High court to decide fate of renegade television service

The Supreme Court is primed to make a decision on copyright law that could change the way people receive broadcast TV.

Broadcasters are fighting to stop the tech service Aereo, arguing it operates illegally and undermines their business. They say allowing the service to continue could spell the end of free, over-the-air broadcast television.

{mosads}For a monthly fee, the company, backed by billionaire mogul Barry Diller, lets users watch broadcast channels such as ABC, CBS and NBC on their computers, tablets or other devices. Instead of requiring an antenna in homes, the company manages a field of miniature devices to send signals over the Web. 

Aereo CEO Chet Kanojia said the service is revolutionizing the way people watch TV.

“It is the starting point for a fantastic outcome, which is a real consumer alternative and choice in an open, online platform,” he told The Hill.

Broadcast companies think differently. They say the service is violating copyright law by grabbing their channels, sending them to consumers and turning a profit without paying licenses or fees.

“Aereo has built a business out of retransmitting broadcast television to members of the public without seeking authorization from or paying compensation to copyright holders,” broadcasters said in a brief filed with the Supreme Court.

“That is precisely the kind of unauthorized exploitation of copyrighted content that Congress enacted the transmit clause to prevent.”

The nine justices on the Supreme Court will hear arguments in the case on Tuesday. The debate will focus on whether Aereo’s service amounts to a “public performance,” which would make it a violation of the 1976 Copyright Act.

The law can be vague, even to experts, and has grown more difficult to interpret thanks to changing technology.

“It’s not a model of clarity,” said Peter DiCola, a professor at Northwestern University School of Law. “I have to teach it; I can tell you it’s not a clear thing.”

For precedent, the justices are likely to turn to a 2008 appeals court case that upheld Cablevision’s right to show programs via DVR service.

In that case, the court ultimately ruled that the service put the consumer, not the company, in control of their programming. As a result, each recording was a personal, rather than public, performance of the work.

But in the Cablevision case, cable companies were already paying retransmission fees, which Aereo is not. Opponents say the service exploits a loophole created by the 2008 ruling and should not be rewarded for it.

Judge Denny Chin, the lone judge to rule against Aereo in the Second Court of Appeals, called Aereo’s platform “a sham.”

Aereo uses a farm of time antennas, one for each subscriber, “but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna,” Chin wrote. “[I]ndeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”

The Obama administration has taken a similar view.

In a brief filed with the court, the administration argued that the service relied on “unauthorized Internet retransmissions” that violate the law.

The Solicitor General’s Office wrote that Aereo “transmits copyrighted broadcast programs to the public, without the authorization of the copyright holders, and is therefore liable for infringement.”

Kanojia said that “narrow perspective” was a reflection of the U.S. Copyright Office, “which is heavily lobbied by these copyright holders.”

“I think pretty much every copyright case that goes before the Supreme Court, the government takes the side of the copyright holders,” he said. “And I don’t think they win every case.”

Kanojia shrugged off the claim that the company is profiting off of a legal loophole.

“Frankly, don’t we want companies to comply with the law instead of try to violate it?” Kanojia said. “My argument is the counterargument, which is you should applaud the fact that a company is trying to do it right.”

However the justices decide, the stakes will be high.

The head of CBS has threatened to cut off its broadcast signal and switch to an Internet-based service if broadcasters lose their bid to get Aereo taken down.

Cable and satellite companies are also keeping track of the case. Those companies, which currently pay broadcasters millions to retransmit their content, could have the incentive to develop a system similar to Aereo’s to cut down on their fees.

Broadcasters are growing increasingly reliant on those retransmission fees, especially as more and more people watch TV on DVR and skip commercials, the other main moneymaker for the stations.

“This is aimed right at the heart of part of their business model, but part of the business that by the way supports local broadcasters and affiliates and also is likely to be increasingly important in the future,” said Mark Schultz, the co-director of academic programs at George Mason University’s Center for the Protection of Intellectual Property.

A broad ruling could also have repercussions for Google, Dropbox and other services that rely on the “cloud” for storing information.

Kanojia has said his company has no Plan B in case the high court rules against him. But a victory would likely lead to a rapid expansion beyond the 11 cities where it currently operates.

A win for Aereo could also spur action in Congress, where broadcasters have a number of allies who will be pressed to crack down on the service.

“If Aereo were to win, I think that Congress would be under some pressure to at least do some partial copyright reform and close the loophole,” DiCola said.