George Mason University Antonin Scalia Law School

Supreme Court Says Aereo has to Play by the Rules

Today in American Broadcasting Companies, Inc. v. Aereo, Inc. the Court held that Aereo’s television service, which re-transmits over-the-air TV signals to subscribers does indeed transmit performances to the public within the meaning of the Copyright Act.

Aereo tried to engineer its system around the law by using individual micro-antennas assigned to each subscriber. An appellate judge below described this system as a “Rube Goldberg-like contrivance.” Aereo’s system was a case of legal engineering rather than technical innovation, as it was hard to see any purpose for its design beyond exploiting perceived loopholes in the law.

The Court today chose to look to the clear result and commercial purpose of Aereo’s system, rather than the superficial appearances created by Aereo’s technical design. In doing so, it returns to Congress’s intent under the 1976 Copyright Act to define the rights of copyright owners in a technologically neutral way.

Contrary to critics, it is important to note that this decision does not make Aereo or its technology, illegal. Instead, it simply confirms that copyright owners and broadcasters continue to have the right to decide how their property is used and sold by commercial resellers. In other words. Aereo must play by the rules just like everybody else does — cable systems, Netflix, and broadcasters themselves. Among other things, they need to pay in the first place for what they are re-selling to consumers.

Despite what some are saying, this decision is a boon, not a threat, to innovation. Studios and TV networks are investing hundreds of millions of dollars into new business models and are licensing their creative works to dozens of new entrants. They can now continue to make these innovative investments with greater certainty that they wont be undermined by overly-technical interpretations of their rights.