 Hello. I'm Terry Fisher. This is the second segment of the eighth lecture and a series of lectures on copyright law. I'll be focusing here on the rights of public performance and display. This part of the lecture was originally prepared in 2013, but was revised in October of 2014 to take into account some recent developments in this sector of the law. The statutory provisions that govern the rights of performance and display are relatively few, but they're slippery, so it's important to be attentive to nuances here. The primary provisions are subsections 4, 5, and 6 of section 106. As you can see, subsection 4 gives the owner of the copyright in a literary, dramatic, musical, choreographic, pantomime, or audiovisual work the exclusive right to perform that work publicly. Subsection 5 is analogous. It applies to the same types of copyrighted works, plus pictorial, graphic, or sculptural works, and the individual images of an audiovisual work. It gives the owner of such things the right to display them publicly. Finally, subsection 6. This was added quite recently, specifically in 1996. As I hope you'll recall from lecture number 3, before 1996, the owners of copyrights and sound recordings in the United States did not enjoy any rights of public performance. At that time, the only provision dealing with public performances was subsection 4. And if you look back at that subsection, you'll notice that sound recordings do not appear in a list of types of works that are covered. Musical works appear, as you know by now, that means musical compositions, but not sound recordings. As I explained in lecture number 3, the record companies that hold the copyrights in most commercially valuable sound recordings have long complained about this state of affairs. In 1996 and then, with a little bit of adjustment in 1998, Congress responded partially to the record companies' pleas and granted them a limited, very limited, public performance right, which is now embodied in subsection 6. As you can see, it only applies to performances, quote, by means of a digital audio transmission. In just a minute, I'll give you some examples of transmissions that fit within this phrase. The crucial terms in these three statutory provisions are performance, display, and public. Fortunately, all three are defined in section 101 of the statute. As you can see, perform means to recite, render, play, dance, act, either directly or by means of any device or process, or, in the case of a motion picture, to show any of its images in any sequence or to make the sounds accompanying it audible. This is a very capacious definition. I'll give some examples of its reach shortly. Display is defined as, quote, to show a work either directly or by means of a film, slide, television image, or other device or process. The key word here is show. Both performances and displays of copyrighted works can only give rise to liability if they're done publicly. Section 101 defines publicly as one of two things. The first of these two subsections is sometimes called the public place clause. It classifies as public. A performance or display, quote, at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family or social acquaintances is gathered. This is the more intuitively plausible meaning of public. The second subsection is sometimes known as the transmit clause. It says that another way in which you can perform or display a work publicly is, quote, to transmit or otherwise communicate the performance or display to a place specified in clause one or to the public by means of any device or process and whether the members of the public are capable of receiving the performance or display, receive it in the same place or in separate places in the same time or at different times. That, as we'll soon see, is a very generous definition of public that sweeps within it many ways in which copyrighted materials are made available today. Those are the main statutory provisions. Now, let's turn to some examples to give these provisions a bit of shape. Here's a hypothetical but not implausible scenario, the purpose of which is to illustrate these concepts. Suppose A sings a copyrighted musical composition into a microphone in a recording studio. Record company B records A's rendition on a record. I know these technologies are quaint, but bear with me. Suppose C purchases a copy of the record and plays it on a turntable in his or her living room. Sounds are generated either from the turntable directly or more likely from an amplifier instead of speakers connected to the turntable. Those sounds spread through C's living room. Another copy of the record is purchased by radio station D. A disc jockey working for the radio station plays the record on a turntable there. The signal generated by the radio station is broadcast over the airwaves. The broadcast is represented in this diagram by the dotted line on the slide. More specifically, this is a traditional analog over-the-air transmission. It's received in the home of E, who in her living room plays another stereo depicted by a boombox. Sound comes out of the speakers into E's living room. The next day, the disc jockey plays the record again, broadcasting it again through an analog signal. This time, it's received by a tuner and an associated stereo system located in a restaurant. The sounds generated by the stereo spread through the restaurant, the customers eating their meals, hear it. The next month, the radio station shifts to a digital broadcasting technology. The DJ plays the record again. Suppose cable system G picks up the digital signal and relays it through a cable, of course, to homeowner H, who plays it through a stereo in her home. Finally, suppose that the station abandons over-the-air broadcasting altogether and shifts to webcasting over the internet. Yet again, the DJ plays the record, the owner of a laptop residing in another state, receives that webcast and listens to it in her living room. Now, let's consider the legal significance of the sequence of events. My suggestion, when you're confronted with a real or hypothetical story of this sort, is that you analyze it in three steps. Breaking the issues down this way may seem needlessly laborious, but it will help alert you to some hidden landmines. Step number one is to identify all of the performances. Keep in mind the capacious definition of performance in the statute. Also, keep in mind that when dealing with music, you have to look for both performances of musical compositions and performances of sound recordings. Let's start with the musical work. Here are all the places in the hypothetical story where and when the musical work, abbreviated with MW, was performed. When A sings the song, that's a performance. When the sound emerges from the record player in the living room of C's home, that's also a performance of the musical work. When the radio station plays the record the first time, it too is performing the musical work. This is slightly less obvious, but remember that the term performance includes to render a work either directly or by means of any device or process. That has been construed to include sending signals of this sort. When E receives the signal in her living room and sends the sound out into her living room, that's yet another separate performance. Same thing happens with a restaurant. When the station sends the signal containing a rendition of the song, that's a performance. When the restaurant receives that signal and plays it for its customers, that's another performance. Things get even more complicated when we get to the cable system. Here there are three performances. By the station when it broadcasts the rendition of the song, by the cable system when it relays that signal, and by the homeowner who receives the relayed signal and place it in her home. With respect to the webcast, there are only two by the station and by the recipient when she plays it. Each time A's rendition of the musical work is performed, the sound recording embodying that rendition is also performed, except of course when A sang it, because there's no recording yet. Why differentiate the performance of the musical work and the performances of the sound recording? Because the copyrights in these things may well be held by different parties, and because, as you already know, they're governed by different rules. All right, that's step one of the analysis. Having identified all of the performances, the next step is determine which of them are public. If they're not public, we don't have to worry about them anymore. If they are, we'll have to proceed to step three. This one is not public because it's done in the studio without an audience, and this doesn't fit either of the two definitions of public. Neither of these two performances, the musical work or of the sound recording, is public because they occur in C's living room. The same is of course true of E's living room, H's living room, and I's living room. The radio station, however, is in a very different position. Every time it broadcasts a signal containing the song, it is publicly performing both the composition and the sound recording. The relevant definition of public is of course the transmit clause, specifically this part of the clause. Quote, to transmit a performance of the work to the public, even if the members of the public capable of receiving the performance, receive it in separate places, or at different times. The result is that even if all of the station's listeners are home alone in their living rooms, the transmission of the signal to them is still public. The same is true of the transmission by the cable company. This may not be altogether obvious to you, but in a few minutes I'll return to the special legal status of cable companies. What about the performance in the restaurant? That's not a transmission, so the transmit clause is not relevant. But the other definition of public, the so-called public space clause applies. What if there's only one patron eating dinner when the song is played, or indeed no customers at all? Doesn't matter. So long as the restaurant is open to the public, the performance is public. The third and last step is to survey the public performances we've identified and determine if there are any grounds for exempting them from the reach of the statute. There are several possible exemptions, one of which you already know. If the work performed is a sound recording, and if the way in which it is performed is not a digital audio transmission, then it's not covered by either 1064 or 1066. So all of these performances escape, either because they are analog or they are not transmissions. For the time being anyway, these do not. This concludes our survey of the basics. Now, let's consider some refinements. Focus on the upper right-hand corner of the diagram. You'll recall that the way in which the music got into E's ears is that singer A sang the composition, record company B recorded A's rendition, radio station D played the record and broadcast a signal over the airways. E's radio, located in her living room, picked up that signal and converted it into sound waves. If E listens to the music while alone in her living room, the two performances that occur within the red rectangle are surely not public. Now, let's alter the facts slightly. Suppose that E's dining room is adjacent to her living room. She's the dinner party in the dining room and the invitees are able to hear the music coming out of the radio. Is that a public performance? The answer is no, the guests are social acquaintances gathered together in a room that's not open to the public. Suppose that E is a professor. She invites the students in one of her seminars to her house for dinner. The radio is playing in the background. Is that a public performance? This is closer to the line. The answer is still probably no, but an argument might be made that E's home is now, quote, a place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered. Change the facts once again. The personnel are the same, but instead of hosting her students in her house, E holds a party in a semi-separate room of a restaurant. The radio in the room plays A's rendition. Is that a public performance? Yes, the restaurant is a place that's open to the public and therefore under the first of the two clauses would clearly be considered public. Now, suppose that E takes her radio to a public park at five o'clock in the morning, tunes it to the D station and listens to it while doing some exercises. The park is otherwise empty, so no one but E hears the radio. Is that a public performance? Strictly speaking, yes, because the place is open to the public, even though she's the only listener. The chances of copyright owners pursuing her for infringement are tiny, but at least technically, that's a public performance. It's still possible that it may nevertheless be excused by one of the exceptions we'll consider later in this lecture, but E is at least presumptively in trouble. For the past few minutes, we've been considering possible applications of the first and more intuitive of the definitions of public, the public place clause. The more serious and economically important puzzles in this area arise under the second branch, the so-called transmit clause. Here are three illustrative cases. The first is Redhorn, one of the old chestnuts of copyright law. It involved a very early application of VCR technology. The defendant operated a somewhat shady operation that rented VHS tapes, but also provided small carpeted rooms in the back of the facility where you could have a VHS tape played. Here's how the system worked. A customer would walk into the front of the store where he'd see many tapes displayed. He'd select one. The attendant would place it into a VCR and activate it. The customer would retire to a room in the back where he alone or with a companion or two would watch it. The Court of Appeals ruled that this system entailed public performances of the audio-visual works on the VHS tapes for two independent reasons. First, because the facility is open to the public, this again is a bit counterintuitive after all it's only open to a couple of members of the public at a given time, but as a whole it's open to the public and that's enough to render the performances public under clause number one. The second reason is more interesting for our purposes. The performances are also public because they involve transmissions, short transmissions to be sure, presumably from the front desk or the room in the back, but transmissions nevertheless. And members of the public are capable of receiving those transmissions in the same place or separate places at different times. The Court didn't spell this out in great detail, but its analysis seems to be that a given audio-visual work is shown to successive customers or groups of customers in the same room at different times through the same transmission facility. That's enough to make it public and to make the proprietor liable for some $44,000. The second case is the important recent decision in cable vision, one aspect of which I discussed in the previous lecture. The essential facts are depicted on this slide. This is mysterious to you, please pause to review the pertinent section of lecture number seven. As you'll recall, I hope, the owners of the copyrights in the works that would be stored and then replayed by cable vision, challenged this technology on three grounds. A, that the brief retention of slices of each work in the BMR buffer constituted in the aggregate and unauthorized reproduction of the work. B, that the more durable retention of a copy on the hard drive of the Oroio server also violated 106.1. And C, that the transmission from the Oroio server to the customer, when the customer asks to watch one of his saved programs, constitutes a public performance of the work. The trial court, as we saw, accepted all three claims, but the court of appeals rejected all three. How did the court of appeals reject the third argument? It might have done so by ruling that even if the transmission involved in public performance, that transmission is initiated by the subscriber when he presses the button on his remote control in his living room, not by cable vision. But it did not. The court assumed, for the sake of argument, the cable vision is responsible for the transmission. Nevertheless, it ruled that the transmission did not violate section 106.4. Crucial to this ruling are two facts, that the transmission is only delivered to one person at a time, and that each subscriber receives his transmission from the unique copy of the work. If cable vision transmitted the work to multiple subscribers, siri atom, from the same copy, then, in the court of appeals judgment, this case would resemble red horn, which, as we saw, gave rise to liability. But the fact that each subscriber received a transmission from his own personal copy made all the difference. Here's the crucial language from the opinion. Because each RS DVR playback transmission is made to a single subscriber, using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances to the public, and therefore do not infringe any exclusive right of public performance. This fact was also emphasized by the solicitor general when advising the Supreme Court not to review the decision. As we saw in lecture number seven, the ruling in cable vision catalyzed a great deal of investment in cloud-based services, several billion dollars. However, the aspect of the court's ruling, I just emphasized, renders that investment less efficacious than it could be. Why? Because constructing systems that store individual copies of works for individual subscribers is very inefficient. The cable vision ruling also catalyzed considerable innovation with respect to technologies and business models in the entertainment industry. When those innovations have been challenged by copyrighted owners, some have been held to be lawful, while others have been ruled to run afoul the owner's rights. The most important of the innovations that came to grief was the service briefly offered by ARIO, an ingenious but risky startup. To understand the nature and novelty of the ARIO system, you need a bit of background. For a long time, as you probably know, television stations have been broadcasting entertainment and sports programming free over the public airways. This system has worked well for consumers located in metropolitan areas with good television reception, but less well for consumers in rural areas with poor reception. For several decades, the latter group of consumers has overcome this impediment by subscribing to cable television services, such as Comcast in the United States. Among the many channels that cable companies typically carry are over-the-air broadcasts that the cable systems pick up in major cities and then redistribute through their cables. Do the cable companies have to pay the owners of the copyrights in the programs that they relay in this fashion? When cable systems were first introduced, the Supreme Court answered no. On the grounds that the cable companies neither reproduced nor publicly performed the programs. In 1976, Congress repudiated that position and in the process adopted the expansive definition of public performance with which we've been wrestling. Since then, the cable companies have been applied to pay copyright owners whose programs they retransmit, although the amount they pay is capped by a special compulsory license, of the sort I've mentioned before, and we'll consider again in the final segment of this lecture. Nowadays, a growing group of consumers get access to audiovisual entertainment, not through over-the-air broadcasts or by subscribing to expensive cable systems but through the internet. This arrangement works fine if the program they want is available either for free from sites like YouTube or from various fee-based on-demand or subscription services now accessible through the internet. But what if the programming they want to watch is broadcast over the airways by television stations located in distant cities? Until recently, there was no convenient way for them to gain access to that material. Enter ARIO. For consumers of the sort I just described located in the New York metropolitan area, ARIO set up a new subscription service. Here's how it worked. Suppose, counterfactually, that I live in Westchester County, I'm a fan of the New York Yankees baseball team, and I don't subscribe to cable TV. A subset of Yankees games are broadcast on WWOR, an over-the-air television station based in northern New Jersey which operates a broadcast tower on the top of the Empire State Building. When I'm at home, I watch the broadcast for free. But I often travel for work and I want to watch the games when I'm on the road. For a fee of $12 per month, ARIO would, at my request, pick up the broadcast of a particular game, convert it to packets, and stream those packets to me over the internet, enabling me to watch the game on my laptop or tablet. Now, if the way that ARIO picked up the program was by building and operating a single big TV receiver on Long Island, then it would have been working very much like a cable company, and thus would have been obliged to pay fees to the owners of the copyrights in the broadcasts of the games. But it didn't. Instead, ARIO obtained thousands of tiny TV antennas, each the size of a dime, which it arranged in arrays. Then, when I asked to see a particular game, ARIO would rent me one of those tiny individual antennas and tune it to the free over the air broadcast. One more potentially important feature of ARIO's system. The game would not be shown to me live. Instead, like Cable Vision, ARIO captured and recorded the live program. The packets sent to me would be from that personal recording. However, the result in lag time was tiny, a few seconds. A different service offered by ARIO, not considered in the judicial opinion I'm about to describe, allowed subscribers like me to timeshift programs, for example, to replay the recording of the game hours or days after it was first broadcast. But for the time being, keep your focus on the nearly live broadcasts. By now, it should be obvious that the reason why ARIO used this seemingly bizarre technology was to make its system resemble, as closely as possible, the system created and upheld in the Cable Vision decision. And thus to avoid having to pay for the material it was supplying to its subscribers. At first, it seemed that ARIO had succeeded. When copyright owners challenged the system, the trial court ruled in favor of ARIO, relying heavily on the Cable Vision doctrine. So did the Court of Appeals for the Second Circuit by a vote of two to one. But the Supreme Court granted certiorari and in July of 2014, reversed by a vote of six to three. The basis for the Supreme Court's ruling, unfortunately, is not completely clear. Justice Breyer, writing for the Court, repeatedly stressed that ARIO's business looked a lot like a Cable Television service, which Congress had made clear, both A, performed programs they relayed, and B, made those performances to the public. But what about the aspect of the ARIO system that differentiated from a Cable system, namely that each ARIO subscriber received an individual transmission from an individual copy of the program at issue? Breyer's answer in brief was that neither the subscribers nor the owners of the copyrights in the programs cared about what was going on under the hood, and so neither should the law. Breyer's analysis is distilled in the sentence that's forth on your screen. In light of the purpose and text of the transmit clause, we conclude that when an entity communicates the same, contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them, regardless of the number of discrete communications it makes. This language is quite broad. Among other things, it seems to render irrelevant the factor that the Court of Appeals treated as so important in Cablevision, namely whether a transmission is made to a single subscriber using a single unique copy produced by that subscriber. Does this then mean that RSDVR services are doomed? Some copyright owners and commentators think so. My own view is no, most RSDVR systems remain lawful in the United States. The principal reason is that, although Justice Breyer did not expressly endorse the Cablevision decision, he went out of his way to emphasize several limitations on the Supreme Court's ruling against Arrio. For example, Breyer stressed the fact that neither Arrio nor its subscribers had paid for access to the programs that Arrio streamed, and Breyer strongly suggested that the case would have come out differently otherwise. Here's the crucial sentence. Quote, an entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to the public, whereas an entity like Arrio that transmits to large numbers of paying subscribers will lack any prior relationship to the works does so perform. The sentence, though not a model of clarity, would seem to leave a safe harbor for cloud locker services and arguably for services like Cablevision that allow consumers who have already paid for programming to watch those programs at later times or in different places. Finally, Breyer pointedly emphasized, quote, the doctrine of fair use can help to prevent inappropriate or inequitable applications of the transmit clause. The potentially expansive safe harbor might be built on that sentence will become apparent next week. Sadly, the net effect of the Supreme Court's ruling in Arrio is to reduce considerably the clarity that, in the wake of Cablevision, stimulated so much investment in cloud-based technologies. For the next few years, lower courts confronted with challenges to businesses that offer consumers new kinds of streaming services will have to determine whether they are more like Cablevision or more like Arrio. Until the dust settles, entrepreneurs and technology innovators will have some trouble predicting what they can and cannot do. An additional source of instability is the divergence between the United States and Europe with respect to the permissibility of services of this general sort. As I hope you'll recall from the first lecture in this series, one of the multilateral treaties to which the United States is a party is the WIPO Copyright Treaty of 1996. Article six and eight of that treaty require member countries to provide copyright owners a generous version of the right of distribution and a right of communication to the public. Both provisions use the phrase, quote, make available to the public, which arguably encompasses more activities than are reached by US law. Nevertheless, after the treaty was ratified, the United States took the position that this language did not require any adjustment in US law because sections 1063 and 1064, as construed by the US courts, already adequately provided such a so-called make available right. That contention was dubious when it was first made and it's become more so over time. In Europe, as Professor Jane Ginsburg of Columbia Law School has shown, the right to make works available to the public is construed more broadly than in the United States and in particular is less forgiving of cloud-based services over the sorts we have been considering. As you can see on your screen, the Information Society Directive of 2001, which implemented in the EU, the WIPO Copyright Treaties, requires EU member states to, quote, provide authors with the exclusive right to authorize or prohibit any communication to the public of their works by wire or wireless means, including them making available to the public of their works in such a way the members of the publics may access them from a place and at a time individually chosen by them. In 2013, the European Court of Justice ruled that a British company called TV Catch Up, which had offered a service that resembled that provided by ARIO, violated this particular entitlement. The ruling forced a redesign of TV Catch Up and the company is now in financial trouble. Even more striking was the insistence by the European Commission that Italy rescind a law that had granted partial immunity to an RS DVR service, analogous to that offered by Cablevision. The United States is not likely in the near future to adopt the EU's more restrictive interpretation of the so-called make available right. But the gap between the US and the EU on the score is not good for business. In particular, it's likely to bedevil enterprises that seek to provide novel cloud-based services, not just to US customers, but to users of the internet in other countries. I've concentrated in this lecture entirely on Section 106-4 and have paid no attention to Section 106-5, the right of public display. The reasons are that the bulk of the economic and litigation action involves performances, not displays, and that the definition of display is clearer and more intuitive than that of performance. As you can see, the statute defines display pretty much the way you'd expect as to show a copy of the work either directly or by means of a film, slide, television image, or other device or process, or in the case of a motion picture or other audio-visual work, just show the individual images non-sequentially. That definition creates few interpretive difficulties with respect to real-space displays. Now, recently, information technology, such as the practice of framing websites, have generated some interesting interpretive problems, but I'll leave such matters to the discussions that will accompany this lecture. This concludes our discussion of the rights of performance and display. After the break, we'll examine some statutory limitations on those rights.