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Ebook Damages Could Take Big Bite Out Of Apple

July 13, 2013 by Wendy Davis

Hearst is taking on Aereo in federal court in Boston, alleging that the online video start-up is a “free-rider” that infringes copyright by streaming over-the-air TV programs to tablets and smartphones.

Hearst is seeking an injunction prohibiting the Barry Diller-backed start-up from continuing to operate. “Aereo’s business is premised on a simple concept: charge its subscribers a fee for transmitting television programming while paying copyright holders nothing,” Hearst argues in its legal papers.

Aereo, which rolled out in Boston in May, allows paying customers to stream live over-the-air TV shows to iPhones, iPads and other devices. The company also offers DVR-like functionality, enabling people to “record” shows and watch them later.

Hearst, which owns the ABC affiliate WCVB in Boston, says in its court papers that it hopes to also stream TV shows, but that its efforts to do so will be hindered by Aereo's Web streams.

“For broadcasters like WCVB, Internet streaming involves discussions, negotiations and agreements between and among various stakeholders” the company says in court papers. “Before WCVB can fully stream its daily programming, it must ensure that it is operating within all parties’ rights and obligations, a process made substantially more complicated by Aereo’s unauthorized internet transmissions.”

Bill Fine, president and general manager of WCVB, elaborated in court papers that the station can't stream network programs without first obtaining the content owner's permission. Therefore, he argues, Aereo's launch in Boston “would deprive WCVB of a significant first-mover advantage.”

The company is already facing litigation in federal court in New York, where the major TV networks have filed copyright infringement lawsuits. So far, Aereo has been winning that legal battle in New York, where trial and appellate judges have rejected requests by TV networks to shutter the start-up. The rulings in those cases said that Aereo's technology does not appear to infringe copyright -- which is a strong indication that Aereo ultimately will prevail in federal courts in New York.

Aereo has argued in those cases that its system is legal due to its architecture. The company uses thousands of tiny antennas to capture over-the-air broadcasts. It then streams shows to users on an antenna-to-user basis. Aereo says it has the same legal rights as consumers to capture over-the-air signals. The company also says its streams are “private” because each stream comes from a separate antenna; therefore, they don't infringe the networks' right to publicly perform shows.

But even though Aereo so far is winning in New York, the law governing this type of technology is unsettled -- the TV broadcasters could prevail in other areas of the country. Last year, a trial judge in California has issued an injunction preventing the Aereo rival FilmOn X (previously called Aereokiller) from operating.

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