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Aereo, a New York based start-up company, provides consumers the ability to watch television programs as they are being broadcasted on Internet connected devices. Since Aereos formation, broadcasters such as ABC, CBS, Walt Disney, and 21st Century Fox have argued that Aereo is violating the Copyright Act by illegally streaming their material without a license.
Aereo uses thousands of small antennas that receive over-the-air broadcasts and transmit the data to consumer-specific copies of the program. The consumer can then watch the program on a computer, tablet, or smart phone for a monthly subscription fee. Aereo’s system is designed to take individual requests for specific programs, and allocate specific antennas to that request, thereby streaming consumers their own “personal” copy. Aereo argued that this system merely provides consumers the equipment to watch their programs on a different medium.
Unfortunately for Aereo, the Court held that their business model was illegal under the Copyright Act. In its decision, the Court asked two questions. Did Aereo “perform” as defined by the Copyright Act? And if so, did Aereo perform “publicly”? Writing for the majority, Justice Breyer stated that the legislative history of the Act makes it clear that Aereo is more than an equipment provider. Rather, Aereo “performs” as defined by the Act and bears an “overwhelming likeness” to cable companies who pay fees to retransmit programs. Next, the Court found Aereo’s argument that it transmits personal “private” copies to individuals as unpersuasive.
Ultimately, the decision does not prohibit companies from broadcasting content and sending it to consumers over the Internet but rather requires companies like Aereo to pay broadcasters who hold the copyrights to the content. But for Aereos, the holding is devastating. The business model depended upon not having to pay retransmission fees and the decision likely means the company will cease operations. In response to the decision, the founder released a letter noting that operations will be paused and customers will be refunded for this past month of service.
So what does this mean for other services using cloud technology? According to Justice Breyer the decision is limited and not intended to address many of the questions involving cloud computing and remote storage. Some say the decision merely upholds the status quo and is narrow in scope. However, although limited in intention, the decision favored copyright protection and one question is how this will impact the development of innovative technology.
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