Aereo Judge
Oliver Munday

Aereo, which will fight for its life before the Supreme Court next month, has issued dire warnings that if its TV-streaming service is ruled illegal, it would spell the doom of “cloud-based” services like Dropbox or Google Drive.

“If the broadcasters succeed, the consequences to American consumers and the cloud industry are chilling,” Aereo said this week, in a statement after filing its response brief with the court. “A decision against Aereo would upend and cripple the entire cloud industry.” But that’s just not true.

Aereo’s defense relies on a 2007 appellate court ruling (upheld by the Supreme Court in 2008) that Cablevision Systems’ remote-storage DVR was legal. The reasoning: An individual user — not Cablevision — initiates recording and playback, from dedicated hardware, ergo it’s a private performance. Same thing with Aereo, according to Aereo.

The 2nd Circuit Court of Appeals agreed with Aereo in denying broadcasters’ request to shut down the service. But that decision was based on a finding that the discrete transmissions to users constitute private performances — incorrectly, the broadcasters say, pointing out the Transmit Clause of the Copyright Act determines public vs. private performance on the relationship between transmitter and receiver, not the nature of the transmissions.

SEE ALSO: Aereo: Broadcasters’ Challenge ‘Imperils’ Cloud Computing

Cablevision likewise asserts that the broadcasters’ legal strategy would threaten the cloud, but for an entirely different reason: The MSO doesn’t want its network-based DVR suddenly found to be illegal — a reversal that would cost Cablevision millions. In the same breath, Cablevision agrees with broadcasters that Aereo is an illegal appropriation of TV content.

The Aereo case isn’t really about “the cloud” at all. Rather, it’s about the “Rube Goldberg-like contrivance” Aereo has built (in the words of Judge Denny Chin, who dissented in the 2nd Circuit’s 2-1 ruling on Aereo), a sleight-of-hand to make a service that’s actually a “public performance” appear as if it were a “private performance.”

Aereo is not simply a cloud-storage service. Nor is it just the equivalent of an antenna-plus-Slingbox-plus-DVR in the cloud (the argument Aereo and its defenders use to posit its legality: I can buy all this stuff at RadioShack and set it up myself; the only difference is Aereo is doing the hosting and heavy lifting for me).

Aereo isn’t a passive hosting service, and it’s not merely renting equipment to customers. Despite its gyrations to build a service that streams only individual TV shows from physically separate spinning disks to stay within the letter of the law, it’s undeniable that Aereo uses a shared data-center infrastructure — exactly like pay-TV providers, from whom broadcasters are entitled to receive compensation under federal law.

Moreover, Aereo’s antennas are not actually dedicated to specific users. The system allocates each tiny antenna to a user when a TV channel is requested, then frees that up for another customer to use after the session is over, according to the startup’s patent filings. This is not at all like me putting up an antenna on my roof and letting my buddy next door borrow or even rent it.

The Copyright Act specifically precludes businesses from profiting from copyrighted works in this way. Yes, individual Americans have a right to free, over-the-air broadcasts, but those rights can’t be assumed by a service provider that’s reselling the content. In a critical difference between Aereo and Cablevision’s RS-DVR, the cable company already has those broadcast rights. (The 2nd Circuit ruling, oddly, said whether Aereo had a license was irrelevant, citing the basis of the Cablevision RS-DVR decision. By contrast, a Utah federal judge last month ordered Aereo to shut down the service, saying Aereo clearly provides a public performance that requires a license.)

SEE ALSO: CBS Chief Moonves: We Can Go Over-the-Top If Aereo Wins at Supreme Court

Unlike cloud storage services, Aereo “provides a means by which consumers can gain access to copyrighted content in the first instance — the same service that cable companies have traditionally provided,” the U.S. Solicitor General and the Copyright Office wrote in their Supreme Court amicus brief this month. “There is consequently no sound reason to suppose that a decision holding (Aereo) liable for copyright infringement will threaten the use of different technologies that assist consumers in hearing or viewing their own lawfully-owned copies.”

Aereo would have you believe it’s “just a technology service,” not marketing or selling TV programming, another position aimed at dressing itself up as a Dropbox-style system. Aereo even avoids featuring TV shows or networks in its advertising and marketing — even though you’d think that would be an obvious thing to do — since that would undermine its legal arguments.

But the idea that Aereo is akin to Dropbox in a legal context is plain nonsense. The Aereo service is custom-built to present TV shows and networks in an easy-to-use way (in an interface that’s actually pretty slick). Whereas cloud storage services act as repositories for personal files, Aereo itself supplies the content to users. Again, just like cable TV.

Here’s more proof that Aereo is not a “passive conduit,” a legal safe harbor that protects ISPs and cloud hosting providers from infringement complaints. Aereo uses geolocation software to block users from accessing the service outside a given designated market area (DMA) for the over-the-air TV stations. This restriction is designed to prove Aereo does not enable access to TV that individuals could not obtain themselves. But in fact, it’s further proof that Aereo — not users — is facilitating the performance of copyrighted TV signals and as such, the service is subject to the Copyright Act’s Transmit Clause. By contrast, a home-brewed Slingbox setup would be accessible from, theoretically, anywhere in the world.

Also worth noting is that Aereo, not users, decides what content is available on the service. For example, Aereo offers cable channel Bloomberg TV to subscribers via a licensing deal. Want something else? You’d have to wait for Aereo to add it. Users can’t even opt to remove Bloomberg TV or any other channels from the lineup.

A Supreme Court finding that Aereo violates provisions of the Copyright Act narrowly tailored to this case won’t kill Dropbox, Apple iCloud, Google Drive, Box, Microsoft OneDrive or Amazon Cloud Drive. Those services aren’t jury-rigged to pull in content from third-party sources without permission. And they’re already protected from liability for copyrighted material illegally uploaded to their services under the Digital Millennium Copyright Act. Cablevision, as noted, already has content rights.

Cablevision and others are worried that the broadcasters’ argument against Aereo is overbroad: ABC et al. say that the original broadcasts of their programming are what Aereo is retransmitting. If the Supreme Court accepted that theory — that making a prior performance available to multiple users constitutes a public performance — that would expand the definition of public performance to then include Cablevision’s RS-DVR (which the 2nd Circuit held in its decision delivers a private performance) or, say, legally acquired songs uploaded to a personal cloud-storage service. But the Supreme Court should decide this case narrowly, mindful of the differences between Aereo and other cloud services, and the court is obviously aware of the implications its ruling would have. “Aereo’s system induces unlawful copying and should be enjoined for that reason alone,” Cablevision said in white paper on the case.

“Innovation” is the magical term Aereo throws around to justify its existence. As Aereo chief Chet Kanojia wrote in a message to users yesterday, “Our innovative technology leverages the power of the Internet to create a smarter, more sophisticated over-the-air antenna for the digital world, and an easy-to-use cloud-based DVR that you can control and watch from a smart phone, tablet, computer or Internet-connected television.”

See? Innovation trumps copyrights. The message is: Deal with it, content creators — you can’t fight progress.

Aereo and its fans say the broadcasters are in a fuss because they want to have their cake and eat it, too: TV stations are obligated to provide free broadcasts under their government-granted spectrum licenses, enjoying virtually universal access for their ad-supported programming, while they also want to cash in on multibillion-dollar retransmission payments from cable, satellite and telco TV providers. Broadcasters’ real fear? That Aereo will shut down the retrans gravy train by making it OK for pay-TV operators to stop paying those fees with the right technical setup — something that will absolutely happen if the Supreme Court court rules in Aereo’s favor.

But TV broadcasters’ dual revenue stream, as it exists today, has nothing to do with the fact that Aereo is repackaging and profiting from content it doesn’t have the rights to. All content owners must be able to control how their works are distributed and monetized. And no “innovative” service should be allowed to wrest that out of their hands.

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