In American Broadcasting Company, Inc. v. Aereo, Inc., the U.S. Supreme Court decided that a “technologically complex system” that permitted Aereo subscribers to view over-the-air TV signals infringed the copyrights of broadcasters. The Court found that Aereo’s system was engaged in transmitting copyrighted material to the public without a license.

Aereo had created an innovative system in which subscribers rented tiny antennas. Each subscriber could in effect access an antenna over the Internet, and use that antenna to receive over-the-air programs from cities remote from the subscriber. Aereo believed the antenna array should be afforded the same rights as a housetop or set-top antenna, which is permitted to receive signals for an individual without any license.

The Court concluded that Aereo’s system was functionally indistinguishable from a community antenna TV (CATV) system. In the 1976 Copyright Act, Congress had expressly required that CATV systems obtain licenses to retransmit broadcast programming.

The dissenting opinion complained that the Court’s decision was stamping out innovation that should be allowed to occur as new technologies, such as those involving the Internet, are developed. The broadcast community has hailed the decision as halting what would have become rampant piracy. The decision likely will have a significantly more muted effect than either camp would have us believe, but it does stand for these principles:

Copyright law looks to substance, not form. The Court repeatedly pointed out that regardless of how it provided subscribers with content, Aereo’s system had an “overwhelming likeness” to a CATV system. Congress included provisions in the Copyright Act saying that CATV systems had to get licenses to content. So if a business looks like a CATV system, it will be treated like one for copyright law purposes.

Owning your own copy makes all the difference. The Court went out of its way to say that Aereo’s subscribers did not own the copies of content that were downloaded in the process of making them accessible to subscribers. The Court explained that viewing your own copy of a work would avoid the “public” transmission that it found Aereo engaged in. This aspect of the opinion leaves significant room for innovation involving content of which a user does own a copy.

Aereo may just be about CATV systems. The Court relied heavily on the fact that Congress had specifically enacted a statute dealing with CATV systems. Innovative systems that are not analogous to CATV systems are unlikely to be subject to the Court’s decision and logic, simply because the Congressional mandate was so specifically targeted on these systems.  The Court cautioned that its decision should not be applied to technologies such as cloud computing and remote access DVR systems.

There is no question that the Aereo decision is a defeat for Aereo itself and a victory for broadcasters. Aereo is likely to go out of business. Stocks of major broadcasters were up substantially after the decision was announced.  But the impact of the decision on others remains to be seen.