By Brent Kendall
Television broadcasters and online-video startup Aereo Inc. will
square off at the U.S. Supreme Court on Tuesday in a battle over
copyright law that could shake up the industry.
Aereo is aiming to become an increasing player in the market for
consumers who want an Internet-based alternative to cable
television. The company's service allows its subscribers to stream
their local over-the-air broadcasts to an array of electronic
devices, along with the functionality to record shows and watch
them later.
The broadcasters, including Walt Disney Co.'s ABC, Comcast
Corp.'s NBC, CBS Corp. and 21st Century Fox Inc., are aiming to
sink Aereo, saying the service is operating illegally by engaging
in wide-scale, unauthorized exploitation of their copyrighted
programming without paying for it.
(Until June of last year, 21st Century Fox and Wall Street
Journal parent News Corp were part of the same company.)
The high court will hear oral arguments Tuesday morning on
whether the Aereo service violates the broadcasters' exclusive
rights under federal copyright law to the public performance of
their works.
In the run-up to the arguments, the broadcasters argued in
written briefs that there is "no serious dispute" that Aereo is
retransmitting their programming to the public. The startup, they
said, was seeking to take advantage of a potential technical
loophole in the law. Congress wanted the law to be flexible enough
to protect copyrighted works even in the face of new technological
advances, the broadcasters argued.
Broadcasters are worried that if the court finds Aereo legal, it
could undercut the billions of dollars in revenue the networks
receive from cable and satellite companies, which pay to retransmit
the networks' programming.
Aereo says it is undisputed that broadcasters' content is
delivered free over the airwaves and consumers have a right to make
their own personal recordings of broadcasts. The company says its
service is the functional equivalent of what a consumer has the
legal right to do with home-based equipment, only it is cheaper and
more efficient. The company has done little marketing so far and
the Supreme Court case could provide it with a publicity boost if
it prevails.
Aereo argues that copyright laws aren't intended to discourage
new technologies. The broadcasters' lawsuit "looks suspiciously
like an attempt to extend their monopoly," the company said in its
written arguments.
The Aereo service, currently available in 11 cities, relies on
thousands of dime-size antennas that are assigned to individual
subscribers who log on to watch and record local broadcasts.
In a bid to avoid problems under U.S. copyright law, Aereo
designed its system so that no two customers share the same antenna
or digital recording, a setup that means the service isn't a public
transmission, the company says. Aereo modeled its technology after
a 2008 ruling by the New York-based U.S. Second Circuit Court of
Appeals that upheld the legality of a Cablevision Systems Corp.
remote-storage digital video recorder.
A divided U.S. appeals court in New York refused to shut down
Aereo last year.
The Supreme Court has heard from a wide range of interested
parties that weighed in on the case. Movie and television
producers, professional sports leagues and groups representing
authors, composers and publishers all filed briefs supporting the
networks. The Obama administration also sided with the
broadcasters, a position that could carry weight with the
court.
Consumer groups are among those backing Aereo, saying
broadcasters have unreasonably restricted viewers' options for how
to watch programming.
Groups representing software and computer makers, meanwhile,
filed briefs urging the court to be careful that any ruling on
Aereo's cloud-based service not threaten the broader
cloud-computing industry.
A high-court decision is expected by the end of June.
Write to Brent Kendall at brent.kendall@wsj.com
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