Aereo, the streaming video service that everyone’s talking about but few people actually have, defended its existence today in front of the U.S. Supreme Court while lawyers for the nation’s broadcasters and the federal government looked to smash the company’s tiny antennae into bits… legally speaking.

You can read the whole transcript in this PDF. Like most SCOTUS transcripts, it actually makes for an amusing and thoughtful read, while showing that these hearings are much more about a group of people debating the issue instead of some camera-ready lawyer making a made-for-TV speech that knocks the justices’ socks off.

Since it will be months before the Supremes get around to issuing their opinion on this case, let’s bide our time with some highlights from today’s arguments…

OF PHONOGRAPH RECORDS AND COAXIAL CABLE…

At the core of the broadcasters’ case is whether or not Aereo’s system — which uses arrays of antennae to pick up over-the-air TV signals and send them to paying users — legally constitutes a “public performance.”

Playing devil’s advocate, Justice Breyer asked the broadcasters’ attorney where one draws the line between actual transmission of a copyrighted performance and merely selling access to copyrighted content.

“Why isn’t what used to be called a phonograph record store that sells phonograph records to 10,000 customers a public performance?” he inquired (while at the same time showing his age).

The broadcasters countered that a record store is “not involved in any performance at all” but said the situation might be different for an online music store where one can both buy music and stream it from the cloud.

“If you provide downloads of music, you get a distribution license or a reproduction license,” explained the broadcasters’ attorney. “If you provide streaming of music where you also have a contemporaneous live performance, then you also get a public performance license.”

Justice Sotomayor raised the concern that ruling in favor of the broadcasters may inadvertently result in problems for those that provide the required hardware for content delivery.

She asked how one could write a ruling “so that someone who sells coaxial cable to a resident of a building” or sells passive storage equipment is not “swept up” in this issue.

“What does the Court do to avoid a definition or an acceptance of a definition that might make those people liable?” asked Sotomayor.

Once again, the broadcasters argued that hardware providers are not involved in the performance, but is just providing the tools needed for an end-user to access a private performance.

“That’s different from an ongoing service, like a cable company or like Aereo,” said the broadcasters’ attorney, “who still owns all these facilities and they’re providing, through wire transmissions, these performances on an ongoing basis.”

AN ISSUE OF LOCATION

Justice Kagan asked the broadcasters to clarify the importance of distance and location in making this distinction.

“In other words, if Aereo has the hardware in its warehouse as opposed to Aereo selling the hardware to the particular end-user, that is going to make all the difference in the world as to whether we have a public performance or not a public performance,” she asked.

JUST SELLING THE HARDWARE…

Justice Ginsburg asked Aereo why other transmitters, like cable companies and other online services, pay royalties but Aereo should not?

“The person who sells an antenna to me at the local Radio Shack doesn’t pay copyright royalties,” explained Aereo, which maintains that all it does is rent people a service to access freely available TV feeds online. “A company that provides a rental service for me to put an antenna in my home and install it, they don’t pay copyright royalties either.”

The broadcasters admit that “if you sell somebody hardware and all they’re doing is transmitting it to themselves at their home, there’s not going to be a transmission that’s chargeable to the person who sold you the hardware,” but countered that by having these streams coming from a remote location “it becomes a public performance on behalf of the sender, but it still would be a private performance on behalf of the receiver.­­”

OF CAR DEALERS AND CLOUD COMPUTING

It’s that last distinction that the broadcasters believe allows them to challenge Aereo without putting all cloud-based computing and storage technology at risk.

“There’s a fundamental difference between a service that… provides new content to all sorts of end-­users — essentially any paying stranger — and a service that provides a locker, a storage service,” argued the broadcasters, who used the analogous comparison of the difference between a car dealer and a valet parking service.

Both of these services “provide” cars to people, but there’s a huge difference in how they do it.

“If I show up at the car dealership without a car, I’m going to be able to get a car. If I show up at the valet parking service and I don’t own a car, it’s not going to end well for me,” explained the broadcasters. “At the end of the day, the car dealer’s providing cars to the public, the valet parking service is not. It’s providing a parking service.”

But Chief Justice Roberts took issue with this analogy, asking if a better comparison might be between a personal garage and one that’s open to the public; i.e., the choice between owning and renting.

“You can go to RadioShack and buy an antenna and a DVR or you can rent those facilities somewhere else from Aereo,” said Roberts. “They’ve got an antenna. They’ll let you use it when you need it and they can, you know, record the stuff as well and let you pick it up when you need it.”

Aereo contends that what the broadcasters’ challenge goes too far and puts all of cloud-based tech at risk by trying to argue that having multiple copies stored of the same content somehow makes Aereo a public performer.

“It means that every time somebody stores something in the cloud — whether it’s a song, a video image or the like — if it happens to be something that somebody else has stored in the cloud, the act of one person initiating it and perceiving it is going to implicate the public performance right,” argued Aereo’s attorney. “And that’s why the cloud computing industry is freaked out about this case, because they’ve invested tens of billions of dollars on the notion that a user-­specific, user-­initiated copy, when perceived by that person, is a private performance and not a public performance.”

THE DEATH OF THE CLOUD DVR?

Justice Kennedy asked the broadcasters to distinguish between Cablevision’s cloud-based DVR (whose legality has never been confirmed by the Supremes) and the DVR service offered by Aereo.

The broadcasters explain that — while still taking issue with Cablevision’s device — the cable company has already obtained licenses for the initial performance of the programming but Aereo has not.

“Aereo is like if Cablevision… decides, ‘Whew, we won, so guess what? Going forward, we’re going to dispense with all these licenses, and we are just going to try to tell people we are just an RS DVR, that’s all we are, and never mind that we don’t have any licensed ability to get the broadcast in the first instance, and we’re going to provide it to individual users, and it’s all going to be because they push buttons and not because we push buttons.'”

(Which is just a ridiculous claim, as the content that goes onto the Cablevision DVRs comes from programming aired on Cablevision’s pay-TV network. It doesn’t magically appear there. If Cablevision stopped offering new TV to customers, there would be nothing new to add to the DVRs and the stuff that’s already on there would have already been licensed… making it a locker-type storage device that the broadcasters say they have no problem with.)

Aereo cited the 1984 SCOTUS ruling in favor of Sony, whose Betamax videotapes were going to ruin the Hollywood movie system by allowing people to record things and watch them over and over again… (How much does the studio system thank itself for losing that case?)

“In Sony, this Court held that consumers have a fair-use right to take local over-the­-air broadcasts and make a copy of it,” argued the company’s lawyer. “All Aereo is doing is providing antennas and DVRs that enable consumers to do exactly what this Court in Sony recognized they can do when they’re in their home… and moving the equipment — the antennas and the DVRs — to the Internet.”