Video on demand goes to court

The cable television industry is ready to introduce an advanced video-on-demand service that would provide rebroadcasts of programs without commercials and without a fee paid to the producers.

But the prospect has sent a shudder through the television and film industries, which could lose the right to profit from their work in the era of video on demand.

All that stands in the way is a final clearance from the Supreme Court.

In October, the TV networks and the Hollywood studios appealed to the high court and urged the justices to block the move by Cablevision Systems Inc. of New York to introduce its “remote storage digital video recorder” service. The justices will consider whether they will hear the appeal today.


At issue is a hugely important question in the emerging world of video on demand: Who has the right to control and profit from copies of TV shows, movies, cartoons, sports events and other videos?

To lawyers for the networks and studios, the answer is clear. Federal law says the copyright owners retain the “exclusive rights” to their works, including retransmissions of broadcast programs.

Three years ago they sued and won a ruling from a federal judge who blocked Cablevision from introducing its on-demand service. Unlike standard home video recorders operated by the consumer, Cablevision’s RS-DVR would copy and store on its computers the programs that a subscriber wished to view later.

Citing the Copyright Act, the judge ruled that Cablevision could not copy and rebroadcast these programs without paying a fee to the owner of the copyright.


But in August of last year, the U.S. appeals court in Manhattan reversed the judge’s ruling and gave a green light to Cablevision. The three-judge panel said the on-demand service worked much the same as a 1980s-style home video recorder. Since the customer would choose which programs he wanted to see re-broadcast, the customer -- and not Cablevision -- was doing the copying, the panel held.

“Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude such transmissions . . . do not infringe any exclusive right” of the copyright owner, said Judge John Walker of the U.S. 2nd Circuit Court of Appeals.

Cablevision’s president said the company expected to roll out its new RS-DVR service early this year if the Supreme Court clears the way. Other cable providers, including Comcast Corp. and Time Warner Cable Inc., said they would offer the same service if it won legal approval.

Industry analysts predict a big leap in the number of video-on-demand customers if they can watch their favorite shows without commercials and without the need for special recording equipment.


In their petition to the Supreme Court, lawyers for the TV networks and film studios said the appeals ruling was wrong as matter of law. Unless it is reversed, they said, it will have “sweeping implications in the digital age, particularly for automated and on-demand services.” The ruling, they said, “provides a blueprint for new automated business seeking windfall profits by providing copyrighted works to consumers” without paying a licensing fee to the copyright owners.

They have been joined in their appeal by an array of groups, including Major League Baseball, the National Football League, the Screen Actors Guild and the National Music Publishers Assn.

Four years ago, the high court heard a somewhat similar case involving the music industry. The justices ruled for the copyright holders and said Web-based file-sharing services could be held liable for aiding others in downloading free copies of music. Lawyers for the file-sharing services had maintained that their clients could not be sued because they were not doing the illegal copying.