The U.S. Supreme Court decided ABC v. Aereo today, reversing a Second Circuit Court of Appeals decision and holding 6-3 (Breyer) that Aereo’s service of providing mini-antennas to each of its thousands of customers to receive over-the-air broadcasts counts as a public performance of those broadcasts under section 106 of the Copyright Act, and that, essentially, Aereo is no different from cable companies, which are subject to limitations on their ability to freely transmit programming under the Copyright Act, such as the requirement that they pay compulsory license fees.

At oral argument, Aereo had difficulty in trying to explain why it constructed its system other than to evade copyright law. Furthermore, its attempt to say that it was no different from a store that sold antennas so that an individual could watch over-the-air broadcasts, did not fly: in such a hypothetical transaction, Aereo would no longer own the antenna and the entire transaction would be completed with no more involvement by Aereo when the programming was actually transmitted. The Court also was not swayed by the claim that Aereo did not perform “publicly,” stating that even if the distribution of a program were made in separate transmissions, one per antenna, it is still a transmission to the public.

At the end of the day, Aereo’s inability to differentiate itself from a traditional cable system sealed its fate. The Court also clearly did not like the fact that Aereo’s customers had no ownership interest or other rights in the copies they were receiving. This fact might distinguish Aereo’s system from, say, Remote Storage DVR systems, where the individual users are receiving programming for which they and their cable companies have already paid fees.

Justice Scalia filed a dissent in which he mocked the majority’s blurry line and said that it would lead to many more cases wherein courts would have to figure out how much the system in question resembled a cable operation.

In briefs and argument, Aereo and some amicus briefs tried to make it appear that a decision against Aereo could have sweeping negative ramifications for other technologies, including cloud computing. The Court went out of its way to clarify that its decision did not consider and would not affect such technologies today. Given what the Court focused on in deciding against Aereo, it is highly unlikely that the language in Aereo could be used to jeopardize technology whose main purpose is to allow customers to store copies of works they already own in the cloud.

The Court’s decision is in line with the European Court of Justice and the United Kingdom High Court decision in ITV v. TVCatchup, which also held that the author’s right of communication to the public covers any transmission or retransmission of a work to the public not present at the place where the communication originates, by wire or wireless means, including broadcasting.

Client Alert 2014-181