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The Supreme Court's Aereo Effect Might Evaporate Silicon Valley's Cloud

June 25, 2014 in Economics

By Julian Sanchez

Julian Sanchez

When is an online streaming service like a cable company? The US supreme court’s answer on Wednesday – sure to send chills down the spines of Silicon Valley entrepreneurs — was this: when five justices think it kinda sorta looks like one.

In a 6-3 ruling — which, in a dissenting opinion, Justice Antonin Scalia predicted would “sow confusion for years to come” — the court held that a company called Aereo violates copyright when it lets users tune into broadcast TV signals over the internet. But the “improvised standard” established by the court’s majority in American Broadcasting Companies v Aereo creates new uncertainty about just what an innovative tech startup must do to stay on the right side of the law — and raises questions about the legal status of familiar cloud services run by companies like Apple and Amazon.

In essence, Aereo combined two services to allow subscribers to watch free over-the-air broadcast television on a computer or mobile device. First, each subscriber effectively rented their own miniature, remotely-controlled antenna that the user could activate and tune to any local broadcast TV station. Second, subscribers got a remote DVR drive that could record, store and stream those broadcasts over the internet. The court tacitly permitted remote DVR services in 2008, when it allowed a lower court ruling blessing them to stand – yet the logic of that decision is at odds with the court’s finding on Wednesday that Aereo “publicly performs” the shows that it allows users to stream, violating federal copyright law.

Aereo’s lawyers had argued that they’re not “publicly performing” any copyrighted works at all, because each user create a personal stream using their own personal antennas. As they saw it, the service was no different than a cloud storage service like Dropbox: each user would be downloading her individual copy of a file (even if a file with the same content could be found in the personal folders of many different users). If individuals are allowed to record broadcast programming using a rented antenna on their own rooftops, and store their recording on a cloud drive, why should it make a difference whether the antenna is on Aereo’s rooftop instead of the user’s?

The court rejected that argument, noting that Congress had changed federal statute specifically to cover cable companies retransmitting broadcast programming, redefining the “public performances” restricted by copyright law to include “transmissions”. Even though Aereo functions …read more

Source: OP-EDS

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