The Supreme Court has announced that it will take up the copyright infringement case brought against Internet startup Aereo by TV broadcasters this term.

Credit - Mark Fischer
Credit – Mark Fischer
The suit filed by broadcasters, including the Walt Disney Company, Comcast, CBS, PBS and Univision, against the nearly two-year-old company that allows subscribers to watch digital TV over the Internet for $8 a month could have major implications on copyright law and the entertainment industry. Aereo has escaped paying broadcasters to resell their shows by exploiting a loophole in the copyright law with “the simple device of installing tens of thousands of dime-sized antennas, each of which stream the over-the-air programming to Aereo’s subscribers individually, thereby qualifying, according to Aereo, as a private performance,” writes Patrick Maines of The Media Institute.

For broadcasters, closing this loophole will not only force Aereo to pay for their content, but also deter cable channels from turning towards Aereo for local stations to avoid licensing fees.

Any ruling would also tackle the growth of similar companies, according to David Kravets at Wired.

The outcome would likely answer the question, at least momentarily, of whether online television would be controlled by a stodgy industry that once shunned the VCR, or whether third-party innovators embracing technological advances have a chance to build on the openness of public airwaves. … Broadcasters claim unless the court block the latest television-viewing technology, their business model will go bankrupt.

So far, there have been victories for both sides in the lower courts. Federal District Courts in New York stated that Aereo’s business model does not violate current copyright, explains Charles Coble of Brooks Pierce for The Newsroom Law Blog. The same could not be said for Aereo imitators, like FilmOn X. A U.S. District judge in California struck down the services while Judge Rosemary Collyer in Washington D.C. ruled the same but extends the reach, writes Harry Cole for CommLaw Blog.

The injunction would be effective not just in D.C., but rather NATIONWIDE, with the limited exception of states within the Second Circuit’s jurisdiction – i.e., New York, Vermont and Connecticut. That limited carve-out was a matter of “comity” in recognition of the fact that the Second Circuit has thus far declined to enjoin Aereo from operation there. But since there is no precedent in any other circuit contrary to Collyer’s decision, she figured that the Copyright Act “commands a nationwide injunction”, so she could and should enjoin FilmOn X everywhere but the Second Circuit.

Even though the hearing is months away, speculation has already begun on what the ruling may be. Cole, in a post written this afternoon, brings forth an interesting fact:

 Justice Alito recused himself from consideration of the cert petition. As is customary, no reason for his recusal was given, nor did the Court’s order disclose whether he would be recused from the merits end of the case – although recusal there would seem more than likely. If he’s out, that would reduce the number of justices hearing the case to eight, giving rise to the possibility of a 4-4 split. In that case the decision of the lower court – i.e., the Second Circuit’s order upholding the denial of a preliminary injunction against Aereo – would remain in place.

However, if Aereo wins, Jeff John Roberts at Gigaom sees that Congress and the FCC may be called upon to pressure Aereo to pay up regardless. James Stenger of Chadboune & Parke noted in TMT Perspectives that Congress overturned a previous Supreme Court ruling to amend the copyright law, and he believes that Aereo’s legal luck has run out.

“This doesn’t mean that Aereo and similar services can’t exist,” writes Stenger. “They just need to negotiate and pay appropriate fees to broadcasters who, in turn, will be able to compensate copyright owners and other creative talent.”