Calm Down: Aereo’s Supreme Court Loss Isn’t Chaos for Cloud Tech

6/27/14Follow @curtwoodward

After the U.S. Supreme Court smacked down online TV service Aereo for violating copyright law, worries instantly sprung up that the justices were putting a huge array of Internet and cloud-computing services at risk of similar treatment.

That torch was carried highest by Justice Antonin Scalia, who wrote for the court’s three-person minority that the Aereo ruling would “sow confusion for years to come.”

But Scalia was complaining mostly about the court’s decision to forgo a detailed legal test for determining a specific kind of copyright infringement.

Media outlets—and some enterprising lawyers they’ve interviewed—have been more than happy go further, trumpeting the supposed fear and confusion that Aereo’s loss is heaping on Internet distribution technologies of all kinds.

The Guardian, for example, wrote that the decision “might evaporate Silicon Valley’s cloud,” asserting that the ruling “seems bound to chill innovation in this burgeoning sector of the economy.” Bloomberg said the court “leaves technology companies with few clues to guess whether their services would pass legal muster if challenged.” The Boston Globe said “disagreement about what the Aereo decision really means for the cloud will likely persist for some time.”

“The worry remains that services that allow customers to stream copyrighted materials stored on a server—be they MP3s, ebooks, or copies of movies or TV shows—are now open to copyright infringement claims,” CNET claimed.

Hogwash. The court’s ruling, written by Justice Stephen Breyer, clearly limits its effect to Aereo and services very much like it. That means companies using the Internet to rebroadcast live versions of copyrighted TV programs for a fee, without paying license fees for that content.

How do we know that? Because the court lays it all out.

The reason Aereo lost on Wednesday was because it bears an “overwhelming likeness to the cable companies” that Congress had in mind when it changed copyright laws in 1976, the court said.

Those old-school cable providers connected subscribers to a better braodcast antenna, and charged them to access a broadcaster’s copyrighted TV feed in real time. The court said Aereo’s live streams of TV shows are “a system that is for all practical purposes a traditional cable system,” despite the technological differences linking the viewers with a TV show.

When it comes to other kinds of technologies, or other services that deliver content, the court was extremely clear: we’re not going there.

—“We cannot now answer more precisely how … the Copyright Act will apply to technologies not before us,” Breyer wrote. Translation: this case is about Aereo and its particular technology, which is an intricate system intended specifically to live-stream broadcast TV to people for a fee. Any other technologies are not being addressed by this ruling.

—“The history of cable broadcast transmissions” is what led the court to determine that Aereo was covered by the copyright law intended to stop cable-company attempts to re-transmit broadcast TV. That history is specific to that set of arguments, the court said, and “it does not determine whether different kinds of providers in different contexts” are doing anything wrong.

—The Obama administration had asked the court to keep its ruling limited to Aereo alone, and not branch out further into “questions involving cloud computing, DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course’” the way it had in this particular cable-TV dispute. The court agreed that was the right policy, and said any other questions about different technologies or services that don’t ape the old cable-company transmission practice “should await a case in which they are squarely presented.” That means entrepreneurs shouldn’t worry about the Aereo ruling stifling their company unless they’re doing something very, very similar to Aereo.

—“We have said that it does not extend to those who act as owners or possessors of the relevant product,” Breyer wrote. The Aereo ruling has no impact on anyone streaming or downloading things they’ve paid for, or content that’s been properly licensed. Period.

—“We have not considered whether [copyright] is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.” If a company like Aereo was selling online storage in which a consumer could put all kinds of content, including broadcast TV shows, the court might not even deem it illegal. The fact that Aereo’s live-streaming service explicitly charges someone to retransmit broadcast TV is the problem being addressed.

—Aereo’s watch-it-later service is probably still legal under this ruling. “Cloud DVRs” that record broadcast shows to remote hard drives and let consumers watch them later are already legal. The Supreme Court specifically said that “that aspect of Aereo’s service is not before us,” which means the ruling doesn’t apply to it.

There’s no question that the demise of Aereo’s live-streaming service is bad news for consumers and for its particular innovation. After all, this was a service that made novel use of advanced technology to provide a convenient service that people were willing to pay for.

Now, consumers will probably have to wait for the giant broadcast companies to implement their own version, or just get ready to pay more, since Aereo or another entrant would have to pay fees to license TV shows.

So if you’re an entrepreneur who wants to set up a cloud service that takes someone else’s copyrighted material and live-streams to people for a fee, yes, you should be worried. And if your startup is based on a very careful workaround of copyright laws, this ruling is probably a bad sign.

But it’s just not the case that the Aereo ruling puts broader cloud-computing services at risk.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • Bryce

    I wonder how the Supreme Court would rule on this. I sell a slingbox, a tv-tuner and an antenna and rent about 1 square foot of real estate to a customer where the slingbox & antenna rests. I allow the slingbox to talk on my Internet connection. The customer could stream over the Internet the over-the-air broadcasts that the antenna can receive. Why is that illegal? It’s only illegal if slingbox is illegal, yet 1000s are sold every year. Project that onto the Aereo model. Not a whole lot of difference.

  • Craig Cherry

    A lot of people could simply use a cheap antenna instead of paying each month – but I haven’t seen any articles about the Aereo decision point this out.