To quote the Thing from the Fantastic Four – “It’s clobberin time!” Just two days after Jack Kirby was honored at Comic-Con, lawyers for the heirs of the comic legend have replied to Marvel and Disney with a pummeling brief filed at the Supreme Court. “Respondents, although called to respond, do not address the legal issues. Instead, they focus on the wrong questions and the wrong court,” say lawyer Marc Toberoff and Tom Goldstein, a new attorney on the case, today. After failing repeatedly in lower courts, Lisa Kirby, Neal Kirby, Susan Kirby and Barbara Kirby petitioned the High Court on March 21 for a hearing. The heirs want SCOTUS to rule in favor of their assertion that they had the right in 2009 to issue dozens of termination notices to Marvel and others on the artist’s characters under the provisions of the 1976 Copyright Act.
EXCLUSIVE: No big surprise that today Marvel and Disney asked the Supreme Court to deny a petition from the heirs of Captain America, The Avengers and X-Men co-creator Jack Kirby. “This case presents a factbound application of a test uniformly adopted by the lower courts under a statute that does not apply to works created after 1978,” said a response filed today (read it here). “It implicates no circuit split, no judicial taking, no due process violation, and no grave matter of separation of powers. It does not remotely merit this Court’s review,” added the media giant’s main attorney in the matter, R. Bruce Rich. In case, Marvel’s rejection of the heirs desires were not clear enough, the Disney-owned company really hits it hard elsewhere in today’s response. “In likely recognition of the fact that the statutory question does not satisfy the requirements for this Court’s review, petitioners turn to a series of bizarre constitutional arguments raised for the first time in this Court,” says Marvel. “Those arguments only underscore that none of the questions presented merits this Court’s plenary consideration.”
In a move that could have huge copyright implications for the entertainment industry if it went before the nine justices and they found in the heirs’ favor, Lisa Kirby, Neal Kirby, Susan Kirby and Barbara Kirby petitioned the SCOTUS this spring to hear their much-denied case. The heirs contended they had the right in 2009 to issue 45 termination notices to Marvel and others including Fox, …
Aereo CEO Chet Kanojia tells subscribers in a note this morning that he has decided to “pause” the service beginning at 11:30 AM ET — even though “our journey is far from done.” The Barry Diller-backed company plans to consult with the U.S. District Court in New York hearing broadcasters’ complaint against it to “map out our next steps” after the U.S. Supreme Court ruled, in a 6-3 decision, that the service violates station owners” copyrights when it streams their over-the-air programming without permission. Users will receive a refund for their last paid month.
The CEO maintains that the airwaves belong to the public and “you should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud.” Following a “staggering” show of support, he urges supporters to “Keep your voices loud and sign up for updates at ProtectMyAntenna.org .”
Here’s the note:
A Letter to Our Consumers: Standing Together for Innovation, Progress and Technology – An Update on Aereo
“The world hates change, yet it is the only thing that has brought progress.” –Charles Kettering, inventor, entrepreneur, innovator & philanthropist
A little over three years ago, our team embarked on a journey to improve the consumer television experience, using technology to create a smart, cloud-based television antenna consumers could use to access live over the air broadcast television.
On Wednesday, the United States Supreme Court reversed a lower court decision
Many TV stations didn’t want to forge streaming alliances with the Iowa-based company while it looked like Aereo might dominate the market to take their over-the-air signals to the Internet — without any agreements. But that could change following this week’s Supreme Court’s ruling that Aereo’s business model violates copyright law. “With this decision behind us, you’ll see movement accelerate over the next few months” as stations leave the sidelines to deploy Syncbak’s technology, company founder and CEO Jack Perry tells me.
I know, that’s just what you’d expect him to say. But Syncbak‘s taken seriously: Investors include CBS, the National Association of Broadcasters, the Consumer Electronics Association, and former NBC execs Bill Bolster, Michael Gartner, and Ed Scanlon. About 150 stations already use its technology with Apple and Android apps. Fox’s WNYW New York is the largest, but Gray Television and Northwest Broadcasting also are on board. Small broadcasters have been most receptive: Perry says it only costs $3,000 to take a station’s signal online. They also have less to fear from Aereo. It has to build antenna farms to serve a market and, with the investment that entails, “I don’t think they could have gone beyond market No. 30,” Perry says.
The industry is weighing in on the Supreme Court’s ruling this morning that the Aereo streaming service violates broadcast companies’ copyrights. Refresh for latest…
Chet Kanojia, Aereo CEO and founder
“Today’s decision by the United States Supreme Court is a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry. It is troubling that the Court states in its decision that, ‘to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.’ (Majority, page 17) That begs the question: Are we moving towards a permission-based system for technology innovation?
“Consumer access to free-to-air broadcast television is an essential part of our country’s fabric. Using an antenna to access free-to-air broadcast television is still meaningful for more than 60 million Americans across the United States. And when new technology enables consumers to use a smarter, easier to use antenna, consumers and the marketplace win. Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle.”
“Justice Scalia’s dissent gets its right. He calls out the majority’s opinion as ‘built on the shakiest of foundations.’ (Dissent, page 7) Justice Scalia goes on to say that ‘The Court vows that its ruling will not affect cloud-storage providers and cable television systems, see ante, at 16-17, but it cannot deliver on that promise given the imprecision of its results-driven rule.’ (Dissent, page 11)”
“We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
Gordon Smith, National Association of Broadcasters president and CEO
“NAB is pleased the Supreme Court has upheld the concept of copyright protection that is enshrined in the Constitution by standing with free and local television. Aereo characterized our lawsuit as an attack on innovation; that claim is demonstrably false. Broadcasters embrace innovation every day, as evidenced by our leadership in HDTV, social media, mobile apps, user-generated content, along with network TV backed ventures like Hulu.
“Television broadcasters will always welcome partnerships with companies who respect copyright law. Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”
UPDATED WITH REACTIONS: Television broadcasters can breathe a sigh of relief after the Supreme Court ruled this morning that the Barry Diller-backed service violates their copyrights when it streams their transmissions without their permission. In a 6-3 opinion, the court reversed and remanded the decision of the 2nd Circuit in the broadcasters favor. The opinion equated Aereo to a cable company, thereby equaling its transmissions of the broadcasters’ material to a public performance under the Copyright Act. That remand means the broadcasters could get the injunction against Aereo they have long been seeking. As was expected, Associate Justice Stephen Breyer wrote the decision (read it here) released this morning; he asked the most questions by far of the lawyers during oral arguments in April. Saying Aereo does not constitute a public performance, Associate Justice Antonin Scalia dissented today’s opinion. He was joined by associate justices Clarence Thomas and Samuel Ailto.
The Court today also addressed concerns raised by Aereo and others that a loss for the streaming service could have grave implications for cloud technology, among others.“Given the limited nature of this holding, the Court does not believe its decision will discourage the emergence or use of different kinds of technologies,” said the 18-page opinion.
“Today’s decision is a victory for consumers,” the broadcasters’ lawyer Paul Clement said today. “The Court has sent a clear message that it will uphold the letter and spirit of the law just as Congress intended.” Clement, a former Solicitor General, represented broadcasters during oral arguments.
This is a big loss for Aereo, which until now has prevailed in the majority of its legal battles with broadcasters including CBS, Disney, Fox, and Comcast’s NBCUniversal. On April 2, Diller sent shivers through Aereo CEO and founder Chet Kanojia and other execs when he said that the company “probably would not be able to continue in business” if it lost at SCOTUS. If Aereo had won, many industry watchers said broadcasters could lose their clout to force cable and satellite companies to pay billions for the right to retransmit their programming.
“It’s over,” Diller told CNBC this morning after the ruling was handed down. Kanojia had a different take: “We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
“We did try, but it’s over now,” Aereo investor Barry Diller told CNBC following this morning’s Supreme Court ruling that Aereo violates TV station copyrights when it streams their over-the-air signals without their permission. That has given a jolt to broadcast stocks: Sinclair Broadcasting leads the pack with shares up more than 15% But CBS is up 5.4% with E.W. Scripps +6.5% and Gannett +4.7%. The decision relieves a big concern for Wall Street: that Aereo or a service like it might endanger broadcasters’ ability to demand rising retransmission consent fees from pay TV providers.
Station owners are expected to collect $7.1B in retransmission payments in 2018, up from $3.3B last year. CBS chief Les Moonves has predicted that his company will collect at least $2B in retransmission revenues in 2020. And the revenues could account for nearly 20% of cash flow growth this year at the major broadcast network owners — CBS, Fox, Disney, and Comcast — MoffettNathanson Research estimates.
CBS had the most at stake among Big Media companies because it has few cable channels or other businesses to offset any threat to its broadcast network and stations. The court ruling “validates CBS’ investment in expensive and high-quality programming,” Guggenheim Securities’ Michael Morris says. Janney Capital Markets’ Tony Wible says the decision “effectively increases broadcaster’s negotiating leverage over [cable and satellite companies] in retrans discussions, which is critical given the weaker ad market and …
Shares for broadcast companies and CBS likely will take a hit if the conventional wisdom is wrong and justices uphold Aereo’s right to stream TV signals without payment, Wells Fargo Securities’ Marci Ryvicker forecasts this morning. Justices should make their decision before June 30, when the current term ends. If they agree with Aereo — which says it merely leases antennas so consumers can access free TV — then many on Wall Street say stations will lose leverage to demand rising retransmission payments from pay TV providers. Broadcast company stocks could fall as much as 20%, and CBS could drop 7%, Ryvicker figures.
Investors shouldn’t worry: an Aereo win wouldn’t change things for the short to mid term, she says. Still, “we do acknowledge that sentiment will drive these stocks lower” referring to a group that includes TV station owners Sinclair, Media General, Nexstar, Gray Television, and Journal Communications. The broadcast companies’ shares “seemed to be somewhat ‘rocked’ by the Supreme Court’s decision to review” the Aereo case. As for CBS, Ryvicker says investors might decide it’s just worth 12.7 times expected per share earnings — down from its current trading price at 13.7 times — which would cut the price by 7%. But “we don’t anticipate it staying there for long,” in part because “CBS can pursue its option to go straight to cable or figure out some sort of other business model that would lessen any potential long term impact of Aereo.” …
UPDATE: MGM “Looks Forward To Vindicating” ‘Raging Bull’ Rights, Says Lawyer After Supreme Court Ruling
UPDATE, 10:12 AM: MGM has responded to the ruling: ”While we agreed with the Ninth Circuit’s conclusion that laches is an available defense against stale copyright claims, the Supreme Court has spoken,” MGM lawyer Mark Perry of DC-based Gibson, Dunn & Crutcher told me today. “The decision, however, does not end this matter as we continue to believe that the plaintiff’s case is legally and factually unsupportable. We look forward to vindicating our rights in the film Raging Bull in the lower courts.” What this politely means: this is going to be a no-holds-barred grudge match.
PREVIOUS, 7:44 AM: It’s not a total TKO, but the Supreme Court today gave the green light to Paula Petrella to take her Raging Bull copyright lawsuit against MGM back into the ring. In an opinion from Justice Ruth Bader Ginsberg, the SCOTUS said in a 6-3 vote that Petrella, daughter of deceased screenwriter Frank Petrella, could pursue a lawsuit against MGM for infringing the copyright of a 1963 screenplay upon which she says the movie was based. The younger Petrella first launched her $1 million suit in 2009 after the release of the latest DVD of the 1980 Martin Scorsese film on the life of boxer Jake LaMotta. MGM claimed that the doctrine of laches barred any such legal action. Separate from the statue of limitations, the doctrine is meant to prevent lawsuits being filed after long delays.
Just eight days before X-Men: Days Of Future Past opens everywhere on May 23, the mutant team’s co-creator Jack Kirby will be getting some marquee attention from the Justices of the Supreme Court. Attention that could lead to Marvel and Disney arguing in front of the High Court against the Kirby heirs over the rights to the numerous characters from the X-Men to The Avengers and the Fantastic Four and many more that the comic legend co-created.
On May 15, the nine Justices will debate in private Conference whether or not to get involved in the Kirby heir’s 5-year attempt to gain back the rights from the media giant. If the High Court agrees to the March 21 filed petition from Lisa Kirby, Neal Kirby, Susan Kirby and Barbara Kirby, an oral argument date will be scheduled later this month for the SOCTUS’ next term.
Marvel and Disney are probably shocked that after their successive victories in lower courts this case is even been discussed in Conference. They certainly didn’t seem to take the initial petition very seriously. On April 24, the media giant’s attorney R. Bruce Rich filed a waiver (read it here) with the Supreme Court. The lawyer from NYC firm Weil …
This is a risky exercise. Jurists often like to play devil’s advocate when they question lawyers in open court. But the comments that Supreme Court justices made today in the hearing pitting Aereo against broadcasters likely will provide the only clues about what investors and others should expect ahead of a ruling expected in June. Guggenheim analyst Paul Gallant says he senses that “a majority of Justices would shut down Aereo if there were no potential implications on cloud storage.” But if that’s an open question, then “our guess is that the Court will find some way to thread the needle and say that Aereo is inconsistent with the 1976 Copyright Act, or send the case back to the lower courts with some negative (but not conclusive) commentary toward Aereo.”
The basic debate: Aereo says it’s merely a technology provider that enables subscribers to privately exercise their right to view signals from the free, public airwaves. Broadcasters counter that Aereo steals their content by packaging and reselling programming to the public without paying.
Justice Sonia Sotomayor: Why aren’t they [Aereo] cable companies?… I’m looking at the – everybody’s been arguing this case as if for sure they’re not. But I look at the definition of a cable company, and it seems to fit. …
Justice Elena Kagan: If Aereo has the hardware in its warehouse as opposed to Aereo selling the hardware to the particular end user, that is going to make all the difference in the world as to whether we have a public performance or not a public performance.
Chief Justice John Roberts: You can park your car in your own garage or you can park it in a public garage. You can go to RadioShack and buy an antenna and a DVR or you can rent those facilities somewhere else from Aereo. They’ve – they’ve got an antenna. They’ll let you use it when you need it and they can, you know, record the stuff as well and let you pick it up when you need it.
UPDATED: CBS investors apparently became more comfortable with the Aereo news from the Supreme Court as the afternoon wore on. The broadcasters’ shares edged back into positive territory, closing +0.1%, and narrowed the striking gap with the S&P 500 that opened right around the time justices began questioning lawyers in the case.
PREVIOUS, 11:00 AM: Can’t say for sure, but the timing leads me to think that there’s a connection. CBS has the most at stake in the Aereo case among Big Media companies because it’s so dependent on broadcasting — including retransmission consent fees which, in theory, could be jeopardized if the streaming service can tap over-the-air transmissions without payment. CBS was up about 0.8% this morning, in line with the benchmark Standard & Poor’s 500, until shortly after noon ET — during the court’s questioning period — when it fell sharply to -0.8% without a corresponding change in the S&P. Shares have begun to creep back up, but are still -0.2% in afternoon trading. This should be a good day for the broadcaster: This morning Morgan Stanley’s Benjamin Swinburne reiterated a “buy” recommendation for CBS, saying that even a loss at the Supreme Court would have “no impact” on existing retransmission consent deals. The analyst added that a loss also “likely leads to a legislative response in ’15 ultimately confirming the networks’ ability to …
If you thought that the legal dispute between Aereo and the broadcasters was combative, it paled compared with today’s one-hour hearing at the Supreme Court. In oral arguments before the nine Justices, both sides took some heavy blows, but the Barry Diller-backed streaming service definitely took one to the jaw from Chief Justice John Roberts. “Your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with,” Roberts told Aereo attorney David Frederick during the presentation before a packed chamber. “There’s no reason for you to have 10,000 dime-sized antennas except to get around the Copyright Act,” he said. Added Justice Ruth Bader Ginsburg: ”You are the only player so far that pays no royalties whatsoever.”
Coming after arguments from the broadcasters by former Solicitor General Paul Clement and current Deputy Solicitor General Malcolm Stewart, Frederick started off his presentation by saying “this is a reproduction rights issue masquerading as a public performance case.” The Justices didn’t seem to buy it.
Despite Roberts’ comments, Justices Sonia Sotomayor and Stephen Breyer were by far the most inquisitive during the presentation with concerns over cloud computing taking up almost as much time as the copyright issue at the heart of the lawsuit filed by an armada of Big Media companies — including CBS, Disney, Fox, and Comcast’s NBCUniversal — as well as the federal government. “I don’t understand if the decision I write for or against you will affect other technologies,” Breyer told Frederick. ”It’s not your problem — but it might be,” Breyer deadpanned to a big laugh from the courtroom.
“I think the cloud was the winner today,” MPAA boss Christopher Dodd said after the hearing. “But I think the Justices see Aereo as gimmicky and want to address that.” Dodd’s comments mirrored remarks made by Clement during the presentation.
During Clement’s three-minute rebuttal at the end of the hearing, Sotomayor directly asked the lawyer about the consequences of a potential ruling. “If it’s just a gimmick, then they deserve to go out of business and no one should shed a tear,” Clement said of Aereo’s prospects should it lose at the high court. The lawyer added that if Aereo’s technology was innovative, it would persevere in one form or another regardless.
Said Frederick in a statement after the presentation: “We’re confident, cautiously optimistic, based on the way the hearing went today that the Court understood that a person watching over-the-air broadcast television in his or her home is engaging in a private performance and not a public performance that would implicate the Copyright Act.”
Originally scheduled to start at 11 AM ET, today’s hearing was pushed back 30 minutes because of readings of other opinions from the bench. In the sundrenched chamber with its strategically lit red velvet drapes and engraved marble walls, almost all of the nine Justices asked questions from their high-backed chairs. As is common, the only Justice not to ask a question was Clarence Thomas, though he did take time during the presentation to whisper asides to Justice Antonin Scalia.
The court likely will rule by late June.
Will the Supreme Court back upstart tech company Aereo in its bid to short-cut broadcasters with a service that provides an Internet connection to over-the-air TV signals? Deadline Legal Editor Dominic Patten is headed to Washington D.C. to cover tomorrow’s oral arguments before the Court. Here’s a quick primer on the legal aspects of the case and what to look for ahead of the court’s final decision, which is expected by July. (Please note that in the time since this podcast was recorded, the Supreme Court has agreed to allow the U.S. Solicitor General to join in the oral arguments on behalf of the broadcasters.) For a view on the potential business-side impacts of the case, make sure to listen to Deadline Executive Editor David Lieberman in his weekly Deadline Big Media podcast from Friday, where he and David Bloom look at whether the Aereo decision will upset the broadcast apple cart should Aereo win. Also, Lieberman and Patten collaborated on a series of stories this past week looking at “The ABCs of the Aereo Case,” beginning with this piece explaining what Aereo is.
UPDATE, 12:48 PM: Looks like three isn’t a crowd for the Supreme Court when it comes to the upcoming Aereo hearing. The high court has decided to let the Solicitor General’s office participate in the one-hour oral arguments session between Aereo and the broadcasters Tuesday in Washington D.C. “Motion of the Deputy Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument GRANTED,” said the SCOTUS yesterday. The granting of the motion comes more than a month and a half after the federal government’s top legal office filed a brief supporting the broadcasters in their showdown with the Barry Diller-backed streaming service. That was followed by the Solicitor General’s office requesting the time to directly make its points. The broadcasters have given the federal lawyers 10 minutes of their time. Though the broadcasters have a couple of former Solicitors General on their team, the current Solicitor General will not be involved; before he took his present post, Donald Verrilli Jr. argued Hollywood copyright cases before the SCOTUS and hence has recused himself. The likely candidate will be Deputy Solicitor General Edwin Kneedler, who submitted the March 13 motion.