TV Broadcasters Tell Appeals Court to Shut Down Aereo

Barry Diller Headshot - P 2012
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Barry Diller Headshot - P 2012

On Friday, the major TV broadcasters made their second attempt to shut down Aereo, the digital TV service that was funded in great part by Barry Diller and launched this past March.

Arguing before a 2nd Circuit Court of Appeals panel, the challenge for the broadcasters was clear: They needed to convince the judges that a technology that already has been judicially certified as likely to irreparably harm the broadcasters also ran afoul of copyright laws.

To this end, attorneys for the broadcasters spoke of Congress' intent when lawmakers crafted the legal underpinnings of the modern television industry. They also attempted to distinguish Aereo's system from a judicially blessed technology that was reviewed four years ago by the same appellate circuit.

At the hearing, the judges prodded attorneys from both sides to think big.

Although the judges were technically reviewing Aereo's system of thousands of antennas capturing TV signals and then relaying content to its subscribers online, the hearing also addressed the legality of Slingbox, the future of the book industry and whether a business built in the same way that some people legally evade taxes was an acceptable model.

The single most repeated word at Friday's hearing was "Cablevision," which is shorthand for Cartoon Network v. CSC Holdings, the 2008 decision that formed the basis of U.S. District Judge Alison Nathan's ruling in July to deny the broadcasters' first attempt at a preliminary injunction against Aereo.

In the Cablevision case, the technology at issue was remote-storage DVR.  "Cablevision" also has become known for the principal that when a unique copy of programming is made for an individual consumer, the transmittal of a copy on demand is not a "public performance," and wouldn't violate broadcasters' rights under the transmit clause of U.S. copyright law.

Attorneys for the broadcasters spent much of their time attempting to convince the court that Aereo's system was different, and that the judges were free to diverge from the outcome of the Cablevision case.

The first argument on how it was different was made by Paul M. Smith, a partner at Jenner & Block, appearing on behalf of a group of broadcasters including Fox Television Stations, PBS and Univision Television. He argued that Cablevision at least had licensed the primary transmission, whereas Aereo had not. To extend the 2008 decision to what broadcasters see to be a TV streamer would "turn [precedent] into carte blanche for an unlicensed service."

Bruce Keller, a partner at Debevoise & Plimpton, appearing on behalf of a group including CBS, NBCUniversal and ABC, made a second argument to distinguish Aereo. He said that Cablevision's technology previously on review was a "storage service, not a retransmission service."

One of the judges noted there was a storage aspect to Aereo, but Keller countered that it was something that Aereo "downplayed," that the key thing to focus on was that unlike Cablevision's remote-DVR, Aereo consumers got a chance to watch the Super Bowl as it happens. And even if Aereo consumers could pause live television and then watch something five seconds after it happened, Keller argued that Congress had made clear that "everything that facilitates retransmission a transmission service."

The judges seemed concerned about creating a dragnet that might cause other technologies not under review to be implicated. In particular, Slingbox's technology of allowing users to remotely view and control their home's cable and satellite system was repeatedly mentioned, with the judges wishing to know the difference between that system and Aereo's.

In response, the broadcasters seemed to suggest that Slingbox could also be illegal, but that it had never come before a court.

David Hosp, a partner at Goodwin Proctor, argued on behalf of Aereo and urged the judges to recognize that the panel that had heard the Cablevision case "knew exactly what they were doing" in holding that the transmission of a unique copy to an individual consumer wasn't a public performance. He also pointed to a 2010 decision (ASCAP) involving digital music downloads, deemed to be different than streaming services and not public performances.

The Aereo attorney pointed to Judge Nathan's determination that Aereo was a private service based on those thousands of antennas each capturing unique copies for playback. "It was factually determined that Antenna A was different than Antenna B," he said.

That brought some skepticism from one of the judges, who observed to laughs in the audience, "Are you saying that the Redskins might win the Super Bowl in some homes and lose in others?"

Later, in his closing words, Keller ran with this idea, saying, "I guarantee you that that for all those watching Super Bowl XLVI (on Aereo), the Giants beat the Patriots every single time."

The judges also questioned Hosp on why Aereo needed to have all those antennas. "Why not one? Is there a technological reason? Any legitimate business reason?"

Hosp admitted that the reason was to comply with the U.S. Copyright Act, which prompted a judge to question whether an upstart digital company in the book business could similarly adopt a distribution business merely by putting the purchaser's names on an e-book.

One judge also observed, "You say your model is built around Cablevision. Isn't that like organizing your business affairs to avoid taxes?"

Hosp responded that there was nothing wrong with obeying legal loopholes.

"The plaintiffs say it is a bad thing to follow the law," he said. "I believe the 2nd Circuit got it right in attempting to strike the right balance between public and private performances that lawmakers wanted."

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