Thursday 24 April 2014

Supreme Court's decision in Aereo could have a significant impact on other technologies

In the recent oral hearing, U.S. Supreme Court appeared a little unsure of whether to rule against Aereo Inc in the major copyright case brought by a group of US broadcasters against the controversial start up.  Several justices raised concerns about how a ruling in favour of broadcast networks could affect increasingly popular cloud computing services - and with both liberal and conservative justices split on what the way forward should be. That said, Aereo, backed by media mogul Barry Diller, could be forced to shut down if the Supreme Court rules for the four major television broadcasters, with the broadcasters saying the service violates copyright law. Aereo charges users a low monthly fee to watch live or recorded broadcast TV channels on computers or mobile devices. Aereo, which launched in 2012, offers the public a means to view broadcast TV over the internet, providing an alternative to expensive cable TV services and say all they do is enable people to access the airwaves with tiny TV antennas, and for this reason the company says they don't have to license broadcasts.

Several Supreme Court justices expressed scepticism at the Aereo business model at the Tuesday hearing, saying that it looked like the company had created to a "technical workaround" to bypass copyright laws: "Your technology model is based solely on circumventing legal prohibitions” Chief Justice John G. Roberts said to Aereo’s attorney David Frederick and asked if there was any particular reason why the company uses thousands of individually assigned antennas - except to avoid copyright fees owed to broadcast networks: “It looks as if somehow you are escaping a constraint” other companies are held to under copyright law, Justice Stephen Breyer said and Justice Ruth Bader Ginsburg noted that one lower court judge’s dissenting opinion stressed that Aereo appeared to be a technology entirely conceived as a legal workaround saying “You are the only player so far that doesn’t pay [a] royalty”.  Retransmission fees are expected to reach $3 billion in the U.S. this year.

But some justices also raised concerns that a decision siding with the television broadcasters could have far-reaching effects on new Internet, cloud and other technologies - from companies such as Google, Microsoft, DropBox and Box, which would then be swept up in other questions about the reach of copyright laws. Justice Stephen Breyer told the networks' attorney, Paul Clement, that his legal argument "makes me nervous about taking your preferred route" and that  he was concerned about what a decision “will do for other technologies.” Justice Sotomayor continued this line of thought, citing different technologies–Dropbox, iCloud, Roku and Simple.TV - and asked lawyers for both sides to make distinctions between them and Aereo. At one point she gave the example of a coaxial cable supplier and asked Clement, “How do I avoid a definition [of ‘public performance’] that might make those people liable?”

The company's fate was placed in the hands of the Supreme Court when ABC network, CBS Broadcasting, Comcast's NBCUniversal and Twenty-First Century Fox appealed a decision by the 2nd U.S. Circuit Court of Appeals in April 2013 that denied their request to shut Aereo down while litigation moved forward.

The Electronic Frontiers Foundation (EFF) commented "The Court will probably decide the case by late June. Yesterday’s oral arguments didn’t give much indication of how the Supreme Court will ultimately rule. But they made clear that the Court is rightfully concerned about side effects of too broad a ruling. It's only in the most narrow sense that Aereo is a case about dime-sized antennas. Fortunately, the Court seems to realize that the issues it raises are much, much larger."

Following the oral arguments,  counsel for Aereo, David Frederick, said, "The court's decision today will have significant consequences for cloud computing. We're confident, cautiously optimistic, based on the way the hearing went today that the Court understood that a person watching over-the-air broadcast television in his or her home is engaging in a private performance and not a public performance that would implicate the Copyright Act."  

New York University School of Law Professor Chris Sprigman explains the copyright law behind the Supreme Court case with 'billions of dollars' of re-transmission fees at stake - and what the decision may mean for the television industry going forward on Bloomberg Television’s Market Makers 

More on the Washington Post here and the EFF here

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