Second Circuit's Aereo Decision Hailed As Win for Cloud Computing Industry

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By Paul Barbagallo  

The Computer and Communications Industry Association, a lobbying group that represents companies such as Google Inc., Facebook Inc., Microsoft Inc., and Yahoo Inc., hailed a federal appeals court ruling April 1 in favor of Aereo Inc., a startup company that streams broadcasters' programming over the internet without compensating them.

In a statement, the association called the case of WNET v. Aereo Inc., 2d Cir., No. 12-2786, 04/01/13, a “test of the legitimacy of the cloud computing industry.”

Aereo's system uses tiny antennas to capture over-the-air broadcast signals that can then be streamed on the internet and viewed on a device of the customer's choice--smartphones, tablet computers, or internet-connected TVs--and recorded to the cloud.

Judge Christopher Droney, writing for the U.S. Court of Appeals for the Second Circuit, concluded that Aereo's live streams of TV shows are not materially distinguishable from a Cablevision Systems Corp. remote digital video recording service that the Second Circuit upheld in 2008.

“The Second Circuit agreed with us that users should be able to access their own, lawfully-acquired content in the cloud without the fear of being branded pirates,” said Ed Black, president of the CCIA, said in the statement in response to the April 1 decision. “As technology evolves, the battles to block it are unfortunately similar to those faced decades ago. Too often still, some entrenched businesses would rather sue than evolve. We saw that in the 1980s when TV and movie makers tried to block the Betamax so consumers couldn't record content to watch later and again with the Aereo case as more people use the internet to watch programs later.”

The decision by the court not to issue a temporary injunction to shut down Aereo's service does not mean the legal dispute is over. The broadcasters could move ahead toward a trial, while continuing to challenge Aereo in courts in other areas where Aereo is rolling out service.

The National Association of Broadcasters issued a statement saying it was “disappointed” with the ruling and noted that Judge Denny Chin dissented.

“NAB is disappointed with the Second Circuit's 2-1 decision allowing Aereo to continue its illegal operations while broadcasters' copyright actions are heard. We agree with Judge Chin's vigorous dissent and, along with our members, will be evaluating the opinions and options going forward,” the statement said.