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Aereo at the Supreme Court: No matter what, broadcasters lose
An industry born of innovation faces a serious challenge from a new innovator
The United States Supreme Court will hear arguments Tuesday in a case that threatens the television industry as we have known it for generations.
In American Broadcasting Companies v. Aereo, the justices will decide whether an enterprising company that uses a raft of tiny antennas in a single location to transmit over-the-air TV programs to paying subscribers in that city may continue to do so without paying broadcasters or owners of the copyrighted shows. (Read more about how Aereo works here.)
A year ago, a panel of the 2nd U.S. Circuit Court of Appeals, in a divided 2-1 ruling, sided with the upstart company, Aereo, Inc. Before that ruling, and the trial judge's ruling that preceded it, broadcast executives presumed that federal copyright law protected their interests by precluding Aereo from charging customers for a television product for which it had no license to charge.
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The case before the justices now will be decided based upon the text and meaning of what is known as the "transmit clause" of the federal Copyright Act. That clause turns upon the definition of the word "public." Aereo was not transmitting broadcast shows to the public, the 2nd Circuit concluded, but rather to a (presumably infinite) series of "private" subscribers. Aereo, the 2nd Circuit concluded, thus was not bound by the Copyright Act and could continue to charge its customers without paying fees to the broadcasters.
To the television industry, this interpretation is senseless as a matter of both law and fact. In their initial brief to the justices in Washington, the broadcasters argue that "Congress could not have been clearer that it does not matter whether members of the public receive these unauthorized retransmissions 'in the same place or in separate places,' or, for that matter, 'at the same time or at different times.'" Nor, they contend, are "the precise technical details of how Aereo provides this service — with one big antenna, thousands of little ones, or in some other manner" — relevant.
Aereo, of course, does not agree. "[B]roadcasters have never been able to claim copyright royalties when a consumer accesses or makes a personal recording of their programming using an antenna or recording device," the company's lawyers told the justices in their Supreme Court brief. "[T]his court should not rewrite the Copyright Act in an effort to protect" the television industry "from lawful and logical advancements in technology or from the economic consequences of their transmitting words for free over the public airwaves."
The ramifications of this case, for the broadcasters as well as Aereo, are obvious and significant. Lined up to support the broadcasters are Major League Baseball, the NFL, and the Department of Justice. Lined up to support Aereo are Dish Network, the American Cable Association, and the Computer and Communications Industry. Why? Because a ruling for Aereo, the broadcasters have warned, would "launch a race by cable and satellite companies to develop competing methods to capture copyrighted content.... That would give broadcasters little choice but to reconsider the quality and quantity of programs they broadcast for free over the air."
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But consider this: Television wasn't just born from the sort of innovation we see here. It has largely been defined by it. "A tale of genius and deceit" is the subtitle of Evan Schwartz's great book, The Last Lone Inventor about Philo T. Farnsworth, David Sarnoff, and the birth of television. And really, given the facts and arguments offered up in ABC v. Aereo, it's clear that things haven't much changed in the industry since 1928.
The broadcasters claim that Aereo's business model is all about deceit — that the company is pirating the licensed broadcasts without even offering to pay for the rights to transmit them. Aereo claims that the television model is arcane, unprotected by the language of the Copyright Act, and that the company has simply done what American innovators have done for generations — apply brilliant new technology to old things. What's happening here, at least in part, is what Schwartz mentioned in his prologue:
Philo T. Farnsworth didn't fully realize that the process of invention itself was being transformed. Innovation became too important and too lucrative to be left in the hands of unpredictable, independent individuals. The giant corporations that had sprung up around all the new technologies of the past century wanted to control the future and avoid surprises that could topple their empires, and they were growing more and more frustrated over negotiating for patent rights with outside inventors. [The Last Lone Inventor]
Now, I think the broadcast industry will prevail in this case. I think it should prevail in this case given the language of the law. I can't imagine four justices interpreting the Copyright Act in a way that permits the lower court's ruling to stand. But in many ways the broadcasters already have lost.
Whatever else it represents, this case is a sign that the industry can no longer control its future the way it once could. It's a sign that technology is once again pushing up against the law. And if the history of this country teaches us anything, it is that the law cannot hold back technology for long.
A decision from the court is expected by June. The inevitable innovations from the broadcasters addressing Aereo's business model, as well as any needed amendments to the Copyright Act, may take just a little bit longer. But just a little bit. There's already word that CBS (for whom I work as a legal analyst) has a "Plan B" in case Aereo prevails — to compete against the small company with its own online streaming service.
