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Judge refuses TV nets’ attempt to block Aereo

Barry Diller among investors in streaming TV service

TV networks and stations have lost a crucial initial effort to halt Aereo, a tech startup that offers online streams to broadcast signals in the New York area.

U.S. District Judge Alison Nathan ruled that broadcasters had not shown a “likelihood of success on the merits” and turned down their request for a preliminary injunction. In siding with Aereo, funded by investors including Barry Diller’s IAC, she has given some credence to the startup’s legality; previous efforts to offer digital streams of free broadcast signals to subscribers have been halted in court.

The networks worry that such services will undercut their business model, particularly the retransmission fees they collect from cable operators, and undermine broadcast stations’ plans to launch mobile offerings to smartphones, iPads and other devices. Indeed, Nathan concluded that Aereo stood to cause “irreparable harm” to the broadcasters, but “they have not demonstrated that the balance of hardships decidedly tips in their favor.”

“Today’s decision shows that when you are on the right side of the law, you can stand up, fight the Goliath and win,” said Aereo founder Chet Kanojia.

A key legal distinction for Aereo lies in its thousands of dime-sized antennas, allowing each subscriber to choose to watch a broadcast show online in real time or to play it back as on a DVR. The networks and New York local stations called it a “gimmick” and argued that Aereo violated the Copyright Act’s right of public performance, specifically its provision barring unauthorized transmission of copyrighted works.

But Nathan concluded that the antennas operate independently, backing Aereo’s contention that it is essentially renting remote equipment to its users that is comparable to what they can install at home.

In her opinion, Nathan drew similarities between Aereo’s technology and a remote storage DVR introduced several years ago by Cablevision. The latter was the focus of a landmark ruling by the 2nd Circuit Court of Appeals that held that the remote DVR did not infringe on copyrights.

She wrote that “in light of this court’s factual determination that each antenna functions independently, in at least one respect, the Aereo system is a stronger case than” the Cablevision case.

While broadcasters saw distinction in Cablevision’s remote DVR and Aereo’s streams of broadcasts in real time, Nathan found that argument irrelevant. “Whether a user watches a program through Aereo’s service as it is being broadcast or after the initial broadcast does not change that the transmission is made from a unique copy, previously created by that user, accessible and transmitted only to that user, the factors (the Cablevision decision) identified as limiting the potential audience,” Nathan wrote.

A group of plaintiffs, including WNET Thirteen, Fox Television Stations, WPIX and Univision, expressed disappointment at the decision and plan to appeal.

“Today’s decision is a loss for the entire creative community,” their statement said. “The judge has denied our request for preliminary relief — ruling that it is OK to misappropriate copyrighted material and retransmit it without compensation. While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal.”

NBC Universal, another plaintiff in the case, also issued a statement noting the Nathan’s opinion represents “a preliminary finding and we remain confident that the courts will ultimately find in our favor and block Aereo from infringing our copyrighted broadcasts. Importantly, the court clearly determined that Aereo’s business is irreparably harming broadcasters and content creators.”

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