Why Aereo Matters to the Cloud: A Primer

by Matt Schruers on March 4, 2014

DisCo has written extensively about the Aereo case now in the Supreme Court, (e.g., [1], [2], [3], [4]) but reading some old commentary, I realized we’ve never quite explained precisely how the outcome of Aereo can threaten cloud computing.  The matter seems particularly relevant since briefs were filed in the Supreme Court yesterday in support of ABC and the other broadcasters pursuing Aereo.  (All briefs should eventually appear on SCOTUSblog.)

In short, the Aereo case puts the cloud at risk because when broadcasters have complained about Aereo, their complaints also describe cloud computing.  It isn’t that broadcasters necessarily bear malice toward cloud computing; it is just that when broadcasters complain about how Aereo works, their complaints describe cloud-enabled access to content.  The cloud is caught in the crossfire.

The Big Picture

By way of background, Aereo’s technology helps subscribers access live broadcast television on Internet-enabled devices.  It isn’t the first service one would think of when talking about cloud computing.  Some people think of consumer-facing services like iCloud, SkyDrive, Google Drive, or Dropbox.  Others may think of software as a service, or web-based apps like webmail.  Most people don’t think about television, but the underlying legal principle is the same.

The broadcasters’ case against Aereo attacks a key legal principle under which such services operate: if a user employs an online service to stream their own, lawfully acquired content to themselves from a remote location, this is a private performance that does not infringe copyright. Broadcasters, however, insist that “any device or process” that transmits works to the public makes a public performance, each of which must be licensed.  Because cloud services are a “device or process,” this calls into doubt cloud providers’ ability to give users remote access to their own content without securing licenses for every file in the cloud.

What’s at Stake

Financially, what’s at stake for broadcasters in the Aereo case is the amount they can charge cable systems for retransmitting broadcast signals.  From that perspective, this is all about retransmission royalties.  The current, largely closed subscription television system is doing quite well, and Aereo might upset that apple cart.  More broadly, however, saying Aereo is about royalties is like saying the American Revolution was about spilled tea.  There are far more important principles at play here, most importantly, whether a commercial service can enable you to access your own content over the Internet, regardless of where you are.  I.e., the cloud.

Legal Analysis 

(*CAUTION*:  Legal analysis may induce drowsiness; do not read before operating heavy machinery.)

The accusations leveled against Aereo generally contend that when Aereo subscribers use Aereo antennae to access broadcast signals, it is violating the broadcasters’ “public performance right.”  That’s part of copyright protection.  In addition to the right to make copies, the Copyright Act gives copyright holders a bunch of other rights, like the right to distribute their work, the right to make derivative works (e.g., merchandising, or the Broadway musical version), and, most importantly here, the right to publicly perform the protected work.

That word “publicly” is very important.  The Copyright Act regulates “public performances”, but not private ones.  So, it matters a lot whether a performance is public or private.  You can play music in your home and sing in the shower without paying a license to perform that music, because the ‘performance’ is private.  But if you get up on a Broadway stage and sing to an audience (even if you erected a shower and got in it first), the performance would be “to the public.”  In most cases a license would be needed, or you would be infringing the public performance right.

Aereo’s position is that when Aereo subscribers pay for access to an antenna and direct it to send them back a unique copy of a particular broadcast, this is private.  Different users access different antennae at different times, and each user receives a different copy of a work — even if they’re watching the same broadcast.  Aereo isn’t rebroadcasting one work to thousands; it gives technology to thousands who at different times use that technology to access and possibly store different copies of works that they’re already lawfully entitled to receive.  This is not unlike the Sony Betamax, which didn’t copy television, but gave thousands of consumers the technology to make reproductions of television content that they were already lawfully receiving.

Broadcasters have responded by saying that none of this matters; Aereo is infringing, they contend, so long as a given work is made available to multiple members of the public, even if Aereo does it with different unique copies, and at different times.

The problem with this rationale is that it applies with equal force to cloud storage like Dropbox, SkyDrive, iCloud, and Google Drive.  If multiple people store their own, unique, lawfully acquired copy of the latest hit single in the cloud, and then play it to themselves over the Internet, that too sounds like the broadcasters’ version of a public performance.  The anti-Aereo rationale doesn’t distinguish between Aereo and the cloud.

In a brief I previously co-authored with other industry and consumer organizations in the somewhat similar FilmOn case (FilmOn unsuccessfully attempted to intervene in the Aereo case), we argued that this would be a terrible interpretation of copyright law.  This unfortunate line of reasoning proceeds naturally, however: if Aereo is publicly performing when you store a unique copy of the nightly news online and watch it later, then why aren’t cloud services publicly performing if they host your (lawful) unique mp3 of the latest hit single and stream it to you later?

Because all commercial content is likely to be stored and streamed to more than one user eventually, cloud services would have to assume that everything they make available online would ultimately implicate some public performance right.

What Arguments Have Been Made So Far

The petitioner broadcasters filed last month, and yesterday, parties supporting the broadcasters, as well as parties taking no side, filed their briefs.

In a move that appears to prioritize expansive interpretation of the Copyright Act over investment in new technology, the U.S. Government weighed in against not only Aereo, but also the seminal Cablevision decision upon which Aereo’s technology is based.  Led by the U.S. Copyright Office, the USG claims that its anti-Cablevision position doesn’t threaten cloud computing, even while arguing in the same breath that the Cablevision case, which motivated about $1 billion dollars of investment capital, was wrongly decided.

In what seems to be an example of ‘the litigants doth protest too much,’ many of the broadcasters’ supporters preemptively raise the issue cloud computing, before Aereo has even filed its brief on the merits.  Interestingly, they disagree substantially: the U.S. Government (USG), for example, carefully hedges, saying that a decision for the broadcasters “need not threaten cloud computing.”  It conspicuously does not argue that it will not threaten the cloud — only that the decision need not, implicitly conceding that a decision for the broadcasters could still be fatal for the cloud.  The USG’s rationale is that as long as a consumer has lawfully acquired media in the first place, no cloud service need worry that someone will demand a license.  Inconveniently for the USG, however, several other briefs filed concurrently argue that cloud computing services need not worry because, hey, everyone can just get a license!  Setting aside the fact that there’s no way to ensure that all files in the cloud are licensed, this point substantially undercuts the USG’s position.  Even as the USG is telling the Court that cloud services need not fear they’ll be demanded to take licenses for everything users put in the cloud, other interests are telling the Court that cloud services should do exactly that.  Arguably, it doesn’t advance the broadcasters’ case that even their supporters cannot agree on whether cloud services would have licensing problems.

Simultaneously, a number of tech associations filed a brief in support of neither the broadcasters nor Aereo yesterday as well, which also undercuts the USG’s contention that a broadcasters victory need not threaten the cloud.  Alongside the Center for Democracy & Technology, these associations argued that an “overly broad view of the public performance right would chill the promise and progress of cloud computing.”  The Business Software Alliance similarly argued that “[t]ransmissions between a provider of cloud storage services and individual users are thus outside the scope of the Transmit Clause [of the Copyright Act]” and that a “contrary interpretation of the Transmit Clause would be fatal for cloud computing.”

By now, the consequences should be clear: if, whenever a service makes copyrighted media available to multiple people, even if it involves different unique copies at different times, a public performance is happening, then all media in the cloud — even if lawfully acquired — is infringing when streamed back to its owner.  Just like the Sony Betamax decision, 30 years old last month, had great consequences for the future of technology, the Aereo case can have great consequences for the cloud.

[Update:  Aereo CEO Chet Kanojia was interviewed by Sam Gustin for TIME yesterday.  In response to the question “What would be the broader consequences for innovation and technology if Aereo loses the case?”, Kanojia answered: “The biggest impact would be on cloud computing in general, and specifically, cloud-based storage services”, and then went on to give some examples.]

  • http://www.laweconcenter.org/ Geoffrey Manne

    See our (ICLE and CEI) amicus brief in Aereo (available here: http://www.laweconcenter.org/images/articles/aereo_amicus_icle_cei_final.pdf). What distinguishes Aereo and the cloud services you describe is the availability of a contractual relationship in which licensing terms can be adjusted, if needed, to accommodate what you describe (as happens with videos purchased and stored in Amazon’s Video Library). The point is – if you have legally licensed content that you store in the cloud, your license can accommodate that. But for Aereo, there is no such contractual relationship. Aereo just asserts that the broadcast license is essentially unlimited, but it’s not. There is no reason to read into a broadcast license a right for Aereo to do whatever it wants with broadcast content. (And no one disputes the content is copyrighted; this isn’t a fair use issue.) And end-users aren’t in a position to contract directly (unlike, by definition, legal content that end users place in the cloud). There is thus a limiting principle available that would prevent the presumptive application of a holding against Aereo to cloud services.

    • drwex

      I don’t see how that follows. By the logic of Betamax, the personal recorded copy is lawfully assigned to the person who recorded it. If I execute a license with Aereo that states “you can act as my DVR with your cloud server” how is that different?

      Your argument seems to rest on the idea that the consumer has no private rights in the content Aereo plays for each person, but I don’t think that’s true.

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