U.S. Supreme Court rules Aereo in violation of copyright laws

July 17 2014

On June 25 2014 the US Supreme Court decided ABC v Aereo, reversing a Second Circuit Court of Appeals decision and holding (six to three) that Aereo’s service of providing mini-antennae to each of its thousands of customers to receive over-the-air broadcasts counted as a public performance of those broadcasts under Section 106 of the Copyright Act. It found that essentially, Aereo was no different from cable companies, which are subject to limitations on their ability to freely transmit programming under the Copyright Act, such as the requirement to pay compulsory licence fees.

At oral argument, Aereo had difficulty in trying to explain why it constructed its system other than to evade copyright law. Furthermore, its claim that it was no different from a store that sold antennae so that individuals could watch over-the-air broadcasts proved unpersuasive: in such a hypothetical transaction, Aereo would no longer own the antenna and the entire transaction would be completed with no more involvement by Aereo when the programming was actually transmitted. The court also was not swayed by the claim that Aereo did not perform “publicly”, stating that even if the distribution of a programme were made in separate transmissions, one per antenna, it would still be a transmission to the public.

Aereo’s inability to differentiate itself from a traditional cable system ultimately sealed its fate. The court also clearly did not like the fact that Aereo’s customers had no ownership interest or other rights in the copies they were receiving. This fact might distinguish Aereo’s system from, for example, remote storage DVR systems, where the individual users receive programming for which they and their cable companies have already paid fees.

Justice Scalia filed a dissent in which he mocked the majority’s blurred line and said that it would lead to many more cases in which courts would have to figure out how much the system in question resembled a cable operation.

In briefs and argument, Aereo and some amicus briefs tried to make it appear that a decision against Aereo could have sweeping negative ramifications for other technologies, including cloud computing. The court went out of its way to clarify that its decision did not consider and would not affect such technologies today. Given what the court focused on in deciding against Aereo, it is highly unlikely that the language in Aereo could be used to jeopardise technology whose main purpose is to allow customers to store copies of works they already own in the cloud.

The court’s decision is in line with the rulings of the European Court of Justice and the UK High Court decision in ITV v TVCatchup, which also held that the author’s right of communication to the public covers any transmission or retransmission of a work to the public not present at the place where the communication originates, by wire or wireless means, including broadcasting.

For further information on this topic please contact Joseph I Rosenbaum at Reed Smith LLP by telephone (+1 212 521 5400), fax (+1 212 521 5450) or email (jrosenbaum@reedsmith.com). The Reed Smith website can be accessed at www.reedsmith.c

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