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A ruling from the U.S. District Judge Alison J. Nathan last week decided an issue of first impression, and held that broadcasters' claims of state law unfair competition were preempted by the United States Copyright Act.

The lawsuit brought in the Southern District of New York, was based on a service brought by defendant Aereo, Inc. and a service it provides called "Watch Now."   Aereo's Watch Now service currently is offered in New York, providing customers access to network broadcast programming on mobile devices through the use of a small remote antenna connected to a digital video recorder.  Aereo contended that it was only providing its customers access to signals already broadcast and freely available.  Not surprisingly, the networks creating the programing disagreed, and in March a variety of broadcasters, including WNET (the local Public Broadcasting Service), Fox Television Stations Inc., Univision Television Group Inc., and others brought suit in the United States District Court for the Southern District of New York.

The plaintiffs brought a claim under the Copyright Act as well as unfair competition under New York State law.   Aereo moved for judgment on the pleadings on the unfair competition claim, arguing that the claim sought to vindicate rights equivalent to those provided by the copyright law and was therefore preempted under the Copyright Act's express preemption provision, 17 U.S.C. § 3o1.   The Court explained that this was an issue of "first impression in the Second Circuit—regarding the breadth of preemption under § 301 of the Copyright Act: does a state law unfair competition claim founded on the private performance of copyrighted works seek to vindicate rights that fall into the general scope of the exclusive rights created by the Copyright Act?”

To resolve the issue before it, the Judge Nathan applied the Second Circuit's two-prong preemption test: whether the claims meet both the subject matter requirement (the claims involve works protected by federal copyright law) and general scope requirement (the acts that violate state-created rights would, by themselves, infringe one of the exclusive rights already protected by copyright law – reproduction, adaptation, performance, distribution or display.).  Judge Nathan also turned to the Second Circuit's “extra elements” test – the claim will not be preempted if it includes any extra elements that make it qualitatively different from an infringement claim under the Copyright Act.

Judge Nathan held that preemption under the Copyright Act extends to state laws that seek to impose liability for misappropriation of a creative works based on the performance of those works.  In this case, that was precisely what the plaintiffs claimed--that Aereo was performing the networks' creative works without permission.  Judge Nathan ruled that the broadcasters' unfair competition claim, which seeks relief for Aereo's alleged unauthorized appropriation of content, is “fundamentally parallel to a copyright claim.”   The plaintiffs claimed that because the performance was private, not a public performance which is provided for in the Copyright Act, preemption did not lie.  Judge Nathan rejected that argument.  "Contrary to plaintiff's argument, the court finds that the plain text of [Copyright Act] does not unambiguously provide that their state law claims survives preemption," Judge Nathan held.  "In this case, preemption would extend to those state laws that seek to impose liability for misappropriation of a person's creative works based on the performance of such works, whether public or private."

A copy of the Judge Nathan's <a href="https://ipintelligencereport.bakerhostetlerblogs.com/wp-content/uploads/sites/11/2012/06/Aereo-Decision1.pdf">Aereo Decision</a> is attached.

A Case of Preemption