Supreme Court Rules Against Hollywood in Copyright Decision

High Court Rules Homevid Taping Does Not Violate Current Copyright Laws

Washington, Jan. 17 — The U.S. Supreme Court ruled today that the widespread practice of homevideo taping is not a violation of copyright laws. In a 5-4 decision that amounts to a crushing defeat for Hollywood, the court ruled in the Sony Betamax case that “time shifting,” the practice of taping shows for later viewing, is a fair use of vid product protected by law. Similarly, it ruled that manufacturers of VCRs are not “contributory infringers,” as program suppliers alleged.

The long-awaited decision, written by Justice John Paul Stevens, overturns an appeals court verdict that home use of a VCR is not legal under current copyright laws.

“One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible,” Stevens wrote.

“It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written.”

The decision will signal a renewed effort by the production industry for legislation that would require royalties to be paid by purchasers of VCRs and blank recording tapes. Key lawmakers in both houses of Congress have promised to address the issue once the Supreme Court’s opinion had been delivered, but chances for enactment during an election year are practically nil.

The industry’s battle for legislation is up against a well-heeled consumer electronics industry that likens the proposed royalties to an additional tax on consumers — an unpopular word for politicians this year.

Joining Stevens in the majority were Chief Justice Warren Burger and Justices William Brennan, Byron White and Sandra O’Connor. The decision does not sidestep the issue as numerous observers had feared it might, but simply rejected the arguments of Universal City Studios in the conflicting battle between the rights of copyright holders and those of the public.

“In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such a calculus of interests,” Stevens wrote.

He said that in the case of time shifting, which may not be authorized by the copyright owner, there still may not be an example of infringement. “An unlicensed use of the copyright is not an infringement unless it conflicts with one of the specific exclusive rights conferred in the copyright statute.”

The first of these factors requires that the commercial or nonprofit character of an activity be weighed in any fair-use decision. “If the Betamax were used to make copies for a commercial or profit-making purpose, such use would presumptively be unfair.” Time shifting for private home use must be characterized as a noncommercial, nonprofit activity, the majority insisted.

“A use that has no demonstrable effect upon the potential market for, or the value or, the copyrighted work need not be prohibited in order to protect the author’s incentive to create,” said Stevens.

The high bench nixed the argument that the Betamax is capable of commercially significant noninfringing uses, and is therefore a contributory infringer. It said that in order to resolve the point, it need not explore all of the different potential uses’ of the machine and determine whether or not they constitute infringement.

“Rather, we need only consider whether on the basis of the facts as found by the (U.S. District Court in Los Angeles, whose decision it upheld), a significant number of them would be noninfringing.” Time shifting satisfies the standard because (1) program suppliers have no right to prevent other copyright holders from authorizing it for their programs, and (2) the district court’s factual findings reveal that even the unauthorized home timeshifting of programs is legitimate fair use.

Dissenters’ Lament

The dissenting opinion, written by Justice Harry Blackmun, argued that there can be no question that under the Copyright Act the making of even a single unauthorized copy is prohibited. “The making of even a single videotape recording at home falls within this definition.”

Blackmun wrote that the 1976 Copyright Act grants a copyright owner the exclusive right to control the performance and the reproduction of his work, “and the fact that he has licensed a single television performance is really irrelevant to the existence of his right to control its reproduction.

“Although a television broadcast may be free to the viewer, this fact is equally irrelevant; a book borrowed from the library may not be copied any more freely than a book that is purchased.”
He said the majority is obviously tempted to stretch the doctrine of fair use so as to permit unfettered use of this new technology in order to increase access to television programming. “But such an extension risks eroding the very basis of copyright law, by depriving authors of control over their works and consequently of their incentive to create.”

He reminds that the studios have identified a number of ways in which VCR recording could damage their copyrights — reducing their ability to market works in theaters and through rental or sale of prerecorded tapes, for example.

It could also reduce their rerun audience, while advertisers may prove unwilling to pay for less than “live” audiences if they believe commercials are being deleted during time shifting. He said the lower court was mistaken in concluding that no harm results from the practice. Blackmun did not address the issue of how to enforce violations of the statute under his rationale. Scrambling equipment or new royalties might solve the problem, he said.

“Even were an appropriate remedy not available at this time, the court should not misconstrue copyright holders’ rights in a manner that prevents enforcement of them when, through development of better techniques, an appropriate remedy becomes available.”

Today’s decision is the final judicial upshot of a suit launched in 1976 by Universal and Disney at a time when the Sony Betamax was a new venture in the consumer marketplace.

During the interim it has become a $3 billion industry and has reached a momentum that will be difficult for Congress to control should it attempt to insert a new royalty plan.

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