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Second Circuit Sides With Aereo

In a decision that could eventually have widespread
implications for the distribution of TV station signals in an online video
world, a three-judge panel of the Second Circuit Court of Appeals has struck a
blow for Aereo TV and against broadcasters' argument that the TV station
streaming service violates their copyright protection.

The court Monday upheld a District Court denial of an injunction filed by
broadcasters seeking to stop the company from streaming TV station signals to
subscribers without permission or payment. The District court has yet to rule
on the underlying broadcaster challenge, but the denial of the injunction means
Aereo can continue to stream the signals. It also means that if the
broadcasters were to lose in the district court, they would face an uphill
battle on appeal, at least on the copyright argument.

"We conclude that Aereo's transmissions of unique copies of broadcast
television programs created at its users' requests and transmitted while the
programs are still airing on broadcast television are not 'public performances'
of the Plaintiffs' copyrighted works under Cablevision. As such, Plaintiffs
have not demonstrated that they are likely to prevail on the merits on this
claim in their copyright infringement action."

"It is beyond dispute that the transmission of a
broadcast TV program received by an individual's rooftop antenna to the TV in
his living room is private, because only that individual can receive the
transmission from that antenna, ensuring that the potential audience of that
transmission is only one person," wrote Judge Christopher Droney in the
court opinion. "Plaintiffs have presented no reason why the result should
be any different when that rooftop antenna is rented from Aereo and its signals
transmitted over the internet: it remains the case that only one person can
receive that antenna's transmissions."

Aereo definitely agreed.

"Today's decision from the Second Circuit Court of
Appeals again validates that Aereo's technology falls squarely within the law
and that's a great thing for consumers who want more choice and flexibility in
how, when and where they can watch television," said Aereo CEO Chet
Kanojia in a statement.

The same circuit ruledback in August 2008 in that Cablevision case that cable operator
Cablevision Systems could provide digital-video-recorder functionality to its
customers by using massive servers at its head-ends to record programming
instead of giving them expensive set-top boxes with hard-disk recorders.
Broadcasters also challenged that decision, saying Cablevision was providing a
public performance that violated copyright protections, but the Supreme Court
upheld the Second Circuit.

The Barry Diller-backed Aereo provides mobile users access
to time-shiftable Web versions of broadcast signals in New York City for a
monthly subscription. In response, broadcasters sued Aereo citing copyright
violations because the company did not get their permission to retransmit the
signals or pay them for their content.

A judge in the Second District of New York denied a request
to shut down the service while it hears the case, a decision broadcasters
then challenged in the Second Circuit Federal Appeals Court.

"Today's decision is a loss for the entire creative
community," Fox said in a statement Monday. "The court has ruled that
it is ok to steal copyrighted material and retransmit it without
compensation.  While we are disappointed with this decision, we have and
are considering our options to protect our programming.  In the meantime,
we plan to move forward towards a trial on the merits of the case, and on
claims that were not impacted by this appeal.  We remain confident that we
will ultimately prevail."

"NAB is disappointed with the Second Circuit's 2-1
decision allowing Aereo to continue its illegal operations while broadcasters'
copyright actions are heard," said National Association of Broadcasters
spokesman Dennis Wharton in a statement. "We agree with Judge Chin's
vigorous dissent and, along with our members, will be evaluating the opinions
and options going forward."  That could include appealing to the full
court, or perhaps trying to get the Supreme Court to weigh in. "It is
clearly a deeply flawed opinion," added NAB spokesman Dennis Wharton.

If broadcasters went to the Supreme Court, they could point
to the decision in
the FilmOn case in Decembe
r, where a California District Judge rejected the
Second Circuit reasoning and upheld an injunction against that company's
Aereokiller TV station streaming service, concluding it was indeed a public
performance and that the New York court's rejection of an injunction was not
binding in the Ninth Circuit. One of the reasons the Supremes will take a case
is to resolve circuit splits.

NAB, in agreeing with the dissent in the case, was pointing
to the following passage from the dissent of Judge Denny Chin: "Aereo's
'technology platform' is, however, a sham. The system employs thousands of
individual dime-sized antennas, but there is no technologically sound reason to
use a multitude of tiny individual antennas rather than one central antenna;
indeed, 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."

"This case is still in its early stages and we are
confident that when the record is fully developed the rights of content owners
will be protected and the courts will conclude that Congress never intended to
allow services like Aereo to retransmit our programming for profit without our
authorization," said NBC and ABC in a joint statement.

Fair-use activist group Public Knowledge applauded the
majorities' decision.

"Only in the world of copyright maximalists do people
need to get special permission to watch over-the-air television with an
antenna," said John Bergmayer, senior staff attorney. "Just because the
Internet' is involved doesn't change this. It is likely that the broadcasters
will try to overturn this decision in the courts or Congress. But Public
Knowledge will continue to argue that any change to the telecommunications and
copyright laws that govern the video marketplace should be in a direction that
better serves the needs of viewers and not broadcasters or other

Broadcasters who had sought the injunction
included Fox, Disney, CBS, NBCU, WPIX and noncommercial WNET, both New York.
Aereo is currently streaming New York stations, with plans to expand to other