On Tuesday, the Supreme Court heard arguments in the Aereo case that could cause legal implications for cloud computing businesses such as Dropbox and Google, especially if remote storage and data transmission are classified as “public performance.” Broadcasters accuse the Internet startup Aereo of violating copyright laws by using antennas to stream over-the-air broadcasts to paid subscribers. Justices will determine if Aereo’s service is “public performance” that requires permission.

David C. Frederick, a lawyer for Aereo, maintained that the service is not a public performance because the company assigns individual antennas to every viewer, so the company has no obligation to pay the retransmission consent fees required by copyright laws to local stations.

The New York Times reports that Aereo contends it “is merely helping its subscribers do what they could lawfully do since the era of rabbit-ear antennas: watch free broadcast television delivered over public airwaves.”

The Supreme Court’s decision on retransmission as a “public performance” could have a huge impact on cloud-based companies. Frederick believes it would stifle innovation in the industry.

“Under the hood, what Aereo is doing is storing TV programs at the request of a user and transmitting to the user’s device,” Mitch Stoltz, a staff attorney at the Electronic Frontier Foundation, told Re/code. ”You put those together and that’s a lot like what a lot of cloud services do, too.”

The Center for Democracy and Technology, the wireless industry, and the Information Technology Industry Council, argued in a brief that classifying remote storage and transmittal of data as a public performance could be disastrous for cloud computing businesses.

“If that understanding were thrown into doubt, cloud computing services would face a serious predicament: Their core functions would become susceptible to copyright claims from a virtually limitless class of possible claimants, with the potential for ruinous statutory damages,” the trade associations wrote.

Meanwhile, broadcasters argue that their Aereo upends their own business model, which has increasingly relied on the billions of dollars in retransmission fees. Cable and satellite companies pay networks and local stations these fees to redistribute their content.

Last year, a divided three-judge panel of the federal appeals court in New York ruled in favor of Aereo. A ruling in the Supreme Court case is not expected until the summer, according to Time, but Frederick remains optimistic after Tuesday’s arguments.

“We’re confident, cautiously optimistic, based on the way the hearing went today that the Court understood that a person watching over-the-air broadcast television in his or her home is engaging in a private performance and not a public performance that would implicate the Copyright Act,” he said.

Related:
Justices Test Aereo on Copyright Issue but Raise Concern About Harming Cloud Services, The Washington Post, 4/22/14
Oral Arguments Transcript, Supreme Court, American Broadcasting Companies v. Aereo