By Dan Levine
(Reuters) - A federal judge in Utah on Wednesday barred online television service provider Aereo from retransmitting programs in a handful of U.S. states, ahead of a closely watched Supreme Court hearing this year between the company and major broadcasters.
U.S. District Judge Dale Kimball in Salt Lake City issued an injunction, ruling that broadcasters including Twenty-First Century Fox Inc had shown a likelihood that they could prove Aereo committed copyright infringement. The ruling will largely impact Aereo customers in the Salt Lake City and Denver metro areas.
Aereo, backed by billionaire Barry Diller's IAC/InterActiveCorp, does not pay broadcasters for use of programming that it retransmits to subscribers. Its users pay a low monthly fee to watch live or recorded programs on their computers or mobile devices.
Last year a federal appeals court in New York ruled in favor of Aereo in a similar lawsuit. Broadcasters appealed to the U.S. Supreme Court, which last month agreed to hear the case. A decision is expected by the end of June.
Kimball put the remainder of the Utah case on hold pending the high court's decision, with the injunction in place. Beyond Utah, Colorado and Wyoming, the injunction also covers New Mexico, Oklahoma, Kansas and parts of Montana and Idaho, though Aereo had not offered its services in those latter five states.
Aereo Chief Executive Officer Chet Kanojia said the company is "extremely disappointed" that the Utah federal court came to a different conclusion than every other court that has reviewed Aereo's technology. Kanojia also said in a statement that Aereo would "pursue all available remedies to restore (customers') ability to use Aereo."
In a separate statement, Fox said the ruling is "a significant win for both broadcasters and content owners."
Aereo subscribers can stream live broadcasts of TV channels on mobile devices using miniature antennas, each assigned to one subscriber. The service was launched in March 2012 in the New York area. The company has since expanded to about 10 cities and plans to enter several more.
The broadcasters claim the service violates copyrights on TV programs, and threatens their ability to control subscription fees and generate advertising.
Traditional cable television providers are also watching the issue. Cablevision Systems Corp has said the legal theory advanced by broadcasters to the high court would spell trouble for cloud-based content services and threaten Cablevision's ability to offer its customers DVR recording.
In court filings in Utah, Fox argued that "free-riders like Aereo" could deprive residents of programming like local news. Randall agreed in his ruling.
PUBLIC INTEREST DEBATED
"Original local programming, covering local news, sports, and other areas of interest, costs millions of dollars to produce and deliver to the public," he wrote, "and the public interest plainly lies in enjoining copyright infringement that threatens the continued viability of such local programming."
In his statement, Aereo's Kanojia said consumers have a "fundamental right" to watch over-the-air television via an antenna.
"The Copyright Act provides no justification to curtail that right simply because the consumer is using modern, remotely located equipment," Kanojia said.
The case in U.S. District Court, District of Utah is Community Television of Utah LLC et al. vs. Aereo Inc., 13-910.
(Reporting by Dan Levine in San Francisco; Editing by David Gregorio and Cynthia Osterman)