Tuesday, March 6, 2012

Start-up company attempts to circumvent stiff copyright laws

A coalition of major broadcasters has sued Aereo, a well-funded start-up that hopes to offer New York residents television broadcasts streamed over the Internet, in federal court on Thursday. The broadcasters argue Aereo's business model infringes their copyrights.

Unveiled in February, Aereo plans to offer broadcast TV directly to phones, tablets, and televisions in New York City, for $12 per month. It gives access to all major networks, including plaintiffs CBS, NBC, FOX, ABC, CW and PBS, as well as local channels, and can store up to 40 hours of programming.

At first glance, it appears to be a no-win situation Aereo, following the recent crackdowns on websites that stream TV programs without authority. The fact that they're trying to make money off it only seems to worsen their position. But not so fast. It turns out that there is something more to their business model than meets the eye.

Rather than capturing content with a single antenna, Aereo plans to have enough tiny physical antennas in its server room that each active user can be assigned his own personal antenna. Aereo claims it is effectively letting each customer use a "remote TV" whose antenna just happens to be located far away from its screen. In other words, what the subscriber would be paying for is the right to use the tiny antenna assigned to him/her. Clever, no?

But is it legal? Apparently so, thanks to a 2008 federal appeals court decision (the Cablevision case) which ruled that a "remote DVR" system offered by a company named Cablevision (therein defendant) did not infringe copyright. The decision was primarily anchored on the following facts: (1) that the user, not Cablevision, was in control of which programs were recorded and played back using the system; and (2) that Cablevision stored a separate physical copy of a program for each user who requested it through a DVR hardware located in the company's server room, rather than storing a single copy and streaming that copy to every user. Replace the DVR hardware with tiny antennas then you have Aereo.

I've always stated that perhaps the only area of law that interests me is intellectual property (and ICT, of course). Why? Cases like this. The opportunity to come out with innovative solutions to skirt the law--without having to deal with moral dilemmas. Did I mention that I'm interested in tax practice, too?

Source: WSJ

Francis Paolo Tiopianco, Entry #12

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