Is the Aereo decision a setback for innovation?

[Commentary] One of the big questions preceding the Supreme Court’s decision in the Aereo case earlier was whether a holding against Aereo would put cloud services into such a legally precarious position that the innovation and investment climate would chill.

While the decision clearly makes Aereo’s use of its technology illegal, one should not be too quick to foretell a drastic impact on all hosted services. Since the court found that Aereo’s service was “substantially similar” to cable systems, Aereo, its successors, or other players in the space could look to monetize the technology while paying the compulsory licenses that Section 111 of the Copyright Act spells out in dizzying complexity.

Or the broadcasters and other content stakeholders could acquire Aereo-like technology and use it to supplement the other means of content delivery currently at play.

In either scenario, the needs for investment and innovation in providing infrastructure (as well as the need for clarity on network neutrality) remain firmly intact. The court’s decision expands the class of online intermediaries who may be liable for direct copyright infringement. In that respect, the case differs from other important technology-provider copyright cases like the Betamax case, Grokster and the Cablevision case.