Deborah D. McAdams /
07.10.2014 10:31 AM
McAdams On: Aereo’s Hail Mary
From the Department of Stuff You Cannot Make Up
THIMBLERIG— Now that the highest court in the United States has determined that Aereo is breaking the law, it is countering with the clever strategy of claiming that it’s not breaking the law because the Supreme Court said it resembles a cable system. By extension, Aereo says it’s therefore eligible to negotiate for the carriage of TV signals. That was the upshot of its response to the district court judge whose denial of an injunction against Aereo was overturned by the Supreme Court last month.

“If Aereo is a ‘cable system’ as that term is defined in the Copyright Act, it is eligible for a statutory license, and its transmissions may not be enjoined,” Bruce P. Keller of Debevoise & Plimpton LLP wrote in a joint letter with the plaintiffs to Judge Alison Nathan of the U.S. District Court for the Southern District of New York.

The high court basically told Judge Nathan to issue the injunction. Aereo basically told Judge Nathan not to issue the injunction because it really isn’t what it said it was back when she denied the injunction.

Because, you see, Aereo is the mayor on HBO’s “True Blood.”

“The Supreme Court has announced a new and different rule governing Aereo’s operations.” Keller wrote for Aereo. “Under the Second Circuit’s precedents, Aereo was a provider of technology and equipment with respect to the near-live transmissions at issue in the preliminary injunction appeal. After the Supreme Court’s decision, Aereo is a cable system with respect to those transmissions.”

The broadcast plaintiffs in the case responded with words to the effect of, “what are these guys smoking?”

“It is astonishing for Aereo to contend that the Supreme Court’s decision automatically transformed Aereo into a ‘cable system,’” Keller wrote for the plaintiffs.

Aereo says it’s eligible to carry TV signals pursuant to the Copyright Act, Title 17, wavy sign 111, which defines the “limitations on exclusive rights: Secondary transmissions of broadcast programming by cable,” and serves as a natural alternative to Sominex.

However, Copyright Act, Title 17, wavy sign 111 says secondary transmission is “permissible under the rules, regulations or authorizations of the Federal Communications Commission.” And the FCC says in 47 Code of Federal Regulations wavy sign 76.64(a) that “no multichannel video programming distributor shall retransmit the signal of any commercial broadcasting station without the express authority of the originating station,” emphasis mine. Exceptions include must-carry and distant signals for unserved households, which do not apply to Aereo.

And so, to the first point: Did the Supreme Court define Aereo as a cable system, or is this a classic case of language filtering. It was a short-lived relationship, after all. Here’s what the ruling said, emphasis also mine:

“Because Aereo’s activities are substantially similar to those of the [community antenna TV] companies that Congress amended the [Copyright] Act to reach, Aereo is not simply an equipment provider.”

This does not appear to be a classification. Jim Burger, a media and intellectual property attorney with Thomson Coburn LLC, said in fact that the court did not formally define Aereo as a cable system, per se.
Had it done so, Aereo and everything like it would have become the FCC’s headache. However, the opinion leaves much to be desired, according to Gus Horowitz, a telecom attorney at the University of Nebraska College of Law.

“Even though it reaches the correct outcome, the Supreme Court’s Aereo opinion is staggeringly, and confusingly, bad. The court’s ‘looks like cable’ analysis fails to address the difficult questions about the meaning of the Copyright Act; rather, it has added to existing confusion,” he wrote for Tech Policy Daily.

Even if Judge Nathan accepts that the high court defined Aereo as a cable system, there’s that pesky sticky wicket of “express authority,” something the FCC recently reiterated with a $2.25 million fine against a Texas cable operator. Media attorney R. Scott Flick with Pillsbury in D.C.:

“The Supreme Court clearly did not rule that Aereo was a cable system for purposes of applying the compulsory license, and even if it had, it still wouldn't circumvent the need to get retrans consent from the broadcasters Aereo wants to carry. More importantly, Aereo’s copyright infringement up to this point carries potential damages awards to broadcasters in the multi-billions of dollars, making any rescue effort by Aereo too little, too late. 

This goes to what the Mr. Keller wrote for broadcasters in the aforementioned joint letter:

“Have these guys stepped off a curb and hit their head?”

Or rather, whether or not the court entertains the cable definition defense, the injunction should be imposed “given the court’s ruling that Aereo has been violating plaintiff’s exclusive rights to publicly perform their works for over two years, during which time plaintiffs, as the court held, have suffered irreparable harm.”

And “irreparable harm,” ladies and gentleman, is a core component of the justification for an injunction. “Irreparable” in that it can’t be measured in the way the judges in the Fox-Dish Hopper stand-off suggest is possible. (See the superbly crafted piece, “Fox v. Dish Hopper: Court Skeptical of ‘Irreparable Damages.”) The Aereo damage is arguably irreparable because the TV stations in the 13 markets where it launched have no way to measure its impact on ratings, the universal currency of ad revenue.

Finally, Aereo argues that even if the court grants an injunction for “near-simultaneous” playback, it should not cover recording under the precedent set in Cablevision. This conveniently ignores “express authority.” Aereo’s plea to the district court amounts to a Hail Mary in overtime, or as Mr. Flick writes: “Aereo is rearranging deck chairs on the Titanic not as it sinks, but as it sits on the bottom of the ocean.”

One more point peripheral to Aereo is the implication of the Supreme Court’s ruling, made by Mr. Burger.

Under this ruling, Google comes up with a local OTT package,” he said. “They could go to the broadcasters with a check.”

It seems the fun has just begun.

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Posted by: Peter Blake
Fri, 07-11-2014 01:40 PM Report Comment
The broadcasters are abusing a dominate position in the market place in an effort to prevent competition. Aereo's technology is for all intents and purposes a television over IP rebroadcasting mechanism - in essence cable TV via the Internet. It should have all the opportunities and obligations of any other cable TV player. Should the broadcasters that were affected by the conduct of Aereo before the Supreme Court ruling be entitled to damage awards. NO. Aereo's conduct increased the size of the potential audience of the affected parties and in so doing improved the marketability of their television content. An entity cannot benefit from another's wrongful conduct than turn around and sue for damages from that conduct. In this case any subsequent action which seeks damages allegedly suffered by the affected broadcasters, is an attempt to put Aereo out of business and deny them access to the industry.
Posted by: Deborah McAdams
Tue, 07-15-2014 01:51 PM Report Comment
Dear ANONYMOUS who usually agrees with me. Metrics for Aereo viewing were never provided, nor were subscriber numbers. Pretty strongly stated views from someone who hasn't signed their name.
Posted by: Anonymous
Fri, 07-11-2014 11:41 AM Report Comment
Ain't it fun when both sides are blowing smoke to obscure the truth? "Irreparable harm"? C'mon guys, that's irrelevant here. The argument is simply about money. And if Aereo affected your ratings in any manner, they helped them by increasing the audience for your broadcasts. Only in Washington would the fact you cannot measure Aereo's positive impact be deemed harm. As for those re-transmission fees you demand, they are finite and measurable. With Aereo's tiny market share, the fees are not going to amount to much. Big bucks for Aereo, maybe, but not for you. I agree with McAdams that getting the license is iffy. Yet to play out is the question of whether the broadcasters might decide that the smarter move is to take Aereo's money and increase viewership. Another unknown, at least to me, will be the attitude of the judges in the 2nd Circuit. Having themselves determined that Aereo's conduct was lawful, will they act to help it survive.
Posted by: Anonymous
Fri, 07-11-2014 01:06 PM Report Comment
Aereo sure is changing their tune! It is definitely a hale-mary with no one to catch the ball.
Posted by: Anonymous
Fri, 07-11-2014 05:06 PM Report Comment
And Kanojia's calls to Barry Diller are still going right to voice-mail...
Posted by: Anonymous
Fri, 07-11-2014 07:55 PM Report Comment
The sad thing for the TV networks is that there's more drama, suspense, and now comedy in this one court case than they put on the air.... ;-)
Posted by: Anonymous
Mon, 07-14-2014 11:03 AM Report Comment
Posted by: Anonymous
Mon, 07-14-2014 11:28 AM Report Comment
Ms. McAdams, I generally agree with you and appreciate your thoughts, but - as several commenters have already said - your thoughts here don't make sense. "The Aereo damage is arguably irreparable because the TV stations in the 13 markets where it launched have no way to measure its impact on ratings, the universal currency of ad revenue." WTF? No way to measure the viewings of streamed content? I can't comprehend how how any educated person in this industry can make a statement like that. OF COURSE they can measure every EXTRA viewer of the EVERY broadcast and then give that data back to Nielson and get higher ratings, and increased revenue for advertising. Any business would LOVE to have "damages" like that. Your most accurate bit of information in this piece is: "Here’s what the ruling said, emphasis also mine: “Because Aereo’s activities are substantially similar to those of the [community antenna TV] companies that Congress amended the [Copyright] Act to reach, Aereo is not simply an equipment provider.” "However, the opinion leaves much to be desired, according to Gus Horowitz, a telecom attorney at the University of Nebraska College of Law." This isn't the 1800's and you can't condemn companies because their actions are "similar to" that of a witch. It's like saying "we think so" and "it felt like" so therefore, the company must burn at the stake. That's now how this should work. And YOU, Ms. McAdams, cannot then condemn Aereo for taking that ball and running with it. Either Aereo is NOT like community cable TV, or they ARE like community cable TV. Aereo went to court saying they are not. That was shot down. So now, if the court wants to treat them like they are, well then, LET THEM pursue that. You and the NAB can't have it both ways. If you want to say they can't do either, then YOU are obligated to define exactly what Aereo is, before you write that they aren't this or that. ===== I am a TiVo user and I pay TiVo every month to get program data and to enable the use of the hardware I use to record my OTA signal and timeshift when I watch my OTA TV programs. I was also an Aereo user and I paid Aereo every month to get program data and to enable the use of the hardware I used to record my OTA signal and timeshift when I watched my OTA TV programs. The ONLY difference was where the HDD was located. The ONLY, ONLY, ONLY, difference is where the hardware is located. The time shifting of OTA programming service is exactly the same. Aereo saved me from having to invest hundreds in a new TiVo or purchase a TiVo Stream to be able to watch it on mobile devices. But the exact same capability is available through TiVo which, as far as I can tell, is still allowed to operate. Aereo did this by letting me rent the hardware the HDD, the Antenna, the internet connection, etc, that I used. And the monthly fee was lower than TiVo as well. You and the NAB just shut that down on me. You owe me "irreparable damages."

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