Aereo Explained -- Why The Court Rejected the Broadcasters' Efforts to Shut It Down

Yesterday, a U.S. Court of Appeals rejected major broadcasters' efforts to shut down Aereo, Barry Diller's controversial upstart that uses mini-antennas in individual homes to capture local broadcast TV and enable its customers to stream those signals over the Internet for a monthly fee (but with no separate licensing payment to those broadcasters).

As I wrote yesterday, the Court's refusal to enjoin Aereo marks a significant win for the company, although its legal battle with major broadcasters is far from over.  An attempt to prevail on a preliminary injunction is just one phase of litigation -- and you can bet this litigation will continue.  However, and importantly, in rejecting the preliminary injunction (the full opinion of which is here), both the U.S. Court of Appeals and the lower federal court (i.e., the original court in which the case was brought) concluded that the broadcasters were "unlikely to prevail on the merits."  So, this does not bode well for the broadcaster plaintiffs as they continue onward.

How did both U.S. federal courts reach this decision (since news stories about it rarely explain why, they simply lay out the factual outcome)?

Interestingly, they relied upon a prior ruling (precedent) that involved -- and benefited -- at least one of the parties (major cable company, Cablevision) that sought to shut it (Aereo) down.  To terminate it.  Ironic, huh?

The earlier case -- Cartoon Network LP, LLLP v. CSC Holdings, Inc. (i.e., the earlier "Cablevision" case) -- centered around Cablevision's hopes to offer its customers DVR (recording) services directly via their cable set-top box, something that is commonplace today.  In that ruling, the same Court of Appeals similarly rejected claims of copyright infringement by major broadcasters and other media companies.  More specifically, the Court found that Cablevision's remote DVR set-top box did not infringe either the copyright owners' reproduction rights or public performance rights.

In this Aereo case, the same Court of Appeals relied primarily upon this earlier Cablevision ruling and found that Aereo's service was factually analogous to Cablevision's stand-alone DVR service.

One of the most interesting aspects of this case is the fact that Cablevision -- the winner in that earlier case which upheld the legitimacy of its DVR service -- joined the broadcasters and copyright owners in this case seeking to stop Aereo from selling its services.  Cablevision filed what is known as an "amicus curiae" brief (which literally means "friend of the court").

The end result is that Aereo now has a major spring in its step as it expands it services beyond New York City and across the U.S.  And, other digital media upstarts now have more precedent in their favor as they seek to disrupt the status quo and long-established business models via new technology.