(Photo: Aereo)

Online streaming startup Aereo Inc. violated the copyrights of major television broadcast networks by retransmitting programs to users’ Internet devices for a fee, the U.S. Supreme Court ruled on Wednesday.

In what some observers have called the most important copyright challenge to reach the high court in a decade, ABC and other networks argued that Aereo was violating their exclusive right under the Copyright Act to “publicly perform” their works. A divided panel of the U.S. Court of Appeals for the Second Circuit disagreed.

In a 6-3 decision, the Supreme Court reversed the Second Circuit, finding Aereo was “publicly” performing the networks’ programs. Justice Stephen Breyer, writing for the majority, said that despite some technological differences, Aereo was similar to cable companies regulated under the federal Copyright Right.

“Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens. They do not render Aereo’s commercial objective any different from that of cable companies,” Breyer wrote.

Breyer was joined by Chief Justice John Roberts Jr. and justices Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. Justice Antonin Scalia, joined by justices Clarence Thomas and Samuel Alito Jr., dissented. Scalia wrote that Aereo didn’t “perform” the programs at all because the subscriber chose the content.

“The court manages to reach the opposite conclusion only by disregarding widely accepted rules for service-provider liability and adopting in their place an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come,” Scalia wrote.

Aereo’s system relies on thousands of dime-sized, individual antennas arranged on large antenna boards at its central facility in Long Island City, N.Y. When a subscriber selects a television program, an individual antenna is temporarily assigned to that user and tuned to the appropriate channel to receive the program.

The program is saved to a large hard drive at Aereo’s facility in a directory reserved for the user. If the user chooses to record the program for later viewing, a complete copy is created in the user’s directory. If the user wants to view the program live, the system starts streaming from the copy in the user’s directory after about six or seven seconds of programming have been saved.

No two users share the same antenna at the same time, according to Aereo, and when more than one user records or watches the same program, a separate copy of the program is created for each user.

The high court case, American Broadcasting Cos. v. Aereo, drew a wide range of amicus briefs. Copyright scholars weighed in on each side. The National Football League, Major League Baseball, the Obama administration and associations of composers, authors and actors lined up behind the major networks. Small and independent broadcasters, Dish Network, the Consumer Federation of America and others filed for Aereo.

The case basically asked whether Aereo’s system was more like home recording of programs via a VCR or DVR, which does not infringe copyrights, or the unlicensed or unauthorized retransmission of copyrighted broadcast programs.

The networks’ counsel, Paul Clement of Bancroft, argued that Congress specifically ensured copyright protection for retransmission of programs in the 1976 Copyright Act. The lawmakers broadened the definition of what it means to publicly “perform” a work. They also defined what it means to “transmit” a program or performance to the public by saying that transmission can be “by means of any device or process.” And the device or process includes “one now known or later developed.”

“Plainly, Congress did not want liability to turn on the technical details of a transmission service,” Clement argued.

Aereo countered that the performance it transmits is actually the subscriber’s playing of his or her personal recording, and not the performance that the networks transmit to the public.

“Because the performance embodied in each transmission from Aereo’s equipment — the user’s playing of her recording — is available only to the individual user who created that recording, the performance is private, not public,” contended Aereo’s counsel, David Frederick of Kellogg, Huber, Hansen, Todd & Figel.

Contact Zoe Tillman at ztillman@alm.com and Marcia Coyle at mcoyle@alm.com.