PBS and New York's WNET joined major commercial networks Wednesday in hailing a U.S. Supreme Court decision that found the business model of Internet TV service Aereo in violation of the 1967 Copyright Act.
In a 6-3 decision, the high court held that Aereo’s business model of charging subscribers for access to an individual antenna and DVR service for over-the-air broadcasts violates the 1967 Copyright Act.
The majority found Aereo's operations more akin to those of a cable company, regardless of the technology it employs, binding the company to the same rules governing broadcast transmissions. Those rules require cable companies to pay networks for the content they transmit.
The majority comprised Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Stephen G. Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. Justice Antonin Scalia wrote the dissenting opinion, joined by Justices Clarence Thomas and Samuel A. Alito Jr.
The broadcasters involved in the case, which included PBS and WNET, issued a joint statement Wednesday supporting the ruling. "Today's decision is a victory for consumers," they said. "The Court has sent a clear message that it will uphold the letter and spirit of the law just as Congress intended."
SAG-AFTRA, a union that represents some broadcasters, also hailed decision, saying that the court focused on Aereo's use of copyrighted works without being sidetracked by the service's technical details.
"SAG-AFTRA applauds the U.S. Supreme Court’s decision in the Aereo case, which sends a clear and strong message that the Court will not permit companies like Aereo to use inconsequential technical workarounds to evade Congress’ intent to protect content creators and owners in the Copyright Act,” the union wrote in a statement.
Aereo CEO Chet Kanojia called the decision a "massive setback" for consumers and cautioned that despite the court's assertion to the contrary, the ruling would have a broader impact on emerging technologies and cloud-based businesses.
"We’ve said all along that we worked diligently to create a technology that complies with the law, but [Wednesday’s] decision clearly states that how the technology works does not matter," he said in a statement. "This sends a chilling message to the technology industry."
The ruling also limits the rights of consumers to inexpensive over-the-air broadcasts, he argued. "Using an antenna to access free-to-air broadcast television is still meaningful for more than 60 million Americans across the United States," Kanojia wrote. "Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle.”
The case of American Broadcasting Companies, Inc., et al., v. Aereo, Inc. stemmed from a pair of lawsuits brought by broadcasters including ABC, CBS, NBC, PBS and New York's WNET.
Prior to the Supreme Court ruling, broadcasters were unable to secure an injunction against the company, which uses banks of dime-sized antennas to capture broadcast signals and convert them into streaming video distributed over the Internet. Subscribers “rent” the antennas and can watch TV programs live or on demand via a device similar to a digital video recorder.
Broadcasters appealed to the Supreme Court after the U.S. 2nd Circuit Court of Appeals denied a request in July 2013 to revisit its earlier decision not to impose an injunction on Aereo. In April 2013, the 2nd Circuit had upheld a lower court’s July 2012 decision to allow Aereo to continue operating despite the pending litigation.
Aereo based its defense on claims that it was essentially an equipment company leasing antennas and digital video recording services to customers for their own use. The company also argued that it was not violating the Copyright Act's clause about transmission of public performances.
But the court majority shot down the arguments and said Aereo was similar to a cable company, offering public performances of broadcasters' content. Under the Copyright Act, public performances require permission from and payment to the content's owner.
"We conclude that Aereo is not just an equipment supplier and that Aereo 'perform[s],’” Breyer wrote in the majority opinion.
Breyer also addressed Aereo's argument that it was not distributing public performances because the broadcasts were accessed through individually leased antennas. Under the terms of the Copyright Act, the broadcasted content was a public performance regardless of Aereo's categorization, Breyer wrote.
“Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter?” Breyer wrote in the opinion. “They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens. They do not render Aereo’s commercial objective any different from that of cable companies.”
In a dissenting opinion, Scalia likened the majority's opinion to "guilt by resemblance" because they found Aereo similar to a cable company. While he agreed that Aereo was taking advantage of a "loophole" in the act, he said the majority came to the opinion incorrectly.
"It is not the role of this Court to identify and plug loopholes," Scalia wrote. "It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude 'looks-like-cable-TV' solution the Court invents today."
While the ruling jeopardizes Aereo's sole business of selling subscription access to antennas, Kanojia said the company is not ready to throw in the towel.
“We are disappointed in the outcome, but our work is not done," he wrote. "We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
The case will now be remanded back to the lower courts, who will likely have to address Aereo’s recording feature and the legality of recording live network shows to watch later.