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Summary:

The Supreme Court on Wednesday issued a decision in the closely watched copyright case that pitted upstart Aereo against the TV industry.

Aereo CEO Chet Kanojia leaves the U.S. Supreme Court after oral arguments April 22, 2014 in Washington, DC. (Photo by Alex Wong/Getty Images)
photo: Alex Wong/Getty Images

The Supreme Court declared on Wednesday that internet TV service Aereo violates copyright law, in a closely-watched case that may have long-term implications for both the TV and cloud computer industries.

In a 6-3 opinion, Justice Stephen Breyer wrote that Aereo infringed on broadcasters’ exclusive right to transmit their programs over-the-air, and that the startup engaged in an unlicensed public performance. Breyer concluded that Aereo was more similar to a cable company and not, as Aereo claimed, like a modern day antenna and VCR service that let consumers carry out private viewing (my annotation):

In sum, having considered the details of Aereo’s practices, we find them highly similar to [early cable TV services] .. Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the Act.

Aereo, which launched in 2012, rattled broadcasters with its service, which let subscribers pay $8 a month to capture and record free over-the-air TV signals and play them on their computers or on mobile devices. The big broadcasters — ABC, CBS, NBC and Fox — sued Aereo almost immediately after it opened.

This week’s ruling means that Aereo, which operates in about a dozen cities, will have to wind down its operations almost immediately, and its investors, led by media mogul Barry Diller, will have to walk away from the nearly $100 million they have put into the company.

However, Aereo CEO Chet Kanojia vowed in a statement that the company would “continue to fight:”

“Today’s decision by the United States Supreme Court is a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry. … 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.”

In deciding to shutter Aereo, the court took up the broadcasters’ suggestion to look at the service in the context of the history of cable TV. Specifically, the court looked at changes to the Copyright Act in 1976 that granted the broadcasters expanded rights in publicly “performing” their works.

Based on those changes, the court found that Aereo, despite its one-antenna-per-subscriber policy, was not just renting equipment that allowed customers to enjoy a private performance — that private right is what allows people to reproduce shows with a VCR or a DVR. The single antenna did not matter because:

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. We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”

The court also blew off concerns expressed in the courtroom that granting copyright owners public performance rights in cloud-based transmission could have unintended consequences.

“We do not believe that our limited holding today will have that effect,” the court wrote as part of a brief explanation.

The conservatives on the court, however, complained that the majority had mangled the plain and commonsense meaning of the law, and specifically what it means to “perform.”

Writing in dissent, Justice Antonin Scalia argued that Aereo did not “perform” at all — an interpretation of the law that enjoyed considerable support by many law professors. Scalia argued that the majority ruling did not reflect what Aereo’s service actually did, and warned that other companies and services would struggle to navigate a “guilt-by-resemblance regime” and complained of “an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come.”

Barry Diller was philosophic over the ruling, telling CNBC: “We did try, but it’s over now .. It’s not a big [financial] loss for us, but I do believe blocking this technology is a big loss for consumers.”

The head of the National Association of Broadcasters, Gordon Smith, crowed over the ruling:

“Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”

The question at the heart of the case turned on the tiny antennas that Aereo rented to each subscriber. The company argued that they were like a private rooftop antenna attached to a VCR, while broadcasters described the setup as a “Rube Goldberg” device to mask copyright infringement.

Broadcasters and sports leagues feared that a win by Aereo would lead cable companies to rejigger their services in an attempt to avoid paying so-called retransmission frees. Meanwhile, many big tech and internet companies supported Aereo, warning that an adverse ruling could threaten the legal status of popular consumer cloud services like Dropbox and Google Drive.

When the Supreme Court heard the case in April, the Justices appeared to be struggling with how to take account of the interests of content owners without threatening the emerging cloud computer industry.

The entire ruling follows below:

Aereo

  1. John Sheffield Wednesday, June 25, 2014

    Of course they did.

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    1. JustSomeNobody Wednesday, June 25, 2014

      Because hindsight is 20/20.

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  2. The ruling is ridiculous. They are more worried about the affect that this decision would have on the cable companies then whether it is legal or not. By the letter of the law, as it is written, this service should be legal. If that isn’t the way it should be then law makers should look to amend the law. This decision protects the incumbents and stifles innovation.

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    1. Rob I agree with you 100%.

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      1. LivePoliticalChat Wednesday, June 25, 2014

        Rob I agree with you.

        Since when has the law been about how it would affect the other guy and not The Actual Legalities involved.

        If Aereo found a loophole that potentially broke CableCo then maybe it was time for them to be broken (I don’t btw…I think at $8 a month Aereo would struggle to find customers etc and fade away…..).

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    2. I see both sides of the debate. I was disappointed with the ruling but if you think it through, the ramifications is that no one will be able to get free TV in 5 years because all the networks would not have money to produce the nightly news, let alone TV programs – they’d be out of business. If Aeroe won, then cable would start doing the same thing – without paying the networks as they do now. We may not like the decision but maybe it was the better of two bad choices.

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      1. Sorry, but that’s incorrect. The only thing that the broadcast networks would lose would be a portion of the retransmission fees, which are only a portion of their revenues (majority comes from commercials. In other words, their profits would be slightly reduced.

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    3. Kenny J Lowry Wednesday, June 25, 2014

      Here, here!

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  3. How in the world did Scalia, Thomas and Alito end up on the correct side of this debate??? For a second I thought there was a mis-print.

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    1. They are almost always on the correct. side of an opinion. You are just very confused most of the time.

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      1. Haha, whatever you say ;)

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    2. Word is that Thomas at least was busy staring at his can of Coke,,,

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  4. I’m with Justice Scalia. Aereo is NOT transmitting publicly. They allow their users to rent an antennae and watch privately. This 6-3 ruling against Aereo is WRONG. If they cant get this ruling right, this goes to show that we have a major SCOTUS problem, especially if they cannot understand simple technological concepts, like Aereo’s login access that mandates private watching of rented antennae, as seen here.

    I guess it would be illegal, then, for me to record my shows with a DVR captured with my OTA antenna, store them on my NAS on my home network, and then login to my NAS with my personal password and watch my recorded shows over the net???!!! Because this is what this ruling is saying. So this ruling is insane.

    How do we overrule the Supreme Court when they get something wrong?

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    1. Amend the US Constitution.

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    2. Chris Stehlik Wednesday, June 25, 2014

      Rewrite the law that they found was violated. In this case, you don’t need to rewrite the Constitution, just amend a portion of copyright law.

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  5. So for those how can’t get tv signals ( I for example live near manhattan and I get nothing) I have to pay TWC $50 extra to get their lousy service. Seems some judges got some $$$ their way

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    1. I’m sure you can receive free channels in Manhattan, you just need the correct antenna and maybe an amp. Try a flatwave antenna from costco and a tv antenna amplifier. I get 50+ free channels in Manhattan.

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  6. Justices Antonin Scalia, Samuel Alito and Clarence Thomas dissented.

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  7. It’s going to be interesting to see how all this plays out.
    Leslie

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  8. Did SCOTUS step outside their bounds in this decision? Aren’t they limited to INTERPRETATION OF THE LAW, REGARDLESS OF THE IMPLICATIONS OF THAT INTERPRETATION? This seems like a bad ruling to me.

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  9. I just read the SCOTUS opinion, and I see a big error in this ruling. The SCOTUS opinion states that along with the petitioners’ exclusive right(s) to “perform the copyrighted work publicly”, per the 1976 Copyright Act’s Transmit Clause, the petitioners right(s) include the right to “transmit or otherwise communicate a performance … of the [copyrighted] work … to the public, by means of any device or process, whether the members of the public capable of receiving the performance … receive it in the same place or in separate places and at the same time or at different times.”

    This all boils down to understanding how Aereo works and to the semantics in how “the public” and “perform … publicly” are defined, and, more specifically, what does it mean to “trasmi[t] or otherwise communicat[e] a performance of the [copyrighted] work to the public”.

    If transmitting works to the public means transmitting over the air so that anyone can see it, whether in the same place or separate places and at the same time or at different times, because it is “openly public”, as in a broadcast, then SCOTUS has erred in this Aereo ruling. Aereo does NOT transmit, openly to the public, works by a device or process so that anyone can see it. Aereo transmits works privately to individuals, just as a DVR or VCR transmits works privately within an electronic device to a connected viewing device (the TV or screen) that is personally available to the end user.

    If this ruling is indeed proper — that is, the SCOTUS ruling/implication that a private transmission such as Aereo’s falls within the petitioner’s exclusive rights to transmit to the public per the Copyright Act is proper — then all VCRs and DVRs must be declared illegal, as they comprise devices and/or processes that perform petitioner’s works “publicly” within the meaning of the Transmit Clause.

    I believe this is a very bad interpretation of the Copyright Act’s Transmit Clause, concluded by a very bad understanding of how Aereo transmits works privately to individuals, just like an HD antenna does after it receives signal, and just like a VCR or DVR does. Otherwise, anyone who has personally recorded and watched a show is guilty of violating copyright law.

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    1. No, Aereo does not transmit openly to the public. They just send signals to anybody who wants them!

      I’m so glad you cleared that up for us.

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      1. Unfortunately you are wrong. Aereo does not transmit signals. They transmit recorded video, as selected by the user and as received by the user’s antenna.

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        1. nofanofaereo Friday, June 27, 2014

          You might want to ask an electronics engineer for the definition of signals.

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      2. And therefore, what they do transmit (recorded video as selected by the user and as received by the user’s antenna), is NOT an open, public transmission to the public.

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    2. Not close and no cigar… if you record something at home and watch it you’re not violating copyright law because you’re only recording the content for yourself. You aren’t retransmitting or rebroadcasting (copyrighted content) for a fee like Aereo was. It doesn’t matter HOW it’s sent, either by the airwaves or over the internet, it’s still considered transmitting.

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  10. That’s what happens when you have last generation supreme court judge who have no idea of where the technology is going and will keep vetting it thru the last century lenses.

    The broadcast signals which is in Air, locally, remains there. Aereo was simply providing an option to DVR it. Dont’ consumer already have that option ? Additionally that DVR feature was available thru the internet, again, don’t consumers have that options.

    So, how come Aereo is illegal and slingbox, Tivo, Hauppage etc. is not etc. is not. In all these cases, consumers are able to DVR any legally available channels (either paid or free OTA).

    so disappointing..

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    1. Because the technologies you mentioned are for *personal* recording and viewing. Aereo was recording and retransmitting for a fee, in direct violation of copyright law. If you used any of the products you mentioned and charged anyone a fee to view what you recorded you’d be doing the same thing Aereo was.

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