NEW YORK - An Internet company offering inexpensive live broadcast television feeds to computers, tablets and smartphones doesn't violate U.S. copyright law, a divided federal appeals court said Monday.
The 2-to-1 ruling by the 2nd U.S. Circuit Court of Appeals cleared the way for Aereo Inc.'s expansion of its $8-a-month service, which had been limited to New York City until this year. Several weeks ago, the company expanded to New York City suburbs, including New Jersey and parts of Connecticut, and it has announced plans to expand to Boston, Chicago, Philadelphia, Washington and 18 other U.S. markets later this year.
Broadcasters including Fox, ABC, CBS, NBC and others had sued, saying Aereo copies and retransmits their programs as they are first aired without permission.
The ruling came in a preliminary stage of the case in federal court in Manhattan. More evidence must be presented to a lower court judge before she issues a final decision. Other legal challenges have been filed elsewhere against a budding industry that stands to challenge the dominance of cable or satellite companies that offer their licensed programming to consumers.
Aereo positions itself as a cheaper alternative to cable and satellite, though it offers far fewer channels, since it is only retransmitting the broadcast networks freely available to anyone with an antenna. (The exception is Bloomberg TV, the financial news channel that reached a deal with Aereo.)
Broadcasters have said in court documents that allowing Aereo to proceed without licenses could threaten the ability of broadcasters to produce marquee sports or awards show events, including the Academy Awards and the Grammys. They also say cable and satellite operators may decide to adopt Aereo's technology or cause revenues from those paying licensing fees to decline because the content is devalued. And they say Aereo's success would hurt their ability to license content on an on-demand basis over the Internet.
In a majority opinion written by Judge Christopher F. Droney, the appeals court said the Barry Diller-backed Internet company does not appear to violate copyright law because subscribers are assigned to their own tiny antennas at Aereo's Brooklyn data center. The antennas grab free over-the-air broadcasts, and Aereo streams the video to subscribers over the Internet. Customers can view programs on their computers, tablets or smartphones, receiving the transmissions over the Internet without additional hardware.