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Justices consider future of TV and copyright in Aereo case

April 22, 2014 at 6:14 PM EST
The Supreme Court heard a request by television broadcasters to shut down Aereo, a TV streaming tech startup that has potential to alter the business model of traditional broadcasting. For more on the case, Jeffrey Brown talks to former Acting Solicitor General Neal Katyal and Gary Shapiro, CEO of Consumer Electronics Association.
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TRANSCRIPT

GWEN IFILL: For more on the arguments behind today’s arguments on the Aereo case, we turn things over to Jeffrey Brown.

JEFFREY BROWN: And joining us now, Neal Katyal, the former acting solicitor general of the United States and legal adviser to the broadcasters in this case, and Gary Shapiro, the president and CEO of the Consumer Electronics Association. His organization filed a brief with the Supreme Court in support of Aereo.

Welcome to both of you.

NEAL KATYAL, Former Acting Solicitor General: Thank you.

JEFFREY BROWN: So, Neal Katyal, so let’s flesh out a little bit of what Marcia was just saying.

Why should Aereo be subject to fees? Why can’t it use antennas over public airwaves to offer services to consumers?

NEAL KATYAL: Well, Aereo is just like everyone else.

As Justice Ginsburg pointed out in today’s argument, everyone else who wants to grab content has to pay for it. And the broadcast companies spend each year billions of dollars creating content, acquiring content, distributing the content.

And if an interloper can come along like Aereo — and Aereo’s business model is essentially grabbing those signals from over the air, bundling them together and then selling them for a profit — well, then the entire model and the entire premise of copyright law is going to be disrupted.

And so I think the debate today in the court really properly focused on the question. It wasn’t really, is Aereo violating the copyright law? I think there was a lot of agreement about that point. I think it was how broadly or narrowly the opinion should be written.

JEFFREY BROWN: All right, Gary Shapiro, let’s start just with that one issue. Aereo — the broadcasters paid for the content. Why should Aereo be able to take it for free essentially?

GARY SHAPIRO, CEO, Consumer Electronics Association: Well, I think that we were at different arguments, because there is a huge question over whether or not Aereo Violated the law.

And actually it’s whatever the Supreme Court says it is. But at this point, two courts have said they have not violated the law. And, in fact, the statute as written, which was, interestingly, barely discussed at the case, is pretty clear that they have not violated the law.

There is a case called the Cablevision case, a Second Circuit decision, which even the opponents of Aereo confessed today, well, that decision has to be fundamentally reversed, at least in principle, if we were to find in favor of the broadcasters. So they relied upon a statute, they relied upon case law.

And this guy went out as an entrepreneur, a great American, doing what innovators do, and said, this is a law, I’m going to follow it.

And the other case which is very relevant is the Sony Betamax case, which I was involved in a long time ago, and it said you have the right as a consumer to record over-the-air television. So there’s no one questioning that today, but a lot of people are relying on it, because that was a fundamental right. And that right…

JEFFREY BROWN: Excuse me. The question still is, do you have a right to make money off of recording that?

GARY SHAPIRO: Well, Sony has the right to selling a VCR.

And Aereo has a right to basically sell access to an antenna. And, as Aereo’s attorney pointed out, there’s nothing different between what we’re doing with a centralized antenna that is located, as opposed to going in and installing them at people’s houses.

The other thing that is at issue here is that broadcasters get for free on loan spectrum that is public spectrum. Out of that, they have an obligation to provide a free over-the-air service. The problem is today that the world has changed from 40 years ago, when broadcasters had 100 percent of the market share.

Now we have smartphones, we have laptops, we have tablets, we have netbooks, and we have different ways of accessing information. So, only less than 8 percent of the American public even rely on — exclusively on free over-the-air television.

JEFFREY BROWN: OK.

GARY SHAPIRO: So, this is a way people get it now. And it’s a new world of technology.

JEFFREY BROWN: All right, respond there. It’s the public airwaves, new world of technology.

NEAL KATYAL: Yes, it’s a clever argument that is unfortunately the argument that Congress precluded in 1976.

They wrote the copyright law broadly to cover — quote — “any device or process that either exists or that is deemed to exist in the future that retransmits the broadcast signal.”

And that was a fundamental balance Congress engaged in at that time. They said, we need to incentivize the creation of content. That’s something that goes all the way back to our founders in their 1787 Constitution. And they said, the way we will do that, yes, broadcasters, you have a public duty, you have public spectrum and the like. But if someone grabs your signals from over the air, be it a cable company or anyone else, and tries to make money off of that, you have got to pay for that underlying content.

That’s the American way. An interloper can’t just come along and steal those signals essentially and make money off of it.

JEFFREY BROWN: Take — put the law aside a moment. Explain it to the general public. That’s a pretty compelling argument.

GARY SHAPIRO: The general public…

JEFFREY BROWN: They — the broadcasters created this stuff, they paid for it. Why should Aereo be able to…

GARY SHAPIRO: For the same reason that they will loan the spectrum.

It’s a — except for PBS, which is different, it’s an advertiser-supported medium. What Aereo is doing is expanding the audience. There are people who live in apartment buildings in major cities. They can’t get an antenna or top of their building or have access.

This allows them to get the signal which they are entitled to receive. They are watching the commercials. We’re not skipping forward commercials. We’re not deleting. We’re doing bringing something in from outside the local area. They’re getting simply what they’re entitled to receive with the spectrum that is lent to the broadcasters for that free over-the-air service.

The problem with the broadcasters’ argument is they can’t get over the Sony Betamax right that you have the right to record that. And they can’t get over this decision of the Second Circuit which says something like this that a cable company is doing with a centralized system is perfectly legal.

Along the way, if the court is going to find for broadcasters, they’re going to have to ignore the words of the statute, ignore the Sony Betamax case, and probably ignore that Second Circuit decision and try to reverse it in principle.

JEFFREY BROWN: This has been looked at in some very grand terms, as in the future of television. Is that what’s at stake? What happens if Aereo wins?

NEAL KATYAL: Well, I think it’s a very complicated thing.

And just to respond quickly to the Sony Betamax case, that wasn’t even mentioned today. It wasn’t mentioned in Aereo’s brief in any heavy way, and for a good reason, because, exactly as you point out, this is about someone making money, an interloper making money and taking the signals from over the air.

JEFFREY BROWN: I didn’t point it out. I asked about it.

NEAL KATYAL: Great.

But I think, in terms of the future, I think we think about the future of copyright law. The kind of essence copyright law is, look, if I spend the money to develop that content and produce it, one of the bundles of rights I have is the right to distribute it in the way I see fit.

I can throw it up on the Internet. I can pipe it into people’s homes over a coax cable. But that’s a fundamental right. And if Aereo prevails today, which I think is going to be tough, as the argument demonstrated, then we are going to fundamentally change what copyright law is about.

And maybe that’s an interesting debate. That’s a debate for Congress to have, not the court trying to change what Congress authorized in 1976.

JEFFREY BROWN: And what do you see as the implications here, television and beyond, as Marcia brought up the whole idea of cloud computing, other technology?

GARY SHAPIRO: Well, first, the transcript will show the Sony Betamax case was mentioned several times.

But, besides that, what the future is and what — this will affect future innovation. The reason the Sony Betamax case was important, if the court had gone the other way, there would not only be no VCR. There would be no personal video recorder. There would be no iPod. There likely would be restrictions on the Internet and whole waves of innovation would be stopped.

The concerns the justices, many expressed, that if we rule the way you want me to, broadcasters, help us. How could we possibly do this and not eliminate cloud computing and not eliminate other technologies which are coming along? Try to parse these definitions. The world has changed in 30 years. Broadcasters had 100 percent of the eyeballs.

Now they less than 7 percent. Yet they are using this free spectrum and they have a duty to provide free over-the-air, commercially-supported broadcasting, which they are doing. This actually helps them. They should work with Aereo. If they to go to Congress, change it. But the reality is, the law is not on their side as it stands now with the precedent and the statute.

JEFFREY BROWN: All right, decision to come in a few months. Right?

NEAL KATYAL: Absolutely.

JEFFREY BROWN: Gary Shapiro, Neal Katyal, thank you both very much.

NEAL KATYAL: Thank you.

GARY SHAPIRO: Thank you.