SCOTUS seems worried about impact on tech sector in TV streaming case

April 23, 2014

SCOTUS ClipboardYesterday, the Supreme Court heard oral arguments in American Broadcasting Companies, Inc. v. Aereo, Inc., a dispute which could be described as a clash between new technology and old.

For a full summary of the facts of the case, check out my post from September of 2012.  But here’s a shorter version:

Aereo is an online service provider that allows subscribers to view live and time-shifted streams of broadcast television on Internet-enabled devices.  Aereo facilitates this by “renting” an antenna to its subscribers to receive and record (via DVR) over-the-air broadcast TV, which is then streamed over the Internet to their mobile device.

Aereo asserts that it is simply an alternative to purchasing a TV set and DVR, in that you may only receive local broadcast TV stations through the service, and Aereo provides no content that the user has not previously recorded onto his or her allocated DVR.

This arrangement is significant because of Cartoon Network LP, LLLP v. CSC Holdings, Inc., a 2008 ruling from the Second Circuit more commonly known as Cablevision (after one of the named defendants).

Cablevision held that a remotely-stored DVR service didn’t run afoul of copyright law by engaging in unauthorized “public performances” with every DVR recording and re-transmission of TV broadcasts.  The court of appeals specifically held that a “public performance” does not occur merely because the same television program is transmitted to a number of different people, and that the transmissions to each individual user were “private,” in that each recording was individually unique.

Aereo is now making the same argument: that each live and time-shifted broadcast is a private performance, so no licensing is required and no copyright laws are violated.

The Supreme Court refused to review the Second Circuit’s decision in 2008, but agreed to hear Aereo now.  At oral arguments, the justices were largely trying to sort out the law and technology involved in the case.

Beyond that, there were a few additional viewpoints and/or concerns expressed by different members of the Court during arguments.

First, some of the justices were worried about the possible implications of ruling against Aereo might be for cloud computing services.  Justice Breyer raised this point quite a bit, but Justices Kennedy, Alito, Sotomayor, and Kagan all seemed to raise these same concerns at one point or another.

One viewpoint raised by the Chief Justice (and seemingly shared in some degree by the rest of the bench) was that Aereo structured its operations – that is, it allocated separate antenna and DVR storage per user to comply with Cablevision.  Granted, Chief Justice Roberts also stated that it’s not “outcome determinative or necessarily bad” if Aereo’s only reason for its technological operations were to get around the law, but the justices didn’t seem satisfied with Aereo’s attorney’s answers about its reasons for its technological model.

Along these same lines, there seemed to be a general feeling on the bench that Aereo was avoiding paying licensing fees through a technicality.  As a counterbalance to this concern, though, was the worry mentioned earlier that ruling against Aereo could destroy the cloud computing industry.

So clearly, it’s fairly difficult to tell where the Court is going to come down on this one.  My personal feeling is that a sizeable number of the justices (Justices Kennedy and Alito in particular) view Cablevision as being decided correctly – especially since Justice Kennedy hypothetically asked the broadcasters’ attorney to differentiate this case from Cablevision – assuming, for the purpose of the hypothetical, that Cablevision was binding precedent on the Court.

None of the justices seemed to believe that this case was consequentially different from Cablevision.  What’s worse for the broadcasters is a comment from the attorney for the U.S. government (who was largely siding with the broadcasters): if the Court finds that Cablevision applies here, “then it’s hard to see how you could rule in favor of our position.”

Although I’m not entirely certain (especially since intellectual property cases rarely divide the Court down ideological lines), my prediction for the ruling in this case will be affirming the Second Circuit six to three, with Chief Justice Roberts, and Justices Kennedy, Breyer, Alito, Sotomayor, and Kagan in the majority, and Justices Scalia, Thomas, and Ginsburg in the dissent.

It’s also entirely possible that the Court may find another way to rule that closes Aereo’s perceived “loophole” without ruling completely in favor of the broadcasters.

Unfortunately, we’ll have to wait until June when the Court hands down its ruling to know for sure.  One thing we do know, however, is that, no matter how the Court comes down, the ruling will carry major implications for remote media and computing industries.