Media Distribution Rights: Here Come The Judges (And Congress)

Consumer watchdog groups are sounding the alert about pending restrictions on media content usage.

Not since Universal City Studios and Walt Disney Productions sued Sony to prevent it from selling its Betamax video recorder back in 1976 has the industry been more on fire about the rights of consumers to legally copy media in the home for their own use.

At issue: whether the courts will focus on consumer behavior rather than the technological capabilities of the devices they use. Although the industry has been pointing to the Betamax case (decided more than 20 years ago by the Supreme Court in favor of Sony) as a legal landmark decision that clearly said manufacturers were not liable if their devices were used in illegal copying, the Grokster ruling in 2005 sent a chill through the market.

The Betamax ruling made it possible for consumers to record media as long as it was strictly for personal use. As long as there was "substantial" use of the recording devices in fair-use copying, companies producing devices couldn't be sued.

If Betamax had been decided in favor of the movie studios, there would have been a virtual stop to the devices that have been developed since that time, such as VCRs, rental movies, home DVDs, digital video recorders, MP3 players, and even PCs, says Fred von Lohman, a senior staff attorney with the Electronic Frontier Foundation.

"Instead of manufacturers being able to design and build the products that they thought the American marketplace wanted, they would basically be told by the content producers what features would and wouldn't be permitted," says Lohman.

It all comes down to an issue called "inducement." As decided in Betamax, device manufacturers couldn't be sued just because a device could be used to cheat the system. In other words, the onus of illegality rested on the people who engaged in illegal activity, not on the device itself.

But last year, with the Grokster ruling, the Supreme Court appeared to reverse this precedent by agreeing with content providers that peer-to-peer companies such as Grokster could be held responsible for copyright piracy on their networks.

This could potentially establish a number of significant hurdles that manufacturers would have to jump over in order to bring a legal device to market. "It's truly a jungle of complications that all these devices have to navigate to be successful," says Phillip Swann, president of

Moreover, multiple bills are now in progress in Congress that would further erode the rights of consumers to copy, move, or share media for their own personal use.

"There's more legislation pending now than anytime that I can remember," says Robert Schwartz, general counsel of the Home Recording Rights Coalition, an industry watchdog group. "For many years media companies were focused primarily on distribution outside the home; now they've turned their attention to inside the home. Their attitude is: This is our content, why should consumers be able to do whatever they want with it?"

Three of the bills that have received the most attention include the Audio Broadcast Flag Licensing Act of 2006; The Platform Equity and Remedies for Rights Holders in Music (PERFORM) act of 2006; and The Digital Transition Content Security Act. Here's a brief rundown of what each of them would mean for consumers and manufacturers:

The Audio Broadcast Flag Licensing Act of 2006, sponsored by Rep. Michael Ferguson, R-N.J., would require that every device capable of receiving digital television broadcasts build restrictions against redistribution of those programs into the product design. Content would contain "flags" that would in essence say that the content was protected and unable to be copied, moved, or redistributed; devices would have to be redesigned to include the capability to recognize those flags.

The Platform Equity and Remedies for Rights Holders in Music (Perform) Act of 2006, introduced by Sen. Dianne Feinstein, D-Calif., would prevent consumers from breaking up music tracks downloaded or captured from a broadcast. This would eliminate their ability to do what they currently do with standard MP3 players, unless they pay for individual songs: this would include storing individual song tracks, searching by title or artist, or creating playlists. The music recording industry is also asking that the regulations require that recordings be tied to the recording device, thus not allowing transfer between, say, MP3 players and PCs.

The Digital Transition Content Security Act, introduced in December by Reps. F. James Sensenbrenner, R-Wis., and John Conyers, D-Mich., and better known as the "Analog Hole Bill," would force makers of any analog video input device that converts content into digital form to impose severe restrictions on the functionality offered.

This would impact a broad range of devices, including DVRs, video capture cards, and other devices that convert analog signals into digital data. As with the Audio Broadcast Flag Licensing Act, this bill would require redesign of a whole range of currently legal consumer devices, including DVD recorders, personal video recorders, and camcorders with video inputs.

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