ARE PERSONAL VIDEO RECORDERS, SUCH AS REPLAYTV AND TIVO, COPYRIGHT-INFRINGEMENT DEVICES?:
A Lawsuit Raising The Question May Force Sonicblue To Spy On PVR Users

In a recent interview, Jamie Kellner, Chairman and CEO of the Turner Broadcasting division of AOL-TimeWarner, had some harsh words for those PVR users who skip commercials:

"[Skipping commercials is] theft. Your contract with the network when you get the show is you're going to watch the spots. Otherwise you couldn't get the show on an ad-supported basis. Any time you skip a commercial . . . you're actually stealing the programming."

To be completely fair, Mr. Kellner did admit that "there's a certain amount of tolerance for bathroom breaks." He added, however, that "if you formalize it and you create a device that skips [30]-second increments, you've got that only for one reason, unless you go to the bathroom for 30 seconds. They've done that just to make it easy for someone to skip a commercial."

From a legal perspective, are Mr. Kellner's arguments correct? To decide that, let's look at the lawsuit currently pending against one prominent PVR producer.

Empowering Couch Potatoes Gets SonicBlue Sued

The particular device that has provoked Mr. Kellner's ire is SonicBlue's ReplayTV 4000, a nifty new PVR that is able to sense the beginning and end of commercials in digitally-recorded TV programs.

The device is thus able to automatically jump forward in order either to allow viewers to take precisely-timed bathroom breaks or - more realistically for most people - to skip commercials. Other PVRs also allow viewers to skip commercials, by fast-forwarding through them, but ReplayTV 4000 does the same job slightly quicker.

In a separate feature, ReplayTV also allows users to record TV shows and then send a digital copy over a broadband connection to as many as 15 other ReplayTV users. This file-sharing feature inevitably opened the PVR up to comparisons with Napster, the online file-sharing system that was for so long mired in litigation. (As I will argue below, such comparisons are, however, inapt.)

Late last year, a group of plaintiffs including Disney, Paramount Pictures, ABC, NBC and CBS, sued SonicBlue. They claimed that the company's inclusion of commercial skipping and file sharing technologies in ReplayTV amounted to contributory and vicarious infringement of plaintiffs' copyrights. (Contributory infringement because it allegedly aided viewers' claimed infringement; vicarious infringement because the company itself allegedly infringed via the viewers.)

As a copyright infringement case, Paramount Pictures v. SonicBlue is far from a sure bet for the plaintiffs. In particular, plaintiffs' claim that ReplayTV's commercial skipping technology contributes to infringement of their copyrights should be a complete loser.

Skipping Commercials is Not Copyright Infringement

SonicBlue cannot be liable for contributory or vicarious copyright infringement unless ad skipping also creates direct infringement liability for ReplayTV users. As noted above, the whole theory of contributory and vicarious infringement is that viewers are infringing, and the company is either helping them to, or infringing itself through their actions.

However, if skipping an ad with Replay is infringement, then skipping one with a VCR is too. For an even more direct parallel, note also that there are VCRs on the market today that, like Replay TV, include an automatic commercial skip feature. Moreover, virtually all VCRs allow either one-touch 30-second skipping or conventional fast-forwarding - both of which are perfectly serviceable methods for skipping through ads.

Plaintiffs argue that they did not "authorize" Replay users (or VCR users, for that matter) to make copies of programs and then skip the ads when viewing those copies. But home recording of television programs for the purpose of "time-shifting" - that is, recording a program for viewing at a more convenient time - has already been considered and pronounced upon by the Supreme Court.

In Sony Corp. v. Universal City Studios, Inc., the Court held this practice to be permissible when it was challenged in the context of VCRs. Time-shifting, the Court ruled, was acceptable under the fair use doctrine - despite the obvious possibility that viewers might fast-forward through ads while watching time-shifted programs on their VCRs. (The "fair use" doctrine creates a number of exceptions to the copyright law; if a use fits into an exception, an infringement suit cannot succeed.)

The fact that ReplayTV's commercial skip feature operates automatically - rather than requiring a user to press one button, or to press a button and hold it for a few seconds - is a meaningless distinction from the facts before the Court in Sony. The devices are the same in their purpose and effect, and thus should be treated the same under the law. Sony's precedent is thus directly applicable in the ReplayTV case.

As a result, as a copyright infringement claim, plaintiffs' complaint about ad-skipping falls flat. The claim is not really about protecting copyrighted works at all. Rather, it's about protecting the plaintiffs' particular business model - feeding ads to passive viewers. That is not a proper role for copyright.

SonicBlue Should Not be Liable for Allowing Limited File Sharing

To support their claim, plaintiffs invoke the example of the Napster file-sharing service. They claim that Replay will enable the same kind of wide-scale "viral" sharing that led to the court-ordered shut-down of the Napster service.

But the analogy to Napster is not apt: ReplayTV is not a Napster-style "infringement machine".

One obvious difference is that ReplayTV, unlike Napster, does not allow unlimited dissemination of copies to unknown recipients. Rather, Replay users are limited to 15 copies, which may only be sent to owners of Replay machines who are known to the sending user.

Accordingly, file-sharing on ReplayTV is more closely akin to the sharing of old-fashioned videotapes among friends - a limited form of file-sharing that has never been shown to harm content owners - than the wide-scale and anonymous distribution of copyrighted works on Napster.

Additionally, under the Supreme Court's holding in Sony, the sale of copying equipment - like a VCR or a PVR - does not create contributory infringement liability as long as the product is "capable of substantial noninfringing uses." (Perhaps this language should have saved Napster, as well, but in any event, it should certainly save ReplayTV, a device closely analogous to the VCRs the Supreme Court was discussing when it made this pronouncement.)

ReplayTV's file-sharing function is obviously capable of substantial noninfringing uses. For example, if home recording for the purpose of time-shifting is fair use, then sending a recorded program to a friend who wanted to time-shift the program but missed the opportunity to record it himself is also fair use. The use of ReplayTV's file-sharing function to send a copy of a program to which the recipient had legitimate access is no different than lending a friend the program on videotape.

Plaintiffs May Lose the Lawsuit, but Win the War, Due To A Discovery Order

Plaintiffs' copyright claims against SonicBlue will likely fail, but plaintiffs' lawsuit may yet succeed in undermining the commercial viability of ReplayTV.

On April 26, Magistrate Judge Charles Eick ordered SonicBlue to begin spying on its users to collect "all available information" regarding every TV program they record, every commercial they skip, and every program they send to a friend. SonicBlue does not currently collect such information. As a result, compliance with the magistrate's order will require the company to write and download to customers' machines customized "spyware" that will log the relevant information and forward it back to SonicBlue.

Within a few days after the report was issued, members of Congress called for a Federal Trade Commission investigation into TiVo's data collection practices. "The simple fact," read a letter sent by Congressional Democrats to then-FTC Chairman Robert Pitofsky, "is that most consumers are not comfortable with having someone or something watch them while they watch television."

If they succeed in forcing SonicBlue to collect the kind of data that got TiVo in trouble, the Paramount Pictures plaintiffs will have gone a long way toward undermining the relationship between SonicBlue and its customers. Although SonicBlue will be able to point to the court order and say "The judge made me do it," customers will still be understandably perturbed. And plaintiffs, who filed the lawsuit to try to shut down ReplayTV, will enjoy at least a partial victory even before the suit is decided on the merits.

Why the Magistrate Judge's Order Should Be Overturned

Fortunately, the magistrate judge's order is subject to review by the federal district judge presiding in the case. Moreover, if the district judge agrees with the magistrate judge, the order - because of its First Amendment implications for viewers who want to keep private the list of shows they watch - could even be considered by the court of appeals, which might issue a rare grant of interlocutory review (that is, review while a case is still ongoing).

The order should be overturned, whether by the district court or the court of appeals. Even if this information must be collected, there are other ways to do so - through survey evidence, for example, which is routinely presented in similar court cases - which are far less invasive of viewers' privacy. Moreover, it is the plaintiffs, not the PVR company defendant, who should bear the onus to collect this evidence, for it is they who have the burden to prove their case.

Meanwhile, once this discovery dispute has been resolved, plaintiffs' copyright claims should be disposed of in short order. Their claim based on time-shifting has already been rejected by the Supreme Court, and their claim based on file-sharing is unpersuasive.

In the end, this case should be seen as what it is: an attempt to write an advertising-based model of television business into law. Rather than enshrine their fixed business model, networks should think of other ways to promote products - perhaps, most simply, by offering more entertaining advertising, or through product placement, as in Survivor, or by granting paying customers discounts if they do watch advertisements and answer questionnaires about their reactions. ReplayTV won't bankrupt TV; it will only force it to become more creative.