Cross-posted on the Law Theories blog.
The cloud took center stage at the oral argument in the Aereo appeal before the Supreme Court this past Tuesday. Several justices expressed concern over how Aereoâ€™s service can be distinguished from a cloud storage service. As they had argued in their reply brief, the petitioners, represented by Paul D. Clement, note that thereâ€™s a difference between a service that allows its users to store and access the content they already possess and a service that supplies the content to its users in the first instance. Clement argues that this distinction flows from the “to the public” language of the Transmit Clause:
Here, I think the ultimate statutory text that allows you to differentiate a cloud locker storage from something like what Aereo does is a language to the public. And I do think that in all sorts of places, including the real world, thereâ€™s a fundamental difference between a service that allows â€“ that provides new content to all sorts of end-users, essentially any paying stranger, and a service that provides a locker, a storage service.
And I think if you want a real world analogy off of the Internet, I think itâ€™s the basic decision â€“ the difference between a car dealer and a valet parking service. I mean, if you look at it from 30,000 feet, you might think, hey, both of these things provide cars to the public. But if you looked at it more closely, youâ€™d understand, well, if I show up at the car dealership without a car, Iâ€™m going to be able to get a car. If I show up at the valet parking service and I donâ€™t own a car, itâ€™s not going to end well for me. . . .
I think there is a very real way in which you would say, you know, at the end of the day, the car dealerâ€™s providing cars to the public, the valet parking service is not. Itâ€™s providing a parking service.
Clement’s “real world analogy” looks at the difference between a car dealer and a valet service. He argues that Aereo is like a car dealer because people go there to obtain a car in the first instance. It’s not like a valet service, where you can only get back the car you dropped off. What makes Aereo different than a cloud storage service like Dropbox is that Aereo supplies the content to its users in the first instance. You donâ€™t go to Aereo to park the car you already own; you go to Aereo to buy the car.
Clement argues that whether a transmission is â€œto the publicâ€ turns on who supplies the content:
If all they can do is, just like the valet car parking service, is get back what they put up there, I think you could easily say that that is not to the public. And that is not just me coming up with a clever distinction. Thatâ€™s the distinction thatâ€™s really been drawn in the real world, because not all cloud computing is created equal, and there are some cloud computing services that use cloud computing technology to get new content to people that donâ€™t have it, and they get licenses. And there is other cloud computing that just has locker services and they donâ€™t think they need a license . . . .
This tracks my own argument, and I think itâ€™s a reasonable line to drawâ€”one that has indeed â€œreally been drawn in the real world.â€ As I mentioned in my last post, the norm is that a service that supplies the content to members of the public in the first instanceâ€”whether by public distribution as with iTunes, by public performance as with Spotify, or by public display as with Westlawâ€”obtains a license to supply this content. The reason the service needs this license is because the content it supplies is being transferred “to the public” in the first instance, thus making it the quintessential public distribution, performance, or display.
These three exclusive rights (public distribution, performance, and display) are all related in that they make directly liable anyone who supplies the content “to the public” in the first instance. All three rights involve transferring the content from the transferor to the transferee where the relationship between the two is a public one. At the end of the transfer, the transferee obtains the content in the first instance, that is, the content in which the transferee has no prior possessory interest. Without a license (or some other defense), the transferor has violated one or more of the copyright ownerâ€™s three exclusive rights to supply the content “to the public” in the first instance.
And this is the difference Clement is talking about. A cloud storage service does not supply the content “to the public” in the first instance. Members of the public use a cloud storage service to store and access the content they already have a possessory interest in. Itâ€™s the difference between a library, which publicly distributes a book that it lends out, and a safety deposit box, where I can store a book that I already possess for safekeeping. If I later go to the bank to retrieve the book from my safety deposit box, the bank is not publicly distributing the book. The bank instead is my bailee, and I am merely retrieving my property as a bailor. The relationship, in other words, is one of bailment.
This same distinction based on who supplies the content was invoked by Deputy Solicitor General Malcolm L. Stewart, arguing on the governmentâ€™s behalf as an amicus curiae in support of the petitioners:
The second thing that I would like to reinforce in Mr. Clementâ€™s presentation is that there is no reason that a decision in this case should imperil cloud locker services generally . . . .
[T]here are obviously services that provide television programming over the Internet. Some of them are licensed because they recognize that they are publicly performing. If a particular company, for instance, recorded television programs and offered to stream them to anyone who paid the fee or offered to stream them for free and make its money off advertising, that would be a public performance because those companies would be providing content to people who didnâ€™t have it.
I think the basic distinction, the one that at least defines the extremes, is the distinction between the company, whether it be Internet-based or a cable transmitter, that provides content in the first instance and the company that provides consumers with access to content that they already have. If you have a cloud locker service, somebody has bought a digital copy of a song or a movie from some other source, stores it in a locker and asks that it be streamed back, the cloud locker and storage service is not providing the content. Itâ€™s providing a mechanism for watching it.
Like the petitioners, the government argues that thereâ€™s a simple dichotomy between a service that supplies the content to members of the public in the first instance and one that does not. When the service itself supplies the content that its users can stream over the internet, itâ€™s publicly performing. And when the service merely enables users to stream the content that they already possess, itâ€™s not publicly performing. That’s how you can tell the difference between the two.
Not surprisingly, David C. Frederick, representing Aereo, thinks this simple dichotomy just doesnâ€™t work. Justice Kagan asked Frederick why he thinks liability does not turn on who supplies the content:
Mr. Frederick, why isnâ€™t it sufficient to create a line such as the one Mr. Clement said, which said, you know, do you on the one hand supply or provide the content, that puts you in one box; on the other hand, if you are not supplying or providing the content, if the user is supplying and providing the content, and you are just providing the space, a kind of platform for them to do that and for them potentially to share the content, that puts you in another box?
To which Frederick replied:
Well, Justice Kagan, I note that my friend did not reference the words of the Transmit Clause at all when he offered that distinction. And thatâ€™s actually quite important, because in order to get there, you have to make up words to put them in the Transmit Clause. But even if you were to think that that was good for a policy reason, you would still have to explain why the hundreds of thousands of people that are subscribers to Aereoâ€™s service donâ€™t have exactly the same fair use right to get over-the-air broadcast content that all of those people who are not Aereo subscribers but they happen to have a home antenna and a DVR. Those people have every bit as right to get that access. And the fact that they are doing it doesnâ€™t make their antenna or their antenna provider a content provider.
As to his first claim, namely, that Clement â€œdid not reference the words of the Transmit Clause,â€ I don’t think this is true. As noted above, Clement explicitly said his argument flowed from the â€œto the publicâ€ language in the Transmit Clause. What makes it â€œto the publicâ€ is the fact that the content is being supplied in the first instance to members of the public. I would add that this is the same rule that applies whether discussing the public distribution, performance, or display right. Weâ€™re interested in whether the transferor has supplied the transferee, a member of the public, with the content in the first instance. Thatâ€™s what makes it â€œto the public.â€
As to his second argument, I have to first point out that I donâ€™t think thereâ€™s any such thing as a â€œfair use right.â€ As I explained in a prior post, fair use is a privilege, not a right. There is no affirmative right to make a copy. The only right is the copyright ownerâ€™s exclusive right to exclude others from making a copy. Regardless, the question isnâ€™t whether a home user can set up an antenna and DVR to time-shift over-the-air broadcasts. Thatâ€™s the reproduction right, which does not involve transferring the content from one party to a member of the public. The transfer of the content in that scenario comes from the over-the-air broadcast, which is a licensed public performance on the broadcasterâ€™s part. And it needs to be licensed because the broadcaster is supplying the content “to the public” in the first instance.
But thatâ€™s not the issue here with Aereo. The issue is whether Aereo is publicly performing when the content is transmitted from Aereoâ€™s service to members of the public. This is the transmission we are looking at, not the prior over-the-air transmission “to the public” from the broadcaster. The difference between this scenario and the home antenna and DVR scenario is that here Aereo is a middleman between the broadcaster and the member of the public. The transmission doesnâ€™t go directly from the broadcaster to the member of the public; it goes from the broadcaster to Aereo to the member of the public. And the difference between the broadcaster and Aereo is that only the broadcaster has a license to publicly perform, i.e., to supply the content â€œto the publicâ€ in the first instance.
So the question is really whether Aereo is publicly performing by supplying the content to members of the public in the first instance. It seems clear to me that it is. Aereoâ€™s service is â€œany device or processâ€ that transmits copyrighted works “to the public.” Members of the public use Aereo to obtain the content in the first instance. And the fact that Aereo also enables its subscribers to make copies is beside the point. Those copies are just part of the â€œdevice or processâ€ that Aereo uses to supply the content â€œto the public.â€ They donâ€™t change the fact that Aereo is still engaging in the quintessential public performance, and Aereo can’t escape liability for copying by way of utilizing more copies.
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