Federal judges Friday struck down FCC rules aimed at preventing broadcast TV programming from being illegally duplicated over the Internet and other computer networks.
The U.S. Court of Appeals in Washington ruled that the FCC overstepped its authority when it required manufacturers of digital TVs to include "broadcast flag" technology to protect programming content from piracy.
Broadcasters and Hollywood say a strong safeguard against illegal copying must be in place if TV stations are going to be allowed to air digital versions of the latest movies and other valuable programming.
In a unanimous decision released Friday, the court agreed with petitioners the American Library Association, Public Knowledge, and others that the flag rules are not authorized by the FCC's right to regulate interstate radio communications.
The FCC has the right to govern how TV signals are received but not what is done with them after reception of the signal is complete.
The flag is a code embedded in broadcast programming that signals the receiver to block the illegal retransmission of the broadcast over computer networks and other devices.
Broadcasters argue that without that protection, the switch to digital is fraught with dangers from digital pirates.
The court said there is "no statutory foundation for the broadcast flag rules." Saying the commission acted outside its scope of authority, the court found that "Congress never conferred authority on the FCC to regulate consumers' use of television received apparatus after the completion of broadcast transmissions."
Joining broadcasters in support of the flag are studios, which also argue that they need the flag to prevent widespread digital piracy, the threat of which is making content providers reluctant to make their intellectual property available, which in turn is slowing the switch to digital broadcasting.
The flag plugs the so-called "digital hole," preventing peer-to-peer and internet sharing of digital content.
But Public Knowledge and other fair-use advocates fear the flag will put undue limitations on copying devices including TiVos, digital VCRs, iPods, tuner cards, MythTV-like PVRs, and cell phones.
Broadcasters and studios will now have to look to Congress to legislate the flag and consumer equipment manufacturers won't be under a July deadline for making its digital receiver's broadcast flag-compliant.
The National Association of Broadcasters vowed to take the fight to the Hill: "Without a 'broadcast flag,' consumers may lose access to the very best programming offered on local television," Said NAB President Eddie Fritts. "This remedy is designed to protect against unauthorized indiscriminate redistribution of programming over the Internet. We will work with Congress to authorize implementation of a broadcast flag that preserves the uniquely American system of free, local television."
ABC which is owned by content giant Disney, was not pleased with the decision: "Consumers are not well served by decisions that preclude content owners from using technical means to prevent piracy," said ABC spokeswoman Julie Hoover. NBC, whose chairman, Bob Wright, has made protecting digital content a priority, was even stronger in its response:
"Today's court ruling imposes crippling restraints on the FCC's ability to effectively support the development of a safe, sustainable marketplace for the creation and distribution of digital TV broadcasting," the network said in a statement. "These limits will harm millions of American consumers who want to receive high-quality content through over-the-air digital broadcasts. The broadcast and motion picture industries are embracing new digital distribution technologies, but, to protect these works from theft, the laws must keep up. As it did with the outlawing of spam, Congress needs to ensure that our laws keep pace with the evolving digital technology landscape. "