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Aereo's tiny little personal antennas have had television broadcasters up in arms, but today the Supreme Court handed the broadcasters a win.
Back in March, Aereo founder Chet Kanojia was so confident in his position that he defiantly proclaimed that he has no Plan B should the Court rule against his company. Today, he issued a statement calling the Court's decision "a massive setback for the American consumer." He added, "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."
Let's take a look at the Court's legal analysis in coming to its decision.
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American Broadcasting Companies, Inc. et al., v. Aereo, Inc. -- Lower Courts
Television broadcasters sued Aereo for copyright infringement, and a district court denied the broadcasters' motion for a preliminary injunction. On appeal to the Second Circuit, in a 2-1 decision, the court relied on its precedent in Cartoon Network LP, LLLP v. CSC Holdings, Inc., (denied cert in 2009) which characterized each transmission as private, not public, because of the use of individual antennas to transmit the broadcasts.
Finding Aereo's use lawful, a few months later the Second Circuit denied the television broadcasters' petition for rehearing en banc. In January, the Supreme Court granted cert to determine whether retransmitting a broadcast to paid subscribers, over the Internet, constitutes a public performance.
American Broadcasting Companies, Inc. et al., v. Aereo, Inc. -- Majority Opinion
Writing for the majority, Justice Breyer took a two-pronged approach to determine whether Aereo's transmissions constituted public performances. First, he had to determine whether the transmissions were performances. To do so, he examined the Copyright Act, and Supreme Court precedent related to community antenna television ("CATV"), the "precursors of modern cable systems." In two cases decided in the 1970s, the Supreme Court distinguished CATV systems from broadcasters and held that CATV systems were more like viewers than broadcasters.
The analysis did not end there. In 1976, Congress amended the Copyright Act and "completely overturned" the Supreme Court's precedent related to CATV. Under the amended language, "both the broadcaster and the viewer of a television program 'perform.'" Furthermore, Congress added the Transmit Clause, which "makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers' ability to receive broadcast television signals." Keeping Congress' intentions in mind, as well as the clear language of the statute, the Court held that "Aereo is not just an equipment supplier and that Aereo 'perform[s]'."
Next, the Court had to determine whether the performances were "public." The Court rejected Aereo's (and the dissent's) arguments that Aereo's unique, one antenna, one folder, one subscriber system insulated it from categorization of "public performances." Instead, the majority held that "'the public' need not be situated together, spatially or temporally." The Court was careful to limit its holding to the present facts, and tried to assuage fears of tech companies and the fate of future technologies and cloud-based storage. It concluded that the technological workarounds were not enough to make Aereo's activities lawful, stating that the differences in Aereo's system "concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service."
American Broadcasting Companies, Inc. et al., v. Aereo, Inc. -- Dissenting Opinion
Justice Scalia, joined by Justices Thomas and Alito, dissented and instead likened Aereo's antennas to copy shops and would have found that Aereo does not perform. He disagreed with the majority opinion because it "suffers from a trio of defects," including being "built on the shakiest of foundations." He added, "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 result-driven rule."
While the dissenters may have their doubts as to the fate of the cloud based on today's decision, for now, that issue will wait for another day.