With just days to go before they meet their Aereo foes face-to-face at the Supreme Court, the broadcasters this week took one last swipe at what they claim is the “blatant and unapologetic copyright infringement” by the …
Editors Note: The first of three Deadline posts that lay out the issues in the Aereo case, which Deadline Legal Editor Dominic Patten will cover from the Supreme Court next week. Today: A primer about Aereo and what’s at stake in the dispute with broadcasters.
U.S. Supreme Court justices are so mistrustful of technology that they bar TV cameras from their proceedings and require visitors to check their smartphones at the door. But on April 22 they will take an hour to hear arguments in a case that could re-shape television and the Internet. All of the major broadcast companies are challenging the legality of an upstart streaming service: Aereo, a company backed by IAC chief Barry Diller that began to sign up subscribers in New York City in February 2012. The issues both sides will raise are complicated. But the controversy boils down to an important question: What rights do broadcasters and citizens have to content on the publicly owned airwaves?
Q: How does Aereo work?
A: Subscribers in the cities Aereo serves pay a minimum of $8 a month. That gives them exclusive access to one of its thousands of dime-sized antennas that pick up free, local, over-the-air broadcasts. The company then streams the live programming in the same local market to subscribers’ Web-connected TVs, computers, or mobile devices.
Q: Does it just stream live TV?
A: Aereo also offers a remote storage DVR. Just like with a home DVR, each customer can choose programs to record, and then watch later with the same fast-forward and rewind capabilities. The difference is that the digital files are kept on Aereo’s servers, not on a hard drive in the home. Those who pay $8 per month get 20 hours of DVR storage each month and access to one antenna, while those paying $12 get 60 hours and access to two antennas.
Q: Where can people subscribe?
A: Aereo began in New York, and now also is available in Boston, Atlanta, Detroit, Cincinnati, Baltimore, Dallas, Austin, Houston, Miami, and San Antonio. It plans to launch in cities including Washington, DC, Philadelphia, Pittsburgh, Cleveland, Chicago, Indianapolis, Minneapolis, and Kansas City.
Q: Why does that bother broadcasters?
A: Aereo doesn’t pay local TV stations when it streams their programming. Broadcasters say that infringes on their copyrights.
Just days before Captain America: The Winter Soldier opens, the heirs of Captain America, The Avengers and X-Men co-creator Jack Kirby are asking the Supreme Court to hand them back the rights to the comic legends from Marvel and Disney. “The Court of Appeals unconstitutionally appropriated Kirby’s valuable copyrights and gave them outright to Marvel, effecting a transfer of wealth on a massive scale,” says the 39-page petition (read it here) filed with the high court on March 21. The petition is the latest legal attempt by Lisa Kirby, Neal Kirby, Susan Kirby and Barbara Kirby to assert that they had the right in 2009 to issue termination notices to Marvel and others on the artist’s characters under the provisions of the 1976 Copyright Act. A response is due from Marvel and Disney on April 28.
With less than three weeks before Aereo argues its case in front of the Supreme Court, amicus briefs today supporting the subscription streaming service in its battle against the broadcasters were being filed fast and furiously. Supporters of the Barry Diller-backed company have until 11:59 PM ET to add their voices to the cause. On the plaintiff’s side, SAG-AFTRA, Viacom, Time Warner and Warner Bros Entertainment, the NFL and MLB are among those who have come out against Aereo. Add to that, the Obama administration filed a brief of its own supporting the broadcasters and a motion to argue during the 1-hour April 22 hearing before the High Court. Today’s briefs from Dish Network, the Electronic Frontier Foundation, the American Cable Association and more come less than a week after Aereo firmly responded to the broadcaster’s February 24 brief and the same day Diller said that Aereo could be “finished” if it loses before the SCOTUS. More briefs are expected throughout the evening — we’ll update as more come in. Here are a few highlights from ones submitted so far today:
Chairman Charlie Ergen has good reason to support Aereo. He, too, butted heads with broadcasters who objected to his Hopper DVR’s ability to automatically jump over their ads in recorded shows. He also owns Sling, a device that streams users’ live and recorded TV programs. “Aereo is in some ways novel, but it is also among a host of technologies that uses the Internet to offer consumers the ability to do what they always have more cheaply and conveniently,” Dish says in its brief. The technology, and others including Dish’s, “are like dumbwaiters, incapable of delivering a pail of water without the thirsty person tugging on ropes and pulleys. If an individual uses that dumbwaiter to fetch himself a video he recorded of Breaking Bad, the dumbwaiter manufacturer does not infringe a copyright in the show.”
The IAC chief, one of Aereo‘s top backers, told Bloomberg Television’s Market Makers that it’s “very possible that there’s some salvage. But Aereo would probably, as I say probably just because I can’t — I can’t see any path forward. It probably would not be able to continue in business.” …
Aereo may have agreed with broadcasters late last year that the best venue for their ongoing legal “war of attrition” is the Supreme Court. But as today’s response brief (read it here) to the plaintiffs reveals, that’s all the two sides agree on in this case. “This Court should not rewrite the Copyright Act in an effort to protect petitioners from lawful and logical advancements in technology or from the economic consequences of their transmitting works for free over the public airwaves,” said the Barry Diller-backed subscription streaming service in its filing today at the SCOTUS. “The ‘one-to-one’ transmissions from Aereo’s equipment – individual transmissions from personal recordings created from data received by individual antennas – do not constitute ‘public’ performances,” the dense, 100-page brief also noted one of the broadcasters’ primary complaints about the company. With the high court scheduled to hear oral arguments on the case on late next month, Aereo now must send in an amicus curiae brief of its own by April 2.
Last week, the Solicitor General’s office entered the Aereo legal fray with a dense brief filed at the Supreme Court on the side of the broadcasters. Turns out that was Round 1 for the government in this potentially game-changing case. This week, the Obama administration asked the court if it could argue its point of view directly before the Justices at the April 22 hearing on the case. While not unprecedented, the amicus curiae request is unusual and a sign of just how high the stakes are in the case between the broadcasters and the Barry Diller-backed streaming service. “Because the Court’s decision in this case will likely address important questions about the scope of the public-performance right in the context of novel technologies for transmitting and viewing copyrighted audiovisual works using the Internet, the United States has a substantial interest in presenting its views on the question presented,” said Deputy Solicitor General Edwin Kneedler in a motion (read it here) filed with the SCOTUS on Wednesday. The Court has not yet responded, but the broadcasters have given the government 10 minutes of their one-hour block of time before the Justices in which to make their case — literally and figuratively.
UPDATE, 10:38 AM: Unsurprisingly, Aereo is not happy with the denial today of its attempt to overturn the six-state injunction against the Barry Diller-backed service. “We are disappointed in the 10th Circuit Court of Appeals 2:1 decision …
The cable company has a stake in the high court’s view of Aereo: Cablevision opened the door for the streaming service in 2008 when it beat back a challenge by broadcasters to its remote storage DVRs. Courts in that case agreed with the cable company that there was little difference, in legal terms, between a DVR that stored shows miles away on a remote server vs a set-top box. Aereo says the same principle applies to its remote antennas: They pick up over-the-air TV the same way consumers would if they had an antenna at home. But Cablevision says, in an amicus brief today, that it disagrees with arguments from Aereo and broadcasters alike. The streaming service should be deemed illegal, Cablevision says, because it’s “functionally identical to a cable system” that must pay broadcasters for the right to retransmit their over-the-air signals. “The fact that Aereo delivers programming on an individualized basis through mini-antennas and hard-drive copies does not change the basic nature of its service.” But Cablevision says that broadcasters go too far when they argue that their copyrights give them broad rights to determine what happens with the shows that they transmit. That view, if upheld, would “imperil nearly any cloud technology that enables remote storage and playback” such as Amazon’s MP3 Store and player. Although broadcasters say they wouldn’t threaten such services, Cablevision says they “advance an overbroad prior performance theory and then, in an effort to avoid its absurd results, engraft on an ad hoc exception for cloud technologies.”
They have been given a date. The broadcasters and Aereo will argue their case before the Supreme Court on April 22 at 11 AM, the court announced today. SCOTUS agreed on January 10 to hear arguments on the petition that ABC, CBS, Fox, NBC and several other broadcasters submitted in October. The broadcasters want the High Court to review an April 1, 2013 ruling by the U.S. Court of Appeals in New York that confirmed a District Court decision and rejected their request for a preliminary injunction against the Barry Diller-backed streaming service. However, there are still a few more steps before the parties show up in Washington D.C. Briefs are due from the broadcasters on February 24 and March 3. Aereo must submit its response to the petitioner’s brief by March 26 and send in an amicus curiae brief of its own by April 2. Like in the decision by the Court to hear the case in early January, Justice Samuel Alito will be recused from the April arguments because his family owns Disney stock. He’s “considered to be pro-business/conservative, so this could be viewed favorably for Aereo,” says Susquehanna Financial Group’s Thomas Claps. If the remaining eight justices split equally, then the District Court’s pro-Aereo decision would stand.
That’s still a big question for broadcast TV investors today following the U.S. Supreme Court’s decision on Friday to hear the industry’s claim that Aereo infringes on their copyrights with it streams their over-the-air programming without permission. Most broadcast company stocks including Sinclair, Gannett, and Gray Television are down today, slightly more than the overall market. But Wall Street analysts — who typically like to encourage people to buy stocks — mostly urge investors to relax. The most prevalent concern is that broadcasters, if they lose at the Supreme Court, might make good on their threats to only offer their hit shows on pay TV. That could sting as they “lose reach, ratings from broadcast-only homes, and reverse network [compensation]” from affiliates, says Janney Capital’s Tony Wible. Pivotal Research’s Brian Wieser also fears that if broadcasters scale back their over-the-air shows then “the political ill-will that would follow… would be a major negative.” And political leverage is broadcasters’ ace in the hole. If they lose at the Supreme Court then “we expect they would pursue legislation and involve Congress” to change the law against Aereo, Credit Suisse’s Michael Senno says. The industry has one of the most powerful lobby groups in Washington. Even if lawmakers are unmoved, he says not to worry: Aereo doesn’t have a compelling service, he says, and cable or satellite companies that might want to create a copycat service to avoid paying retransmission consent fees face “a number of hurdles” before they could “leverage this technology, if ever.” Wells Fargo’s Marci Ryvicker also tells investors to chill.
UPDATED WITH REACTIONS: The broadcasters and Aereo are getting their day in the top court in the land after all. The Supreme Court agreed today to hear arguments on the petition that ABC, CBS, Fox, NBC and several other broadcasters submitted on October 11. “The petition for a writ of certiorari is granted. Justice Alito took no part in the consideration or decision of this petition,” said the Court in its order today. No word yet on when SCOTUS will hear oral arguments in the case — with the Court’s already full schedule, at this point it could only come during the two weeks they hear arguments in April or next term. “We look forward to presenting our case to the Supreme Court and we have every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice,” Aereo CEO Chet Kanojia said after the order was revealed. The petitioning broadcasters also responded. “We are pleased the Court has agreed to hear this important case. We are confident the Court will recognize that this has never been about stifling new video distribution technologies, but has always been about stopping a copyright violator who redistributes television programming without permission or compensation,” said Fox, Univision and PBS in a joint statement. Added CBS: “We believe that Aereo’s business model, and similar offerings that operate on the same principle, are built on stealing the creative content of others. We are pleased that our case will be heard and we look forward to having our day in court.” Said ABC and NBC together: “We are gratified that the Supreme Court has granted our petition to review issues that both sides recognize as significant, and we look forward to making our case to the Court.”
If you thought the legal battle between Aereo and the broadcasters at the Supreme Court would take a break for the holidays, think again. Today, ABC, CBS, Fox, NBC and several other broadcasters fired back at the …
Just more than two months to the day after broadcasters petitioned the Supreme Court to overturn a denied injunction against the Barry Diller-backed streaming service, Aereo today responded with an unexpected battle cry of “bring it on”. “We have decided to not oppose the broadcasters’ petition for certiorari before the United States Supreme Court. While the law is clear and the Second Circuit Court of Appeals and two different federal courts have ruled in favor of Aereo, broadcasters appear determined to keep litigating the same issues against Aereo in every jurisdiction that we enter”, said Aereo CEO Chet Kanojia today as the company filed a brief (read it here) with the Court. “We want this resolved on the merits rather than through a wasteful war of attrition”. Since Aereo’s 2011 launch, broadcasters have insisted in various jurisdictions and legal actions that the company is breaking the law by transmitting their shows to its Internet subscribers without paying a license fee. Today’s 31-page response and lack of objection to the broadcaster’s petition now raises the stakes to a winner-take-all proposition.
Broadcasters have until October 15 to file a writ of certiorari, which I’m told they plan to do. They’ll ask the Supreme Court to review lower court decisions that upheld Aereo’s right to continue operating while it defends itself against charges that its streaming service violates TV station copyrights. ABC, CBS Fox, NBC and others say Aereo breaks the law by transmitting their shows to its Internet subscribers without paying a license fee. Aereo counters that consumers have the right to watch broadcasters’ free over-the-air signals, and it simply leases the antennas and equipment people need to take advantage of that right. Aereo won a big victory last year when U.S. District Court Judge Alison Nathan in New York rejected broadcasters’ request for a preliminary injunction in the copyright infringement case. Broadcasters challenged the decision, but 2nd Circuit Court of Appeals Judge Christopher Droney, writing for the majority, sided with Aereo saying that its transmissions “are not ‘public performances’ of the Plaintiffs’ copyrighted works.” Fox said in July that it might take the case