The Supreme Court today struck a mighty blow against Internet television.
Firms that beam television programs to Internet users for a fee now face staggering liability for copyright infringement.
The 6-3 Court held that Aereo infringed the copyrights of content owners by enabling subscribers to select the channels they want to watch via the Internet.
Aereo argued that it didn't infringe because it didn't "perform" or "transmit" the content "publicly" within the meaning of the Copyright Act. It relied on the fact that each subscriber — and not Aereo — activates a unique antenna when she or he selects a show to watch and doesn't view the program in real time but instead sees a subscriber-specific copy of it after Aereo's servers record that copy for the subscriber. That the process takes seconds did not diminish the subscriber's control over the process, Aereo argued. It thus makes Aereo less like a cable company and more like an enterprising copy shop that generates business by giving library cards to college students so they can check out books and bring them back for cheap reproduction.
Aereo's position won the day in the Second Circuit but not in the Supreme Court. The subscriber's nominal control over the process of fetching, copying, and transmitting the program "means nothing to the subscriber", Justice Breyer wrote for the majority. Am. Broadcasting Cos., Inc. v. Aereo, Inc., No. 13-461, slip op. at 10 (U.S. June 25, 2014). "It means nothing to the broadcaster." Id. "We [therefore] do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into 'a copy shop that provides its patrons with a library card.'" Id.
Winners and losers
The big TV networks and content owners got a large victory from the decision. Their win protects a key revenue stream from "retransmission" fees that they collect from cable and satellite companies. See NYT article here.
Aereo, on the other hand, may go the way of the pteradactyl.