• by Wendy Davis , Staff Writer @wendyndavis, March 5, 2012

When the startup ivi began distributing television programs online last year, broadcasters promptly obtained an injunction shuttering the service for alleged copyright infringement.

Now broadcasters are trying to prevent Barry Diller's IAC from rolling out Aereo, a $12 a month service that allows people to watch TV shows on their computers or other Web devices. The service is slated to launch in New York on March 14, unless the courts put the kibosh on it.

Here's how Aereo works: The company captures free TV signals with antennas, and then streams those signals to computers. The company has installed thousands antennas and streams just one program at a time to a device.

Rather than paying licensing fees, Aereo is relying on the fact that people are allowed to install antennas and then receive TV transmissions for free.

Not surprisingly, broadcasters aren't happy about the new service. "Copyright law ... does not permit Aereo to appropriate to itself the value of plaintiffs’ television programming by retransmitting it over the Internet without proper licenses," the broadcasters argue in a copyright infringement lawsuit filed last week. "It simply does not matter whether Aereo uses one big antenna to receive plaintiffs’ broadcasts and retransmit them to subscribers, or 'tons' of 'tiny' antennas, as Aereo claims it does."

Will the courts allow Aereo to stay in business? Legal experts disagree.

Tyler Ochoa, a copyright expert and law professor at Santa Clara University, tells MediaPost that the future looks bleak for the start-up. "Aereo has almost no chance of not being shut down," he says.

On the other hand, Marvin Ammori, a legal fellow with the New America Foundation Open Technology Initiative, appears more optimistic. "Aereo’s business model is creative, convenient, and looks completely legal," he writes.

The case seems likely to turn on whether Aereo's antenna-to-PC transmissions are considered public performances. If so, Aereo is likely to lose, given that companies must pay licensing fees to publicly perform TV programs. If not, Aereo might stay alive.

In Aereo's favor, three years ago the Second Circuit Court of Appeals ruled that Cablevision's remote-storage DVRs don't violate copyright law. The court in that case rejected an argument by major studios that transmissions from a remote server to consumers' homes were public performances.

But, as Ochoa points out, there are some key differences between Cablevision and Aereo. Among others, Cablevision already had a license (though not the type of license that the studios said was required for the DVR service). By all accounts, Aereo doesn't have even a license to broadcast shows.

Meanwhile, New York Law School professor James Grimmelmann says the emergence of Aereo, ivi and other new companies that are clashing with traditional media shows that "the wheels are coming off the bus of copyright law’s conceptual framework."

"In any sane world, Aereo would not exist," Grimmelmann blogs. "There is no practical reason to use thousands of tiny antennas rather than a few good ones; reencoding the same signals again and again is pure waste.