Aereo's streak of legal victories over the broadcasting industry has come to an end.
The startup company, which sends broadcast television signals to consumers via the Internet, will have to shut down its operations in Utah and Colorado thanks to a ruling by the U.S. District Court in Utah.
The ruling, which covers the 10th Circuit, grants a request for preliminary injunction against Aereo that was sought by Fox Broadcasting Co. and other TV station owners.
The decision comes about two months before the Supreme Court is scheduled to hear arguments from the major broadcast networks that Aereo should be shut down because it illegally steals their copyright.
Broadcasters are asking the high court to overturn an earlier decision by the U.S. Court of Appeals for the 2nd Circuit in New York, which said that Aereo's transmissions and recordings are not "public performances" of copyrighted material.
The Utah ruling is important because it is the first a court has sided with broadcasters in their fight against Aereo.
"This is a significant win for both broadcasters and content owners," a Fox spokesman said in a statement.
Fox, along with Sinclair Broadcast Group and Nexstar Broadcasting Co. filed complaints against Aereo in Utah in October when it launched its service there. It has since started offering its service in Denver, which is also covered by the injunction. Other states within the 10th District are Kansas, New Mexico, Oklahoma, Wyoming and Montana.
Launched in 2012 and backed by media mogul Barry Diller, Aereo distributes broadcast signals via a tiny antenna and offers customers access to a cloud-based digital video recorder that holds up to 60 hours of content. The service costs $8 to $12 a month.
Broadcasters argue that they need to be compensated by Aereo otherwise it is engaging in copyright theft. The fear is that if Aereo grows in popularity it could threaten distribution fees broadcasters get from pay-TV distributors including cable and satellite companies.
Besides Fox, CBS, NBC and ABC are also engaged in a legal battle with Aereo.
In the 26-page ruling, Judge Dale Kimball said the broadcasters made the case that their fight against Aereo will succeed on the merits.
"Based on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs' programs," Kimball wrote. "Despite its attempt to design a device or process outside the scope of the 1976 Copyright Act, Aereo's device or process transmits Plaintiffs' copyrighted programs to the public."
Aereo Founder Chet Kanojia said the company is "extremely disappointed that the District Court in Utah has chosen to take a different path than every other court that has reviewed the Aereo technology." Consumers, he added, "have a fundamental right to watch over-the-air broadcast television via an antenna and to record copies for their personal use."
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