Court rejects broadcasters’ appeal to block Aereo

By Ben Mook

Aereo, the startup service that allows subscribers to view and record television broadcast programs via the Internet, won another legal victory on Tuesday from a federal appellate court.

In a 10-2 decision, the U.S. 2nd Circuit Court of Appeals denied a request from a consortium of broadcasters to revisit its earlier decision not to impose an injunction on Aereo. In April the 2nd Circuit upheld a lower court’s decision to allow Aereo to continue operating despite the pending litigation.

PBS and WNET are among the TV broadcasters that have filed lawsuits in New York federal courts attempting to block Aereo’s expansion, with little effect. Last July, Judge Alison J. Nathan of the federal court for New York’s Southern District refused to grant an injunction against Aereo, an action that likely would have shut down the service.  The television networks appealed to the U.S. 2nd Circuit, but it upheld the lower court’s decision in April. In the latest decision, a majority of the circuit declined the networks’ request that they revisit the appeal “en banc,” with all of the circuit court judges participating.

After the ruling was issued July 16, Fox Networks said it will consider appealing the decision to the U.S. Supreme Court.

“The 2nd circuit’s denial of our request for an ‘en banc’ hearing, while disappointing, was not unexpected,” said Fox Networks Group senior v.p. of communications, in a prepared statement. “We will now review our options and determine the appropriate course of action, which include seeking a hearing in the U.S. Supreme Court and proceeding to a full trial on the merits of the case.”

Aereo started offering daily, monthly or annual subscriptions to television viewers in March 2012. Initially the service was limited to New York City, but has since expanded to multiple states and cities, most recently Atlanta and Boston.

Aereo uses banks of dime-sized antennas to capture broadcast signals and convert them into streaming video distributed over the Internet. Subscribers “rent” the antennas and have the option to watch TV programs live or on demand via a device similar to a digital video recorder.

In a pair of lawsuits, broadcasters, including PBS and New York’s WNET, and commercial broadcasters including ABC, CBS and NBC have claimed Aereo is violating the U.S. Copyright Act.

In a dissenting opinion issued July 16 2nd Circuit Court Judges Denny Chin and Richard Wesley agreed with the broadcasters’ legal argument alleging copyright infringements. Reiterating an earlier position, Chin wrote that Aereo’s technology was a “Rube Goldberg” device meant to exploit legal loopholes barring Internet transmission of broadcast shows. By not revisiting the matter en banc, Chin wrote, the court’s decision “eviscerates” the Copyright Act.

Chin warned that Aereo could become to be a huge disruptor to traditional TV broadcasters whose businesses are built on substantial revenues earned from retransmission fees. Cable broadcasters such as Time Warner look to adopt similar technology to avoid paying broadcasters for retransmitting their programs, while the Dish Network has reportedly been in talks to acquire Aereo.

“In fact, as with newspaper companies, broadcasters are relying increasingly on subscriber fees to fund the creation of content,” Chin wrote. “The majority’s decision, which permits Aereo to retransmit television broadcasts without paying a fee, undermines this model.”

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