• by Wendy Davis  @wendyndavis, July 10, 2014

Shifting gears, online video service Aereo says it now plans to argue that it's a “cable system” and is entitled to stream television shows over the Internet, providing that it pays fees to broadcasters.

The company contends in new court papers that the Supreme Court's recent decision that Aereo infringed copyright supports the argument that it's actually a cable system.

In the past, Aereo argued it was not a cable system.

Aereo suspended its $8-a-month service around two weeks ago, shortly after the Supreme Court ruled 6-3 that it was “publicly” performing television shows without a license. Before shutting down, Aereo had rolled out to 11 U.S. cities, offering residents the ability to stream live over-the-air television shows to tablets and smartphones. The company also offered a DVR-like service, which allowed people to “record” shows and watch them later.

At the end of June, the Supreme Court rejected Aereo's argument that its real-time streams were “private” -- and therefore didn't require licenses. Aereo used dime-size antennas to capture programs and stream them on an antenna-to-user basis. The start-up said that the one-to-one nature of the streams meant they weren't public.

In an opinion authored by Justice Stephen Breyer, the Supreme Court ruled that Aereo's back-end architecture was irrelevant to the legal question. He wrote that Aereo's performances were “public,” because its service was “highly similar” to that offered by the first generation of cable companies, then known as community antenna tv providers.

Aereo now says that ruling has changed the legal landscape. “The Supreme Court’s holding that Aereo is a cable system under the Copyright Act is significant because as a cable system, Aereo is now entitled to the benefits of the copyright statutory license,” the company said in a status report filed on Wednesday with U.S. District Court Judge Alison Nathan in New York.

Nathan is presiding over a copyright infringement lawsuit against Aereo filed in 2012 by a coalition of broadcasters. Nathan originally rejected the broadcasters' request for a preliminary injunction that would have prohibited Aereo from operating while the case was pending. (Although the Supreme Court ruled that Aereo infringed copyright, that court didn't prohibit Aereo from operating. Instead, the court returned the case to Nathan for further proceedings.)

Aereo also told Nathan that questions about whether it's entitled to a compulsory license “must be decided on an immediate basis or Aereo’s survival as a company will be in jeopardy.”

TV broadcasters say Aereo's “astonishing” new stance -- that it's entitled to a license under Section 111 of the Copyright Act -- is at odds with the company's prior legal position.

“Aereo never before pled (much less litigated) Section 111 as an affirmative defense,” broadcasters told Nathan on Wednesday. “Whatever Aereo may say about its rationale for raising it now, it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a 'cable system'."

Aereo also is arguing that it should be allowed to continue offering DVR functionality, given that the Supreme Court only addressed whether the company's live streams were public performances.

University of Maryland law professor James Grimmelmann, who has closely followed the ligitation, says Aereo faces an uphill battle with its argument for a compulsory license. “Aereo will have a very hard time backing out of its previous litigation position,” he says in an email to Online Media Daily.

Also, while the Supreme Court said that Aereo was similar to a cable system, that doesn't mean that the company qualifies for a compulsory license. “It is quite possible, the way the Copyright Act is written, to perform publicly in a way that resembles cable without actually being a cable system,” Grimmelmann says.

An appellate court in New York previously ruled that ivi TV -- which streamed television programs over the Internet -- wasn't entitled to a compulsory license. But unlike Aereo, ivi TV transmitted shows to people nationwide; Aereo only streamed shows available over-the-air in subscribers' locations.