If you thought that the legal dispute between Aereo and the broadcasters was combative, it paled compared with today’s one-hour hearing at the Supreme Court. In oral arguments before the nine Justices, both sides took some heavy blows, but the Barry Diller-backed streaming service definitely took one to the jaw from Chief Justice John Roberts. “Your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with,” Roberts told Aereo attorney David Frederick during the presentation before a packed chamber. “There’s no reason for you to have 10,000 dime-sized antennas except to get around the Copyright Act,” he said. Added Justice Ruth Bader Ginsburg: “You are the only player so far that pays no royalties whatsoever.”
Coming after arguments from the broadcasters by former Solicitor General Paul Clement and current Deputy Solicitor General Malcolm Stewart, Frederick started off his presentation by saying “this is a reproduction rights issue masquerading as a public performance case.” The Justices didn’t seem to buy it.
Despite Roberts’ comments, Justices Sonia Sotomayor and Stephen Breyer were by far the most inquisitive during the presentation with concerns over cloud computing taking up almost as much time as the copyright issue at the heart of the lawsuit filed by an armada of Big Media companies — including CBS, Disney, Fox, and Comcast’s NBCUniversal — as well as the federal government. “I don’t understand if the decision I write for or against you will affect other technologies,” Breyer told Frederick. “It’s not your problem — but it might be,” Breyer deadpanned to a big laugh from the courtroom.
“I think the cloud was the winner today,” MPAA boss Christopher Dodd said after the hearing. “But I think the Justices see Aereo as gimmicky and want to address that.” Dodd’s comments mirrored remarks made by Clement during the presentation.
During Clement’s three-minute rebuttal at the end of the hearing, Sotomayor directly asked the lawyer about the consequences of a potential ruling. “If it’s just a gimmick, then they deserve to go out of business and no one should shed a tear,” Clement said of Aereo’s prospects should it lose at the high court. The lawyer added that if Aereo’s technology was innovative, it would persevere in one form or another regardless.
Said Frederick in a statement after the presentation: “We’re confident, cautiously optimistic, based on the way the hearing went today that the Court understood that a person watching over-the-air broadcast television in his or her home is engaging in a private performance and not a public performance that would implicate the Copyright Act.”
Originally scheduled to start at 11 AM ET, today’s hearing was pushed back 30 minutes because of readings of other opinions from the bench. In the sundrenched chamber with its strategically lit red velvet drapes and engraved marble walls, almost all of the nine Justices asked questions from their high-backed chairs. As is common, the only Justice not to ask a question was Clarence Thomas, though he did take time during the presentation to whisper asides to Justice Antonin Scalia.
The court likely will rule by late June.
Fox co-COO James Murdoch and Fox TV’s Peter Rice showed up in person today along with Diller, Aereo CEO Chet Kanojia and Dodd to witness the debate that pits the tiny streaming service against the broadcasters. Aereo was represented by Frederick of D.C. firm Kellog Huber Hansen Todd Evans & Figel LLP, who has appeared more than 40 times before the Supreme Court. Clement has argued more 70 cases before the high court.
Up until last week, only eight of the Justices were expected to participate, but on April 16, Judge Samuel Alito — who had recused himself — decided to join the case. That removes the chance of a tie vote, which would have upheld a lower court ruling favoring Aereo.
Diller and Kanojia say their company is likely out of business if they lose. Broadcast execs including CBS’ Les Moonves and Fox’s Chase Carey have said that, if they lose, they might take their most popular primetime shows off of free TV, and just make them available to the 85% of households that subscribe to pay TV. In theory, an Aereo victory could embolden pay TV distributors to deploy a similar technology that would enable them to avoid paying billions in retransmission consent fees.
Today’s hearing comes after what has been multi-jurisidictional legal trench warfare between the broadcasters and Aereo almost since the day the streaming service started in NYC in early 2012. On October 11 last year, the broadcasters cut to the chase and asked the high court to review an April 1, 2013 ruling by the U.S. Court of Appeals in New York that confirmed a District Court decision and rejected their request for a preliminary injunction against Aereo. The high court agreed in January to hear the case.
As their respective briefs have long since made clear, the two sides have very different perspectives on what Aereo is doing and what it means. The broadcasters say this is “a straightforward case” and that Aereo is stealing their content “There is no dispute that Aereo has developed a business model around the massive, for-profit exploitation of the copyrighted works of others,” said their initial petition to the SCOTUS. “Its competitive advantage in that business model derives from the fact that its competitors pay fees for the commercial retransmission of those copyrighted works, while Aereo does not.”
Aereo say they are the future and the broadcasters are simply trying to stop technological progress. They contend that “the ‘one-to-one’ transmissions from Aereo’s equipment – individual transmissions from personal recordings created from data received by individual antennas – do not constitute ‘public’ performances.” That Copyright Law distinction between “public” and “private” performances is in many ways the legal heart of the case.
However, Aereo also positions itself as seeking to protect public control of the airwaves, and consumers’ ability to harness the power of the Internet. “This Court should not rewrite the Copyright Act in an effort to protect petitioners from lawful and logical advancements in technology or from the economic consequences of their transmitting works for free over the public airwaves,” the company said in its March 25 reply brief.