i know as mr. mchenry brought in theier yesterday "wall street journal," we have the 4 employees under investigation. obviously raised some concern 42%makes sense while only think the organization leaders have honesty and integrity as

values. i want to follow up on a asked.n mr. mchenry have any of those for referrals criminal investigations? >> i'm going to need to defer to general bus these are in his hand much. >> but i'm asking you. comment on it. >> do you know? >> i'm not -- asking if you know, do they've been refer toward prosecution? >> to my knowledge, thoar in the stage.gation >> okay. one the employees placed leave? >> i can't comment. you comment on whether they're placed on leave or not. >> two of them have left the bank. >> oh the two that didn't leave, are they still drawing a paycheck? >> this is investigation -- i'm told by counsel i'm not to comment --

>> whether they're drawing a paycheck or not? not allowed to comment on that. i'm just told by counsel i can't that.t on >> there's a little concern reauthorized we the bank. i know some have presented it as institution that should have great on top and provides opportunity and is a pristinely run organization. tulips. roses, it's a beautiful thing. some of the concerns you might have her earlier are concerns that i imagine don't surprise you. we've asked that you do an impact analysis on are activities. testimony that you have out of 17,000 only 24 of them have you done the economic impact analysis. wander why we sit back in

surprise and the why do we want reauthorize a institution that can't follow our directions from congress? anwell, congressman, we do economic impact review of every transaction. not every transaction warrants a full indepth full blown -- >> at 17,000, do you agree with that, you only did 24 out of that? >> i don't know where the 17,000 number comes from. with the 24?ee >> i don't very a precise number. if you'd like to know the process, we do an economic analysis. when on the surface it says there is more to sles -- my understanding that ae chairman's been given large amount of discretion on whether this bank is reauthorized or not. and it think it with a be good fully level with us,

you don't dance on questions, anddon't hedge, but honesty being forth right might get to pie into few of us to significant reforms. but when you come in and dance us, and henl, that makes me vote for reform i don't trust that you're going to do it. tell me lot of folks this has no economic or no consequence to the taxpayer. job growth, doesn't have an impact to the taxpayer. with that, the xm bank? >> no. >> thank you. from 1928u know that to 8 l on average we bailed out about 330 million a year, and '92 to '96 it cost the taxpayer almost 10 billion. is not cost-free to the taxpayer. that, acan respond to

transfer was made because reform --edit >> listen. >> then. >> my time is almost up. you are not convince me that i for re,ote for reforms you have not convinced me. and forth honesty rightness, with this committee. and i yield back. >> time has expired. the chair recognizes the gentleman from washington, mr. heck. >> before i begin i ask consent to submit for the record three statements in externalrom organizations most notably including a statement of the along withcommerce statement in support of hcht the bill i spruced last night. >> without object shun. you.ank berg.ack

how many audit have you had at sinceency reauthorization? is nine. that.uld probably confirm >> they all completed, to my knowledge, seven have been fully completed and two are in process. time i'dair at this mitunanimous concept to sib a list of all the requirements and reforms as include haded the and theiration act state us as well. >> without on vehicle shun. you.ank mr. hochberg, there's a l. today aroundhere pursuedorms should be with respect to the funding or of wide body aircraft. at no point during the many today did ie here

actually hear a specific proposal from delta airlines, what i wasthought interpreting was let's just prohibit them. if e were to do that, what in your opinion would happen in the market place? >> well, my concern would be weess it's multilateral, would be unilaterally disarming and putting the sale of boeing the thousands upon thousands of jobs that are jennered from that manufacturer risk. it's as though the honda dealer didrs few financing and toyota dealer says cash only, there will be a tilt towards vendor that provides financing. so if congress were to prohibit it would financing open up that market to airbus, and the competition would still u.s. carriers because the only difference would be foreign carrier would be flying

more airbus planes. i in the last two minutes have i'm going to ask you to stop, breathe, and then paint a picture. lots of surface projections made about what we wake up on october 1 and your doors are shuttered. as a long-timeu former business person, former actinged amy straighter of the administration and as the president of the export import bank, look just october 1 and 2, but what is the long-term to america's manufacturing base? our economy,to what happens to our position in the world? meez.the picture for us, >> i will paint the picture and i would include something that's man,ently joar looked kk and that is foreign companies that are looking to invest in to make products for the u.s. market, but all of them have said to me when we here it also to export from

the united states. said weof them is there would not be open new manufacturing facility in the united states if there was no possibility of sphoarlt for our export navment would be too risky to en tract u.s. manufacturing here. solar, a company that solar panels, they were costing pretty much the same. xm budget he would probably shift more manufacturing to malaysia. we'll see some changes if that happens. the threat of it is enough the manufacturers think twice if this is going to be op again, whenen continually, there's so much uncertainty. >> the breft amount of time we i appear fascinated

to know how you have accomplished such a will default loss rateuch a will k. you express that in 25 seconds? how do you get that? all, 80% of the transactions on our books are collateralized, we have security for it guarantee by a we have anation, so high degree of collateralization and security. a good job of underwriting and an ex-len job to following up on critics and people sure staye mo are aren't current. >> the chair now recognizes the jersey,n from new our --rett sherman of >> i will defer if you are another member first. that case the chair will recognize the gentleman from kentucky, mr. barr. >> thank you, mr. chairman. hochberg, i appreciate

you coming to my office and talking to me about a month ago, and i think you know what my are with concerns reauthorization of xm bank. abouts been a lot of talk jobs, and i'd like the talk a particularobs in jobs be situation in kentucky. the obama administration's climate policyings, carbon tim pack that those policies have had on jobs particularly in eastern you mayt, and as december 3, i sent you aler expressing my concerns supplement am high intensity projects, guidelines that your thatadopted that would, explicitly provides that your bank will not provide support high carbonfor

intensity plants and you define your agency, your bank, defines a high carbon and texting than as any plant that uses cole as the source of heat.llers of power or my own state of kitchen is the third plarnlest cole producing the country. we've lost over 7 now coal jobs over then kentucky last two years as a result, direct result of the regulatory of this administration. we're talking about jobs, you to talk about jobs. so thatber 19 in nons letter, you said that the revisionings and the adoption of thee guidelines was for purpose of harmonizing xm bank with the administration's policies.ange my question to you is, why on if you're with creating jobs, why are you aligning a job killing

agenda? >> congressman, we've op had time to meet in your office and 1992, xm bank has had to take into account credit worthiness an export as well as the environmental impact. in by congress 22 years ago. experiment al criteria for all ebbing for since 1929. a new-fangled policy. >> i would just submit that if thenis really about jobs, xm would not have adopted these guidelines. say int to know, and you your letter here, you have reviewed this expensively with administration and i want to the administration to d you work with in adopting and if xm would this bank'sndoning

participation. in the, we are active export of coal mining equipment, ofare active in the export cole coal. regulations only apply to a cole fired power plant. understand that. let me reclaim my time i. would theit also, if administration is concerned about the environmental impact, them whether you're doing by discriminating against cole fired power projects is you are ex-polluting u.s. technology much theseportunity projects will be funded, but they will be funded by china. interested in supporting environmental sensitive policies then support the technology to build and of millions ofs people from energy poverty across the globe. want tomaining time i share a story from a constituent. when we talked in my office, you of a malle example

business in my district that fbs financing.m the reason we stopped working with xm was the cost and complexity. do you have a pons to that? >> congressman, we are asked by dos committee to continue to a better job of risk management, a better job of oversight.

i hope to get it right. we get tilted in one direction we'll adjust that. expired.as the chair now lengths the gentleman from new jersey. of the capital markets subcommittee. forhank you, mr. chairman, your interest in promoting job creation in this country and hearing. very timely so this committee is very lending with government programmings, very familiar with government lending programs that have gone belly up. including fanny and freddy. insurance andlood f.h.a., you know their numbers. as such i've come to believe that over time when proponent of government lending programmings out the that they make money for the federal government, i tend remember the old adage that there are no such things as free lunch eggs. so we have to look at it deeper

than the talking points that we panel.metimes on the according to the congressional next 10ffice over the years, xm's six largest programs will generate $14 billion on the government's standard accounting framework. applies toen the it the private sectors accounting method, that issue was discussed with mr. anderson in some detail, and i appreciate him of that. understanding sector standards, the bank is projected to lose about $2 billion. so between 14 bomb, i can do the math in my head. swings andbillion that's suggests there's a lot of comes to xm.hen it the currentve that

accounting standards truly and honestly and fully account for the risk, the risk to the taxpayers of the bank's lending programmings? >> i do, congressman. my difference between, as understanding of fair value, and thatnalysis c.v.o. did, in swing assumes one large giant assumption that i believe is not true. and that is we would adjust our fear fees. our fees. we could adjust our fees make sure that we or --t a break even >> that's the only difference on it.r appraisal of dr. el men dorf, can you elaborate. >> the only estimate we've done take the structure of the programs, as they currently are so they take the fees as they currently stand, they take xm's

banks projectionings of the on.very rates and so if the programs were to channel, withthe would end up possibly different estimates of the cost. >> so when they talk about the fees changing, those fees are on current loans or future loans? point much view the fees that are currently in were to chargenk different fees then we'd have to see how that affected not just the direction paintings but also how it would affect the composition of the for aring would occur from kp bank. so we have to look at the whole structure. c.v.o. does on other programs, would you commit to evaluating your loan portfolio a fair value basis?

>> is the microphone on? >> sorry. actuallyst asking that you would do your books as other doesies do, as the cbo their analysis on a fair value basis. requirednow i'm because congress, the law of the land is federal credit reform in 1990, so that's how we keep our books. youran pick and chootion accounting system. that's the accounting system when we do our annual audit. think youirman, i wanted additional time? >> yes. >> if not -- the 30 seconds here. you have used some apocalyptic language recording happen if the xm was

not reauthorized. for the record, i believe you sid it already, but true 98.4% of u.s. exports are financed without your bank? correct? only 5%so correct that of all transactions of xm are to meet counterveiling subsidies? it's from your records. 5% of the transactions of the classified these, are to meet other subsidies. competitiveness. >> i can't remember or recall if one of thet

criteria's meeting foreign competition from other agencies, in 2013 it was 38%. records hking at my here, in to 13. that's dollar volume. correct? >> that was transactions by purpose. transaction basis. >> that's on a transaction basis. gentleman hase expired. the chowr now recognizes recogne from michigan. >> mr. chairman, i'll yield some of my time to you if you want to muchnue that line questioning as i believe is that a line that needs to be explored. i thank the gentleman for yielding. so mr. hochberg, we've her a lot you yourself, have unilateralrase,

disarmament. over 98% of we have all u.s. exports not being financed, again, any reading of tor report and i will try get the page number, was that it was 5 policer of transactions roughly a third of dollar volume, to so-called revel the playing field all in all it's a fairly small percentage of awe u.s. exports. you also said that the bank on needyesterday based and where they cannot find it in the private sector. i didn't have the transcript in me.t of their., boeing, based on notnced sheets, can they find credit in the private sector? pin?at your

>> well, it's not g.e. for boeing, it's their customer. so used thateing case example, i waws was in africa, it's kenya airlines or either yoap kra airports'. the signs of their balance them to sten't shl rez. >> they're not a bank. to manufacture and put mope into arms. >> capital boeing doesn't have a finance arm. extend that of the again.requirements and, >> what's a global timer. >> franly,. >> what's an ebb for need? trying to say,ing mr. chairman, is that broing when they say. the other thing we have to buffser is we have air

fund their credit agencies, particularly in france. germany and don't have the try kier yeah we have. >> g.e. capital has match a hill trun -- trillion in assets. boeing has 92 billion in assets. need thatey have a apparently you have to fill. so you're telling me again some of the largees companies in america can't finance their customers' desire for their products, correct? >> they cannot, they're not in a position to provide 12-years financing -- >> i wonder what they're doing with a half a trialup dollar balance sheet. mr. hockey berg, a couple of times you've tacked about and right shutdown

think said i believe this is something as harmful to the something tosume be avoided. talkednderstand you about the shutdown earlier today? >> i talked with it in terms what was the impact was on exports and small businesses that we work w. from yourtake away answer was debtry mental, is that correct? >> that's correct. >> so if congress decided to sue continuingnt a clean resolution and he refused to because it did not renors the xm bank and the ended thetion threats government shut down, would you counsel the administration do that?not to >> i'm in the in a position to make that recommendation on my job is toh manage the bank -- >> you just said shut down in your yerl -- earlier testimony something i think you thought was negative to the economy. so the xm bank

would be something that would be extraneous, potentially attached to a clean reorganization to the government open. you have no opinion on this matter? to, sir, waser it the threat of a not the bank or sirm my reporting what i heard when i theirto exporters and customers. >> so do you have no opinion on the matter or you refuse you to share your opinion? >> i haven't given it any thought, sir. >> fascinating. >> three seconds. the exact quote nation we are the privatehe, when sector cab or won't. the question mark i wrote the really, doesn't always seem to be the that is the case. thank you. gentleman has expired. the chairman recognized as the from indiana,

mr. messer. >> thank you, mr. chairman. my time back to chair tohair to continue your inquiry. the judge for yielding. hochberg, i would have you take a look at fib b1 pang transactions by our 2012rom ,ompetitiveness report, page 1s 149 where you list the financing the fact that vote, no private sector financing was available. and that which says meet competition is, as i do the math, by number of transactions about five%. would have you take a look

at some of your report. have 2013 here. i did not bring 2012. >> well, thank you, but we just got 2013 yesterday. so this is data that we have. the properhatever number is, i appears to be a somewhat smaller number. again about the so-called level playing field, listening to some of those who of thethe other side debate. you would think the only way one takee competitive is to taxpayer money and subsidize fortune 50 companies. dr. al man dorf, we're going to all ofc you back into this. but i believe the latest february budget and economic outlook said that the affordable care act, also known as obamacare works reduce the

naming of faux time employees the would exist other 10-year budget window by 2.5 million. c.b.o. still hand by that report,. those are from jekses and we stand by those estimates. morerhaps we quo make them exift would be to retail obamacare much here something else that makes people competitive. "washington journals," now some competitors have a higher wage scale, some have a scale.age the has called for the minimumng the federal wage, according to february could reduce, that employment by half a million, but could be as high as one million. is a according to a fib, report. c.b.o. stand by that report?

>> yes. i rememberthink if right, just about every dack on committee koa sponsored their reduction in jobs of a million, plans may might that.o rethink we've got the top five pro is toed rules that are coming down pike. most women is coming from each p.a. the impact on the park, fish ebb sit standards from loaners. we had the highest corporate tax world,f any nation the friends who to sink takes tax mayer money. are in the times that remaining, he's another question that i somewhat disturb to me him that makingppears that i were

money and guaranteeding the net to some nation states veilaccording to the worst laters of human price, dickic republican of congress on e, why the government authorities have sought to silence disisn't with threats, violence, laster human rights act tests? freedom from for tour, another group, calls it the rape capital of the on behalf of yet the american taxpayer, extended oneu have of the state owned prir prices a credit. you've also intended the lines credit to russia. now that the ukraine has been absorbed. jair year sire intoan.

what you do with taxpayer money is something else. taxpayerou taking money and squintly loaning it to nation stays that are some the abusers on rights the planet? >> well, mr. chairman, the cited goes to the 1980's, it over 30 years ago. day says 2012. >> every transaction the state ofartment gives a clearance human rights tonight k thans and we don't make the transaction has.the state department so that is current practice. about what happened in the st 8 #'s, i can talk currently. state department gives us a transaction. every

>> i might say it's sometime to showing a limb independent matters.in these the gentleman from indiana, time has expired. members the thank our who testified today. additional questions will be the witnesses, i ask to meez respond promptly without objection. will have five days within which to submit from a records. that hearing stands adjourned. 3w4r

>> speaker boehner said he's planning to file a lawsuit against president obama over his use of executive orders. we'll hear from speaker boehner we'lln c-span much then get reaction from the white house to the possible lawsuit. the supreme court ruled on a couple cases beds. the court ruled that the company aereo was in violation of copyright law by signals toraf tv subscribers without paying a second fees, and in case the supreme court said phones generally cannot be by police without a barnt. warrant. >> coming up on the next "washington journal," senator johnson of wisconsin on the u.s. strategy in iraq and other news. then congressman jeff reese of about his imgrab voice act. legislation to provide legal to uncompanied moirns.

everygton journal is live morning on c-span speaker boehner spoke to reporters about his plans to file a lawsuit against president obama regarding executive actions, saying the president has not faithfully the law. this briefing is 10 minutes.

>> the situation in iraq continues to worsen. toward baghdad continues. the president has a number of options in front of him, which if part a larger regional strategy i would support. is whether the president will make a decision in time to reverse the terrorist momentum as it sweeps toward baghdad. the president is fond of saying iraqis consult this problem. but we can't pretend that this our problem as well. alowing terrorists to gain save haif from which lauren attacks on americans and our allies is a serious problem. we've got to be engaged in iraq, national interest to reverse the momentum and the spread of terrorism. retroating from the world stage

in my view is not an option. it innocent undermines our more chaoslead to and puts americans at rick. problem.art a bigger the economy continues to struggle, the president has no for economic growth and won't push his party to act on the goodied ideas that we've passed the i.r.s. talks opponent, and the white house won't lift a finker therovide the truth to american people. the v.a.'s abuses continue to be and we still don't sew a long-term plan for reform at the v.a. not only does the remember me brags about it and about his willingness to it unilaterally. first this administration makes the wrong decisionings, then the american people the straight answers. instead its arrogance and

sense trite down the line. i think americans deserb weather dollars. our energy focus this week is a good example, as all of our helpionings are to families who are still asking the same question, where are the jobs. .inaudible question) >> you know, the constitution clear that the president's job is to faithfully execute the laws. the president has not faithfully executed the laws. system of government outlined in our constitution, branch, theve legislative branch and judicial branch.

to sco, sos its job does the president. and in, when there's conflicts between the legislative branch and the it's, inative branch, my view, our responsibility to stand up for this institution in serve.e not about impeevment, this is about his faithfully laws of oure country. >> in three days there's been three separate hearings on the i.r.s., we've heard from theist economics err, the held clear to, said it's him they broke the law, so the notnistration has responded. what else can the house of representatives do to pursue the i.r.s. case much. l. committees that have bond working on this are at least one of the committees have together a letter, frying to get into what i would call the

ibs of what happened and who else may be aware of in. the trackdown any possible way remailed may be tree treefd. any suiturt action or on that? calling for a bill, a special prosecutor, asked for prosecutor, those requests have fallen on deaf ears at this point. >> speaker boehner -- >> right here. >> mr. speaker, do you think any the paid funding extension house of passing the house. and know the house ways means committee is working on a package and i expect that after

the district work period we'll see such activity there. >> briefly what sort panel do get through -- >> we'll let the ways and means work.tee do their >> you opened up with iraq, so i'm curious if you have any suggestions what to president should do there? overarching stream to deal with the growing threat of testimony. a 58% increase. in the number much terrorists there.e out and intending to inflict harm on in and abroad. there's a growing problem. of thatby one part problem. that's why i was called for the theident to outline strategy to deal with in overall threat that we face.

>> if you look at our tax code, used toems that are produce goods typically are fashion.e in some whether it's the cost of therials or whether it's machinery that's depreciated over some period of time. it's by and large over the last 50 or 60 years, has en couraged more investment in our economy. can give you the tax side of it. the, it wask at originally designed to help with

us unfair competition in the marketplace. atsome places you look government subsidies going to airplane manufacturers, as an example. and i think for a long time the export import badge provided some equity to u.s. manufacturers. having said all that, there's a big debate going on in our toference and we'll have sort our way through this. to help facilitate the sorting through of this so get oh an outcome. you said or two ago that you were interested in hearing what the president's policy was. don't you feel that you have

some responsibility to say here's what i think we should do and what the president should do. is this districtly in the president's -- more increased u.s. activity a year ago. when the isis forces came across the iraq border and gather territory, i called on the administration to act. and it's not my job to outline the president what tools she use.d use or not it not my job to outloin a strategy for the president when comes to the overall fight against terrorist. so this is the president's responsibility. he'selected president, elected to lead. >> you said a few times that you to --

have said what they want to do. what does the gentleman from southern ohio, what do you want to -- >> i'm not going to answer the question. on tried to do this immigration. listen, it's the guy who is the trying to get to a discussion to get to an my cardsi think laying on the table tilts the balance. i don't want to do that. i want to get our members to awe comfortable,hey're whatever that is. >> you are in a different position now from when you supported it. what different position are you in now that you welcome back in time? >> i didn't recall the 2012 vote a this, but there was bipartisan effort to do this. i think more than half our and is supported it support it. given where the export import given theday,

accounts of what's gone on down there, in terms of kickbacks and other things, it's clearly time all the members to take a serious look at this. of immigration, you working group to deal with the problem on the border with this influx of central america. what exactly do you expect that working group to do? working group was put together because we've got a group members who i think are qualified to understand what's happening down there. to help our members understand the factings are as opposed is.hat some of the fiction to suggest to the administration things that we think can be done or should be done. and if necessary make suggestions to our members about changes in the law that might occur.

it just seems to me, given the crisis and theis fact that it appears it going to continue, that we ought to get a better handle on it. >> have you asked them to report back to you in a certain time so to decide what to do? >> i've given them some suggestions. going to help for them. information >> what are you planning to challenge in court? make that decision i'll let you know. to theker boehner, back lawsuit, given how long it will take for a lawsuit to make its the courts, the fact that we're a divided government toht now, do you expect

change the president's behavior or is this more about ener your base? >> no this is about defending serve.titution we if you look back over history, betweenbeen a movement the powers of the executive branch versus the inherent the legislative branch. and what we've seen, clearly last five years is an effort to erode the power of the branch.ive i believe the president is not faithfully executing the laws of country. and on behalf of the institution constitution, standing up and fighting for this is in of best long-term interest the congress.

>> now we'll get reaction from the white house about speaker lawsuit plans to file a against president obama over his use of executive orders. of what spokesman josh earnest said at wednesday's briefing >> speaker boehner plans to file a lawsuit against the president. reaction?ur >> we've heard the president talk many times about his to working with congress much it's his preference that we would be able opportunity to with democrats and republicans, to put in place policies that would expand economic opportunity for middle class families. this is the focal point of the president's domestic agenda, and something we shouldn't have to

to convinced republicans should be a priority. said is president also that where necessary he'll use to executive authority advance the cause of expanding economic opportunity for the strengtheningnd our economy overall. a long type we've seen republicans block progress in congress, a range of bills that would promote economic strength. but in this case it seems that shifted theirve opposition into a higher gear, frankly it's a gear they didn't existed.iously the fact that they are considering a taxpayer funded lawsuit against the president of the united states for doing his stepi think is the kind of that most americans wouldn't

support. looking, i any what most americans would say is they want their leaders in make progress. to on behalf of the american people thati'm not suggesting that is easy bipartisan progress in firm is difficult. but just lapsing into these so longctics that for have been employed at the legislative branch and now are to be apply at the judicial branch, is frankly not to go.ht a weigh >> do you know if he told the lawsuit wasat this coming? >> i am not able to speak with a of detail about what dine of --versations we typically don't read out in detail much of the conversations that are had when they do occur between the president and speaker of the house. you morecan get information i'll look into it.

>> were awe wear this was going happening before the speaker' announcement today? >> i'm not aware of that, but into what theook white house got any heads up with this. >> a senate panel will look at to try and reduce the number of rapes and sexual soughts on clean campuses. that's live from the health education and labor committee today at 10:00 a.m. eastern on c-span 3. later in the day, president obama will hold a town hall minneapolis, we'll have live coverage start, at also on c-span 3. that all men are created equal. are denied equal treatment. believe that all men have ablein unable yen rights -- rights, yet men americans don't enjoy those

rights. are intielted men to the messings of liberty, yet millions are being deprived of this is blessings. not because of their own because of the color of their skin. beddedsons are deeplile in history and tradition, and the nature of man. can understand without rancor happened.how this all but it cannot continue. our constitution, the foundation republic, prevent it. the principles of our freedom it.id morality forbids it. and the plow i will sign tonight forbids it. >> this weekend, the 50th civilrsary of the st 64 right act with president johnson's address to the nation

andthe signing ceremony, later hear from lotterrers who covered the debate -- reporters had covered the debate in congress. >> the supreme court ruled wednesday that startup company air yo is in violation of copyright law by streaming broadcast video without paying fees. the company uses antennas to capture from air waves and streams it to users laptop and mart fonse for $a fee. >> we'll hear argument next in case 13461, american broadcasting companies v aereo. mr. clement. >> mr. chief justice, and may it please the court -- aereo's business model is to enable thousands of paying strangers to watch live tv online. aereo's legal argument is that

it can make all of that happen without publicly performing. but congress passed a statute that squarely forecloses that rather counterintuitive submission. because although the internet and the thousands of mini antennas are new, the basic service that aereo is providing is not materially different from the service provided by the cable company before this court in 1969. where are they n- >> the -- >> everybody has 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 a facility located in any state. they have, whatever they have a warehouse or a building in brooklyn. the receipt, that receives signal transmissions or programs broadcast by television broadcast stations. you're taking the signals off of -- >> they're taking signals, right. >> i'm sorry, they are. makes secondary transmissions by

wires, cables or other communication channels. seems to me that a little antenna with a dime fits that definition, to subscribing members of the public who pay for such service. i mean, i read it and i say, why aren't they a cable company? >> well, justice sotomayor, a couple of things. first of all, if you're already at that point you probably understood just like a cable company they're publicly performing and maybe they qualify as a cable company and maybe they could qualify for the compulsory license that's available to cable companies under section 111 of the statute. >> this gets it mixed up. >> we have to go to all of those other questions, if we fine that they're a cable company. we say they're a cable company, they get the compulsory license. >> there is lots of conditions on the compulsory license. i think the first place, the reason that we haven't been debating whether about whether they're a cable company, they

want to be a cable company. they have a footnote in the brief that make it clear. they are not a cable company in their view. they don't want to be a cable company. that is because, cable company might potentially get you compulsory license but bring as lot of obligations being a cable company. >> that's why they don't want it. >> exactly. >> that isn't the question. >> well here's the other thing -- >> question is, are they. >> i don't think they are. that is really ultimately a question under the federal communications act but here's why if i could i think, mr. frederick will certainly speak to this if you want him too, i think the reason they don't want to be a cable company, i think their basic business model would not allow them to qualify for compulsory license any ways. >> i would still like to know the answer to the question in your opinion. of course if you want a reason i will give you my reason. if we take the public performance, maybe we run into what professor saw as a problem, why is it, what used to be a called phone know graph record

store that sells phonograph records to 10,000 customers, giving a public performance? it seems to fall within that definition. if it is, there's no, no first sale doctrine and it's a big problem. so we could avoid that problem. that's why i'm very interested in the answer, not just what they want. >> well, i don't think they are ultimately a cable company and we could debate that question but it is not the question before you so maybe i can give you some comfort about why you don't need to decide that question. >> because my reason for wanting to decide it is what i said. and what you have read in their briefs, they in their supporting amici has thrown up a series of serious problems not involving them, like the cloud, which the government tells us to ignore. and many others which make me nervous about taking your preferred route. so that's why i was interested

in this question. >> but justice breyer, i think it is very important to understand, even if they're a cable company it doesn't make all the problems go away. they wouldn't be a cable company by very virtue they want to point to, user specific copies i don't think they qualify for the compulsory license. i think best way to avoid your concerns take them on directly. the reason the record company is not involved in public performance because it is not involved in any performance at all. that is different of course from an online music store which not only provide a download of something but actually performs it and streams it and allows it live. that is a basic distinction that is not only recognized by the second circuit in the as scrap case but -- as cap base case but real world the way the services are structured. if you provide download of music get services license or reproduction license. and streaming of music where you have contemporaneous live performance then you also get a public performance license. and -- >> is your definition, just

breyer has already asked you, says he is troubled about the phonograph store and the dropbox and the icloud. i'm also worryied about how to define or public performance or the performance of a work publicly which i guess is the better way to do it according to you. how do i define that so that someone who sells coax seal cable -- coaxial cable to a resident of a building is not swept up as a participant in this or, someone who, sort of passive storage advisors? this is really hard for me. what do i do to avoid, what do we do, not me, what does the court do to avoid a definition or an acceptance of a definition that might make those people

liable? >> let me try to take those, those are two different examples and i think answer to both of them is somewhat different. the provider of coaxial cable, if it is just a simple sale of the cable is not performing at all. and so i think if you're somebody and all you do is take as piece of hardware and sell it once and for all to a user, then the user may be performing with the equipment but you're out of the picture and that's different from an ongoing service like a cable company or like aereo, who still owns all these facilities and they're providing through wire transmissions these performances on ongoing basis. >> before you get to justice sotomayor's second half of the question, but something more along the lines of providing hardware. suppose a company just behave the antenna and a hard drive, that is what they sold to the user. and the user was able to use the antenna and the hard drive in her own house or apartment and in order to get all these broadcast programs. what would the, would that be a

performance? >> i think the end user would be doing the performance but it would be a purely private performance and i don't think the person that sold them the hardware or really anybody else if i understand your hypowould be involved in a performance. the answer to these hypos, this is not something i'm making up on the fly. it is right there in the text of the statute? that really does depend where the hardware is. in other words, 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. >> well, and again i think that goes to what i was about to say which is, that is not because we like one better than the other. it is because of the text of the statute congress wrote. one of the ways you can public perform. they start with classic performance, right? singer at concert hall. they sold tickets. they say, wait, also a public performance if you take the singer's performance and you transmit it and they're singing over the airwaves and all sorts

of other ways, if you transmit it to the public. the definition of transmission then is communicate it from one place to another. so there is a geographical aspect if you will that built right into the statute if you sell somebody hardware and all they're doing is transmitting it to themselves, at their home, there is not going to be a transmission that is chargeable to the person who told you the haired wear. if you provide an ongoing service -- >> you think in my hypo, it's a performance but a private performance? you move the hardware and it becomes a public performance is that it? >> it become as public performance on behalf of the sender but still would be a private performance on behalf of the receiver. that is one thing that is really important to get in mind, is that in this statute as to the public performance right, there is nothing particular i anomalous about a single transmission that from the sender's perspective it's a public performance but from the recipient's perspective only allows for a private performance. if you think about the classic cable context which is what congress is trying to address in

1976 with the transmit clause you have the cable company and they're taking a performance off of the airwaves and they're transmitting it to all the enusers. now the cable companies clearly performing to the public but that same transmission is allowing each end user to turn on their television set and -- private performance. >> we're playing a license for no reason? >> i'm sorry. >> hulu is paying a license for no reason? they sold me a piece of equipment? >> i don't know all the details of that particular piece of equipment. i'm not sure whether they're paying a license or not. if there was really transfer and there is nobody else providing a transmission, i don't think that just operating the hardware in the privacy of your own home is going to result in anything but a private performance. >> so to the drop in the cloud. >> i think that is different situation. i think ultimately text that allow you to differentiate a cloud locker storage like

something like what aereo does is language to the public. i do think in all sorts of places including the real world there is a fundamental service between a service that provides new content to all sorts of end-users, essentially anything stranger and a service that provides a locker, a storage service. i think if you want a real world analogy off the internet i think it is basic decision, the difference between a car dearly and valet parking service f you look at it from 30,000 feet. you might think both of these things provide cars to the public. if you looked at it more closely you understand, if i show up at a car dealership without a car i'm going to get a car. if i show up at valet parking service and i don't own a car it will not end well for me. >> what is the difference, i didn't mean to interrupt your -- >> so i think, there is a very real way in which you would say, you know, at end of the kay the car dealer is providing cars to the public. valet parking service is not. it is providing a service. >> i don't want to stretch it, why not like a public garage and

your own garage? you park your car in your own garage or park it in your own garage. you can go to radioshack and buy antenna and dvr or rent those facilities from somewhere else from aereo. they have a antenna to use when you need it. they record the stuff as well as let you pick it up when you need it? >> mr. chief justice, that is not implausible way to look at it. this is the way they looked at it in the for the nightly decision. congress in 1976 decided it would look at it differently. it decided if you're providing a service, if providing a service one could reconceptualize that on one could put on their own house, the person provided service ongoing basis and exploit copyrighted works of others is engaged in public performs performance. that is clearly what they were trying to do in the 1976 act by adding the transmit clause. >> second circuit analgized to its cablevision decision. so maybe you could explain to me what is the difference in your view between what aereo does and

a remote storage dvr system. does the difference have to do with the way in which they cable company, that has remote storage dvr system versus aereo acquires the program in the first place? does it have to do with the number of people who view this program that's been recorded? what is the difference? >> i think that the potential difference and both the cloud locker storage and this example i don't think this court has to decide it today. i think it can be confident they are different. here -- >> i don't find that very satisfying. i need to know how far the rationale that you want us to accept we'll go and i need to understand, i think, what effect it will have on these other technologies. >> i had the same question. just assume that cablevision is our precedent. i know it isn't but let's assume that it is. how would you distinguish the cablevision from your case? has it happened here, assume it is binding precedent.

that is hypothetical. >> okay, but, justice kennedy, i would like to answer both your questions that result in cablevision is right but i don't necessarily buy the reason. i think the reason for cablevision is profoundly wrong. let me circle back. the reason there is fundamental difference between the dvr at issue in cablevision and what aereo provides is as justice alito alluded to, the fact there is license in the cablevision context to get the initial performance to the public. so then i think appropriately the focus in the cablevision context becomes, just the playback feature and just the time shifting that enabled by that and in that context if you focus only on that, the rsd vr looks a lot like a locker service where you have to come in with content before you get content out an only get back

that if there were ever anything that should be held to fall within the public performance, this should be. all right? i'll assume that. . as the government says, don't worry because that isn't a public performance. and then i indeed the definition and i don't see how to get out

of it. >> here is the way to get out of it, justice breyer. ultimately the court will have to interpret to the public. >> to the public, you see separate at the same time? or different times? separate or together? a thousand people store in the cloud the same thing as can easily happen and call it back at varying times of the day. and if all they can do, just like the valet car parking service is get back what they put up there i think you could easily say that is not through the public. that is not me coming up with clever distinction. that is the distinctions that's been draw in real world. not all cloud compute something created equal. some cloud computing services use cloud computing technology to people that don't have it and they get licenses. there are other cloud computing that just has locker services and they don't think they need a license. i'm not saying you have to bless what the market has done but it

is profound indication -- >> what if mr., clement, it is not as simple as a company allows you yourself to put something up there? how about there are lot of companies where many, many thousands and millions of people put up there and share them. the company in some ways aggregates and sorts all that content. does that count? >> that, justice kagan, is precisely why i'm not asking you not to decide the clout computing question once and for all today. not all cloud computing is created equal. details might matter f i can take the valet parking service one more time. if valet service rents them out with a zipcar service on the side. while we have the car somebody needs a car, we'll rent it out. that is like the different valet parking service. i like to reserve rest of my time for rebuttal. >> thank you, counsel. >> mr. stewart. >> mr. steve justice and may it

please the court. i like to reinforce two points mr. clement made. the first is what aereo was doing is really functional equivalent of what congress in the 1976 act wanted to define as public performance. as chief justice said, one potential way of looking at this, early companies like it are not providing services. they are simply providing equipment that does a more sophisticated way what the viewer himself can do. it is plausible way looking at word. that is what the court in for the nightly and teleprompter said but congress acted promptly on that. cable services that used one big antenna to pull broadcast signals out of the sky and rerout it to the subscribers those people were engaged in public performances and they ought to be paying royalties. the second thing i would like to reinforce in mr. clement's presentation is that there is no reason that a decision in this case should imperil cloud locker

services generally. as mr. clement was pointing out that the term cloud computing -- >> how about simple tv or nimble tv, which is not quite hybrid? >> i guess i'm not familiar enough with the precise details of the operation but just, let me say in general terms there are obviously services that provide television programing over the internet. some of them are licensed because they recognize that they are publicly performing. if a particular company, for instance, recorded television programs and offered to stream them to anyone who paid the fee, or offered to stream them for free and made its money off advertising, that would be a public performance, because, those companies would be providing content to people who didn't have it. i think basic distinction. one at least defines the extremes that the distinction between the company, whether it be internet-based or cable transmitter that provides content in the first instance and company that provides consumers with access to content

that they already have. if you have a cloud locker service, somebody has bought a digital copy of a song or a movie from some other source, stores it in a locker and asks that it be streamed back. the cloud locker and storage service is not providing content. it is providing a mechanism for watching it. >> my same question to you that i asked to mr. clement, how about if there's a company that allows sharing and that aggregates all the content that is different individual users put up and that in some sense sort of sorts and classifies the content in different way, how about that? >> i think you would have to know both the details of the service and you would have to be making a harder call there about how to draw the line because i don't pretend there is a bright line between providing a service and providing access to equipment. if you look for instance, at the extremes of a person putting a rooftop antenna at his own home, everybody agrees that there, the

rooftop antenna manufacturer is not performing at all and the individual is engaged in a solely private performance. at the other extreme is the cable company, one big antenna, makes transmissions to a lot of people. congress clearly intended to define that as a private performance. somewhere in you could come up with lots of hypotheticals that look more or less like one of the other extremes or somewhere in the middle. it is ought then i cannily hard call where to drought line. so i don't have a good answer for you. >> how do we get out of the example? how do we get out of, what words do i write to get out of this throwing into this clause a music store that distributes via federal express, a device or u.s. postal office or even someone over-the-counter, distribute 10,000 people a copy of a record which they then will take and play it? they have the same degree transmitted something that will

electronically, make a performance of the music. are they, when they sell the record, of violating the display clause? because -- >> because, the definition of to transmit goes on to transmit a performance or display is to communicate it by any device or process. >> yes. >> whereby images or sounds are received beyond the place from which they are requested. >> they are. the sounds are received beyond the place. it requires the person to take the record, put it on a machine, and then play it. >> well there is a separate exclusive right in the copyright act. >> of course there is. that separate, exclusive right has such things as first sale doctrine attached. but if they also flow here, if they all, if this covers them, which is why he wrote the paragraph quoted if this is covers it there is no for sale doctrine that has a lot of

consequences i think so. >> if you don't know -- >> you haven't got something right there, and not going to think about it in two minutes, nor will i. >> i have thought about it and i think the answer is that the word transmit being used in a particular sense. you are correct that there are some contexts in which we would say that a person who sends cds or vinyl albums over the mails is transmitting those. that is the not sense in which the term transmit is used here. it is talking about transmitting in a way that causes the sights and sound to be received. transmission through radio waves, through cable, et cetera. and if there were any doubt about the word transmit, remember, that it is part of the definition of the word perform and ambiguity is in the definitions should be construed in light of a defined term. nobody would say in ordinary parlance that a person who transferred a copy of a record was performing it. >> justice -- >> before you go, and mr. clement made the point that

we would be, if we took the position that petitioner urges, incompatability with our international obligations that is, aereo's view of the public performance rights is incompatible with our obligations of the bern convention and under, what is it white? at pages 44 to 45 of his brief. he says that area area -- aereo view of the public performance right runs straight up against our international obligations and cites a case from the european court of justice and i think another case. >> we haven't made that argument. we believe that committing u.s. copyright law properly construed is fully sufficient to comply with our international

obligations. that doesn't mean we think that whenever a court misconstrues a statute we will automatically be thrown into breach. it is certainly possible if this case were to decided in aereo's favor that some of our international trading partners might object but i'm not going to take the position that we concede those objections had merit. so we're not making that argument. the other thing i would make to say, to reinforce the point that mr. clement was making about the phrase, to the public, using his example of the valet parking, using a comparable example after coat check room, there are situations all the time which people place property momentarily at the disposal of another and then retrieve later and it is distributed to them at that later date, not in their capacities as members of the public but as the true owners of the property. and i think some kind of distinction along those lines is essential in much more mundane

applications of the copyright act. for example, if i invite 10 friends over to watch the super bow, that's a private performance. it is not a public performance. that is not because my friends are not members of the public. they are and in some other capacity it is would be important to regard them as such. if the theater down the street had a screening of casablanca and happened those 10 people were the only 10 people who attended, it would be a public performance because they would be in their capacities as members of the public. so i think in a wide range of situations dealing with public performance, distribution to the public, it is essential to ask not only are these individuals members of the public in some tense but are they acting in their capacities as such. if you have the pure cloud locker service. a service that doesn't provide content and simply stores content and plays it back at the user's request, that service would be providing content to its true owner. >> how do you want us to deal

with cablevision, the cablevision case in the second circuit? again assume it is binding precedent, just assume that. >> my answer would be the same as mr. clement's. the reasoning of cablevision, if you really adhere to the idea that the only, the only performance that counts is the individual transmission and asks, does that go to more than one person, then it is hard to see how you could rule in favor of our position here. but as far as the bottom line outcome of cablevision is concerned, you could accept the government's position and still say, cablevision was decided the correct way because precisely because cablevision had a license to perform in real time, to broadcast a program to its subscribers of the only thing that was at issue was the supplemental rsd vr service. the court in cablevision held prepare at rattily we think -- appropriately we think. the holding of program to the

subscribers entitled to view them in real time and play back could be characterized of a private performance much their own content. thank you. >> thank you, mr. stewart. mr. frederick. >> thank you, mr. chief justice and may it please the court. i want to address the cable questions, before i do that, i can say the three points i wanted to make the text is very clear for aereo. the interpretations of the text that they offer, absolutely threaten cloud computing and third, this case is really a reproduction right case, masquerading as a public performance case. now, we are not a cable service. the reason we're not a cable service is because cable takes all signals and pushes them down. there's a head-in, defined by statute. there is a very particularized, regulatory structure that deals with taking a lot of content and pushing it down to consumers. aereo is an equipment provider.

nothing happens on aereo's equipment until a user initiates the system. the user initiates the system by logging on and pressing, this is the program that i want to watch. that then tunes the antenna, activates the recording that will be made, and then the user is then able to play back the recording. >> i always thought and i try to be careful about it but not often enough, probably breach it like every other member of the public, that if i take a photograph of a record, and just locate i had a million times the way you're doing it and i then go out and sell each of those copies to the public, then i am violating the act. so why is it that you're not? it is not logical to me. >> sure. >> that you can make these millions of copies and get, sell

essentially sell them to the public because you're telling the public when they want to buy it, they can call it up and hear it. so why aren't you? >> your hypothetical, justice sotomayor implicates the reproduction right. that is exclusive right of the copyright holder to restrict the number of copies that is made. that is not a public performance right question. they abandoned their challenge in the preliminary injunction proceeding to the reproduction right issue because it runs right into the sony decision. in sony this court held that consumers have a fair use right to take local, over the air broadcasts and make a copy of it. all aereo is doing is providing antennas and dvrs that enable consumers to do exactly what this court in sony recognized they can do when they're in home and using equipment and antennas, and dvrs to the internet.

>> with judge wright when he said, there is no technically sound reason to use these multiple antennas. that the only reason for that was to avoid the reach of the copyright act. aren't there technical reasons, instead of having one antenna to all all these dime-sized antennas? >> this is very complex question, justice ginsburg and let me answer at multiple levels. there are technical reasons why the individual antennas provide the same utility at lower costs and functionality than one big antenna. but there are very practical concerns too. as a startup business, aereo is attempting to inties consumers to replicate on the cloud what they can do at home at lower costs and more efficiency. as a practical matter, and judge chen had no basis which to make this statement at all in his dissent because these are facts not in the record and efficiency is not a consideration under the

copyright right act, you can't do multiple channels over the internet anyway. you can only do a single video stream at a time. so whether you have one big antenna or whether you have lots of little antennas you still have to compress the signal and only one can go over the internet at a time. however, justice ginsberg, as a startup business there is very real consideration why multiple antennas make sense. if you're in new york city you want to put a antenna on top after building you got to get a building permit. if you want to construct it, you have to get a construction permit if you want to put it up there with a crain you have to get a subway permit to before you do all the things to put a big antenna on a building in new york city to get broadcast signals. >> is there any reason you need 10,000 of them? if your model is correct, can't you just put your antenna up and do it? there is no technological reason for you to have 10,000 dime-sized antennas, other than

to get around copyright laws. >> the point of the copyright laws, your honor, shouldn't turn on number of antennas. it turns whether the person who is receiving the signal that comes through the internet is privately performing by initiating the actions of that antenna, getting a data stream, having that signal compressed so it can be streamed over the internet, through a user-specific, user-initiated copy. >> that may well be but it doesn't contradict the chief justice's question. i mean, you're just saying that by doing it this way you don't violate the copyright laws but his question is, is there any reason you did it other than not to violate the copyright laws? >> we understood, yes, there is a reason, justice scalia. we wanted to tell consumers you can replicate the experience at very small cost. you know you have a right to put an antenna on your roof and put a dvr in your living room. we can provide exactly same

antenna and dvr for fraction of the cost by putting it over the cloud. >> but it is not, you give them space that's available when they call in. they don't have, this is my little dime thing and this is my copy going to be here. they're there, when they want something you provide service of giving them. they don't have a dedicated antenna in brooklyn. >> well, some of the consumers do, the record is clear that some are statically assigned to particular users. but mr. chief justice, that doesn't answer the question, the statutory interpretation question which as in cablevision, as justice kennedy noted, there is a user specific, user initiated copy that when used by the user is a private performance. that operation of a system works exactly the same way. and the fact that cablevision is able to compress its signals to make them internet accessible to a single antenna and aereo chooses to do it through multiple an 10 i can'ts to avoid all the hassles that go with having a big antenna should not

matter for the copyright laws. we're still talking about renting equipment that consumers have a right to get over the air signals that are free to the public. using public spectrum that the government allocated to -- >> suppose aereo offered a service so that the viewer at home could press three different buttons but it takes only 45 seconds and he could get the broadcast without advertising and aereo would have some way to screen out the advertising, so you could watch the entire baseball game or football game without the ads? >> that would probably violate the reproduction right, justice kennedy. >> would aereo be a performer then? >> aereo would not be a performer. the question would be, and this does go into the technical details and here the position between the parties is quite stark, they say that the facts don't matter. we have a well-developed factual record. there, justice kennedy the fact

it would matter in your hypothetical, would be whether or not the mission of the -- initiation of advertising free had been done by consumer or the cloud. >> the consumer makes the choice, you can have it with ads or without the ads, push button one and push button two. >> i understand. >> i don't understand why you're the performer in one case and not the other case? >> because the action who is a performer turns under the statute on who is making, who is acting to make the sequence of sounds and and images perceivable. where you're talking about taking out advertising, what you're doing is you're alter iting the copy and you are abridging, infringing the reproduction right. that is not something you can do in the aereo technology. i have no brief to defend that. that would be a very difficult reproduction right question but it doesn't matter in terms of who is exercising a private

performance because that is being done in the home with a user initiated, user-specific copy. >> mr. frederick, your client is just using this for local signals right now. >> yes. >> but if we approve that, is there any reason it couldn't be used for distance signals as well? >> possibly. >> possibly what? there is possibly a reason or it could possibly be used? >> it can be used for distance signals but -- >> what would the difference be? it could be hbo. you could carry that without performing? >> because hbo is not done over the airwaves. it is done through a private service. ly, justice scalia, let me answer your distant signal hypothetical this way. that would implicate the reproduction right. it does not implicate the public and private performance distinction. even if you take distant signals and make them available through the home it is still through a

user-initiated. and user-specific copy of the programing. the question becomes is there a fair use right to be able to do that? what sony said because sony was dealing with local over the air broadcasts and making a copy of local over the air broadcast, it said that consumers have a fair use right to make a copy of that. sony did not address the distant signal. the question would become balancing the various fair use factors, whether it was appropriate for a consumer to be able to get access to that programing without being able to otherwise implicate the free public spectrum. now, the way congress has addressed that, congress has addressed that by saying when there are distant signals that then get pushed through a cable system, there is a copyright royalty that gets paid. but i want to make absolutely clear. satellite, cable, do not pay copyright royalties for local over the air broadcasts.

why? because the local over the air broadcast channels wanted it that way. they didn't want to be in a situation of having to figure out how to divvy up all the copyright royalties to the various holders the so when they talk about how congress supposedly overruled fortnightly, what they ignore in section 11-d and section 122-c of the copyright act, congress said the retransmission of local over the air broadcasts through satellite and cable shall be exempt from the copyright regime so when they talk about the transmission issue they're really trying to conflate totally different regulatory system -- >> every other transmitter does pay a royalty. maybe it is under a compulsory license. and you are the only player so far that doesn't pay any royalties at any stage.

>> well, justice ginsburg, the person who sells an antenna to me at the local radioshack doesn't pay copyright royalties either. the company that provide rental service for me to put antenna in my home and install it, they don't pay copyright royalties either. the question is really boils down to in this case, is how significant should it be, how long the cord is between the antenna and the dvr. >> the answer is very significant. and the reason very significant is because what the local antenna person doesn't do but you apparently could do, even if you don't, is with the same kind of device, pick up every television signal in the world and send it almost and send it into a person's computer. and that sound so much like what a catv system does or what a satellite system does. it looks as if somehow you are escaping a constraint that's imposed upon them. that is what disturbing everyone and, then what disturbs me on

the other side is i don't understand what the decision for you or against you, when i write it, is going to do all kinds of other technologies. and i have read the briefs fairly carefully and i'm still uncertain that i understand it well enough. that isn't your problem but it might turn out to be. >> well let, let me address -- [laughter] let me try to make it their problem. [laughter]. i think i have addressed the distant signal and i think you can reserve that case to say that might raise a different issue but on the facts here would not entitle the company to an injunction enjoining aereo from providing this service. now with respect to the second aspect of this, the reason why their interpretation of the transmit causes so much problem, so many problems for the cloud computing industry is that it is twofold. number one, they are conflating performance with work in the

transmit clause. what they are saying is that so long as the work is always perceived in some fashion to a performance that is privately done through the playback of a recording, that that, because the initial work was disseminated to the public, that implicates the public performance right. what that does is it means that every time somebody stores something in the cloud, whether it's a song, a video image, or the like, if it happens to be something that somebody else has stored in the cloud, the act of one person initiating it and perceiving it is going to implicate the public performance right. that is why the cloud computing industry is freaked out about this case because they have invested tens of billions of dollars on the notion that in user-specific, user-initiated copy when perceived by that person, is a private performance and not a public performance. the second thing that they do that is wrong with the statute

is they aggregate performances. sin he had of where the statute says, transmit a performance, they say, transmit performances. because they acknowledge that the way that the technology works for aereo is that it is an individual user-specific, user-initiated copy but they say no matter. if you add enough of them together you can aggregate that to become a public performance. >> just to make sure, there is no reason it is a user-specific copy, is it? 10,000 copies it, would be much easier for you to have to make one copy and everybody could get a copy. >> that is where the issue about replicating what happens in the home matters, mr. chief justice. because if i'm in my home and i start the program two minutes in using aereo's technology i miss the first two minutes, i never get to watch it. it happens to be when i push the button to initiate the copy just like if i'm home watching on a dvr the same principle.

so that copy will always be different because i have control over it versus -- >> surely you can make a program where you have just one copy and starting it at different times? you don't need every viewer to have his own copy. >> but that, that is the key distinction between video-on-demand ad the service that aereo provides, the kind of equipment and technology that aereo provides. we don't have a debrief to defend the master copy. that the master copy situation is indisputably public because there is no right to exclude anyone else. with aereo's technology, if i'm making a copy using aereo's system, no one else can look at it. even if you happen to have watched the same program, you can't watch my copy. i can't download it. >> you're saying your copy is different from my copy. >> correct. >> that is the reason we call them copies because they're the same. [laughter] >> all i'm trying to get at, i'm not saying it is outcome determinative or necessarily bad

but i'm saying your technological model is basebased upon circumventing legal prohibitions that you want to comply with. that is fine. lawyers do that. i'm wonder considering, whether you can give me any technological reason apart from compliance with the particular legal issue for your illogical -- >> it is much simpler if you're a startup to ad components, to add modules, when you're starting up, ramping up. what we're talking about in any cloud computing industry you're starting with one group of servers and then you add them, almost like lego pieces, as you are adding the number of people that you're using. that is a technological reason why the cloud works the way it does, mr. chief justice. so aereo's antennas and its dvrs, we can with about the length of the size of this counsel table here service tens of thousands of people in the new york area. we can provide the antennas and we can provide the dvrs.

it is a very compact, small space. then if we expand and we're able to continue to be in business and we get more subscribers in brooklyn we might add another row that would be size of the counsel tables behind me. that aspect of the technology goes to the modules that are used for cloud computing where you basically can additional servers, additional hard disk space and then when new consumers activate, let me just be clear about this. when they sign up, their system is completely empty. there is no content be provided. there is equipment that is being provided. so when they activate the system and they say, i want to watch the news at 6:00, they 10 start the process that then has their individually-assigned storage with the 6:00 news. but until that happens, there's no content being provided. so the notion that they have in the reply brief that over and over we're somehow a content provider would mean that

everybody who provides an antenna or dvr is somehow a content provider f that's true, then the implications for the equipment industry are obviously quite massive and you can understand why that would frighten the cloud computing industry because that turns them into public performers when ever they are handling content. now. >> if the subscriber a menu and says, you can get any of these things. it is not as though the subscriber initiates it. it, you have these choices. they're providing you these choices and those choices are content. >> it is no different, justice ginsburg, if i'm at home have antenna or rabbit ears on my tv -- >> no different from a user's perspective. exactly the same as if i'm, watching cable, right? you just have a different content selection but it looks the same to you. somebody else is providing with

you with a menu and then you pick off of that menu. >> right, but the menu, justice kagan, and justice ginsburg is simply what is technologically available. there are broadcast signals available in a local area and they are limited because that's what the broadcasters make available. systemly providing a user guide you can tune to this channel or tune to that channel if you want to pick up one program or another can't be the difference between a content provider and merely facilitating the use of your equipment. >> would you explain, and in a sentence, or two, which will sound as if i'm favoring with you but i want them to have a chance to reply, the thing that frightened me somewhat in your brief, was i think of the cloud storing everybody's music. that is -- music. then they send it down, perhaps to a million people at a time, who want to all hear the same song. now what you said was, if i understood it, but explain it if it is, there is a provision of

the copyright law that says when that happens, it is subject to a compulsory license. if it is subject to a compulsory license, then of course people can get it and it's paid for by somebody, about if we decide with them, there would be a different provision that would come into play, namely the performance. and it wouldn't be subject to the compulsory license. there is no point telling me i'm right if i'm wrong. what i want to know, have i got your argument correctly? and if not, what is it? >> i think your argument, justice breyer -- >> not my argument or perhaps a parody or incorrect version of yours. >> let me try to correct it. there is no come powell pull sorry license with respect to music and videos. there are different compulsory licenses with respect to satellite and cable and capture all signals that push them down. >> that would be the same. that won't be a problem? >> no. where it will be a problem with the cloud, if you say, if i'm watching a particular program and you're watching a particular

program and justice sotomayor is watching the same program, we're engaging in the company that has allowed us to make a copy of that, is engaging in public performance. where you have to deal with infringement is the concept of volition and the idea of who is doing the act. if i'm simply making equipment available -- >> it should work in a parallel way. that is, when i look at the program, i am making a copy of the program and therefore i am violating the nonexclusive right to copy. if that is fair use, and therefore i can do it, it should also be fair use, exactly same thing happens but comes from a cloud. >> let me further answer your question about music because i omit ad key distinction which is that for local radio broadcasts there is a music distribution license. it is under section 115 of the -- >> 115-c-3. >> that is exactly the same way satellite and cable work as

well. so that if you're broadcasting in the local area, you, it is for free. it is like a copyright-free zone. the reason for that in the music world is because they want local radio broadcasters to play songs because that drives sales of the records. that's a totally different business model of course than in the television world. but the reason why this matters for your perspective is that what the court, the second circuit in cablevision said, user-specific, user-initiated copies are private performances, they are not public performances and the only way -- >> but now you're saying that at&t's system, netflix, hulu, all of those systems get their content and they don't push it down to you. they do exactly what you do. they let you choose what you want to see. >> the difference -- >> the difference is that they do not exclude anyone and the difference the public, private, distinction from property law is

whether or not there's a right to exclude. if i have private property i exclude others. if i have public property, i'm not excluding others. netflix, hulu, there are other services, they're not excluding anyone. as a users of those services i have no right to exclude anyone else. so they are making their product, their content available to all without exclusion, other than the subscription that you pay. what we're doing is providing the equipment that enables people to access it. now the only distinction that is offered -- >> -- subscribers, legions of subscribers. so i don't understand that. you say they have to, selective and some people will want to use your service are going to be turned down or not? you take anybody who can pay, right. >> sure. if we went around to 1000 or 10,000 homes in brooklyn and put up antennas an installed their dvrs for them and sent them a monthly bill every month to pay us because we have performed

that service and provided that equipment, it would be exact same position, justice ginsburg. and that can't be a copyright violation. now the only distinction the government offered why cablevision decision in the second circuit, and goes to your question, justice kennedy somehow should be different here, is supposed lawfulfuls rers in of the -- lawfulness the first instance that content is received that distinction can't work and would imperil the cloud. here's why. when a person is accessing local over the air broadcast television is doing so because that is free public spectrum. sony says we have a fair use right in order to make a copy of that free use. the government in the fortnightly case argued that there is an implied in law license when a person accesses local over the air telecasts in that way. there can't be distinction between our situation and cablevision there is somehow some difference because if i'm watching local over the air broadcast tv in my home, i don't have to pay a royalty for it.

and that is exactly the analogy that would be appropriate there. now, how would that affect the cloud? well if you turn every type of performance from an individual makes from some content that gets downloaded and or transferred from the cloud, the cloud provider can not tell what is legal or not legal. some stuff would be up there pie rated. some stuff could be up there perfectly licensed. what the position of other side in this case, those people are liable for direct infringement of the public performance right. and that's why the cloud industry is very concerned that if you have too expansive a interpretation what is the public performance right you are consigning them to potentially ruinous liability. >> mr. frederick, why isn't sufficient to create a line such as the one mr. clement said, which said, do you on the one hand supply or provide the content? that puts you in one box. on the other hand, if you're not supplying or providing the

content, if the user is supplying and providing the content and you're just providing the space, a kind of platform form them to do that and for them to potentially share the content, that puts you in another box? >> justice kagan, i note my friend did not reference the words of the transmit clause at all when he offered that distinction. and that is actually quite important because in order to get there, you have to make up words, to put them in the transmit clause. but even if you were to think that would be good for a policy reason you would still have to explain why the ones of thousands of people that are subscribers to aereo's service don't have same fair use right to get over the air broadcast content. all those people who are not aereo subscribers but happen to have a home antenna and dvr. those people have every bit of a right to get that access and the fact that they are doing it doesn't make their antenna or their antenna provide ear content provider. as i said -- >> a lot of people pay for the

aereo service, do the same thing all by themselves? >> because if you don't have to buy a tv, a dvr, and an antenna and a shrink box which might -- sling box, which might cost thousands of dollars, might pay hundreds of dollars to rent it or look at programing selectively $8 a month. that is rental service, justice ginsburg. that can't change the copyright analysis. just because you rent equipped does not transform the person providing that equipment into a public performer, particularly when you are the one who initiates every set of signals that activate the programing and the he have content. if there are no further questions, we'll submit. >> thank you, counsel. mr. clement, you have three minutes remaining. >> thank you, mr. chief justice. just a few points in rebuttal. first i have to correct the fundamental difference. mr. frederick says as he did in

his red brief, if you're only cable company, and you only retransmit locally you doesn't have to pay a royalty. that is just wrong as we point out in the replay brief. there is minimum royalty that every cable company pays whether or not they transmit distant signals. so that is just wrong. second this is not a case as mr. frederick would like to say where the user pushes a button and after that point aereo is just hapless bystander. if you want insight into what actually happens behind the scene is the phrase, the district court used, look at pages 64-a, to 67-a of the petition appendix. because judge nathan explains all the things that aereo does after the consumer presses the button and before it comes back to them on their home screen. they are not just a passive bystander. this whole notion of what's volitional. maybe in the reproduction concept, context, just pushing a button, there is only one person who reproduces but the concept of what is the requisite volitional conduct is answered by the transmit clause.

congress specifically looked at this and said there will be a lots of situations where the where the sender, usually the cable company or aereo, sends a transmission to the user around the sender of that transmission, if it allows a contemporaneous performance, unlike the record company, they are a transmitter. they are publicly performing. >> mr. clement, till me the consequences of our decision today? do you put them out of business or do they have to go and negotiate a license with every copyright holder? what, you're in fact tell me they're not a cable company. they're not a satellite company. so they can't go into those systems payment. what happens there? >> the consequences really gets back to the chief justice's question. if they actually provide something that is a net benefit technologically, there is no reason people won't license them content. but earned, if all they have is a gimmick, then they probably will go out of business and nobody should crier a tear over that. >> once you take them out of the compulsory licensing system they

will have to find copyright owners who own the james agooge pictures, who owns something that was written by a french silent film in 1915. i have mean the problem is that, they might want to have perfectly good things that people want to watch and they can't find out how to get permission. that is a problem that worries me and it worries me again once you kick them out of the of the other systems. >> not a problem should worry you. first of all if they really need a compulsory license maybe congress can revisit has in technologically specific ways for cable and satellite. there are other ways to get content. . .

they provide thousands of instructors >> in another case the supreme court ruled unanimously that cell phones and smart phones scombrenlly cannot be searched weancht. without a >> hear argument first this morning riley versus alifornia. mr. fisher. >> mr. chief justice may it please the court. this case involves applying the

core protection of the fourth amendment to a new factual circumstance. it has always been the case that the occasion of an arrest did not give the police officers authority to search through the private papers in the drawers and bureaus of the cabinets of somebody's house and that protection should not evaporate more than 00 years after the founding because we have the technological development of smart phones that have resulted in people carrying that information in their pockets. >> just to test the principle for why the police can search and seize some objects, consider a gun. the arrestee has a gun on his person and the police take the gun. is part of the reason for that seizure to obtain evidence of the crime or is it just for the safety of the officer and the safety of the community? >> well, what this court said in robinson is the reason supporting the authority for search and arrest are the two

chanel factors which are gathering evidence to prevent its destruction and officer safety. now. >> what about gathering evidence? for instance with the gun. could they take fingerprints? the gun is in the police station where the arrestee is being booked. could they take fingerprints? could they copy the serial number? could they see how many she was were left in the chamber? they're have to empty it for safety purposes. all for the purpose of building the case of obtaining evidence? >> yes. of course that's done every day. once the gun is in the police department's lawful possession i think edwards says they can do all that. >> so if the proposition and if the principle then is that some objects that are obtained from the arrestee can be examined in order to build the state's case, is that at least a beginning premise that we can accept in your case although

obviously there are problems of the extent and intrusiveness of the search that are in your case but not in the gun hypothetical. >> well, justice kennedy the court has never described that as one of the things. if you want to think about this case the way you thought about the automobile in gants it would be a beginning premise but even if that were it would be only that a beginning. in footnote 9 in edwards, still has to satisfy the fourth amendment general reasonable. >> i think you are right that gapt is probably the best that gant is the best statement in support of the position i have suggested. then we are back where we started. >> there are important things to understand if you want to start thinking about gant. in terms of history and modern application, it is different from what we have here.

>> mr. fischer, have you been accurate about what you said ?bout robinson and the cases in weeks, which was quoted in robinson, the court said "the right always recognized under english and american law to search the person of the accused would legally arrested to discover and sees the fruits or evidences of crime." is that historically inaccurate do you want us to repudiate that? is that starkly inaccurate? do you want us to repudiate that? >> no your honor. what we said and you quoted it, and she mentalities of the crime have always been something that can be seized from a person. weeks as this court said in robinson itself was dicta and there was that historical authority to take the fruits of the evidence, fruits and instrumentalities. >> instrumentality or evidence?