Judge denies networks’ injunction against Aereo

District Court judge Alison J. Nathan has denied (7/11) a request for a preliminary injunction by the major broadcasters that would have shut down Aereo, Barry Diller’s online distributor of broadcast signals. Aereo streams broadcast TV and offers DVR storage via the internet for $12 a month to iPhones, iPads, and TV sets. On 3/1, ABC, CBS, FOX and NBC filed a copyright infringement lawsuit and sought an injunction against Aereo.

This is the second round that broadcasters have lost. Judge Nathan also dismissed (5/21) part of a complaint filed by broadcasters against Aereo—unfair competition.

The language in this most recent ruling indicates that Aereo could ultimately prevail in the overall copyright lawsuit. While case is not over, the language was clearly more negative than anticipated, noted Wells Fargo Senior Analyst Marci Ryvicker.

FOX and CBS have already stated that they intend to appeal the Court’s decision: “While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal,” said Fox in a statement.

CBS issued this statement: “This is only a ruling on a preliminary injuction. This case is not over by a long shot. We intend to immediately appeal this decision to the Second Circuit and seek expedited consideration. We also intend to seek damages and a permanent injunction in this case before this court.”

“Today’s decision is a loss for the entire creative community,” Fox, PBS, WNET-TV NY, Univision and Tribune Broadcasting said in another statement. “The judge has denied our request for preliminary relief, ruling that it is OK to misappropriate copyrighted material and retransmit it without compensation. While we are disappointed, we will continue to fight to protect our copyrights and expect to prevail on appeal.”

So, the underlying claim of copyright infringement (of which the trial has yet to determine), has not been addressed yet. Aereo argued that its retransmission of broadcast signals does not trigger any copyright liability because it is merely providing a remote antenna reception service for its subscribers.

The decision relied heavily on the precedent set by the Cablevision remote-storage DVR ruling in 2008. The judge indicated that were it not that decision, she may have sided with the broadcasters. Then, the 2nd U.S. Court ruled that Cablevision’s remote-storage DVR did not violate copyright law as it encoded each request separately and the copy could only be viewed by the individual who made it, thus making it a “private” performance rather than a “public” performance as argued by networks.

In its case, Aereo argued that it too used individual equipment and its service could only be viewed by the requesting individual and was thus protected by the Cablevision case.

The judge had said: “Plaintiff’s have not shown a likelihood of success on the merits.” The networks failed to meet the criteria for the injunction — that they will suffer irreparable harm without an injunction.

In their claims, the networks had argued that Aereo was not protected by the merits of the Cablevision case primarily because Aereo provides a live broadcast service versus the Cablevision DVR, which provides a time shifting service.

In the filing, the judge found that this claim doesn’t apply because “when confronted with the reasoning of that case the Second Circuit’s analysis was directly focused on Cablevision’s copies, but did not say one word to suggest that time-shifting played any part in its holding.”

So, the networks’ attempt to distinguish their case from the Cablevision case by arguing that live viewing should be treated differently than time-shifting technology failed.

Diller spoke with Bloomberg TV’s Jon Erlichman 7/12 from Sun Valley about the partial legal victory for Aereo. Diller said that Aereo is on the “right side” of the copyright debate and that the company is going to “really start marketing” in the coming year:

On how much insight Diller had that he would get this favorable ruling:

“I really did think we were on the side of the angels. The ability for a consumer, an American, to receive broadcast over the air signals is their right. And we’re simply a technologically advantaged way of doing it in a modern way.”

“So I really did think we were on the right side of this. And we’re happy that the first test of the judge agreed with us.”

On whether Diller is getting feedback from industry peers in Sun Valley:

“Yes, one of my friends who runs a large broadcast company said you succeeded in dropping my stock by 2%. I said, I did not…I like disrupting things.”

Diller on how long the Aereo lawsuits could play out:

“We’re going to proceed. We don’t care. A year, six months, two years. We’re going to go. We’re going to move. We’re going to really start marketing.”

“I can’t tell you how many cities [Aereo could be in] by this year, but I could say that in a year-and-a-half, certain by ’13 at some point, we’ll be in most major, certainly every major, city.”

RBR-TVBR observation: The ruling gives Aereo more time to build its service nationwide. Had the preliminary injunction been issued, it could have marked the end of Aereo. The bigger issue, say many, has to do with retrans consent. The MSOs may soon look into the fact that that they too could provide individual antennas for their subscribers and skip retrans fees. It would require a investment and upgrading of set-top boxes, but over time it could be worth it—so a lot is riding on this case.