CEA: Aereo Decision Not Helpful to Innovation

Reaction continued to pour in following Supreme Court decision
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The Consumer Electronics Association was not happy with the decision, but found a silver lining in its support of fair use.

“We are disappointed that the Supreme Court today ruled against innovator Aereo," said CEA president Gary Shapiro, "but are pleased the Court said it favored future innovation and specifically referred to the Sony Betamax principles of fair use as a safety valve for new services and technologies. We especially appreciate Justice Scalia’s powerful dissent describing how innovation is often opposed by incumbents who make false, ‘the sky is falling’ predictions about the future."

Shapiro was concerned with the court's advice to those who wanted more clarity on the role of technological innovation.

“We have concerns that the Court, although welcoming innovation, also declared that ‘to the extent commercial actors…may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.’ We believe laws should be clear and favor innovation. Innovators should not have to get ambiguous laws changed to give consumers new products and services."

Some cable operators, who could have potentially replicated the play-without-pay, over-the-top model for carrying TV stations without paying escalating retrans fees, were not happy with the Supreme's decision.

“ACA is concerned because it appears that the Supreme Court’s Aereo ruling negatively affects the rights of small cable operators to utilize individual antenna-based delivery of broadcast services," said the American Cable Association. "Although the court attempts to preserve the ability of consumers to enjoy accessing a range of time-shifted programming in the convenient manner enabled by Aereo, the decision drew lines that are not clear as to what is acceptable and what is not and, as a result, will likely have a chilling effect on technology innovators. Although ACA is disappointed that bold, forward-thinking Aereo lost the direct infringement fight in this case, we are hopeful that the court has not slammed the door entirely on Aereo and other related pioneering technologies that enable online consumers to access freely available content.”

Analyst SNL Kagan saw it as a victory for investments in TV.

"Today's Aereo decision protects not only the tens of billions of dollars broadcast networks and TV station owners have invested in programming content," said research director Robin Flynn, "but also the transmission of that valuable sports and video content over the air for the foreseeable future.  It does not stifle multichannel operators' continued strategic imperative to deliver licensed video content to consumers over multiple devices at the time of consumers' choosing, with the goal of responding to how their subscribers prefer to watch video today. Innovation will no doubt continue in the video space."

The court went out of its way to say that its decision should not necessarily jeopardize other new technologies—like cloud storage.

Albert Lai, CTO of media at video cloud company Brightcove, agreed. "Aereo tried to raise a red herring that a negative ruling would affect cloud computing but SCOTUS seems fairly clear in keeping those issues separate from the ruling in regards to public vs. private performances."

While broadcasters were understandably celebrating a big victory, Brian Wieser, senior research anaylyst with Pivot Research Group, suggested it was too early to start breaking out the champagne.

"[T]he ruling should not be conveyed as suggesting that broadcasters are out of the woods yet with respect to technology," he said in a client advisory. "We expect that new technologies will continue to come to market, and from the vantage point of today’s broadcasters, they will still need to develop the capacity to iterate and adapt without relying on Courts to solve disputes. Otherwise, broadcasters will generally face new and somewhat similar risks in the future as new technologies emerge."

Roy Gutterman, director of Syracuse University’s Tully Center For Free Speech, who attended the Aereo oral arguments, sees two options for Aereo: closing up shop or dealing with the broadcasters.

“The only way I can see this not putting Aereo out of business would be them coming to the table and negotiating paying licensing fees to the networks,” said Gutterman. Areo declined to comment on its future plans.

But striking down Aereo’s current business plan is not a negative for future content innovators, he says. “The opinion really goes to lengths to say that [the ruling] should not be construed to be applied to technologies not before the court at this point. If and when [different] intellectual property rights involving cloud technology comes to the court, the court will look at it with new eyes and apply the law to that set of facts.”

Ariana Romero contributed to this report.

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