Aereo, Inc. thought it had found a legal and clever way to deliver broadcast television programming to its subscribers inexpensively via the Internet.  Aereo “rented” equipment to its subscribers that captured and streamed broadcast programming at about the same time the programs broadcast over the air.

Aereo had designed its business model to take advantage of certain court decisions on copyright law involving Cloud-based services that permitted users to store and time-shift programming.  In a 6-3 opinion, however, American Broadcasting Cos. v. Aereo, Inc., the Supreme Court ruled that Aereo, Inc. infringed television broadcasters’ copyrights.

Under the Copyright Act of 1976, a copyright owner has the exclusive right to “perform the copyrighted work publicly.”  A person who publicly performs a copyrighted work may be found to have infringed upon the copyright.  As a result, the Court focused on the question of whether Aereo “performed” the copyrighted television programming “publicly” by streaming, or retransmitting it, to its subscribers at about the same time it was broadcast.

Aereo argued it only supplied equipment to its subscribers and did not “perform” the copyrighted television programs.  Aereo further asserted that its service was not “public” because the streams were transmitted to individual subscribers privately.  While noting that Aereo uses unique technical equipment for its services, the Court found that Aereo bears an “overwhelming likeness” to the cable companies specifically targeted by amendments to the Copyright Act in 1976.  The Court ultimately held that Aereo’s service is equivalent to a performance under the statute and that Aereo is not simply an equipment supplier.  The Court also held that Aereo performs publicly because “the subscribers to whom Aereo transmits television programs constitute ‘the public.’”

Yesterday’s decision exemplifies the courts’ ongoing struggle to adapt existing principles of intellectual property law to evolving technologies.  The decision has immediately raised concerns about the propriety of other Cloud-based services that permit consumers to store content of their choosing and watch at a later time – the updated version of the legally-approved practice of allowing an individual to record broadcast at home and watch it later.  Certainly, evolving technology will continue to present difficult line-drawing questions for the courts.