Sep 6 2008

Copyright content providers lose control of a DVR market to cable companies.

Who should derive revenue from remote DVR systems?  According to a panel of the Second Circuit Court of Appeals Cartoons case, the revenue should not go to the content providers.  This decision, grounded in three very narrow interpretations of the Copyright Act, works a shift of potentially significant revenue away from content providers.  Hopefully, it will be challenged and reversed on rehearing.

The case seemed simple for the content providers, but with judicial panel sympathetic to the other side, it became what is a potential nightmare for copyright owners in digital environments.


            A recurring issue today in court is who control or has an advantage in the newly emerging digital and elated markets.  Are technologists like Google in control with a right to use any content any time without permission, or do we still value the content creators?   This is not a philosophical issue and the combatants are not professors or mavericks.  They are large companies with billions of dollars at stake.  This is the era of the information wars.


            In the Cartoons case, Cablevision implemented a remote DVR system, allowing customers to select, store, and later play cable broadcasts.  In the system, when cable programs are received by Cablevision, they are routed through a buffer (buffer 1) and copied briefly while software checks if any customer had requested copying of the program for later replay.  If there was a request, the program would be copied into a server (buffer 2) and held for later viewing by the customer.  When the customer later desired to watch the program, the DVR system delivered a performance to the customer’s home video.  Variations of this system are widespread in the cable market and are a robust competitor to home recording systems.


            Cablevision did not ask for licenses from the content (program) providers for copying their programs or publicly performing them at times other than the original transmission.  It simply implemented the system and charged customers who desired to use it. 


            The Second Circuit concluded that this was fine – a major corporation (a cable company) could reuse another company’s copyrighted product without permission or payment.  This was a complicated decision, but fundamentally, a choice by the panel to turn potentially billions of dollars away from the creative parts of the industry to those who copy and retransmit.  It was a wrong decision.


            First, the panel held that copying was not copying if the copied image lasted for only a second or two.  So, the entire line of cases started in the Ninth Circuit’s MAI decision remains intact, but now seems to become a question of …..   I do not know what. 


            Second, the full content was copied into buffer 2 by Cablevision’s system.  But, no, cablevision who charged for this service, did not make the copies – the customers did – at least if you believe the panel of he court!


            Strike 2.


            Strike 3 is when the court held that, when the customer who caused the copy to be made, eventually asked for it to be performed in the customer’s home – this was not a “public” performance.


            This may be among the worst appellate court decisions in copyright law history

Written By:George Graff On September 8, 2008 5:35 AM

Although the the court had to bend and twist the copyright act to reach its decision, it was clearly motivated by the fact that there is no real practical distinction between use of a "remote" DVR and a local one at home. If the latter is "fair use," one can argue that it is hard to justify permitting the content owners to prevent the former.

There is however, a solution for the content providers: they can (and some already do) put provisions in their licenses prohibiting the cable operators from transmitting their content at times other than when it is received or when authorized by the content provider. After all, the content provider ultimately controls the terms under which the operator gets access to the material and need not rely solely on the Copyright Act for protection.

Written By:Wes On September 20, 2008 1:28 PM

seems to me there needs to be discourse on how to balance privacy with piracy ... simple enough if we had an equitable way to measure content & a more equitable way to provide transparent accounting of the bandwidth being consumed ... privacy & piracy are both forms of information "misappropriation" & yet too few of these cases ever call for an accounting system to establish responsibility over allegedly infringed datum ... instead we find the red herring of "scarcity" used to justify arbitrary limits on how information can or should be valued ... now about all those attacks on the Patent Act ...

Written By:Sean Jones On December 26, 2008 7:21 PM

I wonder how this approach could impact the music industry. Seems like the court has created a potentially disastrous loophole. A clever, technologically capable capitalist will certainly piggyback on this decision.

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