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Working Paper

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Businesses are exploiting perceived gaps in the structure of copyright rights by ingeniously designing their technologies to fulfill demand for individual access through a structure of personalized copies and playback engineered in ways intended to implicate neither the public performance nor the reproduction rights. The archetypal example is Aereo Inc.’s system for providing online access to broadcast television. Aereo allows users to tune into individual antennae to stream TV to themselves, near-live, online. Aereo’s activities look a lot like the retransmission of broadcast signals, an activity which Congress has made very clear must result in remuneration for rightholders. However, Aereo’s careful design, which assigns each user her own antenna to generate an individual transmission copy from which she can access only the signals she could freely pick up from her own rooftop, means that it can also be argued that Aereo is simply enabling consumers to engage in legitimate non-remunerable uses. If the legality of this design is upheld by the Supreme Court this term, Aereo and subsequent comers will be able to offer consumers on-demand access to content, in a way that competes with licensed services, without any obligation to remunerate the rightholder.

The implications of these business models are significant: in the case of audio and audiovisual works, for example, the on-demand access market may soon exceed the value of the retention copy-based market. When some participants are licensed but their competitors are not, the imbalance may provoke licensees to revise or forego their agreements. More generally, opportunistic engineering choices that obscure some courts’ perceptions of the impact on the on-demand access market risk removing evolving markets from the scope of copyright owners’ exclusive rights. Businesses that free-ride on copyrighted works also obtain an unfair competitive advantage over copyright licensees. The authors of this paper approach copyright from very different perspectives, but are united in the view that it is undesirable for legal outcomes to depend so heavily on technical design.

This article addresses the U.S. caselaw that encouraged businesses such as Aereo to design technologies that could rival or even displace copyright-remunerative modes of making works of authorship available to the public. We consider the implications for copyright owners were Aereo and its supporters to succeed in their reading of the Copyright Act, as well as the implications for other technologies, particularly those involving “cloud” storage, were the broadcasters to prevail. Finally, each author offers her own analysis to demonstrate how it is possible to read the U.S. Copyright Act’s transmit clause in a way that does not make technological design determine the outcome. Either one of our readings, we argue, enables copyright’s exclusive rights to remain effective without discouraging technological innovation.


Entertainment, Arts, and Sports Law | Intellectual Property Law | Law


Center for Law and Economic Studies