Aereo Outcome Seen Too Close to Call After Oral Argument At Supreme Court

Aereo v. ABC remains too close to call after oral argument at the U.S. Supreme Court Tuesday (CED April 21 p1), said several communications attorneys who attended the hearing and gave follow-up interviews. They said a decision, which may be 5-4, seems likely to hinge on what’s safest for the cloud computing industry.

In oral argument, Justices Samuel Alito, Stephen Breyer and Sonia Sotomayor seemed mainly concerned about how a broad decision against Aereo would affect other industries. “I don’t understand what the decision for you or against you, when I write it, is going to do to all kinds of other technologies,” Breyer told Aereo’s attorney David Frederick, of Kellogg Huber.

Since both sides’ arguments seemed to spur an equal number of prodding questions from the justices, the case is difficult to handicap based on what happened Tuesday, several attorneys told us. While that leaves things murky for broadcasters and streaming-video service Aereo, the court’s focus on what Breyer called not “catching things we shouldn’t” makes it unlikely the court’s eventual decision will have lasting consequences for cloud computing, said technology attorney Jonathan Band, who filed a brief in the case supporting neither side on behalf of the Center for Democracy and Technology and the Computer and Communications Industry Association. Judging by the oral argument, the court’s decision is likely to be “as narrow as possible” to avoid unintended consequences for cloud computing, Band said.

Questions about Aereo’s technology from Chief Justice John Roberts and Justice Antonin Scalia may indicate they're leaning to the broadcasters’ camp, said public interest attorney Andrew Schwartzman of Georgetown Law’s Institute for Public Representation. Roberts pressed Frederick on whether the technology had been specifically engineered to exploit a loophole in copyright law, as many broadcasters have argued. “I'm just saying your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with, which is fine,” Roberts said. Schwartzman, Fletcher Heald copyright attorney Kevin Goldberg and Band also cited Justice Ruth Bader Ginsburg as seeming to side with broadcasters. Ginsburg was the only justice to ask about the negative implications for international contracts if Aereo is allowed to survive -- the subject of a white paper written by her daughter and cited in the broadcasters’ brief, Goldberg said.

Sotomayor seemed focused on determining how Aereo differed from multichannel video programming distributors. She posed the first question at oral argument by asking how Aereo is different, for example, from a cable company, and Justice Elena Kagan pointed out that for the home viewer, watching Aereo is functionally the same as watching an MVPD. Kagan also seemed skeptical of some broadcaster arguments, asking why “moving the hardware” -- broadcast antennas -- from a private home to Aereo’s warehouse turns viewing TV into a public performance.

Aereo isn’t an MVPD, it’s an equipment rental service, argued Frederick. If Aereo went to homes and installed antennas and DVRs, it would be in the same position regarding the Copyright Act, he said. While MVPDs provide content to viewers, Aereo is merely “providing the equipment to access it,” Frederick said.

Breyer asked repeated questions about how language in an eventual opinion would be worded to avoid unintended consequences. Combined with his history of being knowledgeable about technical issues, that may indicate that he will eventually write the court’s majority opinion, Goldberg said. Though he also pronounced the case too close to call, Goldberg said a 5-4 decision is unlikely, and that Breyer will likely helm a largely unified opinion.

Other attorneys said they believe the case would end in a 5-4 split. The decision is “a coin flip,” Schwartzman said. From “the questions asked today, the court seems torn what to do,” said Dorsey & Whitney copyright attorney Bruce Ewing in an email.

The head of Aereo-competitor FilmOn disagreed with the perception of the case as being close. “The networks did an abysmal job,” said FilmOn CEO Alki David in an interview, though he conceded that the justices “have a lot of confusion.” Though his company is currently under a nearly nationwide injunction not to stream copyrighted material and is involved in several court cases on that are on hold pending a court decision on Aereo, David said it doesn’t matter to his company which way the justices go. “We win either way,” he said.

Broadcasters’ attorney Paul Clement and Deputy Solicitor General Malcolm Stewart responded to Breyer’s concern about cloud computing by suggesting the court simply decide not to rule on the validity of the 2nd U.S. Circuit Court of Appeals Cablevision decision. Aereo has argued that decision lies at the heart of its case and is the underpinning for the cloud computing industry. “Don’t decide cloud computing today,” said Clement. Frederick seemed to be playing on the court’s concerns, by repeatedly mentioning the threat to the cloud industry after Breyer raised the issue, said Goldberg and Fletcher Heald colleague Harry Cole.

Though Breyer said he can’t see how the court could separate Aereo and cloud computing, it wouldn’t be hard for the court to do so, Band said. If the court rules that the decision doesn’t apply to cloud computing, it doesn’t necessarily have to be logical, he said. “That’s the beauty of the Supreme Court.” The court’s concern for the cloud could also lead to a victory for Aereo, said Band. Though the court was concerned about unintended consequences of a decision, no justice asked about the adverse effects of a decision on the broadcast industry, Band pointed out.

Justices never mentioned that multiple court cases involving Aereo remain open throughout the country, or that the ostensible issue in Tuesday’s case was a 2nd Circuit preliminary injunction in a case that has yet to be decided on the merits. “They're looking to rule,” on the broad issues of the case rather than remanding the issue to lower courts, as some had predicted, said Goldberg.

If the high court rules against Aereo, it’s unlikely to mean much change for the industry, several attorneys said. Aereo recently unveiled an advocacy website, and attorneys said the company could try lobbying for a legislative solution if it loses in court. If broadcasters lose, that’s likely to be one of their strategies, said Pillsbury Winthrop broadcast attorney Scott Flick. Since so many court battles remain unresolved, broadcasters may still be able to find a solution to a positive Aereo decision -- litigation, but lobbying may be faster, Flick said. If broadcasters are unable to quash Aereo, it still may not mean too much upheaval for broadcasters, Band said. “People are already used to finding their content in a variety of ways.” Flick said it was possible that broadcasters would move to their own Aereo type business model -- the company has likely already increased broadcaster focus on online content, he said.