Supreme Court to settle potentially huge television case

National Constitution Center

The Supreme Court announced on Friday that it will take on a potentially historic case about how Americans receive and watch television, after the Justices granted a request from both sides in the dispute for a day in court.

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That day will be in April 2014, when the Justices hear arguments in American Broadcasting Companies, Inc. vs. Aereo, Inc.

The highly publicized case was under consideration on Friday in a closed-door session, and it involves a copyright battle between a tech TV startup and the major television networks that could affect the future of broadcast television.

Aereo is a company that provides a paid service used by people with computers, and it allows customers to watch broadcast TV programs on a computer that are also available for free over the airwaves.

The TV networks are deeply upset that Aereo can resell their broadcast TV signals without permission or compensation and fear the precedent will erode their revenue models, which depend on retransmission fees and contracts with sports organizations.

So in addition to ABC, the network lawyers at CBS, Fox, NBC and Univision are involved in the case, and the National Football League and Major League Baseball have filed petitions against Aereo.

In December 12, 2013, Aereo announced that instead of fighting an appeals request from ABC, CBS, Fox and NBC, it wanted the Supreme Court to decide the case of American Broadcasting Companies, Inc. v. Aereo, Inc.

In July 2013, the U.S. Second Circuit Court of Appeals said it wouldn’t revisit its April ruling, in which a three-judge panel refused to issue an injunction halting Aereo, a service that steams over-the-air TV signals to consumers, for a fee, without paying broadcast networks.

“We will now review our options and determine the appropriate course of action, which include seeking a hearing in the U.S. Supreme Court and proceeding to a full trial on the merits of the case,” said Fox in a statement in July.

In October 2013, the four networks, represented by top Supreme Court lawyer Paul Clement, filed its petition with the Supreme Court.

The question posed in the networks’ petition seems simple: “Whether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.”

Aereo is represented by another legal heavyweight, David C. Frederick, and it presents the question for the Court in a different way:  “Whether Aereo ‘perform[s] publicly,’ under Sections 101 and 106 of the Copyright Act, by supplying remote equipment that allows a consumer to tune an individual, remotely located antenna to a publicly accessible, over-the-air broadcast television signal, use a remote digital video recorder to make a personal recording from that signal, and then watch that recording.”

Aereo is backed by Barry Diller, the media mogul who was the first head of the Fox broadcast network in the 1980s. The company uses banks of tiny antennae to record and stream broadcasts for subscribers and relay them over the Internet to a computer-based device.

Its successful legal strategy, so far, is based on a 2008 ruling, commonly called the Cablevision case, in the United States Court of Appeals for the Second Circuit. The case of Cartoon Network, LP v. CSC Holdings, Inc., found that Cablevision had the right to record Cartoon Network programs using a DVR service that Cablevision hosted for the benefit of its subscribers.

In a July 2012 ruling, a U.S. district court denied the broadcasters’ request for an injunction against Aereo, citing the Cablevision decision. The judge in that case said without the Cablevision precedent, the broadcasters would have likely gained the injunction, based on copyright laws.

After the networks filed their October 2013 petition, they were joined by the National Football League and Major League Baseball in asking for a Supreme Court date.

“This judicially created loophole allows such services to avoid the force of the Leagues’ copyrights in broadcasts of their games, eroding the value of one of the Leagues’ most important assets,” the sports leagues said in their petition.

Aereo said that since it had won several legal challenges already, it wanted the Court to settle the question.

“Even though the Second Circuit decided that issue correctly, petitioners have signaled their intention to wage a war of attrition by re-litigating this issue in every market to which Aereo expands its business,” Aereo said in its court petition>

But Aereo also mentioned a wild card in the case: a company called FilmOnX with a similar business model that has lost several court cases.

“Petitioners note, however, that two district courts have ruled against one of Aereo’s purported competitors, FilmOn. Because of the extensive evidentiary record and careful fact-finding by the district court below, this case (and not the cases involving FilmOn) pro-vides an appropriate vehicle for this Court to resolve this issue.”

Industry observers say a filing in the District of Columbia against FilmOn X was significant, because the circuit gets close scrutiny by the Supreme Court.

A Supreme Court hearing couldn’t come soon enough for the broadcasters. Aereo said it was considering working with Google to provide a TV-based app on its Chromecast device that would let viewers access the service on newer model televisions with HDMI inputs. It also has a similar deal with Apple TV and Roku.

There also have been reports that television providers such as DirecTV and Time Warner would consider an Aereo-like system to avoid billions of dollars in retransmission fees paid to the networks.

In the long run, networks could be forced to rethink their business strategy about offering free TV signals if they lose the Aereo case. Executives at CBS, Fox and Univision have said they would consider pulling most of their programming from the airwaves and put it on paid cable or satellite channels they already own.

But such a decision would also face Congressional and FCC scrutiny.

Scott Bomboy is the editor in chief of the National Constitution Center.

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