Just in Time for Halloween: Zombie Aereo!

Preliminary injunction kills Aereo’s “live” retransmissions, but leaves it partly alive and still shuffling.

By Kevin Goldberg  
on

Ed note: This post originally appeared on CommLawBlog.

Preliminary injunction kills Aereo’s “live” retransmissions, but leaves it partly alive and still shuffling.

It’s still alive!!!

Given up for dead by many, our old pal Aereo has managed to sidestep the Grim Reaper yet again. (Rule No. 2 in Zombieland: Always double tap.) But just barely, and its future prospects are not good.

We’ve already covered Aereo’s arc from Nothing to Big Deal to, well, whatever it is now that Judge Alison Nathan has enjoined it from doing some, but not all, of the things it was originally set up to do. To recap briefly for newcomers, Aereo marketed itself as a way to watch over-the-air television, live or recorded, through Internet-connected devices. It rolled its new service out in New York in 2012 and was immediately sued by broadcasters who insisted that Aereo’s system infringed on their copyrights. After losing three rounds in the Second Circuit, the broadcasters finally prevailed in the Supreme Court, which concluded that, to the extent Aereo offered effectively real-time retransmission of over-the-air programming, it was indeed infringing. The Supremes then sent the case back down to the trial court (Judge Nathan presiding) to decide what to do with Aereo.

And now we know.

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Given a second bite at the Aereo apple, Judge Nathan has chomped down hard, issuing a nationwide preliminary injunction barring Aereo “from retransmitting programs to its subscribers while the programs are still being broadcast”. Not the injunction that broadcasters wanted (or that might have been expected given the Supreme Court’s ruling), but still a major disappointment to Aereo.

Nathan’s ruling is in line with the Supreme Court opinion, particularly because it demonstrates the same measured caution seen in Justice Breyer’s majority opinion. But because of that, it sets us up for further proceedings to explore what Aereo can and cannot still do. And that could eventually lead us back to the Supreme Court to determine Aereo’s ultimate existence.

So for now, Aereo is not the fully living, breathing entity it originally set out to be, but it’s still not dead. And as it stumbles around zombie-like, it could still constitute a threat to broadcasters’ interests.

In her decision, Judge Nathan reviews the three new legal arguments Aereo has developed in the wake of the Supreme Court decision. She does not appear impressed … favorably, at least.

As we have seen before, Aereo is now claiming that it should be considered a cable system under Section 111(f)(3) of the Copyright Act (often referred to as the “Cable Compulsory License”) and that it should therefore be allowed to continue operating as long as it satisfies all the obligations of a cable system. It made that argument to Judge Nathan. In the alternative, it also argued that, even if it isn’t a cable system, it should be protected by Section 512(a) of the Digital Millennium Copyright Act (DMCA) as a “mere conduit” of content. Aereo’s final fall-back position: if neither of the first two arguments is a winner, Aereo still shouldn’t be enjoined from operation because the broadcasters won’t be irreparably harmed.

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As to Aereo’s “Look Ma, I’m a cable system!” argument, Judge Nathan saw that as an attempt to “turn lemons into lemonade”. (Hey, haven’t we heard that analogy before? Oh yeah, right here!) But she quickly squeezed the juice out of that. As she put it, “while all cable systems may perform publicly, not all entities that perform publicly are necessarily cable systems, and nothing in the Supreme Court’s opinion indicates otherwise.” She also observed that the Second Circuit has already answered the question of whether an Internet service can qualify as a cable system with a flat “NO” in its ivi, Inc. decision. Because the Supreme Court didn’t address the ivi, Inc. case, that case remains good law and binding precedent. (Note that Judge Nathan’s decision on this point is not at all helpful to Aereo’s efforts to get the Copyright Office to let treat it as a cable system for compulsory license purposes.)

Nathan took even less time to shoot down Aereo’s DMCA argument. But that’s because it wasn’t really an argument at all. As she noted, “Aereo’s opposition brief only declares that it qualifies as a service provider, but does not explain how it satisfied the statutory definition.” Aereo did suggest that it might come within the statute because Aereo doesn’t itself transmit programming but only acts at the direction of its users, but the Supremes had already rejected that notion.

As to Aereo’s renewed claim that the broadcasters wouldn’t suffer any irreparable harm if Aereo were permitted to continue to operate while the merits trial goes forward, Judge Nathan had a number of things to say. First, she noted that she is currently bound by the findings in her 2012 ruling, where she found that there may well be irreparable harm to the broadcasters. (Aereo will soon re-litigate this issue as the court moves to the full trial on the merits, but until then her earlier findings stand.)

Nathan also observed that Aereo hasn’t challenged other indicia of irreparable harm, such as loss of subscribers for broadcasters’ own services, loss of control over copyrighted content and damage to relationships with content providers, advertisers and licensees. So putting aside the two factual findings that Aereo asked her to relitigate, she concluded that “there is still substantial evidence of irreparable harm to Plaintiffs that Aereo does not challenge.”

And perhaps even worse news for Aereo on the irreparable harm/significant hardship front. In her 2012 decision Nathan held that Aereo would itself suffer significant hardship if it were enjoined from operating. But since then, the Supremes have indicated that Aereo’s service likely infringes on the broadcasters’ copyrights. And because it is “axiomatic that an infringer of copyright cannot complain about the loss of ability to offer its infringing product”, Aereo can no long claim that it would be harmed if enjoined.

So Aereo is now subject to an injunction considerably broader than Aereo might have expected. The broadcasters argued that the injunction should prevent it from any retransmissions, whether live or on delay. Aereo countered that with the suggestion that any injunction should prevent the retrans of only live programming or programming subject to no more than a 10-minute delay. Judge Nathan came up with her own approach: an injunction limiting Aereo subscribers from accessing a program they’ve recorded through the system until the over-the-air broadcast of that program has ended.

Interestingly, in considering the geographical scope of the injunction, Nathan noted that “the technological safeguards designed to ensure that subscribers cannot access broadcasts outside of their home DMA are easily overridden.” This is important not only in terms of the preliminary injunction motion, but also in the longer term. It’s hard to see Judge Nathan – or anyone else – allowing a service to operate in way that results in national accessibility of local broadcast programming.

So what’s next?

Either Aereo or the broadcasters could appeal the injunction back to the Second Circuit.

Aereo might want to appeal the full decision or simply the time limitation of the injunction, which goes well beyond the 10-minute delay Aereo had sought.

The broadcasters might want to appeal the fact that the injunction still allows Aereo to provide any service at all. After all, a time-delayed Aereo is still a competitor in many ways. Viewers who don’t mind watching on a time delay – quite often the case for anything other than live sports – could still use Aereo as a cord-cutting/time-shifting alternative to cable or an alternative to the broadcasters own on-demand services. It could also compete with services like Hulu (in which broadcast networks have an ownership interest) and Netflix.

Or either side could let this play out through the rest of trial. This obviously suits the broadcasters to some extent, since Aereo may not be as attractive to potential subscribers without the live viewing function. The networks may simply be content to wait and see what happens in the District Court, especially given some of Judge Nathan’s comments about Aereo’s viability. And, of course, they can continue to pursue the legality of Aereo’s time-delayed service then.

Which leaves us with the prospect of still more litigation dragging on, possibly for years to come, possibly even back to the Supreme Court, as the not-quite-dead Aereo struggles to survive some way, somehow, while broadcasters keep trying to administer the final double tap. Check back here for updates.

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