A divided federal appeals court, ruling 2-1 Monday, declined to block a unique, antenna-based subscription service that enables the streaming of broadcast television to any internet-enabled device.
NBC, ABC, CBS, PBS, Fox and others sued Aereo, a subscription service that went live in New York last year and is expanding to other markets. The suit claimed that the upstart, backed by media mogul Barry Diller, had failed to acquire licenses from the networks who deliver their broadcasts over the air.
Broadcasters claimed the redistribution of the material, without a license, infringed their copyrights because it amounted to Aereo briefly buffering or copying the broadcast and "facilitating" a public performance without permission.
"We conclude that Aereo’s transmissions of unique copies of broadcast television programs created at its users' requests and transmitted while the programs are still airing on broadcast television are not 'public performances' of the plaintiffs' copyrighted works," wrote Judge Christopher Droney of the New York-based 2nd U.S. Circuit Court of Appeals. He was joined by Judge John Gleeson.
The case is being closely watched as many suspect it could shape the manner and method by which people watch television in the future. The outcome also answers the question, at least momentarily, of whether online television would be controlled by a stodgy industry that once shunned the VCR, or whether third-party innovators embracing technological advances have a chance to build on the openness of public airwaves.
To be sure, the court is likely to rehear the case with a larger panel of judges because of a sharp dissent and because one member of the panel, Gleeson, is a New York district judge sitting by assignment.
Aereo's technological setup, the court found, basically allows it to do what cable companies could not: retransmit broadcast airwaves without paying licensing fees. In short, the Aereo service is as legal as somebody putting an antenna on top of their house to capture broadcast signals. The court said Aereo "provides the functionality of three devices: a standard TV antenna, a DVR, and a Slingbox" device.
"Each of these devices is legal, so it stands to reason that a service that combines them is also legal. Only in the world of copyright maximalists do people need to get special permission to watch over-the-air television with an antenna," said John Bergmayer, an attorney with the digital-rights group Public Knowledge. "Just because 'the internet' is involved doesn't change this. "
Aereo's New York customers basically rent two tiny antennas, each about the size of a dime. Tens of thousands of the antennas are housed in a Brooklyn data center. One antenna — unique to a customer — is used when a customer wants to watch a program in real time from a computer, tablet or mobile phone. The other works with a DVR service to record programs for later online viewing.
Monday's decision affirms U.S. District Judge Alison Nathan, who hadruled last year there were no copyright violations.
In dissent, Judge Denny Chin agreed Monday with the broadcasters. "In my view, by transmitting (or retransmitting) copyrighted programming to the public without authorization, Aereo is engaging in copyright infringement in clear violation of the Copyright Act," Chin wrote. He said Aereo's position "makes no sense."
The broadcasters said in their suit that "no amount of technological gimmickry by Aereo — or claims that it is simply providing a set of sophisticated 'rabbit ears'— changes the fundamental principle of copyright law that those who wish to retransmit plaintiffs' broadcasts may do so only with plaintiffs' authority."
Chet Kanojia, Aereo’s chief executive, said, "We may be a small startup, but we've always believed in standing up and fighting for our consumers. We are grateful for the court's thoughtful analysis and decision and we look forward to continuing to build a successful business that puts consumers first."
