Supreme Court Deals Blow to Cable Cutters

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April 7, 2014
Eric Lamb
SmithAmundsen Intellectual Property Alert

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The U.S. Supreme Court recently held that an online television streaming service violated copyright law by retransmitting copyrighted television programs over the Internet without permission from the copyright holders. The decision impacts those who used the service as a replacement for pricey cable television subscriptions and could have implications for other cloud based video services.

Aereo, Inc. used thousands of tiny television antennas to receive broadcast television signals, and then streamed the programs to their subscribers over the Internet. Each individual user was fed a unique stream from a dedicated antenna. Aereo also provided its users with DVR-like functionality, enabling users to view recorded programs at a later time. Subscribers paid a monthly fee to Aereo for use of the service.

The Copyright Act provides copyright owners with the exclusive right to “perform the copyrighted work publicly.” Aereo did not pay a license fee to the television broadcasters, as cable television providers do for the right to retransmit the same programs. Aereo argued that it was exempt from paying for a license because its service was essentially a cloud-based version of a traditional television antenna and DVR used by a consumer to legally make private, personal recordings, and thus, did not constitute a public performance of the copyrighted works.

The Supreme Court came to a different conclusion. In American Broadcasting Cos., Inc., et al. v. Aereo, Inc., No. 13-461 (June 25, 2014) the Court held that Aereo performed the works, as defined by the Transmit Clause of the Copyright Act. The Court also held that Aereo’s performances were “public” because Aereo “communicate[d] the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.” The Court noted that, “whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds.”

As for the possible chilling effect of the decision on other cloud services, the Court noted that it does, “not believe that our limited holding today will have that effect,” while essentially leaving the issue for another day. As for Aereo, it has decided to “pause” its operations as it determines its next steps, leaving consumers with one less alternative to cable television.