Court blocks U.S. anti-piracy TV rules

WASHINGTON -- People buying the next generation of digital televisions will be able to record and then watch their favorite shows without any interference from Hollywood.

A federal appeals court on Friday threw out government rules requiring built-in, anti-piracy technology to let broadcasters and studios prevent digital shows from being copied and being shown on other TVs, computers and video players.

The three-judge panel for the U.S. Circuit Court of Appeals for the District of Columbia said the Federal Communications Commission had exceeded its authority in requiring such technology in digital televisions and consumer devices sold after July 1.

Congress may get the last word. The appeals court panel said lawmakers could change the law to require the anti-copying technology on new products. An aggressive lobbying effort by entertainment companies is already anticipated.

The court's decision illustrates the complexity of applying copyright laws to forthcoming technology. The ruling narrowly hinged on whether the FCC under a 1934 law could regulate new digital TV and video-playback devices once the programs they receive are already in the home.

The court said the FCC's arguments that it had such authority were "strained and implausible."

Consumer groups and library associations challenged the new rules after they were announced in 2003. Their attorneys complained that the FCC requirement would drive up prices of digital television devices and prevent consumers from recording and viewing programs in ways permitted under copyright laws.

The appeals court panel said there is a "substantial probability" the anti-copying technology would interfere with libraries legally transmitting clips of television broadcasts over the Internet for educational purposes.

Broadcast flag

The technology, known as the broadcast flag, would have been required after July 1 for televisions equipped to receive new digital signals, many personal computers and VCR-type recording devices. It would permit entertainment companies to designate, or flag, programs to prevent viewers from copying shows or distributing them online.

Most digital TV sets and recording devices already accommodate the anti-copying technology, so the court's decision will have little immediate effect. Major television manufacturers design their products up to 18 months before they hit retail stores and have been preparing for the upcoming July deadline.

Some manufacturers, however, could choose to market TVs, computers and VCRs as unrestricted.

"Courts are right to be wary when government institutions seek to regulate the specific features and functions of safe, useful consumer technology," said Shapiro.

His trade group did not challenge the FCC rules in court because some member companies agreed with the requirement. Shapiro said he was "personally gratified the court took a narrow view over how government can regulate products."

Entertainment companies said the technology was needed to block viewers from recording high-quality, digital versions of television shows and films and distributing them free online. The Motion Picture Association of America and the National Association of Broadcasters warned that companies may choose not to air their best programs over local television if the shows couldn't be protected.

"If the broadcast flag cannot be used, program providers will have to weigh whether the risk of theft is too great over free, off-air broadcasting and could limit such high quality programming to only cable, satellite and other more secure delivery systems," said Dan Glickman, MPAA's chief executive.

The FCC acknowledged it had never before tried to impose regulations affecting television broadcasts after such programs are beamed into households. But it maintained that it was permitted to do so under the 1934 Federal Communications Act since Congress didn't explicitly tell the commission not to do it.

"We categorically reject that suggestion," the appeals panel said.

There were clear signals for Friday's ruling.

During earlier courtroom arguments, U.S. Circuit Judge Harry T. Edwards told the FCC's lawyer the agency had "crossed the line" by requiring the new anti-piracy technology for next-generation television devices and rhetorically asked whether the FCC also intended to regulate household appliances.

"You've gone too far," Edwards said. "Are washing machines next?"