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Aereo Loses Supreme Court Copyright Fight, But Does it Have a Future as a Cable Company?

Aereo Loses Supreme Court Copyright Fight, But Does it Have a Future as a Cable Company?On June 25, 2014, the Supreme Court ruled that streaming television service, Aereo, violated U.S. copyright law. In American Broadcasting Companies v. Aereo, Inc., the Court overruled the U.S. Court of Appeals for the Second Circuit, holding that Aereo performs TV broadcasters works publicly within the meaning of the 1976 Copyright Act (the "Act").

Background

Aereo, which, while operational, allowed subscribers to view television programs over the Internet, was sued by the broadcast networks who alleged that Aereo performed the broadcasters' works (i.e., programming) "publicly" within the meaning of the Act's Transmit Clause. The Transmit Clause states that performing a work "publicly" is "to transmit or otherwise communicate a performance or display of the work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or different times."

Aereo subscribers could view broadcast television programming over the Internet, as the programs were being broadcast with a minor delay.  Aereo’s system was made up of thousands of dime-sized antennas stored in warehouses that captured local broadcast signals. Subscribers would visit Aereo's website, select a show, then an antenna would capture the show from the airwaves. An individual copy of the show would then be made on a remote hard drive and, once a few seconds of the show were saved, it would then be streamed to the subscriber's digital devices over the Internet.

The broadcast networks, including ABC, CBS, NBC and Fox, alleged copyright, and brought suit in U.S. District Court for the Southern District of New York. The plaintiffs sought, but were denied, a preliminary injunction prohibiting Aereo from streaming programming. The case was appealed to the Second Circuit, which affirmed, siding with Aereo. The case then went to the Supreme Court.

The Decision

In a 6-3 decision written by Justice Breyer, the Court concluded that Aereo’s activities constituted a public performance and, therefore, infringed the broadcasters’ copyrights. The Court found that Aereo was equivalent to a cable company, and Congress intended cable companies to be within the scope of the Act. The Court noted the "overwhelming likeness of Aereo to cable companies, dismissing Aereo's arguments that there were meaningful differences since those differences concern "not the nature of the service that Aereo provides so much as the technological manner in which it provides the service." Aereo was not "just an equipment supplier," it performed like cable companies, which pay large fees to retransmit broadcast programming.

After concluding that Aereo performs the broadcasters' copyrighted works, the Court then determined that those performances were made to the "public," as only "public" performance is prohibited. The Court concluded that when Aereo streams the same television program to multiple subscribers, even though it performs using individualized copies of the content and transmits those copies to individuals, it nonetheless transmits the program to the public.

The Court took pains to stress that its decision was limited in nature, and should not chill or discourage the emergence of new technologies, stating that it "did not believe that [its] limited holding will have that effect." Time will tell.

The Aftermath

Following the ruling, Aereo CEO Chet Kanojia said the company would suspend operations and users would be refunded their last paid month. Despite claiming in advancing of the Court's ruling that the company had no "Plan B" if it lost, it subsequently came up with one.

The company filed a letter in U.S. District Court arguing, essentially, that since the Supreme Court deemed it "for all practical purposes a traditional cable system," it should be allowed to operate like one, with a statutory license to the programming it retransmits. The case was returned to the Second Circuit for further consideration and it denied Aereo's request in a brief ruling on August 21, stating that "We leave it to the district court to consider whether the issues are properly raised in these cases and, if so, to rule on the issues in the first instance."

Not Done Yet

While Aereo may have shut down its operations in the wake of the Supreme Court's ruling, it's clear it still has some fight left in it.  Apparently, Aereo still feels it can survive,as it recently stated in its opposition to an injunction demanded by broadcasters.

We will continue to monitor and keep you apprised of the legal developments as Aereo pursues its future as a cable company.

Categories: Copyright

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John brings a unique perspective to Foster Swift with his practical experience as an entrepreneur, business owner, and manager.  He focuses in the areas of business, tax, intellectual property and entertainment.

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