Supreme Court Debates Aereo's Fate, Future of TV and Cloud

Photo: Joshua Roberts/Bloomberg/Getty Images

Aereo CEO Chet Kanojia outside the U.S. Supreme Court.

Should scrappy, tech-savvy entrepreneurs be able to design their way around laws that regulate rebroadcasting? That was the underlying issue on 22 April as the U.S. Supreme Court heard oral arguments in American Broadcasting Companies, Inc., et al. v. Aereo, Inc.

Aereo, which IEEE Spectrum profiled earlier this year, is a Brooklyn, N.Y.-based startup that lets subscribers stream TV shows from certain channels to their digital devices. Its tagline is “Watch live TV online. Save shows for later. No cable required.” Aereo does that by picking up free television broadcasts and storing them in a cloud-based DVR system.

But here's the key technological detail: Each Aereo subscriber is assigned an individual, postage-stamp-size antenna, which is attached to one of the company's servers and picks up TV signals for that user. Because customers rent their own antennas, Aereo argues that its service does not violate rebroadcasting laws.

As the hour-long hearing unfolded, veteran court-watchers like Brent Kendall at the Wall Street Journal and Lyle Denniston at SCOTUSBlog saw more vacillation than decisiveness in the questions from the bench, and less concern for the fortunes of Aereo than for broader impacts as traditional and electronic business models clash.

Aereo maintains that U.S. courts have already decided that its service is legitimate: In 2008, in what has come to be known as the Cablevision decision (though the actual title is Cartoon Network LP v. CSC Holdings), a U.S. appellate court affirmed a cable company’s right to store and retransmit streaming digital video to produce a hosted digital video recorder (or virtual DVR).

But a group of 17 broadcasters and content producers has been trying for two years to stop Aereo, arguing that the service offers an unauthorized “public performance” of their videos, and so violates their copyrights. The plaintiffs include (often under multiple names as both broadcast and production divisions weigh in) ABC/ Disney, CBS, NBC Universal, Telemundo, Fox, Univision, and the Public Broadcasting Service.

In 2012, the U.S. District Court for the Southern District of New York accepted Aereo’s argument, stating that the Cablevision decision ruled in this case and thus rejecting the broadcasters’ effort to stop the company from redistributing content. The broadcasters appealed, of course, and the U.S. Court of Appeals for the Second Circuit twice turned them down—though over appellate judge Denny Chin’s vigorous dissent. Chin called Aereo’s approach a “Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”

So ABC, et al, took their case to the Supreme Court. The Court’s docket typically boils issues down to one or two concise questions. In this case, the question is whether Aereo—or any company—“’publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.”

In Tuesday’s questioning, Chief Justice John Roberts and Justice Ruth Bader Ginsburg reportedly echoed Justice Chin’s reservations. According to the Wall Street Journal, at one point Roberts said, "There's no technological reason for you to have 10,000 dime-size antennas other than to get around the copyright laws," referring to Aereo's tiny copper antennas, which are attached by the thousands to modular racks.

(A transcript of the 22 April arguments is posted on the Court's website. In the normal course of events, the audio should follow on 25 April.)

Overall, reports indicate that the justices seemed more concerned with their decision's impact on emerging cloud services than with Aereo’s fate.

Justice Stephen G. Breyer initiated the discussion of commercial impact—though with a curiously quaint question. As SCOTUSBlog reported, “In the digital age, perhaps only someone as old as Justice Stephen G. Breyer (or older) would fret about what might happen to a store that sells ‘phonograph records.’” Many of the justices seemed to be grappling with the cloud—simultaneously trying to grasp basic concepts, envision its future and implications, and understand how the issues under discussion might affect its development. (To be fair, though Breyer turned 75 last August to become the fourth sitting Justice to pass that milestone on a court with a mean age of 68.4 years, it wasn’t necessarily the older members who were trying to wrap their heads around the cloud.)

The dated reference to vinyl notwithstanding, Breyer posed one of the key questions of the day: What happens to established business models when inventive entrepreneurs can devise technological workarounds to existing copyright law? Justice Sonia Sotomayor extended the question to include new web enterprises as well as the traditional. What about DropBox and iCloud, she asked Paul Clement, the attorney for the broadcasters. What about "someone who sells coaxial cable to a resident of a building? Would they, too, be in violation of copyright if protected material is transferred using their services? Clement said that they would not, arguing that the text of the law allows the justices to distinguish between an Aereo-type "performance" and straight "cloud locker storage."

By my count, interested parties have filed about 30 friend-of-the-court briefs in the case: 17 supported the broadcasters, 10 supported Aereo, and two or three (including those from the trade group Software Alliance, also known as BSA, and the Center for Democracy and Technology) favored neither.

As expected, corporate amicus support lined up heavily behind ABC et al: the American Society of Composers Authors and Publishers, the American Intellectual Property Law Association, the National Association of Broadcasters, Viacom, National Football League, Major League Baseball, Cablevision, the Copyright Alliance, the Screen Actors Guild, the American Federation of Television and Radio Artists, and Time Warner, to name just a few.

Aereo’s allies included the Computer and Communications Industry Association, Mozilla, Dish Network, the Consumer Federation of America, and various coalitions of law professors and small and independent broadcasters.

Probably the most important friend-of-the-court brief, though, came from the U.S. Solicitor General, who threw his support behind the broadcasters and sent Deputy Solicitor General Malcolm Stewart to argue before the court on 22 April. The Solicitor General’s opinion can be crucial. According to a 2010 Boston College Law Review article, the Court winds up supporting the Solicitor General’s position 70 to 80 percent of the time, and “a petitioner's likelihood of winning increases approximately 17 percent when the Solicitor General comes in on its side, and decreases approximately 26 percent when the Solicitor General supports the respondent.”

The Court should hand down its decision by 30 June, the end of its current term.

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