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Aereo, Broadcasters Battle On In Court - Broadcasting & Cable

Aereo, Broadcasters Battle On In Court

Broadcasters say bankruptcy sale should be stayed or modified in light of ongoing copyright litigation
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Aereo and broadcasters continued their legal wrangling this week over the fate of the service.

There are actually at least two legal venues, a bankruptcy court where Aereo is trying sell its assets or restructure its business, and a district court where broadcasters are suing Aereo for copyright infringement.

There was a flurry of filings as broadcasters, led by Fox, told the court Aereo should not be able to wipe some servers because they could hold evidence in the infringement suit and want the bankruptcy sale stayed until copyright issues are settled.

Broadcasters told the bankruptcy court that it should hold off on setting a schedule for the asset sale or at least modify it to protect broadcasters' interests given that the copyright litigation and bankruptcy cases are "substantially intertwined."

The district court presiding over the copyright case enjoined Aereo from retransmitting broadcasters programming while it decided whether it should make that permanent and extend it to delayed transmissions in addition to live streaming.

Aereo has signaled it might consider restructuring in addition to an asset sale. If Aereo tries to restructure, said the broadcasters in a court filing this week, "the delayed retransmission issue must be addressed to ensure that Aereo’s post-confirmation operations do not violate the law and to demonstrate that its plan is feasible."

If it sells the assets to someone else, it should not be able to evade the issue of whether time-delayed retransmissions are lawful in order to attract a buyer willing to gamble on whether the court finds the conduct infringing.

"For these reasons, substantial copyright issues still need to be resolved before any court can decide whether Aereo should be allowed to sell assets that have only one apparent use – to infringe the Broadcasters’ copyrighted works," the broadcasters said.

Aereo countered that the motion to delay the sale was part of "broadcasters’ strategy to bleed the Debtor of its remaining assets by continuing prepetition litigation and/or to seek advisory opinions from the District Court related to how some hypothetical but yet unknown purchaser of the Debtor’s assets may someday engage in some hypothetical unlawful conduct."

The Broadcasters on Thursday (Dec. 18) asked the court to deny Aereo "the right to destroy data and dispose of computer servers that contain evidence relevant to pending lawsuits," as part of its asset sale.

An attorney for unsecured creditors argued that a lengthy copyright suit would result in defense costs that would diminish what they could collect from Aereo.

Aereo also weighed in Thursday saying it would give "immediate and complete access to all of its data contained on Production Servers to the Broadcasters on reasonable terms."

A hearing on a host of issues related to Aereo's Chapter 11 filing is scheduled for Friday morning (Dec. 19) in The U.S. Bankruptcy Court for the Southern District of New York.

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