Aereo Woes: Justice Department Backs Broadcasters in Supreme Court Showdown

By Tara Seals March 05, 2014

Online video streaming startup Aereo is headed to the Supreme Court this April to defend its right to exist, and the battle lines are already being drawn. In a Supreme Court filing Monday, the Justice Department has backed the broadcaster contingent in the showdown, ABC vs. Aereo.

Aereo is facing lawsuits from nearly every major content company and broadcaster, which are claiming copyright infringement because they allege that the company retransmits local TV affiliate feeds via the Internet without paying retransmission fees.

Justice Department lawyers say that Aereo’s streaming service does indeed infringe on broadcasters’ copyrights, and are asking the court to reverse a lower court’s decision that found in favor of the startup.

Aereo has counter-argued that because it provides dime-sized antennae to its subscribers—who pay $8 per month for access to a couple dozen channels—it constitutes an over-the-air, rabbit-ears based service, which is exempt from retrans. It has also argues that its content is delivered to a single cloud-based DVR device for one subscriber and can therefore not be categorized as a public broadcast service, subject to fees and regulations.

So far, it has mostly succeeded in its arguments, winning legal challenges in a handful of cases. In Boston, Federal Judge Nathaniel M. Gorton has issued a ruling in the United States District Court for the District of Massachusetts in a suit brought by Hearst Stations on behalf of its local TV station, WCVB-TV. The judge denied the plaintiff its motion for a preliminary injunction against Aereo.

In his decision, Judge Gorton concluded, “After considering the relevant factors, the Court finds that a preliminary injunction is unwarranted.  Hearst has not demonstrated a sufficient likelihood of success on the merits nor the requisite irreparable harm and therefore it is not entitled to that ‘extraordinary and drastic remedy.’” 

He added, “Hearst fails to make a sufficient showing that it is likely to prevail on any of [its] claims and therefore this factor weighs against a preliminary injunction in its favor.” 

In New York, Aereo has won the day overall. There, a panel of judges for the 2nd Circuit have ruled that Aereo does not violate copyright law—and a review of the decision by the full court was denied.

Yet in Utah, Aereo’s fortunes have gone the other way. In February, the U.S. District Court for the District of Utah Central Division ruled to prohibit Aereo from operating in the Salt Lake City DMA and throughout the entirety of the Tenth Circuit. There is no appeal: the Utah court stayed any further action on the matter until there is a decision from the Supreme Court.

The Supreme Court’s decision will clearly have widespread ramifications for over-the-top (OTT) business models going forward. But the Justice Department was anxious to narrowly define the scope of the issue, because the decision could set precedent for how cloud computing infrastructures may be used overall by consumers and businesses.

“A decision rejecting [Aereo’s] infringing business model and reversing the judgment below need not call into question the legitimacy of innovative technologies that allow consumers to use the Internet to store, hear and view their own lawfully acquired copies of copyrighted works,” it said in its filing.

Indeed, “reversal of the judgment below need not threaten the legality of cloud computing,” the department’s lawyers noted. The issue with Aereo, it argued, is that the company is providing access to content that has not already been paid for.

The Supreme Court is scheduled to hear oral arguments in the Aereo case on April 22, with a decision expected in June. 

Edited by Cassandra Tucker

TechZone360 Contributor

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