Commentary

Aereo, Broadcasters Face Rematch In New York Court

Aereo and TV broadcasters are expected to face off in New York tomorrow morning, when a federal judge could decide whether to officially prohibit the online streaming company from operating.

In June, the Supreme Court ruled that Aereo infringed copyright with its real-time streams of television shows to users' smartphones and tablets. The startup suspended operations several days after that ruling came out, but did so voluntarily.

Now, the broadcasters want U.S. District Court Judge Alison Nathan in Manhattan to enter an injunction prohibiting Aereo from offering either its real-time streams or a cloud-based DVR service. They say that Aereo's service -- or, at least its real-time streams -- have already been found to infringe copyright, and that Aereo's continued operation will cause “irreparable harm.”

The broadcasters clearly have momentum on their side, given that they prevailed in the Supreme Court and that Aereo is no longer operating.

But Aereo isn't giving up without a fight. The company says it's entitled to resume its paid service, which allows subscribers to stream shows in real time and also “record” them for later viewing.

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The company makes several arguments, though whether any will gain traction remains unclear. First, Aereo says that the Supreme Court ruling transformed the company into a “cable system,” which is entitled to a license.

The Supreme Court said in its ruling that Aereo infringed copyright because it resembled a cable system, and cable systems can't transmit programs without licenses.

Aereo argues that it should have the same rights to licenses as cable companies. But the problem for Aereo is that the Supreme Court didn't say Aereo was a cable company -- only that it resembled one.

An even more daunting problem for Aereo is that federal courts in New York previously ruled that online-only companies aren't entitled to cable licenses.

But Aereo still has a few other arguments that might carry the day. One centers on its DVR service. The Supreme Court made a point of noting that its ruling concerned only Aereo's real-time streams, and not its cloud-based DVR service.

The broadcasters say that Aereo's DVR infringes copyright because the service involves transmissions of programs by Aereo to users.

But Aereo points out that federal courts in New York ruled several years ago that a remote DVR marketed by Cablevision doesn't infringe copyright.

Aereo also hopes to convince Nathan that the broadcasters haven't shown they will suffer “irreparable harm” from the company's continued operation. Aereo says in court papers that the fact that it offered its service for more than two years without hurting broadcasters shows it doesn't pose a real threat.

If Aereo's legal arguments all fail, the company still has another shot at a comeback. The Federal Communications Commission could rule that Aereo -- and other online only companies, like Alki David's FilmOn X -- are entitled to negotiate for cable licenses. Aereo has already asked the FCC to do so; so far, the FCC hasn't publicly taken a position.

Meanwhile, Aereo continue to maintain a payroll and run up more than $1 million a month in expenses, according to its court papers. Whether the company will continue to do so could depend on the outcome of tomorrow's hearing

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