Supreme Court US 2010

US Supreme Court

In February at Over Easy we talked about tiny Aereo, a startup company that streams broadcast television over the internet. Now, two years after it began, Aereo is arguing for its very existence before the Supreme Court, and the broadcast TV companies are hoping to shut it down. Even the Obama administration has sided with the broadcasters, filing an amicus brief asserting that Aereo is “clearly infringing” on the networks’ copyright by streaming content without permission.

You may recall that Aereo lets users stream and record live over-the-air TV to their connected devices such as computers or iPads by providing each customer exclusive rental of a dime-sized antenna and online “cloud” storage. This unwieldy method was designed to comply with very narrow legal restrictions so that Aereo can stream broadcast content to its subscribers without paying the networks for the privilege. The Aereo setup mimics “rabbit ears” or a roof antenna together with a virtual digital video recorder (DVR), both of which have been ruled a legal way to bring broadcast TV programs to a viewer’s home. It is now up to the Supreme Court to decide whether this model still is legal when it’s used to deliver television over the internet.

C|NET provides a fascinating look at how it all works.

The Supreme Court will hear arguments based on a sentence in the Copyright Act of 1976 in which Congress granted copyright holders the exclusive right to “perform the copyrighted work publicly.” That phrase is further defined to mean, among other things, “to transmit or otherwise communicate a performance or display of the work … to the public, by means of any device or process, whether the members of the public who are able to receive the performance or display are receiving it in the same place or in separate places, and at the same time or at different times.” This is known as the “transmit clause.”

The key issue in the case is whether or not Aereo is using their process to retransmit to the public. Aereo’s setup is insane from a technology standpoint, but because it has been ruled legal to “place shift” legally accessible TV (for example, with a Slingbox), and to watch over-the-air TV via a personal antenna on your roof, Aereo has set up an individual antenna for each customer, connected to the equivalent of a Slingbox that a customer “subscribes” to and thereby gets access to over-the-air channels. It’s technically no different than if an individual set up an antenna and Slingbox in his/her own home, except that the length of the cable between the antenna/Slingbox combo and the TV is much longer with Aereo (across the Internet) than in the home. However, broadcasters and their supporters (now including the U.S. government!) argue that this longer cable somehow magically transforms an individual antenna into a public broadcast for which Aereo should pay retransmission fees.

The first day of the SCOTUS hearing was April 22nd, and the outcome is too close to call at this point. Some of the questions and answers at the first hearing were covered in this Techdirt article: “At Least the Justices Recognize the Harm They Might Do.”

The decision in this case is likely to affect other cloud computing services.  People think of consumer-facing services like Google Drive, iCloud, SkyDrive, or Dropbox as cloud computing, and others think of web-based apps like webmail.  Most people don’t think of television in that context, but the legal principle is the same.

If an individual uses an online service to store and stream lawfully acquired content to himself/herself from a remote location, this is a private performance that does not infringe copyright. Broadcasters insist that “any device or process” that transmits works to the public is a public performance, each of which must be licensed.  Because cloud services are a “device or process,” how can cloud services providers give users remote access to their own content without securing licenses for every file in the cloud?

And many individuals (some of whom should know better) are tying themselves in knots to assert that Aereo’s complicated setup is an attempt to circumvent the law, rather than an attempt to ensure that they are complying. Aereo’s technical setup is bizarre, but not because Aereo is trying to “get around” the law, but because it’s trying to stay within the law. This silly argument is like saying that if the speed limit is 70MPH and I use my car’s cruise control to ensure that I don’t exceed the limit, I am somehow trying to circumvent the speed limit so therefore I must be guilty … of something.

A number of important issues will depend on the outcome of the Aereo case, not only Aereo’s survival, but the future of cloud services that are rapidly becoming part of our daily lives. The ruling is expected in the summer, so stay tuned!