Death Knell for Aereo – The Supreme Court Says that What They Do is Copyright Infringment

People that follow copyright law have been waiting on pins and needles for the Supremes to decide the Aereo case, which finally happened this week. The networks won; Aereo lost; and the Court tried hard to limit the import of this decision. In a nutshell, Aereo, Inc., sells a service that allows its subscribers to watch television programs over the Internet at roughly the same time the programs are broadcast over the air. When a subscriber indicates it wants to watch a given program, Aereo’s system picks up the show’s broadcast signal, translates its audio and video components into digital data, stores the data in a user-specific file, and transmits that file’s contents to the subscriber via the internet. The plaintiffs, an assortment of television networks and content owners, had unsuccessfully tried to enjoin Aereo in the courts below, on a number of different copyright theories. For the purposes of the Supreme Court’s decision, the sole issue was whether Aereo’s service amounted to a “public performance” so as to violate the exclusive rights of the content’s copyright owner and constitute direct copyright infringement. The majority likened Aereo’s service to cable services and found that it is a “public” performance of the copyrighted content it retransmits and, thus, constitutes direct infringement. The case was remanded for the lower court to award the content owners injunctive relief on this basis.

Judge Scalia, in dissent, while agreeing that what Aereo was doing (or enabling to be done) “ought not to be allowed,” he disagreed with the majority’s reasoning that Aereo was “publically performing” the copyrighted works. Scalia argues that while the services may amount to indirect or contributory infringement, they did not constitute direct infringement because Aereo’s conduct did not meet the act’s “volitional” requirement. In short, he does not find the services to be sufficiently similar to cable services.

What is the impact of this decision? In the short run, this decision will pave the way for television networks to continue to charge significant fees for the transmission of their content. The long-term impact of the decision is harder to predict. Which technologies are now infringing because they are too close to “cable services,” and which ones still require “volitional” conduct by the provider of the service? Because uncertainty almost always stifles growth and investment, is not difficult to see how inventors and investors will be reluctant to create and invest in new technologies if the specter of an injunction for direct copyright infringement looms murkily in the distance.

The bottom line:

-Everybody pretty much agreed that what Aereo did was infringing, they just differed on how they reached that conclusion;
-Content owners can still charge hefty fees for the transmittal of their content;
-The decision explicitly states it does not apply to DVR’s and cloud computing;
-Companies similar but not identical to Aereo may also now be guilty of direct copyright infringement if they are too close to “cable services”;
-Investment in technologies like this is a risky move;
-Congress is likely the best avenue for inventors and technology companies to seek more certainty on this issue

American Broadcasting Companies Inc. et al. v. Aereo Inc. f/k/a Bamboom Labs Inc., case number 13-461, in the U.S. Supreme Court



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