Monday, March 26, 2007

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.

15 comments:

Anonymous said...

Bill, on my first reading of the opinion, I share your reservations about the court's analysis of copying.

The court seemed quite taken with the distinction between the VCR as a "standalone" technology and the RS-DVR as a "complex system" and service.

But I'm not sure this changes the question of who is "doing" the copying (notwithstanding the court's emphasis on "doing"). I would have drawn an analogy to a library that housed several high-speed, high quality color copiers conveniently in the stacks for patrons to copy whatever works they chose. The library is conveniently providing its patrons with the copyrighted works, the copy machines, and the electricity. But I don't think we would say the library is actually "copying" the materials that an individual patron copies on one of the machines. Not sure Cablevision is doing anything that different here. The technology is a little more sophisticated, but not that much more compared to today's state of the art copy machines.

William Patry said...

Dear Anonymous, in your example, wouldn't the claim against the library have been for secondary liability, though? The "doing" part in Cablevision takes on importance because of plaintiffs' decision to limit liabilty to direct infringement.

Anonymous said...

The hotel analogies also fall apart because the hotel performances came from a single "public" copy (or at worse no more than a few) of the copyrighted work. The performances in this case come from "private" copies stored on the portion of the hard drive reserved to the customer.

Max said...

I have heard no end of "we'll do this, and it should be copyright infringement, but because we'll be using this technology, it won't be infringement." I've always felt that was a bogus argument, because copyright infringement is a legal question, not a technical question.

So (without first reading it), I'm disappointed that this opinion seems to be based mostly around whether using technology X instead of technology Y determines if an identical act is copyright infringement. I'm really disappointed.

Anonymous said...

this is from the 1st anonymous poster:

Yes, I agree, Bill. The claim against the library should be limited to secondary liability. That's why I share your skepticism of some of the court's analysis.

I'll even concede to the court that the so-called "system" of Cablevision is more sophisticated and allows the copying selected by its users to occur more seamlessly, but I'm not sure Cablevision is any more involved in the actual copying than the library is.

Another point not discussed by the court: there may well be some copyright holders who don't object to what Cablevision is doing. If not, then the fact that Cablevision set up a system that allowed DVR copying would not even dictate that infringement would occur. It all depends on what the users select to copy.

abs said...
This comment has been removed by the author.
Chris said...

Bill,

Here's a slight variation: if 1,000 different subscribers wanted Cablevision to record a specific show, do they have to make 1,000 different recordings, all identical? Or, can they get away with one recording and let 1,000 different people access that one?

If that's fine, then how is that different than somebody putting the show up on youtube?

William Patry said...

Chris, I'm sure you don't really expect me to comment about YouTube, but as to the other hypo, about someone making 1 copy of a single recording for 1,000 people, that is what happened in the Mp3.com case.

But in the Cablevision case, Cablevision would have (but for the fact that the service was enjoined before it was launched) made 1,000 different copies. All were dedicated streams for people who were entitled to see the show in the first place: Cablevision wouldn't have let people remotely store shows that were not part of their particular service plan, so I don't see why the number of people who would remotely store the same show matters.

Anonymous said...

Under Cablevision, one is "engaging in unauthorized reproductions and
transmissions" when using a "complex system that involves an ongoing relationship between Cablevision and its customers, payment of monthly fees by the customers to Cablevision, ownership of the equipment remaining with Cablevision, the use of numerous computers and other equipment located in Cablevision's private facilities, and the ongoing maintenance of the system by Cablevision personnel."

Using this standard (complexity, ongoing relationship, monthly fees, retained ownership, numerous computers, ongoing maintenance), most existing PVR systems seem to be directly infringing.

For example, cable set-top boxes with built-in PVRs are complex, have an ongoing relationship with the cable operator, the cable operator retains ownership, require numerous computers involved, monthly fees, and ongoing maintenance.

Some I've spoken with find little problems with this decision, but I'm quite a bit more worried.

Anonymous said...

The respected legal commentator, George Carlin, once noted, "XXXXing is legal. Selling is legal. Why isn't selling XXXXing legal?"

I'm sympathetic to the notion expressed by Abs that this decision seems to prohibit paying Cablevision for something that I could legally do myself.

Richard said...

Anonymous said...

Under Cablevision, one is "engaging in unauthorized reproductions and
transmissions" when using a "complex system that involves an ongoing relationship between Cablevision and its customers, payment of monthly fees by the customers to Cablevision, ownership of the equipment remaining with Cablevision, the use of numerous computers and other equipment located in Cablevision's private facilities, and the ongoing maintenance of the system by Cablevision personnel."

Using this standard (complexity, ongoing relationship, monthly fees, retained ownership, numerous computers, ongoing maintenance), most existing PVR systems seem to be directly infringing.


Well, the distinction seems to rely on the "use of numerous computers and other equipment located in Cablevision's private facilities," by which I assume the court means "the copying actually takes place at Cablevision's private facilities." I'm similarly wary, though, of the idea that the physical location where the copying occurs should be determinative, especially since the person most directly "doing" the copying (pressing the button) is the customer at home.

Robert Pierce said...

Bill, I'd like to blog on this case myself, but I can't find any recent information on its status. Is it still pending at the second circuit? Have respondent's filed a brief? Did it settle? Let me know if you know.

William Patry said...

Robert, the case hasn't settled. It was to have been argued before the Second Circuit at the beginning of September but got put off until October 24th.

Robert Pierce said...

Here you go.

http://softwarelawyer.blogspot.com/

Matthew ficke said...

Any attempt to dilute our freedom of privacy on the internet is a step toward big brother. This decision is ridiculus and the MPAA, 20th Century Fox and the major studios can buy a judge pretty cheap these days. They even bought the swedish police to shutdown thepiratebay.org, until lawmakers released the owners, released their computers and they were up the next day. NO INTERNET SPYING PERIOD. If the MPAA and big studios are failing it's because of cruddy movies and a bad economy in which no one can afford to pay for the trash they consider movies nowadays.