Hearst-Owned TV Station in Boston Sues Aereo

Newsflash from your Hollywood Attorney:

The ABC affiliate is the latest broadcaster to demand an injunction. It's the first lawsuit against Barry Diller's digital TV service outside of New York.

Aereo is expanding its footprint and so is the litigation that challenges the upstart tech company's right to digitally deliver television.

The latest lawsuit came Tuesday in a Massachusetts federal court. Hearst Stations, owner of ABC affiliate WCVB-TV, is demanding an injunction that would stop Aereo, which launched in the Boston area in May, from using antennas to capture over-the-air programming for the delivery onto consumers' digital devices.
According to Hearst's lawsuit, "If Aereo is permitted to profit from the unauthorized retransmission of copyrighted television programming, WCVB will be deprived of existing and potential revenue streams from advertising and authorized retransmissions."

Aereo is already at war with the other networks over its technology.
The company, which was backed financially by Barry Diller and others, was able to fend off a preliminary injunction in round one in a New York federal court. Then, Aereo was able to gain an important appellate victory in April from the Second Circuit.
But what other courts around the nation will decide is still an open question. Especially since a California judge decided to stop one of Aereo's competitors earlier this year.
As Aereo moved into the Boston area, it brought a lawsuit against CBS that sought a declaration about the legal validity of its system. CBS reacted by accusing Aereo of jumping the gun, and it's still to be decided whether or how that lawsuit will proceed.

Whatever happens, it looks like Aereo will be tested in a Massachusetts court. In some ways, it is home turf for Aereo as the company is headquartered in Boston. Still, given a choice, Aereo would have preferred to adjudicate the legality of its Boston operations in a court that was beholden to the Second Circuit.
In asking for a judge's intervention, Hearst cites the Copyright Act's public performance rights. In the Aereo cases, the main subject of controversy has been whether Aereo's delivery of television to individual subscribers is "to the public."

Read the Full Compaint here... http://www.scribd.com/doc/152998617/aereoboston

The lawsuit also emphasizes Aereo's "Watch Now" feature. Aereo has fought back against the broadcasters' legal claims by pointing to a prior Cablevision ruling and arguing that its subscribers are watching playbacks of recorded material. Hearst attempts to direct the judge's attention to the live nature of Aereo's service.

"Aereo claims that its service enables its subscribers to watch WCVB’s programming 'live,' i.e., at the same time that it is broadcast by WCVB," says the lawsuit. "Indeed, this is a key aspect of Aereo’s service and has featured heavily in its advertising."

Read More.... http://www.hollywoodreporter.com/thr-esq/aereo-sued-by-hearst-owned-583164

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A Group of Broadcasters (Fox, ABC, CBS, NBC) filed a copyright infringement lawsuit in Washington DC against a similar outfit to Aereo that is also offering re-transmission services to consumers.

Fox Television is going to war with Barry Diller, the man who helped found the network. On Thursday, Fox, ABC, CBS, NBC, and several other television broadcasters filed two major copyright infringement lawsuits against Aereo, a service that's planning to launch in the New York area on March 14th to allow consumers the ability to watch broadcast television online through digital streaming.

Aereo announced it had raised $20.5 million in venture funding at a news conference last month.

In making the announcement of the forthcoming launch, Diller, who joined Aereo's board after his company IAC/InterActiveCorp provided major financial backing, told reporters that Aereo "pries over-the-air broadcast television out of [a] closed system.”

The broadcasters allege that the Aereo service infringes upon the copyright protection afforded to the content of broadcasters’ television programming.  In one lawsuit filed in New York federal court last week, the broadcasters say that the $12-a-month service will “provide unlimited streams of Plaintiffs’ television broadcasts over the Internet in direct competition with Plaintiffs.”  The broadcasters’ complaint also alleges “[c]opyright law does not permit Aereo to appropriate to itself the value of Plaintiffs’ television programming by retransmitting over the Internet without proper licenses” and “simply put, Aereo is an unauthorized Internet delivery service that is receiving, converting and retransmitting broadcast signals to its subscribers for a fee.” The broadcasters claim that statutory definitions and interpretations of a “public performance” render Aereo’s service impermissible as copyright infringement.  Currently, one group of broadcasters including Fox, Telemundo, and PBS, represented by Steven Fabrizio at Jenner & Block, is seeking a permanent injunction and statutory damages against Aereo. Another set of broadcasters including CBS, NBC, and ABC, represented by Bruce Keller at Debevoise & Plimpton, is after pretty much the same thing, though the cases are likely to be consolidated.

Broadcasters are not unfamiliar with battling companies that offer digital streaming services. In 2010, the same major broadcasters sued streaming television companies FilmOn and ivi, and were granted injunctions against both services.  Ivi’s strategy utilized Section 111 of the Copyright Act, which authorizes cable TV companies to make secondary transmissions of copyrighted works embodied in primary transmissions so long as a nominal statutory licensing fee is paid.  The Judge rejected this argument, holding “[n]o technology . . . has been allowed to take advantage of Section 111 to retransmit copyrighted programming to a national audience while not complying with the rules and regulations of the FCC and without consent of the copyright holder.”  Ivi has appealed this judgment, arguing that it only needed to pay a compulsory license fee.  The appeal will be heard at the 2nd Circuit later in March.  Broadcasters have well-founded reasons to fear the threat posed by startups like Aereo – Deloitte’s 6th edition of its report The State of the Media Democracy and other sources report a long term trend of increased “cord-cutting,” a term that refers to the choice by consumers to unsubscribe from cable services in favor of accessing programming content online.  Although current statistics are not dispositive, the proliferation of websites like Hulu has increased the usage of digital streaming services, especially for video content.

Aereo defends its service stating, “[c]onsumers are legally entitled to access broadcast television via an antenna and they are entitled to record television content for their personal use. Innovations in technology over time, from digital signals to Digital Video Recorders (“DVRs”), have made access to television easier and better for consumers. Aereo provides technology that enables consumers to use their cloud DVR and their remote antenna to record and watch the broadcast television signal to which they are entitled anywhere they are, whether on a phone, a tablet, a television or a laptop.”  The district court judge in the ivi case noted that when Congress enacted Section 111, it was doing so with an “understanding of the cable industry as a highly localized medium” and ivi’s service, in contrast, ”retransmits broadcast signals nationwide, rather than [to] specific local areas.” Alternatively, because Aereo is offering its initial service next month in New York, before expanding “a step at a time, a market at a time,” the company may avoid the pitfalls ivi encountered.  The Aereo lawsuit has the potential to provide substantive implications for the future of the Internet TV business and cord-cutting trend in the broadcast television industry.

Read More... http://www.ipbrief.net/2012/03/09/cord-cutting-culprit-fox-television-and-major-broadcasters-claim-aereo-broadcast-streaming-service-infringes-programming-copyrights/ 
and
http://www.hollywoodreporter.com/thr-esq/aereo-barry-diller-stream-tv-online-296426

Barry Diller said Monday that Aereo's recent legal victories make it clear that networks and studios suing to stop his IAC-owned service are fighting a losing battle.

The IAC topper says networks and studios' impending petitions for government intervention against the streaming service are also futile: “No incumbent ever wants to see its territory invaded."

“We think the lawsuit is over, but what we think is broadcasters are doing is saying this is a terrible threat and [they are trying to] get Congress to act," the IAC chairman and senior executive told a crowd at the Milken Institute's Global Conference in Los Angeles. "I don’t think it will happen, but its up for grabs.”

Diller said it was not his intent to disrupt the cable and broadcast industry. Aereo it just part of the changes in business models being brought about by technology advances.

“The reason it interested me was not that I wanted to go into the newly enabled business of technology with antennas,” said Diller  “We’re just starting on video.. It's just beginning and its going to absolutely change most things. It will break up the closed and bundled system of cable and satellite distribution because I think it has  gotten unwieldy.”

ANALYSIS: How Talent Loses if Aereo Wins

The resistance has not surprised him. “No incumbent ever wants to see its territory invaded,” said Diller. “That makes them angry if you invade the territory of a closed system.”

Diller is the primary backer of Aereo, which broadcasters and studios see as the latest technological challenge to owners of intellectual property. Aereo takes signals from over the air -- without paying royalties or retransmission consent fees -- and delivers them over the Internet in packages sold to viewers as an less expensive alternative to paying for cable TV. 

Aereo offers consumers a full lineup of broadcast stations. That includes the ability to fast-forward past commercials and record programs on digital recorders for later use.

On April 1, The Second Circuit Court of Appeals declined to issue an injunction against the streaming-TV service Aereo in a legal battle with broadcasters and film studios including Disney’s ABC network and Twentieth Century Fox. Hollywood says Aereo is the same as a cable-television network, so it falls under the 1976 Copyright Act which bans unlicensed communications with “the public,” “by means of any device or process.”

The three-judge panel ruled that by providing individual streams to consumers Aereo was similar to a consumer streaming a TV show from a Slingbox in one room to a TV set in another room. The judges said Aereo has one TV antenna and one recording device for each subscriber, so it is not the same as a cable TV system.

Aereo is already available in the New York City market and will launch in Boston on May 15. The company has said it will soon expand to about 20 other markets, including Chicago, Philadelphia and Washington, D.C.

When asked about the threat by broadcasters to move their prime programming to cable TV to protect it from Aereo, Diller said “there is literally no chance. I think they are doing it  so enough people will say that would be terrible. Let’s get Congress to change the law.”

Read More... http://www.hollywoodreporter.com/news/barry-diller-defends-aereo-says-448340