Appeals Court Declines to Block Aereo Service During Trial

Aereo while a trial over its right to distribute New York City TV stations’ signals to online subscribers plays out. In a business plan that owes much to Cablevision’s remote-storage DVR litigation that also played out at the 2nd Circuit, Aereo leases small antennas and DVRs to its subscribers who can then access the programming through software on devices such as Apple’s iPad.In a 2-1 opinion, the court suggested the laws covering cable TV and online video may be out of date. “As much as Aereo’s service may resemble a cable system, it also generates transmissions that closely resemble the private transmissions from” devices such as a rooftop antenna, said the opinion by Circuit Judge Christopher Droney and District Judge John Gleeson, who’s sitting on the circuit bench by designation. “Thus unanticipated technological developments have created tension between Congress’s view that retransmission of network programs by cable television systems should be deemed public performances and its intent that some transmission be classified as private,” the opinion said. But the legislative history of the Copyright Act and the statute’s language compel the court to hold that Aereo’s transmissions are not public performances, it said.Judge Denny Chin disagreed. In his dissent he called Aereo’s system of small antennas a sham. “The system is a Rube-Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law,” he wrote. Chin’s analysis was brilliant, said Ralph Oman, a law professor at George Washington University and former U.S. register of copyrights who filed a friend-of-the-court brief in support of the broadcasters. “It was obviously designed not for engineering efficiency but to conform with the Cablevision holding and avoid copyright liability,” he said of Aereo’s technology.It was not a surprise to see Chin dissent, said John Bergmayer, a staff attorney for Public Knowledge, who filed a friend-of-the-court brief on behalf of Aereo. “He was the one who wrote the district court Cablevision decision that was overturned by the Second Circuit,” he said. “We already know he disagrees."Plaintiffs in the case said they're considering their options and preparing to litigate the case on the merits in U.S. District Court, New York. “Today’s decision is a loss for the entire creative community,” said Fox, Univision, Tribune, PBS and WNET-TV New York. “We remain confident that we will ultimately prevail."The most likely next step for the litigation is seeking review by a larger panel of 2nd Circuit judges, Bergmayer said. If Aereo expands its service outside the footprint of the 2nd Circuit, that could prompt further litigation and potentially a circuit split that would entice the Supreme Court to get involved, he said. Other courts around the country would not be bound by the precedent set by the Cablevision ruling in the 2nd Circuit, Stifel Nicolaus analysts Chris King and Dave Kaut wrote in a note to investors. Congress may wait to weigh in until the issue has reached the Supreme Court, Oman told us. “When there’s a possibility the issue is going to be resolved by the Supreme Court, I think there would be a reluctance to jump in and legislate,” he said.Aereo CEO Chet Kanojia said the company was grateful for the court’s decision. “We look forward to continuing to build a successful business that puts consumers first,” he said. An Aereo spokesman declined to discuss a report in the Wall Street Journal that said the company has held talks with pay-TV distributors about potential partnership.