Terry Hart is Director of Legal Policy for the Copyright Alliance and blogs on his own behalf at Copyhype.com

The highly anticipated opinion in American Broadcasting Cos. v. Aereo, Inc. finally answered the question whether the start-up performed copyrighted works to the public.  In the six-to-three decision, Justice Breyer held that, despite the use of thousands of antennas uniquely allocated to individual subscribers, it did.

In hindsight, the holding should be obvious to anyone who reads the text of the Copyright Act.  Of course a service that transmits copyrighted works to thousands of paying subscribers is performing to the public.

But despite the case’s resolution, it may mark the beginning of a far bigger issue that emerged during litigation:  the application of copyright law in the cloud computing context.  As users rely more and more on remote services, the significance of multiple actors involved in activity that results in infringement will increase.  In its admittedly limited holding, the Court bluntly remarked that it “cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us.”  The dissent warns that the majority’s holding “will sow confusion for years to come.”

It need not.  For one thing, as the Court notes, the online safe harbors within the DMCA already shield the vast majority of good-faith cloud computing providers that allow user-initiated storage of (potentially) copyrighted files.  But more importantly, within the majority’s opinion is a roadmap for determining direct liability for copyright infringement in the cloud.  While the majority is able to resolve that question for Aereo by reading the text of the Act in light of the legislative history regarding CATV systems, the question of who engages in the infringing act remains in more novel circumstances.

Copyright infringement is a strict liability tort, and all torts require some element of causation, an act that results in the harm.  Courts typically divide causation into two inquiries:  factual (“but for”) causation and “proximate” causation.  That is, did the conduct actually cause the harm, and, if so, should the law as a matter of policy hold the actor liable for causing the harm?  One could trace forever the chain of events that lead to a specific harm, but it has long been recognized that there is little sense in extending legal responsibility throughout those chains.  As a result, courts rely on proximate causation as a limiting theory about what qualities must be present for a factual cause to be recognized as a legal cause.

The Supreme Court has previously recognized that proximate causation is an element of all strict liability torts and “depends to a great extent on considerations of the fairness of imposing liability for remote consequences.”  Along with fairness, other courts have pointed out the role of responsibility, intent, and foreseeability in proximate causation.  Proximate causation is, in other words, an intensely fact-specific analysis, but one that reaches better results than any bright-line rules.

Although Justice Breyer never raises the issue of proximate causation, he outlines a number of reasons why Aereo is directly liable in this case and which serve to lay the path for future proximate causation analyses. First, Breyer notes that in providing its service, “Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes.” The owner of the equipment is relevant since she maintains dominion and control over the process and is in a position to prevent infringement.

Breyer next points out that Aereo subscribers don’t “receive performances in their capacities as owners or possessors of the underlying works.”  Later, he explains that the decision “does not extend to those who act as owners or possessors of the relevant product.”  The provider of the copyrighted work at issue is relevant because he initiates the process that results in potential infringement and is in a better position to know whether the particular copy was authorized and whether she has a right to copy or perform the work.

Breyer also notes that the holding is limited because “we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.”  The range of uses of a particular service speaks to foreseeability and intent.

None of these facts by themselves are sufficient to show proximate causation. But taken together, they support the conclusion that Aereo is the legal cause of the harm and provide guidance to lower courts facing the question in future cases.

The dissent correctly identifies the issue as determining the cause of the infringing conduct but approaches it using the ill-conceived “volitional conduct” approach.

Courts first articulated the volitional conduct test nearly two decades ago in Religious Technology Center v. Netcom On-line Communications Services.  There, a district court determined that an Internet access provider who provided Usenet access was not liable for infringement by a Usenet user.  In doing so, the court said liability requires “some element of volition or causation which is lacking where a defendant’s system is merely used to create a copy by a third party.”  Its analysis resembles a proximate causation analysis.  For example, it considers the consequences of placing liability on the Internet access provider when it notes that doing so “would create many separate acts of infringement and, carried to its natural extreme, would lead to unreasonable liability.”  It noted that holding Netcom liable “would hold the entire Internet liable for activities that cannot reasonably be deterred.”  In short, it demonstrated reasons why it should limit Netcom’s legal liability despite it being a but-for cause of the infringement.

Unfortunately, later courts would pay less attention to Netcom’s discussion of causation and more attention to its use of the word “volition.”  In adopting Netcom, the Fourth Circuit appears to have translated volition into a bright-line rule that “an ISP who owns an electronic facility that responds automatically to users’ input is not a direct infringer.”  The Second Circuit extended this holding to non-Internet service providers in Cartoon Network v. CSC Holdings (“Cablevision”).

The dissent reveals two shortcomings to this focus on “volitional conduct” at the expense of proximate causation.

First, it creates a temptation to ignore the conduct of a service provider who designs an automated system.  In Cablevision, the Second Circuit proclaimed that “a significant difference exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct.”  Likewise here, the dissent says, “The key point is that subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it.”  Essentially, the “volitional conduct” test collapses into a simple determination of “who pushes the button.”  But service providers certainly engage in volitional conduct by designing the system itself, as well as by maintaining and promoting it. In addition, the types of processes that can be automated are increasing rapidly, so a hard distinction between automated processes and those requiring contemporaneous human operation makes little sense.

Second, the volitional conduct discards the important policies animating proximate causation for an overly formal analysis that tends to lead toward unprincipled results.  In Netcom, one gets the sense that “volitional conduct” and proximate causation are roughly synonymous (the Ninth Circuit, in fact, explicitly referred to Prosser’s definition of proximate causation when it adopted Cablevision in Fox Broadcasting Co. v. Dish Networks).  One can also see the resemblance to proximate causation in the dissent’s own proposed analysis.

The dissent’s analysis draws a line between direct and secondary liability, holding a defendant liable for the former only if it engages in volitional conduct.  The purpose of this rule, says the dissent, “is not to excuse defendants from accountability, but to channel the claims against them into the correct analytical track.”  The dissent does not, however, say why these separate tracks exist. We need to look at secondary liability doctrines ourselves to see why.  While direct liability is strict, secondary liability has other requirements.  Contributory liability, for example, requires material participation in infringing conduct along with knowledge of the infringement.  Vicarious liability vests on one who gains a benefit from infringing conduct that one has the right and ability to control.  These requirements – knowledge, participation, responsibility – sound very similar to the policies that underlie proximate causation.  But despite the resemblance, the dissent’s analysis neglects the policies in favor of an inflexible “channeling” analysis unmoored from well-established causation principles.

Proximate causation ensures that liability is apportioned appropriately and plays a critical role in tort law as causal chains become increasingly complex.  While not explicitly mentioning the doctrine, the Aereo decision does implicitly reject the volitional conduct test while providing guidance to future courts in determining who should be held directly liable for infringing acts online.  This guidance, combined with the DMCA safe harbors and other copyright doctrines, should provide the certainty cloud-computing providers desire to continue innovating while also ensuring that authors and creators can continue to contribute to our culture and economy through their creativity.

Posted in American Broadcasting Companies v. Aereo, Aereo symposium, Everything Else, Merits Cases

Recommended Citation: Terry Hart, Symposium: Series finale for Aereo, but will there be a spin-off?, SCOTUSblog (Jun. 26, 2014, 3:10 PM), http://www.scotusblog.com/2014/06/symposium-series-finale-for-aereo-but-will-there-be-a-spin-off/