The Supreme Court ruled Wednesday that an Internet startup can't take television programs from the airwaves and give them to subscribers to watch on portable devices without the company paying the TV networks.
The decision is a big win for television networks like ABC, which filed suit against Aereo Inc., a two-year-old Internet streaming service, as well as for the National Football League and other major sports leagues that want licensing fees from the company.
How they voted
In the majority
Stephen Breyer John Roberts, Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor, Elena Kagan
Antonin Scalia, Clarence Thomas, Samuel Alito
The justices, in a 6-3 decision, said Aereo is violating the broadcasters' copyrights by taking the signals for free. The ruling preserves the ability of the TV networks to collect huge fees from cable and satellite systems that transmit their programming.
Aereo is available in New York, Boston and Atlanta, among 11 metropolitan areas, and uses thousands of dime-sized antennas to capture television signals and transmit them to subscribers, who pay as little as $8 a month for the service.
The high court said Aereo is equivalent to a cable company, not an equipment provider as the company has claimed.
"Insofar as there are differences, those differences concern not the nature of the device that Aereo provides so much as the technological manner in which it provides the service," said Justice Stephen Breyer in writing the majority opinion. "We conclude that those differences are not adequate to place Aereo's activities outside the score of copyright laws."
Breyer added the court doesn't believe the ruling will stifle, "discourage or to control the emergence or use of different kinds of technologies."
The justices' decision reverses a lower-court ruling that said Aereo didn't violate copyright laws.
“We’re gratified the court upheld important copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivized,” ABC’s parent company, the Walt Disney Co., said.
And SAG-AFTRA, which represents more than 165,000 actors, performers, broadcast journalists and others, said the ruling “sends a clear and strong message” that companies like Aereo cannot use “inconsequential technical workarounds to evade Congress’ intent to protect content creators and owners in the Copyright Act.”
Major sports leagues, which have lucrative contracts with the television networks, have closely watched the case, worrying that Aereo's model threatened their revenue streams.
The NFL and Major League Baseball, in an amicus brief to the court supporting ABC’s lawsuit, called Aereo’s business “technological gimmickry that serves no valid purpose to nullify critically important copyright rights.”
These are “rights that the leagues fought hard to secure and that have become an integral part of their businesses during the past four decades,” they wrote.
Cable systems and satellite carriers pay more than $300 million annually in “compulsory licensing” fees for the right to retransmit broadcast programming, with sports programming, including the NFL and MLB, collectively receiving about one-third the amount.
Had services such as Aereo been allowed to operate without paying for the programming, more people might have ditched their cable services, meaning broadcasters would have been able to charge less for the right to transmit their programs.
Such a scenario would have put cable companies in a position to charge consumers higher rates to make up the difference, and possibly charging premium rates for major sporting events.
The Associated Press contributed to this article, which has been updated.