The Cablevision Decision

Judge Denny Chin of the SDNY has handed down his opinion in Twentieth Century Fox Film Corp. v. Cablevisions Systems Corp., 2007 WL 867093, involving Cablevision's planned Remote Storage DVR (RS-DVR). He granted plaintiff's motion for a declaratory judgment and injunction and denied defendant's counterclaim declaration for non-infringement. Judge Chin delved deeply into the technical aspects of RS-DVRs with a zeal and level of detail whose value is not self-evident. Indeed, at the end, when one gets to the legal analysis, there is a letdown in the court's explanation of the central legal issues in the case. It is as if the relentless march through the technology in all its glory somehow answered the legal questions. I think not, but credit should be given to plaintiffs for forging a sophisticated strategy.

The cornerstone of that strategy consisted of suing for direct infringement, not secondary liability. This had the intended effect of excluding the staple article of commerce defense. Having excluded that defense, one would think the role of Sony would be zero, but one would be mistaken:

To Cablevision, the RS-DVR is a machine, just like a VCR, STS-DVR, or a photocopier. Relying on Sony and other cases, Cablevision argues that it cannot be liable for copyright infringement for merely providing customers with the machinery to make copies. At most, it contends, its role with respect to the RS-DVR establishes indirect infringement, but plaintiffs have waived such a claim. ( See June 7, 2006 Order). Plaintiffs, on the other hand, allege direct infringement-that is, they claim that it is Cablevision that is “doing” the copying here. Plaintiffs characterize the RS-DVR as a service-one that requires the continuing and active involvement of Cablevision.

I agree with plaintiffs. The RS-DVR is clearly a service, and I hold that, in providing this service, it is Cablevision that does the copying.

In Sony, programming owners sued Sony and others for copyright infringement based on defendants' marketing and sale of Betamax VCRs. The record showed that consumers primarily used VCRs for home “time-shifting”-the practice of recording a program to view it at a later time, then erasing it. The Supreme Court held that time-shifting is “fair use” and does not violate the Copyright Act. 464 U.S. at 456. The Court held that Sony's manufacture of Betamax VCRs therefore did not constitute contributory infringement.

Cablevision's reliance on Sony is misguided. First, Cablevision has waived any arguments based on fair use. ( See June 7, 2006 Order).Second, apart from their time-shifting functions, the RS-DVR and the VCR have little in common, and the relationship between Cablevision and potential RS-DVR customers is significantly different from the relationship between Sony and VCR users.

A VCR is a stand-alone piece of equipment. A consumer purchases the VCR and owns it outright. The consumer can then pick the VCR up, transport it, connect it to someone else's television and, assuming both devices are in working order, record programming. The RS-DVR does not have that stand-alone quality. An RS-DVR customer would not be able to disconnect his or her home set-top box, connect it elsewhere, and record programming. This is because the RS-DVR is not a single piece of equipment; it consists of a multitude of devices and processes. Unlike a VCR, the simple push of a button by the RS-DVR customer does not produce a recording. The pushing of the “record” button on the remote control merely sends a request to Cablevision's head-end to set the recording process in motion. The various computers and devices owned and operated by Cablevision and located at its head-end are needed to produce a recording.

Indeed, ownership of the RS-DVR set-top box remains with Cablevision and the RS-DVR requires a continuing relationship between Cablevision and its customers. In Sony, “[t]he only contact between Sony and the users of the Betamax ... occurred at the moment of the sale.” 464 U.S. at 438. In stark contrast, Cablevision would not only supply a set-top box for the customer's home, but it would also decide which programming channels to make available for recording and provide that content, and it would house, operate, and maintain the rest of the equipment that makes the RS-DVR's recording process possible. Cablevision has physical control of the equipment at its head-end, and its personnel must monitor the programming streams at the head-end and ensure that the servers are working properly. (Tr. 52-54, 75-76). Cablevision determines how much memory to allot to each customer and reserves storage capacity for each on a hard drive at its facility, and customers may very well be offered the option of acquiring additional capacity-for a fee. On the other hand, once Sony sells a VCR to a customer, Sony need not do anything further for the VCR to record.

The ongoing participation by Cablevision in the recording process also sets the RS-DVR apart from the STS-DVR.

I have never understood Cablevision's decision not to assert fair use, but I also don't understand the relevance of any of the above discussion to a claim of direct infringement. None of the facts recited matter to whether there is direct infringement. Leaving aside the buffering claim, the direct infringement claims are simply stated: (1) when a consumer pushes the remote control button and requests that a copy be stored, who makes the copy? (2) when the consumer uses the remote control button and requests that the copy stored be sent for viewing, was the resulting transmission a public or a private performance?

The court, based I think on its fascination with the back-end of these straightforward questions, bought into plaintiffs' analogy to VOD, rejecting defendant's analogy to TIVOs and other STS-DVRs (set-top storage). In one important respect, RS-DVRs are less of a threat than STS-DVRs, namely with RS-DVRs, there is no ability to download the show to an external hard-drive. Neither of these analogies though have a bearing on the basic legal questions. I find it far less impressive than the court did that the copying issue should turn on the back-end of how the copy is stored. with both STS-DVRs (whose legality was not at issue nor conceded by plaintiffs), it is the consumer who pushes a remote control button that initiates the process. Similarly, on the performance issue, I do appreciate the analogy to hotel transmissions; yet there is an important difference between a hotel room that is open to the public and that will be inhabited by a great number of people throughout the year and one's own living room which receives a dedicated stream created at your request and available only to you.