High court strikes down Web TV service

The Supreme Court on Wednesday ruled that the upstart TV company Aereo is illegal, delivering a huge victory to broadcasters who warned the service could destroy their industry.

In a 6-3 ruling, the court decided that the service backed by billionaire Barry Diller violated broadcast stations’ copyright licenses by “publicly performing” their programming without paying them any fees. 
 
{mosads}The case has been closely watched by tech and media companies: Aereo threatened to undermine the business model that broadcast companies, such as CBS and NBC, rely on. If the service were upheld, broadcasters had threatened to abandon their free, over-the-air service and switch to an online-only model.

Aereo relies on a series of tiny antennas that pick up free broadcast signals and send them to people’s laptops, tablets and other devices for a monthly fee. The company does not pay broadcast companies for the rights, however, unlike cable and satellite companies, which the stations said amounted to a violation of their rights.

Because Aereo merely provides a device that allows people to watch their TV programs how they want, the company claimed it was covered under current copyright law, just like any antenna purchased at RadioShack. Its system of antennas, the company said, did not amount to a “public performance” under copyright law because each subscriber effectively rents his or her own contraption.

The high court on Wednesday disagreed.

Congress’s effort to update copyright law in 1976, Justice Stephen Breyer wrote on behalf of the court, “makes clear that Aereo is not simply an equipment provider.

“Rather, Aereo, and not just its subscribers, ‘perform[s]’ (or ‘transmit[s]’)” content, he wrote, just like community antenna TV systems that Congress specifically targeted with its law.
 
“When an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them, regardless of the number of discrete communications it makes,” Breyer wrote.

“We do not see how the fact that Aereo transmits via personal copies of programs could make a difference.”

Breyer was joined in the decision by Chief Justice John Roberts as well as Justices Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.

For broadcasters, the decision was a major victory. Paul Clement, who argued the case on behalf of the broadcasters, called Wednesday’s decision “a victory for consumers.”

“The court has sent a clear message that it will uphold the letter and spirit of the law just as Congress intended,” he said in a statement.

“Aereo characterized our lawsuit as an attack on innovation; that claim is demonstrably false,” National Association of Broadcasters chief executive Gordon Smith added after the decision. “Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”

Aereo, for its part, said it had no backup plan if it lost at the high court, and said the firm could well go bankrupt.

Still, chief executive Chet Kanojia maintained after the ruling that the company’s “work is not done.”
 
“We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world,” he said in a statement.
 
Kanojia said the decision “sends a chilling message to the technology industry,” and other supporters of the TV service said they fear the ruling could stifle innovation.
 
Gene Kimmelman, head of the consumer interest group Public Knowledge, said the decision is “endangering a competitive choice for consumers” and “leaves consumers beholden to dominant entertainment and cable companies that constantly raise prices and gouge consumers.”

Aereo supporters had also worried its defeat could imperil all services that rely on the “cloud,” including Dropbox and Google.

In his decision, Breyer was clear to note that the high court did not mean to meddle in that area.

“We have said that it does not extend to those who act as owners or possessors of the relevant product,” he wrote. “And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.”

Still, the three dissenting justices worried that the decision could “sow confusion for years to come.”

Justice Antonin Scalia wrote in the dissenting opinion that because users, not Aereo, chose what shows they wanted to watch, the service was more like a copy machine that made it possible to reprint copyrighted books but did not, itself, violate copyright law.

“In sum, Aereo does not ‘perform’ for the sole and simple reason that it does not make the choice of content,” he wrote. “And because Aereo does not perform, it cannot be held directly liable for infringing the Networks’ public-performance right.”

— This story was last updated at 12:11 p.m.