The Supreme Court announced today it would take up a challenge from the major broadcasting networks to Aereo - a retransmission service backed by media mogul Barry Diller.
Aereo transmits to its subscribers broadcast television programs over the Internet for a monthly subscription fee. It does not have any license from copyright holders to record or transmit their programs.
In court papers, former Solicitor General Paul Clement, who is representing the networks, including ABC, does not mince his words. He says the case presents questions of copyright law that "profoundly affect, and potentially endanger, over-the-air-broadcast television."
Copyright law grants to creators the exclusive right, in the case of literary, musical, dramatic, and choreographic works, pantomimes and motion pictures and other audiovisual works, to perform the copyrighted work publicly.
At issue in this challenge is the definition of a public transmission. Clement says Aereo is publicly performing his clients' copyrighted work without a license to thousands of paid subscribers over the Internet.
David C. Frederick, a lawyer for Aereo, told the court how the company operates: a consumer has access to a remotely located individual antenna that only receives a broadcast signal when a user requests to tune to a particular channel. The consumer uses Aereo's equipment to create a unique copy of that programming, and the individual user can view his copy using an Internet-connected device shortly thereafter.
Frederick stresses that his company is not about broadcasting "publicly" in violation of copyright, but simply to an individual consumer. He says the technology behind Aereo "does not cause infringement because Aereo does not engage in any performance to the public."
Frederick says "the essential bargain" that the broadcasters made to obtain, for free, public spectrum worth billions of dollars was that, once they have broadcast their programming, consumers have a right to receive and view it using an antenna for their personal use.
But Clement argues, "There is no dispute that Aereo has developed a business model around the massive, for-profit exploitation of the copyrighted works of others."
"We are gratified that the Supreme Court has granted our petition to review issues that both sides recognize as significant, and we look forward to making our case to the Court," ABC and NBC said in a joint statement.
ABC and ABC News are owned by The Walt Disney Co.
A federal appeals court in New York ruled in favor of Aero, finding that Aereo's transmissions are not "public performances." Even though Aereo won that case, it encouraged the Supreme Court to take up the case.
"Consumers have the right to use an antenna to access the over-the-air television," said Aereo founder Chet Kanojia in a statement. "It is a right that should be protected and preserved and in fact, has been protected for generations by Congress. Eliminating a consumer's right to take advantage of innovation with respect to antenna technology would disenfranchise millions of Americans in cities and rural towns across the country."
But Judge Denny Chin wrote a blistering dissent in the lower court case. Calling Aereo's technology platform a "sham" Chin wrote, "The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law," he wrote.
John Simson, a professor at the Kogod School of Business at American University, believes Judge Chin got it right. "What it really boils down to is that people who invest their time and energy in creating copyrighted works are given certain rights by law and it's unfair for people to try to skirt those laws through technicalities to avoid having to pay for the right to use them."
Justice Samuel Alito will take not part in the case. The case will be heard this term with a decision by July.