Start-up Aereo has lost its case in the US Supreme Court against major TV broadcaster who accused Aereo of violating copyright law.
Aereo offers subscribers the ability to access live TV streaming on mobile devices via the Internet, plus 20 hours of DVR space for time-shifting programs. Aereo gets around the issue of broadcast licensing by manufacturing and using thousands of tiny antennas, each assigned to a single subscriber and used to receive the TV broadcasts that are then recorded or re-transmitted.
A coalition of TV networks, including Fox, PBS, ABC, NBC and Univision sued Aereo in 2012 for unauthorized re-broadcasting of their channels. The studios argue that Aereo is simply being too clever in trying to circumvent copyright laws by using a ridiculous set up of thousands upon thousands of tiny antennas (each the size of a dime), in order to escape paying broadcast licensing fees.
While earlier Federal court victories gave hope to Aereo in their fight against the media conglomerates, the US Supreme Court on Wednesday ruled 6-3 in favor of the TV broadcasters, saying Aereo's business model doesn't mean it isn't liable for re-transmission fees.
After hearing arguments from both sides in late April, the court released its ruling this week and overruled lower court decisions on the matter.
Justice Stephen G. Breyer, speaking for the court in the majority opinion, cited historical precedent in relation to early attempts by cable companies to circumvent the need to pay re-transmission fees by using their own antenna based system, an issue addressed in the Copyright Right Act of 1976.
Bayer explained that Aereo's business model did not differ that much from "a traditional cable system". "The many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here," he said.
Bayer was also keen to stress that the ruling was limited in nature and should not affect other cloud-based content services being offered by the likes of Google and Microsoft.
The dissenting opinion was led by Justice Antonin Scalia and he believed that what Aereo does may not constitute a "public performance", as it was only sending signals, received from each unique antenna, to one household.
Broadcasters welcomed the decision, saying it was a victory for content producers and consumers alike.
"Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.," said Gordon Smith, the president and CEO of the National Association of Broadcasters.
"Independent producers are already challenged in finding licensing opportunities for their television programming in the United States and unauthorized systems like Aereo, which do not pay licensing fees directly to producers nor indirectly through statutory compensation for retransmission of their programming, stifle innovation and creation by cutting off sources of legitimate financing and investment for independent production," said Independent Film & Television Alliance president and CEO Jean Prewitt.
Aereo was naturally disappointed in the decision and said it was "a massive setback for the American consumer". Aereo CEO and founder, Chet Kanojia applauded Justice Scalia's dissenting opinion.
"Justice Scalia’s dissent gets it right. He calls out the majority’s opinion as ‘built on the shakiest of foundations.’ (Dissent, page 7) Justice Scalia goes on to say that ‘The Court vows that its ruling will not affect cloud-storage providers and cable television systems, see ante, at 16-17, but it cannot deliver on that promise given the imprecision of its results-driven rule.’ (Dissent, page 11).
"We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world," Kanojia posted on the company's official blog.
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