American Broadcasting Companies v. Aereo: The Supreme Court meets the cloud
UPDATE: On Wednesday, the Supreme Court ruled against Aereo in the case brought by American Broadcasting Companies.
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The first big legal test of who owns and has the rights to things stored in the cloud is now in the hands of the U.S. Supreme Court, with a decision expected by the end of June. At issue is the validity under copyright law of services provided by an online video startup named Aereo, with some observers claiming that a decision against the fledgling company could pose an unintended, existential threat to many cloud services generally.
Aereo maintains banks of thousands of tiny, dime-sized antennas, each of which captures over-the-air network television signals and is individually assigned to an Aereo subscriber. Aereo makes individual copies of the signals for each of its subscribers, stores them in the cloud, and then sends them back to the subscriber over the Web. A subscription to Aereo costs roughly $8 to $12 per month, and the service is currently available in about a dozen cities. Combined with services like Hulu and Netflix, an Aereo subscription allows users to go without satellite, cable, or other traditional television services. Aereo subscribers can stream over-the-air broadcasts to a variety of electronic devices, like smartphones and tablets, and can use functionalities, such as recording programs to watch them later.
Shortly after it went to market two years ago, Aereo was sued by American Broadcasting Companies (ABC), which along with the other networks was concerned about the billions of dollars of revenue they receive from cable and satellite companies for the right to retransmit network and local programs. ABC contends that because Aereo pays no retransmission fees to the networks, it is effectively stealing their content and violating copyright laws by providing unlicensed “public performances.” By contrast, Aereo contends that it is doing little more than renting an individual antenna to a subscriber, and that any individual could achieve the same result by going to a local electronics store and buying an antenna and DVR machine.
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The U.S. Supreme Court heard oral argument on the case in April. At oral argument, Aereo’s counsel told the court that “the cloud computing industry is freaked out about” a possible decision against Aereo. The industry’s concern is that established, popular cloud services like Dropbox, iCloud, Gmail, and media storage lockers give users online access to copyrighted documents, pictures, music, and other content stored in the cloud, which arguably is the same thing that Aereo does.
In short, the issue before the U.S. Supreme Court is whether Aereo’s cloud-based storage and personal streaming service for network TV programs is the equivalent of stealing broadcasters’ content because Aereo does not pay licensing fees like cable companies do.
Until now, there have been few decisions addressing cloud computing issues, and certainly none from the nation’s highest court. The Aereo decision will likely change that, and people who use or are interested in using the cloud should get ready for the decision and its possible ramifications.
Donald A. Daugherty is an attorney in the Milwaukee office of Whyte Hirschboeck Dudek S.C., where he leads the firm’s Business & Commercial Litigation Team. He can be contacted at 414-978-5443 or ddaugherty@whdlaw.com.
