Network Giants Argue In Appeals Court: Aereo Should Be Treated Like A Cable Company
Today the Southern District Court of NY heard the oral argumentsfrom Fox, ABC, Univision and a handful of other cable broadcast providers who wish to see streaming network TV startup Aereo's business shut down. This is just the latest development in an unwinding legal battle over whether the startup's service, which uses hundreds of tiny antennas to stream live and recorded TV to internet-connected devices, is infringing the networks copyrights. The plaintiffs switched gears a bit today, focusing on Aereo's existence as a retransmission service rather than focusing on the DVR-like functionality of the service.
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Today the Southern District Court of NY heard the oral argumentsfrom Fox, ABC, Univision and a handful of other cable broadcast providers who wish to see streaming network TV startup Aereo’s business shut down. This is just the latest development in an unwinding legal battle over whether the startup’s service, which uses hundreds of tiny antennas to stream live and recorded TV to internet-connected devices, is infringing the networks copyrights.

The plaintiffs switched gears a bit today, focusing on Aereo’s existence as a retransmission service rather than focusing on the DVR-like functionality of the service.

In other words, the plaintiffs are less focused on the public performance aspect of the case (which centers around a single fixed copy being transmitted to multiple users), and more focused on whether Aereo ever had a license to transmit the signals in the first place.

The district court originally ruled in Aereo’s favor in the preliminary injunction hearing, which would halt Aereo’s business until the main trial had concluded, which could take months or even years. The plaintiffs are now filing an appeal to that ruling, hoping once again to shut her down during the interim of the main case.

In the first preliminary hearing, Aereo convinced the court that there is no public performance issue, maintaining that the user captures individual copies of content both live and recorded to watch later, as opposed to a single fixed copy being rebroadcast to multiple users at once. The company cited a Cablevision precedent that states that Cablevision’s remote DVR (which moves the individual recordings of episodes from the user’s living room to a server) does not infringe copyright law, and Aereo claims its service does the same exact thing.

In today’s oral arguments, the networks focused instead on the fact that Cablevision had a standing license to broadcast the content in the first place, arguing that Aereo (without any such license) has no right to capture and then retransmit the over-the-air signals to its users. The networks even cited a line from Aereo’s appeals briefing, which admits that the NY-based startup does transmit the signal for the user.

On page 28 of the briefing, it says “All transmissions in the Aereo system are made from a consumer’s uniquecopy, and never directly from an incoming broadcast signal.”

Aereo’s lead counsel, on the other hand, argued that the individual users are the ones capturing and retransmitting the content which is a unique copy made by the user, for the user.

I spoke with the plaintiffs attorney Paul Smith (of Jenner & Block LLP) after the hearing. I asked him what the main difference was between Cablevision and Aereo.

“Cablevision was a licensed retransmission service,” said Mr. Smith. “The only thing it did was move the wire from the set-top box to the server. In that context, the court focused just on the transmisssion from the copy to the user.

“Aereo is unlicensed, so everything it does, from receiving the content and transmitting it from the servers, everything it does is unlicensed. In that context, we say ‘you can’t read the statute that’s allowing them to do that and say it’s ok just because they’re making a copy of everything they send on.’ That would basically swallow the rule because everyone would do that.”

The networks still don’t agree with the Cablevision precedent, but they do concede that what Cablevision does is licensed in the same way that all cable companies have licenses to broadcast the network content, whether it’s live or stored for later.

“Aereo should be treated like every other cable company, because that’s what they are,” said Mr. Smith.

Aereo’s counsel explained that the user is actually accessing the content the same way that you would if you had rabbit ears on your TV set, except the rabbit ears are remote (just as the DVR recordings were remote in the Cablevision case). The judge seemed resistant to that, since those transmissions are actually being captured through Aereo as a service, as opposed to the customer buying and putting the antenna on the TV.

But Aereo built technology that included hundreds of tiny antennas and chose to make individual copies of publicly available content (as in, streamed over the air for free on publicly accessible radio signals) for a very good reason. The company admits that it was trying to uphold the law, especially the precedent set in Cablevision and even ASCAP.

The court and the network providers both seem to frown upon the idea of this loophole startup — the judge even likened the service to a company that avoids taxes, “which is different from tax evasion,” he said. However, it’s hard to argue that a company is breaking the law when it was designed specifically to be within the bounds of the law.

The court will present a decision soon as to whether or not Aereo will be required to shut down service while the main hearing is underway.



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