The Network DVR Dispute, Thoughts & Briefs

by on July 25, 2007 · 2 comments

I earlier posted our amicus brief in the Cablevision case, along with most of the others, here.

The brief of Americans for Tax Reform, affiliated with the Property Rights Alliance, is here in two parts:

Part I
Part II

The brief of the American Society of Media Photographers and a number of other publishers and guilds is here:

Download file

And the Fox Opposition brief on appeal is here:

Part I Fox
Part II Fox

And now for some thoughts; this is an experiment in making this set of arguments as concise as possible. This case involves Cablevision’s plans to deploy a service that is a functional equivalent of giving every consumer a VCR; this has been pointed out most concisely as a point against liability by Steven Effros, but also by others. Cablevision already licenses the material to be distributed over the service. Why liability?

1) Cablevision seems to have abandoned the argument below that its existing licenses cover the service in question; in some cases, the licenses provided for only simultaneous retransmission. But so what? Isn’t the fact that there is some kind of income stream going back to the creators enough? This seems to me to make little sense; the economic desirability of recorded content (available on demand) is surely significantly different from a stream of content on someone else’s schedule. Proposed new legal principle: if a license is negotiated for some limited purpose, we may assume that the resulting income stream suffices to compensate for other purposes, never negotiated. Won’t work. Wrong incentives. The content owners end up paying the original licensees not to distribute their stuff outside the license. Extortion.

2) If the use is unlicensed, does it matter? Suppose that the end user makes only fair use of the material? Should a commercial service be able to “stand in” for consumers’ fair use in an action for direct infringement? This also seems to make little sense; a commercial service that sells “fair use” to consumers has a potentially quite different market impact than a single consumer, or even several, deciding disparately to time-shift. A network DVR is the functional equivalent of a consumer DVR from one standpoint, but not from a standpoint of economic impact.

This observation solves an annoying problem with secondary liability; that is, that secondary liability *can* be averted by an assertion of consumers’ fair use–but fair use in that instance (including the question of market impact) would be decided by looking in part at market impact–and the “market impact” of individuals dipping in occasionally, uncoordinated, is quite different from a widespread pattern of dipping likely to result from facilitation by a commercial service. If direct and secondary liability diverge here, that is quite possibly a good thing.

As we note in our brief, the secondary liability cases involve defendants who were in no position to license the material being copied because they did not know what would be copied–there the fair use inquiry seems to belong. But with Cablevision that is not the case.

3) Sony did not decide that time-shifting was a fair use quite as decisively as some might like: there is a lot of concern that the content side just didn’t make their case. Jim’s paper goes into this in greater detail.

4) Back to the functional equivalent–that network DVR is a functional equivalent of a DVR. It is also, however, a functional equivalent of video-on-demand. Once the recording is made, for a period of time, the program is available whenever he wants to watch. The functional equivalence argument cuts both ways.

And under some circumstances, a whack on the head is the functional equivalent of brain surgery. So there is only so far the functional equivalent argument ought to take one in any case.

As we conclude our brief, the right result is to come up with a rule under which Cablevision’s incentives are to negotiate a broader license. We do wish the venutre well. Cablevision might find it easier going than anticipated, since network DVR should indeed be preferable from a content owner standpoint to individual deployment of hungry individual DVRs.

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