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Aereo Welcomes Supreme Court Action

18 Dec, 2013 By: Doug McPherson

LONG ISLAND CITY, N.Y. – Few companies like heading to court, but Aereo is welcoming it. Last week, it asked the Supreme Court to decide – once and for all – whether its service that streams over-the-air TV shows to paying subscribers’ iPhones, iPads and other devices is legal.

Aereo might just emerge a winner. The Barry Diller-backed startup has already prevailed in court against TV broadcasters in New York and Boston. But the networks aren’t deterred – they’ve vowed to sue Aereo in every market where it launches.

Aereo said last week wants Supreme Court action because it’s tired of fighting the same battle in multiple cities. In court papers it writes: “Even though the Second Circuit decided [the] issue correctly, petitioners have signaled their intention to wage a war of attrition by re-litigating this issue in every market to which Aereo expands its business. Accordingly, Aereo believes it is appropriate for this court to grant review to affirm the decision.”

Aereo CEO Chet Kanojia told the Los Angeles Times, “We have decided to not oppose the broadcasters’ petition for certiorari before the United States Supreme Court. While the law is clear and the Second Circuit Court of Appeals and two different federal courts have ruled in favor of Aereo, broadcasters appear determined to keep litigating the same issues against Aereo in every jurisdiction that we enter. We want this resolved on the merits rather than through a wasteful war of attrition.”

The dispute in a nutshell: Can Aereo stream TV shows without licenses? The broadcasters say no and argue Aereo’s streams are “public” performances, which require licenses. But Aereo says its streams are “private,” and therefore don’t infringe copyright. The company has installed thousands of tiny antennas in cities where it operates, and uses those antennas to capture over-the-air signals and stream them to users. Aereo argues that the streams are private because they’re made on an antenna-to-user basis.

If the Supreme Court declines to take the case, Aereo can continue to operate, but it will likely face battles in one circuit court after another, University of Maryland law professor James Grimmelmann told MediaPost News.

In the meantime, the Aereo bashing continues. On Monday, Cablevision released a 43-page white paper in which it condemns Aereo for transmitting TV programs without a license. The cable giant essentially argues that Aereo is acting like a cable company and therefore should have to pay the same retransmission fees as cable companies.

But legal analysts say Cablevision’s anti-Aereo stance is awkward because the legality of its remote DVRs is directly tied to Aereo’s legality. It turns out, Cablevision can only offer remote DVRs because a federal appeals court in New York ruled in 2008 that the devices were legal. The court rejected arguments that Cablevision was infringing copyright by “publicly” performing TV shows by transmitting copies from a remote DVR to a user’s home. Instead, the judges said, the remote DVRs’ transmissions to users were “private,” because users were watching their own individual copies.

That decision opened the door for Aereo, which uses tiny antennas to capture over-the-air programs and then streams shows on an antenna-to-user basis. The company says it’s legal for the same reason as Cablevision’s remote DVRs – each user receives an individual stream tied to a single antenna.

Cablevision’s argument is that courts should treat Aereo like a cable carrier because it is “functionally identical” to one. “Aereo offers a service functionally identical to a cable system. It captures over-the-air broadcast signals and retransmits them for subscribers to watch,” Cablevision’s whitepaper reads. “In terms of the basic function it performs for subscribers, Aereo is not meaningfully different from cable or satellite providers, services that have long been required to pay statutory royalties and retransmission consent fees.”

In October, U.S. District Court Judge Nathaniel Gorton oversaw proceedings between Aereo and Hearst, which owns the ABC affiliate WCVB in Boston. Gorton agreed that Aereo’s streams are not “public” performances – which would violate the copyright law – but private ones, because they are made on an antenna-to-user basis.

Gorton said Aereo’s interpretation of the law “is a better reading” of the copyright statute than Hearst’s interpretation. He refused to grant Hearst’s request to ban Aereo from operating while the case proceeds.

Hearst is appealing that ruling. “Regardless of the technology it uses, Aereo transmits performances of copyrighted programs to members of the public,” Hearst writes in court papers. The broadcaster also says it will suffer “irreparable harm” if Aereo is allowed to continue operating. “Aereo’s entry into the Internet space before WCVB irreparably harms WCVB in the form of lost ‘first mover’ status,” the broadcaster argues.

Hearst adds that the “most dangerous” harm it will face is the potential loss of retransmission revenue. “If Aereo is not enjoined, licensed distributors of WCVB’s broadcasts likely will opt to utilize their own Aereo-like systems, eliminating all payments to WCVB for the right to retransmit and resell WCVB’s signal,” the company contends.

Insiders says if the Supreme Court sides with Aereo, cable and satellite companies might create their own version of the technology, creating a strain on the multi-billion dollar revenue stream currently paid out by companies like Comcast and Time Warner Cable.

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