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Aereo founder and CEO Chet Kanojia stands next to a server array of antennas as he holds an antenna between his fingers (Bebeto Matthews/AP)
Aereo founder and CEO Chet Kanojia stands next to a server array of antennas as he holds an antenna between his fingers (Bebeto Matthews/AP)

Canadian, U.S. TV groups cheer Supreme Court’s ruling on upstart Aereo Add to ...

Canadian content producers are breathing a sigh of relief after the U.S. Supreme Court ruled that online streaming service Aereo Inc. violates U.S. copyright laws, dealing a devastating blow to the two-year-old startup.

The 6-3 decision released Wednesday is seen as a triumph for conventional broadcasters who feared their business model could be at risk if services such as New York-based Aereo were allowed to survive.

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Launched in early 2012, Aereo uses thousands of dime-sized antennas to pull in free over-the-air broadcast signals, then streams those channels live to subscribers’ computers, tablets, mobile phones and other devices such as Apple TV or Roku for as little as $8 a month. Users can also save programs to a cloud-based digital video recorder.

The ruling is welcome news to an array of concerned Canadian groups that jointly opposed Aereo’s model in an amicus brief. Organizations including the Canadian Media Production Association, actors’ union ACTRA, and the Society of Composers, Authors and Music Publishers of Canada (SOCAN), argued to the court that Aereo was exploiting a loophole in U.S. copyright law to avoid paying royalties.

“Aereo had tried to game the copyright system,” said Barry Sookman, a partner at McCarthy Tétrault LLP who helped draft the brief. “It tried to find a loophole and to basically engineer its way around the Copyright Act.”

The concern for Canadian film, TV and music creators was not that a company such as Aereo would move north: The groups behind the brief argued that Canada’s legal precedents would make an expansion here difficult since they spell out more clearly how to define new broadcasting platforms. The Supreme Court of Canada ruled in a 2012 case that, where new technologies perform the same activity, “there is no justification for distinguishing between the two for copyright purposes.”

But Canadian rights-holders sell content in the U.S. and internationally, and were worried their earnings would suffer in step with the broadcasters’ as a result of Aereo’s model. U.S. broadcasters collect an estimated $3-billion (U.S.) in annual retransmission fees from cable and satellite companies for some of the same signals Aereo distributes, and they fought to guard that revenue.

“Almost everybody agrees that the folks that create music and intellectual property deserve to be compensated,” said Jeff King, SOCAN’s chief operating officer. “This is a victory for those rights.”

Aereo, which is backed by media mogul Barry Diller, claims it simply provides a better technology allowing users to watch free TV programs that they could get with a simple aerial of their own. Founder and CEO Chet Kanojia in a statement called the ruling “a massive setback for the American consumer” and said, “when new technology enables consumers to use a smarter, easier to use antenna, consumers and the marketplace win.”

At issue in the case, American Broadcasting Companies, Inc. et al v. Aereo, Inc., was whether Aereo’s streaming and storage should be considered a public or private performance. Aereo argued it is private, citing a 1984 Supreme Court case giving viewers the right to record and watch TV programs using a VCR.

But the court’s majority ruled the company “is not simply an equipment provider.” Writing for the majority, Justice Stephen G. Breyer noted programs are streamed “a mere few seconds behind the over-the-air broadcaster,” and concluded “Aereo ‘performs’ petitioners’ copyrighted works ‘publicly,’” violating copyright laws.

Aereo had also warned that a ruling against it could damage the entire cloud computing industry, but Justice Breyer wrote that “we do not believe that our limited holding today” would limit such technologies.

Aereo operates in 11 U.S. cities including New York, Boston and Miami, and planned to expand to 19 more soon. Its future is now in doubt, to the delight of broadcasters such as ABC, CBS, NBC and Fox.

“Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated,” Gordon Smith, CEO of the U.S.-based National Association of Broadcasters, said in a statement.

With a report from Reuters

Follow on Twitter: @jembradshaw

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