Aereo CEO Chet Kanojia after the Supreme Court arguments.
The Supreme Court heard arguments today for and against Aereo, the startup that streams broadcast television to subscribers over the internet without paying copyright fees to broadcast networks.
The court didn't give many indications of which way it will rule, but the questions centered around a few themes: the impact of the ruling on cloud computing, whether Aereo is transmitting content or merely providing equipment, and whether the company's antenna farm is more than a sleight of hand to skirt copyright law.
Broadcasters including ABC, CBS, NBC, and Fox sued Aereo two years ago, alleging that the company should have to pay fees to deliver their content, just as cable and satellite networks do. The startup countered that through a complex set up of antennas and individual hard drive directories, its streams are individual private performances that do not infringe. The question before the court was whether the company's service constitutes a public performance and therefore a copyright infringement, or whether it is more like an individual watching something privately in her own home.
The court didn't give many indications of which way it will rule
Justices Stephen Breyer and Sonia Sotomayor seemed most concerned that a ruling against Aereo would endanger cloud services such as Google Music or Dropbox, a question that remained unsettled by the close of the arguments. Justice Ruth Bader Ginsburg and Justice John Roberts seemed skeptical that Aereo's technology makes sense outside of copyright law.
"All I'm trying to get at, and I'm not saying it's outcome determinative or necessarily bad, I'm just saying your technological model is based solely on circumventing legal prohibitions that you don't want to comply with, which is fine," Justice Roberts told Aereo's lawyer, David Frederick. He added that the answer would not determine the outcome of the case either way. "I mean, lawyers do that."
Frederick maintained that Aereo's technology delivers additional benefits in cost and efficiency and bolsters the company's ability to scale.
The court also cycled through various analogies, comparing Aereo to a parking garage versus a valet service, a phonograph store, an antenna installer, and a cable company. Some justices wondered why Aereo isn't considered a cable company, something neither side is arguing. "I look at the definition of a cable company and it seems to fit," Justice Sotomayor said.
I'm cautiously optimistic about Aereo after today's argument. Excellent lawyering and justices seemed pretty receptive.— Parker Higgins (@xor) April 22, 2014
Aereo was in public relations blitz mode last week, with CEO Chet Kanojia giving dozens of interviews. But today, Kanojia declined to comment and his lawyers declined to take questions after the case. The CEO seemed to be in a good mood as he left the courthouse, however, and Frederick told reporters that the team was "confident, cautiously optimistic" that the case would go their way. Buzz among the scrum of bar members, press, and members of the public who sat in on the case seemed to be that "Aereo had held its own."
Paul Clement, the attorney for the broadcasters, reiterated his points to reporters afterward and threw in an argument reserved for the public: "What's at stake in this case is really that this will change watching broadcast television as we know it," he said.
"Notice he didn't make that argument to the justices," James Grimmelmann, who co-authored a brief in favor of Aereo and sat in on the case, whispered to me.
"What's at stake in this case is really that this will change watching broadcast television as we know it."
Because it wasn't relevant or because they wouldn't buy it? "Because they wouldn't buy it," he said.
If Grimmelmann had to bet, he'd guess that the Court will either give a very narrow ruling in favor of the broadcasters, or rule in favor of Aereo on the copyright question and remand the case back to the New York appeals court where the broadcasters could argue it on other merits. The court will likely rule on the case in June.
"It's very hard to read," he says. "The justices didn't give many clues as to what they were thinking."
At the end of the arguments, Sotomayor pursued an interesting tack. "Tell me the consequences of our decision today," she asked Clement, the lawyer for the broadcasters. "Do you put them out of business?"
The answer, according to statements Aereo has made to the press, is yes: if the company loses on the copyright question, it will fold its cards. Clement used the question to rail a bit. If Aereo is actually providing an innovative technology, it will stick around. But "if all they have is a gimmick then it will probably take them out of business," he told the justices. "And nobody should cry a tear."