Court Emphasizes Industry in Aereo Case

**Update—IP Clinic client Consumer Federation of America issued the following statement regarding the decision:

This decision is bad for video consumers, who have lost an important low cost option for viewing the programming they want whenever, wherever and on the device they prefer. However, its full impact may be to unleash a flood of law suits that challenge much content distribution through the Internet cloud.

When a decision says we don’t know how we would rule in other cases, it is an open invitation to litigation. For copyright holders who have little else to cling to, it is red meat. Scalia’s dissent shows the crack through which the flood of lawsuits will flow. Breyer, writing for the majority, tries to reassure us using the transmit clause to plug the leak, but Scalia notes that the Court should never have created the crack in the first place. The failure to recognize the passive nature of Aereo’ service will invite all manner of mischief with copyright holders suing anyone who simply passes signals to consumers of any type of content. In short, a cloud of lawsuits now hangs over cloud computing. This is the first step in the digital age equivalent of the Sony Betmax decision and, unfortunately for consumers and the Internet economy, the Court got it wrong.

Original post:

Today the Supreme Court struck a blow against consumer choice in the closely-watched *ABC v. Aereo* case, finding that the start-up’s service infringes copyright by allowing users to record and stream free over-the-air broadcast television signals to themselves over the Internet. The 6-3 decision featured a majority opinion authored by Justice Breyer and joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Sotomayor, and Kagan. Justice Antonin Scalia wrote a dissenting opinion joined by Justices Thomas and Alito.

The majority opinion focuses on Aereo’s similarity to cable operators and attempts to distinguish cloud services such as Dropbox and Google Drive, a response to concerns raised by the IP Clinic and other amici who pointed out that an adverse holding could have dire consequences far beyond the television industry. It is unclear, however, just how far the majority opinion’s rationale will reach beyond this case.

A team of four student attorneys at the Glushko-Samuelson IP Clinic filed a friend of the court brief on behalf of consumer groups the Consumer Federation of America and Consumers Union, arguing that Aereo’s service, like the VCR before it, empowers consumers without harming copyright holders. The student team consisted of Natasha Dhillon, Justin Hemmings, Maggie Scales, and William Stanley, and was supervised by clinic faculty Victoria Phillips, Peter Jaszi, and Brandon Butler.

“There is still valuable learning for the students in this case,” said IP Clinic Practitioner-in-Residence Brandon Butler. “I know they are reading the opinion closely to see how the majority arrived at its position and what our brief might have done differently to persuade them.”

“Of course this isn’t the result we had hoped for, but we are extremely proud of our students’ work in this case,” said Victoria Phillips, director of the IP Clinic. “Without this brief, consumers might have been left out of the conversation entirely.”

“As our students eloquently explained in their amicus brief, the primary aim of the copyright system is protecting and enriching the public’s access to culture,” said Peter Jaszi, co-founder of the IP Clinic. “Unfortunately a majority of the court seems to have lost sight of that goal.”

While the majority opinion gave short shrift to the consumer interest, the dissent echoed some of the themes in the IP Clinic’s brief. Most importantly, Justice Scalia points out the importance of determining who is directly liable for alleged infringement. The IP Clinic’s brief emphasized the potential of cloud services to empower consumers with tools they control, with emphasis on the rights and responsibilities of users rather than service providers; the majority opinion instead emphasizes service providers as key actors and stakeholders.

Drafting a Supreme Court brief is an intense but rewarding experience for a young lawyer. The clinic student attorneys got a crash course in a number of the core challenges that all IP lawyers face, including: applying old law to new technology, interpreting complex and interrelated statutory provisions, and finding and protecting the law’s balance between public interest and private rights.

“To me, the Aereo case is a perfect example of how the rapidly changing landscape of technological innovation makes it so difficult to interpret and apply Congressional statutes covering copyright and patent law,” said Will Stanley ’14, one of the student attorneys who worked on the case.

“Writing an amicus brief was an incredibly challenging experience,” said Justin Hemmings ’14, another student attorney on the brief. “While it’s unfortunate that the Court failed to protect consumers and the public interest in this instance, the experience of writing on behalf of CFA and CU remains one of the most rewarding experiences I had in law school.”

About Aereo

Aereo’s service uses thousands of tiny antennas, assigning one to each user, to allow consumers to receive free over-the-air broadcasts using their computers, tablets, or smartphones. The system’s design results in performances that are initiated by consumers, not Aereo, and are private, not public, a carefully calibrated system that tracks what courts have said in the past about cloud technology and television.

About Consumer Federation of America and Consumers Union

The Consumer Federation of America (CFA) is a non-profit organization established in 1968 to support consumers’ interests through advocacy, research, and education. Currently the largest consumer advocacy organization in the United States, with nearly 300 non- profit member organizations and 50 million consumer members, CFA is a champion of consumer sovereignty, which includes the freedom to choose how to use lawfully acquired content. CFA is also the leading analyst of, and advocate for, digital disintermediation, a powerful process that leverages digital technologies to reduce costs for both producers and consumers.
CFA believes that these two phenomena are connected: digital disintermediation promotes flexibility and choice for consumers. Therefore, the flexibilities in copyright law that promote innovation and consumer sovereignty in the use of information are crucial protections. These flexibilities help free markets in information function properly by removing unnecessary constraints on consumer choice. Consumers Union (CU) is the policy and advocacy division of Consumer Reports. CU is an expert, independent, non-profit organization working for a fair, just, and safe marketplace for all consumers while working to empower consumers to protect themselves. Founded in 1936, as advertising was beginning to flood the mass media, CU has grown to more than one million online activists working to protect consumers at both the State and Federal levels. Like CFA, CU seeks to empower consumers through promoting increased competition, and through consumer education and pro-consumer action on communications and media issues involving telecommunications, cable, Internet, and wireless services and equipment, and other markets. Consequently, the shared missions of CFA and CU to protect consumers’ interests include advocacy to protect the consumer choice- enabling characteristics of copyright law.
For example, CFA has urged: (1) greater transparency in the negotiation of the Anti-Counterfeiting Trade Agreement, to protect fair use and avoid criminalization of non-commercial copyright infringement; (2) published articles to explain the importance of digital disintermediation for consumer sovereignty in the market for music; and (3) filed an amicus brief in support of the legality of the time- and place-shifting technologies of the Dish “Hopper” digital video recorder. In 2005, the two organizations joined in filing an amicus brief in this Court in defense of Grokster’s peer-to-peer file sharing software. CFA and CU have participated as amici in several of the Circuit Court proceedings regarding Aereo. CFA has also participated in the related cases involving the FilmOn X technology. Consumers have a deep interest in the courts recognizing the legitimacy of these consumer choice-enabling technologies and encouraging their pro-consumer effects on the dysfunctional market for television information and entertainment.

About Brandon Butler

Practitioner-in-Residence at the Glushko-Samuelson Intellectual Property Clinic.
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