Editors Note: This is the second of three Deadline posts that lay out the issues in the Aereo case, which Deadline Legal Editor Dominic Patten will cover from the Supreme Court next week. Today: An interview with former Acting Solicitor General Neal Katyal, who is serving as an adviser to the broadcasters in their case against the streaming service.
On April 22, Aereo and major broadcasters will have their day in the Supreme Court. Broadcasters will say Aereo is stealing their copyrighted material, end of story. The Barry Diller-backed streaming service that launched in early 2012 will say it merely rents antennas to consumers so they can watch TV that’s already available for free over the public airwaves. Both sides will be represented by lawyers who know the Supreme Court well. David Frederick of D.C. firm Kellog Huber Hansen Todd Evans & Figel LLP has more than 40 SCOTUS appearances notched on his belt and will handle defendant Aereo’s arguments. Former Solicitor General Paul Clement, who has argued more 70 cases before the high court, will represent Disney, CBS, NBCUniversal, Fox and the other plaintiffs. He will have a half hour to make his points, unless the Justices give 10 minutes to the current Solicitor General’s office to argue on behalf of the plaintiffs.
Here’s the broadcasters’ argument from Neal Katyal, now a partner at international firm Hogan Lovells, who was picked by President Obama to serve as Acting Solicitor General from May 2010-June 9, 2011.
DEADLINE: So, let’s cut to the chase — what is this case really about?
KATYAL: I certainly think that streaming of the broadcasters’ signals is retransmission and blatantly violates the Copyright Law. Our case is can a company come along and yank broadcast signals out of the air and then package them and sell them to individual subscribers for a fee when the producers of that content aren’t compensated for it? The networks each year spend billions of dollars creating, producing, acquiring and distributing and marketing their content. Aereo is yanking the signals out of the air and selling them to people. So that’s what the case is about.
DEADLINE: Aereo would say that it complies with the Copyright Act and that broadcasters are trying to stem the use of innovative technology and stop the future from happening.
KATYAL: I think this idea that Aereo has some innovative new technology is an absolute red herring. The only thing innovative about Aereo is its legal strategy. It’s not people capturing the signal, its Aereo capturing the signal through antenna and then selling it to the entire American public and it’s Aereo who’s violating the Copyright Law by doing that. What Aereo is doing is grabbing the broadcasters’ signal from the air and then they’re retransmitting it. In 1976 Congress expressly said any device or process that retransmits a broadcast signal without the copyright holder’s permission is unlawful. So to me this is one of the easiest cases the Supreme Court is going to decide this year because it’s something that Congress settled. There maybe a number of interesting policy arguments about how we should have a different Copyright Law, but with respect to the Copyright Law we do have, it’s a very hard argument for Aereo.
DEADLINE: In its response brief filed last month, Aereo said that the Supreme Court should not rewrite the Copyright Act in an effort to protect the broadcasters from lawful and logical advancements in technology or from the economic consequences of their transmitting works for free over the public airwaves. That’s very different from your side’s belief.
KATYAL: The only people rewriting the Copyright Law is Aereo and I think that’s very clear from the briefs that have been filed by the networks. It’s also clear from the briefs filed by a cross-section of folks including the United States Justice Department. My old office, the Solicitor General, coming in and saying that Aereo violates the Copyright Law. There’s also the brief by Ralph Oman, who is one of the two former living U. S. Registers of Copyright. Oman, who helped draft the 1976 Copyright Law, said this violated the Copyright Law.
DEADLINE: OK, but there are a number of groups and organizations like Dish Network, the Electronic Frontier Foundation and the Consumer Federation of America who filed briefs in support of Aereo. They say that the company is giving consumers a meaningful choice of a cloud-based method for enabling private performances of live or timed over-the-air television.
KATYAL: The case has nothing to do with cloud computing and that’s made very clear by the United States Justice Department’s brief. Look I buy a lot of music and I store it in the cloud. What Aereo does is not like me with Amazon or iTunes where I paid for the music. Aereo hasn’t paid a dime to the copyright holder and that’s the fundamental distinction. Aereo’s trying to get something for nothing at the end of the day and something for nothing is not the American Way.
DEADLINE: One major point of contention from the very beginning of the legal battles is if Aereo is engaging in a public or private performance. It makes all the difference in the world in terms of copyright violation. It claims the latter, your side claims the former.
KATYAL: The copyright statute is designed to forbid public retransmission. Aereo’s argument is when we make our service available to the entire American public we’re not engaged in public performance because it’s an individual user borrowing an individual antenna for a particular moment in time to watch whatever show they want to watch. The idea that the thousands of difference performances are private is, I think, too clever by half.
DEADLINE: How so?
KATYAL: Well, Aereo’s entire business model is to offer a service that isn’t selling an antenna to you but for selling to any member of the American public at any time the right to watch a television show when they want without giving compensation to those who produced and created and distributed and marketed the show. That to me is a really hard argument to say if you’re giving the entire American public the show you’re not engaged in public performance of the show. I’m sure Aereo will try to make that argument to the Supreme Court on April 22nd but I expect a lot of resistance to it.
DEADLINE: In that vein, if Aereo loses at the Supreme Court, one of its major backers, Barry Diller, has said the business is pretty much over. Did those remarks surprise you?
KATYAL: I was a bit surprised to see those statements from Aereo that their business is over because normally when you have a new innovative technology regardless of what court decisions come out, the technology survives. There may be licensing issues or so but if tomorrow the iPhone were declared to violate patents or something like that nobody thinks that the iPhone would go away. They’d just realize that there would be different compensation to patent holders and the like. For Aereo to say that their business could end I think underscores the fact that what’s an issue here is not some innovative technology; the technology has been around for decades. As I’ve said, what’s innovative is simply their legal strategy which is based on I think just a flat misreading of what the Copyright Law says.
DEADLINE: Alright, but seriously, sure Aereo is growing but it is still so small you could say it has almost as many lawsuits as subscribers. Why try to quash a bug with a bomb?
KATYAL: I think that there’s a very important principle at stake here. The principle is will the American system permit businesses that operate on the something-for-nothing principle. If the courts are to permit this here it will do untold damage in the future because it won’t just be Aereo, it’ll be other companies as well. I mean something-for-nothing is always an attractive business proposition and people will come there and do that. So, you know, the Copyright Law has been designed to strike a certain balance. It’s worked well since 1976 and I think it would be a very dangerous thing for the law to change in the way that Aereo is trying to seek it to change.
Next Up: On Friday an interview with Aereo CEO Chet Kanojia.