The 411 On Aereo’s Many Legal Challenges

Aereo Inc. makes headlines now because it provides TV stations’ signals and programs to paying customers, without permission from or compensation to the stations. This service is a 2013 echo of the cable industry that began operations several decades ago. Originally known as CATV (community antenna television), cable, like Aereo, also retransmitted broadcast signals for profit without station permission or compensation.

Also like early cable, Aereo and other similar services (FilmOn; ivi; Aereokiller) have spawned multiple high-profile lawsuits. Though these cases are still in early stages, the Supreme Court has already rejected an appeal of a preliminary ruling in one, and in another case a request for Supreme Court review has been filed.   

In the early cable controversy the Supreme Court ruled that cable’s unauthorized use of broadcast signals did not violate the copyright law of that time because the cable retransmissions were not considered to be “public performances” of broadcasters’ programs. Ultimately, Congress enacted requirements that cable get broadcasters’ retransmission consent in advance, and created the cable “compulsory license,” which yields royalties from cable operators to broadcasters and other owners of the copyrights to broadcast programming. The FCC also adopted cable must-carry and retransmission consent rules to address the permission-to-use and compensation issues. Those rules now apply to cable and other MVPDs (multichannel video program distributors such as DirecTV and AT&T U-verse).

This Legal Memo summarizes Aereo’s business, its “copycat” competitors and the litigation, and offers some observations of mine.

Who and What is Aereo?

Chet Kanojia is Aereo’s founder and CEO. Earlier he headed Navic Networks, an “advanced television advertising” company acquired by Microsoft in 2008. Kanojia holds patents in robotics and data communications systems, has a master’s degree in computer systems engineering from Northeastern University and a bachelor’s degree in mechanical engineering from the National Institute of Technology in Bhopal, India. 

Barry Diller is a major Aereo financial backer. Diller was chairman and CEO of Fox Inc. from 1984 to 1992, was instrumental in the creation and growth of the Fox Network and was CEO and chairman of Paramount Pictures, among other ventures. Today, he is chairman and senior executive of IAC/InterActiveCorp.

Aereo’s Business Model

Aereo offers subscribers what its website calls “live” broadcast TV signals over the Internet to small antennas, one for each subscriber, throughout a service area. Subscribers access these antennas remotely with their computers, tablets, smart phones or any other Internet-enabled device. Subscribers can watch all major broadcast networks and local channels that they could receive at home with a standard antenna. Customers can view and record individual programs from any of the available broadcast channels. Aereo’s website touts access to “live” broadcast content, though reportedly there is a several-second delay compared to the original broadcast.

Aereo claims that each customer sees a “unique” recording of each broadcast, created by the subscriber when requesting a program electronically from his or her personal antenna.  Aereo claims that this technology precludes copyright infringement of the broadcast signals because the transmissions are private, not public, performances.

Monthly memberships, according to the website, cost $8 plus tax for 24/7 access to broadcast signals in the subscriber’s coverage area, and 20 hours of DVR space to record the user’s chosen shows. For $4 more per month, subscribers can upgrade to 60 hours of DVR space and the ability to record two shows simultaneously. This is a lot less than cable and other MVPDs charge, but it is not free as broadcast TV is to over-the-air viewers. An Aereo subscriber must have Internet access but doesn’t need a TV set, rooftop antenna or a subscription to a cable, satellite or fiber optic multichannel service.

The Aereo Rollout

Aereo began its service in New York City in February 2012; now it also operates in Boston and Atlanta. Aereo expects to add Utah on Aug. 19, Chicago on Sept. 13 and numerous other markets including Austin, Texas; Baltimore; Miami; Denver; Dallas; and Washington within the next few months. Subscriber numbers are unavailable at this writing.

Aereo competitors include, among others, ivi Inc. (it provides software for “live” video streaming by Internet for a flat rate — perhaps akin to an Internet-based cable system); and the former Aereokiller, recently renamed FilmOn X (a service similar to Aereo’s). Aereo and FilmOn X each argues that it complies with copyright law because its transmissions are private, not public, performances.

Litigation Summary

Aereo is a defendant in at least six pending lawsuits, and has sued CBS in a seventh case. Also, there are or have been broadcaster suits against Aereo rivals ivi and Film On X (aka Aereo-killer). All are in federal courts and based mainly on federal copyright law.  Here are brief profiles of the main cases:

1. WNET et al. (and others) v. Aereo Inc.

This is perhaps the leading case. On March, 1 2012, numerous broadcasters sued Aereo for copyright infringement in the U.S. District Court for the Southern District of New York, in New York City.  This and the appeals court in the same District are leading courts for copyright law cases.  

Thus far the main focus has been on the broadcasters’ request for a preliminary injunction to stop Aereo from offering its services while the court considers the full merits of each side’s copyright and other arguments.  Getting a preliminary injunction requires convincing the court that the requesting party is likely to succeed on the merits in the case, and that the requesting parties would suffer irreparable harm unless there is a preliminary injunction. 

The District Court in New York denied the request, the broadcasters appealed to the higher court, and, on July 16 2013, it affirmed denial of the injunction. Fox and perhaps others may appeal this to the Supreme Court.

2. ABC Inc. et al. v. Aereo Inc. (New York)

This is a companion case to WNET, and filed in the same District Court on the same date. Brought by various broadcasters, among them ABC, Disney, CBS, and NBC, this case alleges copyright infringement. Currently pending is a motion for summary judgment filed by Aereo. Possibly, the court may consolidate the WNET and ABC cases.

3. ABC et al. v. Aereo Inc.

Filed May 22, 2013, in the federal Northern District of Iowa by ABC, Disney, CBS, NBC and other broadcast parties. This case is at a very early stage.

4. Hearst Stations Inc. v. Aereo Inc. (Massachusetts)

Plaintiffs filed on July 9, 2013, in response to Aereo’s recent expansion into Boston. Aereo has filed a motion to transfer the case to the Southern District of New York.

5. Aereo Inc. v. CBS Broadcasting Inc. et al. (New York)

Aereo started this one on May 6, 2013. Aereo seeks a declaratory judgment to preempt multiple new CBS affiliate lawsuits in various cities.

6. WPIX Inc. et al. v. ivi Inc.

Broadcasters sued Aereo competitor ivi in 2010 in the Southern District of New York for copyright infringement. In this one, the court granted broadcasters a preliminary injunction against Ivi pending completion of the case on the full merits.  This prohibited ivi from operating in the country’s second judicial circuit. On March 18, 2013, the Supreme Court declined an ivi appeal of that ruling. 

Ivi had a non-copyright defense that the court rejected: ivi meets the Copyright Act’s definition of a “cable system,” which can retransmit signals of copyrighted television programming to its subscribers, provided they pay copyright royalties at government-regulated rates and comply with other cable requirements. 

7. Fox Television Stations Inc. et al. v. Aereokiller LLC et al.

This is a copyright suit launched May 23, 2013, in U.S. District Court in Washington, D.C. It is still in its infancy.

The Latest Twist

In a highly publicized dispute between Time Warner and CBS over how much the cable operator will pay CBS for the right to continue to carry CBS signals in New York, Time Warner said it might recommend that its New York subscribers watch CBS programming on Aereo if and when Time Warner drops the CBS channels as part of the dispute. This is a first, although there have been many other down-to-the-wire retransmission negotiations.

Where Is All This Going?

Hard to tell, although the cable history is useful, but of course imperfect, precedent. Here are some observations at this point:

A legislative solution as in the CATV era seems less likely than the 17-year cicadas re-emerging next year.

Even when there is not the extreme gridlock of the current Congress, the retransmission issues are complicated and make it easy for legislators to offend parts of their constituencies. And the federal budget, the national economy, immigration reform and other overarching issues loom as the 2014 elections draw closer.

The litigation process could take a very long time. That is one reason why broadcasters sought preliminary injunctions that with one exception thus far have been denied. In the meantime, Aereo and others can not only build their businesses on free use of copyrighted broadcast signals, they can also convert many cable, satellite and fiber optic multichannel subscribers. Competition, if fair, is a worthy goal.

All of this is déjà vu. I practiced communications law throughout the cable/broadcast battles. As an NAB lawyer, I negotiated with NCTA over terms of the Cable Act of 1984, which set the legal framework for current law governing cable use of broadcast signals. Issues of course are still with us — witness the Time Warner/CBS retransmission consent negotiations in New York — but at least there is a legal structure in place for authorized cable and other MVPD carriage of broadcast signals, and compensation to stations for use of their signals.

Technology drove the changes back then and does so now. A key difference, though, is the unprecedented rapid pace of Internet-related technology change, which could leave Aereo in the dust not long after it emerges. It’s important that the law keep up.

Although many areas of the law struggle to keep up with technology, copyright law changes can be exceptionally slow. In 2013, it seems particularly anachronistic to allow Aereo-like unauthorized and unpaid use of broadcast signals based on a metaphysical distinction between “public” and “private unique” performances, when potentially hundreds of millions of unauthorized, unpaid viewings of the identical broadcaster-originated programs could occur.

This column on TV law and regulation by Michael D. Berg, an experienced Washington communications lawyer and the principal in the Law Office of Michael D Berg, appears periodically. He is also the co-author of  FCC Lobbying: A Handbook of Insider Tips and Practical Advice. He represents commercial and noncommercial television and radio broadcasters, and others.

He can be reached at 1200 New Hampshire Ave., Suite 800, Washington, D.C. 20036-6802; [email protected]; or 202-776-2523. Read more of Berg’s Legal Memos here. 

Michael J. Nelson II, a law clerk at Berg’s firm, contributed to this article. He expects to have his Juris Doctor degree in 2014 from the Georgetown University Law Center. His email is [email protected]. His phone number is 206-225-0578.