Supreme Court Deathmatch: Aereo vs. The Entire Broadcast Network Industry

Aereo-Logo-2013For the last six months, a friend of mine has relentlessly tried to get me to ditch my Xfinity hookup and replace it with Aereo, an online TV subscription service. To hear him tell it, it’s the greatest thing ever invented - immediate and live access to broadcast news, sports, and TV shows from the big 10 networks such as NBC, CBS, ABC, FOX, PBS (no cable channels though), all for a measly $8 a month. I think I’ll wait though. I’m happy with my yesteryear technology and I derive a certain amount of comfort from mindlessly flipping through hundreds of channels I’ll never watch. More importantly, Aereo may not even exist in six months. That’s because tomorrow the Supreme Court will hear oral arguments in the case of American Broadcasting Companies, Inc. v. Aereo, Inc. And if Aereo loses, according to its own CEO, the company is kaput.

For those who don’t know, Aereo is a startup that takes television broadcasts from networks and retransmits them to you live via the internet. You can also store these broadcasts in a cloud-based DVR, all for the cost of two cups of coffee. As it turns out, even though you’re paying Aereo, Aereo is not paying the networks; it's just ripping these broadcast signals out of the air and streaming them to you. That didn’t make the networks too happy, so they banded together and sued Aereo for copyright infringement.

This isn’t an easy case and I don’t envy the justices the amount of work they'll have to even understand the technology at play (read this article if you want to know how behind-the-times the SCOTUS really is). Ultimately, this case turns on whether Aereo’s retransmission of broadcast television constitutes a “public or private performance” of copyrighted works. Private performance is perfectly legal, like when you buy a DVD and show it in your home. Even if you invite 100 friends over to watch, you’re safe. But let’s say you rent a theater and charge for admission - that would make the performance public, and that becomes copyright infringement.

In this case, the networks argue that Aereo’s actions constitute public performance because:

  1. Aereo streams “live TV” to a wide variety of subscribers;
  2. Aereo charges fees for its services;
  3. Unlike other retransmitters, Aereo doesn’t pay licensing fees to the networks for permission to broadcast their content.

In opposition, Aereo argues that it does not transmit “to the public.” It transmits only to its paying user base. Furthermore, the choice about what gets retransmitted at any given time is made by the subscriber, not Aereo. Some lower courts have already sided with Aereo, but if I’m being totally honest, I empathize with the networks, even though siding with a corporate copyright holder gives me the willies. Creating and broadcasting content is back-breakingly hard and terrifically expensive. Even some of those low-budget reality shows for third-rate cable channels that look like they were shot on iPhones… oftentimes they have budgets in the tens of thousands of dollars per  episode. And there are lots of working-class content creators behind those shows. Remember, most people in the entertainment industry aren’t millionaires; they’re regular people working paycheck to paycheck, relying on a steady stream of work from networks and studios to pay their bills. It’s easy to think of the producers and directors and say “who cares?” But the people who get hurt first and hardest are the below-the-line talent: the grips, boom operators, location managers, scouts, production assistants, etc. What will happen to those jobs if the networks believe that pouring money into original content is no longer a profitable business model? And if you’re one of the networks, do you want to continue operating in an industry where it’s permissible for competitors to poach your signal and rebroadcast your content without owing you a fee for your trouble?

I don't know what's going to happen, but in a corporate-friendly court like this one, I can see the Supreme Court buying an argument that Aereo’s continued existence will irreparably harm the bottom lines of not just the networks, but the big telecoms like Comcast and Time Warner (soon to be a single world-killing behemoth). I don’t want to see Aereo go down because the use of technology to better peoples' lives is an intrinsic part of the American ethos. But I also don’t want to see a wholesale dismantling of the entire entertainment industry (alarmist I know, but still possible).

I’ll update this post with some thoughts after Tuesday’s oral arguments. In the meantime, I’m going to stick with my cable hook up, and I’ll tell my friend to  start budgeting for cable again if Aereo goes down the poop chute.

Tortious Interference on Parks and Recreation: How Rent A Swag Can Fight Back Against Tommy's Closet

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[Parks & Recreation is the best comedy on TV these days, so in honor of its new season, I've taken a look at one story issue that's been bugging me since last season's finale.  Enjoy!]

Tortious interference occurs when a person intentionally damages the  business relationships of another.  Parks & Recreation occurs at 8:00pm, Thursday nights on NBC.  The former is a type of civil liability imposed on one party who financially harms another party.  The latter is an exceptionally sweet and intelligent sitcom that none of you are watching.  What do the two have in common?  A lot, surprisingly.

Last season, Tom Haverford - played by Aziz Ansari as a pop-culture obsessed, clothes horse, mogul wannabe - started a business called Rent-a-Swag, a store where the "teens, tweens, and in-betweens" of Pawnee, Indiana could rent "the dopest shirts, the swankiest jackets, the slickest cardigans, the flashiest fedoras, the hottest ties, the snazziest canes and more!"  Per the store's fake website, "before you waste your money on something that won't fit in a month, or fight with your parents over that sick velvet blazer they won't buy for you - step into Rent-A-Swag."  It's a good idea, right?

Anyway, the business took off and Tom was thisclose to leaving his job at the Parks and Recreation Department.  Unfortunately, Tom discovered that a competitor opened a rival store directly across the street called Tommy's Closet.  The competitor (whose identity I won't reveal here) informed Tom that Tommy's Closet was designed specifically to drive Rent-a-Swag out of business.

I don't know how the Parks & Recreation writers intend to resolve the situation (it will likely be sweet and goofy), but if I was Tom's attorney, I would advise him to sue the pants off (hehe) the owner of Tommy's Closet.  In tort law, there's something called tortious interference with an expected economic advantage and it gives business owners a way to stop those who maliciously attempt to drive expected consumers away from their business.  To win, Tom would have to prove that:

  1. Tom had a reasonable expectation of economic benefit from the operation of Rent-a-Swag,
  2. The competitor had knowledge of that expectation,
  3. The competitor intentional interfered with Tom's expected economic benefit, and
  4. Tom suffered economic damage as a result of the interference.

It wouldn't be very entertaining to watch, but Tom would most assuredly win a lawsuit against his competitor.  First, Tom had a good reason to expect an economic benefit; he was already receiving it!  His business was booming during the tail end of Season 5.  Tom was even able to hire employees and pay dividends to his stockholders.  Second, the competitor told Tom (in front of other people, I might add... witnesses!) that he was aware of Rent-a-Swag's financial success.  In fact, during the Season 5 finale, he tried to buy Rent-a-Swag from Tom because it had become a known moneymaker.  Third, the competitor admitted his desire to drive Tom out of business out of a misplaced sense of revenge and was actively luring customers away with free pizza and prizes.  Finally, we see in the Season 6 opener that Tommy's Closet had succeeded in drawing customers away from Rent-a-Swag; the episode shows Tom alone in his store, all the customers having fled across the street.  Tom has clearly suffered an economic damage.

While these kinds of malicious actions are rare, they do happen.  Therefore it's important for all artists and small business owners to be aware that there are options available to them should they become victims of tortious interference.  As a rule, the law doesn't look kindly upon those who open a business solely to spite another business.  In the real world, Tom has options - and so do you.  Of course, this is TV and I'm sure that whatever the Parks & Recreation writers come up with, it will be a hell of a lot funnier than watching this play out in a courtroom.

[You can also make a credible argument that Tom has a trade dress claim - a form of trademark infringement that protects a store's interior design - against the competitor since we learn that the interior of Tommy's Closet looks exactly like the interior of Rent-a-Swag.]