The U.S. Supreme Court stepped gingerly into the brave new world of cloud computing and online streaming Tuesday morning when the justices heard oral argument in American Broadcasting Companies, Inc. v. Aereo, a case testing the reach of copyright law in today's hi-tech world.
At issue is whether Aereo, a New York-based company whose tagline reads, "Watch Live TV Online," is in violation of federal copyright law because it does not pay royalties for the TV broadcasts its service allows paying customers to watch on their smart-phones, tablets, and computers.
"Aereo is an equipment provider," the company's lawyer, David C. Frederick, told the Court. That equipment includes some 10,000 dime-sized antennas in the company's Brooklyn facility. Those antennas, Aereo says, operate just like the old-fashioned antennas that were once commonly affixed to TV sets. They catch over-the-air broadcasts and allow people to watch those broadcasts on their TVs. According to federal law, the old-fashioned scenario raises no copyright concerns. Aereo maintains that its hi-tech service should be seen as the modern equivalent. "All Aereo is doing is providing antennas and DVRs that enable consumers to do" what the law already allows them to do, Frederick repeatedly stressed during questioning.
But several members of the Court voiced significant doubts about the probity of Aereo's approach. "If every other transmitter does pay a royalty," observed Justice Ruth Bader Ginsburg, "you are the only player so far that doesn't pay any royalties at any stage."
Justice Stephen Breyer amplified that concern. "It looks as if somehow you are escaping a constraint that's imposed upon" cable companies and satellite systems, he told Frederick. Indeed, added Justice Elena Kagan, from the user's standpoint, Aereo is "exactly the same as if I'm watching cable."
But the other side faced sharp questioning as well. Representing ABC and several other media entities in their fight against Aereo was Paul Clement, the former solicitor general and high-profile conservative lawyer. He told the Court that because Aereo is "publicly performing" copyrighted material it must pay the price. "They provide thousands of paying strangers with public performances over the TV, but they [claim] they don't publicly perform at all. It's like magic," he quipped.
Yet Clement's definition of what should count as a "public performance" of copyrighted material plainly troubled several of the justices.
Justice Sonia Sotomayor, for example, worried that "someone who sells coaxial cable to a resident of a building" might be "swept up as a participant in this." They also enable strangers to watch public performances, she implied.
Justice Samuel Alito, who appeared visibly frustrated with Clement's evasive answers at one point, raised a broader concern. "I need to know how far the rationale that you want us to accept will go…what effect it will have on these other technologies," Alito declared.
Foremost among those "other technologies" is what's commonly called "the cloud," a shorthand term for the ability to store and access vast amounts of material online, including copyrighted items such as the digital files for songs and movies.
What if, asked Justice Breyer, an anti-Aereo ruling causes fallout for "other things that really will change life and shouldn't, such as the cloud?"
It's a good question. But judging by Tuesday's closely divided oral argument the Court is still groping its way towards an answer.
A ruling in American Broadcasting Companies, Inc. v. Aereo is expected by June.