Aereo Decision Seen Harming Future Video Tech Innovators

The Supreme Court’s decision on Aereo (CED June 26 p1) may have a bigger effect on new technology than majority opinion author Justice Stephen Breyer intended, especially for tech related to TV, said representatives from several trade associations in interviews.

By saying companies with an end-product that resembles cable TV should be treated similarly to cable TV by copyright law, the court’s opinion is likely to chill investment interest in tech that appears to deliver a similar product to cable, said American Cable Association President Matt Polka. ACA filed a brief in the case in support of Aereo. “This is not a good thing for consumers,” Polka said: The decision “really calls into question the ability of companies to innovate.” Aereo said over the weekend it’s shutting its service. (See separate report in this issue.)

Last week’s ruling will be especially hard on smaller innovators who don’t have the bankroll to fight court challenges based on the high court decision, said Polka. Smaller companies like Polka’s members are likely to be interested in products that have to do with delivering video, which puts them right in an area that several copyright attorneys told us the majority opinion will have most effect. Smaller companies are also disproportionately dependent on outside investment, and if the markets perceive their products as at risk of being ruled illegal, it’s that much harder to find funding, Polka said.

"It’s difficult for investors to ascertain what does and doesn’t have exposure,” said Computer & Communications Industry Association Vice President-Law and Policy Matthew Schruers. Court decisions against file-sharing services Grokster and Napster led venture capitalists to avoid investing in anything even superficially similar for many years, and something similar could happen in the video realm, he said. “These kind of decisions cast a long shadow.” Aereo has been cited in Fox’s challenge of Dish Network’s new advertising blocking technology, and is likely to come up in any case involving video technology, Schruers said.

"One of our main concerns about the Aereo decision is the ambiguity it creates for other services,” said CEA Senior Vice President-Government Affairs Michael Petricone. Aereo is a member of CEA, which had come to its defense during the court proceeding. The Supreme Court had tried to make the decision narrow, but ultimately many troubling questions are raised, provoking CEA’s concerns, Petricone said. CEA is focused on “protecting and defending innovators,” Petricone said, saying most innovation is not permission-based, and the ruling is ultimately bad for innovators.

Not everyone agrees that Aereo will affect innovation outside the video realm. The emphasis the decision has on who is doing the infringing is good for tech innovators, said copyright attorney Jonathan Band, who filed a neutral brief in the case advocating on behalf of the Center for Democracy & Technology for a decision that doesn’t affect the cloud. “In the vast majority of cases, the user is selecting the content,” Band said. That means if the content is infringing on copyright, it can be argued the user is the infringer, he said. That still leaves companies open to secondary infringement cases, but not in the same vulnerable position as Aereo, he said.