Aereo - Legal Controversy

Legal Controversy

On March 1, 2012, Aereo was sued by a consortium of network broadcasters who argued that Aereo infringed their copyrighted material because Aereo's streams constituted public performances. They sought a preliminary injunction against the company. On July 11, Federal Judge Alison Nathan denied this injunction, citing as precedent the 2008 Cablevision case, which established the legality of cloud-based streaming and DVR services. In response to the decision, Aereo Founder and CEO Chet Kanojia said “Today’s decision shows that when you are on the right side of the law, you can stand up, fight the Goliath and win.” In a subsequent interview with CNET, Kanojia asserted, “With one step, we changed the entire TV industry. The television industry and its evolution are now starting towards the Internet and that was stopped until Aereo came along...And I think as consumers start migrating to the Internet, new programming and new content are going to come in.” The plaintiffs appealed the decision to the U.S. Court of Appeals for the Second Circuit. Several other players in the industry, such as cable provider Cablevision, the Electronic Frontier Foundation, and the Consumer Electronics Association filed amicus briefs.

Broadcasters argue that Aereo is a threat both to their business model, specifically the re-transmission fees that cable companies pay broadcasters for their content, and to their audience. Because the fees cable companies pay for broadcast content can comprise up to 10% of a broadcaster's revenue, broadcasters object to Aereo's re-distribution of this content without paying any fees. Broadcasters have also identified Aereo as part of the cord-cutting trend among TV audiences, and diminishing or aging audiences pose a threat to broadcasters' advertising revenue.

On April 1, 2013, the federal appeals court upheld the lower court's ruling, finding that Aereo’s streams to subscribers were not "public performances", and thus did not constitute copyright infringement. The appeals court also affirmed the earlier district court decision that denied the broadcasters a preliminary injunction against Aereo.