When an Internet company grabs television programs from the airwaves without paying the broadcasters and then allows subscribers to watch them on their smartphones and other portable devices, it’s stealing. So said the U.S. Supreme Court (using more formal language) in a 6-3 decision that’s a major victory for the TV networks and a crippling defeat for Aereo, a startup company whose most prominent investor is billionaire Barry Diller.
But the ruling’s significance went beyond the issue of fairness and legal business practices. It strongly reaffirmed the sanctity of this nation’s copyright law.
Aereo had argued that it is not a cable operator and, therefore, is not controlled by a 1976 amendment to the copyright law requiring payment to broadcasters for the right to retransmit programs.
The court found otherwise.
“Aereo’s system is, for all practical purposes, identical to a cable system,” Justice Stephen Breyer wrote for the majority. “Both use their own equipment. Both receive broadcast television programs, many of which are copyrighted. Both enable subscribers to watch those programs virtually as they are being broadcast.”
Aereo had contended it is not a cable provider because each of its subscribers is assigned an individual, dime-sized antenna, often stored on rooftop circuit boards, and receives a live broadcast upon request, according to USA Today.
But the Supreme Court majority dismissed the Internet company’s argument by noting that the antennas are just a way around copyright law.
The ruling Wednesday preserves the ability of television networks to collect huge fees from cable and satellite systems that transmit their programming.
Retransmission fees brought in an estimated $2.37 billion in 2013, much of which was used by the broadcasters to create new programs.
While the high court’s decision only applies to Aereo, which was sued by ABC, CBS, Fox, NBC and PBS, among others, for copyright infringement, the ramifications could be far reaching. That’s because the explosion of new media platforms has increased the demand for content a hundredfold. Unfortunately, this has led to widespread theft of copyrighted material.
By ruling in favor of the networks, the justices bought the argument that if one company were allowed to avoid paying fees for programs, others would follow suit.
It is noteworthy, however, that in its ruling against Aereo, the justices stressed that new technologies such as cloud computing should not feel constrained, USA Today reported. During oral arguments in April, Aereo’s attorney, David Frederick, had warned that “the cloud-computing industry is freaked out about this case.”
“We believe 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,” Justice Breyer said in the majority opinion.
Given that open door, the networks and other traditional media outlets must come up with ways to protect their intellectual properties from the leeches who seek something for nothing.