chief executive took the U.S. Supreme Court to task after it ruled against the
Aereo CEO and founder Chet Kanojia called the decision “a massive setback for
the American consumer.”
“We’ve said all along that we worked diligently to create a technology that
complies with the law, but today's decision clearly states that how the
technology works does not matter,” he said in a statement. “This sends a
chilling message to the technology industry. We are disappointed in the
outcome, but our work is not done. We will continue to fight for our consumers
and fight to create innovative technologies that have a meaningful and positive
impact on our world.”
Kanojia and Aereo’s architects insisted the company rented individual antennas
to subscribers, who paid $8 to $12 to stream broadcast channels on a few-second
delay through a cloud server to Internet-connected devices. Broadcast engineers
said the tiny individual antennas, packed into large arrays, could not work as
claimed and instead would act as one large antenna, making Aereo the same as an
other pay TV operator and therefore subject to retransmission fees.
Former Fox technology executive Andy Setos was pointed in his opinion of
Aereo’s technology claims.
“Now that that distraction is over with Mr. Kanojia, still believing that his
myriad small antennae work independently of each other as opposed to a single
antenna such as one a cable operator would use to perform a broadcaster’s
copyrighted works to the public, he should turn his attention to reaping
billions from his invention which overturns the Standard Model, the underpinning
of the scientific community’s way of characterizing the physical universe that
we all exist in,” Setos said, referring to the Standard Model of particle
physics. (Also see Pete Putman’s “Deconstructing
Aereo’s Patent” for details on the technology.
The case came before the high court after two federal courts denied injunctions
against Aereo, while two others granted them against Aereo and a similar
service. The resulting circuit split gave broadcasters a chance to appeal the
denials. The high court was expected by many observers to limit their ruling to
the injunction, but it instead addressed the full question of copyright
“Whether a company ‘publicly performs’ a copyrighted
television program when it retransmits a broadcast of that program to thousands
of paid subscribers over the Internet.”
Retransmission consent law applies to public, versus private, performances.
The court found that “Aereo performs. It does not merely supply equipment that
allows others to do so.”
The justices voted 6-3 to overturn the lower court. Justices
Antonin Scalia, Clarence Thomas and Samuel Alito dissented.
Barry Diller, a former Fox executive and current chairman and CEO of IAC, told
CNBC that the debate about Aereo was “over now” and “a bit loss to consumers,”
according to Time.
Diller was one
of the lead investors in the company, which has raised a total of $97 million.
to the ruling were mixed and generally predictable. Gordon Smith, president and
CEO of the National Association of Broadcasters, said it sent the message that
“businesses built on the theft of copyrighted material will not be tolerated.”
Consumer Electronics Association President and CEO Gary Shapiro said the ruling
against Aereo was a disappointment, but at least it left the Sony Betamax
principles of fair use intact.
Wells Fargo’s Marci Ryvicker also noted that the ruling narrowly targeted Aereo.
“The opinion makes it clear that this
ruling will not
technologies,” she wrote in an analyst note. “Recall that during oral
arguments, several justices expressed concern about the potential implications
of their ruling against Aereo to other technologies, namely cloud computing.
The opinion seems to be very specific to Aereo and therefore should have no
impact on the CVC RS-DVR case.”
While the case technically has been remanded to the lower court, Ryvicker said the ruling “does not appear to leave Aereo
much opportunity to maneuver. In our [June 11 update], we discussed the
possibility of Aereo going back to the trial courts to argue the case based on
its merits. However given that the Supreme Court’s opinion appears to be
sweeping and definitive that Aereo is illegal, which we think takes Aereo out
of operation as we know it.”
She further said the ruling left retransmission consent law “safe… and we
anticipate broadcast networks and affiliates conducting business as usual.”