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Court Reverses Ruling, Favors Cablevision DVRs

4 Aug, 2008 By: Chris Tribbey

The studios lost a round in court Aug. 4 when the U.S. Court of Appeals reversed a lower court's ruling against Cablevision Systems Corp.

The group of entertainment companies — including 20th Century Fox, Universal Studios, The Walt Disney Co., Paramount Pictures, ABC, CBS and NBC — had won a ruling in March 2007 against Cablevision and its new digital video recorder. The entertainment companies said that the DVR, called Remote Storage Digital Video Recorder, violates copyrights, since it would allow users to store programs on Cablevision's servers. Most DVRs store programs on a hard drive.

The ruling found that the RS-DVR system only made transmissions to one subscriber using a copy made by that subscriber, which the court said greatly limited the potential audience by an alleged infringer.

“In general, any factor that limits the potential audience of a transmission is relevant,” said the court.

In addition, the court found that copyright holders that felt they have been “injured” by a particular transmission already have legal options against alleged infringement.

“This is a tremendous victory for consumers, which will allow us to make DVRs available to many more people, faster and less expensively than would otherwise be possible,” said Cablevision COO Tom Rutledge. “We appreciate the Court's perspective that, from the standpoint of existing copyright law, remote-storage DVRs are the same as the traditional DVRs that are in use today.”

Rich Greenfield, media analyst with Pali Research in New York, said Cablevision would tread softly rolling out the RS-DVRs against a possible backlash from studios.

He said he expected studios, programmers and content holders to seek an appeal (with a new injunction pending appeal) all the way to the Supreme Court, and assuming the case was accepted, would idle the RS-DVR upwards of another 12 months.

“We also believe the programmers may make a new complaint based on contributory infringement vs. direct infringement, meaning the RS-DVR enables consumers to violate copyright,” Greenfield wrote in a research note. “This process could take at least a couple of years to wind its way through the court system.”

Additional reporting by Erik Gruenwedel.

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