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The Supreme Court Bans Aereo’s Service: An Odd Decision With an Odd Rationale


Sunstein | Winning IP View more articles

Last week the Supreme Court decided, in American Broadcasting Companies, Inc. v. Aereo, Inc., that Aereo was infringing the copyrights of the television broadcasters. This decision was not a surprise in light of the comments of the justices during the April oral argument, which I discussed in “How Will the Supreme Court Decide the Aereo Case?” The court voted 6-3 with Roberts, Kennedy, Ginsburg, Sotomayor and Kagan joining Breyer’s decision in favor of the broadcasters, and Thomas and Alito joining Scalia’s dissent.

Aereo used arrays of small antennas to pick up over-the-air television shows and make them available to Aereo customers. Each customer was assigned a separate antenna. Aereo also allowed its customers to record television shows and save them in a cloud storage dedicated to that customer. For this service, Aereo charged $8 a month. Prior appellate court cases had ruled that cable companies providing such individualized remote storage and playback systems did not infringe the copyright of the content owners. Aereo undoubtedly hoped that this line of thinking would apply to its individualized antennae. ABC and other over-the-air content providers hoped otherwise and sued to enjoin Aereo’s service.

The majority recognized that Aereo and the cable companies distributed content in different ways. However, the majority took the position that—whatever the technical differences may be—Aereo still seemed like and acted enough like a cable company so that, if its technology had existed when Congress passed the Copyright Act of 1976, Congress would have treated Aereo like a cable company, requiring it to pay for the privilege of rebroadcasting over-the-air content. The majority also concluded that Aereo was publicly performing the plaintiffs’ television shows.

An individual is clearly entitled under the law to set up an antenna and record onto a DVR a copyrighted show that was broadcast over the air. But the Aereo majority rejected the view that Aereo was merely a service provider that rented an antenna and a virtual, cloud-based DVR to each of its customers. By providing antennas and a virtual, cloud-based DVR to thousands of subscribers, Aereo crossed a line between what an individual is entitled to do on his or her own and what a company is not allowed to do on a large scale, even if it is merely helping people exercise their legal rights.

Ironically, the more liberal Justices sided with the vested interests—the television broadcasters and cable companies—against the individual who wants an easy, efficient way to enjoy the free over-the-air television transmissions, while the dissenting Justices, who favored allowing individuals to take advantage of the new technology, were from the conservative end of the bench.

Aereo kept each subscriber’s signal separate and distinct from the signals of other subscribers—from the time that a signal was received by the antenna to the time that that subscriber viewed the television show. In my view, therefore, there was no “public” performance of the television show by Aereo, and Aereo should not have been treated like a cable company.

Imagine someone renting an apartment in a location where an antenna needs to be mounted on the roof of the apartment building in order to receive a good signal. That person can buy an antenna and either take the time to install the antenna on the roof or pay someone else to do so. That person can also buy a DVR to record his or her favorite television shows or, if he or she does not have the skills to set up and program the DVR, he or she may hire someone else to do that too.

Thus, this individual can easily end up spending several hundred dollars to watch the free over-the-air television broadcasts. And if the lease for the apartment is only one year, that individual may have to make another substantial outlay of money to set things up again the next year.

Of course, this individual can spend a lot more money on cable or satellite companies to get those same over-the-air television shows. However, with their decision, the majority of the Supreme Court has removed another option for such an individual to obtain the free over-the-air broadcasts that the individual is entitled to—the Aereo option.

It may seem strange that the television broadcasters would object to a technology that would allow more people to view their shows. However, these broadcasters receive enormous amounts of money from cable and satellite companies. These companies have very strong oligopoly power over the distribution of the television shows. (As I noted in my previous article, less than ten percent of U.S. households report receiving television programming solely through an antenna.) Aereo presented a threat to this oligopoly—and thus presented a threat to the money that the cable and satellite companies pay to the broadcasters.

Of course, the television broadcasters and cable companies predicted much doom and gloom if Aereo were allowed to continue with its business, but similar predictions were made at the introduction of the video cassette recorder, and those predictions did not come to pass.

Leslie Moonves, the CEO of CBS, threatened to remove programming from over-the-air broadcasts and provide it only through cable and satellite, if Aereo were allowed to continue providing its service. Such an idea may not be so bad.

The Federal Communications Commission has begun to implement the “Broadcast Television Incentive Auction,” which is intended to encourage television licensees—who have obtained their radio-wave spectrum rights for free—to relinquish some or all of their spectrum usage rights so that wireless broadband capacity can be increased. The demand for wireless spectrum is increasing dramatically and is seemingly surpassing the demand for over-the-air television broadcasts.

A better allocation of the radio-wave spectrum might result if all television broadcasters adopted Mr. Moonves’s idea of moving programming to cable and satellite. Maybe over-the-air broadcasts will become obsolete, overtaken by the demand for wireless broadband. If that were to become the case, Aereo’s business would have had a limited lifespan in any event.

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