BizTech Law Blog

The Final Chapter on Aereo’s Chapter 11

On June 25, 2014, the United States Supreme Court ruled that cloud-based television-streaming service, Aereo, violated U.S. copyright law and its subsequent Chapter 11 bankruptcy filing has come to a dramatic conclusion. We have followed this case throughout its lifecycle, and updated this blog with posts like this one to keep you up-to-date on its implications for copyright and telecommunications regulations. Now, as reported by Inc. and other media, the company’s sale of its technology – once considered disruptive and wildly innovative – for a “disappointing” $2 million brings the technology company’s story to an end.

Following the Supreme Court’s ruling, Aereo filed for bankruptcy, and recently conducted an auction sale of its intellectual property and hardware in order to raise funds to pay creditors. The company sold its name and customer list to TiVo, and its patent portfolio to RPX Corporation, which has been categorized by some as a patent troll. Aereo sold off its remaining equipment to Alliance Technologies. Aereo had expected the sale to raise up to $40 million.

Aereo’s backstory was one of high highs and low lows. The company’s technology allowed subscribers to view television programs (with a minor delay) over the Internet with the purchase of a miniature antenna, a product and service that promised to transform the way viewers could access television content. It raised a reported $100 million in funding from investors such as media mogul Barry Diller.

However, broadcast networks, including ABC, CBS, NBC and Fox, alleged copyright infringement – arguing that Aereo was essentially performing their programming work “publicly,” in violation of the Transmit Clause in the Copyright Act – and brought suit against the company in the U.S. District Court for the Southern District of New York. The plaintiffs sought, but were denied, a preliminary injunction prohibiting Aereo from streaming programming. The case was appealed to the Second Circuit, which affirmed, siding with Aereo. The case then went to the Supreme Court, which reversed the lower courts.

"We are very disappointed with the results of the auction," said William Baldiga, a partner at Brown Rudnick serving this week as Aereo's counsel. "This has been a very difficult sales process, and the results reflect that," Baldiga added.

In the ever-evolving world of technology – particularly in the telecommunications field where we have witnessed no less than a complete revolution in the way services are delivered and consumed – it can be a challenge to navigate legal issues including intellectual property protection and copyright infringement. If you are a business owner with questions or concerns around how to expand your offerings or bring an innovation to market, please contact an attorney from our Technology team. We are here to help demystify this complex marketplace and make it work for you.

Categories: Copyright