Aereo's remote TV antenna is the size of a dime.
Aereo’s remote TV antenna is the size of a dime. ()

The U.S. Supreme Court on Friday afternoon granted review in ABC v. Aereo, a high-stakes copyright dispute that could shake the television industry to its core. The case will likely be argued in April and decided by the end of the term in late June.

The case was brought by broadcast networks ABC, NBC, CBS and PBS, among others, against the 2011 upstart Aereo, which transmits free broadcast shows individually to customers through dime-sized antennas.

The networks say the technology was meant to evade the Copyright Act, which gives copyright holders the exclusive right to “perform the copyrighted work publicly.” They say Aereo threatens their ability to produce marquee sports or awards shows, including the Academy Awards, the Grammys and the Super Bowl. CBS, Fox and Univision television networks are among those that say they might end their free broadcasts and become a subscription-only channel like CNN, Nickelodeon and Discovery if Aereo is successful.

The networks have supplemented their advertising revenue with fees from cable and satellite TV companies for redistributing their stations to subscribers. If customers drop their pay-TV service and use Aereo, broadcasters would lose some of that revenue.

Aereo claims what it is doing is legal because it has thousands of tiny antennas at its data centers and assigns individual subscribers their own antenna. According to Aereo, that makes it akin to customers picking up free broadcast signals with a regular antenna at home.

Aereo’s service starts at $8 a month and currently covers New York, Boston, Houston and Atlanta, among other places. Subscribers get about two dozen local over-the-air stations, plus the Bloomberg TV financial channel.

In July 2012, Southern District Judge Alison Nathan (See Profile) in WNET v. Aereo, 12 Civ. 1543, denied the networks’ motion for a preliminary injunction blocking Aereo’s service (NYLJ, July 12, 2012).

At the Second Circuit, Judge Christopher Droney (See Profile), joined by Eastern District Judge John Gleeson (See Profile) sitting by designation, agreed that Aereo’s service did not violate broadcasters’ copyrights and that its transmission method did not add up to a public performance, but instead to thousands of private performances.

Judge Denny Chin (See Profile) dissented, calling Aereo’s business model a “sham.”

The Second Circuit’s decision, the networks say in their brief, “is already transforming the industry and threatening the very fundamentals of broadcast television.” They say Supreme Court intervention “is urgently needed.”

The court’s announcement was not altogether surprising. Both sides in the dispute asked the high court to take up the case, underscoring its importance and urgency for the industry. The dispute will likely be argued by veteran Supreme Court advocates. Paul Clement of Bancroft and Paul Smith of Jenner & Block represent the networks, and David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel represents Aereo.

In a statement after the court announced its grant of certiorari, Aereo founder Chet Kanojia said, “We said from the beginning that it was our hope that this case would be decided on the merits and not through a wasteful war of attrition. We look forward to presenting our case to the Supreme Court and we have every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.”

The broadcast case was one of eight in which the court granted review on Friday, helping fill out the rest of the argument docket for the current term. Among the others docketed were: Argentina v. NML Capital, on discovery of assets of a foreign country; Limelight Networks v. Akamai and Nautilus v. Biosig, both patent cases; Susan B. Anthony List v. Driehaus on criminalizing false campaign speech; and POM Wonderful v. Coca-Cola, a Lanham Act false advertising case.