Chet Kanojia, founder and CEO of Aereo, Inc., stands next to a server array of antennas in New York, Dec. 20, 2012.
Aereo, the upstart online video company that’s become the bane of big TV broadcasters, didn’t use the words immortalized by Clint Eastwood‘s “Dirty Harry” in its Supreme Court filing on Thursday, but the message is clear. Aereo has asked the high court to grant the broadcasters’ petition for a writ of certiorari, arguing that it’s time to settle the legality of its streaming video service once and for all.
Aereo’s message to the broadcasters: Bring it on.
ABC, CBS, NBC and FOX, along with several powerful allies, have asked the Supreme Court to shut down Aereo, arguing that it is stealing their TV signals. If the high court agrees to take the case — which is far from certain — it would set the stage for landmark test of copyright law that could have major implications for the entertainment industry.
Aereo, which launched in February 2012 after raising more than $20 million from media mogul Barry Diller’s Internet conglomerate IAC and other investors, picks up free, over-the-air broadcast signals using an array of tiny antennas, and then sends those signals to its customers via the Internet for $8 to $12 per month. Aereo’s users technically lease the tiny antennas, which the company houses in nearby “antenna farms.”
The New York-based startup was immediately sued by the major broadcasting giants, including Comcast-owned NBC, News Corp-owned FOX, Disney-owned ABC, and CBS. Aereo says that because each user receives programming over the Internet via his or her own leased antenna, the system is legal, and so far, the federal courts have agreed. The broadcasters maintain that Aereo — which doesn’t pay for the TV signals it captures over the air — is violating copyright law and stealing their programming.
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“While the law is clear and the Second Circuit Court of Appeals and two different federal courts have ruled in favor of Aereo, broadcasters appear determined to keep litigating the same issues against Aereo in every jurisdiction that we enter,” Chet Kanojia, the company’s founder and CEO, said in an emailed statement. “We want this resolved on the merits rather than through a wasteful war of attrition.”
The broadcasters’ campaign against Aereo underscores the technology-driven changes sweeping across the entertainment industry, as consumers increasingly access content over the Internet and on their mobile devices. Aereo poses a threat to the existing TV business model, which involves cable and satellite companies paying billions of dollars in retransmission consent fees to the broadcasters for the right to carry popular programming like prime-time shows and sporting events.
In October, the broadcasters formally asked the Supreme Court to take the case. “This Court’s intervention is urgently needed,” the broadcasters wrote in their petition. “This Court has had little tolerance for business models built on the for-profit exploitation of the copyrighted works of others. And this Court has repeatedly recognized the important public interest in protecting the viability of over-the-air broadcast television.”
But the federal courts have repeatedly sided with Aereo’s argument that it is transmitting “private performances” not copyright-protected “public performances,” much to the annoyance of the broadcasters. Those rulings have relied on principles of federal copyright law affirmed by the U.S. Court of Appeals for the Second Circuit in its 2008 Cablevision remote-storage DVR decision. That verdict established the legal basis for remote, or “cloud-based,” video storage and playback systems.
Aereo argues that its users are picking up free, over the air signals for personal use. “The long-standing landmark Second Circuit decision in Cablevision has served as a crucial underpinning to the cloud computing and cloud storage industry,” said Kanojia. “The plaintiffs are trying to deny consumers the ability to use a more modern antenna and DVR by trying to prevent a consumer’s access to these technologies via the cloud.”
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For its part, Cablevision, the New York-based cable company, weighed in with a white paper on Thursday, saying that while it believes that Aereo is illegal, the company “strongly rejects” the anti-Aereo arguments made by the broadcasters. Cablevision said that Aereo violates copyright law because it retransmits broadcast content without a license, but called the broadcasters arguments “radical” and “completely unnecessary.” The company said the court should focus solely on Aereo and not on cloud services generally.
“The broadcasters’ overreaching copyright arguments would, if accepted, cause grave harm to consumers, cloud-based technology and future innovation,” Cablevision said in a statement. “In a case about Aereo, the broadcasters go well beyond Aereo and attack the legal underpinning of all cloud-based services, everything from the Apple iCloud to Cablevision’s own remote storage DVR service. In short, the broadcasters are asking the Court to throw the baby out with the bathwater – a move that could cripple cloud-based innovation in the U.S.”
Last month, Major League Baseball and the National Football League threw their weight behind the broadcasters, warning in a brief to the Supreme Court that if Aereo prevails, the leagues might move football and baseball broadcasts to pay-TV outlets like ESPN, TNT, or other cable or satellite outlets. (TIME parent Time Warner has also filed a brief supporting the broadcasters.)
“The fact that the broadcasters are asking their most powerful allies, including the NFL and Major League Baseball, to support them in front of the Supreme Court, shows just how disruptive Aereo could be if the service is found legal,” Rich Greenfield, a media and technology analyst at BTIG Research, told TIME last month. Now, with both Aereo and the broadcasters urging the Supreme Court to review the dispute, it’s up to the high court to decide whether it will take the case.