Here’s an amicus brief filed 3/3 with the Supreme Court by NAB and broadcast network affiliate associations in support of declaring Aereo a copyright infringer. According to the brief:
“Aereo’s wasteful free-riding stands in marked contrast to the genuine innovation being achieved within the framework of the law by services like Netflix and Hulu, as well as by broadcasters themselves. Reaffirming the role of copyright protection for free, over-the-air broadcasting will not harm innovation, which is already happening under Congress’s carefully calibrated legal regime. It is Aereo’s scheme that represents a step backward, both as a matter of law and technology.”
Here’s the filing:
The National Association of Broadcasters, the
ABC Television Affiliates Association, the CBS
Television Network Affiliates Association, the NBC
Television Affiliates, and the FBC Television
Affiliates Association (collectively, the “Broadcaster
Associations”) are associations representing the
interests of television broadcasters. The National
Association of Broadcasters (NAB) is a non-profit,
incorporated association of radio and television
stations and broadcasting networks. NAB serves and
represents the American broadcasting industry,
advocating before Congress, the Federal
Communications Commission, and the courts on
behalf of its members. The majority of NAB’s
members are not large entities; they are local,
independent stations.
The ABC Television Affiliates Association, the
CBS Television Network Affiliates Association, the
NBC Television Affiliates, and the FBC Television
Affiliates Association represent hundreds of local
television stations affiliated with the national ABC,
CBS, NBC, and FOX television networks,
respectively. Together, the Broadcaster Associations’
members serve millions of viewers in every state in
the country.
The Broadcaster Associations have a
compelling interest in promoting adherence to
copyright and communications laws that govern
public performances of television programming and
retransmission of broadcast signals to the viewing
public. Without these laws, broadcasters could not
fulfill their obligation to offer free over-the-air
television programs that meet the needs and
interests of the communities they are licensed to
serve. Unauthorized retransmissions of broadcast
programming siphon viewers away from lawfully
authorized sources, which include over-the-air
broadcasts, cable and satellite subscription services,
and authorized online distributors. As a result, the
Broadcaster Associations’ members lose advertising
revenues and retransmission fees essential to
recouping the significant costs of acquiring,
producing, and distributing local and national
programming. This undermines broadcasters’ ability
to create new and innovative programming and
distribution mechanisms, and threatens existing
programs, such as original local news and
community affairs programming, that are costly to
produce.
INTRODUCTION AND SUMMARY OF ARGUMENT
Quality broadcast television, delivered for free
over the air by local stations, is a public good, as
Congress has long recognized. But free over-the-air
television is not cost-free and cannot be taken for
granted. Aereo seeks to subvert a carefully
constructed legal framework with a technological
gimmick. If the Court were to hold that Aereo’s
deliberately wasteful and inefficient system can
successfully circumvent the plain meaning and
purpose of the Copyright Act, it would strike a
serious blow to the institution of free and innovative
broadcast television. The Court should instead hold
that Aereo’s claimed loophole in the law does not
exist.
1. Broadcast stations serve their communities
by delivering quality programming, including local
news programs on which the public relies. Nearly 60
million Americans – including many low-income and
minority households – rely exclusively on over-the-air
broadcast signals to watch television. Many
other Americans watch broadcast programming
through multichannel video programming
distributors (MVPDs). Over-the-air broadcasting
involves substantial costs, including capital
expenses, network affiliation fees, licenses for
popular syndicated programs, and the personnel,
equipment, and facilities needed to produce local
news programs and emergency coverage.
Congress has struck a careful balance that
protects the interests of broadcasters, copyright
holders, MVPDs, and the public. Overriding earlier
decisions of this Court, Congress decided that cable
systems may not retransmit copyrighted broadcast
programs without a license, but created a
compulsory licensing system to facilitate cable
systems’ access to broadcast programs. Separately,
Congress granted broadcasters rights in their
signals, including the right to negotiate with MVPDs
for the ability to retransmit those signals. Together,
this interlocking set of provisions assigns distinct
benefits and burdens to broadcasters, MVPDs, and
copyright owners.
The court of appeals’ decision subverts this
balance. It allows Aereo to exploit broadcasters’
creative efforts and investment by retransmitting
their programs and signals for a profit, without
producing anything and without paying broadcasters
(or other copyright owners) anything. Aereo does
this through a technological gimmick, using
thousands of dime-sized antennae and identical
digital copies to simultaneously retransmit live
television programming and signals to its paying
subscribers, while claiming that these are not “public
performances.” As Judge Chin explained, this
system clearly constitutes an unauthorized public
performance under the plain text of the Copyright
Act: it is a “device or process,” used to transmit
copyrighted television programming, i.e., the
“performances,” to “paying strangers,” i.e., “the
public.” The panel majority’s view that the system
is saved by its “technical details” is foreclosed by the
text of the statute and is inconsistent with its
purpose and legislative history.
2. Aereo’s scheme is inflicting grievous and
irreparable harm on broadcasters and, more broadly,
on the system of national and local broadcast
television. As several courts have found, Aereo and
similar schemes:
(i) seriously undermine the value of network
and local advertising, the largest revenue stream
supporting free, over-the-air broadcasting;
(ii) impair broadcasters’ ability to negotiate for
retransmission consent fees, their second-most
important revenue stream;
(iii) interfere with authorized online
distribution of broadcast programming, an
increasingly important issue for broadcasters; and
(iv) threaten to cause a migration of popular
network programming to subscription services, and
present local broadcasters with difficult financial
decisions with respect to costly programming on
which their communities rely.
Aereo’s “Rube Goldberg-like contrivance” is
not a technological innovation, but is instead a
technologically flawed approach designed solely to
circumvent the law. Aereo solves no technological
problem; instead, it is merely a scheme to avoid legal
obstacles to free-riding. Aereo’s technology is also
notably inefficient, using excessive amounts of
electricity and bandwidth.
Aereo’s wasteful free-riding stands in marked
contrast to the genuine innovation being achieved
within the framework of the law by services like
Netflix and Hulu, as well as by broadcasters
themselves. Reaffirming the role of copyright
protection for free, over-the-air broadcasting will not
harm innovation, which is already happening under
Congress’s carefully calibrated legal regime. It is
Aereo’s scheme that represents a step backward,
both as a matter of law and technology.
ARGUMENT
I. Aereo Subverts Congress’ Careful Balance
Through Technological Contrivance.
A. Broadcasters Provide Important Services
To Their Communities At Substantial Cost.
1. This Court has observed that “the
importance of local broadcasting outlets can scarcely
be exaggerated.” As of December 31, 2013, there
were 1,388 full-power commercial television stations
operating in the United States,5 each licensed by the
Federal Communications Commission (FCC) to serve
the needs and interests of a particular geographic
area. Some commercial broadcast television
stations are owned and operated by the network with
which they are affiliated, but the majority are
independently owned.
The most-watched broadcast television
stations make three principal forms of programming
available. First, most of these stations obtain a
significant amount of their programming from the
national network with which they are affiliated, such
as ABC, CBS, NBC, and FOX. Second, stations
obtain syndicated programming from content
providers. And third, stations broadcast locally-produced
news, sports, public affairs, and related
programming of particular interest to the station’s
community of license.
Broadcasters’ role in delivering the news is
especially significant, and “[i]n many ways . . . more
important than ever,” according to a recent FCC
report. “[L]ocal TV remains a top news source for
Americans, with almost three out of four U.S. adults
(71%) watching local television news.” These
stations increasingly “fill the void” in investigative
journalism left by changes in other media sectors.
And broadcast news plays an irreplaceable role in
emergency situations, when the viewing public as
well as law enforcement authorities rely on the wall to-
wall coverage provided by local stations.
2. Local broadcasters make this programming
available to the general public free of charge through
over-the-air service. Approximately 22.4 million
American households, accounting for nearly 60
million people, rely exclusively on over-the-air
broadcast signals to watch television, including 30
percent of households with annual incomes under
$30,000.15 In addition to lower-income families,
minorities and younger adults rely heavily on free
television, with minority groups making up 41% of
all broadcast-only households.16 As the FCC has
noted, “[f]or many people, free, over-the-air television
is their primary source of news, information and
emergency alerts – not to mention entertainment.”
Millions more watch broadcast television
stations as retransmitted – with authorization – by a
cable system, satellite carrier, or other MVPD to
which viewers pay a monthly fee.
Because the most popular local and national television programs
appear on broadcast stations, MVPDs are willing to
pay for the right to retransmit popular stations.
3. Bringing top-quality national and local
programming to the public entails significant costs
for broadcasters. Local stations face substantial
capital expenses for their transmission facilities and
invest heavily in innovation. They pay network
affiliation fees and other compensation to acquire
exclusive rights to popular network programming in
their local markets, as well as licensing fees to
acquire exclusive local rights to syndicated
programming. Broadcasters may pay syndication
fees of up to $2.5 million in barter and cash for a
single episode of top shows such as Modern Family
and The Big Bang Theory. Stations also incur
significant costs to produce local programming,
including hiring reporters and camera crews,
purchasing news vans and other equipment, and
maintaining production facilities. A survey of
television stations reported that, on average, they
spend over $4 million per year in their news
operating budgets and over $700,000 in their news
capital budgets. Finally, stations provide
expensive-to-produce news coverage on which the
public depends, such as commercial-free reporting
during times of emergency.
Broadcast television is available for free over
the air to viewers; it is not and could not be free to all
entities for all purposes. Like any business,
commercial television broadcasters would suffer
devastating harm if other commercial enterprises
could appropriate their product freely and without
compensation. Congress has crafted a
comprehensive statutory scheme to ensure that this
does not happen.
The right to authorize public performances of
a copyrighted audiovisual work is an exclusive right
secured to copyright holders. Prior to 1976, this
Court had held that retransmissions of broadcast
programming by cable systems were not
“performances” of that programming, allowing cable
systems to retransmit broadcast television for free.
Congress concluded that these decisions posed a
serious threat to the broadcast industry and
abrogated them in the Copyright Act of 1976. As
the legislative history confirms, Congress determined
that a “commercial enterprise[]” – like Aereo –
“whose basic retransmission operations are based on
the carriage of copyrighted program material” –
again, like Aereo – should pay “copyright royalties”
to the “creators of such programs.”
At the same time, Congress was concerned
that individual negotiations with every copyright
owner would be “impractical and unduly
burdensome.” It therefore created a narrowly
tailored compulsory licensing regime, not universally
applicable, but limited to cable operators and later
satellite providers. Thus, Congress struck a
balance: copyright holders receive robust protection
that applies to retransmission of broadcast
programming, but select entities – cable and satellite
systems – are granted a streamlined licensing
mechanism.
Distinct from the copyright interests in
broadcast programming, Congress enacted the Cable
Television Consumer Protection and Competition Act
of 1992,32 and the Satellite Home Viewer
Improvement Act of 1999. These statutes created a
separate right for broadcasters in their signals and
allowed commercial television stations to bargain
regarding the right of MVPDs to retransmit those
signals.
Together, these interlocking statutory
provisions strike a careful balance designed to serve
the public interest:
• Over-the-Air Broadcasts: Each local broadcast
station receives a license from the FCC to
transmit program services on a particular
frequency, and is required to operate the
station in a manner that serves the public
interest.
• MVPDs and Retransmission Consent: Local
commercial broadcast stations have control
over retransmission of their signals by
MVPDs. Because of the demand for the mix of
programming they make available, network affiliated
television stations typically negotiate
compensation from MVPDs for the right to
deliver the broadcast signal to subscribers
(“retransmission consent”).
• Copyright Owners: Copyright holders
authorize broadcasters to publicly perform
their works over the air, but this permission
does not necessarily carry over to other
platforms. Only cable systems and satellite
carriers may bypass direct negotiations with
rights holders through a statutory compulsory
licensing system; other would-be
retransmitters must obtain individualized
consent.
C. Aereo’s “Rube Goldberg-Like
Contrivance” Violates The Plain Text Of
The Copyright Act and Circumvents Its
Purpose.
Unauthorized streaming of copyrighted
programming to the public over the Internet is
illegal. To its subscribers, Aereo functions just like
the indisputably infringing services that came before
it. Aereo, however, claims it is different because it
employs a convoluted technological ruse: in making
live television programs available to its subscribers,
it claims to use “thousands of individual dime-sized
antennas” to make identical “unique copies” that it
then transmits simultaneously to as many
subscribers. This “Rube Goldberg-like contrivance,
over-engineered . . . to take advantage of a perceived
loophole in the law,” does not change the basic fact
that Aereo is “publicly performing” copyrighted
works in violation of the Copyright Act.
The exclusive right to “perform the
copyrighted work publicly” includes the right to
“transmit or otherwise communicate a performance
. . . to the public, by means of any device or process”
(the “Transmit Clause”). The expansive language
of the Transmit Clause makes clear that a
performance is public “whether the members of the
public capable of receiving the performance or
display receive it in the same place or in separate
places, and at the same time or at different times.”
As Judge Chin explained, Aereo fits squarely within
the statute: its “system of thousands of antennas” is
a “device or process,” and it uses that system to
transmit copyrighted television programming, i.e.,
the “performances,” to “paying strangers,” i.e., “the
public.” This common-sense interpretation is also
supported by the legislative history of the Copyright
Act of 1976, which explains that Congress intended
to cover “all conceivable forms and combinations of
wired or wireless communications media,” in order to
anticipate future technological developments.
The court below incorrectly reasoned that the
“technical details” of Aereo’s system allow it to
thwart this straightforward application of the law.
According to the majority, the Transmit Clause
applies only if “‘a particular transmission of a
performance’” can be received by the public; each
“transmission sent by Aereo” to its subscribers is
“generated from [a] unique copy” of the television
program, so that copy is not transmitted to “the
public.” But the Act says nothing about whether
the underlying “performance” is “transmitted” to “the
public” using one copy or multiple (technologically
unnecessary) copies. To the contrary, the Transmit
Clause “does not use the terms ‘copy’ or ‘copies’” at
all.46 Instead, in language that is remarkable for its
comprehensiveness and breadth, the statute applies
to “any device or process,” without regard to whether
the underlying work (i.e., the “performance”) is
transmitted to members of the public “in separate
places” or “at different times.” The lower court has
simply and improperly rewritten the Transmit
Clause to replace “performance” with “transmission.”
Only by departing from the statutory text could the
panel conclude that Aereo’s “technical details” save
it.
Beyond its lack of textual justification,
Aereo’s contrivance plainly subverts the balance
Congress struck. Like broadcasters, Aereo transmits
programming to the public. But unlike broadcasters,
it pays nothing for that programming and has no
duty to serve the public. Like MVPDs, Aereo retransmits
broadcast signals and profits from
charging monthly subscription fees to viewers. But
unlike MVPDs, it does not negotiate with rights
holders, pay any fees, or comply with any of the
statutory conditions Congress imposed upon
MVPDs.48 Like copyright holders, Aereo profits from
valuable programming. But unlike copyright
holders, it does none of the innovation, supplies none
of the creativity, and contributes none of the
financial investment. This is not a legitimate
function contemplated by Congress’s carefully
calibrated regime; it is simply free-riding.
II. Aereo’s Illegal And Inefficient Scheme
Inflicts Serious Harm On The Public.
A. Aereo Undermines Broadcasters’ Ability To Deliver Free And Innovative
Programming.
In subverting the careful balance Congress
has struck, Aereo inflicts grievous – and, as several
courts have found, irreparable49 – harm on
broadcasters. The harm faced by local stations
points to a broader harm to the system of national
and local broadcast television service that has long
benefited the public.
1. Aereo’s technological contrivance
undermines the largest revenue stream supporting
free, over-the-air television: advertising. Aereo
audiences are “not measured by Nielsen” ratings,
meaning broadcasters cannot command advertising
revenues commensurate with their viewership.50
Since 88 percent of broadcast revenue is derived from
advertising, even small differences in ratings points
can have a huge financial impact on local stations.
Aereo and services like it may further
diminish advertising revenues by diverting viewers
out of their local markets. Aereo’s purported controls
against out-of-market viewing are illusory –
customers are invited to watch programming from
any available market so long as they click a button
that says, “I swear, I am in market.” More
fundamentally, the Second Circuit’s reasoning allows
Aereo and its sister services to offer streaming of out of-
market stations. If an unauthorized streaming
service allows Californians to watch New York
programs – three hours early, and with commercials
for New York car dealerships instead of California
dealerships – it would further “reduce the value
of . . . local advertisements.” Enabling this viewing
of out-of-market television stations would also
destroy local stations’ bargained-for program
exclusivity rights. These are the very harms
Congress sought to prevent in significantly
restricting, and in some cases prohibiting outright,
the importation of out-of-market stations.
Aereo also directly jeopardizes
retransmission consent fees, broadcasters’ second most
important revenue stream. These fees
represent a “substantial and growing revenue source
for the television programming industry.” The
threat to this revenue comes not only from Aereo,
which retransmits broadcast signals for profit
without paying these fees; large MVPDs are already
exploring ways to take advantage of a legal regime in
which paying for signals is apparently optional.
Aereo’s very existence gives cable companies
“leverage to negotiate deals with broadcasters on
more favorable terms.” The fundamental
economics of broadcast television are already being
undermined by the need to bargain in the shadow of
the Aereo threat.
3. Aereo is also undermining broadcasters’
negotiating position with respect to authorized
online distribution. Ensuring that broadcasters have
the exclusive “first run” of popular programming
ahead of Internet sources is an important point of
negotiation between broadcast television stations
and their programming suppliers, including the
networks with which they are affiliated.
“[N]egotiated Internet retransmissions – for
example, on Hulu.com – typically delay Internet
broadcasts so as not to disrupt plaintiffs’ broadcast
distribution models, reduce the live broadcast
audience, or divert the live broadcast audience to the
Internet.” Aereo subverts the carefully negotiated
balance between first-run live broadcasts and
authorized Internet viewing.
4. In combination, the harms described above
will reduce broadcasters’ ability to continue offering
costly and diverse national and local programming
free over-the-air. Aereo’s free riding creates a
substantial danger that quality programming will
migrate from broadcast television to pay services.
Local broadcasters will also face difficult choices. As
entities licensed to serve their local communities,
broadcasters strive to avoid scaling back
programming on which the public depends.
However, with both advertising and retransmission
consent revenues jeopardized, expensive-to-produce
local news coverage, such as wall-to-wall emergency
reporting, faces clear financial challenges.
B. Aereo’s System Does Not RepresentTechnological Innovation, But Is Rather A Flawed And Inefficient Tool For Circumventing The Law.
Some previous copyright cases have involved a
balance between “supporting creative pursuits
through copyright protection” on the one hand, and
promoting “technological innovation” on the other.
This is not such a case. Aereo’s free-riding scheme is
deliberately wasteful and inefficient; it is
“innovative” only in the realm of legal artifice, not in
the realm of technological progress. It is
broadcasters and authorized retransmitters who are
making societally beneficial innovations within the
framework of the copyright laws and the
comprehensive legal architecture that Congress has
erected.
Aereo does not solve any technological
problem; it only aims to “solve” a legal obstacle that
would otherwise prevent its free-riding scheme. Far
from benefiting society, this law-office innovation is
tremendously inefficient. Aereo’s convoluted
“technology” requires disproportionate consumption
of electricity, demanding enough power in New York
alone to light two football stadiums. Aereo also
requires considerable bandwidth for its inefficient
operations, and has recently confronted problems in
various markets related to unspecified “capacity”
issues.65 This prodigious consumption of resources
serves no technological purpose. In fact, Aereo
appears to deliver a product that is technologically
inferior to the legitimate services it seeks to
displace.
Aereo’s wastefulness stands in marked
contrast to the genuine innovation being achieved
within the framework of the law. Services like
Netflix and Hulu, which lawfully acquire the rights
to deliver copyrighted programs over the Internet,
deliver vastly more content than Aereo at a lower
price to subscribers. Broadcasters themselves, in
addition to their continued innovation in
programming, also devote considerable effort to
innovation in content delivery, including the live
streaming of their station signals and content over
the Internet.
Reaffirming the role of copyright protection as
a pillar of the free, over-the-air broadcast model will
not harm technological innovation. That innovation
can and will happen – and is already happening – in
lawful ways pursuant to Congress’s carefully
calibrated regime. Aereo’s scheme, by contrast, is a
step backward not just as a matter of law but as a
matter of technology as well.
CONCLUSION
For the foregoing reasons, as well as the
reasons set forth in petitioners’ brief, the decision of
the court of appeals should be reversed.
Respectfully submitted,
Jane E. Mago
Jerianne Timmerman
Benjamin F. P. Ivins
NATIONAL ASSOCIATION
OF BROADCASTERS
