NEW YORK (Reuters) - In another win for Barry Diller's IAC-backed Aereo Inc, a U.S. appeals court declined on Tuesday to rehear an appeal by the major broadcasters seeking to temporarily shut down the online television start-up.
The broadcasters, including Walt Disney Co's ABC and Comcast Corp's NBCUniversal, contend Aereo infringes their copyrights. In April, a panel of the U.S. 2nd Circuit Court of Appeals refused to close down Aereo while a lawsuit over the service continued in Manhattan federal court.
The broadcasters had asked the full court to rehear the appeal, but the majority of the court on Tuesday declined. In dissent, U.S. Circuit Judge Denny Chin, joined by circuit judge Richard Wesley, said the full court should hear the case and that Aereo's reliance on precedent in arguing that its technology does not infringe the networks rights is "misplaced."
The case has been closely watched by the television industry because Aereo's service threatens the traditional broadcast model and broadcasters see Aereo as a challenge to their ability to control subscription fees and generate advertising income.
Aereo charges users about $12 a month to watch live or recorded TV channels on their computers or mobile devices. The company, which does not pay licensing fees to the broadcasters, streams the televised content to subscribers via tiny off-site antennas.
Scott Grogin, a representative for plaintiff Fox Networks Group, called the court's decision disappointing but not unexpected. Fox is reviewing its options, including whether to seek review by the U.S. Supreme Court, Grogin said.
CBS Broadcasting Inc also called the decision "no surprise" and said that "all industry lawsuits against Aereo and similar services that steal our content are going forward as planned."
A spokeswoman for ABC said it remained confident that "Congress never intended to allow services like Aereo to retransmit our programming for profit without our authorization and we will continue to aggressively pursue that position."
NBC did not respond to a request for comment. Aereo said it was pleased by Tuesday's ruling.
Shortly after Aereo launched in March 2012, the broadcasters sued the company in Manhattan federal court, claiming the technology infringed their copyrights because the transmission of the content resulted in a "public performance" of the shows. Under U.S. copyright law, copyright owners have the exclusive right to perform their works.
The lawsuit is currently in the discovery phase, and the broadcasters are asking both for money damages and that the service be permanently shut down.
Aereo is also fighting a court battle in Boston, where it expanded its service in May. Last week, Hearst Television Inc's WCVB-TV filed a lawsuit in federal court asking that court to forbid Aereo from streaming its content.
Aereo expanded to the Atlanta area in June and has announced plans to launch in Chicago in September.
The cases are CBS Broadcasting Inc et al v. AEREO Inc and WNET et al v. AEREO Inc, 2nd U.S. Circuit Court of Appeals, Nos. 12-2807 and 12-2786.
Reporting By Erin Geiger Smith; additional reporting by Jennifer Saba; Editing by Ted Botha, Tim Dobbyn and Chris Gallagher