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The Aereo Case - and Prediction
Submitted by Allison Bernstein on Tue 22 Apr, 2014

Guest post by Professor Edward Lee of IIT Chicago-Kent College of Law

On April 22, the Supreme Court heard oral argument in an important copyright case involving Aereo, an Internet TV service from Brooklyn that has the financial backing of media mogul Barry Diller. The case has received a lot of media attention because it pits a disruptive Internet startup against the old-line broadcast TV networks. But it also has the potential to transform the cable industry and the way in which people watch TV.


Predicting the winner: A Win for Aereo?

If you want to learn more about the facts and legal issue in the case, jump to the analysis below. Right now, I'm going to cut to the chase and predict a winner. Of course, every appellate attorney knows that predicting the outcome of a Supreme Court case based on how the oral went is perilous, if not foolhardy. But Judge Richard Posner and Professors Lee Epstein and William Landes have analyzed a simple—yet statistically significant—method of identifying the likely winner of a Supreme Court case based on the number of questions the lawyers receive during oral argument. In a nutshell, the party that receives the most questions from the Justices during oral argument is more likely to lose. See Lee Epstein, William M. Landes, & Richard A. Posner, Inferring the Winning Party in the Supreme Court from the Pattern of Questioning at Oral Argument, 39 J. Legal Stud. 433 (2010). Prior studies by others found similar results. Id. at 434 n.1 (citing Shullman, Wrightsman, and Johnson et al.). Even Chief Justice John Roberts arrived at the same conclusion based on his own study of 28 cases. Id.

Based on this crude method of counting up questions, my prediction is that Aereo will win the case. Aereo’s attorney received fewer questions during oral argument than the total questions asked of the opposing side (the attorney for TV networks and the attorney for U.S. government combined): 26 questions for Aereo, and 31 questions for the TV networks and U.S. government. But I'm not as confident in my prediction. Two lawyers represented the side of ABC, whereas Aereo had only one lawyer. If you look just at the lawyers for each party, ABC’s lawyer actually had fewer questions, 23 for ABC to 26 for Aereo. The total number of questions for ABC’s side (including the U.S. government) might be inflated if, for example, the Justices feel obliged to ask each attorney some questions (in which case ABC’s side would have received some extra questions that it wouldn’t have received if only one attorney represented its side at oral argument).

Of course, this prediction must be taken with a generous grain of salt. The question differential is small here. This method has correctly predicted the winner of only one of the two intellectual property cases the Supreme Court has decided so far this Term. In Medtronic, Inc. v. Boston Scientific Corp., the attorney for the losing side (Boston Scientific) received the most questions (52), five times the amount for the winning side (10). However, in Lexmark Int’l, Inc. v. Static Control Components, both sides received an equal number of questions (33).


Facts

So, what does Aereo do? Aereo provides an antenna and recording service that enables its monthly subscribers to watch and record free broadcast TV programs, including ones aired by ABC, NBC, and CBS.

Aereo’s subscribers pay either $8 or $12 a month for its service. For each subscriber, Aereo assigns a unique antenna that receives the free network TV broadcasts. Aereo also gives space on its servers for subscribers to record and store the shows like a VCR or DVR for later viewing. Aereo is a cloud-based service, and its subscribers do not actually have or see the individual antennas and the storage space that are remotely located at Aereo’s facility.


Legal Dispute

The legal dispute involves whether Aereo needs to have copyright licenses from ABC and the other networks whose programs are used in Aereo’s service. The issue centers around the meaning of the so-called “Transmit Clause” in the definition of public performance that Congress added back in the 1976 Copyright Act (17 U.S.C. 101: “to transmit it to the public ‘by means of any device or process, 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.’”).

ABC and the other networks contend that Aereo is violating their right of public performance by effectively retransmitting their broadcasts to the public, specifically to Aereo’s subscribers.

Aereo, however, responds that its service does not constitute a “public performance” of the broadcast TV shows, but instead, it is merely a private performance of the shows to Aereo subscribers. Aereo’s argument rests on the fact that each subscriber of Aereo watches a unique copy of the shows using her own individually assigned antenna. Aereo believes this cloud-based antenna service should be treated just like antennas on old TVs coupled with VCRs, which enabled people to receive and record network TV broadcasts for private viewing in their homes—all legally without copyright licenses.

In a 2-1 decision, the Second Circuit Court of Appeals agreed with Aereo’s argument, relying on a prior Second Circuit decision in Cablevision. The networks appealed to the Supreme Court, which agreed to hear the case. Subsequently, the U.S. government has taken the position that Aereo violates the networks’ public performance right. The Court’s decision is expected by end of June.


Importance for Businesses

The case involves high stakes for the TV industry. As Bart Lazar, partner at Seyfarth Shaw LLP, explained, “I think the decision has more ramifications for business than necessarily for copyright law because the decision will likely establish the rules of the road for cloud re-transmission of copyrighted content.” If the broadcast TV networks win, “business will ultimately adapt to paying royalties in much the same way other new, potentially disruptive technologies, like satellite TV and music sharing technologies—adapted, by getting licensed.” If Aereo wins, Lazar believes the Court will likely adopt a narrow approach as it did in Twentieth Century Fox v. Aiken, which led to the copyright exemption for public reception of broadcasts on “a single receiving apparatus of a kind commonly used in private homes.” 17 U.S.C. § 110(5)(A).

The decision in Aereo may also impact cloud computing and new businesses. As Naomi Jane Gray, partner at Harvey Siskind LLP, stated, “Whether the Supreme Court rules in favor of Aereo or the networks, the Aereo case has the potential to have a significant impact on copyright law, the future of cloud-based computing, and models of dissemination yet to be invented. Imagine today’s technological landscape had the Supreme Court ruled that the Sony Betamax VCR was infringing back in the 1980’s.

“A decision against Aereo, if broadly drawn, could jeopardize existing cloud-based storage services like DropBox and Amazon Cloud, and could impede the development of technologies that we cannot even imagine today,” Gray explained. “By contrast, a win for Aereo would allow dissemination of content without payment to the copyright owners—assuming the networks do not follow through on their threat to cease over-the-air broadcasts entirely. Thus, even a narrowly drawn decision is likely to have a significant impact on copyright law and future technologies.”


Inside the Case: American Broadcasting Company, Inc. v. Aereo
Submitted by Allison Bernstein on Tue 22 Apr, 2014

Today, the Supreme Court hears oral argument in American Broadcasting Company, Inc. v. Aereo. Professor Edward Lee of IIT Chicago-Kent College of Law explains why Aereo's system is a problem for the broadcasters and what the issues are in this case.


Lies and the First Amendment
Submitted by Allison Bernstein on Mon 21 Apr, 2014

By Professor Christopher Schmidt. This post is part of ISCOTUS Director Schmidt's "Drama in the Court" series.

Tomorrow the Supreme Court will hear oral arguments in Susan B. Anthony List v. Driehaus, a First Amendment challenge to an Ohio law that prohibits intentionally false statements about political candidates. The case itself presents the basic free speech question only obliquely. The central issue before the Court is a technical one: whether a party can even go to court to challenge this kind of law prior to being prosecuted for violating that law. This is a question, in other words, of whether the plaintiff has “standing” to make the First Amendment challenge. But the underlying constitutional question—whether the First Amendment permits the regulation of blatant lies in political campaigns—will surely be part of the tomorrow’s oral argument.

The First Amendment status of lies is not a new issue for the Roberts Court. It was at issue before just two years ago in United States v. Alvarez, a case involving a small town public official who liked to tell stories about himself. In describing his background at a local water board meeting, Xavier Alvarez described himself as a retired marine who had won the Congressional Medal of Honor. This was a bald-faced lie. Alvarez had never even served in the military. It was, as the Court would describe it, “a pathetic attempt to gain respect that eluded him.” Alvarez was charged with violating the Stolen Valor Act of 2005, a federal law that prohibited falsely claiming military decorations or medals. Alvarez challenged the law as infringing his First Amendment right to free expression.

The Supreme Court sided with Alvarez. Justice Kennedy, writing for a 6-3 majority (although his reasoning had only four votes), rejected the Justice Department’s contention that lies receive no protection under the First Amendment. As content-based speech restrictions, lies must be held to the most exacting demands of the First Amendment. “Some false statements are inevitable if there is to be an open and vigorous expression of views in public and private conversation, expression the First Amendment seeks to guarantee,” wrote Justice Kennedy.

By looking back at oral argument in Alvarez, we can find a couple of fascinating moments that may help illuminate the issues the Court will consider tomorrow in the Susan B. Anthony List case.

First, an exchange in which Chief Justice Roberts presses Alvarez’s lawyer, Jonathan D. Libby, about the free speech value of lies.


Mr. Libby: Thank you, Mr. Chief Justice, and may it please the Court: The Stolen Valor Act criminalizes pure speech in the form of bare falsity, a mere telling of a lie.
It doesn't matter whether the lie was told in a public meeting or in a private conversation with a friend or family member. And the law punishes false claims to a military award regardless of whether harm results or even is likely to result in an individual case.

Chief Justice John G. Roberts: What is—what is the First Amendment value in a lie, pure lie?

Mr. Libby: Just a pure lie?
There can be a number of values.
There is the value of personal autonomy.

Chief Justice John G. Roberts: The value of what?


Mr. Libby: Personal autonomy.


Chief Justice John G. Roberts: What does that mean?


Mr. Libby: Well, that we get to—we get to exaggerate and create—

Chief Justice John G. Roberts: No, not exaggerate—lie.

Mr. Libby: --Well, when we create our own persona, we're often making up things about ourselves that we want people to think about us, and that can be valuable. Samuel Clemens creating Mark Twain. That was creating a persona, and he made things up about himself—

Chief Justice John G. Roberts: Well, but that was for literary purposes. No one is suggesting you can't write a book or tell a story about somebody who earned a Medal of Honor and it's a fictional character, so he obviously didn't. It just seems to me very different.


Mr. Libby: —Perhaps.
But there are other things.
In addition to the fact that people tell lies allows us to appreciate truth better.

Justice Samuel Alito: Do you really think that there is—that the First Amendment—that there is First Amendment value in a bald-faced lie about a purely factual statement that a person makes about himself, because that person would like to create a particular persona? Gee, I won the Medal of Honor. I was a Rhodes scholar, I won the Nobel Prize. There's a personal—the First Amendment protects that?

Mr. Libby: Yes, Your Honor, so long as it doesn't cause imminent harm to another person or imminent harm to a government function.

Justice Stephen G. Breyer: Obvious example. Are there Jews hiding in the cellar?
 No.

Mr. Libby: Well, that's right.

Chief Justice John G. Roberts: That's not a statement about one's self.
This is—

Mr. Libby: And that's—

Justice Stephen G. Breyer: Are you hiding Jews in the cellar?

Chief Justice John G. Roberts: —Excuse me.
Sorry.
[Laughter]
Seems to me that the Stolen Valor Act is more narrow than that. And I would say, in that situation, you would not describe what the individual in Justice Breyer's hypothetical was as simply telling a false statement about himself. It is about whether there is someone hiding in the attic. It is not about himself.

Mr. Libby: —Well, perhaps, just dealing with an example under the Stolen Valor Act, if a grandfather were to make up a story that he had won a medal in order to persuade a grandchild to—

Chief Justice John G. Roberts: In order to—

Mr. Libby: —to join the military—

Chief Justice John G. Roberts: --It seems to me that that's missing the limitation that the government has read into this statute: Not damage, not for parody, not to avoid the discovery of someone who should be hidden, not in order to do something with respect to one's grandson. It's just a purely false statement about one's self. What—what—what is the First Amendment value in that, again?

Mr. Libby: —Well, another value is the fact that the purpose of the First Amendment was a limit on government power. It's—it's—our founders believed that Congress as a general principle doesn't get to tell us what we as individuals can and cannot say.

Chief Justice John G. Roberts: Well, of course they do in countless areas, the state does, whether you're talking about defamation, trademark, perjury, all sorts of things. You can't adopt that as a general principle and apply it without regard to the situation.

Mr. Libby: Well, that's right, Mr. Chief Justice. But in all of those examples, those are examples where we have harm attached to the falsehood.


Even more directly on point for tomorrow’s argument in Susan B. Anthony List was when Justice Kagan asked Solicitor General Verrilli to discuss the very issue that will be before the Court: state laws that prohibit lies in political campaigns. Here is their exchange:

Justice Elena Kagan: General, what about these State statutes—there are more of them than I thought that there would be—that say no demonstrable falsehoods by a political candidate in a political race, and prohibit demonstrable falsehoods by political candidates? How would your analysis apply to those? Would they come out the other end as constitutional?

Mr. Verrilli Jr.: I think that those kinds of statutes are going to have a lot harder time getting through the Court's "breathing space" analysis because the context in which they arise is one that would create a more significant risk of chill—

Justice Elena Kagan: Well, suppose it says demonstrable falsehoods about yourself—

Mr. Verrilli Jr.: —I think—

Justice Elena Kagan: —just about your qualifications, about what you've done in your life, your—you know, whether you have a Medal of Honor, whether you've been in military service, whether you've been to college. So any demonstrable statement that a candidate, political candidate, makes about himself.

Mr. Verrilli Jr.: —Yeah. I think under the Court's "breathing space" analysis, because of the political candidate context, those statutes are going to pose a particular risk of chill, that this statute does not pose because this is a statute about verifiable factual falsehoods.

Justice Elena Kagan: I guess I don't understand why it would be more chilling in the one case than in the other. They are the same kind of statement. And one knows the same sorts of things about oneself.

Mr. Verrilli Jr.: Well, I think the idea would be, in a situation like that one, the government's power and authority is being trained specifically on the political process and statements in the political process, and this is—this is quite different.
This is a statute that says—

Justice Elena Kagan: Well, I assume that that would be in the case of the State statutes because the State feels that it has a specially important interest in maintaining the political sphere free of lies.

Mr. Verrilli Jr.: I guess the chilling effect seems to me, at least, to be materially different than in a situation like this one, where what we're talking about is a very specific pinpoint thing, one thing: Have you been awarded a military honor or not?
And a statement that is about yourself only, not about somebody else, and is supported by a quite strong particularized interest in ensuring the integrity of the military honor.


As one can gather from this excerpt, skepticism abounds toward the constitutionality of these truth-in-politics laws. After Alvarez, it is hard to imagine that, given the right case, there are not enough votes on the Court to strike down this kind of speech regulation. As indicated in Solicitor General Verrilli’s statements above, the Justice Department also has First Amendment concerns about these regulations. The Government submitted a brief basically supporting the First Amendment challenge. The real question for Susan B. Anthony List might be how far down this road the Justices are interested in going in a case that doesn’t even squarely raise the key constitutional question.