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  • Tom Gara
Aereo CEO Chet Kanojia holds one of his company’s miniature antennas

Online video startup Aereo got its day in the highest court in the land today, with the Supreme Court hearing the case of American Broadcasting Companies v. AereoAt issue in the case: is Aereo’s system of streaming free-to-air television over the internet for a monthly subscription fee a violation of broadcasters’ rights, or simply an internet-enabled version of what people with an antenna and a VCR have been doing for decades?

The WSJ’s Brent Kendall has a report on the hearing. Below, we’ve put together a few of the highlights from today’s oral arguments.

One big focus of today’s hearing: how would you describe, in layman’s terms, what Aereo is doing? It’s a question that many took a shot at answering.

David C. Frederick, representing Aereo, put across the company’s take:

You know you have a right to put an antenna on your roof and put a DVR in your living room.  We can provide exactly the same antenna and DVR for a fraction of cost by putting it over the cloud.

Paul Clement, representing the broadcasters, said Aereo goes beyond merely renting out access to equipment:

In all sorts of places, including the real world, there’s a fundamental difference between a service that allows ­­  – that provides new content to all sorts of end­ users, essentially any paying stranger, and a service that provides a locker, a storage service.

And I think if you want a real world analogy off of the Internet, I think it’s the basic decision,­­ the difference between a car dealer and a valet parking service. I mean, if you look at it from 30,000 feet, you might think, hey, both of these things provide cars to the public. But if you looked at it more closely, you’d understand, well, if I show up at the car dealership without a car, I’m going to be able to get a car. If I show up at the valet parking service and I don’t own a car, it’s not going to end well for me….

So I think there is a very real way in which you would say, you know, at the end of the day, the car dealer’s providing cars to the public, the valet parking service is not. It’s providing a parking service.

The image of the parking service was important, because the judges often showed serious concern that any ruling on Aereo’s right to “park” and distribute content to its subscribers could have unintended consequences across the Internet.

Of particular concern were operators of cloud storage services: could Gmail or Dropbox or Facebook end up being classed as offering “performances” of copyrighted content that users access through storage, email or messaging products that use its servers?

AFG/Getty Images

Justice Breyer shared, with others on the bench, a suspicion that Aereo’s transmission of television to its users could be classified as a “performance” by legal standards and thus require licensing from the broadcasters. But assuming the court wants to declare it a public performance:

The problem is in the words that do that, because we have to write words, are we somehow catching other things that really will change life and shouldn’t, such as the cloud? And you said, well, as the government says, don’t worry, because that isn’t a public performance. And then I read the definition and I don’t see how to get out of it.

Justice Sotomayor had similar concerns:

I’m also worried about how to define public performance or the performance of a work publicly, which I guess is the better way to do it, according to you. How do I define that so that someone who sells coaxial cable to a resident of a building is not swept up as a participant in this? Or someone who — ­­the sort of passive storage advisers that — ­­ this  is really hard for me. What does the Court do to avoid a definition or an acceptance of a definition that might make those people liable?

While worrying about how any ruling could reverberate in the technology and media industries, the judges were more skeptical about Aereo’s specific set up: farms of thousands of tiny antennas, each one being leased to one person, thus enabling the “we’re just renting an antenna” argument. Is it just a legal gimmick? This exchange between the judges and Mr. Frederick, representing Aereo, was representative of the skepticism.

Chief Justice Roberts – But is there any reason you need 10,000 of them? Can’t you put just, if your model is correct, can’t you just put your antenna up and then do it? I mean, there’s no technological reason for you to have 10,000 dime-­sized antenna, other than to get around the copyright laws.

Mr. Frederick - Well, the point of the copyright laws, though, Your Honor, shouldn’t turn on the number of antennas. It turns on whether the person who is receiving the signal that comes through the Internet is privately performing by initiating the action of that antenna getting a data stream, having that signal compressed so that it can be streamed over the Internet through a user ­specific, user ­initiated  copy.

Justice Scalia – That may well be, but it doesn’t contradict the Chief Justice’s question. I mean, you’re just saying that by doing it this way you don’t violate the copyright laws. But his question is, is there any reason you did it other than not to violate the copyright laws?

Mr. Frederick – We understood yes, there is a reason, Justice Scalia. We wanted to tell consumers, you can replicate the experience at very small cost. You know you have a right to put an antenna on your roof and put a DVR in your living room. We can provide exactly the same antenna and DVR for a fraction of cost by putting it over the cloud.

Justice Breyer took it further, wondering whether the “just an antenna” argument could be extended even further:

The answer is very significant. And the reason it’s very significant is because what the local antenna person doesn’t do but you apparently could do, even if you don’t, is with the same kind of device pick up every television signal in the world and send it, almost, and send it into a person’s computer. And that sounds so much like what a CATV [cable TV] system does or what a satellite system does that it looks as if somehow you are escaping a constraint that’s imposed upon them. That’s what disturbs everyone.

And then what disturbs me on the other side is 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. 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.


Getty Images

Ho ho ho.  But Mr. Frederick was keen to capitalize on the judge’s concerns that their ruling could have adverse consequences across the technology industry. He said (emphasis ours):

Every time somebody stores something in the cloud, whether it’s a song, a video image or the like, if it happens to be something that somebody else has stored in the cloud, the act of one person initiating it and perceiving it is going to implicate the public performance right. And that’s why the cloud computing industry is freaked out about this case because they’ve invested tens of billions of dollars on the notion that in user­ specific, user ­initiated copy, when perceived by that person is a private performance and not a public performance.

A decision is expected by the end of June.

See also:
Supreme Court Conflicted on Legality of Aereo Online Video Service – WSJ