What cloud computing services need to know about the Aereo decision

In June. the United States Supreme Court issued its much-anticipated decision in American Broadcasting Cos. v. Aereo, Inc. The decision effectively shut down the Aereo service, at least temporarily as it explores fundamental changes to its business model to permit it to continue distributing content while complying with the Court’s decision.

The Aereo service in question offered subscribers the ability to watch television broadcasts over the Internet, streamed in substantially real time as the programs were being distributed over-the-air by the original broadcasters. Aereo implemented this service via a network of antennas. When a subscriber selected a program, Aereo would select an antenna, deliver the program to the subscriber via the antenna, and dedicate the antenna to the subscriber until the program was complete.

The question that the Court considered was whether Aereo’s retransmission violated U.S. copyright law.  The Court focused on the section of the Copyright Act that gives a copyright owner the exclusive right to “perform the copyrighted work publicly.” The Copyright Act defines that exclusive right to include the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, 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.”

Aereo argued that it did not transmit any performances “publicly” but rather only enabled the transmission of content privately, to a single subscriber at a time. However, the Court found that Aereo’s overall system could transmit a program to many subscribers, and that its activities constituted a “public” performance. In particular, the Court stated:  “we conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.”

The Court’s conclusion, if taken out of context, could cause cloud storage service providers to be concerned. Services that allow users to store music, video and other content online for on-demand delivery may indeed wonder whether their services permit “public performance” when a user accesses stored online content.

However, the Court took care to say that its ruling was limited to an interpretation of the Copyright Act’s Transmit Clause, which the Court said was intended to apply “to cable companies and their equivalents, [and] did not intend to discourage or to control the emergence or use of different kinds of technologies.” The Court noted that the term “public” in this context “does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.”

Thus, not only did the Court state that it was not addressing remote storage systems, it also hinted that it would not consider distribution of remotely stored content in a cloud storage service to be a violation of copyright law because those distributions were not to the “public.”

So, at least for the present, remote storage services can take comfort in lower court decisions such as Cartoon Network LP v. CSC Holdings (2nd Cir. 2008), which held that remote DVRs may operate without violating copyright law.

 

 

2 responses to “What cloud computing services need to know about the Aereo decision

  1. Jim,
    Good article. That was much more succinct than most of the summaries out there. However, it leaves one question in my geek mind. That is, is there a difference between uni-cast technologies and multi-cast? Historically, cable used mutli-cast and I believe that one of Aereo’s claims was that they were using a one-to-one, uni-cast methodology. Does this decision effectively erase the legal difference between the two?

    • It does in the case of Aereo’s situation: the Court stated that “we conclude that when an entity contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of distinct communications it makes.”

      However, it may or may not erase the difference in other situations. The Court suggested that its conclusion may not apply to every technical configuration and business model by noting that its holding was “limited,” The Court also said that it was not considering other types of systems (such as remote storage systems) in its decision. Service providers should consult with legal counsel for a review of their systems in view of the Court’s decision.

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