Why the Aereo Supreme Court case over TV’s future is too tough to call

Curious if the Supreme Court will let Aereo live or die? So are copyright experts at the country’s top law schools, especially with the future of TV and digital copyright on the line.

Joan E. Solsman Former Senior Reporter
Joan E. Solsman was CNET's senior media reporter, covering the intersection of entertainment and technology. She's reported from locations spanning from Disneyland to Serbian refugee camps, and she previously wrote for Dow Jones Newswires and The Wall Street Journal. She bikes to get almost everywhere and has been doored only once.
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Joan E. Solsman
8 min read

The US Supreme Court in Washington, D.C. Getty Images

If you want to flummox copyright-law students, ask them about TV-streaming service Aereo.

On a final exam, University of California Berkeley law professor Pamela Samuelson asked her copyright class to answer whether Aereo is, essentially, a true technological innovation or just a legal one. It's a nuance that the Supreme Court will consider, too, on Tuesday as it weighs whether Aereo's service to stream local over-the-air broadcast TV violates the copyrights of the television broadcasters that are suing to stop it.

"My poor students were suffering enormously," Samuelson said, after they complained about the difficulty of the Aereo question. "I told them, 'I was really interested in what you thought!'"

Why? Digital copyright expert Samuelson isn't certain how the Court is likely to go on the case, which sets the stage for reinterpreting video and digital law in today's technology-laced era. The legal minds of Berkeley aren't alone. Professors from many of the country's top law schools say it's unusually hard to predict because the Supreme Court's track record in copyright varies, because copyright law is politically ambiguous and because an Aereo decision could radically change not only how the US interprets copyright in the digital age but also what technologies -- some of which are the bedrock of the Internet itself -- are infringing upon it.

No one will have clarity on those uncertainties anytime soon -- a decision likely won't come for weeks. When the justices question lawyers for New York-based Aereo and the broadcasters, though, they will give glimpses of what they believe to be the most important elements of the case.

Copyright conflict in the Aereo case

Aereo, backed by IAC Chairman Barry Diller, launched a service in 2012 that lets consumers remotely record and watch local broadcast TV on connected devices such as desktop computers and iPads, as well as TVs connected to Roku set-top boxes. To do this, Aereo developed a unique system of miniature antennas that tune into over-the-air programming -- the kind your home television could receive with "bunny ears" -- and connected those antennas to a storage drive located outside a customer's home. Those recordings can then be played back over the Internet.

Aereo's little antenna is causing some headaches among TV executives.
An Aereo antenna Aereo

Aereo charges $8 a month for its cheapest package -- less than half the $20.55 average price for a basic pay-TV service package in 2012, and far below the $61.63 price for the package tier most people buy, according to the Federal Communications Commission.

Here's the problem: Aereo doesn't pay the broadcast TV companies for storing and delivering their hit shows to consumers. And that has the broadcasters furious -- and afraid (Disclosure: CNET is owned by CBS, one of the broadcasters suing Aereo). Aereo says it is simply setting up antennas and DVRs on behalf of customers and plugging them into the Internet for their convenience. The only difference between Aereo and the same setup in a customer's own home is the length of the cord, the company says.

And if over-the-air TV is free, what's the problem?

This is where copyright law comes in. The Copyright Act of 1976 distinguishes between public performances and private performances. Private ones aren't subject to copyright rules, which is why you don't need to pay a copyright holder when you watch TV in your living room. Public performances, such as a cable or satellite company funneling channels to its customers en masse, are subject to copyright and required to pay a fee.

Read: Inside the tech aiming Aereo through TV's legal hoops

At first glance, Aereo looks similar to a cable or satellite company. Yet Aereo doesn't pay, and lower courts have largely supported its argument that it shouldn't have to. The trick is this: Aereo specifically developed its technology to enable private performances, the kind that are free of copyright concerns. Every customer has an individual tiny antenna that he or she controls, and every antenna makes a dedicated recording of the programming. By that rationale, Aereo isn't infringing because these aren't public performances.

An array of Aereo antennae
An antenna array Aereo
The networks say that's bunk. Taken as a whole, they argue, Aereo's service is clearly the same as a public performance like that of a cable operator. The big TV companies -- ABC's Disney, NBC's Comcast, Fox's 21st Century Fox, and CBS's namesake corporation -- as well as at least seven other broadcasters sued to stop Aereo and then petitioned the Supreme Court after their first thread of cases failed to shut down the service.

They want money from Aereo, sure. But their real fear is that the cable and satellite companies will set up an Aereo-like technology and stop paying them, too.

Who'll win? History holds no clues

If the case itself is vexingly complex, the history of copyright-related decisons at the Supreme Court clouds the outcome even more because of the lack of a clear legal precedent, a key factor that helps justices determine how they might rule.

"There's nothing that ties the Supreme Court's hands in this case, which makes it doubly intriguing," said Shyamkrishna Balganesh, assistant professor at University of Pennsylvania's law school.

The evolution of copyright in the US has followed a clear pattern, according to Dotan Oliar, a University of Virginia law professor who has written about the legal trade-off between copyright and innovation. A copyright-based industry, he said, makes money under a status quo until a disruptive technology threatens it, the copyright holders go to court or Congress, and the model morphs to a new status quo until the next disruptive technology surfaces.

Only six cases addressing the same copyright issues as Aereo have actually made it to the Supreme Court over the last 100 years, Oliar said. But no pattern of decisions has yet emerged. The Court has found infringement in some and none in others. It has reversed some lower-court decisions, and it has affirmed others. "I cannot say, 'Here's the consistent line.' There is no consistent line," he said.

The Court found no infringement in two relevant cases known as Fortnightly and Teleprompter in the '60s and '70s. Both dealt with "community antenna television systems," as cable networks were known then, which basically retransmitted TV signals to a group of customers from a single antenna. In the simplest terms, the Supreme Court decided nothing was illegal about that, and if you don't like it, go to Congress.

Read: Aereo's Supreme Court battle may change how you watch TV

That's exactly what happened. When Congress revamped the Copyright Act in 1976, it created a new framework that didn't tolerate the practice, including what is known as the Transmit Clause. That clause set the distinction between public and private performances that Aereo and the broadcasters are clashing over today.

The Transmit Clause has been tested twice at the Supreme Court: when device maker Sony was challenged over the VCR and when music service Grokster was challenged over file sharing. In the Sony case, the Court found no infringement. But Grokster was a dressed-up pirate and violated copyright law, the Court said.

To complicate matters more, while the Sony and Grokster decisions both reversed lower-court decisions, other copyright decisions -- such as one in which libraries photocopied articles and shared them -- affirmed earlier rulings.

"The cases are all over the place," Oliar said. "If it were so predictable, nobody would take it to the Supreme Court."

Even this Aereo case has led to differing conclusions based on the same legal approach. The US District Court of the Southern District of New York and later the Second Circuit Court of Appeals decided Aereo could keep operating because they didn't see enough support for an infringement argument. "The Second Circuit opinion and dissent both approach the Copyright Act from a plain-language perspective, and yet came to opposite conclusions," said Balganesh, the Penn Law professor.

But the US District Court of Utah in a separate suit against Aereo -- which isn't being directly considered by the Supreme Court -- came to the opposite ruling of the New York-based court, shutting Aereo down in several states.

Politically ambiguous

Politics, or rather the lack thereof, add to the mess. Unlike issues such as gay marriage or abortion, the politics of copyright are vague. A right-winger could protect the status quo (stronger copyright) or advocate limited government intervention (weaker copyright), while a liberal could favor innovation (weak) or protect the value of creative expression (strong).

Justices Ruth Bader Ginsburg and Stephen Breyer Getty Images

Two of the nine justices illustrate the conundrum. Legal experts have consistently said to watch Ruth Bader Ginsburg and Stephen Breyer to gauge the opposing poles of copyright opinion. Ginsburg is expected to be skeptical of Aereo's argument. She is one of the most knowledgeable justices about the Copyright Act, understanding the bargains that went into its crafting and often deferring to its structure and logic. Breyer is expected to be more receptive to Aereo's argument. In past copyright cases, he has been vocal in questioning the possible implications of the Copyright Act, and he is reputed to be an intellectual property minimalist.

The kicker is both are Democrats appointed by President Bill Clinton. Yet they are expected to approach the issue from opposing standpoints.

Randal Picker, a professor at the University of Chicago's law school, noted that Aereo is attempting to frame the debate around Americans' right to watch free broadcast TV. Free over-the-air TV was the original design of television, but since the Federal Communications Commission's transition from analog to digital broadcast signals, very few people watch TV that way anymore. "I think that the big wildcard is what [the Justices] do with the idea that consumers have the right to set up rabbit ears," he said.

Setting the stage for copyright's future

Finally, the Aereo case is tangled by vast implications not only for copyright law but also for industries that may have nothing to do with television.

Aereo's legal argument relies heavily on a case that cable provider Cablevision won over the media companies in 2008, allowing it to offer network DVR, the same cloud-based system that Aereo is using to record, store and deliver over-the-air broadcasts. The Supreme Court declined to hear an appeal of the Cablevision case the following year, and these cloud-based services have been trucking along ever since.

Many see the Aereo case as a renewed opportunity for the Supreme Court to clarify the copyright notions of the Cablevision case. Because of that, the Aereo case could call into question cloud-based services beyond TV. Some -- including Aereo and Cablevision itself -- have argued that the broadcasters are challenging the legal underpinning of all cloud-based services, which could threaten Dropbox or your Amazon cloud-storage locker because they allow individuals to access songs and videos that are stored on a server elsewhere.

Jessica Litman, a professor at the University of Michigan's law school and author of "Digital Copyright," said the justices' decision could potentially affect many ways we use the Internet legitimately -- fundamentals of the Internet that are very like what Aereo is doing.

Whether Aereo is distinguishable from Cablevision's system in a way that's pertinent to its copyright liability was the question that so confounded Samuelson's Berkeley Law students. "The DVR system in the Cablevision case was just a higher-tech version of Sony VCR," Samuelson said, and in some ways, Aereo is just a more clever version of the same technology. But a genuine criticism of that interpretation, she said, is whether Aereo is just a Rube Goldberg contraption designed to fit a loophole. A legal innovation, not a true technological one.

"I think that [the Supreme Court] saw this as the kind of thing that could recur," she said. "If they didn't decide to review it, it would be the next technology, or the next, or the next."

Tuesday, we will get our first peek at those answers to come.