On June 25, 2014, in American Broadcasting Companies, Inc. v. Aereo, Inc., the US Supreme Court issued a narrowly tailored opinion holding that Aereo's service publicly performs the plaintiffs' television programming within the meaning of the Copyright Act's "transmit clause" in violation of their public performance rights (No. 13-461, (S. Ct. June 25, 2014)). In reversing the US Court of Appeals for the Second Circuit's denial of the plaintiffs' motion for a preliminary injunction, the court emphasized the limited nature of its holding.

The plaintiffs are television producers, programmers, broadcasters and marketers. Aereo is a company that provides its subscribers access to over-the-air television broadcasts over the internet. Through Aereo's service, subscribers use a programming guide to select and view current and future-scheduled television programs on their internet-connected devices, including internet-ready televisions, computers, laptops and mobile devices. Aereo's service uses tiny antennas to receive over-the-air broadcast signals. An antenna is assigned only to one subscriber at a time and only captures programming when it is selected by the assigned subscriber. The service then stores the programming on its servers in a folder dedicated to that subscriber and streams it to that subscriber either with a delay of only a few seconds or when the subscriber later chooses to view it. As a result of its architecture, the service effects one-to-one transmissions where each copy of a program is accessible only to the subscriber that requested it.

The plaintiffs sued Aereo in the US District Court for the Southern District of New York, asserting, among other claims, that the Aereo service violates their public performance rights in their programming and sought a preliminary injunction based on that claim. On July 11, 2012, the SDNY denied the plaintiffs' motion, finding that under the Second Circuit's decision in Cartoon Network LP v. CSC Holdings, Inc. (Cablevision), 536 F.3d 121 (2d Cir. 2008)) Aereo's one-to-one transmissions of the television programs are private performances and, therefore, did not violate the public performance right. On April 1, 2013, a divided Second Circuit panel affirmed the SDNY's ruling, also finding that Aereo's transmissions to subscribers were private, not public. For more on the SDNY and Second Circuit decisions, see Legal Updates, SDNY Denies Copyright Infringement Preliminary Injunction against Aereo and Second Circuit Affirms Denial of Preliminary Injunction Against Aereo.

For more background on this case and its implications, see Article, Expert Q&A on ABC v. Aereo and Copyright Public Performance Rights.

In an opinion written by Justice Breyer, with Justices Scalia, Thomas and Alito dissenting, the Supreme Court reversed the Second Circuit, holding that Aereo's service effects public performances under the Copyright Act. Key factors in the Court's decision were that:

Court emphasized that its decision has limited applicability and, therefore, is not likely to stifle technological innovation.

While the Supreme Court's holding is significant for Aereo and the television business, it provides no clarity on the Copyright Act's application to cloud storage, remote DVR and other new technologies. The Court's substance-over-form approach to Aereo's service highlights the risk of infringement liability associated with using technology to exploit perceived loopholes in the Copyright Act.