Aereo keeps the legal war going despite Supreme Court loss
Aereo keeps the legal war
going despite Supreme Court loss
The streaming-TV startup's new legal tack embraces the
ruling against it, arguing that the decision means Aereo deserves the same
copyright license cable companies get.
by Dara Kerr and
Joan E. Solsman
July 9, 2014 7:14 PM PDT
Streaming-television service Aereo plans to continue its
fight for survival in a lower court, switching to a new legal argument: If the
Supreme Court says we're a cable company, we want the cable companies' content
license.
"Aereo temporarily suspended its
operations...despite the fact that it believes that it can still operate with
the terms of the Supreme Court's decision," the company wrote in a court
filing with the Second Circuit Court of Appeals Wednesday.
Should Aereo's new strategy advance it to the next stage
of its fight, the small startup faces a steep uphill climb. It is embarking on
what is likely to be a very long and costly legal battle against some of the
biggest and best funded corporations in the world. With its service suspended,
Aereo is taking in no revenue while continuing to pay the costs of operating in
its scaled-back state. And the startup's most vocal financial backer -- IAC
Chairman Barry Diller -- had a bleak outlook immediately after the Supreme
Court ruling. "We did try, but it's over now," he told CNBC.
Last month, the Supreme Court decided that Aereo -- a
startup that uses arrays of tiny, individual antennas to pick up free
over-the-air television and then stream that programming to paying customers --
was essentially the same as a cable provider with two major exceptions: It has
different, fancier technology, and it fails to pay the required licensing fees
to broadcasters that cable companies must. The latter shortcoming resulted in a
6-3 decision against Aereo on the grounds that it was infringing copyright
under its model at the time.
Aereo's response Wednesday was to change its licensing
model, switching from zero licensing to a type known as a statutory license. It
is a royalty system set up in the Copyright Act of 1976 -- the same act the
Supreme Court found Aereo to be violating -- that allows cable systems to
retransmit copyrighted programming by paying royalty fees with the Licensing
Division of the US Copyright Office.
Working in Aereo's favor, this is what is known as a
compulsory license. That means Aereo doesn't need any approval from the
broadcasters to pay its way and resume retransmissions. (CBS, the parent
company of CNET, is among the broadcasters suing Aereo.)
"If Aereo is a 'cable system' as that term is
defined in the Copyright Act, it is eligible for a statutory license, and its
transmissions may not be enjoined," the company wrote in its letter to the
Second Circuit. It added that it has begun to file the necessary paperwork and
royalty fees under the statutory license.
CNET News has requested the broadcasters' response to the
letter. The broadcasters Wednesday called the tactic astonishing in its
presumption that the Supreme Court ruling against it transformed the company
into a cable system, especially given its statements to courts previously that
it was not, according to reports.
The decision by the Supreme Court sent the case back to
Second Circuit Court of Appeals, where Aereo had initially triumphed over the
preliminary injunction the broadcasters sought.
It is in the Second Circuit's hands now to decide whether
to issue that preliminary injunction or to allow Aereo the opportunity to keep
operating as it pursues this new line of argument to a trial. In the wake of
the court's ruling, Aereo temporarily suspended its service.
Before the Supreme Court ruling, the company had more
than 100,000 subscribers paying $8 to $12 a month, according to an analyst
estimate.
"From the beginning, it has been our mission to
build a lawful technology that would provide consumers with more choice and
alternatives in how they watch television," Aereo CEO Chet Kanojia said in
a statement on Wednesday. "We remain committed to building great
technologies that create real, meaningful alternatives for consumers."
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