Cablevision loses suit on network DVRs

Judge sides with studios over devices

A federal judge has ruled against Cablevision Systems Corp.’s experiment with network digital video recorders, siding with Hollywood studios who said the devices would have violated copyright law.

The case has been closely followed in the cable industry since Cablevision, a New York-area company with about 3 million subscribers, had been the first to try to put the service into use, despite opposition from the studios.

Unlike a standard set-top digital video recorder with a built-in hard drive, which allows TV viewers to store and play back shows when they like and also to skip through commercials, a network DVR would allow any customer with a digital set-top box to record and play back shows in the same way, with the programs being stored in remote computer servers maintained by Cablevision.

Several studios and cable networks sued Cablevision, saying the company didn’t get their permission to rebroadcast the programs.

Cablevision argued that because the control of the recording and playback was in the hands of the consumer, and not Cablevision, the devices were compliant with copyright law.

Cablevision said its network DVRs were comparable Sony Corp (NYSE:SNE – news).’s Betamax videotape recorders, which the Supreme Court said, in a landmark 1984 ruling, did not infringe on copyrights because it was the home viewer who used the videotape machines for personal use.

Cable companies have been eager to experiment with network DVRs because the technology could greatly increase their ability to add DVR customers, who pay a monthly fee, without having to provide new set-top boxes for each one. Those boxes can cost up to several hundred dollars each, a cost that is usually borne by the cable company.

Cablevision caused a stir in the cable industry last March when it announced that it would proceed with its trial of network DVRs. Other cable providers including industry leader Comcast Corp. said they would follow the situation closely but hold off on their own trials.

In a ruling on Thursday, U.S. District Court Judge Denny Chin found in favor of the plaintiffs against Cablevision, which included Twentieth Century Fox, a unit of News Corp., Viacom Inc.’s Paramount Pictures, General Electric Co.’s NBC Studios, CNN and Turner Broadcasting System, both units of Time Warner Inc.

Cablevision spokesman Jim Maiella said in a statement that the company was disappointed in the decision and was considering an appeal. The company never started its trial, pending the outcome of the case.

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