Aereo, Broadcasters Battle Before Supreme Court

The Supreme Court on Tuesday expressed skepticism about the legality of online streaming service Aereo, but also appeared concerned that a ruling against the startup could result in unforeseen consequences on cloud computing services.

Aereo allows people to watch over-the-air television on iPhones, Androids and other devices. The service also allows people to record shows for later viewing.

TV broadcasters are suing the company for allegedly infringing copyright by publicly performing programs without a license. But Aereo says its performances are private due to the company's technology, which uses antennas to capture programs and stream them on an antenna-to-user basis.

Aereo's attorney, David Frederick, told the Supreme Court on Tuesday that the company merely provides equipment -- antennas and DVRs -- that enables consumers to record over-the-air shows for their personal use.

But several judges indicated they thought it was problematic that Aereo gives consumers some of the same services as cable providers, but doesn't pay licensing fees. At one point, Justice Stephen Breyer said that Aereo seems similar to a cable or satellite system, yet is “escaping a constraint that's imposed upon them.” He then added: “That's what disturbs everyone.”

Justice Ruth Bader Ginsburg also pointed out to Aereo's attorney, David Frederick, that “every other transmitter does pay a royalty ... and you are the only player so far that doesn't pay any royalties at any stage.”

But Breyer also said he was troubled because he couldn't predict how a decision in the case would affect other companies. “I don't understand what the decision, for you or against you, when I write it, is going to do to all kinds of other technologies. I've read the briefs fairly carefully, and I'm still uncertain that I understand it well enough,” he said.

Justice Sonia Sotomayor expressed concern that a ruling in favor of the broadcasters could pose a risk to cloud-service companies, like Dropbox. She specifically asked the broadcasters' attorney, Paul Clement, how to “avoid a definition” of public performance that might make those companies liable.

Clement answered that there's a “fundamental difference” between a service that “provides new content to all sorts of end-users, essentially any paying stranger,” and a storage service.

But Breyer indicated that it wouldn't be easy to write an opinion that would distinguish Aereo from cloud storage companies. He said that the problem was that the wording of an opinion could end up “somehow catching other things that really will change life and shouldn't, such as the cloud.”

University of Maryland law professor James Grimmelmann, who filed a friend-of-the-court brief in the case, says the judges could end up writing a very narrow ruling -- which would have a limited impact on other businesses. “They were clearly looking for a way to distinguish Aereo from other companies they may care more about,” he says.
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