Aereo Inc., the Boston-based Internet video company that lost a US Supreme Court copyright case last year, is now suing the television networks that defeated it.
Aereo, which filed for bankruptcy protection after its Supreme Court loss, accused the networks of illegally interfering with the auction of Aereo’s assets, driving down their value and costing its creditors millions of dollars.
“I’ve practiced bankruptcy [law] now for 32 years, and I’ve never been involved in a case where a bankruptcy has been chilled in this way,” said Aereo attorney William Baldiga.
Aereo is seeking unspecified financial damages from the TV companies, including triple damages for alleged violation of New York’s antitrust law.
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Filed in US Bankruptcy Court in New York, the lawsuit alleges TV broadcasters “have aggressively pursued litigation strategies that are objectively baseless and intended only to injure the debtor.”
Specifically, the TV companies, including NBC, ABC, CBS , and Fox, sought an injunction to bar purchasers of Aereo’s assets from selling video services similar to Aereo’s offerings. The broadcasters also sought to block the auction until they could pursue a financial judgment against Aereo in the copyright case.
Aereo said those actions scared away companies that had been interested in bidding on the bankrupt company’s electronic hardware and patent portfolio. In the end, the video recorder company TiVo paid $1 million for Aereo’s trademarks, Internet domain, and customer list, while two smaller companies paid $545,000 for patents and electronics gear.
According to Baldiga, major satellite, cable, and Internet companies refused to participate in the auction.
“We think we had very few bidders because people have watched the litigation efforts,” he said. “In the weeks leading up to the auction it’s been unrelenting, and we think most of the parties decided they wanted no part of that.”
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But Jane Willis, an antitrust attorney with Ropes & Gray in Boston, thinks Aereo may be heading for another defeat. “It’s very difficult to prove that the broadcasters brought the litigation completely without any basis,” Willis said.
Besides, Willis added, courts are reluctant to use antitrust law to benefit a specific company. “The antitrust laws are intended to protect competition,” she said, “not individual competitors.”
Attorneys for the networks did not respond to requests for comment, and a spokesman for the National Association of Broadcasters declined to discuss the case.
Founded by Newton entrepreneur Chet Kanojia, Aereo used thousands of small antennas to pick up over-the-air TV broadcasts, then transmit them over the Internet to subscribers for $8 a month. The broadcasters said Aereo violated copyright law by retransmitting their shows without paying for them, as cable and satellite TV services must do.
When the networks sued Aereo in 2012, two federal courts found that the company’s business model was legal. But that changed last year, when the Supreme Court ruled 6 to 3 that Aereo was the equivalent of a cable TV company and must pay retransmission fees.
The ruling destroyed Aereo’s cut-rate business model and drove the company to seek bankruptcy protection in November.
Related:
• BetaBoston: Aereo’s bankruptcy auction raises less than $2m
• Aereo subscriptions jumped in months before it went dark
• Aereo ending operations, laying off 43 in Boston
• Aereo wants a TV revolution, if the Supreme Court will let it
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Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.
Correction: Because of an editing error, a photo caption in a previous version of this article listed an incorrect date for Aereo’s bankruptcy.