Judge Denies Injunction Against Barry Diller’s Aereo

On Wednesday, New York federal judge Alison Nathan declined to issue an injunction against Aereo in a tremendous blow to major TV broadcasters. She has ruled that the plaintiffs have not demonstrated a likelihood of prevailing in the case.

“Of course I’m happy the judge denied the injunction, and now we can really begin telling television consumers they have an alternative,” said Aereo’s primary financial backer Barry Diller in a statement.

All of the major networks were firm in their contention that the upstart streaming company violated the transmit clause of the Copyright Act. The company maintains a number of antenaes in Brooklyn which capture over the air television signals and then stream content to its subscribers online.

In the decision denying the injunction, the judge says that the plaintiffs would likely prevail on their claims “but for Cablevision‘s express holding regarding the meaning fo the provision of the Copyright Act in issue here.”

The reference is to a 2008 case before the 2nd Circuit Court of Appeals concerning Cablevision’s plan to introduce remote-storage DVR.

In that case, the 2nd Circuit ruled that because “each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber … such transmissions are not performances ‘to the public.'”

Aereo wanted to use the decision to justify its own service. The company argued that, like the RS-DVR system in Cablevision, its system creates unique, user-requested copies that are transmitted only to the particular user that created them and, therefore, its performances are nonpublic.

The judge is agreeing with Aereo’s assessment.

“Contrary to Plaintiffs’ arguments, the copies Aereo’s system creates are not materially distinguishable from those in Cablevision, which found that the transmission was made from those copies rather than from the incoming signal,” she writes. “Moreover, Plaintiffs’ attempt to distinguish Cablevision based on time-shifting fails when confronted with the reasoning of that case, particularly considering that the Second Circuit’s analysis was directly focused on the significance of Cablevision’ s copies but did not say one word to suggest that time-shifting played any part in its holding.”

The judge decides that the broadcasters have not shown a likelihood of success on the merits and although she agrees they face irreparable harm, that the balance of hardships if an injunction is issued does not favor plaintiffs as it will ruin Aereo’s business.

Fox, PBS, WNET, Univision and Tribune issued this statement:

“Today’s decision is a loss for the entire creative community.  The judge has denied our request for preliminary relief – ruling that it is ok to misappropriate copyrighted material and retransmit it without compensation.  While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal.”

CBS added this comment:

“This is only a ruling on a preliminary injuction. This case is not over by a long shot. We intend to immediately appeal this decision to the Second Circuit and seek expedited consideration. We also intend to seek damages and a permanent injunction in this case before this court.”

During the case, the broadcasters argued that if Aereo prevailed, it would be less likely that broadcasters would ever invest billions of dollars for programming, that retransmission negotiations between stations and cable/satellite companies could get even more contentious and that Aereo’s service would threaten advertising money and piracy protection and the growth of Internet-based video on demand market.

“Events like the Super Bowl will not be on TV anymore,”predicted the plaintiff’s lawyer during the two-day hearing over the motion for the injunction.

“The evidence establishes that Plaintiffs will suffer irreparable harm in the absence of a preliminary injunction,” says Judge Nathan, pointing to the fact that a streaming service has the potential of siphoning viewers from traditional distribution channels, which would lower Nielsen ratings and impact the broadcasters’ ability to negotiate with advertisers.

“This harm is not speculative,” writes the judge, impressed by the testimony of broadcast executives like Fox’ Sherry Brennan, who warned about the dangers faced by cable companies. (Much of the evidence submitted was about retransmission fees, but analysts also warn that a favorable decision for Aereo will embolden cable companies to mimic Aereo’s service.)

Ultimately, though, the harm aspect is just one factor that the judge takes into consideration. To prevail, the plaintiffs also needed to show they are going to win the case. And on that factor, the judge is less convinced.

“Aereo has made substantial investments of money and human capital in its system, all in reliance on the assumption that the Second Circuit meant what it said in Cablevision rather than what it did not say,” she writes. “This Court does not believe it would be appropriate to blaze a trail that runs opposed to the direction dictated by Cablevision.”

The judge does, though, make some cautious notes about today’s decision, writing that the ruling doesn’t “accept Aereo’ s position that the creation of any fixed copy from which a transmission is made always defeats a claim for a violation of the public performance right” nor does the judge “need to resolve Aereo’s argument that their antennas, standing alone, defeat Plaintiffs’ claim that Aereo engages in a public performance.”

Lest others attempt a similar route, she says, “The Court’s holding that Plaintiffs have not demonstrated a likelihood of success is limited. There may be cases in which copies are purely facilitory, such as true buffer copies or copies that serve no function whatsoever other than to pass along a clearly identifiable ‘master’ copy from which the transmission is made.”

Still, the decision marks a huge victory for Aereo and its lawyers Michael Elkin and R. David Hosp.

Here’s the full decision

E-mail: eriq.gardner@thr.com

Twitter: @eriqgardner