VertaMedia - leaderboard - 4-3-17
  • Aereo Asks for Supreme Court Review, Saying Cloud Computing Is At Risk

    Yesterday Aereo announced that it will not oppose the petition by the major broadcast TV networks (formally a "petition for a writ of certiorari") for a U.S. Supreme Court review of a ruling last May in Aereo’s favor. In that instance, the broadcasters were thrown for a pretty significant loss by Aereo when the U.S. Circuit Court of Appeals for the Second Circuit ruled preliminarily that Aereo’s business should not be halted due to alleged violations of the copyrights of broadcasters.  

    Normally it is big news when two sides so diametrically opposed like Aereo and the broadcasters seek (or at least willingly accept) review from the Supremes. But in this case there may be less than meets the eye (at least from a litigation perspective - see below).

    We may just have an interesting confluence of litigation strategy at work. The broadcasters’ motivation here is obvious and consistent - stop Aereo as quickly and as comprehensively as possible.  But more subtly, Aereo may also be calculating that it would be better off hearing from the Supremes now, and in this specific case. As well, it is now positioning the battle in far broader terms (see below).  

    Although the company has staved off its biggest threat so far in the 2d Circuit, Aereo could be calculating that it would rather have the Supremes hear this case than let things continue to play out ad hoc in other cases across the country. As I noted back in October, in much of that litigation Aereo isn’t even a litigant - the battle against the broadcasters is being fought by Aereo’s nemesis, FilmOnX (aka “Aereo Killer”). And FilmOnX is not winning - despite operating on a similar business model to Aereo, it is now the subject of an injunction in the D.C. Circuit that may keep them from operating. The Supremes reviewing the 2d Circuit case keeps FilmOnX out of the equation as a direct party.

    But just because both sides are seeking immediate review from the Supremes doesn’t in any way guarantee that they get it. In fact, the Supreme Court grants only a tiny portion of cert petitions. And while this case has a huge focus for the media world, it doesn’t fit into any obvious agenda being pushed by a significant faction of the Court (as compared to, say, a case that might help further equate “corporations” with “people”, for those of you familiar with the Citizens United case and its progeny).  

    Beyond the actual announcement of not opposing Supreme Court review, there is one particular aspect of Aereo’s statement from CEO Chet Kanojia that is quite illuminating.  Aereo is framing the battle here as not simply about preserving its over-the-top video service and creating more competition and choice for television viewers, but rather as a battle is to preserve the 5-year old Second Circuit decision that upheld the validity of the network DVR (Cartoon Network v. CSC Holdings).

    Aereo calls that decision a “crucial underpinning to the cloud computing and cloud storage industry.” This is an interesting play from Aereo since the broadcasters in fact explicitly note in their petition that they are not trying to overturn that case.  Aereo seems to be hinting at a broader political as well as legal strategy - to tie its future to that of the far more powerful and economically vital cloud computing industry - from Amazon on down. So if Aereo loses at the Supremes, we could see an all-out battle between Silicon Valley (not to mention Seattle) and the broadcasters. A new white paper from Cablevision underscores the stakes for the cloud industry (but while still accusing Aereo of being a copyright infringer). Predictably, the tech media is already picking up this angle.

    How the Supremes will come out on all of this is anyone's best guess. I’ve seen far too many noted Supreme Court “watchers” lose bets trying to game plan what the nine cloistered justices may decide.  And, as I've said in the past though, we should all be cautious about anything that looks like a potentially speedy resolution to the Aereo-broadcaster battles. To paraphrase the late Paul Harvey, we’ll just have to stick around for “the REST of the story.”

    Howard Homonoff is Principal/Managing Director of Homonoff Media Group LLC, a management consulting firm focused on traditional and digital media content distribution, social media analytics and regulatory strategy. He is a frequent industry speaker and Executive Producer/Host of Media Reporter, carried on cable systems throughout New York City. He can be found at www.homonoffmedia.com.

     
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