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COLUMN-At Aereo arguments, old-school v. new technology: Frankel

Source: Reuters - Tue, 22 Apr 2014 23:14 GMT
Author: Reuters
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(The opinions expressed here are those of Alison Frankel, a columnist for Reuters.)

Technology is hard. Valet parking and coat check rooms are not, at least for U.S. Supreme Court justices. So at Tuesday's oral arguments over the online TV startup Aereo, lawyers for Aereo, the U.S. government and the broadcasters who believe Aereo is pirating their copyrighted content used all sorts of tangible analogies to bring issues out of the cloud and into the real world.

Aereo, as you probably know from breathless coverage of how it will break cable's stranglehold and change television-watching forever, permits subscribers to watch shows in almost live time without paying for cable service. The service uses thousands of dime-sized antennas to capture TV signals, then retransmits them to customers' Internet devices at their direction.

Aereo and its major backer, Barry Diller's IAC/InterActive, contend that because its customers control transmissions from the tiny antennas, its set-up complies with copyright law as the 2nd Circuit U.S. Court of Appeals defined it in a 2008 case called Cartoon Network v. Cablevision. (In the Cablevision ruling, the 2nd Circuit said that the cable company wasn't liable for infringement because its remote digital video recorder system was directed by its customers, who made copies of shows to replay for their own private use, not for prohibited public performances.) Broadcasters, of course, say Aereo's multiple antennas are a guise to cover the company's outright violations of the Copyright Act's Transmit Clause, which Congress enacted in 1976 to prohibit cable companies from engaging in the same signal piracy that Aereo is now accused of.

Aereo realized before its case reached the Supreme Court that it was better off comparing itself to an old-school equipment provider - a sort of Radio Shack of the digital age - than bickering with broadcasters over how exactly its banks of antennas operate. No one, after all, believes Radio Shack is responsible for copyright infringement when it sells television antennas and electrical cables that people can set up on their own roofs.

'LEGO PIECES'

At oral arguments Tuesday, Aereo's Supreme Court lawyer, David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel, mostly stuck with that easy-to-grasp analogy. But when Chief Justice John Roberts challenged him on whether Aereo uses thousands of teeny antennas rather than one big one simply to take advantage of the 2nd Circuit's quirky Cablevision ruling, Frederick called on another tactile comparison to justify Aereo's devices: Lego blocks.

"It is much simpler if you're a startup  to add modules," he said. "In any cloud computing industry you're starting with one group of servers and then you add them, almost like Lego pieces, as you are adding the number of people that you're using. That is a technological reason why the cloud works the way it does, Mr. Chief Justice."

Not according to the broadcasters' lawyer, Paul Clement of Bancroft, or to Deputy Solicitor General Malcolm Stewart, who argued the government's position as an amicus in support of the broadcasters. Clement, a former Solicitor General in the George W. Bush administration, is regarded as one of the best oral advocates appearing at the Supreme Court.

When it became clear early in the Aereo argument that Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan were worried about how their ruling would affect other cloud computing businesses, Clement said that the difference between Aereo and cloud services that permit users to store and download content they've already purchased is like the difference between a valet parking service and a car dealer.

"If you look at it from 30,000 feet, you might think, hey, both of these things provide cars to the public," Clement said. "But if you looked at it more closely, you'd understand, well, if I show up at the car dealership without a car, I'm going to be able to get a car. If I show up at the valet parking service and I don't own a car, it's not going to end well for me."

'VALET PARKING'

Clement returned to the car parking comparison when Justice Kagan pointed out that the cloud isn't simply a digital storage locker. "There are lots of companies where many, many thousands of millions of people put things up there, and then they share them, and the company in some ways aggregates and sorts all that content. Does that count?" she asked.

Clement answered that the court didn't need to decide the entire legality of cloud computing. "If a valet parking service starts renting them out and sort of has a little Zipcar service on the side and says, hey, while we have your car, if somebody else needs a car, we're going to rent it out to them, I think that's different from the pure valet parking service," he said.

To be honest, I was a little confused by Clement's parking example (more confused than I get in the actual argument about Aereo's alleged infringement). Is Aereo supposed to be the valet parking service?

I preferred Deputy SG Stewart's analogy of the cloud to a coat check. "There are situations all the time in which people place property momentarily at the disposalof another and then retrieve it later," Stewart said. "It's distributed to them at that later date not in their capacities as members of the public, but as the true owners of the property." In his extended metaphor, Aero is a cloakroom attendant busily reselling coats (or television shows) she has stolen from their true owners, the broadcasters.

Some of the justices suggested their own analogies. Justice Sotomayor wanted to know why Aereo isn't a cable company, but both sides rejected the comparison. (Cable companies are subject to compulsory licenses under the Copyright Act, which is antithetical to Aereo's business model.)

Chief Justice Roberts asked whether using Aereo was like parking your car in a public garage, a perfectly legitimate alternative to a private garage. (Clement said that even if Aereo is just renting out its antennas like a public garage rents parking spaces, the Copyright Act applies to its retransmission of protected content.) Justice Breyer got hung up on record stores, which sell copyrighted music, and postal services, which distribute copyrighted material that users can subsequently perform.

You can see from Justice Breyer's 20th century questions why the lawyers on both sides felt the need to steer clear of microcircuits and latch onto tangible examples for this particular audience of nine. Whose analogies were better? We'll find out next month.

(Reporting by Alison Frankel; Editing by Noeleen Walder)

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