Supreme Courts Aereo Decision Sends a Chilling Message to the Technology Industry

In a victory today for American broadcasters, the U.S. Supreme Court ruled Aereo has committed copyright infringement by delivering a service that allows consumers to watch streaming TV programs over the Internet.

Interpreting a provision of the Copyright Act of 1976, the court held that Aereo “performs” the copyrighted works of the broadcasters “publicly.”

The landmark 6-3 decision overturned a ruling from a federal appeals court, which had held that Aereo delivers private transmissions when it streams to a subscriber.

“Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated,” said Gordon Smith, president and CEO of the National Association of Broadcasters (NAB).

In finding that Aereo “performs” or transmits a performance when a customer watches a show over Aereo’s systems, the court examined 1976 amendments to federal copyright law.

The amendments were adopted by Congress to reach the predecessor to modern cable systems and essentially reject prior decisions from the court, which found community antenna television systems (CATV) did not commit copyright infringement, Justice Stephen Breyer explained, writing for the majority. 

The court dismissed Aereo’s argument that its service is not delivered to the public simply because it streams a copy of a program to only one subscriber. The majority found no meaningful distinction between Aereo’s system and cable systems that perform publicly.

“Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter?” Breyer wrote. “They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens. They do not render Aereo’s commercial objectives any different from that of cable companies.”

Chet Kanojia, founder and CEO of Aereo, characterized the court’s decision as “a massive setback for the American consumer.”

“We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter,” Kanojia said. “This sends a chilling message to the technology industry.”

But the court rejected the argument that its holding will impose copyright liability on other technologies that Congress did not intend to reach.

Breyer said the court couldn’t answer how federal copyright law applies to other technologies that neither the court nor Congress has squarely addressed, such as cloud computing and remote storage DVRs. 

“We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us,” Breyer wrote.

Mark Cooper, director of research with the Consumer Federation of America, said the court’s failure to address the impact of the ruling on other technologies could open the door to a torrent of lawsuits.

“When a decision says we don’t know how we would rule in other cases, it is an open invitation to litigation,” Cooper said. “For copyright holders who have little else to cling to, it is red meat.”

Some Republicans in the House Energy and Commerce Committee said the decision emphasized the need to reform federal communications law.

“The ABC v. Aereo case highlights the regulatory uncertainty that exists in the rapidly evolving video marketplace as a result of our country’s outdated communications laws,” said Rep. Bob Latta (R-Ohio), vice chairman of the Communications and Technology Subcommittee. “I look forward to working with Chairman Upton and Chairman Walden in engaging in a comprehensive review of the Communications Act to ensure our policies foster robust investment and innovation in the 21st century digital economy.”

In a dissenting opinion, Justice Antonin Scalia (joined by Clarence Thomas and Samuel Alito) said Aereo did not infringe on copyrighted works because the company “does not ‘perform’ at all” and is distinguishable from video-on-demand services in which prearranged TV shows and movies are offered.

“Rather, it assigns each subscriber an antenna that – like a library card – can be used to obtain whatever broadcasts are freely available,” Scalia wrote. “Some of those broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it.”

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