updated 11:38 am EDT, Wed June 25, 2014
Cloud-based DVR service should pay licenses to broadcasters, rules Supreme Court
Aereo has lost its battle against broadcasters, after the US Supreme Court ruled against the start-up. In a 6-3 ruling, the court states the company violates copyright law by streaming recordings of TV shows to its subscribers, classifying the streams as "public performances" and so requires that Aereo pay content licenses to broadcasters for their programming.
Currently, Aereo provides thousands of micro antennas for recording individual programs unique to their subscribers, rather than using fewer antennas, recording a program once, and playing that recording to multiple users. In the court's opinion, Aereo is still operating as if it is a cable company, despite the background machinations, and therefore is not able to escape paying the licensing fees to broadcasters.
Aereo antenna array
The issue of public or private performances in relation to a clause in the Copyright Act was central to the case. Aereo claimed the individual, user-specific copies from assigned antennas were made just to one subscriber, and so should classify as a non-public performance. "Viewed in terms of Congress' regulatory objectives, these behind the scenes technological differences do not distinguish Aereo's system from cable systems, which do perform publicly," states the ruling. "Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies."
The ruling leaves Aereo with relatively few courses of action. Aside from shutting down, it could opt to pay broadcasters licenses for content, something which would almost certainly raise the subscription price to customers. Broadcasters could also refuse to provide a license to Aereo at a reasonable charge, a move which would starve the company of content and force a service closure. Aereo may also decide to put its equipment and technology to use in another direction, though it is unclear what else it could do.
It was suggested before the Supreme Court hearings that a negative ruling could have negative consequences to cloud storage providers and other streaming services, with Aereo attorney David C. Frederick claiming "The cloud computing industry is freaked out about this case." The opinion states "Given the limited nature of this holding, the Court does not believe its decision will discourage the emergence or use of different kinds of technologies."
Justices Breyer, Ginsurg, Kagan, Kennedy, Roberts, and Sotomayor are in favor of the decision, with justices Alito, Scalia, and Thomas against.