliminary injunction would encourage current and prospective retransmission rights holders, as well as other Internet services, to follow ivi's lead in retransmitting plaintiffs' copyrighted programming without their consent. The strength of plaintiffs' negotiating platform and business model would decline. The quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules—all would be adversely affected. These harms would extend to other copyright holders of television programming. Continued live retransmissions of copyrighted television programming over the Internet without consent would thus threaten to destabilize the entire industry.

691 F.3d at 286 (citations omitted). These concerns apply with equal force here.

B. Uniformity of the Court's Decisions

En banc rehearing is also appropriate when “necessary to secure or maintain uniformity of the court's decisions.” Fed. R.App. P. 35(a)(1). Here, the majority's decision conflicts with our precedent, as this Court has repeatedly acknowledged that activity similar to Aereo's constitutes copyright infringement.

In ivi, for example, although the issue was not even contested, we recognized that retransmitting copyrighted television programming by streaming it live over the Internet constituted a public performance in violation of the Copyright Act. See691 F.3d at 278, 286–87. Similarly, in United States v. American Society of Composers, Authors & Publishers, 627 F.3d 64 (2d Cir.2010) (“ASCAP ”), cert. denied,––– U.S. ––––, 132 S.Ct. 366, 181 L.Ed.2d 232 (2011), where, again, the issue was not even contested, we observed that the streaming of a song, like the streaming of a “television or radio broadcast,” is a public performance. Id. at 74 (but holding that downloads of music do not constitute public performances). Finally, in Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104 (2d Cir.1998), it was undisputed that providing users with access to receivers connected to private phone lines—arguably the equivalent of the individual antennas here—so they could listen to public radio broadcasts in remote locations was a public performance. Id. at 106–07, 111–12.¹¹

There is no substantive difference between what the retransmitters in ivi,...