AEREO: Supreme Court Takes Us Back To The Future

by Wendel, Rosen, Black & Dean LLP
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Hot-New Technology

Hot-New Technology Circa 1975

It’s 1975; Saturday Night Live just debuted, disturbed women keep shooting at President Ford and Sony just came out with a new-fangled product called Betamax that allows television viewers to record shows and watch them on their own schedules and to fast forward through the ads. The television networks, there were only a handful, since this was the dark ages (a.k.a. pre-cable), claimed this would destroy their industry and sued Sony for copyright infringement.

The Betamax Decision Begat the VHS, DVD, Blu-ray and DVR Revolutions

The networks’ argued that Sony designed Betamax to enable copyright infringement and thus it was liable for contributory infringement. The Supreme Court ruled for Sony, finding that “the business of supplying the equipment that makes such copying feasible should not be stifled simply because the equipment is used by some individuals to make unauthorized reproductions of [the networks’] works.”

The Aereo Decision Will Wound, if not Kill, a Cutting Edge Industry

This week, the Supreme Court took a giant step backwards when it ruled for the networks and against Aereo. Aereo provides antennas to its subscribers that, at the subscribers’ direction, record or view broadcast signals. This allows subscribers to unbundle cable by allowing subscribers to subscribe to just the channels they want at a fraction of cable’s cost. The Court rejected Aereo’s argument that, like Betamax, Aereo simply allowed each subscriber to view or record whichever programs he or she wanted and to watch them at the time of their choice. Instead, the Court found that Aereo was publicly rebroadcasting the networks’ programs when it sent the same signal to multiple subscribers and thus Aereo was infringing the networks’ copyrights.

In a statement that will send chills to cloud storage innovators, the Court stated that “resolution of questions about cloud computing, remote storage DVRs and other novel matters not now before us should await a case in which they are clearly presented.” To paraphrase the Court’s pronouncement on pornography, the Court will “know [copyright infringement] when they see it.”

If you’re an unhappy cable subscriber (is there any other kind), or a start-up developing cloud storage devices, the Supreme Court just slammed a door that looked pretty securely open with its prior Betamax decision.   In the real world, investors and innovators are unlikely to sink hundreds of millions of dollars into developing technology that may or may not infringe the networks’ copyrights.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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