Judges scrutinize Aereo as nets press case

Appeals panel hears arguments in challenge to remote retransmission

A panel of a federal appellate court has expressed skepticism about the legal standing of Aereo, the startup service that streams broadcast signals to subscribers. The major networks have challenged Aereo’s right to offer its service in two separate lawsuits.

At a hearing before a panel of the 2nd Circuit Court of Appeals in New York. the networks urged the judges to reverse a lower-court ruling that has allowed Aereo to continue service, even though the broadcasters argue that the company infringes on its right to public performance.

Aereo argues that its service — in which subscribers receive broadcast signals via a farm of thousands of dime-seized antennas assigned to each customer — is merely doing remotely what consumers would otherwise do with their own equipment.

“Is there a legitimate business reason for having all these little itty-bitty antennas?” Judge Denny Chin asked.

“The reason is to comply with the copyright act,” R. David Hosp, attorney for Aereo, responded.

Another judge, John Gleeson, asked whether Aereo’s business model is akin to “constructing a business to avoid taxes.”

In July, U.S. District Judge Alison Nathan sided with Aereo when she refused the broadcasters’ motion to immediately halt the service, citing a 2008 2nd Circuit opinion that upheld Cablevision’s plan for a remote DVR service.

“Congress expressly and deliberately exempted ‘private’ performances from copyright protection,” Aereo argued in an appellate brief. “Further, consumers have a right of access to local, over-the-air broadcast television.”

They compared their service not just to the Cablevision remote DVR, but to Slingbox, which allows users to access DVR recordings over the Internet via mobile devices. Aereo noted that the networks challenge the legality of Slingbox, which is still in operation.

Aereo’s service, with backing from Barry Diller, allows subscribers to access the remote antenna to their TVs, computers and mobile devices. It provides a remote DVR, in which viewers can watch those live broadcasts yet still pause and forward.

Aereo’s streaming of signals threatens to undermine the networks’ ability to collect retransmission fees from cable and satellite services, and the broadcasters have successfully fought previous ventures that sought to capitalize on making free, over-the-air TV available to digital devices. But Aereo’s distinction is the use of individual antennas, which it maintains allows it to comply with public performance copyright law.

Networks argue that has little to do with Cablevision’s remote DVR.

Aereo “is a retransmission service, plain and simple,” Bruce Keller, attorney for the broadcasters, told the court. “Super Bowl comes in, Super Bowl goes out, plain and simple.”

In an appellate brief filed by ABC, NBC, CBS and others, the networks counter that Aereo still is retransmitting their signal to the public, violating the transmit clause of the law. Attorneys for the networks wrote that “Aereo’s service is unlike anything a consumer does in the home … and nothing like equipment a consumer can buy. Moreover, commercial retransmitters cannot stand in the shoes of individual consumers.”