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Aereo ruled illegal by US supreme court as broadcasters win copyright battle Aereo ruled illegal by US supreme court as broadcasters win copyright battle
(about 1 hour later)
The Supreme Court ruled against internet TV service Aereo on Wednesday, handing a victory to major broadcasters who had argued the service violated their copyright and posed a fundamental threat to their businesses. The supreme court ruled against internet TV service Aereo on Wednesday, handing a victory to major broadcasters who had argued the service violated their copyright and posed a fundamental threat to their businesses.
The court rejected an earlier appeals court decision which had ruled the fledgling service did not breach broadcasters’ copyright. The judges voted 6-3 against the earlier ruling. The ruling effectively means the court sees Aereo as similar to a cable company – and therefore liable to pay for the content it broadcasts.The court rejected an earlier appeals court decision which had ruled the fledgling service did not breach broadcasters’ copyright. The judges voted 6-3 against the earlier ruling. The ruling effectively means the court sees Aereo as similar to a cable company – and therefore liable to pay for the content it broadcasts.
Broadcasters make hundreds of millions per month from retransmission fees paid by cable companies. Jason Buckweitz, associate director for the Columbia Institute for Tele-Information, said if Aereo had to pay those fees it would be “dead in 90-days”. Broadcasters celebrated the decision. They make hundreds of millions per month from retransmission fees paid by cable companies. In a statement 21st Century Fox called the ruling “a win for consumers that affirms important copyright protections”.
“I’m in complete shock about this decision,” he said. “It’s a major blow for cord cutters.” He predicted the ruling could have a knock-on effect on Slingbox, Aereo founder Chet Kanojia called the decision “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.”
Aereo captures the over-the-air signals of network broadcasters and streams them to customers via their computers, smartphones or devices such as Apple TV or Roku. It has thousands of tiny aerials that it assigns to each of its customers, which allows Aereo to argue that its clients are merely renting antennae of the sort they would otherwise have in their homes. He said it sent a “chilling message to the technology industry” and would “continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
Customers pay between $8 and $20 a month for the service, which includes a cloud-based digital video recorder – far less than the average cable bill. The company does not pay fees to the media companies whose signals it redistributes, while the cable companies pay about $3bn. The broadcasters argued that Aereo violated copyright law. But experts predicted the end for Aereo. Jason Buckweitz, associate director for the Columbia Institute for Tele-Information, said if Aereo had to the fees cable firms pay, it would be “dead in 90-days”.
“I’m in complete shock about this decision,” he said. “It’s a major blow for cord cutters.” He predicted the ruling could have a knock-on effect on Slingbox, another TV streaming service.
Major broadcasters had threatened to pull their stations off the air and move to subscription only if they lost the case. The National Football League and Major League Baseball said sports programming would likely migrate from broadcast to cable television if Aereo succeeded.Major broadcasters had threatened to pull their stations off the air and move to subscription only if they lost the case. The National Football League and Major League Baseball said sports programming would likely migrate from broadcast to cable television if Aereo succeeded.
Aereo, which launched in 2012 in the New York area, has expanded across the US and is now available in cities including Atlanta, Boston, Denver, Houston and Miami.Aereo, which launched in 2012 in the New York area, has expanded across the US and is now available in cities including Atlanta, Boston, Denver, Houston and Miami.
Diller downplayed the ruling on Wednesday. “It’s not a big (financial) loss for us, but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute (Aereo CEO) Chet Kanojia and his band of Aereo’lers for fighting the good fight,” he said. Each customer can receive broadcast shows via a small digital antennae and store them on a DVR and stream channels on computers and Android or iOS devices, or via Apple TV, Google’s Chromecast and Roku. Monthly plans start at $8 for 20 hours of storage, a fraction of the average cable bill.
Backed by Diller’s IAC, Aereo has clashed repeatedly with the television networks. Last October broadcasters including ABC, CBS and Fox filed a petition to the supreme court after an appeals court rejected their call for a ban on the service. Backed by media mogul Barry Diller’s IAC, Aereo has clashed repeatedly with the television networks. Last October broadcasters including ABC, CBS and Fox filed a petition to the supreme court after an appeals court rejected their call for a ban on the service.
They argued that the service was making a “public performance” of their shows – something that would be covered by copyright law – and that Aereo was effectively stealing their shows. Cable companies pay huge fees to broadcasters whereas Aereo has so far paid nothing.They argued that the service was making a “public performance” of their shows – something that would be covered by copyright law – and that Aereo was effectively stealing their shows. Cable companies pay huge fees to broadcasters whereas Aereo has so far paid nothing.
21 Century Fox chief operating officer Chase Carey, speaking at the time as COO of News Corp, threatened to take Fox off the air and convert it to a cable-only channel after the lower court ruling. "We need to be able to be fairly compensated for our content … we can't sit idly by and let an entity steal our signal. We will move to a subscription model if that's our only recourse,” he said. The ruling was far more definitive than many observers had been expecting. Lobby groups Electronic Frontier Foundation and Public Knowledge had backed Aereo in court, arguing that shutting the service would send a dangerous message to startups and calling the broadcasters’ arguments “bogus”.
In a statement, 21st Century Fox, formed from the breakup of News Corp, said: “21st Century Fox welcomes the US supreme court’s ruling, a decision that ultimately is a win for consumers that affirms important copyright protections and ensures that real innovation in over-the-top video will continue to support what is already a vibrant and growing television landscape.”
Alki David, CEO of FilmOn, a rival to Aereo which has faced similar legal battles, said: "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. 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. The effects on values the US supposedly takes pride in – from innovation to free markets to freedom of speech itself – are truly scary.”
The ruling was far more definitive than many observers had been expecting. Lobby groups Electronic Frontier Foundation and Public Knowledge had backed Aereo in court arguing that shutting the service would send a dangerous message to startups and calling the broadcasters’ arguments “bogus”.
In their ruling the supreme court justices argued: “Given the limited nature of this holding, the court does not believe its decision will discourage the emergence or use of different kinds of technologies.”In their ruling the supreme court justices argued: “Given the limited nature of this holding, the court does not believe its decision will discourage the emergence or use of different kinds of technologies.”
The argument centered on the interpretation of a federal law that applies to the public performance of copyrighted works. Aereo argued that its antennae meant it was facilitating thousands of individual performances and not a public performance, which would violate the Copyright Act of 1976, which gives the copyright owner the “exclusive right” to “perform the copyrighted work publicly”. The argument centered on the interpretation of a federal law that applies to the public performance of copyrighted works. Aereo argued that its antennae meant it was facilitating thousands of individual performances and not a public performance, which would violate the Copyright Act of 1976 which gives the copyright owner the “exclusive right” to “perform the copyrighted work publicly”.
Last April, Aereo beat off an attempt to shut it down in a New York court with the judges citing the case of Cablevision, which in 2008 clashed with 20th Century Fox and others over the creation of a cloud-based, digital video recorder. One dissenting judge, Denny Chin, called Aereo's technology "a sham". Chin wrote that the company was using a multitude of antennas in order to take advantage of "a perceived loophole in the law". Last April Aereo beat off an attempt to shut it down in a New York court with the judges citing the case of Cablevision, which in 2008 clashed with 20th Century Fox and others over the creation of a cloud-based digital video recorder. One dissenting judge, Denny Chin, called Aereo's technology "a sham". Chin wrote that the company was using a multitude of antennas in order to take advantage of "a perceived loophole in the law".
Objecting to the ruling, supreme court justice Antonin Scalia compared Aereo to a photocopier and said the company “should not be directly liable whenever its patrons use its equipment to ‘transmit’ copyrighted television programs to their screens”. But the majority of the judges rejected that argument given Aereo’s “overwhelming likeness to the cable companies”. Objecting to the ruling supreme court, justice Antonin Scalia compared Aereo to a photocopier, and said the company “should not be directly liable whenever its patrons use its equipment to ‘transmit’ copyrighted television programs to their screens”. He said the decision was “built on the shakiest of foundations and would have unintended consequences."
“The court vows that its ruling will not affect cloud-storage providers and cable television systems … but it cannot deliver on that promise given the imprecision of its results-driven rule”
David Wittenstein, partner in law firm Cooley LLP's Technology Transactions, which represents several broadcasters and cable firms, said: “The court has said that what Aereo was doing was the functional equivalent of a cable or a satellite system. The question was could they cleverly [avoid] the obligations of that a cable company is subject to, the answer is no.”David Wittenstein, partner in law firm Cooley LLP's Technology Transactions, which represents several broadcasters and cable firms, said: “The court has said that what Aereo was doing was the functional equivalent of a cable or a satellite system. The question was could they cleverly [avoid] the obligations of that a cable company is subject to, the answer is no.”
But Wittenstein said the ruling was far from the end the debate over copyright in the digital age and the court had tried, perhaps unsuccessfully, to avoid ruling on copies made by consumers and stored in the cloud. “The toughest issue for cloud computing now is whether Aereo [can say] that legitimate copies made by consumers can’t be transmitted back by those consumers. I can’t definitively say that but there is a little bit of wiggle room for copyright owners.” But Wittenstein said the ruling was far from the end the debate over copyright in the digital age and the court had tried, perhaps unsuccessfully, to avoid ruling on copies made by consumers and stored in the cloud. He said he was “certain” that copyright and the cloud would be back before the supreme court in another case in the not too distant future.
He said he was “certain” that copyright and the cloud would be back before the supreme court in another case in the not too distant future.