Supreme Court to Hear Aereo Case

Aereo Judge
Oliver Munday

The Supreme Court will hear broadcasters’ challenge to the legality of startup Aereo, in a case that may determine not only the future of digital streaming of station signals but of network television itself.

Without comment, the justices on Friday agreed to accept ABC Television Stations vs. Aereo, in which the television networks are seeking to halt the Barry Diller-backed venture, contending that its offering of streams of station signals in New York and other markets violates the public performance provisions of the Copyright Act. Justice Samuel Alito took no part in the consideration of the petition, the court said, without elaborating. Typically such recusals are for a potential conflict of interest, and Alito has previously said that his family owned stock in the Walt Disney Co.

“We are pleased the Court has agreed to hear this important case,” Fox, Univision, PBS and other plaintiffs said in a joint statement.  “We are confident the court will recognize that this has never been about stifling new video distribution technologies, but has always been about stopping a copyright violator who redistributes television programming without permission or compensation.”

CBS, along among the plaintiffs, said that they “believe that Aereo’s business model, and similar offerings that operate on the same principle, are built on stealing the creative content of others. We are pleased that our case will be heard and we look forward to having our day in court.” ABC and NBC also released a joint statement, saying they were “gratified” that the high court is taking the case.

Chet Kanojia, founder and CEO of Aereo, said that “it was our hope that this case would be decided on the merits and not through a wasteful war of attrition. We look forward to presenting our case to the Supreme Court and we have every confidence that the court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.”

Aereo argues that it is well within legal boundaries. It assigns each subscriber a dime-sized remote antenna, with individual copies of broadcast feeds recorded to a remote hard disk and, after a delay of at least six seconds, streamed to the viewer.

Aereo contends that its users, not the company, have “control” over the system, making it a private use akin to time-shifting on a VCR or DVR. It is relying in large part on a 2nd Circuit Court of Appeals decision in 2008 that determined that Cablevision was within the bounds of copyright law when it offered a remote DVR.

The next year, the Supreme Court declined to review the Cablevision case, letting the decision stand in what ultimately turned out to be an example of the unintended consequences of challenging emerging technology in the courts. Before declining media congloms’ petition to review, the justices asked then-Solicitor General Elena Kagan to weigh in, and she and other staff attorneys concluded that the Cablevision decision was “insufficiently important” to warrant it.

But Aereo was launched in March, 2012, the company mindful of the precedent of the Cablevision case. Several months later, U.S. District Judge Alison Nathan relied on the Cablevision decision in refusing to issue an injunction to halt Aereo, and a split panel of the 2nd Circuit affirmed her ruling. Another federal judge, in Boston, also has sided with Aereo.

Interestingly, as the TV networks sought review from the Supreme Court, Aereo also urged the justices to take the case, concluding that it would be better to have the issue resolved rather than to have a patchwork of decisions across the country as it launches in new markets. Broadcasters also are challenging Aereo in such places as Utah, and they have had greater success at putting a halt to one of Aereo’s rivals, FilmOn X. Federal judges in Los Angeles and Washington DC ruled against FilmOn X, and a decision is pending on that startup’s appeal in the 9th Circuit.

But the implications for broadcasters are greater than just whether the two companies continue to exist. They contend that Aereo threatens to undercut the growing stream of revenue coming from retransmission fees, estimated at more than $3 billion annually, money broadcasters say is more important in helping to finance original programming. If Aereo continues, broadcasters say, cable and satellite operators will see little need to pay those retransmission fees and can merely develop their own streaming services. Last year, News Corp. COO Chase Carey even threatened that they would consider putting its Fox network on a subscription platform if services like Aereo were not stopped.

The broadcast networks are confident that the justices will see the Cablevision decision as an outlier in an otherwise straightforward interpretation of the Copyright Act, particularly a provision that says a performance can be defined as ‘public’ whether viewers “receive it in the same place or in separate places and at the same time or at different times.” They argue that lawmakers who wrote the Copyright Act in 1976 intended it to restrict future new technology like Aereo from transmitting their signals without permission.

Aereo, meanwhile, argues that the Supreme Court’s opinion could affect the future growth of cloud computing, in that users are accessing a host of content stored remotely.

“The landmark Second Circuit decision in Cablevision provided much needed clarity for the cloud industry and as a result, helped foster massive investment, growth and innovation in the sector,” Kanojia said in his statement. “The challenges outlined in the broadcasters’ filing make clear that they are using Aereo as a proxy to attack Cablevision itself and thus, undermine a critical foundation of the cloud computing and storage industry.

He added, “The broadcasters are asking the Court to deny consumers the ability to use the cloud to access a more modern-day television antenna and DVR. If the broadcasters succeed, the consequences to consumers and the cloud industry are chilling.”

The prospect of courts shutting down Aereo has not stopped its expansion into other markets, although it is doubtful it would expand to Los Angeles any time soon, nor has it prevented it from raising additional money from investors like Diller. Earlier this week, Aereo announced that it had raised another $34 million to help it grow.

For its part, Cablevision has said that it believes that Aereo infringes on copyright, but that the Cablevision decision was sound. “Cablevision remains confident that while the Aereo service violates copyright, the Supreme Court will find persuasive grounds for invalidating Aereo without relying on the broadcasters’ overreaching — and wrong — copyright arguments that challenge the legal underpinning of all cloud-based services,” Cablevision said in a statement on Friday.

Jonathan Steinsapir, partner at Kinsella, Weitzman, Iser, Kump & Aldisert, noted that Aereo represents the biggest copyright case involving new technology to reach the high court since MGM vs. Grokster, in which the justices decided that a file-sharing company could be held liable for distributing devices with the purpose of making infringing copies.

Studios, he said, are anxious to see the Cablevision decision overturned. “I think there is a feeling that it was too focused on the form [of the technology] rather than the substance,” he said. A Supreme Court ruling also could have an impact on another case that is in the 9th Circuit, the broadcast networks’ challenge to Dish Network’s introduction of its Hopper service, which includes an automatic ad-skipping feature. The networks are in the midst of appeals over that technology.

Broadcasters are taking the chance that they will get an adverse ruling from the Supreme Court, Stensapir said, but they have too much at stake not to seek a review. “It is a risk they have to take,” he said.

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  1. Mr. Lewis,
    I stated my background and referenced my employment with ABC, though my views are entirelely my own. Do you have any affiliation with Aereo?
    Responding to civil discourse by attacking the person giving his/her view rather than simply stating your own hurts your own case, not mine.

    • Ron Lewis says:

      That your views are entirely your own I had no doubt in that they serve your own interests. I have no affiliation with anyone in this fight, in fact, I don’t even watch TV — for several reasons: 1) all that creativity you contribute to and defend sucks – what isn’t blatant re-hash of old storylines and characters, albeit with racial diversity and updated, and cruder, dialogue, is ugly liberal propaganda; 2) commercials suck — and worse if I were paying for cable, I’d be paying twice to see the same show, and 3) the bundled programming business model sucks – there’s only 2-3 channels I’d watch anyway, but I have to pay for 400 to see them.

      Not sure how you think I “attacked” you. I didn’t call you any names or say anything about you personally. I simply accurately described the words you stated as “inane blather,” etc., but not without documenting why they were inane.

      False accusing someone of attacking you instead of defending your blather from accurate criticism hurts your case, not mine.

  2. As both an employee of ABC and a composer it bothers me that any company can make a profit on works created by another company or person with no fee at all.
    Whatever happened to the wisdom empodied in the phrase, “You can’t have your cake and eat it too”?
    Another “hit” on the labor force will occur if the Supreme Court decides in “Aereo”‘s favor. The Networks will no longer be able to pay for the creation of programming through the use of advertising, and not only the direct employees of the Networks and local stations be affected, but thousands of companies who make their living providing support services to the Networks and Stations.
    “Aereo” is not providing new technology, as antennas have been around since the 1800’s, but continuing the tradition of allowing rich people and their companies thrive and grow at the public’s expense.
    In a society increasingly unfavorable to it’s less fortunate members, those people will be less informed, and less able to make decisions based on the free information broadcast by the Netwrks and local stations.

    • Ron Lewis says:

      Wow, what a self-serving pile of steaming opinion. You make no sense, Freddy.

      If I stand on the corner giving away copies of the book I’ve written as a way to generate publicity, would it bother you if someone sold the copy I gave them? Or mailed it to someone else across the country? If so, why?

      The networks give their product away as well. They do it so that more people will watch, which means their advertisers will pay more. Their business model is based on those sources of revenue, and it is those sources of revenue that pay all the employees and contractors who create the programming and support the broadcast. Under that business model, the more people who watch their shows the better, no matter how those people are able to watch.

      Aero does nothing to disturb that. They are not taking from anyone, or stealing products. They simply put up an antenna and provide access to it from anywhere over the Internet. They don’t control what, if anything, is broadcast and the networks are under no obligation to broadcast anything. They are not selling access to the broadcasts, they are selling access to the antenna.

      How does that take any money from the networks, such that they will no longer be able to pay their employees? The rest of your comments are inane blather. This isn’t some rich guys vs poor folks battle. If it were, you’d have it backwards. Aero would be the poor folks trying to help the public. The networks would be the ones trying to stifle technology and limit access to their free product so that they can charge people more for it. And nothing about Aereo would end network broadcasts of news programs et al.

      Where did you come up with this nonsense?

      • Ron Lewis says:

        To Stacey K: What’s “obvious” is that you don’t know the meaning of “obvious.” Nothing of what I said suggests that I do not create anything original, unique, or imaginative, much less obviously so. In fact, I do create – I am a marketing consultant and most of my deliverables are creative documents.

        Aereo is not profiting off of anyone’s creation except its own. They are not reselling broadcast TV, they are selling remote access to local airwaves. They have no control over what is broadcast over those airwaves and make no promises that anyone will be able to view any content with that access provided.

        And, how much “compensation” should be paid for something being given away for free? If you’re giving it away to the entire football team, one after another, what have I stolen from you that deserves compensation if I get in line as well?

        Nor did I “speak so much” about the advertising business (exaggerating the opponent’s argument to make yours look better is really grade-school debate tactics – better watch out, I’ll get my granddaughter on here to whoop up on you). However, whether Dish et al delete those commercials or not has nothing to do with Aereo. However, it does point out the network’s broken business model, of which Aereo is but another example.

        Aereo is paying “fair compensation” to rightsholders – nothing. It is the rightsholders who set the market value of their product when they gave it away for free. Why should Aereo have to pay for something that the networks give away free to everyone else?

        But, again, Aereo is not taking that product. They merely offer remote access to public airwaves. If the networks don’t want far-off users from seeing the products they are giving away for free locally, they should stop giving it away locally because they can’t control what far-off people look at.

        As for your next post, I marvel at the way you ignore all those zeroes on the network’s balance sheets but see Mr. Diller’s. Do you understand that Mr. Diller’s personal wealth does not belong to Aereo, that it is an incorporated entity with only its own assets?

        Nor did I say Aereo was a Robbing Hood. I said the opposite – that this wasn’t “some rich guys vs poor folks battle.” Freddy made that ludicrous implication – I denied it. Do you understand that distorting your opponent’s argument into something you can rebut only works if the readers are complete idiots? While I doubt Variety readers include a large Mensa contingent, I’m sure they can see through your amateur tactics.

      • Stacey K says:

        Mr. Lewis, what do you do for a living? Obviously you don’t “create” anything original, unique or imaginative or else you’d have a different perspective on people profiting off your creation without you seeing a penny of that profit. New technology & distribution is not being debated but fair & proper compensation to those who “own” the product is and has been as long as the internet has been in the average consumer’s lives. Have you forgotten about Napster? Obviously you’re not a musician or songwriter. You speak so much about the advertising business model but what about DISH TV which provides technology to zap those adverts? Your business models mean nada because technology has an answer for everything but the bottom line is without fair compensation to RIGHTSHOLDERS creative programming will cease to exists! Maybe the industry will eventually change to the streaming pay-per-view model but there must be some sort of compensation for creative material. Netflix, Amazon & iTunes make a profit AND compensate the rightsholders whose property they are streaming. No one is fighting new technology but you are closed minded to seeing the bigger picture.

      • Stacey K says:

        Mr. Lewis, you are the one who makes no sense! Seriously, Aereo is the “poor folk?” Obviously you missed the 9 or 10 zeros to the left of the decimal point on Barry Diller’s income statement. Aereo is not Robin Hood robbing the rich in order to give to the poor; it’s a money making venture trying to make money off a “free” direct to consumers product that is NOT meant to be re-sold to those consumers without compensation. If Aereo cared about the consumer they wouldn’t be profiting with monthly fees and be providing a FREE public service!

        Mr. Lewis, if you believe in selling products that are not yours to sell I have a few bridges you might be interested in: Brooklyn, Geo Washington, Whitestone, Throgs Neck…take your pick!

  3. CW says:

    Television broadcasters are now addicted to retransmission fees and the current system has left “free TV” with no advocate. They don’t want you accessing their signal by way of an antenna; any antenna, even one on your own roof. They now consider the over-the-air broadcast a necessary evil and their least favorite means of distribution. A ruling against Aereo will drive another nail in the coffin of “free TV”. Lets hope this court has the interest of consumers and emerging technologies at heart.

  4. Ron Lewis says:

    Lots of people have given up TV. Cable and satellite subscription numbers have been going down for years. It’s really easy to give up when you realize how mindlessly stupid it is and get fed up with the relentless liberal propaganda included.

  5. just as Todd said I’m shocked that any body able to profit $8150 in 1 month on the internet. pop over to this website… T­E­C­8­­0.C­O­M

  6. gubatron says:

    I see Aero as putting a TV antenna to my computer with a virtual cable to their servers.
    The signal over the air is FREE, I hope they win.

  7. Nero Jasmine says:

    How about during this year, for 1 month, everyone just stop watching TV, particularly the big networks. It’s the same idea I have for gas stations except that blockage will only need a week before we see gas prices PLUMMET. I never watch ABC anyway’s since their programming stinks. 1 month no TV – you could get some serious constructive things done.

    • john sjoblom says:

      Again with the idea that shows a lack of thinking. It would only work if we never where to want the service again. With gas we’ll need it regardless of if it’s today or next week. Simply not getting the gas today will have NO impact on the gas price. They’ll just keep the gas in the tank and sell it when you finally run out. The only way for it to have an impact is if you gave up using gas which would mean giving up driving. Same with TV it only works if they know we won’t come back. I know numerous people who’ve given up TV and most are back with TV within a month or two.

    • Ron Lewis says:

      I think you’re late to that party, Nero. A bunch of us quit watching TV years ago. Crazy thing – I got at least 10 TVs, huge ones, big ones, small ones. Surround sound systems, dvrs, all that crap. Chicks like that BS, and I gave them up too, LOL. They’re worth so little in resale, the TVs I mean, and I’d feel like a heroin dealer selling them anyway. But I hate to just throw them away. On the other hand, my kids scarfed up my old turntable and are using the heck out of it.

    • Stacey K. says:

      Not arguing your main point but the fact is that ABC is just the first named broadcaster in this case. All or most of the major broadcast networks as stated in the article are plaintiffs in this case including CBS, FOX, PBS, Univision, etc.

  8. lamigra says:

    The instrument has yet to be invented that can measure the degree of my disinterest in this.

    • Ron Lewis says:

      LOL, I know what you mean, but this actually has huge ramifications for life as we know it. The legalities are cool.

  9. Steve says:

    This business could have been setup in the 1970’s. A company that owns one hundred antenna’s and one hundred VCR’s rents an antenna and a VCR to one hundred customers. Each customer calls the company to instruct them which show they want to record each week. The company then records the shows and mails each customer a video cassette every week with the recorded shows.

    NOT INFRINGEMENT.

    • The Aereo dime-size antennas are almost certainly a creative legal fiction. I don’tdon’t beliueve that they real and I don’t think that they’re actually connected to anything. They’re probably non-functional props to provide legal cover. Just my opinion based on decades of working with antennas.

      • Ron Lewis says:

        That is plaintiff’s attorney’s opinion, Stacey, and certainly doesn’t constitute a compelling argument by itself. I expect the court’s majority believes it had the correct area of focus, and that’s all that matters.

      • Stacey K. says:

        Gubatron, I wasn’t questioning the technology…P.M. Begin was. My only argument is that the technology doesn’t matter in this instance. As the attorney in the article stated, the previous case “was too focused on the [form of the technology] rather than the substance” (the programming content). In that case if SCOTUS must interpret existing copyright law then I believe this method of distribution is an infringement.

      • Ron Lewis says:

        I understand your suspicions, it’s obvious that the technology has been designed around the Cablevision precedent.

      • gubatron says:

        Stacey, the antennas are very real. A lot of money has been invested in this technology, and they’re not the only ones doing this, there’s another big case similart to this against FilmOn.com, the antennas are very real.

    • Stacey K. says:

      I’m not familiar with legalese but each of those video cassettes would be considered “bootlegs” once programming not owned by the person recording/dubbing it sold it to another party. It doesn’t matter what the fee they’re charging is for, they are not the rightsholder to that material and cannot redistribute without permission and/or compensation. Emerging technology does not change the essence of copyright laws as each individual show/entity has its own rightsholders whether being broadcast on “over-the-air” networks or not.

  10. Steve says:

    So if someone sells a good antenna, that’s a copyright infringement, but if someone sells a crappy antenna, that’s ok.

    An antenna can be 3 feet tall without copyright infringement, but an antenna 6 feet tall carries the signal from the top 3 feet to the bottom 3 feet and into the TV which is a redistribution and a copyright infringement.

  11. Stacey K. says:

    The past decade or so we’ve seen the decline of original drama programming on Network TV in favor of cheaper programming such as reality TV & talk shows. If the public wants to access their local over-the-air broadcast signal then let them buy a TV/receiver that allows them to access it. If another company is charging monthly fees to store & distribute this programming then they MUST compensate the networks. It’s very costly to produce this programming and if the nets don’t get these revenues only premium networks such as HBO & Showtime or Netflix will be able to afford to do so. Unless you’re redistributing the air that we breathe nothing is free to pass along and profit from. Talent needs compensation!

    • Steve says:

      Storing TV shows so people can watch them at their convenience is not a copyright infringement. People were programming VCR’s to record shows in the 1970’s and courts have decided it isn’t copyright infringement.

      • Ron Lewis says:

        Well, I hope SCOTUS doesn’t limit its thinking as y’all have. Your foci seem to be on the old technologies and the old ways of doing things. I think the importance of this decision lies in the future — a future that I don’t pretend to know — and IMHO, I’d hate to see a future that limits, or abets monopolies on, the distribution of content. Content should be free to come and go. In the short term, if this ends the abusive bundled pricing to let me pay just for the shows I want to watch, I’d come back to TV. As it is, I see most of those free online now and don’t watch TV so this means nothing to me until it’s used to limit other things I can watch now.

      • Stacey K. says:

        Once again I’m not a lawyer but this scenario might be correct, Steve. In this 70s scenario the company is only “leasing” hardware (VCR) on a monthly basis. The programming content/signal in the person’s home is for their private use. That copyrighted programming is NOT being recorded by a 3rd party outside the intended consumer’s home. The “service man” is only providing a service like a dog walker would, providing a convenience when someone isn’t able to do it themselves at home. Then this specific instance probably is not infringement but this example in no way correlates to what Aereo & the new technologies are providing. Once they download & have possesion of copyrighted programming then charge to redistribute whether in physical form or streaming then they need permission or must PAY.

      • Steve says:

        If a company in the 1970’s leased a VCR for monthly fee and someone from customer service made a weekly visit to your house to program the VCR because you didn’t understand how to do it, it still wouldn’t be infringement.

      • Stacey K. says:

        I agree, if the consumer purchases & owns the equipment outright like the old VCRs for personal use then there’s no infringement. But when a middle-man is involved and charging for a monthly service such as this Aereo case or cable OnDemand, etc. then that 3rd party is redistributing & profiting off copyrighted material. They are not just providing technology so unless they obtain their own original programming or compensate for the programming they’re using like cable or other existing streaming services do, that is the same as recording a movie off your TV and selling DVD copies of it on eBay. It’s clearly an infringement of copyright laws.

      • Andrei Bilderburger says:

        It isn’t a copyright infringement when the person does it themselves with hardware they own, control and have physical possession of.

        I wouid say it is in this case, but the Supremes get to make that law.

  12. mark says:

    It is time for boradcasters and movie companies to realize thier product is now a comodity service, and can not rake in the billions of dollars it once did. They either need to adjust their business model or persih. Fear not though there will be a long line of comapnaies to step in and fill the void when they are gone, you just will not have actors and executives in the industry getting 7 figures any more, and at the end of the da tihsis what this is all about. I also wonder why there is no anti-trust componnent of this against the networks, etc… Anyway, I would like to welcom Hollywood to middle America from thier lofty and high paid positions now. The party is over, and now it is time for entertainers and entertainment to learn to live in normal houses and earn normal working salaries.

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