Aereo's Tough First Day At The Supreme Court

“It’s not logical to me,” said Justice Sonia Sotomayor, “that you can make these millions of copies and essentially sell them to the public.”

If Aereo CEO Chet Kanojia wants anything, it's to disrupt the status quo--in this case, the vice-like grip television networks like ABC, CBS, and Fox currently exhibit over what he sees as an antiquated model for content distribution. As he told Fast Company's David Zax in 2012, "Our goal is to minimize foolishness."

On Tuesday, Aereo began its date with destiny, as preliminary hearings in front of the Supreme Court began. Naturally, the television networks are not happy about Aereo, which retransmits free television to the cloud using an army of individual tiny antennas. Since broadcasters are granted spectrum access by the government for free, the law goes, anyone with their own TV antenna (think: the rabbit ears on top of your grandparents's old television) should have free access to broadcast television programming--but Aereo charges a subscription fee for that access through its antennas, which are kept in Aereo's facilities. The crux of the TV networks' argument concerns Aereo's ability to syndicate their copyrighted content without paying the same fees that cable companies, Hulu, or even Netflix have to cough up. "We can't sit idly by and let an entity steal our signal," News Corp. COO Chase Carey said last year, referring to Aereo. "We will move to a subscription model if that's our only recourse."

A key question, in this case, is whether Aereo's retransmission technology constitutes a public or private performance. If Aereo delivers a public performance of copyrighted audiovisual material, Aereo is breaking the law--this is why a Pay-Per-View boxing fight might cost you $50 at home, whereas an establishment like a bar is supposed to cough up between $1,500 to $3,000. If it's a private performance, as Kanojia and Aereo backer Barry Diller contend, then, well… the entertainment industry's floodgates could veritably open. In theory, an Aereo victory means cable providers could build their own antennas, allowing them to also skirt the $3.3 billion retransmission fees they pay to TV networks. Writes copyright expert Devlin Hartline at the blog Law Theories:

…the case boils down to who is the direct performer in this scenario. If the subscriber is the direct performer, then the performance is private since the sender and the receiver are the same party and the transmission therefore is not "to the public." If Aereo is the direct performer, then the performance is public since the relationship between the sender and the receiver is a public one and the transmission therefore is "to the public." And whether Aereo is the direct performer turns on the volitional conduct test: Is Aereo’s volitional conduct sufficient such that it directly causes the transmission?

It's a dizzying logistical and technological puzzle that, as a few writers have pointed out, the nine justices of the Supreme Court might not be the best equipped to handle. Rarely do copyright cases ever make it to America's highest court. And rarer is the potential ripple effect throughout multiple industries. If Aereo's cloud-based infrastructure is deemed an infringement, for example, what does that mean for a service like Dropbox? Or Google Drive?

After Tuesday, the Justices made it clear that they understand the potential fallout of their decision--even if they don't yet entirely understand the nuances of the quandary in front of them. "What disturbs me on the other side is I don’t understand what the decision for you or against you when I write it is going to do to all kinds of other technologies, " said Justice Stephen G. Breyer, addressing Aereo's lawyer, David C. Frederick.

If the day's hearings were any indication, the tone of the court may have been set. And Aereo's prospects are looking grim. “It’s not logical to me,” said Justice Sonia Sotomayor, “that you can make these millions of copies and essentially sell them to the public.” Chief Justice John G. Roberts echoed her remarks: "Your technological model is based solely on circumventing legal prohibitions that you don't want to comply with."

Aereo still has time to make its case, and a ruling isn't expected until the summer. As Kanojia notes in the video above, he believes that the service Aereo provides is in the best interest of a free market system. If the networks win, nothing will change. TV stays the way it is. An Aereo victory is where things get slightly messier, as the company will likely be forced to grapple with more competition while simultaneously trying to build itself into a sustainable business and brand that regular people--that is, folks who don't read technology blogs every day--might recognize, let alone consider subscribing to. That is a tall task for any company. Even one hell-bent on minimizing foolishness.

[Image: Flickr user Michael Gil]

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1 Comments

  • Scott Thompson

    With regard to the matter. I as an entertainer have the right to distribute my content to whom I deem would pay for it etc. However, if you do not have an agreement to redistribute my content you are in violation of my rights.

    So, the matter is simple. If I air on any channel, free or paid and I'm to be compensated for it, then no other entity, without my expressed permission, has a right or authority to collect money on my talent without compensating me, period.

    Now, in the interest of innovation, if they want to put the ability for me to get incredible new talented entertainment into my television set/media device as a viewer, then we have a new distribution model for content that indeed peaks my interest, providing there is a mass market to view my talent off the traditional network grid.

    That is a better model by far because I get to choose and if they want to revenue share for more exposure, then everyone gets served.

    "Those who hold the eyes, own the gold." Scott Thompson