AIPPI Congress Report 5: 'A' stands for "Arbitration" and "Aereo"

There was so many 'A' things going on on Monday afternoon
the AmeriKat's 45th chai tea latte of the day
was adopting its shape

While the AmeriKat was ramping up her third day of the AIPPI Congress marathon with an ever-increasing influx of caffeine into her veins with back-to-back meetings from contacts around the world, her colleague Lorraine Neale was herself having a marathon afternoon in the Land of 'A' - arbitration and Aereo.  Lorraine brings you the details:

"Following a busy morning meeting old work colleagues and exploring interesting collaborative opportunities with new ones, this AIPPI newbie settled in for an afternoon of workshops. The first was a mock International IP arbitration.  The mock trial fast becoming a regular feature of the AIPPI Congress following the first mock patent trial at the 2008 Boston Congress.  This year's mock centred on the validity and infringement of industrial design rights in glassware. It showcased the typical procedural, evidentiary, legal and tactical issues that may arise in international IP arbitrations, and was excellently executed by the skilful international team of arbitrators and litigators representing the 3-person Tribunal, the Plaintiff team, the Defendant Team, and each sides’ expert witness (the amusing Argentinian expert Ivan Poli for the plaintiff and the Italian expert Mario Franzosi for the Defendant). The facts of the dispute mirrored those of a case decided by the Federal Court of Canada in 2012, Bodum USA v Trudeau Corporation (1889) Inc.

From arbitrating designs to litigating copyright, the chosen follow-on workshop entitled “Aereo – copyright lessons for the US and beyond” provided an engaging debate surrounding the US Federal Supreme Court’s decision in ABC v Aereo, handed down in June 2014.

John Carson Partner (Knobbe Martens, US) and a member of the AIPPI standing Copyright Committee, moderated the debate.  Before launching into proceedings, John provided the audience with a helpful summary of the case. Aereo, a TV-over-the-internet service, had introduced a disruptive business model, using thousands of very small antennas stored in a warehouse, to stream broadcast signals which they had encoded into packets, directly into the homes of users. It was sued by the broadcasters (originally including 21st Century Fox, CBS, NBC and ABC) for infringement of their copyright in public performance. Aereo defended its actions claiming that all it did was to provide a device to watch a programme that was already available. The Supreme Court decided 6-3 in favour of the broadcasters, ruling that Aereo and its cloud-based technology was too similar to a traditional cable company to say that its service did not infringe. Justice Scalia, however, writing for the minority felt that this legal underpinning ("looks like-cable -TV") was flawed and would “sow confusion for years to come”.

In the opinion of Mitch Stoltz (Electronic Frontier Foundation), the Supreme Court had got it wrong! Up front about his organisation’s amicus brief submission in support of Aereo, Mitch was of the view that Aereo was fulfilling a market need that was not met elsewhere, i.e. for people to receive their local suite of broadcast channels (local news, sport, commercial), live or nearly live on a mobile device. This case was as much about competition as anything else. Furthermore, the case highlighted the important question as to who should make technology policy - the courts, the legislature, or should it be left to the market?  The court had felt able to engage in a free form construction of industrial policy, whereas Justice Scalia had recognised that this was the remit of the legislature. In Mitch’s opinion the markets are always the better determinants of whether a policy is promoting or prohibiting competition.

Elizabeth Valentina, Vice President Content Protection for Fox Entertainment Group, (speaking on her own behalf as Fox was still litigating the case), pointed out that Aereo’s business model involved the streaming of broadcast content obtained without permission, authorisation or license, and for which service Aereo were charging their subscribers. This business model was harming that of the broadcasters and content owners, by devaluing their content, interfering with exclusive deals for content to be delivered over the internet and to mobile devices, as well as diverting eyeballs from TV advertising revenue. It was a harm clearly recognised by Judge Nathan at first instance, in the broadcasters’ motion for a preliminary injunction.

The case was now back in this District Court on remand, with Judge Nathan considering the scope of the injunction. Furthermore in an interesting shift in business and legal strategy, Aereo has raised a section 111 US Copyright Act defence. Aereo is arguing that, as the Supreme Court thought that it acted like a cable system and should be treated in the same manner as cable system for all purposes, it should also be entitled to carry the signals of TV stations pursuant to the statutory licence granted to cable systems by section 111 of the US Copyright Act.

Sanna Wolk (Associate Professor at University of Uppsala, Sweden and co-chair of AIPPI’s copyright committee) compared the US position with that adopted in the EU where the CJEU in March 2013 ruled that online near-live streaming by the UK Company, TV Catchup, was an unauthorised "communication to the public" within the meaning of Article 3(1) of Directive 2001/29 (InfoSoc Directive) and therefore an actionable infringement of copyright. The CJEU concluded that as TV Catchup was making the works in the original “terrestrial” TV broadcast available over the internet, and hence using different technical means to retransmit the broadcast, this retransmission was a “communication” within the meaning of the Article 3(1). Furthermore in the circumstances the court did not have to consider whether communication was to a “new public”, as the new transmission required an individual and separate authorisation from the copyright owners. 

In the following Svensson case (Case C-466/12) an Article 267 TFEU reference from the Svea Court of Appeal in Sweden, the CJEU however reiterated that under Article 3(1) every act of communication of a work, by the same technical means, to a “new” public (“a public that was not taken into account by the copyright holders when they authorised the initial communication to the public” SGAE), has to be authorised by the copyright holder. The CJEU held however that making the works available by means of a clickable link does not lead to the works being communicated to a “new” public and does not therefore need authorisation. The CJEU emphasised that the position is different where the hyperlink permits users to circumvent restrictions and access works not freely available elsewhere. In these circumstances, circumvention makes the works available to a “new” public (as defined above) and requires authorisation. Sanna noted that we should now be looking out for the decision in another reference to the CJEU from Sweden, C More Entertainment AB v Linus Sandberg, this time from the Hogsta Domstolen. Sanna hoped that this case would offer some clarification as to the status of “the new public” criteria.

Finally Andrea Rush (Blaney McMurtry, Canada), provided the Canadian perspective drawing the audience's attention to an important case on technological neutrality that is currently being appealed to the Supreme Court of Canada - Canadian Broadcasting Corporation v Sodrac 2003 Inc. In 2012 the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) invoked section 70.2 of the Copyright Act and asked the Copyright Board of Canada (the Board) to settle a licensing dispute with CBC. The latter had taken issue with the fact that SODRAC requires producers to pay for the right to incorporate musical works into their productions even in cases where a project is commissioned by a SODRAC –licensed broadcaster. The Broadcasters argued that requiring each link in the distribution chain to pay for the right to make copies of a musical work is inconsistent with the prevailing industry model. 

The Board, however, found for SODRAC on the basis that the copy-dependent technology adds value to the businesses of producers and broadcasters because it allows them to remain competitive. The Broadcasters appealed the decision, with their primary legal argument being that the Board’s decision flew in the face of the principle of technical neutrality in copyright matters. They contended that copies of musical works that are made purely out of technological necessity should not attract royalties and that to hold otherwise would impede technological innovation and efficiency. The Board had grounded its reasoning in the Supreme Court decision in Bishop v Stevens (1990) which held that the use of ephemeral recordings is not implied in the right to broadcast a work, and that the right to copy and exploit a copyrightable work was the exclusive remit of the copyright holder. The Federal Court of Appeal upheld the Board’s decision and it was this decision that is currently under appeal. "