Bloomberg News

Networks Ask Appeals Court to Shut Down Aereo TV Service

November 30, 2012

Television networks including Walt Disney Co. (DIS:US)’s ABC and Comcast Corp. (CMCSA:US)’s NBC asked an appeals court to shut down Aereo Inc., the online TV service backed by Barry Diller, claiming it violates their copyrights.

The broadcasters, which also include News Corp. (NWSA:US)’s Fox Television and CBS Corp. (CBS:US), made oral arguments today in federal appeals court in Manhattan, seeking to overturn a lower-court judge’s refusal to put New York-based Aereo out of business. They said the judge erred in relying on an appeals court ruling in a case involving a Cablevision Systems Corp. (CVC:US) video recorder.

The networks sued in March, claiming Aereo infringed their copyrights by capturing over-the-air signals and retransmitting them without a license to subscriber smartphones and computers. Aereo’s service would devalue programming and cut ratings, jeopardizing revenue from advertisers and pay-TV providers, they argued.

“Cablevision was a storage service, not a retransmission service,” Bruce Keller, a lawyer for the networks, told the three-judge appeals panel today. “Aereo is a retransmission service by its own design. Without a license, it violates copyrights. It sells our broadcasts, our performances, to its customers.”

Video Recorder

Aereo said in court papers that its service gives individual subscribers access to broadcast programming and lets them record it using remotely located individual antennas and digital video recorders. That constitutes a private performance under the law, according to Aereo.

“Consumers have the right to make private performances,” David Hosp, a lawyer for Aereo, told the appeals panel. “Supplying the technology to accomplish this does not violate the public-performance right.”

U.S. District Judge Alison Nathan in Manhattan in July denied the networks’ motion for an injunction, ruling that Aereo’s retransmissions weren’t public performances requiring a license under copyright law.

Nathan cited the case involving Cablevision, the Bethpage, New York-based pay-TV provider that was sued by the networks for offering subscribers a remote-DVR service.

The same appeals court considering the Aereo case found for Cablevision, saying the cable company wasn’t providing public performances of copyrighted works.

Cablevision’s Relevance

The judges today repeatedly questioned Aereo’s lawyer about the Cablevision ruling’s relevance to the current dispute.

“Are you asking us to go one step further than the Cablevision case?” U.S. Circuit Judge Denny Chin asked. He said that Cablevision, unlike Aereo, had licenses from the networks to retransmit their shows.

Aereo has argued that providing a copy of a program through an individual antenna that transmits to one subscriber and no others constitutes a private performance. Using one antenna to gather a signal before redistributing it to many subscribers would constitute a public performance requiring a license.

The judges asked whether Aereo’s individual dime-sized remote antenna wasn’t a way of circumventing copyright laws.

“It’s like constructing your business to avoid taxes,” John Gleeson, a district court judge who was sitting on the appeals panel today, said of Aereo’s approach. “The reason you have all these little antennas is simple: to avoid copyright violations.”

Private Performance

Hosp said each individual antenna transmits a different fixed copy of a program to a listener. He compared Aereo’s case to one in which the appeals court ruled that when someone downloads a copy of a song it’s not a public performance, whereas when a service streams a song to a listener it is.

Aereo subscribers in New York can get TV broadcasts for $12 a month, according to court papers. The service began in March. After the injunction was denied, the company said it planned to expand to other cities.

Before the service began, Aereo received support from Diller’s digital media company IAC/InterActive Corp. (IACI:US), which led a $20.5 million round of financing. Diller, who is on Aereo’s board, once ran News Corp.’s Fox Broadcasting. Chet Kanojia is the founder and chief executive officer of Aereo.

The plaintiffs also include the Public Broadcasting Service and WNET, a New York-based nonprofit licensee of TV stations.

The appeals are American Broadcasting Cos. v Aereo, 12- 2807, and WNET v. Aereo, 12-2786, U.S. Court of Appeals for the Second Circuit (Manhattan). The lower-court cases are American Broadcasting Cos. v. Aereo, 12-1540, and WNET v. Aereo, 12-1543, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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