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What sort of disruption of broadcasters' distribution can be disrupted?

Numerous opportunities have arisen for disruptors to intervene in media and entertainment markets where there is suspected unmet demand for distribution through new digital channels.

June 2013

The disruptor will, typically, re-distribute or re-package content through a different channel from the content owners' channels and without paying a licence fee for that use. The technology that has caused probably the biggest recent shockwaves is that which allows unauthorised internet retransmission of TV broadcasts. Broadcasters in the US and England have taken legal action against these sorts of disruptors, but with mixed success.

The Aereo case in the US

Aereo provides paid-for online access in an increasing number of US regions to freely available terrestrial broadcast channels. It also allows pausing and rewinding of live TV and recording for later viewing. It does so via remote antennae and hard drives; when a subscriber uses the Aereo system, an individual antenna is assigned to him (which no other subscriber shares), which receives the relevant signal. The system saves an individual copy of a program to a section of a large hard drive reserved for the subscriber. That copy is either saved until the subscriber has finished watching a programme or is retained for later playback.

Statue of LibertyThe New York Court of Appeals ruled that the Aereo service does not constitute an infringing “public performance” (i.e. a communication to the public). This conclusion was based on two key facts. First, customers each create a unique copy on their own portion of the remote hard drive and, second, when they choose to watch "live" or in play-back, they watch that individual copy. Other users cannot access that individual copy. The potential audience of each individual Aereo transmission is therefore the single user who requested the recording initially. Each of the individual private transmissions should not be aggregated. It is the audience of each transmission of each individual copy that is relevant, rather than the total audience of the work being transmitted.

That a Californian District Court has found (in the Aerokiller case) that an equivalent service does constitute an infringing public performance reveals how difficult and controversial decisions in these kinds of cases can be. Although, it should be noted that the precedent on which the Aereo Court relied was a Court of Appeals decision which had overturned the New York District Court's finding of infringement.

The TV Catchup case in England

The result in Aereo contrasts with that of the English and EU courts' views of the TV Catchup service. That service allows subscribers to stream free-to-air programming broadcast live on UK television on computers, smart phones, games consoles etc. There were two main issues: whether there was a communication to the public and whether TV Catchup made infringing copies.

The communication to the public question was referred to the CJEU, which was asked, in particular, whether there was a communication to a new public (a criterion added by earlier CJEU decisions) when TV Catchup's subscribers, being TV licence holders, could have received the broadcasts via their TVs in the usual way. The CJEU decided that, where there is a new type of communication (which there was here because TV Catchup delivered the broadcasters' content via internet streaming rather than broadcasts), there is no need to ask whether there is a new public. It is enough that a "fairly large" and indeterminate number of people can access the communication, which was the case here as any internet user in the United Kingdom who has a TV licence could access the service. Click here for more detail on this part of the case.

Remote control and televisionTV Catchup argued that lots of one-to-one communications meant that there was no communication to the public (a similar argument to that used by the Aereo Court). The High Court disagreed, in a finding that was supported by the CJEU, deciding that lots of individual communications could be aggregated and treated as if they were a communication to the total number of recipients or potential recipients. In the English judge's words, "It would be an unfortunate result if a point-to-multipoint communication were to be actionable but a number of point to point transmissions were not." As the CJEU put it, "it is irrelevant whether the potential recipients access the communicated works through a one-to-one connection. That technique does not prevent a large number of persons having access to the same work at the same time." This policy-driven approach found favour in the Aereo Court's dissent but not, as discussed above, with the majority.

The High Court found that there was reproduction of a substantial part of films in TV Catchup's servers (the plaintiffs in Aereo did not pursue their reproduction claim).  Temporary copies (of around 30-40 seconds for Apple streaming and 1 to 5 seconds for PC streaming) were made on TV Catchup's servers. In light of the CJEU's decision on the communication to the public infringement it is unlikely that the temporary copies defence will apply to those reproductions (although, if the CJEU and later English courts take the same approach to this defence as the English Supreme Court did in the recent Meltwater case, it may well apply – see our note on that judgment here).

The Cablevision case in the US

The Aereo judgment relied heavily on an earlier ruling in the Cablevision case, which, as well as ruling that there was no public performance, had ruled that Cablevision's remote digital video recorder system did not infringe the reproduction right. There, each user who requested the recording of a program would make their own remote copy and that copy would be played back to that user. Cablevision was not liable for creating the playback copies because, the New York Court found, Cablevision was not "sufficiently proximate" to the act of copying. This question has not been considered in England but the Full Federal Court of Australia, in the TV Now case, found that the provider of an equivalent service did make a copy when a subscriber requested recording of a broadcast.

The legality of these remote DVR systems is untested in the UK.  The UK has a time-shifting defence but, following revisions introduced in light of the Information Society Directive, the recording of the broadcast has to be made "in domestic premises" for it to apply, which may mean the defence would not apply to Cablevision-type services. By way of comparison, TV Now could not rely on the similar Australian defence, which does not contain the "in domestic premises" limitation. The private copying defence that will be introduced into UK law within the next 12 months may not assist the disruptors or their customers, because the original copy has to be "owned" by the private copier and there will be restrictions around what sort of cloud services can be used to store a private copy.

The future

Mobile phoneTechnologies will continue to develop that will use others' content in innovative but unlicensed ways and rely on laws that do not always clearly demarcate what can and cannot be done. At the same time, content owners will continue to respond, for example by improving on-demand and live-streaming offerings, amending windowing practices and offering new types of DVR device and mobile access. Even if legislation were introduced to try to deal with the content industry's concerns (it has been reported that Capitol Hill is the next stop for the US broadcasters), it is unlikely to do so in a comprehensive and future-proof way (as the Courts in Cablevision and Aereo revealed). So disruptor challenges, uncertainty, followed by incremental piecemeal clarity, and development of authorised innovative distribution platforms seem the way this area is likely to progress.

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Adam Rendle

Adam Rendle considers the divergent approaches that English and US courts have taken to services that provide online access to broadcasts.

"Technologies will continue to develop that will use others' content in innovative but unlicensed ways and rely on laws that do not always clearly demarcate what can and cannot be done."