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Aereo Argued, Waiting Begins

WASHINGTON—The justices of the U.S. Supreme Court were skeptical about Aereo’s technology but concerned about protecting the cloud in Tuesday’s oral arguments.

“There’s no technological reason for you to have 10,000 dime-sized antennae, other than to get around copyright law,” Chief Justice John Roberts said to Aereo attorney David Frederick, according to the hearing transcript.

Several networks and TV stations have sued Aereo for reselling broadcast signals without a copyright agreement. After a series of fights in several lower courts, the Supreme Court agreed in January to review the case. Only on-site journalists were privy to the live proceedings. The SCOTUS does not yet allow electronics in the court room.

Paul Clement, arguing on behalf of broadcasters, opened by saying that despite Aereo’s distribution method of renting one of thousands of tiny antennae to each subscriber, the service itself was “not materially different” from cable television. Cable providers, however, have to pay retransmission fees to carry TV station signals. Aereo intentionally does not, claiming its antennas provide a private, rather than a public performance, and are therefore not subject to retrans requirements.

Justice Sonia Sotomayer asked why Aereo wasn’t considered a cable operation.

“I look at the definition of a cable company, and it seems to fit,” she said.

Clement replied that Aereo doesn’t want to be defined as a cable company in order to avoid retrans fees. Further, he said, its business model would prevent Aereo from securing a compulsory license to retransmit TV signals.

Justice Elena Kagan jumped in and steered the conversation toward the public-private performance issue. She asked if selling rather than renting the antenna and hard drive to the user comprised a private performance. Clement said it did. Sotomayer said that meant Roku is paying for a license for no reason.

“They sold me a piece of equipment,” she said.

Clement said he didn’t know Roku’s arrangement, but that if there was no one involved in the transmission of content and it was played solely in the home, it likely comprised a private performance.

Justices Anthony Kennedy and Samuel Alito asked how Aereo was different from Cablevision’s remote digital video recorder, deemed permissible in the 2008 case, Cartoon Network v. CVC Holdings. Clement replied that Cablevision pays retrans to get the initial performance.

Justice Stephen Breyer asked how to word a ruling that didn’t take other content cloud storage down with it. Kagan joined in. Clement said not all cloud services are created equal.

“The details of it might matter,” he said.

Malcom Stewart of the Solicitor General’s office was up next. He said Aereo fit the definition of a cable service, and that a cloud locker storage provider who sold content access to multiple users was promulgating a public performance.

Breyer pressed on the cloud matter. Stewart said over-reaching could be avoided in how the content is transmitted “to the public.”

“If you have a pure cloud locker service, a service that doesn’t provide content, it simply stores content and then plays it back at the user’s request, that service would be providing content to its true owner,” he said.

David Fredrick countered Clement and Stewart’s description of Aereo as a cable service.

“There’s a very particularized regulatory structure that deals with taking a lot of content and pushing it down to consumers,” he said. “Aereo is an equipment provider. Nothing happens on Aereo’s equipment until a user initiates the system.”

Justice Ruth Bader-Ginsburg asked if Judge Denny Chin of the U.S. Court of Appeals for the Second Circuit was right when he said there was “no technically sound reason to use these multiple antennas; that the only reason for that was to avoid the breach of the Copyright Act.”

Frederick said it was a “complex question” involving technical and economic reasons. A start-up, for example, could not afford the process of erecting a large antenna in New York City. That’s when Chief Justice John Roberts reiterated Bader-Ginsburg’s remarks.

Frederick said the case shouldn’t turn on the number of antennas, but who is receiving the signals from them via the Internet as a private performance.

Justice Antonin Scalia said that had nothing to do with the question.

“You’re just saying that by doing it this way, you don’t violate the copyright laws,” Scalia said. “But his question is, is there any reason you did it other than not to violate the copyright law?”

Frederick said the model allows consumers to replicate putting an antenna on the roof and installing a DVR, at a smaller cost. Roberts wasn’t having it.

“They don’t have, ‘this is my little dime thing, and this is my copy that’s going to be here,” he said. “They’re there, and when they want something, you provide the service of giving them that. They don’t have a dedicated antenna in Brooklyn.”

Some do, Frederick said, but the point is that users rent the equipment much the same way Cablevision subscribers rent set-top boxes. He also said the Aereo model allows for easier growth.

“It is much simpler if you’re a start-up to add components, to add modules, when you’re… ramping up,” he said.

Breyer expressed the court’s concern about getting the ruling right.

“I don’t understand what the decision for you or against you when I write it is going to do to all kinds of other technologies,” he said to Frederick. “I’ve read the briefs fairly carefully, and I’m still uncertain that I understand it well enough. That isn’t your problem, but it might turn out to be.”

The court’s decision is expected this summer.