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Summary:

Aereo, a bold bid to transmit television via broadband using tiny off-site antennas, won a major victory in federal court Wednesday when a judge denied the plaintiffs’ demand for a preliminary injunction blocking the service from allowing timeshifting during a live broadcast. The judge found that […]

Aereo Dime Size Antenna

Aereo, a bold bid to transmit television via broadband using tiny off-site antennas, won a major victory in federal court Wednesday when a judge denied the plaintiffs’ demand for a preliminary injunction blocking the service from allowing timeshifting during a live broadcast. The judge found that Aereo’s method of enabling individuals to control viewing and recording from their PCs or mobile devices was covered by an earlier appellate decision. (Full ruling embedded below.)

IAC Chairman Barry Diller, an investor in the startup, has insisted all along that Aereo is legal because the antennas are leased to subscribers who control them. After the ruling, he told the New York Times: “I did think we were on the side of the angels…certainly for consumers — good to see the judge saw it that way.”

The plaintiffs, including Fox, Tribune Company, PBS, and Univision, quickly issued a statement of their own, promising to appeal:

Today’s decision is a loss for the entire creative community. The judge has denied our request for preliminary relief – ruling that it is ok to misappropriate copyrighted material and retransmit it without compensation. While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal.

U.S. District Judge Alison J. Nathan ruled that the networks and television stations suing Aereo had some points in their favor but were arguing a legal position that was unlikely to win in court based on precedent set by the earlier case Cartoon Network vs. CVC Holdings (Cablevision). In that case, an appellate court agreed with Cablevision that individual delivery to customers of shows recorded via off-site DVR was not the same as a transmission to the public. Aereo’s individually operated antenna-DVR contention dovetails with Cablevision. The judge accused the plaintiffs of trying to twist that ruling by arguing some elements should apply and others should not — and concluded “faithful application of Cablevision requires the conclusion that Plaintiffs are unlikely to succeed on the merits of their public performance claim.”

But Aereo didn’t emerge unscathed. It doesn’t change the results but Judge Nathan agreed that the networks and television stations suing are threatened “with irreparable harm by luring cable subscribers from that distribution medium into Aereo’s service, diminishing Plaintiffs’ ability to benefit from their content in ways that are fundamentally difficult to measure or prove with specificity.” She described the possibility of imminent irreparable harm as “substantial, but not overwhelming.”

She also pushed aside Aereo’s claims, and that of supporters, that shutting down technology that transmits public airwaves would not be in the public interest. The judge pointed out that “Aereo is a business and does not provide ‘free’ access to broadcast television.”

The U.S. District Court case dates back to March, just two weeks after the startup was unveiled and before the $12-a-month service started. As my colleague Jeff John Roberts wrote then, the case was “likely to turn on a distinction rooted in the analog era that distinguishes between transmitting to one or to many viewers.” Aereo argued that each subscriber would operate his or her own antenna and that DVR-like use allowing time shifting would be individually controlled as well. After nearly three months of discovery, Judge Nathan held a two-day hearing. This ruling comes six weeks later.

In the ruling, Judge Nathan said of all the theories the plaintiffs offered, “including infringement of the right of public performance, infringement of
the right of reproduction, and contributory infringement,” only one mattered in the quest for a preliminary injunction that would bar it from operating and in a narrow way. That’s the claim of “copyright infringement by publicly performing Plaintiffs’ copyrighted works.”

That was narrowed even more by limiting it to “the aspects of Aereo’s service that allow subscribers to view Plaintiffs’ copyrighted television programs contemporaneously with the over-the-air broadcast of these programs.”

(Judge Nathan also pointed out in the footnotes that Aereo wants to be viewed as a tech platform, not a service.)

When the startup’s plans went public earlier this year, networks began asking for payment in exchange for permission to transmit the signal (retransmission fees). But Diller says he told them: “When you get Radio Shack to pay you a slice of profit for selling an aerial, we’ll pay you.”

Diller also said in March that Aereo, which is available only in New York City, will go national. This ruling should help with the legal aspect. The jury on profitability is going to be out for a while.

Update: React continues to roll in as people parse the ruling. In a separate statement, plaintiff CBS told Reuters: “This case is not over by a long shot. We intend to immediately appeal this decision to the Second Circuit and seek expedited consideration.”

All broadcasters are avid about retrans fees but it’s close to a religion for CBS CEO Leslie Moonves. NBC also plans to appeal, according to Reuters.

And we got this statement from ABC Wednesday night:

“The main event in this case has always been a decision by the Appeals Court. We remain confident in our position and look forward to the opportunity to present our argument to that Court.”

Aereo CEO Chet Kanojia savored this victory: “Today’s decision shows that when you are on the right side of the law, you can stand up, fight the Goliath and win.” (A company with Diller on its side isn’t exactly fighting Goliath with pebbles.) But Aereo also acknowledges more legal challenges are ahead: “The cases remain technically pending, however, Judge Nathan’s opinion has spoken eloquently, clearly and comprehensively about the issues in the case. It is Aereo’s hope that in light of the Judge’s opinion, the plaintiff broadcasters will reconsider their resistance to new technology and embrace consumer access and innovation.”

It’s July. Don’t expect hell to freeze over.

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  1. If Aereo set up enough of their antennas and acquired enough customers to have as many customers as a cable company in NYC, I don’t see how Aereo would be any different from a cable company in NYC. So Aereo’s antennas allow their clients to control what they see – a cable company’s clients can also control what they see. I think Aereo is trying to exploit a loophole in the copyright law and accomplish something that could not have been anticipated when the law was written.

    1. The key difference is that with the cable company, people are sharing an incoming feed picked up off of satellite provided by the networks to the cable companies. In Aereo’s case, they are renting you a DVR and a single antenna that is yours alone to control that only picks up OTA television.

  2. Mark Herman Simon Thursday, July 12, 2012

    Great summary. Expect action in Congress soon..

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