[opendtv] Supremes Rule Against Aereo | Broadcasting & Cable

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 25 Jun 2014 12:07:46 -0400

http://www.broadcastingcable.com/news/washington/supremes-rule-against-aereo/132015

Supremes Rule Against Aereo

In a big win for broadcasters, the Supreme Court has reversed a lower court 
ruling denying broadcasters' injunction against internet service Aereo.

That came in an opinion released Wednesday (June 25), according to SCOTUSblog. 

The decision was 6-3, with Justice Breyer delivering the opinion. Justices 
Antonin Scalia, Clarence Thomas and Samuel Alito dissented.

“Today’s decision is a victory for consumers,” said Paul Clement, an attorney 
for broadcasters in the appeal. “The Court has sent a clear message that it 
will uphold the letter and spirit of the law just as Congress intended.”

“We’re gratified the Court upheld important Copyright principles that help 
ensure that the high-quality creative content consumers expect and demand is 
protected and incentivized,” ABC parent Disney said. ABC was the lead 
broadcaster in the appeal

The court ruled that Aereo provides a public performance, not a private one, as 
Aereo had asserted. "The statute makes clear that the fact that Aereo’s 
subscribers may receive the same programs at different times and locations is 
of no consequence. Aereo transmits a performance of petitioners’ works “to the 
public,”Breyer wrote for the majority.

The court went out of its way to say that the ruling was a narrow one that 
should not discourage technological innovation.

“We must decide whether respondent Aereo, Inc., infringes this exclusive right 
[of public performance] by selling its subscribers a technologically complex 
service that allows them to watch television programs over the Internet at 
about the same time as the programs are broadcast over the air,” said the 
court. “We conclude that it does.”

The court said Aereo was more like a cable company than the mere 
access-to-equipment provider it claims to be. "Aereo is not simply an equipment 
provider. Rather, Aereo, and not just its subscribers, 'perform[s]' (or 
'transmit[s]'). Aereo’s activities are substantially similar to those of the 
CATV [cable] companies that Congress amended the [Copyright] Act to reach."

“The Court decided the Aereo case correctly," said David Wittenstein, a partner 
in law firm Cooley LLP's Technology Transactions practice who advises broadcast 
and cable clients. "Aereo has set itself up as the functional equivalent of a 
cable system, and it shouldn’t be able to create a commercial video 
distribution business without any of the obligations imposed on other 
commercial video distributors."

The court said its ruling should still allow for technological innovation--like 
the cloud storage regime some feared could get swept up in the decision.

“The Court largely resisted the temptation to address issues relating to cloud 
storage and network DVRs," he said. "The Court concluded that those issues 
weren’t squarely presented in this case.  It’s clear, however, that the Court 
is likely to more sympathetic to other cloud applications than it was to 
Aereo’s business model.”

The dissenting judges said the majority got it all wrong when they concluded 
that Aereo provided a public performance, similar to a cable operator, subject 
to copyright payments.

"Aereo does not 'perform' at all," they wrote in their dissent. " The Court 
manages to reach the opposite conclusion only by disregarding widely accepted 
rules for service-provider liability and adopting in their place an improvised 
standard (“looks-like-cable-TV”) that will sow confusion for years to come."

Broadcasters claimed that Aereo was violating copyright by delivering TV 
station signals remotely over the Internet without compensating content 
providers.

The High Court upheld broadcasters challenge to a Second Circuit Court of 
Appeal's denial of a preliminary injunction against Aereo, which uses banks of 
remote mini-antennas and serviers to acquire and make available TV station 
signals and remote DVR functionality to subscribers for a monthly fee. The 
Second Circuit had signaled that the company's remote antenna system does not 
violate copyright.

The lower courts were split over whether that was legal or not, though there 
was not an actual split in the federal appeals courts, in part because 
decisions had been put on hold until the Supremes ruled.

The broadcasters' case against Aereo could still go to trial in several lower 
courts--the Supremes reversed the Second Circuit and remanded for further 
proceedings "consistent with this opinion. But the opinion makes it clear that 
Aereo would lose those cases with the arguments it has used to defend not 
having to pay a copyright fee.

Broadcasters argued that allowing Aereo to operate without paying would 
undermine the value of advertising, their largest revenue stream; "impair" 
their ability to negotiate for their second-largest revenue stream, retrans 
fees; cause a migration of popular free, over-the-air network programming to 
pay platforms; and interfere with authorized online streaming.

Pro football and baseball leagues had warned that if Aereo were allowed to 
deliver and package TV station signals without paying copyright fees for the 
programming, the leagues would likely take their ball and go home, "home" being 
pay channels where they could be sure to get compensated, and where their own 
packages of games can't be trumped by a service that doesn't pay.

Aereo had argued that it was simply providing remote access to free TV and the 
fair ues recording right its subs are entitled to.

Broadcasters got some high-powered support for their argument when the Obama 
Administration weighed in on their side back in March, concluding that Aereo 
was illigally retransmitting broadcast content and infringing public 
performance rights. Aereo had argued it was not a public performance but a 
private one.

Aereo founder Chet Kanojia and Aereo investor Barry Diller have said that if 
Aereo loses, the company may have to go out of business, although more recently 
there have been reports that Kanojia was considering the option of paying 
broadcaster, though, financial analyst Well Fargo points out that it could also 
pay for the content or continue to fight in the lower courts--the ruling was on 
an injunction, so the underlying case could still be argued, though with the 
Supreme Court's ruling, that would clearly be a tough sell.

Also adversely affected by the decision is FilmOn, which also delivers TV 
station signals online via remote antennas. A court decision on the fate of an 
injunction against that service, also sought by broadcasters, had been put on 
hold until the Supreme Court decided the Aereo case.

"This huge blow to net neutrality and consumer rights proves my mistrust of the 
courts is well founded and that the policies and agencies that are supposed to 
protect the public interest have failed," said FilmOn founder Alki David. "They 
are indeed mere tools of a handful of corporations intent on keeping the people 
in a stranglehold of bad cable service at extortionist fees."

To read the full opinion, click here. 

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