Cablevision

Here is something I wrote (a long time ago, so don't jump all over it) about Cablevision and the impact of copyright case law on the incentive to innovate and how smaller fish are disadvantaged under current case law developments. I post in the event it is a helpful supplement to the case.


A. RS-DVR’s Are Legal, So Far, Kind Of: The Cablevision Case
I. Background
Since the advent of the DVR, there are around 25 million DVR users in America today, with an expected 50 million users in three years. DVRs come in second, just behind the cell phone, of essential household technology items.
In March of 2006, Cablevision Systems Corporation, the sixth-largest U.S. cable operator, announced it will started testing what it called the remote storage digital video recorder (“RS-DVR”). Unlike a traditional DVR, which is a hard drive encased in “set-top” box located in the users home, the RS-DVR is housed in Cablevisions facilities and is operated by the user just like a traditional DVR is operated. The set-top DVR is a combination of a traditional cable box and a traditional DVR. The RS-DVR would enable Cablevision customers, with only cable box equipment, to use the RS-DVR. Cablevision planned to offer the RS-DVR to its 2 million digital cable subscribers.
Cablevision notified its content providers of its plans to offer the RS-DVR without seeking any licenses from them to operate or sell the RS-DVR. In response to this notification, several major television networks filed suit against Cablevision (CSC Holdings, Inc. is the parent company of Cablevision) in federal court, contending Cablevision’s RS-DVR would make them liable for direct copyright infringement.
II. How Cablevision’s RS-DVR Works
Cablevision compiles the content of all the television channels it will broadcast into a single stream of data. Usually, the stream is transmitted to the viewer in real time, so that content designated to air at 8 p.m. is streamed at 8 p.m. Unlike how data transmissions were normally conducted, the single stream is split into two streams. On stream is sent to viewers as normal. The second stream is created to feed RS-DVRs with content Cablevision subscribers wish to be recorded. The way this RS-DVR is designed—as I assume there are other ways to design the system—the second stream first flows into a device called the Broadband Media Router (“BMR”). The BMR buffers the data stream—holding no more than 1.2 seconds of television programming at any time—reformats it, and sends it to the “Arroyo Server.” The Arroyo Server is composed of two data buffers and a number of hard drives. When television channels are transmitted by Cablevision to the Arroyo server, the data moves to the first buffer (the “primary ingest buffer”). The primary ingest buffer copies 0.1 seconds or less worth of each channel’s content at any moment. While the data resides in the primary ingest buffer, the Arroyo Server checks if any subscribers requested content to be recorded—meaning, the subscriber scrolled the TV menu with their remote control and selected a program to be recorded. If no recording was requested, then the data is not transmitted any further. If a customer did select for content to be recorded, then the data is transmitted from the primary buffer to the secondary buffer, which then is transmitted to a hard drive designated for that particular customer.
III. The District Court Grants Summary Judgment Against Cablevision
The district court analyzed three systematic actions by Cablevision for direct copyright infringement, which were based around two rights—the right to reproduce the work in copies and the right to publically perform the work.
a. Are the Arroyo Server Copies Unauthorized Copies?
The district court concluded that the RS-DVR was a service and that Cablevision was the one doing the copying at the request of Cablevision’s subscribers. The district court distinguished Sony. The court noted that when Sony would sell a VTR they would transfer ownership in the equipment and would cease contact after the moment of sale, the VTR was a stand-alone piece of equipment where the push of a button would produce a recording, and Sony did not provide content to be recorded. By contrast, the district court stated Cablevision does not sell a RS-DVR to its customers and would maintain a continuous relationship with them so long as they subscribed to the service, the RS-DVR was not a stand-alone piece of equipment (RS-DVR customers could not disconnect their set-top box and connect somewhere else and record programming), the press of a button sent a signal to equipment owned and operated by Cablevision to record a program, and Cablevision decided which content to make recordable and provided the content to be recorded.
The district court, citing to Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y 1991), and Princeton Univ. Press v. Michigan Documents Services, Inc., 99 F.3d 1381 (6th Cir. 1996), concluded Cablevision was the one doing the copying into the RS-DVR. The district court distinguished Religious Technology Center. v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), and its progeny, stating those holding were based on the court trying to find a workable theory of liability that would not make the whole internet liable for activities not capable of being deterred.
b. Are the Buffer Copies Unauthorized Copies?
The district court held the primary ingest buffer copies were “copies” as defined by § 101 and that Cablevision’s use of the RS-DVR system would directly infringe on plaintiffs’ copyrights.
Under the Copyright Act, “copies” are defined as:
[M]aterial objects . . . in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term “copies” includes the material object . . . in which the work is first fixed.


The Copyright Act defines when a work is “fixed”:
A work is “fixed” in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.
While the primary ingest buffer only held 0.1 seconds or less of content at any given time, the district court considered those copies “sufficiently permanent or stable to permit [them] to be perceived, reproduced, or otherwise communicated for a period of more than a transitory duration” because an entire program would pass through the primary ingest buffer. Citing to MAI System Corp. v. Peak Computer, Inc., 911 F.2d 511 (9th Cir. 1993) and its progeny, the district court held “the transmission of information through a computer’s random access memory or RAM, as in the case with the buffering here, creates a ‘copy’ for purposes of the Copyright Act.”
Lastly, the district court gave weight to the United States Copyright Office’s report on the Digital Millennium Copyright Act, which concluded that, generally, temporary copies of a work in RAM are “fixed” if they exist for a sufficient amount of time to be capable of being copied, perceived, or communicated and therefore constitute “copies” regulated by the Copyright Act.
c. Are the Transmissions of Recorded Shows to Subscribers Who Requested the Recording Unauthorized Transmissions?
The district court held Cablevision would publicly perform plaintiffs’ content were they to transmit recordings requested by customers to those same customers in their home, which, without plaintiffs’ permission, would directly infringe upon their copyrights.
The Copyright Act defines to “perform” a work as to “recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.” The Copyright Act provides in relevant part that to “perform” a work “publicly” is:
[T]o transmit or otherwise communicate a performance or display of the work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

Cablevision agreed the transmission of recorded programs to subscribers who requested the program to be recorded were performances. The district court held Cablevision was the one doing the performing for the same reasons it held Cablevision was the one doing the copying on the Arroyo Servers, but also cited to Columbia Pictures Indus., Inc. v. Redd Horne, Inc., 749 F.2d 154, 159 (3d Cir. 1984), for the proposition that placing a video cassette in a VCR and operating the controls renders that person the one who performs the content because those activities resulted in the sequential showing of the performance.
The district court held Cablevision’s RS-DVR “would transmit the same program to members of the public, who may receive the performance at different times, depending on whether they view the program in real time or at a later time as an RS-DVR playback. Furthermore, the district court read On Command Video Corp. v. Columbia Pictures Indus., 777 F. Supp. 787, 790 (N.D. Cal. 1991) to hold that transmissions of a commercial nature are transmissions to the public, which this district court held to apply to Cablevisions transmission to RS-DVR customers.
IV. The Cartoon Network Decision
The Court of Appeals for the Second Circuit reversed the district court on each holding and removed the injunction against Cablevision. The Court of Appeals held Cablevision’s RS-DVR would not directly infringe on plaintiffs’ copyrights. In so holding, the court “repeatedly noted that the ruling is based only upon the given facts and that other unknown facts may change the outcome of the case.”
a. Are the Arroyo Server Copies Unauthorized Copies?
The Second Circuit considered only two instances of volitional conduct existed in that case: First, “Cablevision’s conduct in designing, housing and maintaining a system that exists only to produce a copy”; Second, a subscriber’s conduct in commanding the RS-DVR system to copy a specific program. The court held the RS-DVR subscriber who schedules a recording was not distinguishable from the VCR user, thus the court held Cablevision did not directly infringe on plaintiffs’ copyrights.
Unlike the district court, the Second Circuit adopted the volitional conduct requirement in Netcom to find direct infringement of copyrights. In determining who makes the copies, the court stated “a significant difference exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct.” The court found Cablevision’s conduct more resembled “a store proprietor who charges customers to use a photocopier on his premises,” which does not result in direct infringement of copyrights for the store proprietor, and less resembled a copyshop that took materials from a professor and photocopied those materials to then sell to the professor’s students, which would result in direct infringement liability for the copyshop.
The second circuit disagreed with the district court’s conclusion that Cablevision exercised “ ‘unfettered discretion in selecting the programming that it would make available for recording.’ ” The court stated:
Cablevision has no control over what programs are made available on individual channels or when those programs will air, if at all. In this respect, Cablevision possess far less control over recordable content than it does in the [video on-demand] context, where it actively selects and makes available beforehand the individual programs available for viewing.
Lastly, the Second Circuit considered Cablevision’s continuing relationship with its RS-DVR customers, its control over recordable content, and the instrumentality of copying to the RS-DVR system to be questions under contributory liability and not direct liability.
b. Are the Buffer Copies Unauthorized Copies?
The Court of Appeals held the district court erred by not including a duration requirement when analyzing whether copies in the buffer were fixed. The Second Circuit concluded the MAI case did not address the duration requirement and that the MAI court did not hold, as a matter of law, loading a program into a form of RAM always constitutes a copy under the Copyright Act. Instead, the court follows CoStar Group Inc. v. LoopNet, Inc., 373 F.3d 544, 551 (4th Cir. 2004), in holding the duration requirement is in relation to the duration the copy is embodied.
The court does not follow the Copyright Office’s 2001 report on the Digital Millennium Copyright Act because its interpretation is such that it “reads the ‘transitory duration’ language out of the statute.”
The court concluded the work was embodied in the BMR buffers, but, as only 1.2 second or less of content resided in the buffers for before being automatically overwritten, the works were not embodied for a period of more than transitory duration. Accordingly, the works were not fixed in the BMR buffers or the other buffers that held even less work in their memory.
c. Are the Transmissions of Recorded Shows to Subscribers Who Requested the Recording Unauthorized Transmissions?
The Second Circuit held transmission of content on the RS-DVR from Cablevision to its subscribers would not constitute a public performance and thus would not directly infringe on plaintiffs’ exclusive right to publically perform their works. After noting the term “performance” or the phrase “to the public,” as found in 17 U.S.C. § 106(4), were not adequately defined by §101. The court then turned to the meaning of the language and to the legislative history. The court concluded the dispositive question is “who precisely is ‘capable of receiving’ a particular transmission of a performance.” As such, the court held transmissions made to an individual subscriber from their unique copy of a work was not a public performance. The court disagreed with the district court’s focus on whether the underlying work would be transmitted to the public as a result of the RS-DVR system generally speaking.
The court did not find persuasive the Redd Horne case, because that case never explicitly explained why the use of distinct copies affects the transmit clause inquiry. The court also did not find persuasive the On Command case, because it was factually distinguishable. On Command involved a single copy of a video work that could be transmitted to successive viewers, where as Cablevision would only transmit a unique copy of a work to one subscriber.
I. Why New Business Concepts Cannot Thrive In Such A Legal Environment
Established industries and businesses can use murky areas of copyright law and their financial resources to transform legal ambiguities into barriers to innovation and competition. Psychologically speaking, we can expect resources to be spent only when the innovation threatens the old way of doing business (because business leaders prefer certainty) or existing protections under the law (because they would lose power).
Even though a new technology might bring more revenue for an industry, the industry might still resist the emergence of that technology. This can be the case if permitting innovation reduces the content producers control over that content, because behavior at the micro-level is not always rational. This principle is exemplified in the Sony case, where plaintiffs contended their industry would be destroyed by the VTR, but now video sales and rental revenues “far surpass” what the industry makes in box office movie sales. In 2008, the US box office sales pulled in over $9.8 billion. Not to mention those other industry’s in the rental of videos and manufacturing of the equipment to view them also grew and thrived.
What value has the law created in clarifying copyright laws applied to the video recording industry who’s target market are those looking to exercise their fair use rights? The value I am concerned with is the value brought by a clear statement of the law that will encourage innovation where the innovation will ultimately be held to be legal and discourage activities the law will ultimately hold are illegal.
In this sense, a law is likely to either have next to no value from the beginning because it rested on such a narrow holding, have great value early on but diminish in value as technologies and creativity advance, or it will have considerable durability because it rests on well selected principles and bright line rules. In the context of copyrights in general, “the law’s ability to stretch itself around new technology has been less than inspiring.”
Regarding the Sony decision, Jessica Litman believes “the rule of Sony has not been clear at all in practice,” and that “a muddier standard could hardly threaten them with more uncertainty than they face today.” “As new technologies appear, copyright owners have relied on their factual differences from the Betamax to justify filing a lawsuit. Digital audio tape recorders, portable MP3 players, and digital video recorders attracted litigation. Sony did not control, it was said, because they are digital rather than analog.” This was the particular case for DVR companies, like ReplayTV mentioned above and also Scour.com. Unlike Justice Breyers contention in Grokster that Sony’s rule is clear and is a strong proponent and aid to technology, “Sony’s doctrinal contributions have eroded over time. It has failed to protect innovators from litigation.”
So what does seem clear to the innovator from Ginsberg’s concurrence and Breyer’s concurrence in Grokster is the Court, as of the Grokster case, is still conflicted as to Sony’s rule—even though all Justices agreed with the result in Grokster—and that lower courts interpreted Sony differently.
ReplayTV seemingly tried to temper the possibilities with their DVR by only allowing a certain number of copies to be sent to friends, kind like how a book would be shared. However they still got the shaft. This can be somewhat rationalized by the fact that when digital works are shared between one person and another, a work remains with the sender, thus there are two works existing after a work is shared.
The Second Circuit’s Cablevision decision shows copyright law does not adapt well to new technologies in relation to providing content viewers an ability to hire, in a competitive market, the capacity to exercise their fair use rights regarding video content. Furthermore, while the Second Circuit’s decision in Cablevision tried to avoid a circuit split with the Ninth Circuit’s holding in MAI, the Second Circuit for all purposes has created one in terms of what the innovator wants to know about. Because the laws involving RAM are critical to electronic innovations in the digital world, this outcome is not helpful for innovators, especially when they seek to operate on a national level. Having different rules in different appellate districts is not a chapter an innovator hopes to see in an Idiots Guide to Copyright.
To add insult to injury, because those in a favorable legal position will naturally resist proposals to tinker with copyright law and given the legislative process Congress employs when revising copyright laws, it is difficult to revise the law to meet new technology. While Cablevision may serve as the starting point for taking copyright into the digital age, it would be a battle constrained by precedent and statutes.
While the Second Circuit considers their holding to be consistent with Sony, that statement is of no use to an innovator with enough cash to realize their concept but not enough to defend against litigation under murky copyright laws. This is especially the case in this context, because the Second Circuit’s analysis in Cablevision is open to serious scrutiny. Innovators need laws they can follow without litigating the issue. Otherwise the law will artificially create barriers to innovation, leaving innovation to large or cash backed companies and not individuals or smaller businesses. There is no reason to leave innovation in this field to the established players.
The value of judicial opinions to innovators is increased the more logically and analytically solid the option is and the closer it comes to a clear rule, assuming it is in their favor. By expressly narrowing its holding and resting its holding on shaky reasoning, the Cablevision case does not give a lot of guidance to other innovators. The Second Circuit’s opinion mainly just granted relief to Cablevision, because of how the opinion was constructed. However, more people and entities need a green light on their innovations too.