Second Circuit: Remote DVR system does not infringe content providers’ copyrightsAugust 13, 2008

In a decision last week, the Second Circuit reversed a lower court's grant of summary judgment holding that the defendant's remote-storage DVR system violated the plaintiffs' rights of reproduction and public performance. The Plaintiffs were various content providers, and the defendant was a cable company. The remote-storage DVR system lets customers store recorded television shows on a central server, rather than on a hard drive in the customer's home, like standard DVRs.The Second Circuit, examining how the RS-DVR system worked, held that buffer copies of programs that subsisted for a maximum of 1.2 seconds were too transient to be considered "fixed" under copyright law, and as such the buffer copies were not "copies" as defined by the Copyright Act. Further, the court held that because the copying of programming onto a consumer's specified hard drive space on the RS-DVR system was automatically done in response to a customer's request, the defendant was not liable for direct infringement, finding the situation to resemble "a store proprietor who charges customers to use a photocopier on his premises." Finally, the court held the RS-DVR system did not infringe the public performance right, as the copies in question were only transmitted to a single subscriber using a single unique copy produced by that subscriber. Thus, the transmissions were not performances to the "public," and did not infringe the public performance right.More on Cartoon Network LP, LLLP v. CSC Holdings, Inc. after the jump.

Cablevision offers a service called RS-DVR, or remote storage digital video recorder service, which falls somewhere in between traditional set-top digital recorders, such as TiVo, and video-on-demand (VOD) services offered by many cable companies. To the customer, the service works just like a DVR. Unlike a DVR, though, shows aren't stored on a hard drive within a set-top box. Rather, the shows are stored on Cablevision's servers and transmitted to customers upon demand using a remote control and a standard cable box. However, the customer can only play a show that they have previously requested to be recorded, making it unlike VOD.Cablevision's system drew the attention of CNN, Twentieth Century Fox, Cartoon Network, Paramount, Universal, Disney and the major TV networks, who joined forces to file a lawsuit. The group alleged that Cablevision's RS-DVR service worked like a VOD offering, and therefore the companies wanted Cablevision to get licenses from each of the content holders before allowing customers to watch the programming. In filing for declaratory and injunctive relief, the plaintiffs alleged theories only of direct infringement, not contributory infringement. Cablevision waived any defense based on fair use, presumably because the conduct of its subscribers was not at issue given no allegation of contributory infringement.Cablevision argued that there was no difference between the remote-storage system and a standard DVR, so it shouldn't be required to pay additional licensing fees. However, Cablevision lost the first round of the legal battle when a judge in the Southern District of New York agreed with the content holders. In March 2007, the district court ordered Cablevision to stop offering its RS-DVR service until it obtained licenses for the content. The judge decided RS-DVR infringed on the content holders' copyrights in three ways. First, the judge ruled briefly storing copies of the program data in data buffers on Cablevision servers violated reproduction rights. Second, the act of storing the programs at a customer's request would again directly infringe on the plaintiffs' reproduction right. Third, transmitting data from the servers to customers' set-top boxes infringed the public performance right. Cablevision appealed.The Second Circuit addressed each of the allegedly infringing acts in turn. With respect to the first act, the court disagreed with the lower court and ruled that Cablevision's DVR did not create "copies" as the Copyright Act defines that term. Specifically, the court concluded that the acts of buffering by the RS-DVR did not satisfy the second requirement of fixation – that the work remains embodied for more than transitory duration. The data residing on the RS-DVR buffers remained there for no more than 1.2 seconds, and in some buffers no more than a tenth of a second. Interestingly, the court narrowly interpreted a case relied upon heavily by the district court, MAI Systems v. Peak Computer. This case, according to the court, did not deal with the significance of the duration requirement. MAI Systems, according to the court, stands for the proposition that these short-duration RAM copies can be fixed but are not automatically fixed. Addressing the second alleged infringing act, the court was faced with the question of who made the allegedly infringing copy. While it was undisputed that Cablevision's equipment made the copy, the question was who was responsible for the copying. If it is Cablevision, then plaintiffs' theory of direct infringement succeeds. However, if is the customer using the RS-DVR, Cablevision at most would face contributory infringement liability. This theory, as emphasized by the court, was expressly disavowed by the plaintiffs.The Second Circuit found that the proper inquiry when there is a dispute as to which party made an allegedly infringing copy is whose volitional conduct caused the copy to be made. In the case of a VCR, for example, the court noted the person who presses the button to make the recording supplies the necessary element of volition. While the RS-DVR may be distinguishable from an ISP, it is not distinguishable from a VCR, a photocopier, or even typical copy shop:

We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer's command.

The court looked past Cablevision's active role in setting up its systems and providing ongoing services, including selecting which broadcast channels are "DVR-able" in its system. The court stated that

Cablevision has no control over what programs are made available on individual channels or when those programs will air, if at all . . . [i]n this respect, Cablevision possesses far less control over recordable content than it does in the VOD context, where it actively selects and makes available beforehand the individual programs available for viewing.

Because the consumer, not Cablevision, performed the volitional act that created the non-transitory copies of the plaintiffs' programs, the second theory of infringement failed.The court then addressed the third alleged infringing act: transmission of the RS-DVR signal to a customer's home. The court declined to address Cablevision's argument that is wasn't "transmitting" as required by the statute because the user makes the legally significant action (as in the copying context above). Rather, the court found that Cablevision's delivery of the file isn't "to the public" as required by the transmit clause of the statute. The court reasoned that because Cablevision encoded each file delivery to its consumers so that each file delivery could be consumed only by a single playback machine, it could not be a public performance. As a result, none of the plaintiffs' theories of infringement were supportable based on how the RS-DVR operates. The Second Circuit therefore vacated the injunction.To read the full decision in Cartoon Network LP v. CSC Holdings, Inc., click here.