Supreme Court Lets Cablevision DVR Decision Stand

CNN and some major studios had wanted Court to overturn appeals court copyright ruling
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The Supreme Court Monday declined to review the challenge by CNN and some major studios to Cablevision's use of a remote DVR service.

The decision paves the way for Cablevision to deploy the service later this summer, according to the company.

The Solicitor General had recommended the court not take the case.

‘We are very pleased that the U.S. Supreme Court today declined to hear a challenge to Cablevision's Remote Digital Recording Service," said Public Knowledge President Gigi Sohn. "From a common-sense point of view, the lower court, and the U.S. Solicitor General, were correct in their interpretation of the copyright law that a recording is a recording, whether done on a set-top box or at the cable head-end, as Cablevision’s proposed service allows."

“We applaud the U.S. Supreme Court today for letting stand a decision
that supports the growth of technology and innovation," said CEA
President Gary Shapiro. "The ability to record television programming
has become commonplace to millions of Americans which has benefited
consumers and allowed the consumer technology and content industries to
contribute billions of dollars to our economy and create millions of
jobs."

“This is a tremendous victory, and it opens up the possibility of offering a DVR experience to all of our digital cable customers," said Cablevision COO Tom Rutledge.

But he was not about to hammer losing studios for their position on the issue.

"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.”

The Cablevision technology is based on setting aside sufficient server space so that each customer gets enough dedicated storage to make and manage individual copies of shows, but with that space on network servers rather in the home. For example, that means if 1,000 people want to record Fox's House, there will be 1,000 copies at the network facility.

In that way, Cablevision could argue, and did successfully, that it was essentially the same result as home copying, just remotely stored.

CNN, studios and other copyright holders wanted to get the Supreme Court to overturn an appeals court ruling that Cablevision's remote storage of digital copies of programs does not violate copyright limitations on reproduction or public performance.

The issue is the copying and storage of those shows for Cablevision's virtual DVR service.

CNN, Cartoon Network and others who supply programming to the cable company had argued that the deals were for airplay, not storage or other performances. While DVRs like those made by TiVo and built in to set-top boxes store programs on viewers' own hard drives, analogous to a videotape copy, Cablevision's system stores copies on its own servers. Copyright holders see that as a big difference from the home recording rights established in the Sony videotape case.

The appeals court had reversed a lower court ruling that barred the virtual DVR functionality as a copyright violation.

The studios' support of CNN et al's petition to the high court to overturn that appeals court ruling came as no surprise. Several Motion Picture Association of America members were petitioners to the suit and the studios filed suit to block the technology when it was first announced back in 2006, claiming it would constitute an unauthorized reproduction of their work.

The initial suit was filed by Turner Broadcasting System's Cartoon Network and CNN, plus Fox, NBC, Disney, CBS and ABC. Those same parties last fall sought the Supreme Court review of the appeals court decision, saying that decision "fundamentally distorts copyright law."

In an amicus brief filed with the court, the Copyright Alliance said it had never filed a brief in any court before. It said it was breaking precedent to ask the court to take the case because the decision could be "so detrimental to the health of our copyright system," saying Cablevision should have to pay for the privilege of copying and transmitting copies of their works, which potentially undercuts their value.

The alliance includes the Motion Picture Association of America (MPAA), the NAB, major sports leagues, and other copyrightholders including B&C parent Reed Elsevier.

Analysts and industry insiders say the back story to the studios' opposition is to prevent the further erosion of ad-supported TV programming, which is easier if consumers can skip commercials.

Cablevision argued that the network-DVR service wouldn't differ in functionality from the set-top DVRs it was already supplying and that by apportioning part of its server storage to individual subscribers, any time-shifting or ad-skipping that they did would be considered "fair use" of TV content.

Judge Denny Chin of the United States District Court for the Southern District of New York sided with the programmers and enjoined Cablevision from operating the network-DVR system without securing licenses from its content providers.

Since then, network-DVR-like services that other cable operators have launched using headend servers -- such as Time Warner Cable's "Start Over" and "Look Back" and Cox Communications' offering of ABC primetime shows through its video-on-demand service -- have been based on removing subscribers' ability to fast-forward through commercials in that programming.

But the U.S. Court of Appeals for the Second Circuit in New York last August reversed that ruling, saying that such a service "would not directly infringe plaintiffs' exclusive rights to reproduce and publicly perform their copyrighted works."

The court lifted the U.S. District Court's injunction against Cablevision and remanded the case back to that lower court for further proceedings.

Now, studios want the further proceeding to the Supreme Court telling the appeals court it made the wrong call.

"We are of course disappointed by the Court's decision not to hear this case but understand that the Court can only hear a limited number of cases each year," said Daniel Mandil, senior EVP and chief of legal affairs and IP protectionat MPAA. "The Court's decision to deny the petition for review does not mean that the Supreme Court agrees with the appeals court's ruling, but is simply a decision not to hear the case. We will continue to do what is necessary to protect the legal rights of our members with regard to their content and look forward to the continued development of the law in this area in future cases."

“Like the lower court’s ruling, the Supreme Court decision is unfortunate and potentially harmful to creators and creative enterprises across the spectrum of copyright industries," said Copyright Alliance Executive Director Patrick Ross. "We will monitor the ramifications of this decision and continue pushing for policy and legal outcomes that maintain creators’ incentives.”

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