Will the Supreme Court holding in ABC v. Aereo really be limited to the facts at hand, or are would-be innovators in the cloud computing and storage space right to be worried?

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According to The New York Times:

In oral arguments in the case in April, the justices had expressed concern that a ruling against Aereo would stifle technological innovation. Justice Breyer took pains on Wednesday to say the decision was limited to Aereo’s service. “We believe that resolution of questions about cloud computing, remote storage DVRs and other novel matters not now before us should await a case in which they are clearly presented.”

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Aereo is a company that circumvents the need for a cable or satellite company, as it allows people to watch tv channels at a cheaper rate, and even online. The way the production of tv programmes work, is that tv channels pay the production companies to make the programmes, and not only that, the cable and satellite companies pay the tv channels a cut of their profits, in order to have the ability to provide their channels. That's right! It's not just advertising that funds tv channels, but also cable and satellite companies. Part of the money you pay a month goes to tv channels. This sounds wrong due to capitalist greed, but the fact that some tv shows cost more than 1 million per episode to produce, is exactly why this happens. The money needed to pay the high production costs of tv shows has to come from somewhere, so why not the cable and satellite companies. Game of Thrones is the number 1 pirated show due to the fact that it's only on HBO which is a premium channel, and an interview with TorrentFreak revealed that it would be impossible for Game of Thrones to be on a free to air channel, because the funds needed to produce the tv show wouldn't exist if they had done otherwise.

Then enters Aereo, a company which doesn't pay any money to tv channels, doesn't negotiate with tv channels, and can provide every tv channel in existence at no extra cost, plus they're cheaper than cable and satellite companies. Why wouldn't the tv industry and telecommunications industry be scared?

Judging from comments made today by the chief operations officer for News Corp., Chase Carey, the Aereo loss must really sting. Speaking at the National Association of Broadcasters in Las Vegas, Carey said the subscription revenue that his company, which owns Fox Broadcasting, gets from cable companies is absolutely vital. If it gets robbed of that cashflow because of the Aereo case, it might actually get out of the free-TV business.
"We simply cannot provide the type of quality sports, news, and entertainment content that we do from an ad-supported only business model," said Carey, according to a CNET report. "We have no choice but to develop business solutions that ensure we continue to remain in the driver's seat of our own destiny. One option could be converting the Fox broadcast network to a pay channel, which we would do in collaboration with both our content partners and affiliates."
http://arstechnica.com/tech-policy/2013/04/news-corp-coo-if-we-lose-aereo-copyright-case-well-stop-broadcasting/

The reason why Aereo has been allowed to operate in existence for so long, and why websites like Movies4k, Let Me Watch This, TV Shack and WatchSeries.lt have been shut down due to piracy reasons or face extradition requests, is because technically, Aereo hasn't done anything illegal, they have found a loophole in the law.

Aereo is not distributing content without the copyright holder's permission, they are not rebroadcasting someone's television stream, in fact they are just an aerial provider. For each customer they have, they create a new aerial, just like the one you would have in your house, so they hold the aerial, and not you. Clever, isn't it?

This reminds me and draws similarities of the record labels creating an advertising campaign that home taping is killing music, that blank VHS and cassette tapes is killing the entertainment industry, despite the fact that no copyrighted content is being distributed. Aereo and blank tapes both provide a means for increased piracy and a loss of profits for the entertainment industry, and on the other hand they are technological innovations which may also provide creative destruction. And if something provides creative destruction, like the iPhone, should Nokia be asking the government for help? Should ABC get help from the government to save itself from Aereo?

Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), also known as the “Betamax case”, is a decision by the Supreme Court of the United States which ruled that the making of individual copies of complete television shows for purposes of time shifting does not constitute copyright infringement, but is fair use. The Court also ruled that the manufacturers of home video recording devices, such as Betamax or other VCRs (referred to as VTRs in the case), cannot be liable for infringement. The case was a boon to the home video market as it created a legal safe haven for the technology, which also significantly benefited the entertainment industry through the sale of pre-recorded movies.

The broader legal consequence of the Court's decision was its establishment of a general test for determining whether a device with copying or recording capabilities ran afoul of copyright law. This test has created some interpretative challenges to courts in applying the case to more recent file sharing technologies available for use on home computers and over the Internet.
http://en.wikipedia.org/wiki/Sony_Corp._of_America_v._Universal_City_Studios,_Inc

The difference between a blank VHS or cassette, and a business selling an aerial that they keep in their office instead of your house, is that there is no guarantee that you will use a blank tape to record copyrighted content, and even if you do, you could say it's "fair use" as that tv or radio show probably won't air again (as it was in the 90s before the internet). However, tv channels make money by broadcasting live, if you manage to broadcast something live that circumvents their need to broadcast live, you are losing them money. This is also why sports streams get shut down. The "fair usage" argument I do not think applies here.

I cannot see Aereo winning this court case, as not only are they keeping your aerial in their office, they are not just a means of piracy like a blank tape or BitTorrent or indexing content like a Tracker or Search Engine that can use the DMCA Safe Harbour laws to avoid being liable for what happens (it's not our fault, it's out users fault). Aereo is distributing copyrighted content. The fact that Aereo is keeping your aerial in their office and has a unique aerial for each customer is a loophole in the law, and it's legal, but the fact that they are distributing content with their custom made remotes, websites and apps, is why they will lose the case.

A federal appeals court has handed a big setback to broadcasters trying to stop Aereo, a startup that streams New York-area television content over the Internet. Broadcasters such as Fox and Univision argued that transmitting TV content without permission was copyright infringement. But Aereo countered that its service was analogous to a television and DVR that happened to have a really long cable between the antenna and the screen. On Monday, the United States Court of Appeals for the Second Circuit agreed.

Aereo's technology was designed from the ground up to take advantage of a landmark 2008 ruling holding that a "remote" DVR product offered by Cablevision was consistent with copyright law. Key to that ruling was Cablevision's decision to create a separate copy of recorded TV programs for each user. While creating thousands of redundant copies makes little sense from a technical perspective, it turned out to be crucial from a legal point of view. Because each copy was viewed by only one household, the court ruled that Cablevision was not engaged in a "public performance" of copyrighted works.

"When an Aereo customer elects to watch or record a program using either the 'Watch' or 'Record' features, Aereo’s system creates a unique copy of that program on a portion of a hard drive assigned only to that Aereo user," the majority ruled. "And when an Aereo user chooses to watch the recorded program, whether (nearly) live or days after the program has aired, the transmission sent by Aereo and received by that user is generated from that unique copy. No other Aereo user can ever receive a transmission from that copy."

And that, the court said, made Aereo's system directly analogous to Cablevision's, and by extension to a conventional DVR. The fact that the recording equipment and the customer's screen might be dozens or even thousands of miles apart was legally irrelevant. So long as each user had his or her own dedicated recording of the program, taken from the user's dedicated antenna, Aereo didn't need the broadcasters' permission to stream their content.

"It is beyond dispute that the transmission of a broadcast TV program received by an individual’s rooftop antenna to the TV in his living room is private," the court reasoned. "Plaintiffs have presented no reason why the result should be any different when that rooftop antenna is rented from Aereo and its signals transmitted over the Internet: it remains the case that only one person can receive that antenna’s transmissions."
In a strongly worded dissent, Judge Denny Chin described Aereo's technology as a "sham."

"The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law."

Judge Chin argued that Aereo was unlike Cablevision because the latter had a license to transmit the underlying content. "Aereo is doing precisely what cable companies, satellite television companies, and authorized Internet streaming companies do—they capture over-the-air broadcasts and retransmit them to customers," he wrote. But unlike Aereo, "those entities are doing it legally, pursuant to statutory or negotiated licenses, for a fee."

The majority's decision received the enthusiastic support of the advocacy group Public Knowledge. "Only in the world of copyright maximalists do people need to get special permission to watch over-the-air television with an antenna," PK's John Bergmayer said in an e-mailed statement. "Just because 'the Internet' is involved doesn't change this." He vowed to fight any effort to get Congress or the courts to reverse the decision.

"We may be a small startup, but we’ve always believed in standing up and fighting for our consumers," Aereo said by e-mail. "We are grateful for the court’s thoughtful analysis and decision and we look forward to continuing to build a successful business that puts consumers first."
All may not be lost for the broadcasters. This week's ruling means the broadcasters won't be able to shut down Aereo's service during the trial, but the company could still prevail in the underlying case. The broadcasters could also seek to have the ruling reviewed by a larger panel of Second Circuit judges.

If the ruling is upheld, it is likely to provide greater legal certainty for modern cloud media services. The Cablevision case is widely regarded as the legal foundation of cloud music services such as Google Music and Amazon Cloud Player. By elaborating on the reasoning of Cablevision, the new ruling will give future startups greater guidance about how to keep cloud media services within the law. Unfortunately, it may lead to a lot of wasted resources, as cloud providers store thousands of redundant copies of content to stay within the arbitrary bounds of the Cablevision ruling.
http://arstechnica.com/tech-policy/2013/04/appeals-court-upholds-legality-of-aereos-tiny-antennas-scheme/

I cannot see Aereo winning this court case as they are distributing copyrighted content. Yes I know that Silicon Valley and Hollywood are America's biggest exports, but Aereo is distributing content, and no judge will fall for that, as lawyers more knowledgeable than me can figure that out.

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