Feds nix piracy play

Court throws out FCC rules on new technology

WASHINGTON — A federal court dealt a blow to Hollywood on Friday by throwing out recent Federal Communication Commission rules that would have required antipiracy technology built into new television sets and other devices cable of receiving digital broadcast signals.

Saying the FCC lacked statutory authority to issue the rules, the U.S. Court of Appeals for the D.C. Circuit’s unanimous decision was a clear victory for public interest groups that opposed them and a stinging defeat for the movie industry, which supported them.

The Motion Picture Assn. of America had filed an intervenor brief in the case, arguing that the groups had no legal standing to challenge the FCC rules. The 3-0 decision called the MPAA’s argument “specious,” summarily dismissing it in a single paragraph.

But the fight is likely to shift to Congress, where the MPAA has been talking to members and staff since March for possible legislation regarding the issue (Daily Variety, March 23).

In 2003 the FCC initiated rules that would require digital televisions, certain personal computers and VCRs manufactured after July 1, 2005, to have antipiracy technology known as “broadcast flag.” Digital broadcasters mark — or flag — a transmission by embedding a protective code; a broadcast flag reader on the receiving device then restricts the ability to copy the program or content and upload it onto the Internet. Hollywood supported broadcast flag as a means of protecting movies broadcast digitally, which will happen exclusively after the transition to digital television transmission.

Libraries opposed

Public interest groups, including libraries, oppose broadcast flag, arguing it would unlawfully restrict consumers’ right to record and disseminate for permissible educational or personal purposes.

FCC attorneys had argued that while the agency did not have specific authority to issue the rules, the commission had “ancillary authority” per a provision in the Communications Act of 1934, which allows the FCC to regulate anything “reasonably” associated with its normal responsibilities. But the court rejected that claim, saying FCC authority is unequivocally limited to the broadcast and reception of signals. Broadcast flag readers are engaged after the signal is received.

“There is no statutory foundation for the broadcast flag rules, and consequently the rules are ancillary to nothing,” the court wrote.

Hard queries for FCC

When the court heard oral arguments last February, judges grilled attorneys for both sides, but two judges sharply questioned the FCC’s authority to issue the rules (Daily Variety, Feb. 23). Friday’s decision hardly came as a surprise.

Still, even some winners marveled at it.

“This was a notable victory,” said Gigi Sohn, president of Public Knowledge, one of the groups. “Clearly a slam dunk for consumers, libraries and civil liberties unions.”

Attorney Pantelis Michalopoulos, who represented the groups for oral arguments, declared the ruling significant for “how sweeping it was.”

“This decision sends a strong message to the FCC that it cannot invent authority,” added Mark Cooper, head of Consumer Federation of America, which also challenged the rules.

NAB disappointed

National Assn. of Broadcasters topper Edward Fritts, who backed the rules, said in a statement, “Without a broadcast flag, consumers may lose access to the very best programming offered on local television. … We will work with Congress to authorize implementation of a broadcast flag that preserves the uniquely American system of free, local television.”

In a statement, MPAA prexy-chief exec Dan Glickman said, “This is a disappointing decision and could create a digital television divide by slowing or eliminating access to high-quality digital programming for some consumers.” Without broadcast flag, he continued, “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.”

An FCC spokeswoman said the agency had no comment.