In a decisive 6-3 ruling, the Supreme Court stated that Internet startup Aereo is illegal in its current form. The service uses dime-sized antennas to pick up broadcast network television, store it in the cloud and then transfer it to subscribers via the Internet.
Broadcasters, who were not being paid licensing fees by Aereo, were naturally irked by the new company's business model. Eventually, the dispute made its way to the Supreme Court. Arguments in American Broadcasting Company (ABC) v. Aereo were heard in April.
On Wednesday, the verdict was handed down, with Justice Breyer writing the opinion for the majority, and Justice Scalia authoring the dissent.
"Aereo performs petitioners’ works publicly within the meaning of the Transmit Clause," the decision read. "Aereo 'perform[s].' It does not merely supply equipment that allows others to do so."
In layman's terms, the ruling states that Aereo infringes television broadcasters' copyrights. (Extensive background on the case can be found here.) The justices found that Aereo looked too similar to cable.
The decision looks pretty cut and dry for Aereo. However, what does this mean for other cloud based technology?
"Justice Breyer is very technology savvy, and a copyright expert, so when I initially saw that he'd written the opinion I had some optimism," said Jason Schultz, a law professor at New York University, who specializes in intellectual property law and new technologies, and teaches The Technology Law and Policy Clinic. "But unfortunately I think this case is just too hard for the Supreme Court to really provide a good opinion -- a good opinion that held that Aereo was liable, which was clear they were going to do during the oral arguments."
"He tries. He says the words 'This does not affect cloud computing. We're not talking about technologies here; we're limiting the opinion.' He tries to limit the opinion just to Aereo," Schultz continues. However, professor Schultz, whose clinic wrote an amicus brief on behalf of small broadcasters who favored Aereo, does see some issues with the decision.
"However, the way he tries to distinguish Aereo from everything else is pretty weak," Professor Schultz explained. "And I say this with the most respect for Justice Breyer. He is a great Justice. I agree with almost every decision he writes about copyright. But here he really doesn't do a very good job telling why Aereo is illegal, but everything else on the Internet might not be in trouble."
What is it about Aereo that makes it illegal, but not other services? And where do you draw the line? That is where things become nebulous. Aereo was illegal because one, it provided contemporaneous streaming: Viewers could watch television via Aereo in the same manner as cable and satellite TV.
"But that's not necessarily true," Schultz explained. "There is in fact -- when you watch TV on Aereo -- a delay, and the delay is because the antenna transmits and transcodes the television to the cloud based DVR, which then plays it back to you."
This, the law professor said, "starts to look a lot more like cloud computing."
So for future companies contemporaneous transmissions might be an important factor to take into consideration. It's possible that anything that is delayed might be okay, according to Schultz.
The second reason Aereo is not allowed is that it looks a and behaves a lot like cable services. Aereo uses antennas and transcoding. Maybe companies are safe, if they don't use an antenna.
"But I don't think that's what he means," Schultz conjectures. "Because if that were the case Aereo would just dump all of its antennas. They'll mail antennas to people in their homes and be back in business tomorrow. So what he's trying to get at is that it looks like a bigger thing; it looks like cable."
"And 'it looks like cable' is not an easy thing for Internet companies and startups to use to help them stay out of trouble. That legal test is not detailed enough for them to know what looks like cable and what doesn't. That's my concern here."
"He's trying to do the right thing," Schultz believes of Justice Breyer. "He's trying to say Aereo is illegal, but I want most of the things to be fine. But he just kind of did this broad brush of well it looks like television, it looks like cable, and so just don't look like television, don't look like cable, you'll be fine."
Basically, this ruling doesn't make it clear for future innovators what is or isn't legal -- what does or doesn't look like cable. In terms of other cloud computing systems like Dropbox or Google Drive, Schultz believes that in current form, they'll be alright, because users are uploading content they've already purchased, including DVDs, CDs and e-books.
However, Schultz believe the future is going to have a lot more to do with streaming and sharing: "The harder questions are to come for cloud computing: How much they can provide services?"
The other big question is: What's next? Where can Internet companies innovate now?
"I think the world of television has become one that is radioactive, and anything that has to do with contemporary broadcast is going to be quite dangerous," Schultz said.
He gives the following scenario to illustrate: "So even if I have an antenna, and I have a DVR, and I tune my computer to watch broadcast television over the air, and I record that on my DVR and I upload that simultaneously to my cloud server so that my friends and I, and maybe some people at work can watch the World Cup, is that illegal now? Not just for me? But for Google and Dropbox? I think they're fine, but it's getting kind of risky now."