• Court Throws out FCC Antipiracy Rule
  • May 19, 2005
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • The D.C. Circuit Court of Appeals has struck down a regulation by the Federal Communications Commission that would have required all digital TV sets to include antipiracy technology.

    The three-judge panel unanimously agreed that the FCC grossly overstepped its reach in adopting the rule. "In the seven decades of its existence, the FCC has never before asserted such sweeping authority," the May 7, 2005, decision said. The ruling was not a surprise: during oral argument in February, one judge went so far as to suggest that the FCC might soon try regulating washing machines.

    The entertainment industry argues that the FCC, or some other government entity, must set rules to protect intellectual property rights for digital broadcasts or the industry will shift programming to a more protected medium such as cable. Prompted by Hollywood, the FCC ruled in November 2003 that beginning on July 1, 2005, some consumer electronics such as high-definition TVs and personal computers that receive digital TV signals must have a device that would recognize a "broadcast flag," a digital code embedded in the broadcast. The code would prevent consumers from copying television shows or movies and sharing or posting them on the Internet.

    But the court showed little patience with the FCC's bid to broaden its reach over digital content. In its decision the court said the FCC has authority to regulate equipment that sends out broadcast signals and TVs or other devices that receive them. But once that signal has been received, the agency has no right to control it.

    Having lost the court battle, the entertainment industry is trying to determine the best way to get a federal law in place that would block consumers from trading television programming online. Possibilities include appending it to a spending bill or including it in a bill that would set a deadline for broadcasters' transition to digital service.

    As a concern, Internet swapping of movies or television programs is still somewhat theoretical, since even with broadband it takes several hours to download movies or TV shows. However, the industry anticipates that this will change as technology improves.

    Significance: The ruling is the latest to throw out a series of FCC rulemakings, including media-ownership rules, and highlights the difficulties the agency is encountering in writing rules that govern a host of new forms of communication.