WASHINGTON - U.S. Supreme Court justices questioned Tuesday the legality of Aereo Inc., a startup company aiming to upend the broadcast industry’s decades-old business model by selling live television programming over the Internet.
Hearing arguments in one of several cases Tuesday in Washington, some justices suggested they viewed Aereo as violating broadcaster copyrights by using thousands of dime-sized antennas to get over-the-air signals without paying fees.
“There’s no technological reason for you to have 10,000 dime-sized antennas other than to get around the copyright laws?” Chief Justice John Roberts asked.
At the same time, justices including Stephen Breyer repeatedly asked whether a ruling favoring the broadcasters would imperil the cloud-computing business.
Aereo would give consumers a new way to watch broadcast television without buying the packages offered by cable and satellite companies. It now lets customers in 11 cities watch live and recorded broadcast programs for as little as $8 a month.
Broadcasters including CBS and ABC have said a legal victory for Aereo would devastate the industry, creating a blueprint that would let cable and satellite providers stop paying billions of dollars in retransmission fees each year to carry local programming.
The broadcasters drew support from Justice Ruth Bader Ginsburg, who told Aereo’s lawyer, “you are the only player so far that doesn’t pay any royalties at any stage.”
The threat posed by Aereo was magnified last year when a federal appeals court said the company wasn’t infringing the broadcasters’ copyrights. ABC, CBS, NBC Universal, 21st Century Fox Inc., Tribune Co. and the Public Broadcasting Service are asking the Supreme Court to reverse that ruling.
The broadcasters’ lawyer, Paul Clement, met resistance from justices who asked about the implications for other technologies, including cloud computing.
“Are we somehow catching other things that really will change life and shouldn’t, such as the cloud?” Breyer asked.
Cloud computing is the delivery of content, like video, through the Internet. The information isn’t stored onsite with the user; instead, it is held off-premise in servers managed by a cloud provider.
Online storage services- including offerings from Dropbox, Box and Google - manage online content for customers through the cloud.
Users can upload photos, videos, personal documents and other information over the Internet to be stored on remote servers, which allow the data to be accessed across customers’ phones, tablets and computers.
Clement argued that a ruling against Aereo wouldn’t impede online storage companies because there is a “fundamental difference” between customers uploading their own content and the dissemination of content that is new to the customer.
Aereo’s lawyer, David Frederick, disagreed, saying a ruling for the broadcasters “absolutely threatens cloud computing.”
The court fight centers on a provision in the federal copyright law that gives owners the exclusive right to perform their works “publicly.” The appeals court said Aereo’s service is legal because the separate antennas let each customer create a distinct copy of a broadcast program for viewing, so no public transmission takes place.
The broadcasters have said Aereo is trying to use a technical detail to circumvent well-established legal rights. President Barack Obama’s administration is backing the broadcasters.
Aereo has said its system is legally indistinguishable from the antennas homeowners have placed on their own roofs for decades.
With retransmission fees estimated to exceed $4 billion this year, some broadcasters have said they may convert to cable channels if Aereo isn’t shut down. Conversion to a cable network would mean broadcast signals would no longer be freely available over the airwaves.
The court will rule by early July in the case, ABC v. Aereo, 13-461.
OHIO LAW PROBED
The court also heard arguments Tuesday in a case challenging an Ohio law that bars people from making false statements about candidates seeking elective office.
The case has attracted widespread attention, with both liberal and conservative groups saying the law tramples on the time-honored, if dubious, tradition of political mudslinging. Critics have said free speech demands wide open debate during political campaigns, including protection for negative speech that may sometimes twist the facts.
The high court is not expected to rule directly on the constitutional issue because the question before the justices is only a preliminary one: Can the law be challenged right away, or do challengers have to wait until the state finds them guilty of lying?
But the justices commented on the law itself, pointing out that the prospect of being hauled in front of state officials to explain comments made in the heat of an election has a chilling effect on speech.
“What’s the harm?” Breyer asked Eric Murphy, attorney for the state of Ohio. “I can’t speak, that’s the harm.”
Kennedy said there’s “a serious First Amendment concern with a state law that requires you to come before a commission to justify what you are going to say.”
The case began during the 2010 election when a national anti-abortion group, the Susan B. Anthony List, planned to put up billboards accusing then-Rep. Steve Driehaus of supporting taxpayer-funded abortion because he voted for Obama’s health-care law. Driehaus, a Democrat who opposes abortion, claimed the group’s billboard ads distorted the truth and therefore violated the false speech law.
Driehaus filed a complaint with the Ohio Elections Commission, an action which prompted the billboard owner to decline posting the ads. The commission found probable cause that the ads violated the law, but Driehaus later withdrew his complaint after losing his re-election campaign.
The Susan B. Anthony List then challenged the state law as unconstitutional, but a federal judge said the group didn’t have the right to sue because it hadn’t yet suffered actual harm. The 6th U.S. Circuit Court of Appeals in Cincinnati agreed.
But Justice Elena Kagan wondered why a probable cause determination didn’t count as harm. For the average voter, “they think probable cause means you probably lied,” she said.
More than 500 false-statement claims have been filed under the Ohio law between 2001 and 2010, Murphy told the justices. Only five cases have been referred to a prosecutor, and of those, three resulted in plea agreements.
“So you have a system that goes on and on, year after year, where arguably there’s a great chilling of core First Amendment speech, and yet you’re saying that basically you can’t get into federal court,” Justice Samuel Alito said.
Other states with similar laws include Alaska, Colorado, Florida, Louisiana, Massachusetts, Michigan, Minnesota, Montana, North Carolina, North Dakota, Oregon, Tennessee, Utah, West Virginia and Wisconsin.
A ruling in the Ohio case, Susan B. Anthony List v. Driehaus, 13-193, is expected by late June.
TRAFFIC STOP UPHELD
Also Tuesday, the high court upheld the authority of police officers to stop cars and question their drivers based on an anonymous tip to a hot line.
In a 5-4 decision written by Justice Clarence Thomas, the justices ruled that such stops do not amount to an unreasonable search or seizure, even if the arresting officer did not observe the vehicle speeding or swaying while driving down the highway.
The decision affirmed a ruling of the California courts.
In August 2008, a 911 dispatch team in Mendocino County received a report that a pickup had run another vehicle off the road. The caller did not identify himself, but the report included a detailed description of the truck, including its license plate number.
Responding to the call, an officer saw a truck which fit the description. After stopping it, he found 30 pounds of marijuana in the truck bed. Two men, Lorenzo and Jose Navarette, were arrested and later convicted of trafficking marijuana.
They appealed and argued the stop and search had violated their rights under the 4th Amendment, which prohibits “unreasonable” searches and seizures.
In the past, the court had said police officers may not rely on an anonymous tip to stop and search a pedestrian. In that case, the justices had worried that anonymous callers could unfairly target people for searches.
But in Tuesday’s decision in Navarette v. California, the court majority agreed that police have “reasonable suspicion” to stop a vehicle if they receive a report that it was speeding, swerving, or, as in this case, forcing another car off the road.
The case split the court mostly along ideological lines, but with two significant switches. Breyer, usually part of the court’s liberal minority, joined Thomas’ majority. Justice Antonin Scalia, who sides with Thomas in most cases, dissented.
Information for this article was contributed by Greg Stohr and Alex Barinka of Bloomberg News; by Sam Hananel of The Associated Press; and by David G. Savage of the Tribune Washington Bureau.
Front Section, Pages 7 on 04/23/2014