Underdog or Underhanded: The Real Issues Behind Aereo

by JD Supra Perspectives

...how do you prove someone is breaking the law, if the technology they are using to do so didn’t even exist when the law was written?

In 1992, the Cable Television Protection and Competition Act passed the U.S. Congress by an overwhelming, bi-partisan majority and established “retransmission consent” requiring cable operators and content distributors to obtain permission from broadcasters before airing original content. The law meant that the cable systems had to pay to carry broadcaster’s programming.

It reflected that age-old concept: Person A makes something Person B wants or needs and Person B offers something of equal value—usually money—for the right to use, access or own that good or service.

In recent years however, there has been a significant shift in how we define ownership. The internet is a virtual wonderland of free, shareable content right at our finger tips. This makes the legal lines between copyright infringement and fair use increasingly blurry. On the internet, the overwhelming consensus seems to be that nothing is really yours or mine. It’s ours. Anything online is communal property to which everyone has equal rights.

While broadcast television is still very much alive, the industry has had to make some serious adjustments as Americans spend more time in front of a computer screen rather than a TV screen. It is at this intersection of broadcast and digital where we are starting to see a major legal divide.

On one hand we have the broadcasters—those who invest a great deal of time, money and resources into creating original content. On the other hand we have the “content aggregators” and others who use technology to distribute that content to end users on a massive scale and hope that their methods evade copyright laws.

Broadcasters have always been well protected by copyright laws but new technologies have been developed for the express purpose of circumventing the broadcasters’ rights. After all, how do you prove someone is breaking the law, if the technology they are using to do so didn’t even exist when the law was written?

This question was recently brought before the U.S. Supreme Court by way of American Broadcasting Companies, Inc. v. Aereo, Inc.

Aereo offers a new and cheap way to access live television, without having to buy a cable subscription, or even a TV. Using a series of small antennas, Aereo streams over-the-air signals to subscribers, allowing them to watch and record programs on any computer or mobile device for the small, monthly fee of just $8.

Sounds great, right?

It is, until you consider that the technology employed by Aereo may allow the company to evade copyright laws, meaning its entire business model may be based on selling Americans stolen content on a massive scale.

Unlike Netflix and Hulu, Aereo does not pay a single penny to the creators of the content they are sharing. Instead, the company pioneered technology that, in the words of Chief Justice John Roberts, “is based solely on circumventing legal prohibitions that [they] don’t want to comply with.”

It sounds like an open and shut case of copyright violation, but there’s a caveat. The law distinguishes between material used for “public” performances and “private” performances.

Until now, that distinction has always been pretty clear. When TBS rebroadcasts The Big Bang Theory, it is considered a public performance and TBS must first pay CBS the requisite retransmission fees. However, if my daughter records an episode of The Big Bang Theory and watches it in her apartment, it is a private performance. In this case, she is exempt from paying such fees.

Aereo argues that because it transmits content to individual subscribers, its streaming service should be considered a private performance and is no different than installing an antenna on the roof of your house or rabbit ears on your TV set in order to get programming for free. The Aereo antenna is just a little smaller and slightly more expensive than the traditional antenna.

The broadcasters however, argue that the Aereo antenna is an infringement of copyright law because it retransmits content to a lot of people all at once, no different than erecting a giant television screen in Central Park, broadcasting a CBS program and charging admission to see it without compensating CBS.

The legal questions posed as a result of Aereo’s streaming service are complex, and its journey to the Supreme Court has brought little clarity to the issue. Over the course of the past two years, broadcasters have filed two separate lawsuits against Aereo. Both cases had identical charges but entirely different outcomes—which is likely why the issue has been brought before the highest court in the land.

There is a lot riding on the Supreme Court’s decision. If the justices determine Aereo’s streaming service is in violation of copyright law, it could be the end for the small, tech start-up. Media members in the digital space have latched on to Aereo’s underdog image and billed this as a new-age David vs. Goliath, penning such headlines as “Supreme Court Case: Startup vs. Broadcasters” as if the legal legitimacy of start-up companies was the issue at hand.

The leading (or misleading) headlines like this one paint a picture of greedy corporate broadcasters out to stifle innovation and open access when in fact, the potential ramifications of a Supreme Court ruling in favor of Aereo could be much more stifling and much more costly for the end-user. If the justices determine Aereo’s rebroadcasting of content via streaming service is exempt from copyright, it could seriously threaten broadcast television as we know it.

Not only will more consumers part ways with their cable providers, but cable and satellite operators—who currently pay billions of dollars in retransmission fees—might develop the same technology used by Aereo to rebroadcast content for free. And with no one paying for it, the quality of content created will plummet. Broadcast’s business model will be harmed and the industry along with it.

I like a good underdog story as much as the next guy, but in this case I’m siding with Goliath. David doesn’t make anything, and what good is cheap access to TV if there’s nothing of any quality left to watch?


[Charles “Chip” Babcock, has argued—and won—some of the most high-profile litigation in recent memory on behalf of major business and media defendants, including Oprah Winfrey, Dr. Phil, ABC, Inc. and Google. Babcock notably established the First Amendment right of journalists to protect confidential sources in a Fifth Circuit case involving the TransAmerican Press. He has represented a wealth of Fortune 500 clients and has tried more than 100 jury cases, on both the state and federal levels. Babcock’s practice focuses on civil trials, arbitration, commercial litigation, catastrophic litigation, intellectual property matters and First Amendment issues.]

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