Tech Industry Nervous Others Will Suffer Aereo’s Fate

The Supreme Court ruling creates legal uncertainty around cloud computing.

BERLIN, GERMANY - AUGUST 31: A visitor tries out an HP Spectre XT laptop computer featuring an Intel Ultrabook processor at the Internationale Funkausstellung (IFA) 2012 consumer electronics trade fair on August 31, 2012 in Berlin, Germany. IFA 2012 is open to the public from today until September 5.
National Journal
Brendan Sasso
June 26, 2014, 8:51 a.m.

The Su­preme Court’s de­cision against In­ter­net video ser­vice Aereo could have re­ver­ber­a­tions throughout the tech­no­logy in­dustry.

The ma­jor­ity of the Court tried to craft a nar­row rul­ing that would kill the con­tro­ver­sial stream­ing site without harm­ing le­git­im­ate In­ter­net ser­vices. Nev­er­the­less, some tech­no­logy com­pan­ies are nervous that the de­cision could de­ter fu­ture in­nov­a­tions and spur more copy­right law­suits.

Ed Black, the CEO of the Com­puter and Com­mu­nic­a­tions In­dustry As­so­ci­ation, said the de­cision has cre­ated leg­al un­cer­tainty around oth­er tech­no­lo­gies that al­low con­sumers to store copy­righted ma­ter­i­al.

“The Court said this de­cision shouldn’t have an im­pact on oth­er tech­no­logy ser­vices,” he said. “That’s nice to say, but they did ba­sic­ally cre­ate a huge gray area.”

Black’s group lob­bies for Aereo, as well In­ter­net gi­ants in­clud­ing Google, Ya­hoo, and Mi­crosoft.

Aereo uses clusters of tiny an­ten­nas to de­liv­er loc­al TV chan­nels to its sub­scribers over the In­ter­net. Every­one has the right to ac­cess over-the-air TV chan­nels us­ing an an­tenna, and Aereo claims its sub­scribers are just rent­ing ac­cess to an an­tenna.

But in a 6-3 de­cision, the Su­preme Court sided with the TV broad­casters, who claim Aereo is steal­ing their con­tent. In the ma­jor­ity opin­ion, Justice Steph­en Brey­er wrote that Aereo is be­hav­ing like a cable pro­vider and should have to pay for the broad­cast TV con­tent.

Aereo, however, isn’t the only com­pany that al­lows users to store and ac­cess copy­righted ma­ter­i­al. Google, Amazon, Mi­crosoft, Drop­box, and oth­ers of­fer cloud ser­vices that al­low users to store videos, songs, doc­u­ments, and oth­er files. 

Black warned that the de­cision “casts a shad­ow” over the cloud-stor­age in­dustry and could make in­vestors think twice about back­ing start-ups that of­fer nov­el ways for users to ac­cess ma­ter­i­al.

The justices em­phas­ized that they wer­en’t ad­dress­ing any tech­no­lo­gies aside from Aereo. And the high court wrote that “own­ers or pos­sessors of the rel­ev­ant product” don’t in­fringe on copy­right.

But in a blog post, John Bergmay­er, a staff at­tor­ney for con­sumer ad­vocacy group Pub­lic Know­ledge, said the rul­ing doesn’t provide much guid­ance for oth­er courts in fu­ture copy­right fights. Only if a court as­sumes Aereo is il­leg­al does it make sense to say its sub­scribers aren’t law­ful “pos­sessors” of the video, Bergmay­er wrote.

“In oth­er words, the Court’s test is that ‘il­leg­al ser­vices are il­leg­al, but leg­al ones are leg­al.’ This is not very help­ful,” he wrote.

Bergmay­er pre­dicted that the de­cision will likely mean “more lit­ig­a­tion, and per­haps fu­ture trips to the Su­preme Court.”

The three dis­sent­ing justices also warned that the rul­ing will “sow con­fu­sion for years to come.” Justice Ant­on­in Scalia, who wrote the dis­sent, said the Court can’t de­liv­er on its prom­ise that the rul­ing won’t af­fect cloud com­put­ing. Fu­ture courts will struggle to de­term­ine which ser­vices are le­git­im­ate and which too closely re­semble Aereo, he pre­dicted.

“It will take years, per­haps dec­ades, to de­term­ine which auto­mated sys­tems now in ex­ist­ence are gov­erned by the tra­di­tion­al vo­li­tion­al-con­duct test and which get the Aereo treat­ment,” Scalia wrote.

But Den­nis Whar­ton, a spokes­man for the Na­tion­al As­so­ci­ation of Broad­casters, em­phas­ized that the ma­jor­ity opin­ion ex­pli­citly said the justices didn’t in­tend to af­fect cloud com­put­ing.

“There are a lot of fantasy spec­u­la­tions be­ing thrown around out there,” he said. “This was a simple case of a com­pany tak­ing someone else’s con­tent, selling it, and not com­pens­at­ing the cre­at­or of the con­tent.”

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