WASHINGTON (CN) - Aereo, a service that lets subscribers watch broadcast television online, infringes on the copyrights owned by the networks, the Supreme Court ruled Wednesday.
Backed by IAC's Barry Diller, Aereo debuted in major cities in 2012, allowing subscribers to access TV broadcasts online via Aereo's warehouse of dime-sized antennae.
While Aereo likened its service to the permissible "rabbit ears" of old, major broadcast networks like ABC and Fox said it infringes their exclusive rights.
A divided three-judge panel of the 2nd Circuit created a circuit split last year in denying the networks an injunction, and digital rights groups like the Electronic Frontier Foundation urged the Supreme Court to affirm after it took up the case in January.
By a 6-3 vote, the justices reversed on Wednesday.
Relevant to their holding are amendments that Congress made to the Copyright Act in 1976 to ensure that the law governed community antennae television (CATV) systems, a precursor to modern cable.
"Aereo's activities are substantially similar to those of the CATV companies that Congress amended the act to reach," Justice Stephen Breyer wrote for the majority. "Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast. ... By means of its technology (antennas, transcoders, and servers), Aereo's system 'receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.' It 'carr[ies] ... whatever programs [it] receive[s],' and it offers 'all the programming' of each over-the-air station it carries." (Parentheses in original.)
Justice Clarence Thomas and Samuel Alito joined the dissent by Justice Antonin Scalia, which concludes that, while Aereo's service maybe "ought not to be allowed," the court should "not distort the Copyright Act to forbid it."
"It is not the role of this court to identify and plug loopholes," Scalia wrote. "It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude 'looks-like-cable-TV' solution the court invents today."
Disputing the majority's finding that Aereo "performs," and thus violates the Copyright Act, Scalia said Aereo is most similar to "a copy shop that provides its patrons with a library card.'
Unlike a video-on-demand service that provides "a prearranged assortment of movies and television shows," Aereo "assigns each subscriber an antenna that - like a library card - can be used to obtain whatever broadcasts are freely available," the dissent states.
"Some of those broadcasts are copyrighted; others are in the public domain," Scalia continued. "The key point is that subscribers call all the shots: Aereo's automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereo's operation of that system is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability."