Aereo: What does the Supreme Court decision mean for cloud?

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This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

The Aereo decision wasn't just the outcome of a case about content and piracy eagerly followed by lawyers, broadcasters, channel providers and the creative industry. At stake was also a threat to a multi-billion dollar cloud industry which was reportedly "freaked out about this case" and the likelihood that it could have much wider implications. Would a loss on the part of Aereo result in wider-reaching consequences in terms of liability for well-known services such as Dropbox?

A sigh of relief (albeit one with a remaining tremor of uncertainty in it) was to be heard last week on that count. The judges emerged with a decision which pointed the finger at Aereo whilst seeking to distinguish its activities and services from cloud service providers whose service is essentially storage provision.

A problem remains however that the judges were clearly battling with this element of their decision and resisting responsibility to set out exactly where this dividing line falls. Indeed, the court tried its hardest not to focus on detailed technological distinctions. Instead it focused on the fact that Aereo's practices were "highly similar to those of [a cable TV solution]" and that it was to all intents and purposes a contrived solution to avoid copyright legislation. So the cloud industry is left with a vague test to apply: when does their activity start being dangerously "similar to" a cable TV solution and when is it sufficiently different?

The judgment gives a few hints and titbits. For example, it states that there is some comfort for new technologies in their finding that "public" applies to a group of individuals who pay primarily to watch broadcast television programmes and does not include those who act as owners or possessors of the relevant product (so distinct from storage in that case then). However, overall, it states that "questions involving cloud computing, remote storage, DVRs and other novel issues….should await a case in which they are squarely presented" meaning that we may well see further debate in different jurisdictions on this point.

However, this is clearly not the major blow for the cloud industry that it could have been. It hasn't created or resulted in a cloud vs content decision and the two industries will continue working together in many different ways. After all, much of the television and movie industry now relies on cloud services for the provision of their own OTT (over the top television) offerings. Netflix, which has been called the biggest cloud app going, and others such as Lovefilm or Magine, survive and even thrive precisely as a result of their popular combination of cloud plus content. The distinction however is that they work with the content industry and legitimately license the content that they make available. For those who don't and who generate users and revenue from pirated content, the world has certainly become a more dangerous place to do business.

To learn more about the implications of the Aereo decision, read our Aereo and the future of cloud TV report.