Update: Aereo recently filed for bankruptcy protection to protect the value of its assets as it tries to find buyers for its intellectual property. The technology involved is revolutionary but the litigation around the product deterred a number of prospective buyers. This case illustrates the importance of intellectual property in today’s market. A company that was set to disrupt the cable industry, flying high with more than 90 million in funding, completely collapsed when its business model was found to be infringing intellectual property.
On April 30th, before the Supreme Court decided if Aereo was guilty of copyright infringement, Michael Witham shared a blog about this story with our readers.
The Supreme Court delivered a major blow to Aereo today. The technology company that provides subscribers the ability to stream and record live television through the internet was found guilty of copyright infringement, putting Aereo’s future in jeopardy.
Inter Active Corp (IAC) had funded over $90 million to Aereo to launch what Barry Diller, CEO of IAC, at the time believed would disrupt the cable industry. He is disappointed but not for what you may think. In a statement to CNBC, he said the financial loss was not big but blocking access to the technology was a great loss to consumers. Barry Diller has given up on Aereo stating, “It’s over now,†but CEO of Aereo, Chet Kannojia, still has hope. He issued a statement, in which he indicated his displeasure with the Supreme Court’s verdict, claiming “we will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
The case was brought before the Supreme Court after cable industry behemoths–ABC, NBC Universal, CBS, and Twenty-First Century Fox–filed a copyright infringement suit in the lower court as Aereo did not pay any retransmission fees for their broadcasts. Although Aereo won in the lower courts, the Supreme Court did not look favorably on their business model. Retransmission nets cable companies billions of dollars so it’s no surprise the appellants were up in arms. But before you run to delete those World Cup games from your DVR, both recording and retransmission of a broadcast for personal use is completely legal. As long as you do not charge people to watch the game, you are in the clear. The issue is not recording the broadcast itself but publicly broadcasting or selling it. Kannojia argued that the subscription fee for Aereo was for the technology and not the content, but the Court did not agree. Aereo attempted to distinguish between a ‘public broadcast’ (for which permission is required), and a ‘private broadcast’ (for which permission is not). He likened his service to that of any other DVR service, the difference being the antenna in this case is small enough to fit on the tip of your finger and is in the cloud. So why is it being equated with a cable company liable to be charged retransmission fees rather than a DVR provider? Aereo can be used anywhere from a device with an internet connection. It is not limited to your home and as such drastically increases accessibility. I believe it’s this differentiation that scares cable companies.
Whether you see this as a good or bad law, at the end of the day Diller is right: this is a major loss for consumers. We at Traklight encourage intellectual property protection, but not at the cost of stifling development.
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