Supreme Court to Hear Aereo Case - Will likely determine the future of digital streaming
Supreme Court to Hear Aereo Case
JANUARY 10, 2014 | 11:53AM PT
Ted Johnson Senior Editor
The Supreme Court will hear broadcasters’ challenge to
the legality of startup Aereo, in a case that may not only determine the future
of digital streaming of station signals but of network television itself.
Without comment, the justices on Friday agreed to accept
ABC Television Stations vs. Aereo, in which the television networks are seeking
to halt the Barry Diller-backed venture, contending that its offering of
streams of station signals in New York and other markets violates the public
performance provisions of the Copyright Act. Justice Samuel Alito took no part
in the consideration of the petition, the court said, without elaborating.
Typically such recusals are for a potential conflict of interest, and Alito has
previously said that his family owned stock in the Walt Disney Co.
“We are pleased the Court has agreed to hear this
important case,” Fox, Univision, PBS and other plaintiffs said in a joint
statement. ”We are confident the court
will recognize that this has never been about stifling new video distribution
technologies, but has always been about stopping a copyright violator who
redistributes television programming without permission or compensation.”
CBS, along among the plaintiffs, said that they “believe
that Aereo’s business model, and similar offerings that operate on the same
principle, are built on stealing the creative content of others. We are pleased
that our case will be heard and we look forward to having our day in court.”
ABC and NBC also released a joint statement, saying they were “gratified” that
the high court is taking the case.
Chet Kanojia, founder and CEO of Aereo, said that “it was
our hope that this case would be decided on the merits and not through a
wasteful war of attrition. We look forward to presenting our case to the
Supreme Court and we have every confidence that the court will validate and
preserve a consumer’s right to access local over-the-air television with an
individual antenna, make a personal recording with a DVR, and watch that
recording on a device of their choice.”
Aereo argues that it is well within legal boundaries. It
assigns each subscriber a dime-sized remote antenna, with individual copies of
broadcast feeds recorded to a remote hard disk and, after a delay of at least
six seconds, streamed to the viewer.
Aereo contends that its users, not the company, have
“control” over the system, making it a private use akin to time-shifting on a
VCR or DVR. It is relying in large part on a 2nd Circuit Court of Appeals
decision in 2008 that determined that Cablevision was within the bounds of
copyright law when it offered a remote DVR.
The next year, the Supreme Court declined to review the
Cablevision case, letting the decision stand in what ultimately turned out to
be an example of the unintended consequences of challenging emerging technology
in the courts. In fact, before declining media congloms’ petition to review,
the justices asked then-Solicitor General Elena Kagan to weigh in, and she and
other staff attorneys concluded that the Cablevision decision was
“insufficiently important” to warrant it.
In 2012, U.S. District Judge Alison Nathan relied on the
Cablevision decision in refusing to issue an injunction to halt Aereo, and a
split panel of the 2nd Circuit affirmed her ruling. Another federal judge, in
Boston, also has sided with Aereo.
Interestingly, as the TV networks sought review from the
Supreme Court, Aereo also urged the justices to take the case, concluding that
it would be better to have the issue resolved rather than to have a patchwork
of decisions across the country as it launches in new markets. Broadcasters
also are challenging Aereo in such places as Utah, and they have had greater
success at putting a halt to one of Aereo’s rivals, FilmOn X. Federal judges in
Los Angeles and Washington DC ruled against FilmOn X, and a decision is pending
on that start up’s appeal in the 9th Circuit.
But the implications for broadcasters are greater than
just viability of the two companies. They contend that Aereo threatens to
undercut the growing stream of revenue coming from retransmission fees,
estimated at more than $3 billion annually, which the networks say is more
important in helping to finance original programming. If Aereo continues,
broadcasters say, cable and satellite operators will see little need to pay
those retransmission fees and can merely develop their own streaming services.
Last year, News Corp. COO Chase Carey even threatened that they would consider
putting its Fox network on a subscription platform if services like Aereo were
allowed to continue.
The broadcast networks are confident that the justices
will see the Cablevision decision as an outlier in an otherwise straightforward
interpretation of the Copyright Act, particularly a provision that says a
performance can be defined as ‘public’ whether viewers “receive it in the same
place or in separate places and at the same time or at different times.”
Aereo, meanwhile, argues that the Supreme Court’s opinion
could affect the future growth of cloud computing, in that users are accessing
a host of content stored remotely.
“The landmark Second Circuit decision in Cablevision
provided much needed clarity for the cloud industry and as a result, helped
foster massive investment, growth and innovation in the sector,” Kanojia said
in his statement. “The challenges outlined in the broadcasters’ filing make
clear that they are using Aereo as a proxy to attack Cablevision itself and
thus, undermine a critical foundation of the cloud computing and storage
industry.
“The broadcasters are asking the Court to deny consumers
the ability to use the cloud to access a more modern-day television antenna and
DVR,” he added. “If the broadcasters succeed, the consequences to consumers and
the cloud industry are chilling.”
Earlier this week, Aereo announced that it had raised
another $34 million to help it expand into other markets.
Cablevision has said that it believes that Aereo violates
copyright, but that the Cablevision decision was sound. “Cablevision remains
confident that while the Aereo service violates copyright, the Supreme Court
will find persuasive grounds for invalidating Aereo without relying on the
broadcasters’ overreaching — and wrong — copyright arguments that challenge the
legal underpinning of all cloud-based services,” Cablevision said in a
statement on Friday.
Jonathan Steinsapir, partner at Kinsella, Weitzman, Iser,
Kump & Aldisert, said that Aereo represents the biggest copyright case
involving new technology to reach the high court since MGM vs. Grokster, in
which the justices decided that a file-sharing company could be held liable for
distributing devices with the purpose of making infringing copies.
Studios, he said, are anxious to see the Cablevision
decision overturned. “I think there is a feeling that it was too focused on the
form [of the technology] rather than the substance,” he said. A Supreme Court
ruling also could have an impact on another case that is in the 9th Circuit,
the broadcast networks’ challenge to Dish Network’s introduction of its Hopper
service, which includes an automatic ad-skipping feature.
Broadcasters risk an adverse ruling from the Supreme
Court, Stensapir said, but they have too much at stake not to seek a review.
“It is a risk they have to take,” he said.
Comments
Post a Comment