Hearst Stations Inc. v. Aereo, Inc.

Filing 72

Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: " Accordingly, 1) Aereo's motion to transfer to the Southern District of New York (Docket No. 20 ) is DENIED; 2) Aereo's motion to stay proceedings pending resolution of its transfer motion (Docket No. 23 ) is DENIED AS MOOT; and 3) Hearst's motion for a preliminary injunction (Docket No. 4 ) is DENIED. So ordered." (Moore, Kellyann)

United States District Court
District of Massachusetts
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HEARST STATIONS INC. d/b/a
WCVB-TV,
Plaintiff,
v.
AEREO, INC.,
Defendant.

Civil Action No.
13-11649-NMG

MEMORANDUM & ORDER
GORTON, J.
This case arises out of a copyright infringement dispute
between two media companies.

Plaintiff Hearst Stations Inc.

(“Hearst”), which owns the local television station WCVB-TV
(“WCVB”), alleges that defendant Aereo, Inc. (“Aereo”) is
intercepting its television signals and converting its programs
into a different format for retransmitting over the internet
without compensating WCVB.

That, says plaintiff, infringes

WCVB’s exclusive rights under the Copyright Act.
Pending before the Court are Hearst’s motion for a
preliminary injunction (Docket No. 4) and Aereo’s motions to
transfer (Docket No. 20) and stay proceedings while the Court
considers its motion to transfer (Docket No. 23).

For the

reasons that follow, all three motions will be denied.

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I.

Background
A.

Hearst and WCVB-TV

Hearst is a Nevada corporation with a principal place of
business in New York, New York.

It owns 29 broadcast stations

throughout the country, including WCVB, a Boston-area television
station with a main studio in Needham, Massachusetts that
broadcasts over Channel 5.

WCVB operates under a license from

the Federal Communications Commission which allows it to
broadcast over the air and requires it to provide content such
as closed captioning and an emergency alert system.
Hearst claims that WCVB creates, produces, owns, broadcasts
and distributes more than 43 hours of original programming every
week and has been recognized nationally for the high quality of
its local programming.

It alleges that WCVB spends considerable

amounts of money, time, energy and creativity on producing
original programming and building the infrastructure that allows
it to transmit and distribute the programming.

WCVB’s two main

sources of revenue are commercial advertising and fees paid by
other companies for the right to retransmit and resell WCVB’s
signal and it hopes to profit in the future from making its
programming available over the Internet.

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B.

Aereo

Aereo is a New York corporation.

Hearst alleges that

Aereo’s principal office is in Boston but Aereo submits that its
principal place of business is in Long Island City, New York.
Aereo uses antenna and digital video recording (“DVR”)
technology to transmit over-the-air television broadcasts over
the internet to its fee-paying subscribers.

The technology

allows users to watch programming “live” (with a few second
delay) or to record it for viewing at a later time.
In either case, when a user elects to watch a program, an
antenna that is assigned exclusively to that user for that time
period intercepts the signal as the program is broadcast overthe-air and transmits it to the user’s designated space on
Aereo’s hard drive.

Aereo has installed banks of small antennas

throughout the Boston area for this purpose.
Next, Aereo’s system converts the signal from its original
format to a different digital format that allows the user to
access the program over the internet.

It then generates three

copies of the program, each at a different “quality rate,” to
enable recording and rewinding and to allow each user to choose
the copy most compatible with his or her internet connection.
When a user elects to watch a program “live,” at least one
copy of the program is stored in a user-specific “directory” on
Aereo’s hard drive until the user finishes watching.
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Users who

select this option receive a notice on their computers or other
devices which advises:
When you press ‘Watch’ you will start recording this
show, allowing you to pause and rewind the program.
If a user elects to record a program, all three copies are
retained in the user’s directory on Aereo’s hard drive and,
according to Hearst, may be kept there permanently.
Finally, a user accesses her individual copy of a program
by streaming it over the internet from Aereo’s hard drive to her
personal computer, smart phone, or other internet-enabled
device.

The system does not permit users to download permanent

physical copies of programs to their personal hard drives.
Instead, all copies are retained on Aereo’s remote hard drive.
Hearst’s amended complaint alleges that, by providing this
service, Aereo engages in
clear copyright violations that put WCVB’s entire
business model at risk and undermine a regulatory
regime carefully constructed by Congress.
Specifically, it contends that Aereo violates WCVB’s exclusive
rights under the Copyright Act, 17 U.S.C. § 106.
Aereo, for its part, claims that it merely provides
technology that allows consumers to do what they are legally
entitled to do: 1) access free and legally accessible over-theair television broadcasts using an antenna, 2) create
individual, unique recordings of those broadcasts for personal

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use and 3) play the individual, unique recordings on personal
devices.

It admits that it has not received any authorization

to provide WCVB’s programming to its subscribers.
C.

Procedural History

Aereo formally launched its service in Boston on May 15,
2013, and the service became generally available to subscribers
later that month.

Hearst filed suit and moved for a preliminary

injunction on July 9 and amended its complaint on July 30, 2013.
On July 16, Aereo moved to transfer the case to the Southern
District of New York where Judge Alison J. Nathan is already
presiding over two cases to which Aereo is a party and that
involve similar issues.

It also moved to stay proceedings

pending resolution of that motion.

The Court held a hearing

with respect to the pending motions on September 18, 2013.
II.

Aereo’s Motions to Transfer and Stay
For the reasons that follow, the Court will deny Aereo’s

motion to transfer the case to the Southern District of New
York.

Aereo’s motion to stay the case pending resolution of its

transfer motion will therefore become moot and will also be
denied.
A.

Legal Standard

District courts have the discretion to transfer “any civil
action to any other district or division where it might have
been brought” for the “convenience of parties and witnesses” and
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“in the interest of justice.” 28 U.S.C. § 1404(a).

Hearst does

not dispute that the case “might have been brought” in the
Southern District of New York so the Court’s analysis is limited
to whether convenience and justice favor transfer.
While the decision to transfer a case under § 1404 lies
solely within the discretion of the court, there is a
presumption in favor of the plaintiff's choice of forum and the
defendant must bear the burden of proving that a transfer is
warranted. Holmes Grp., Inc. v. Hamilton Beach/Proctor Silex,
Inc., 249 F. Supp. 2d 12, 15 (D. Mass. 2002).

Factors to be

considered in determining whether transfer is warranted include
1) the plaintiff's choice of forum, 2) the relative convenience
of the parties, 3) the convenience of the witnesses and location
of documents, 4) any connection between the forum and the
issues, 5) the law to be applied and 6) the state or public
interests at stake. Id. at 17.
B.

Application

Aereo maintains that transfer is warranted because 1) Judge
Nathan is already familiar with the facts and legal issues that
will arise in this dispute and therefore will be able to avoid
duplicative discovery and 2) Hearst has engaged in impermissible
forum-shopping by filing in this Court rather than in New York.
Aereo’s arguments in favor of transfer do not overcome the
presumption in favor of Hearst’s chosen forum.
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Even if the

Court were inclined to transfer this case to New York, the
actions pending before Judge Nathan are already quite advanced
and therefore transfer is virtually guaranteed to either delay
litigation or unfairly burden Hearst.
Nor is the Court persuaded that it would be unjust to allow
Hearst’s suit to proceed in this forum.

Hearst is suing Aereo

in its capacity as WCVB’s owner and only seeks to enjoin Aereo
with respect to WCVB’s local programming.

As such, it is the

hometown plaintiff for the purposes of this litigation and is
entitled to a strong presumption in favor of its choice of
forum. See Kettenbach v. Demoulas, 822 F. Supp. 43, 44 (D. Mass.
1993); Layton v. Nat’l Freight, Inc., 2012 WL 5419140, at *2
(S.D. Miss. Nov. 5, 2012) (reasoning that plaintiff who sues in
home forum has not “venue shopped”).

Hearst’s decision to limit

the scope of the suit to WCVB’s local programming and Aereo’s
local activities also weighs in favor of resolving the suit here
rather than in New York. See Transcanada Power Mktg., Ltd. v.
Narragansett Elec. Co., 402 F. Supp. 2d 343, 354 (D. Mass. 2005)
(noting local interest in having local controversies decided in
the local forum).
III. Hearst’s Motion for a Preliminary Injunction
Hearst seeks to enjoin Aereo from infringing WCVB’s
exclusive rights under the Copyright Act, 17 U.S.C. § 106.
the reasons that follow, Hearst’s motion will be denied.
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For

A.

Legal Standard

To prevail on its motion, Hearst must establish
that [it] is likely to succeed on the merits, that
[it] is likely to suffer irreparable harm in the
absence of preliminary relief, that the balance of
equities tips in [its] favor, and that an injunction
is in the public interest.
Voices of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645
F.3d 26, 32 (1st Cir. 2011) (quoting Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 129 (2008)).
Of these factors, the likelihood of success on the merits
“normally weighs heaviest on the decisional scales.” Coquico,
Inc. v. Rodriguez-Miranda, 562 F.3d 62, 66 (1st Cir. 2009).
This factor is also given particular weight in copyright cases
because “the resolution of the other three factors often turns
on the plaintiff’s likelihood of success.” Id.
B.

Application
1.

Likelihood of Success on the Merits

In the instant case, Hearst claims that Aereo’s services
violate WCVB’s exclusive rights under § 106 of the Copyright Act
to 1) publicly perform, 2) reproduce, 3) distribute and 4)
prepare derivative works based on its copyrighted programming.
Hearst fails to make a sufficient showing that it is likely to
prevail on any of these claims and therefore this factor weighs
against a preliminary injunction in its favor.

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a.

Exclusive Right to Perform Copyrighted Work
Publicly

The most hotly contested issue is whether Aereo infringes
WCVB’s exclusive right to transmit its works to the public.
i.

Relevant Statutory Provisions

Section 106 of the Copyright Act gives copyright owners the
exclusive rights to “perform the copyrighted [audiovisual] work
publicly.” 17. U.S.C. § 106(4).

Section 101 of the Act explains

that “to perform” a work is
to recite, render, play, dance or act it, either
directly or by means of any device or process or, in
the case of a motion picture or other audiovisual
work, to show its images in any sequence or make the
sounds accompanying it audible.
Id. § 101.
Furthermore, the statute distinguishes between public and
private performances.

The “Transmit Clause” of § 101 defines

“to perform a work publicly” as
to transmit or otherwise communicate a performance or
display of the work to a [public place] or 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.
Id.

Section 101 elsewhere defines “to transmit” as “to

communicate [something] by any device or process whereby images
or sounds are received beyond the place from which they are

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sent.” Id.

A “device or process” is also defined broadly to

include “one now known or later developed.” Id.
ii.

Legislative History

The House Committee on the Judiciary’s Report on the 1976
revisions to the Copyright Act provides additional insight into
the intended meaning of “perform” and “public performance.”

The

report explains that the same copyrighted work may be
“performed” in various ways:
Concepts of public performance and public display
cover not only the initial rendition or showing, but
also any further act by which that rendition or
showing is transmitted or communicated to the public.
Thus, for example: a singer is performing when he or
she sings a song; a broadcasting network is performing
when it transmits his or her performance (whether
simultaneously or from records); a local broadcaster
is performing when it transmits the network broadcast;
a cable television system is performing when it
retransmits the broadcast to its subscribers; and any
individual is performing whenever he or she . . .
communicates the performance by turning on a receiving
set.
H.R. Rep. No. 94-1476, at 63 (1976).
iii. Case Law
The First Circuit Court of Appeals has not addressed
whether technology that allows users to record copies of overthe-air broadcasts of television programs on remote servers and
view the programs using the internet violates broadcasters’
exclusive public performance rights.

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The Second Circuit Court of Appeals is the only circuit
court to address this issue to date and it has held that this
technology does not infringe the copyright holder’s exclusive
right to perform its work publicly.

First, in the 2008

Cablevision case, the Second Circuit held that “RS-DVR”
technology that allows users to record programming on remote
servers for later viewing does not infringe the original
broadcaster’s public performance right because technology’s
manner of transmitting a recorded program to the viewer who
recorded it did not constitute a “public performance.” Cartoon
Network LP v. CSC Holdings, Inc. (Cablevision), 536 F.3d 121,
137 (2d Cir. 2008).

In 2013, the Second Circuit applied

Cablevision’s reasoning to Aereo’s service and found that
Aereo’s transmissions to subscribers also did not infringe.
WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013).

The

court described Cablevision’s holding as resting on two
“essential facts”: 1) the RS-DVR system created unique copies of
each program a customer wished to record and 2) a customer could
only view the unique copy that was generated on his behalf. Id.
It found that Aereo’s system, which employs individuallyassigned antennas to create copies unique to each user and only
at the user’s request, shares these two traits. Id. at 690.

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In contrast, Judge Denny Chin, who dissented in the WNET
case and from the Second Circuit’s denial of a rehearing in
banc, contends that the majority erred by
erroneously conflat[ing] the phrase ‘performance or
display’ with the term ‘transmission,’ shifting the
focus of the inquiry from whether the transmitter’s
audience receives the same content to whether it
receives the same transmission.
WNET, Thirteen v. Aereo, Inc., 722 F.3d 500, 507 (2d Cir. 2013)
(Chin, J., dissenting).

Two district courts have similarly

reasoned that what makes the transmission “public” is not its
intended audience of any given copy of the program but the
intended audience of the initial broadcast. See Fox Television
Stations, Inc. v. FilmOn X LLC, Civil Action No. 13-758, 2013 WL
4763414, at *25 (D.D.C. Sept. 5, 2013); Fox Television Stations,
Inc. v. BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138,
1144 (C.D. Cal. 2012).
iv.

Application

Hearst urges the Court to adopt the latter interpretation
and argues that Aereo’s services clearly fall within the
definition of transmitting to the public because Aereo is
transmitting a performance of the original program to members of
the public.

It contends that the fact that each user views a

unique copy of the program is irrelevant to the analysis.
Aereo responds that it is transmitting private rather than
public performances per Cablevision.
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It also argues that

Hearst’s suggestion that the relevant performance is the
copyrighted work reads the terms “a performance or display” out
of the statutory phrase “a performance or display of the work”.
Aereo’s interpretation is a better reading of the statute
because the “canon against surplusage” requires this Court to
give meaning to every statutory term if possible. See
Cablevision, 536 F.3d at 135-36.

The House Report accompanying

the 1976 amendments, which explains that the process of
communicating a copyrighted work from its original creator to
the ultimate consumer may involve several “performances,”
provides further support. See H.R. Rep. No. 94-1476, at 63.

In

short, while the Transmit Clause is not a model of clarity, the
Court finds at this juncture that Aereo presents the more
plausible interpretation.

As such, Hearst has not persuaded the

Court that it is likely to succeed on the merits of its public
performance claim.
b.

Exclusive Right to Reproduce Copyrighted
Work

Hearst also argues that Aereo violates WCVB’s exclusive
right to reproduce its copyrighted work or authorize others to
do so by creating three copies of WCVB’s copyrighted programming
every time a consumer chooses to watch or record a program and
saving the subject copies for longer than a “transitory” period.

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i.

Legal Standard

Copyright holders enjoy the exclusive right “to reproduce
the copyrighted work in copies” and to authorize others to do
the same. 17 U.S.C. § 106(1).

“Copies” are

material objects . . . in which a work is fixed by any
method now known or later developed, and from which
the work can be perceived, reproduced, or otherwise
communicated, either directly or with the aid of a
machine or device.
Id. § 101.

A work is “fixed” when it is

sufficiently permanent or stable to permit it to be
perceived, reproduced, or otherwise communicated for a
period of more than transitory duration.
Id.
ii.

Application

Aereo contends that it cannot be liable for infringing
WCVB’s exclusive right to reproduce WCVB’s copyrighted works
because its users provide the volitional conduct that creates
the copy of the program they select.

Aereo asserts that there

is a well-established principle that a technology provider
cannot be held directly liable on a copyright claim for
providing a machine that responds automatically to user
commands.
The First Circuit has not decided if a plaintiff claiming
infringement must show volitional conduct on the part of the
defendant. See Soc’y of Holy Transfig. Monastery, Inc. v.
Gregory, 689 F.3d 29, 55 (1st Cir. 2012).
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The Second, Third,

and Fourth Circuits have, however, imposed such a requirement.
Those courts reason that holding a media company liable just
because it provides technology that enables users to make copies
of programming would be the rough equivalent of holding the
owner of a copy machine liable because people use the machine to
illegally reproduce copyrighted materials. See, e.g., CoStar
Grp., Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th Cir. 2004).
Requiring a showing of volitional conduct comports with the
general principle that, even with a strict liability statute
such as the Copyright Act, the challenged conduct must cause the
harm. See Religious Tech. Ctr. v. Netcom On-Line Commc’ns Serv.,
Inc., 907 F. Supp. 1361, 1370 (N.D. Cal. 1995).

The Court finds

that, in this case, it is likely that the user supplies the
necessary volitional conduct to make the copy.

The fact that

Aereo users have the option to watch programs “live” does not
command a different result because those users are informed that
the system will create a copy of the program so that they can
pause and rewind.

This is a closer question than the issue of

public performance, however, and discovery could disclose that
Aereo’s service infringes WCVB’s right to reproduce its work.
c.

Exclusive Right to Distribute Copyrighted
Work to the Public

Hearst also submits that Aereo violates WCVB’s exclusive
right to distribute its copyrighted works to the public “by sale

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or other transfer of ownership, or by rental, lease, or
lending.” 17 U.S.C. § 106(3).

The Copyright Act does not define

what it means to “distribute” but courts have interpreted it to
entail an “actual dissemination of either copies or
phonorecords.” Atl. Recording Co. v. Howell, 554 F. Supp. 2d
976, 981 (D. Ariz. 2008) (collecting cases).

Here, Aereo’s

technology allows users to stream but not download programming.
As such, Aereo is more aptly described as “performing” than
“distributing” copyrighted works. See William F. Patry, 3 Patry
on Copyright § 8:23 (March 2013).

The Court thus finds it

unlikely that Hearst could prevail on its claim that Aereo is
unlawfully distributing WCVB’s copyrighted works.
d.

Exclusive Right to Create Derivative Works

The Court will quickly dispose of Hearst’s argument that
Aereo’s act of reformatting intercepted programming violates
WCVB’s right to prepare derivative works. 17 U.S.C. § 106(2).
Hearst has presented no legal authority nor is the Court aware
of any for the proposition that Aereo’s technology creates a
derivative work merely by converting programs from their
original digital format to a different digital format compatible
with internet streaming.

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2.

Irreparable Harm

The Court finds that Hearst has made a minimal showing of
irreparable harm that is an insufficient basis for entering a
preliminary injunction in its favor.
a.

Legal Standard

Irreparable harm is “a substantial injury that is not
accurately measureable or adequately compensable by money
damages.” Ross-Simons of Warwick v. Baccarat, Inc., 102 F.3d 12,
19 (1st Cir. 1996).

Plaintiffs alleging irreparable harm must

show more than a “tenuous or overly speculative forecast of
anticipated harm.” Id.
In the preliminary injunction context, the First Circuit
measures irreparable harm
on a sliding scale, working in conjunction with a
moving party’s likelihood of success on the merits,
such that the strength of the showing necessary on
irreparable harm depends in part on the degree of
likelihood of success shown.
Braintree Labs., Inc. v. Citigroup Global Mkts. Inc., 622 F.3d
36, 42-43 (1st Cir. 2010) (internal quotation marks and
citations omitted).
b.

Application

Hearst suggests that Aereo’s services will irreparably harm
its ability to profit through 1) retransmission fees, 2)
advertising fees and 3) new revenue streams that may result from
making WCVB’s programming available over the internet.
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The Court finds that it is possible that WCVB will be
irreparably harmed in its ability to negotiate retransmission
fees with cable providers.

Cable, satellite and other

television communications companies currently pay WCVB
retransmission fees in exchange for the right to transmit WCVB’s
signal.

WCVB’s President and General Manager averred that

Aereo’s service jeopardizes these arrangements in two ways: 1)
its users might cancel their cable subscriptions and, as a
result, the cable companies will have less money to pay in
retransmission fees and 2) the presence of a low-cost competitor
harms WCVB’s bargaining position with the cable companies and
may even lead the companies to stop paying WCVB altogether.
Yet such a showing does not overcome Hearst’s inability to
demonstrate a likelihood of success on the merits. See Braintree
Labs., 622 F.3d at 42-43.

While the prospect of harm is real,

Hearst has not shown that WCVB will suffer the “full magnitude”
of the claimed harm before the Court disposes of the case on the
merits.

Instead, it seems more likely that the harm will take

several years to materialize. See Am. Broad Cos., Inc. v. Aereo,
Inc., 864 F. Supp. 2d 373, 399-400 (S.D.N.Y. 2012).
Next, Hearst has not made a convincing showing that WCVB
will be irreparably harmed in its ability to generate
advertising revenue.

Hearst’s claim that WCVB will not be able

to measure viewers who access its programming through Aereo is
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simply not true.

Nielsen, one of the main organizations

tracking viewership for such purposes, announced in February,
2013, that it is beginning to include online viewership in its
viewership totals. See Hosp. Decl., Docket No. 42, Ex. E.
Similarly, Hearst’s claim that Aereo’s services threaten
its prospects of profiting from putting its programs online does
not meet the standard for irreparable harm because WCVB’s plans
to put programming online are insufficiently developed.
3.

Balance of Hardships and Public Interest Factors

The balance of hardships does not favor one side over the
other.

Hearst has demonstrated some likelihood of injury but

any harm will likely take several years to materialize if the
Court does not enjoin Aereo from streaming WCVB’s local
programming.

Aereo, for its part, overstates the effect that a

narrow injunction envisioned by Hearst would have on its
business.

It would still be able to provide its users with

access to the national programming that airs on WCVB and all
programming on the other local channels.
Similarly, the public interest factor cuts both ways.
Hearst plausibly contends that a preliminary injunction in its
favor will make it more likely that WCVB has the financial
resources to continue to offer its highly-regarded and unique
local programming to the Boston community.

Aereo responds that

enjoining its services will harm the public because it will take
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off the table a “lawful and innovative option for consumers to
access over-the-air broadcasting.”

The Court finds that those

contentions balance out and therefore this factor does not weigh
heavily in its analysis.
C.

Conclusion

After considering the relevant factors, the Court finds
that a preliminary injunction is unwarranted.

Hearst has not

demonstrated a sufficient likelihood of success on the merits
nor the requisite irreparable harm and therefore it is not
entitled to that “extraordinary and drastic remedy.” See Voice
of the Arab World, 645 F.3d at 32.
ORDER
Accordingly,
1) Aereo’s motion to transfer to the Southern District of
New York (Docket No. 20) is DENIED;
2) Aereo’s motion to stay proceedings pending resolution of
its transfer motion (Docket No. 23) is DENIED AS MOOT;
and
3) Hearst’s motion for a preliminary injunction (Docket No.
4) is DENIED.
So ordered.
/s/ Nathaniel M. Gorton______
Nathaniel M. Gorton
United States District Judge
Dated October 8, 2013

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