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Entertainment & Sports
Feb. 19, 2002
Digital Videorecorders May Not Meet 'Sony' Fair Use Test
Focus Column - By Alexis Garcia - In the landmark 1984 decision of Sony v. Universal, 464 U.S. 416 (1984), the U.S. Supreme Court rejected the studios' attempt to impose vicarious copyright liability upon Sony, the manufacturer and seller of Betamax VCRs, for direct infringement by Betamax users.
Focus Column
By Alexis Garcia
In the landmark 1984 decision of Sony v. Universal, 464 U.S. 416 (1984), the U.S. Supreme Court rejected the studios' attempt to impose vicarious copyright liability upon Sony, the manufacturer and seller of Betamax VCRs, for direct infringement by Betamax users.
A few months ago, a number of media conglomerates filed a joint lawsuit against digital recording service ReplayTV (and its parent company Sonicblue Inc.), challenging features of the ReplayTV 4000, Sonicblue's newest digital videorecorder (DVR). Paramount Picture Corp. v. ReplayTV Inc., 01CV-9358 (C.D. Cal. Oct. 31, 2001).
Since then, a number of other studios and networks have joined to bring similar claims in another three lawsuits against Sonicblue. Time Warner Enter. Co. v. ReplayTV Inc., 01CV-9693 (C.D. Cal. Nov. 9, 2001); Metro-Goldwyn-Mayer v. ReplayTV Inc., 01CV-9801 (C.D. Cal. Nov. 15, 2001); Columbia Pictures v. ReplayTV Inc., 01CV-10221 (C.D. Cal. Nov. 28, 2001). Sonicblue is the target because the ReplayTV 4000 is the most advanced DVR on the market. However, the suits are aimed at all DVR manufacturers and their customers.
Many commentators have been quick to question the validity of the claims. One analyst, Michael Donahue of Sidoti Co., even has implied that the claim can only succeed in wearing out the small company, since he "really [doesn't] see any possibility of the networks winning this lawsuit" in light of the Betamax precedent. Franklin Paul, "Sonicblue Ships TV Recorder Despite Network Suit," Reuters (Nov. 28, 2001) (available at www.techtv.com).
Such a statement mischaracterizes the networks' claims and misconstrues the applicability and protection offered by the Betamax case. The networks do not dispute the Betamax ruling, which allows fair use of recorded programs for playback in the home at a more convenient time. But while most DVR features may fall within the protection offered for VCR users in Sony, the networks argue that certain features exceed the scope of the allowed fair use.
In particular, the networks challenge two features of ReplayTV 4000: the "send show" feature, which allows consumers to distribute recorded programs to other ReplayTV 4000 users, and the "autoskip" feature, which automatically deletes commercials during playback of a recorded program.
In response to the lawsuit, Sonicblue is likely to first seek the shelter of Sony's "staple article of commerce doctrine." According to this doctrine, as defined by the Sony court, copyright holders cannot interfere with the sale of technologies that may be used to infringe, but are also capable of "substantial non-infringing uses." Thus, the court held Sony not liable for contributory infringement because the court found "time-shifting" (recording a program in order to watch it a later time) to be a fair use.
However, in contrast to VCRs, DVRs entail a relationship with consumers beyond the sale of the recorders themselves. In the case of ReplayTV, owners must subscribe to a service in order to use the recorders. Sonicblue tracks the recording habits of its users and thus has actual knowledge of recording activities, including the specific program recorded.
It is less clear whether Sonicblue would have knowledge of the "autoskip" feature; however, it seems possible that this information is also stored when the user implements the feature. It is also likely that Sonicblue has knowledge of the use of its "send show" feature, for it restricts distribution to 15 other ReplayTV users. Because this control contrasts with the lack of a relationship in Sony, the "staple article of commerce doctrine" likely will not be available for Sonicblue or DVRs in general.
The doctrine provides shelter from contributory infringement by finding that the defendant lacks constructive knowledge of the infringing activity, in such cases where the device has substantial noninfringing activities. Where a defendant has actual knowledge, the doctrine is overridden. See A&M Records Inc. v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001).
Because the relationship implies that Sonicblue knew or had reason to know of its users' potentially infringing activities, the doctrine probably will not protect Sonicblue from a finding of constructive knowledge just because its device has substantial noninfringing uses.
Without the doctrine's protection, Sonicblue will rely on a fair-use defense. In Sony, the court focused on two main factors in finding that time-shifting is a fair use: the purpose and character of the use, including whether the use is of a commercial nature; and the effect of the use upon the value of the copyrighted work (the other two main factors are the nature of the work and the amount and substantiality of the portion used). The court found that the private home use of time-shifting required a characterization of noncommercial, nonprofit activity and that there was no proof of harm to the studios, thus cutting both factors in favor of fair use.
Sonicblue probably will argue that its features fall under the umbrella of Sony's allowed time-shifting. However, a ReplayTV feature that allows for the automatic deletion of commercials poses a challenge to Sony's findings about the lack of potential harm to ad revenues involved in home recording.
The Sony court's dismissal of such potential harm caused by viewers fast-forwarding through commercials relied partly on a conclusion about the tediousness of the activity, which still required users to view the commercials, even when skipping through them. The networks argue that, unlike VCRs and even the normal fast-forwarding feature on DVRs, the automatic-deletion feature precludes the viewer from viewing the commercials at all.
Sonicblue refutes this idea, noting that the technology simply "make[s] it easier for people to do things they are already doing anyway." See Marc Graser & Scott Hettrick, "Industry Heavyweights Sue Blurb-Buster Replay," at www.variety.com (posted Oct. 31, 2001). Customers must still choose whether to skip the commercials or not, because the feature can only be used when the viewer is watching the show on a delayed basis.
Relief will depend on whether the court views the evidence of harm as speculative, as the Sony bare-majority found, or whether the court takes a more liberal view of the likelihood of harm, as the Sony dissent did. In the dissent's view, the copyright owner need prove only a potential for harm to the market for or the value of the copyrighted work, with only a reasonable possibility of harm being necessary. The Sony dissent concluded that the plaintiffs had satisfied this burden and should not be the ones to bear the risk created by the uncertainty of harm involving advertising revenues.
If four Supreme Court justices could reach this conclusion based on the harm caused by "tedious" fast-forwarding through commercials, it seems quite possible that the networks could convince a court that the "autoskip" feature threatens potential harm to advertising revenues.
Furthermore, the court should apply fair-use analysis only to the challenged feature, the use of "autoskip" in home recording. Therefore, a conclusion that the potential harm of "autoskip" precludes a finding of fair use would not require the court to find that time-shifting is not a fair use. Rather, the court merely would need to consider whether the likelihood of harm is enough to find against fair use for the "autoskip" during time-shifting. The standard time-shifting allowed by Sony would remain permissible.
Given the narrower holding required, how close the Supreme Court came to rejecting regular time-shifting as a fair use, and the fact that viewers would not see the commercials at all using the feature, it seems conceivable that a court may find the "autoskip" feature to be an infringing use.
On the other hand, it seems almost inconceivable that the court will find the "send show" feature to be a fair use. Once the ReplayTV user sends the show to another user, it no longer can be characterized as a private home use, such as the time-shifting that required a finding of noncommercial use in Sony.
Furthermore, it may even be commercial. A direct economic benefit is not necessary to demonstrate a commercial use, but rather it may be enough to show that repeated and exploitative unauthorized copies of copyrighted works were made to save the expense of purchasing authorized copies. See A&M Records.
Television today is no longer all free. Using the "send show" feature, a user subscribing to HBO presumably could send a copy of the most recent episode of "The Sopranos" to a nonsubscribing Replay 4000 user. Thus, the nonsubscribing user would be acquiring these copies in order to save the expense of subscribing or purchasing programming.
Consequently, the potential harm of this use on the market is clear in the ReplayTV case. If this use of the "send show" feature became widespread, it would diminish copyright holders' fundamental means of generating revenue through licensing to pay channels (including pay-per-view services). It would adversely affect the potential market for the networks' copyrighted work, thus satisfying a showing of likelihood of harm.
However, such a showing would not likely be necessary in this case, because the first factor (commercial use) results in a presumption of market harm. Therefore, a court may conclude that the "send show" feature is not a fair use and thus is an infringement.
In conclusion, an application of Sony to the ReplayTV 4000 case leads to conclusions vastly different from those of many observers. The court probably will distinguish between Sony time-shifting and the features challenged by the networks. While the "send show" feature likely will fall short of a fair use, a finding on the "autoskip" feature will depend on the networks' ability to show a likelihood of harm.
Alexis Garcia is a third-year law student at UCLA and will be starting at O'Melveny & Myers (Century City) in the fall. He is one of the editors-in-chief of the UCLA Entertainment Law Review.
By Alexis Garcia
In the landmark 1984 decision of Sony v. Universal, 464 U.S. 416 (1984), the U.S. Supreme Court rejected the studios' attempt to impose vicarious copyright liability upon Sony, the manufacturer and seller of Betamax VCRs, for direct infringement by Betamax users.
A few months ago, a number of media conglomerates filed a joint lawsuit against digital recording service ReplayTV (and its parent company Sonicblue Inc.), challenging features of the ReplayTV 4000, Sonicblue's newest digital videorecorder (DVR). Paramount Picture Corp. v. ReplayTV Inc., 01CV-9358 (C.D. Cal. Oct. 31, 2001).
Since then, a number of other studios and networks have joined to bring similar claims in another three lawsuits against Sonicblue. Time Warner Enter. Co. v. ReplayTV Inc., 01CV-9693 (C.D. Cal. Nov. 9, 2001); Metro-Goldwyn-Mayer v. ReplayTV Inc., 01CV-9801 (C.D. Cal. Nov. 15, 2001); Columbia Pictures v. ReplayTV Inc., 01CV-10221 (C.D. Cal. Nov. 28, 2001). Sonicblue is the target because the ReplayTV 4000 is the most advanced DVR on the market. However, the suits are aimed at all DVR manufacturers and their customers.
Many commentators have been quick to question the validity of the claims. One analyst, Michael Donahue of Sidoti Co., even has implied that the claim can only succeed in wearing out the small company, since he "really [doesn't] see any possibility of the networks winning this lawsuit" in light of the Betamax precedent. Franklin Paul, "Sonicblue Ships TV Recorder Despite Network Suit," Reuters (Nov. 28, 2001) (available at www.techtv.com).
Such a statement mischaracterizes the networks' claims and misconstrues the applicability and protection offered by the Betamax case. The networks do not dispute the Betamax ruling, which allows fair use of recorded programs for playback in the home at a more convenient time. But while most DVR features may fall within the protection offered for VCR users in Sony, the networks argue that certain features exceed the scope of the allowed fair use.
In particular, the networks challenge two features of ReplayTV 4000: the "send show" feature, which allows consumers to distribute recorded programs to other ReplayTV 4000 users, and the "autoskip" feature, which automatically deletes commercials during playback of a recorded program.
In response to the lawsuit, Sonicblue is likely to first seek the shelter of Sony's "staple article of commerce doctrine." According to this doctrine, as defined by the Sony court, copyright holders cannot interfere with the sale of technologies that may be used to infringe, but are also capable of "substantial non-infringing uses." Thus, the court held Sony not liable for contributory infringement because the court found "time-shifting" (recording a program in order to watch it a later time) to be a fair use.
However, in contrast to VCRs, DVRs entail a relationship with consumers beyond the sale of the recorders themselves. In the case of ReplayTV, owners must subscribe to a service in order to use the recorders. Sonicblue tracks the recording habits of its users and thus has actual knowledge of recording activities, including the specific program recorded.
It is less clear whether Sonicblue would have knowledge of the "autoskip" feature; however, it seems possible that this information is also stored when the user implements the feature. It is also likely that Sonicblue has knowledge of the use of its "send show" feature, for it restricts distribution to 15 other ReplayTV users. Because this control contrasts with the lack of a relationship in Sony, the "staple article of commerce doctrine" likely will not be available for Sonicblue or DVRs in general.
The doctrine provides shelter from contributory infringement by finding that the defendant lacks constructive knowledge of the infringing activity, in such cases where the device has substantial noninfringing activities. Where a defendant has actual knowledge, the doctrine is overridden. See A&M Records Inc. v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001).
Because the relationship implies that Sonicblue knew or had reason to know of its users' potentially infringing activities, the doctrine probably will not protect Sonicblue from a finding of constructive knowledge just because its device has substantial noninfringing uses.
Without the doctrine's protection, Sonicblue will rely on a fair-use defense. In Sony, the court focused on two main factors in finding that time-shifting is a fair use: the purpose and character of the use, including whether the use is of a commercial nature; and the effect of the use upon the value of the copyrighted work (the other two main factors are the nature of the work and the amount and substantiality of the portion used). The court found that the private home use of time-shifting required a characterization of noncommercial, nonprofit activity and that there was no proof of harm to the studios, thus cutting both factors in favor of fair use.
Sonicblue probably will argue that its features fall under the umbrella of Sony's allowed time-shifting. However, a ReplayTV feature that allows for the automatic deletion of commercials poses a challenge to Sony's findings about the lack of potential harm to ad revenues involved in home recording.
The Sony court's dismissal of such potential harm caused by viewers fast-forwarding through commercials relied partly on a conclusion about the tediousness of the activity, which still required users to view the commercials, even when skipping through them. The networks argue that, unlike VCRs and even the normal fast-forwarding feature on DVRs, the automatic-deletion feature precludes the viewer from viewing the commercials at all.
Sonicblue refutes this idea, noting that the technology simply "make[s] it easier for people to do things they are already doing anyway." See Marc Graser & Scott Hettrick, "Industry Heavyweights Sue Blurb-Buster Replay," at www.variety.com (posted Oct. 31, 2001). Customers must still choose whether to skip the commercials or not, because the feature can only be used when the viewer is watching the show on a delayed basis.
Relief will depend on whether the court views the evidence of harm as speculative, as the Sony bare-majority found, or whether the court takes a more liberal view of the likelihood of harm, as the Sony dissent did. In the dissent's view, the copyright owner need prove only a potential for harm to the market for or the value of the copyrighted work, with only a reasonable possibility of harm being necessary. The Sony dissent concluded that the plaintiffs had satisfied this burden and should not be the ones to bear the risk created by the uncertainty of harm involving advertising revenues.
If four Supreme Court justices could reach this conclusion based on the harm caused by "tedious" fast-forwarding through commercials, it seems quite possible that the networks could convince a court that the "autoskip" feature threatens potential harm to advertising revenues.
Furthermore, the court should apply fair-use analysis only to the challenged feature, the use of "autoskip" in home recording. Therefore, a conclusion that the potential harm of "autoskip" precludes a finding of fair use would not require the court to find that time-shifting is not a fair use. Rather, the court merely would need to consider whether the likelihood of harm is enough to find against fair use for the "autoskip" during time-shifting. The standard time-shifting allowed by Sony would remain permissible.
Given the narrower holding required, how close the Supreme Court came to rejecting regular time-shifting as a fair use, and the fact that viewers would not see the commercials at all using the feature, it seems conceivable that a court may find the "autoskip" feature to be an infringing use.
On the other hand, it seems almost inconceivable that the court will find the "send show" feature to be a fair use. Once the ReplayTV user sends the show to another user, it no longer can be characterized as a private home use, such as the time-shifting that required a finding of noncommercial use in Sony.
Furthermore, it may even be commercial. A direct economic benefit is not necessary to demonstrate a commercial use, but rather it may be enough to show that repeated and exploitative unauthorized copies of copyrighted works were made to save the expense of purchasing authorized copies. See A&M Records.
Television today is no longer all free. Using the "send show" feature, a user subscribing to HBO presumably could send a copy of the most recent episode of "The Sopranos" to a nonsubscribing Replay 4000 user. Thus, the nonsubscribing user would be acquiring these copies in order to save the expense of subscribing or purchasing programming.
Consequently, the potential harm of this use on the market is clear in the ReplayTV case. If this use of the "send show" feature became widespread, it would diminish copyright holders' fundamental means of generating revenue through licensing to pay channels (including pay-per-view services). It would adversely affect the potential market for the networks' copyrighted work, thus satisfying a showing of likelihood of harm.
However, such a showing would not likely be necessary in this case, because the first factor (commercial use) results in a presumption of market harm. Therefore, a court may conclude that the "send show" feature is not a fair use and thus is an infringement.
In conclusion, an application of Sony to the ReplayTV 4000 case leads to conclusions vastly different from those of many observers. The court probably will distinguish between Sony time-shifting and the features challenged by the networks. While the "send show" feature likely will fall short of a fair use, a finding on the "autoskip" feature will depend on the networks' ability to show a likelihood of harm.
Alexis Garcia is a third-year law student at UCLA and will be starting at O'Melveny & Myers (Century City) in the fall. He is one of the editors-in-chief of the UCLA Entertainment Law Review.
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