Supreme Court quizzes Aereo: Do TV streams break the law?
Aereo CEO Chet Kanojia outside the Supreme Court Tuesday. His company is engaged in a high-stakes legal fight over whether his company's streaming service violates copyright law.
In high-stakes arguments on Tuesday, the Supreme Court's justices challenged an attorney for Aereo to explain why the startup isn't violating copyright law by providing streams of local television stations to paying subscribers without a license.
The arguments summarized two years of legal tussling between Aereo and the country's biggest broadcasters.
Several of the justices repeatedly expressed concerns that a broad ruling against Aereo would imperil the nascent cloud computing industry and seemed, through their questions, to be searching for a way to avoid that. The justices also quizzed Aereo about why the system is set up the way it is, and some implied it was designed to skirt copyright law.
The formal issue before the court is 'whether a company 'publicly performs' a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.'
The Supreme Court's decision, expected sometime this summer, could have far-reaching implications for television and technology companies -- and ultimately on how people watch TV programs.
That's because Aereo brings up crucial questions about copyright law and threatens to disrupt lucrative business models. A ruling against Aereo will likely force the business to shut down and protect the broadcasters from similar challenges in the future.
Related: What the heck is Aereo, anyway?
On Tuesday, attorney Paul Clement, arguing on behalf of the broadcasters, said Aereo is 'not just a passive bystander,' as the startup claims to be, providing equipment rentals to consumers.
Malcolm Stewart, a deputy solicitor general at the Department of Justice, supported the broadcasters on behalf of the Obama administration.
The Justice Department and the United States Copyright Office took a public position against Aereo earlier this year and called it 'clearly infringing.'
Clement and Stewart were pressed about the definition of a 'public performance.'
David Frederick, the attorney for Aereo, repeatedly asserted that it does only a private performance. 'This is a reproduction rights case masquerading as a public performance case,' he said.
Aereo is an 'equipment provider,' not the pirate cable-like service that the broadcasters say it is, according to Frederick.
The questions and exchanges on Tuesday indicated that the justices may seek to issue a somewhat narrow ruling.
A number of media heavyweights were in attendance. Among them were Barry Diller, the IAC/InterActiveCorp. chairman whose investment helped Aereo launch two years ago, and James Murdoch, the co-chief operating officer of 21st Century Fox, one of the many companies suing Aereo.
Using thousands of miniature TV antennas, Aereo scoops up the freely available signals of local stations. Then it delivers the signals to smart phones, tablets or computers via the Internet. Subscribers pick what to watch through a traditional on-screen guide. They can also record shows and stream them later.
The owners of ABC, CBS, Fox, NBC, Univision and other broadcasters argue that Aereo qualifies as a 'public performance' of the TV shows they distribute, something that is prohibited under the Copyright Act. Time Warner, the parent company of CNN and this Web site, is not a plaintiff in the case, but it is supporting the broadcasters. 
First Published: April 22, 2014: 1:10 PM ET
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