Aereo, Scareo: the #IPnerdvigil Ends in Disappointment

Today, the United States Supreme Court handed down its highly anticipated opinion in ABC v. Aereo. The decision reverses the Second Circuit’s ruling, which had held that Aereo’s transmissions constitute private performances in line with its previous holding in Cartoon Network LP, LLLP v. CSC Holdings, Inc. (“Cablevision”). In addition to being the wrong outcome, this opinion leaves much to be desired.

The primary thing missing from the Court’s opinion is an applicable standard. The Court relied so heavily on the fact that Aereo looks like a cable service and the historic battle over broadcast programming retransmission that it completely failed to give any guidance to future actors. This has the unfortunate result of chilling future innovation, as the risk of litigation has just substantially increased.

The Court did not explicitly touch the Second Circuit’s opinion in Cablevision, but it appears as though today’s opinion effectively eviscerates the long-relied upon rule. As the Computer & Communications Industry Association pointed out in their amicus brief, the Cablevision decision had created certainty in the industry that led to approximately a billion dollars of additional incremental investment in the American cloud computing industry over two and a half years, which some have estimated is the equivalent of “$2 to $5 billion in traditional R&D investment.”

Perhaps the most offensive part of the Court’s ruling is the assertion that technological distinctions don’t matter.Screen Shot 2014-06-25 at 10.42.26 AMThe very essence of the inquiry the Court was faced with was a technological question: does Aereo transmit anything and, if so, to whom do they transmit? To say that it is feasible to answer this question without exploring the technological distinctions is naive at best. The transmissions at issue here are the result of a complicated technological process, and determining the recipients of a given transmission requires a thorough investigation into the inner workings of the technology at issue.

One of the more perplexing parts of the opinion is the Court’s assertion that Aereo’s viewers have no pre-existing relationship to the content.
Screen Shot 2014-06-25 at 5.28.09 PMSetting aside the unfortunate fact that the valet parking analogy raised at oral arguments actually made it into the opinion, this section raises a puzzling conflict with the Court’s prior precedent in Sony Corp. of America v. Universal City Studios (the Betamax case). While in Sony this discussion arose in a different legal and factual context (a fair use analysis of private time-shifting), it was still significant that this was content the public was freely invited to view.
Screen Shot 2014-06-25 at 2.31.54 PMOur communications law is premised on the fundamental principle that the spectrum licensed to broadcasters belongs to the public, for their benefit. In return for the license, broadcasters are obligated to provide, among other things, free, over-the-air programming. How is it possible then, as the Court suggests, that the viewing public has no pre-existing relationship to this content? Answer: it’s not. By virtue of its status as content transmitted over the publicly owned airwaves, all viewers have a pre-existing relationship to the content.

The Court’s attempts to allay concerns about the impacts of this ruling beyond Aereo-like services are similarly unconvincing. The Court’s adoption of an “it’s not going to be a problem because we say it won’t” approach is troublesome and does little to shelter existing and future actors from being sued out of existence. The Court’s discussion does little to distinguish Aereo from other services, such as cloud storage lockers, beyond stating that they “have not considered” the issue.
Screen Shot 2014-06-25 at 3.41.28 PMAdditionally, as Ali Sternburg points out, the Court’s pointing to fair use as a possible means to salvage some part of Aereo’s service does little to minimize the blow, because “services should only have to rely on that doctrine when they are actually infringing copyright.”

Overall, the opinion reads like the Court simply couldn’t get past the bad feeling they had about Aereo in trying to “circumvent” the law, as Chief Justice Roberts noted at oral arguments.
Screen Shot 2014-06-25 at 3.54.48 PMWhile Aereo may feel wrong to the Justices, this opinion sure feels wrong to many of us who have been following this case closely. This decision is lacking in clarity and does little more than create confusion moving forward.

Hopefully, this won’t chill innovation for web-based services for years to come. But, as with everything, there are no guarantees. The Court does note that parties are free to seek Congressional intervention, and Aereo CEO Chet Kanojia hinted that he may be ready to take up that fight.

*Many thanks to Ali Sternburg for all of her help editing this post and inspiring the title!

Advertisements

One thought on “Aereo, Scareo: the #IPnerdvigil Ends in Disappointment

  1. Did Aereo Kill The Cablevision Ruling That Enabled So Much Innovation? Who The Hell Knows? | Technology

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s