What the 1984 Betamax ruling did for us all

Friday night at 9, millions of Americans will sit in front of their televisions and watch the tropical police drama “Hawaii Five-0” on their local CBS station. And over the next week, roughly 3 million more will watch the show on their own schedule. That’s an unremarkable statistic today, considering that half of American homes have a digital video recorder. But until Jan. 17, 1984, it was an open question whether consumer electronics companies would even be allowed to sell such devices.

On that day 30 years ago, a divided Supreme Court overruled the U.S. 9th Circuit Court of Appeals and declared that Sony could continue to sell its Betamax videocassette recorder despite the objections of two large Hollywood studios, Universal and Disney. It’s an anniversary worth celebrating by consumers and copyright owners alike, because it helped clear the way for a multitude of new technologies that have increased the demand for creative works. Yet it hardly ended the decades-long fight between the entertainment and tech industries.

Justice John Paul Stevens’ majority opinion in Sony Corp. of America vs. Universal laid down at least two important principles for future innovators. First, even if people copied an entire show, it wasn’t an infringement if they were doing so to watch the program later. And second, if a product had a substantial legitimate use (such as time-shifting shows that are broadcast free over the air), it could be sold even if some buyers put it to illegitimate use (such as making copies of shows to rent or sell). But just as important, Stevens declined to expand copyright law to restrict new capabilities Congress hadn’t contemplated when it wrote the copyright statute.

Betamax eventually lost the format war to VHS recorders, but its courtroom triumph helped all such devices proliferate. Recorders soon became the foundation for the home video business, which turned into Hollywood’s largest cash cow. Meanwhile, the ruling opened the door for TiVo and other digital gadgetry in the home, then helped defend an assortment of Web-based services with both infringing and non-infringing uses, such as YouTube and other user-generated content sites and Dropbox and other online storage services.

As new technologies emerge, however, so do legal questions that Stevens’ opinion doesn’t answer — at least not to the satisfaction of copyright holders or, in some cases, the courts. Last week, the Supreme Court agreed to hear a case brought by the major broadcast networks against Aereo, a company that erects an array of tiny TV antennas on its property that subscribers use to tune in broadcasts on their computers, tablets and smartphones. We’ll have more to say about the case later; for now, it’s enough to note that it could prove as important to cloud-based services as the Betamax case was to new devices in the home.