The US Supreme Court has refused to hear an appeal by the major networks and Hollywood studios to a lower court decision that Cablevision’s central storage digital video recorder system does not violate copyright laws. That clears the way for Cablevision to begin offering the networked DVR later this year.
Cablevision and its opponents had each won a round in court – but this is the one that really counts. First, a trial level federal judge in New York had ruled that the networked DVR did violate copyright law because it was Cablevision doing the copying at its central facility, rather than the consumer. Round One to the networks and studios.
But Cablevision appealed and the Second Circuit Court of Appeals reversed the lower court, finding that the networked DVR did not violate copyright law because the consumer was in charge of what was stored by the central system to be accessed only by that consumer. Round Two to Cablevision.
The networks and studios then appealed to the US Supreme Court. The high court, without comment, on Monday refused to hear the case. Round Three to Cablevision. And, unless the networks and studios figure out a different route to get the issue before the Supreme Court, that’s the ballgame.
“This is a tremendous victory, and it opens up the possibility of offering a DVR experience to all of our digital cable customers. At the same time, we are mindful of the potential implications for ad skipping and the concerns this has raised in the programming community. We believe there are ways to take this victory and work with programmers to give our customers what they want — full DVR functionality through existing digital set-top boxes — and at the same time deliver real benefits to advertisers. This landmark case gives the cable industry, and Cablevision in particular, the opportunity to do something that our satellite competitors cannot do. We expect to begin deploying the first application of this new technology, the ability to pause live television when the phone rings, as a value-added benefit to our customers later this summer,” said Cablevision COO Tom Rutledge after the Supreme Court announced that it would not take the case.
The consumer Electronics Association also applauded the court outcome. “From a common-sense standpoint, the Court’s decision was a slam-dunk. The Court has already ruled that consumers have the right to time-shift television shows. Whether the bits reside in a box under your TV or a box in the cable field office is not relevant,” CEA said.
Twentieth Century Fox Films (owned by News Corporation), Paramount Pictures (Viacom), Disney Enterprises, CBS Broadcasting, NBC Studios (NBC Universal), ABC Television Network (Disney) and Universal Studios (NBC Universal) had sued Cablevision in 2006, seeking to block its plans to roll-out a test of its “Network DVR” system on Long Island. Numerous other copyright holders had filed briefs supporting the position of the networks and studios, but to no avail.
Cablevision sees the networked DVR as a money-saving alternative to having to physically locate a DVR in each subscriber’s home. If its Long Island test is successful, other cable MSOs are likely to seek the technology as well.
What does the decision mean for the television industry? Click here for some analysis by Carat Programming that RBR/TVBR published a few months ago.
RBR/TVBR observation: This is one of those cases where you can make good arguments for both sides, since it’s really a case of technology moving beyond anything anticipated when the law was written. With the Supreme Court refusing to hear the case, the Second Circuit decision stands – centralized video storage that is selected by the consumer is fair use under the copyright law. The networks and studios are just going to have to live with it.
