Betamax Legacy Plays On

Sony Corp.’s Betamax videorecorder long ago vanished from store shelves, but its spirit lives on in Apple Computer Inc.’s iPod.

And TiVo Inc.’s personal videorecorder.

And Archos’ portable video player.

And Hewlett-Packard Co.’s Media Center PC, not to mention umpteen other digital devices.

Simply put, virtually any equipment that can record, store or transmit music or movies owes its existence at least in part to Sony and the Betamax.

The Betamax triggered a bitter battle with Hollywood over products that can promote piracy, leading to a landmark Supreme Court ruling that technology and entertainment companies are arguing over to this day.

In the 5-4 ruling, issued 20 years ago today, products that could be used for piracy were deemed legal if they were “capable of substantial noninfringing uses.” The opinion gave manufacturers the freedom to produce a range of audiovisual devices without the approval of Hollywood.

Now, lawyers for the entertainment and technology industries are fighting to define what the ruling means in the Internet era. The key question is whether companies can be held liable for products primarily used for piracy -- even if people can use those products for legitimate purposes.

The Betamax decision is at the heart of a case pitting Hollywood studios and major record labels against the companies behind the Grokster and Morpheus file-sharing networks. A federal judge in Los Angeles ruled last year that Grokster and Morpheus were legal under the Betamax doctrine, but the studios have challenged the ruling in the U.S. 9th Circuit Court of Appeals.

Software company 321 Studios, whose software can be used to copy DVD movies, is also relying on Betamax to defend against a copyright infringement lawsuit by the studios. That case is awaiting a decision from a federal judge in San Francisco.

At stake is how far technology companies will have to go to protect copyrights before releasing new products or features -- and the degree of control Hollywood and other copyright holders will have over those innovations.

The Betamax decision has been a shield for the manufacturers of many products that have both legitimate and illegitimate uses, including VHS machines, CD burners and DVD recorders. But the more narrowly the Betamax decision is applied by the courts and Congress, the smaller the shield will be, enabling copyright holders to force more products to include anti-piracy features.

To lawyers for the entertainment industry, it’s too great a stretch to extend Betamax’s protection to companies like Grokster and 321 Studios.

Russell Frackman, an attorney who has represented the major record companies in the file-sharing lawsuits, said the main thing people did with Betamax machines -- recording shows for later viewing -- was legitimate and “done for a very limited purpose in one’s home.”

By contrast, the main thing people do with file-sharing networks is make and share unauthorized free copies of copyrighted songs and movies.

It’s not the technology that’s the problem, he said; it’s what most people do with it.

“You can rhetorically turn Betamax into a fight over technology. But that’s not our position, and if you look at it, that’s not what Betamax was talking about.”

David Kendall, a lawyer for the major Hollywood studios, contends that the Betamax case doesn’t give carte blanche to technologies that can violate copyrights. Although the original Napster file-sharing network relied on the Betamax defense, Kendall noted that the 9th Circuit ruled that the company wasn’t taking the steps it could to deter piracy.

Attorneys for consumer electronics and technology companies said the entertainment companies were trying to replay the Betamax dispute, only with a different ending. The same arguments used against the file-sharing networks -- that copying entire songs or movies isn’t legal and that it damages the market for entertainment -- were used against Sony’s videorecorder, and the Supreme Court rejected them.

“The Sony Betamax decision was definitely the high-water mark for the growth of technology, all of which has benefited the content community,” said Gary Shapiro, chief executive of the Consumer Electronics Assn.

That’s quite a distinction for a ruling that very nearly went the other way.

The 9th Circuit ruled against Sony in October 1981, and a majority of the Supreme Court originally wanted to uphold the appellate ruling, said Jonathan Band, a copyright attorney who examined late Justice Thurgood Marshall’s papers in the case. But Justice Sandra Day O’Connor switched sides, backing Justice John Paul Stevens’ view that Betamax was legal.

Before the recent spate of lawsuits against file-sharing companies, the Betamax case was rarely used to defend a new technology. Although entertainment industry lawyers disagree, attorney Fred von Lohmann of the Electronic Frontier Foundation said this showed how clearly Betamax drew the line between technologies that were legal and those that weren’t.

Rep. Rick Boucher, a Virginia Democrat active on technology issues, agreed. Noting the digital revolution sweeping through consumer electronics, Boucher said, “All of that is because of the legal certainty that Betamax provided.”

In 1998, Congress muddied the waters for technology companies with the Digital Millennium Copyright Act. The law banned the manufacture or sale of products whose primary intent was to unscramble or pick the electronic locks on copyrighted works.

“A big goal of the DMCA was to create a quid pro quo: If the copyright owners lock their stuff up, the Betamax doctrine goes away,” Von Lohmann said. Unless copyright owners approve, he added, the DMCA prevents manufacturers from unscrambling material even for the kinds of legitimate uses that the high court ratified in Betamax.

As a consequence, manufacturers are increasingly looking to strike deals with Hollywood to govern how people can use the next generation of digital products, such as high-definition videorecorders. The risk is that their agreements will be good enough for some consumers, and “we’ll never know how much better it could have been,” Von Lohmann said.

Steve Kroft, the Los Angeles-based attorney who represented the studios that sued Sony in the Betamax case, said it was nonsense to suggest that copyright owners could limit innovation.

“There’s always going to be technological innovation because we’re technological innovators,” Kroft said. “You just have to operate within the rules.... Don’t trample somebody else’s rights because you’ve got the next ‘next thing.’ ”