On April 1, 2013, the Second Circuit Court of Appeals wasn’t fooling when it affirmed a lower court decision ruling that Internet start-up Aereo can continue to stream live television to its subscribers through the Internet much to the chagrin of the television network plaintiffs.
Aereo allows its subscribers to stream live television through its website and smartphone app. Each subscriber, in effect, leases an antenna. These tiny antennas are stored in Aereo’s Brooklyn warehouse and pick up signals, which are then transmitted through the Internet to the individual subscribers. Aereo’s subscription fees average about $8 per month.
A group of broadcasters, including ABC, NBC, CBS, Comcast, News Corporation, Disney, PBS and Telemundo, sued Aereo in federal court seeking an injunction. They argued that Aereo’s business constitutes illegal retransmission of copyrighted content. The district court denied the injunction, finding that plaintiffs were unlikely to succeed on the merits of their case. The court agreed with Aereo that retransmission of content to subscribers from individually leased antennas constitutes a “private performance.” While “public performances” of copyrighted material violate copyright law, “private performances” do not.
The Second Circuit affirmed this decision in a 2-1 ruling. However, dissenting Judge Denny Chin called Aereo’s business a “sham” and wrote that there is no legitimate reason for Aereo to use multiple little antennas as opposed to one centralized antenna. Further, he said, “[t]he system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”
Following this decision, Aereo plans to expand its service outside New York to various other markets, providing a more cost effective way for TV watchers to catch their favorite shows as well as another outlet for advertisers to reach people. Moreover, there is a growing potential for cable companies to join in on Aereo’s “sham,” using similar technology to avoid paying retransmission fees.
While broadcasters may have been beaten, they are not broken. They are encouraged by a recent decision in California where the court ruled against a nearly identical streaming service, and accordingly, they plan to take this case to trial.