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Supreme Court Won’t Hear Remote DVR Case

29 Jun, 2009 By: Erik Gruenwedel

In a win for cable operators and the Obama administration, the U.S. Supreme Court June 29 said it would not weigh in on litigation involving Cablevision’s remote-storage digital video recording service.

The decision opens the door for Cablevision to deploy a DVR service that records programming on a remote system controlled by the Bethpage, N.Y.-based service and not a subscriber’s set-top box.

COO Tom Rutledge hailed the decision and said deployment of the service would begin this summer.

“We believe there are ways to take this victory and work with programmers … and at the same time deliver real benefits to advertisers,” Rutledge said.

In 2006 a group of entertainment studios and TV networks filed a lawsuit against Cablevision alleging that its planned DVR service violated their copyrights.

Unlike TiVo and other cable-based DVR services, Cablevision's service would allow subscribers to record and store programming on the company's server instead of a set-top box.

The plaintiffs, which include 20th Century Fox, Universal Studios, Paramount Pictures, The Walt Disney Co., and TV networks ABC, CBS and NBC, claimed such an arrangement circumvented “simultaneous broadcast” license agreements that forbid cable companies from storing content and repurposing it for a fee without a separate license.

Last summer a Philadelphia appeals court overturned a previous ruling disallowing Cablevision from commencing with its service.

The Consumer Electronics Association said the decision underscores the commonplace ability by consumers to record TV programming.

“The court has already ruled that consumers have the right to time-shift TV shows,” said Gary Shapiro, president and CEO of CEA, in a statement. “Whether the bits reside in a box under your TV or in a box in the cable field office is not relevant.”

The Solicitor General May 29 said Cablevision’s RS-DVR service essentially offered “the same functionality” as a VCR or a set-top DVR and thereby was not in violation of license agreements.

To date, studios and content owners have never filed a lawsuit against a set-top DVR, a stance that could change, according to Richard Greenfield, analyst with Pali Capital.

He said the studios could re-address the matter alleging contributory infringement against Cablevision. Contributory infringement, versus the direct infringement alleged in the current case, means the RS-DVR enables consumers to violate copyright and could prompt the courts to re-examine the landmark 1984 Sony Betamax fair use case that opened the door for video rentals.

Greenfield, in a recent note, said a positive outcome for Cablevision would be a boon for the cable industry and, to a lesser extent, content owners, as consumers with DVRs watch more television, in addition to fewer ads.

“We believe the rapid rise in DVR usage would create an even darker cloud over the television advertising business, the analyst said in a note. “While this issue is already playing out with current DVR technology, only 35% of multichannel homes have a DVR and the vast majority only has a DVR in one room of the house.”

A representative from the Motion Picture Association of America was not immediately available for comment.

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