Aereo's Supreme Loss Doesn't Handcuff Anyone

There’s plenty of hand-wringing in the wake of Aereo’s defeat before the U.S. Supreme Court about the ruling’s allegedly devastating implications for technology “innovation.” But the only people stifled by the narrowly tailored decision are those that have the bright idea of trying to get something for nothing.

With the Aereo decision, “the court threw a legal shadow over a slew of other tech-driven companies,” the Los Angeles Times said in an editorial, which wondered, “Did the justices really understand Aereo?”

Aereo CEO Chet Kanojia, going down swinging, said his company’s definitive legal defeat “sends a chilling message to the technology industry.” He also posed a hypothetical question: “Are we moving towards a permission-based system for technology innovation?”

The Supreme Court’s unequivocal answer to that was: Yes, if you are a business trying to make money from someone else’s copyrighted content, you need permission.

EARLIER: Why a Loss for Aereo Wouldn’t Threaten Cloud Services

Look, I could innovatively copy-and-paste the entire contents of the L.A. Times and sell access to it — and dozens of other news websites — in, say, a Google Android TV app for a monthly fee. I’m not sure how many people would pay for that, but I never completely understood why Aereo was a terribly appealing service, either (unless you were too cheap to pay a couple bucks more for basic cable service and a Slingbox).

Like Aereo, all I’d be doing with my innovative Android TV app is letting users access something they already can freely access on the Internet on a different device, right? But I don’t think the L.A. Times would be OK with that.

The Aereo case, however, was particular to TV. Congress, through the Copyright Act, requires service providers to obtain permission to retransmit TV signals.

The Supreme Court correctly disregarded the specious arguments by Aereo’s lawyers that its service was somehow technically different: “Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies,” Justice Stephen Breyer wrote in the majority opinion.

Don’t like the law? Turns out that circumventing it is not always the right way to effect legislative change.

Meanwhile, the Supreme Court specifically — and prudently — said the Aereo decision has no bearing on cloud-based storage services, network-based DVRs or other “technologies not before us.” The majority opinion agreed with the Solicitor General’s position that how those apply to the Copyright Act “should await a case in which they are squarely presented.”

Some hand-wringers read that as an invitation for media companies to launch new attacks on cloud services, or other technologies — like Dish Network’s Slingbox-enabled Hopper DVR.

Indeed, Fox filed a brief Wednesday in its litigation against Dish claiming that the satcaster’s Internet-slinging DVR “has repeatedly raised the same defenses as Aereo which have now been rejected by the Supreme Court.”

But this is a red herring. Dish, in its reply to Fox’s filing, pointed out that the Supreme Court’s decision was based on the fact that Aereo “transmits to large numbers of paying subscribers who lack any prior relationship to the works.” Or, as the Solicitor General put it, Aereo “provides a means by which consumers can gain access to copyrighted content in the first instance.”

A Dish subscriber has already paid for the rights to the content, and fair-use provisions of copyright law protect whatever he or she does with that content for personal use. Fox’s argument is that Internet-streaming of its content is prohibited under its licensing agreement with Dish. But networks will have trouble challenging Sling technology, because they didn’t raise any legal challenges to it when it launched almost a decade ago.

Aereo’s investors — which threw $97 million into the venture — took a calculated risk that the legal gambit would succeed. It didn’t, and “now it’s over,” said IAC chairman Barry Diller, one of its major backers. He also noted that “it’s not a big (financial) loss for us.” Shrug. Next project.

Cable and satellite TV companies were secretly, and in some cases openly, rooting for Aereo to win. That’s because they believed that if Aereo prevailed, they would gain leverage over broadcasters in retransmission-consent negotiations.

But ultimately, a crafty legal end-run is not the way innovation — or retrans reform — will come to bear in the TV business.

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