Court Rejects Anti-Piracy Regulation

An appeals court Friday tossed out rules requiring anti-piracy technology in new digital TV receivers and recorders, saying the Federal Communications Commission had overstepped its authority.

The unanimous decision by three judges from the U.S. Court of Appeals for the District of Columbia was a blow to the Hollywood studios and television networks that had been the driving force behind the regulation.

But it was welcomed by some consumer groups and technology advocates, who argued that the rule gave the government too much power over computers, software and other digital gear.

The studios and networks are expected to take their case to Congress. Getting lawmakers’ attention may be a challenge, given the other important piracy and communications-related topics bubbling up in Washington. These include shutting off analog TV broadcasts, revamping telecommunications regulation and, potentially, trying to stop businesses that profit from piracy.

At issue is the so-called broadcast flag, a system for deterring piracy that the FCC mandated in November 2003.

The FCC’s order required televisions, video recorders, computers and other devices that received or interpreted digital TV signals to use government-approved anti-piracy technology by this July. That technology would bar the devices from retransmitting a digital TV show to the Internet or any device that did not meet the FCC’s anti-piracy requirements.

Proponents argued that the rule would help protect high-definition TV shows from being swapped online. Without this protection, they claimed, Hollywood studios and other copyright owners would be reluctant to let their most valuable programs be shown on free, over-the-air TV stations.

Motion Picture Assn. of America Chief Executive Dan Glickman echoed these themes in a statement released Friday.

“If the broadcast flag cannot be used, program providers will have to weigh whether the risk of theft is too great over free [local TV] broadcasting and could limit such high-quality programming to only cable, satellite and other more secure delivery systems,” Glickman said. “We will continue working aggressively on all fronts to make sure consumers will have access to high-value content on broadcast television.”

Opponents argued that the piracy threat was overstated, the flag system was easy to circumvent and the regulations would interfere with some viewers’ ability to enjoy digital TV broadcasts when and where they wished. Beyond that, they said, the rules would bring a vast range of digital products under the FCC’s purview, possibly even Microsoft Corp.’s next computer operating system.

“This is not about digital TV; it’s about the FCC regulating all kinds of new technology and having to pass judgment about new software,” said Gigi B. Sohn, president of Public Knowledge, the technology advocacy group that led the appeal. “Congress has to ask itself the question, ‘Do we want to have a Federal Computer Commission?’ ... Something tells me they don’t want that to happen.”

The 34-page opinion by Judge Harry T. Edwards did not address whether broadcasts should be protected against piracy or whether the system required by the FCC would be effective. Instead, Edwards ruled that the FCC did not have authority to take up the issue in the first place.

Although Congress gave the FCC the power to regulate how devices receive TV signals, Edwards ruled, the agency does not have the power to regulate the other things a receiver might do.

“The FCC, like other federal agencies, ‘literally has no power to act ... unless and until Congress confers power upon it,’ ” Edwards wrote, quoting a ruling from 1986.

The broadcast flag rule exceeded the FCC’s authority, he said, because it “affects receiver devices only after a broadcast transmission is complete.”

FCC officials declined to comment.