Aereo is leaving the courts dazed and confused

An ingenious, Rube Goldberg-style invention called Aereo, backed by Barry Diller's IAC/Interactive Corp., is posing riddles for a federal judge, whose decisions could have enormous consequences for the future of television distribution.

The lawsuit is the latest iteration of a now familiar spectacle in which federal courts are tasked with cramming a digital technology into the Procrustean bed of analog-era legal concepts. In this instance, the service looks quite dubious when viewed from 30,000 feet, but becomes more plausible as you get closer and start wading into the weeds. Aereo's technology works like this: The company rents space in a warehouse in Brooklyn and fills it with custom-made, wine cooler-sized computer hardware jammed with vertically aligned blades. Projecting from the blades are thousands of thumbnail-sized television antennas. These are tiny, modern-day versions of the old bunny ears that people have used to watch over-the-air television since time immemorial. Aereo then effectively rents each customer one of these antennas and all the other off-site hardware needed to operate her own individualized remote DVR using her Apple (AAPL) iPhone or iPad. As with most DVRs, the customer can choose to watch live (with a pause-function available) or watch later. The signal reaches the customer's device over the Internet. The service currently costs $12 a month, and provides access to the 28 over-the-air channels one can receive at that Brooklyn warehouse.