Supreme Court paints a bull’s-eye on the ‘cloud’

U.S. Supreme CourtA high court ruling this week that sent a renegade over-the-air TV provider reeling could leave a scar that stretches into the digital ‘cloud.’

This week, the U.S. Supreme Court cinched shut a legal loophole that let upstart Aereo tap the prime-time broadcast signals of the major networks and stream them directly to customers, bypassing cable and satellite providers altogether and skirting the systems and agreements networks created to charge for their broadcasts. Those charges created a revenue stream worth about $4.3 billion in 2013.

A legal challenge arose almost the moment Aereo started two years ago intercepting the network signals relayed from the antennas atop the Empire State Building in New York City and sending those signals straight to subscribers’ computers or mobile devices. Aereo grew to serve 11 metro areas.

The networks said what Aereo was doing amounted to copyright infringement. Last year, a federal appeals court disagreed.

But the Supremes ruled 6-3 on Thursday that Aereo resembles a cable TV service and so should comply with federal rules cable and satellite providers follow in distributing copyrighted material. The rules were first laid in place in 1984, when home VCR recording was popular, and were extended in 2008 to cover remote storage and DVR usage.

Aereo is not expected to survive. However, Thursday’s ruling likely will ripple out much further.

Aereo logoDuring the case’s oral arguments, held before the Supreme Court in April, a point arose that widely available cloud storage services managed by Apple, Dropbox and Google are not held to the same standard as Aereo though they offer similar remote data access. Currently, the onus of copyright violation involving files stored in the cloud falls on users and not the services themselves.

In other words, if a pirated broadcast is discovered in someone’s Dropbox account it’s the account’s owner who suffers, not Dropbox.

The Supremes stepped gingerly away from the door they opened by saying, “We cannot now answer more precisely how (copyright provisions) will apply to technologies not before us.” Analysts of the ruling say this just opens a path for data providers to squeeze usage fees out of cloud storage providers.

“The court is sending a very clear signal that you can’t design a system to be the functional equivalent of cable,” University of Maryland legal scholar James Grimmelmann told Vox. “The court also emphasizes very strongly that cloud services are different. But when asked how, it says, ‘They’re just different, trust us.’”

If it ever comes down to making a legal distinction, cloud users may also suffer, says Mark McKenna, associate dean and professor of law at Notre Dame.

“That’s the cloud companies’ concern — do they have to now make sure all of their users are only making available things they own?” he told Forbes.com.

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David Sheets is a freelance writer and editor, Region 7 director, and past-president of SPJ’s St. Louis Pro chapter. Reach him by e-mail at dksheets@gmail.com, on Twitter at @DKSheets, on Facebook and LinkedIn.

 

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