A Utah Court handed broadcasters their first major victory in their legal battle with the online video service Aereo, two months before the Supreme Court will hear a similar case.
Aereo uses thousands of tiny antennas — one for each subscriber — to stream and record over-the-air TV signals to users, sidestepping the expensive retransmission fees that cable companies pay broadcasters to distribute their content. But the U.S. District Court in Utah told the online video start-up to shutdown its service in Utah and Colorado on Wednesday, saying it was "indistinguishable" from cable TV.
"Based on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs' programs," Judge Dale Kimball wrote. "Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo's device or process transmits Plaintiffs' copyrighted programs to the public."
The court granted Aereo's request to put the lawsuit with Fox and local broadcasters on hold until the Supreme Court hears the case, set for April 22.
The ongoing legal battle is essentially about whether Aereo's performances are public or private.
Broadcasters — including Disney, CBS, NBCUniversal, Fox, and Univision — have been trying to bring Aereo down since it launched in March 2012, suing the company in multiple jurisdictions for stealing their content.
But Aereo Founder and CEO Chet Kanojia contends it does not violate copyright law because its performances are private, a view recently affirmed by the U.S. Court of Appeals for the 2nd Circuit. Kanojia was disappointed by the Utah court's decision to follow a "different path."
"Consumers have a fundamental right to watch over-the-air broadcast television via an antenna and to record copies for their personal use," Kanojia said in a statement after the Utah court order. "The Copyright Act provides no justification to curtail that right simply because the consumer is using modern, remotely located equipment."
This is a major setback for Areo which, until now, has averted injunctions in New York and Boston in similar lawsuits. With Kanojia's blessing, the broadcasters appealed the 2nd Circuit Court's decision to the Supreme Court, which decided to take the case last month.
Aereo began offering its services in Utah in August, and in Denver in October. The start-up currently operates in 10 cities, and plans to expand after raising $34 million in funding last month.