Broadcasters including ABC, CBS, Fox, NBC and PBS sued Aereo for copyright infringement, saying Aereo should pay for redistributing the programming in the same way cable and satellite systems must or risk high-profile blackouts of channels that anger their subscribers.
The National Association of Broadcasters praised the court for rejecting Aereo's argument that the lawsuit was an attack on innovation. "Broadcasters embrace innovation every day, as evidenced by our leadership in HDTV, social media, mobile apps, user-generated content, along with network TV backed ventures like Hulu," NAB president Gordon Smith said.
The broadcasters and professional sports leagues also feared that nothing in the case would limit Aereo to local service. Major League Baseball and the National Football League have lucrative contracts with the television networks and closely guard the airing of their games. Aereo's model would pose a threat if, say, a consumer in New York could watch NFL games from anywhere through his Aereo subscription.
The federal appeals court in New York ruled that Aereo did not violate the copyrights of broadcasters with its service, but a similar service has been blocked by judges in Los Angeles and Washington, D.C.
The 2nd U.S. Circuit Court of Appeals said its ruling stemmed from a 2008 decision in which it held that Cablevision Systems Corp. could offer a remote digital video recording service without paying additional licensing fees to broadcasters because each playback transmission was made to a single subscriber using a single unique copy produced by that subscriber. The Supreme Court declined to review that ruling.
In the Aereo case, a dissenting judge said his court's decision would eviscerate copyright law.
Judge Denny Chin called Aereo's setup a sham and said the individual antennas are a "Rube Goldberg-like contrivance" — an overly complicated device that accomplishes a simple task in a confusing way — that exists for the sole purpose of evading copyright law.
Smaller cable companies, independent broadcasters and consumer groups backed Aereo, warning the court not to try to predict the future of television.
Indeed, Scalia himself noted that the high court came within a vote of declaring videocassette recorders "contraband" when it ruled 5-4 for Sony Corp. in a case over recordings of television programs 30 years ago.
The case is ABC v. Aereo, 13-461.
Associated Press writers Nancy Benac and Anick Jesdanun in New York contributed to this report.