Tech startup Aereo continued to disrupt the market this week when the Supreme Court heard arguments in the American Broadcasting Companies Inc. v. Aereo Inc. case. The case has garnered lots of attention in the technology community due to the implications it may have on Cloud services. Essentially, Aereo provides an electronic antenna that picks up and broadcasts existing signals with the added bonus of being a virtual recorder and storage locker.  Aereo’s creation is brilliant, but as seems to be the case with many such tech developments, it may have outpaced current laws and policy.

Broadcasting companies believe copyrighted content is illegally transmitted through the internet from Aereo to Aereo’s paying subscribers. Companies such as ABC, NBC, CBS, Fox, and PBS allege that the company is publicly performing by transmitting content without proper licensing and payment of royalty fees — a violation of intellectual property laws.

Broadcast Companies are using the 1976 Copyright Act definition of transmission to prove that Aereo’s transmission of content is a public performance, while Aereo’s customers are private performers. This distinction is important because private performances are exempt from obtaining licenses and paying fees for copyrighted content, while public performances are not.  Paul Clement, the attorney working on behalf of the broadcast company petitioners, recognizes that a person or company that sells traditional antennas would not be involved in a public performance; however, he asserts that Aereo’s use of ongoing services, even if considered a rented service, exploits the use of copyrighted works and therefore represents a public performance and a violation of the Copyright Act.

In response to questions from Justices Alito and Kennedy about the difference between Aereo’s services and the DVR service provided by companies like CableVision, Clement responded that unlike Aereo, CableVision acquired licenses to receive their content in the first place. Because CableVision’s customers are recording and storing content for private use that the company was given permission to transmit, CableVision’s DVR service was rightfully excluded from obtaining a reproduction license. Aereo did not obtained permission to access the content that they allow their customers to stream, record, and store.

The use of Aereo allows its customers to only view local over-the-air broadcasts, the signals for which are free to the public, which makes the sale and private use of antennas to disseminate these broadcasts a lawful act. Aereo asserts that they are not publicly performing because they are equipment providers, no different than a company that sells antennas. This equipment provides access to free, public content, which is different from providing content in the first place. Aereo attorney David Frederick cited Sony Corp. v. Universal City Studios as precedent for the lawful use of Aereo’s DVR service. The Sony decision held that consumers have the right to record local over-the-air broadcasts for private use. Since Aereo is renting equipment that provides access to free local content, the company argues that they’re not in violation of the Copyright Act.

What is bothersome to Aereo, and potentially problematic to Cloud service, is the interpretation of the Copyright Act’s Transmission Clause. Aereo believes that the petitioners’ interpretation qualifies any device or process disseminating works to the public, as a public performance, thereby requiring licenses and payment of royalties, which could be detrimental to cloud computing. Clement; however, was clear on the subject of cloud computing and doesn’t believe a decision in his clients’ favor should threaten that technology’s future.

Whether anyone believes that a decision against Aereo should threaten Cloud’s future or not is irrelevant — the more important question is, could it be applied when considering cloud computing? I’m not sure how the Supreme Court will rule, but I do believe this decision will affect cloud computing no matter the outcome.

Aereo is the twenty-first century solution to the discontinued use of antennas and VCRs. If the Supreme Court rules in its favor, Aereo could build on its existing technology and become an entity more comparable to a cable company, at which time they should be responsible for proper licensing and adherence to copyright laws. Technology is constantly changing and challenging older, more established technologies and industries — this is exactly what drives continued innovation. A ruling against Aereo would stifle this innovative growth.

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Teerah Goodrum (@AisleNotes), is a graduate student at Howard University with a concentration in Public Administration and Public Policy. Her time on Capitol Hill as a Science and Technology Legislative Assistant has given her insight into the tech community. In her spare time she enjoys visiting her favorite city, Seattle, and playing fantasy football.

Featured image courtesy of [Adam Fagen via Flickr]

Teerah Goodrum

Teerah Goodrum is a Graduate of Howard University with a Masters degree in Public Administration and Public Policy. Her time on Capitol Hill as a Science and Technology Legislative Assistant has given her insight into the tech community. In her spare time she enjoys visiting her favorite city, Seattle, and playing fantasy football. Contact Teerah at staff@LawStreetMedia.com.

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