Supreme Court Justices Worry About Implications of Shutting Down Aereo

Concerns About Cloud Computing

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Aereo CEO Chet Kanojia leaves the Supreme Court following oral arguments on Tuesday
Aereo CEO Chet Kanojia leaves the Supreme Court following oral arguments on Tuesday Credit: Andrew Harrer/Bloomberg

It was difficult to tell which side the Supreme Court favored after oral arguments on Tuesday in TV broadcasters' appeal to shut down Aereo, but the justices were clearly apprehensive about the implications a decision could have on cloud computing.

Chief Justice John Roberts expressed concerns that Aereo's technology, which lets subscribers stream and record broadcast TV using dedicated individual antennas at the company's facilities, was designed simply to get around copyright laws. But there was no obvious real hostility to either side, said Andy Baum, a partner at Foley & Ladner who specializes in trademark law, copyright, advertising, intellectual property and technology.

"All I'm trying to get at, and I'm not saying it's outcome-determinative or necessarily bad, I'm just saying your technological model is based solely on circumventing legal prohibitions that you don't want to comply with, which is fine," Justice Roberts said.

Broadcasters are arguing the technology infringes on their copyright. Aereo, which is backed by Barry Diller's IAC/InterActiveCorp, contends that it does nothing different than people do with antennas and DVRs of their own, and therefore has no obligation to pay broadcasters for their programming. If Aereo is allowed to keep operating, it could upend big portions of the TV business.

But the justices seemed most concerned over the impact their ruling could have on cloud computing and future of technology.

The broadcasters' argument, if taken to the full extent, could define cloud storage services as a kind of public performance and make them liable for copyrighted material that consumers store there, Mr. Baum said. "The justices are sensitive to not writing an opinion that would have that effect," he said.

When Paul Clement, a lawyer for the broadcasters, suggested that the court didn't have to decide exactly how cloud storage services like CloudLocker would be affected, Justice Samuel Alito disagreed.

"Well, I don't find that very satisfying because I really ­­I need to know how far the rationale that you want us to accept will go," Mr. Alito said, "and I need to understand, I think, what effect it will have on these other technologies."

The line of questioning during arguments was generally inquisitive, with the justices trying to understand a difficult issue. "There was so much time spent on definitions -- the judges are trying to understand it themselves," said Brian Wieser, analyst, Pivotal Research.

Justice Sonia Sotomayor kicked off questioning by asking why Aereo isn't considered a cable system -- which would imply that it needs pay the same royalties and retransmission fees that cable systems do.

"It's clear there are fundamental concepts that need a definition," Mr. Wieser said, adding that in non-political cases such as this, the justices do not typically have individual ideologies. That, along with the line of questioning today, would support Mr. Diller's recent guess that the case could go either way.

The decision is expected to come at the end of June. If the justices allow Aereo to keep operating, some cable companies have said they will likely create similar antenna farms to pull in broadcast signals without having to pay the broadcasters. Broadcast executives have threatened to yank their signals off the air in that event, transforming themselves into cable channels. It's unclear what would happen to the hundreds of local TV affiliates around the country if that happened.

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