Aereo is Dead – Now What?
The last time the Dotted Line mentioned Aereo was back in January. The television streaming service had just finished playing a proverbial game of whack-the-mole with a group of litigious broadcasters (NBC, ABC, Fox, etc.). The national broadcasters brought lawsuits in multiple jurisdictions, claiming Aereo was stepping on their public performance right by capturing broadcast signals on miniature antennas and delivering them to subscribers for a fee. Such an act usually requires a retransmission license, which Aereo believes it never owed to the broadcasters. Due to a circuit split on the matter between the Ninth and Second Circuits, the broadcasters decided that the Supreme Nine needed to intervene to settle the matter.
On April 22, oral arguments were heard before the nine Supreme Court Justices. At that point, the Court seemed to have little love for the dark horse Aereo. It’s possible the broadcasters got a boost by the appearance of the U.S. Solicitor General Paul Clement, arguing on behalf of ABC and the other networks. Also at oral arguments, the justices were informed by Aereo’s lawyers that a decision in favor of the broadcasters could have negative repercussions on cloud computing. Overall, the justices didn’t seem impressed with the way Aereo’s service operates. Several justices even commented that the service appeared to work in a way that plugs a hole in copyright law.
On June 26, Justice Stephen Breyer delivered the final 6-3 decision, handing a major victory to the broadcast networks. He was joined by Kagan, Sotomayor, Ginsburg, Roberts, and Kennedy. To some, Breyer’s lead comes as a surprise, as he asked the toughest questions of the broadcasters during oral arguments.
Breyer divides his analysis into two issues: whether Aereo performs in the meaning of the Transmit Clause; and if so, whether Aereo publicly performs? In plain English, the decision turns on the identity of the volitional user of the antenna. Who is the doer – the consumer or the service provider? Aereo contends that the user is the volitional agent here, because its system – unlike a cable system – does nothing for the user until the user affirmatively instructs their personal antenna to start recording a program.
If it walks and talks like a cable system…
The Court found that Aereo is not merely a supplier of equipment, but rather acts more like a cable system in that it transmits copyrighted content. Breyer points to transformations in copyright law after the 1968 Fortnightly case and the 1974 Teleprompter case. He notes that “one of Congress’ primary purposes in amending the Copyright Act in 1976 was to overturn the Court’s holdings that the activities of community antenna television (CATV) providers fell outside the Act’s scope.”
The Act, as it currently stands, “clarifies that to ‘perform’ an audiovisual work means ‘to show its images in any sequence or to make the sounds accompanying it audible.’ Thus, both the broadcaster and the viewer ‘perform,’ because they both show a television program’s images and make audible the program’s sounds.” Additionally, the Court notes that Congress also enacted the Transmit Clause, which specifies that an entity performs when it ‘transmits…a performance…to the public.’”
The Court reasons, since Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach, Aereo is not just an equipment provider. “It is Aereo that employs its own equipment, housed in a centralized warehouse, outside of viewers’ homes. By means of its technology, Aereo’s system ‘receives programs that have been released to the public and carries them by private channels to additional viewers.’”
Thus, Aereo’s main argument is defeated. The Court did acknowledge that Aereo has technical features that make it look like a remote storage DVR, and less like a cable system. The systems in the Fortnightly and Teleprompter cases transmitted constantly, whereas Aereo’s system remains inert until a subscriber indicates that she wants to watch a program.” Yet, that distinction does not matter, “given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments.”
Not so private, now is it?
The Court also held that Aereo performs the plaintiff’s works publicly. To rebut that contention, Aereo points to the implementation of its service, claiming that because it transmits the copyrighted content from user-specific copies, using individually assigned antennas, and because each transmission is available to only one subscriber, it does not transmit a performance “to the public.” Again, the Court disagrees: “… [T]hese behind-the-scenes technological differences do not distinguish Aereo’s system from cable systems, which do perform publicly. Congress would as much have intended to protect a copyright holder from unlicensed activities of Aereo as from those of cable companies.” Moreover, the subscribers to whom Aereo transmits constitute “the public” under the Act. “This is because Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.”
Scathing Scalia and Like-minded Dissenters
Scalia, leading the dissent, criticized the majority opinion for being a results-driven decision and its two-step analysis a farcical gloss. Though Breyer took caution to note that this decision has a “limited holding”, Scalia scoffs at the false prudence. In his dissent, he warns of the consequences: “The Court vows that its ruling will not affect cloud-storage providers and cable television systems, but it cannot deliver on that promise given the imprecision of its results-driven rule.”
Indeed, this decision may have a consequence on the pending Fox v. Dish case, which implicates the legality of Dish’s place-shifting technology in its Hopper product. Dish may lose because the erosion of the volition requirement in copyright liability may render Dish’s Hopper product more vulnerable to attack.
The greater concern of the Aereo case is how it affects other technology cases. The brushing aside of Aereo’s implementation details may make arguments in tech cases more uncertain all around. The analysis expounded by Breyer leaves only a variable standard of how other innovative companies are supposed to use this decision as a guiding light. Is the new rule of thumb for a wannabe, ground-breaking TV start-up to avoid “overwhelming likeness to the cable companies”? If so, Breyer’s opinion is more like a flashlight with a dying battery.
Others are angered that this decision is only further evidence of how the cable companies control the U.S. government. Multichannel video programming distributors (MVPD) have certainly wiped the smile from their face. Had Aereo survived and thrived it might have spurred the unbundling of cable and satellite packaging (see Cut the Cord). If Aereo had lived on, it would have completed the potluck meal that Netflix, Hulu and other services were already bringing their own dishes to.  Point being, it may still be too soon to fully cut the cord. And if you already think your cable bill is too high, it’s not about to get any cheaper, as TV industry stocks rose immediately following the Aereo decision.
Ding Dong, Aereo’s Dead
While there are mourners, Aereo’s death has some dancing on its grave. Broadcasters are naturally rejoicing, because they can continue to charge MVPDs carriage fees and press any Aereo copycats for a retransmission fee. Content companies and film studios are happy because a portion of the fatter profits for broadcasters flow back to them. Likewise, the creative bunch (producers, writers, direectors and crews) win as well, because more money for the companies means less pressure on them to churn out content.
Aereo’s financial backer, Barry Diller, told CNBC that “it’s not a big financial loss for us, but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute [Aereo founder and CEO] Chet Kanojia and his band of Aereo’lers for fighting the good fight. We did try, but it’s over now.”
 17 U.S.C.A. § 110(5).
 Fortnightly Corp. v. United Artists Teleivision, Inc. 392 U.S. 390 (1968); Telemprompter Corp. v. Columbia Broadcasting System, Inc. 415 U.S. 394 (1974).
 ABC, Inc. et al. v. Aereo, Inc., 575 U.S. 2 (2014).
 Ibid., 3.
 Ibid., 3.
 Ibid., 4.