There are two types of liability for copyright infringement: direct and secondary. As its name suggests, the former applies when an actor personally engages in infringing conduct. Secondary liability, by contrast, is a means of holding defendants responsible for infringement by third parties, even when the defendants âoehave not themselves engaged in the infringing activity.â It applies when a defendant âoeintentionally induc[es] or encourag[es]â infringing acts by others or profits from such acts âoewhile declining to exer- cise a right to stop or limit [them].â
Most suits against equipment manufacturers and service providers involve secondary-liability claims. For example, when movie studios sued to block the sale of Sonyâ(TM)s Betamax videocassette recorder (VCR), they argued that Sony was liable because its customers were making unauthorized copies. Record labels and movie studios relied on a similar theory when they sued Grokster and StreamCast, two providers of peer-to-peer file-sharing software.
This suit, or rather the portion of it before us here, is fundamentally different. The Networks claim that Aereo directly infringes their public-performance right. Accordingly, the Networks must prove that Aereo âoeperform[s]â copyrighted works, Â106(4), when its subscribers log in, select a channel, and push the âoewatchâ button. That process undoubtedly results in a performance; the question is who does the performing. If Aereoâ(TM)s subscribers perform but Aereo does not, the claim necessarily fails.
The Networksâ(TM) claim is governed by a simple but profoundly important rule: A defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act. ...
A comparison between copy shops and video-on-demand services illustrates the point. A copy shop rents out photocopiers on a per-use basis. One customer might copy his 10-year-oldâ(TM)s drawingsâ"a perfectly lawful thing to doâ" while another might duplicate a famous artistâ(TM)s copyrighted photographsâ"a use clearly prohibited by Â106(1). Either way, the customer chooses the content and activates the copying function; the photocopier does nothing except in response to the customerâ(TM)s commands. Because the shop plays no role in selecting the content, it cannot be held directly liable when a customer makes an infringing copy.
Video-on-demand services, like photocopiers, respond automatically to user input, but they differ in one crucial respect: They choose the content. When a user signs in to Netflix, for example, âoethousands of . . . movies [and] TV episodesâ carefully curated by Netflix are âoeavailable to watch instantly.â That selection and arrangement by the service provider constitutes a volitional act directed to specific copyrighted works and thus serves as a basis for direct liability.
The distinction between direct and secondary liability would collapse if there were not a clear rule for determining whether the defendant committed the infringing act. The volitional-conduct requirement supplies that rule; its purpose is not to excuse defendants from accountability, but to channel the claims against them into the correct analytical track. Thus, in the example given above, the fact that the copy shop does not choose the content simply means that its culpability will be assessed using secondary-liability rules rather than direct-liability rules.
So which is Aereo: the copy shop or the video-on-demand service? In truth, it is neither. Rather, it is akin to a copy shop that provides its patrons with a library card. Aereo offers access to an automated system consisting of routers, servers, transcoders, and dime-sized antennae. Like a photocopier or VCR, that system lies dormant until a subscriber activates it. When a subscriber selects a pro- gram, Aereoâ(TM)s system picks up the relevant broadcast signal, translates its audio and video components into digital data, stores the data in a user-specific file, and transmits that fileâ(TM)s contents to the subscriber via the Internetâ"at which point the subscriberâ(TM)s laptop, tablet, or other device displays the broadcast just as an ordinary television would. ...
The only question is whether those performances are the product of Aereoâ(TM)s volitional conduct.
They are not. Unlike video-on-demand services, Aereo does not provide a prearranged assortment of movies and television shows. Rather, it assigns each subscriber an antenna thatâ"like a library cardâ"can be used to obtain whatever broadcasts are freely available. Some of those broadcasts are copyrighted; others are in the public do- main. The key point is that subscribers call all the shots: Aereoâ(TM)s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereoâ(TM)s operation of that system is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability.
In sum, Aereo does not âoeperformâ for the sole and simple reason that it does not make the choice of content. And because Aereo does not perform, it cannot be held directly liable for infringing the Networksâ(TM) public-performance right.