The U.S. Supreme Court ruled in a 6-3 decision Wednesday that two-year old start-up company Aereo is in violation of copyright law. The decision is a victory for cable companies, which claimed that Aereo's transmission of over-the-air TV signals should be considered rebroadcasting and subject to the associated fees.
Aereo allows customers to rent tiny TV antennas which would record TV broadcasts for the user to stream later. The service is built on a workaround of the section of copyright law which prevents cable companies from rebroadcasting over-the-air transmissions without a license to use the content. Since it stores an individual antenna for each subscriber in a warehouse, Aero claimed that its service constitutes a "private performance" rather than a public one, which would make it legal. The recording of these broadcasts is also explicitly permitted thanks to a court decision originally created to address the recording of content onto VHS tapes.
The Supreme Court found that "behind-the-scenes technological differences do not distinguish Aereo's system from cable systems, which do perform publicly." The decision likely spells the end of Aereo, as it is unlikely the company can afford to pay the retransmission fees based on an income of $8 per subscriber per month. The three dissenting judges agreed that what Aereo is doing should not be allowed, but did not agree that is explicitly disallowed by current copyright law. Instead, they suggested that a new law should be created to close the loophole Aereo is exploiting.
The decision to use a more broad interpretation of the law could potentially affect cloud storage services such as Google Drive and Dropbox. By focusing on the end result, that is, the delivery of copyrighted content to multiple customers, rather than the details involved, cloud storage services could be implicated in the illegal actions of their users. The court promises that this kind of legal action will not be allowed, but not all are confident that promise will stand.
"The Court vows that its ruling will not affect cloud-storage providers and cable television systems, see ante, at 16-17, but it cannot deliver on that promise given the imprecision of its results-driven rule," says [pdf] dissenting Justice Antonin Scalia in the ruling.
"We've said all along that we worked diligently to create a technology that complies with the law," says Aereo CEO Chet Kanojia in a statement, "But today's decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry."