Early on TiVo had won pretty much of all of its patent battles with EchoStar over its DVR technology, perhaps helped along by a bit of bull buying in Texas. We had noted, however, that the USPTO had expressed concerns over the validity of the patents, and we wondered why the court case would move forward while the patents themselves might be rejected by the Patent Office. But, the case did go forward, and while TiVo initially won at the appeals court level (which made it so happy that it sued others and demanded ridiculous sums from EchoStar), things haven't been looking quite so good lately.
Last month, the appeals court vacated the earlier decision, and agreed to rehear the case. And, now, it turns out that the USPTO has rejected two patent claims that were a key part of this fight. Of course, as TiVo is quick to point out, this isn't the end of the review process, but it certainly raises serious questions about the validity of the patents TiVo is basing its whole strategy on.
With Hollywood getting the right to break your TV and DVR thanks to the FCC's granting of a waiver to let them use selectable output control to stop DVRs from recording certain movies, the MPAA insisted that this was a huge win for consumers. Why? Because it meant that the Hollywood studios would rush to put movies on TV earlier than ever before. Except... apparently, that's not actually the case. Despite the victory, no studios have stepped up to make use of the new ability to stop your DVR from recording, because they're scared about how the movie theaters will react to greater competition. Of course, the theaters are notoriously unwilling to allow any threat of actual competition from home viewership to encroach on their turf, even if it could actually help theaters.
But, uh, the whole argument that supposedly convinced the FCC to give the Hollywood studios this waiver was that they would make use of it to give consumers more access. Quoting from the FCC's decision:
This offering will allow the homebound, parents with young children, and others who simply want to stay in for the night to choose a
new entertainment option that they may value highly....
[On] balance, grant of MPAA's waiver request will provide a benefit to those who have the appropriate
equipment and would like to view movies in their homes in an early release window that outweighs the
limited impact on consumers with legacy devices....
So, a large part of the basis of the FCC approval was that it would increase content availability to homes. But that's not happening. Does that mean the FCC will admit that the entire basis for the approval was wrong?
Oh, and my favorite part is how the MPAA is playing this. Acting MPAA boss Bob Pisano put out the following statement when the FCC's announcement was made on May 17th:
"This action is an important victory for consumers who will now have far greater access to see recent high definition movies in their homes. And it is a major step forward in the development of new business models by the motion picture industry to respond to growing consumer demand..." (emphasis added)
So, gee, what does Pisano have to say, just a few days later when it turns out that none of that is true?
When asked about the studios' plans late last week, Bob Pisano, the president of the Motion Picture Association of America, said, "I can't tell you that, because I don't know." To comply with antitrust law, he added, "we stay out of business-model decisions."
Uh huh. So, let me get this straight. He argued -- successfully -- to the FCC, that granting this waiver to break people's TVs and DVRs would certainly create new business models and allow much more content to be available earlier. But, when it comes to actually supporting that, he claims that the MPAA "stays out" of business model decisions? So, how could he possibly have promised such "new business models" to the FCC in the first place?
A new report estimates that some 800,000 American households now watch TV only via the Web, as the move to abandon cable, satellite or OTA broadcasts starts to gather pace. This represents a small percentage of the pay TV industry's 101 million subscribers, but the number is expected to double by the end of next year. These are the earliest adopters, though, and they account for just 3 percent of all full-episode online television viewing -- meaning that plenty of people are already supplanting their standard TV viewing with online episodes. It's clear already (and has been for some time) that TV viewers are undertaking a fundamental change in how they want to access and view content. The combination of the Web and DVRs allowing on-demand viewing has made the linear TV channel something of an outdated concept, and at some point, TV providers will need to realize that on-demand shows are now how a growing number of people want to receive their programming.
Cable companies, for one, recognize this to a certain extent, so they've responded with TV Everywhere, a plan to offer programming online. But that plan is doomed to failure because it's being implemented in the hamfisted way you might expect from cable companies, and is set up simply to force people to keep paying for cable if they want to watch shows online. If the plan to capitalize on online viewers is first to force them to keep paying for something they don't want, then by further embracing the "features" of current systems that drive users away, it's hard to see TV companies having a whole lot of success. The key is not to shoehorn the cable model onto the web, but to embrace the positive features enabled by the web and apply them to the rest of their business.
As copyright-watchers are well aware, recently there was an important case that went through the US court system over whether or not cable company Cablevision could provide a remote DVR service. Effectively, Cablevision was setting up a bank of TiVo-like devices at its own datacenter, and allowing users to record and playback shows as if they were recording them on a DVR settop box sitting under their television. The only real difference is where the box is (or, you might say, how long the wire is between the TV and the DVR). Since it's already well established that time-shifting is perfectly legal it was difficult to see how anyone could make the argument that Cablevision's setup was infringing. The only difference was the length of the wire. But, of course, the TV guys objected strenuously with bizarre analogies that didn't make much sense.
The appeals court sided with Cablevision, saying that such a service doesn't infringe, and the Supreme Court chose not to hear the appeal, so this ruling stands, at least in the Second Circuit, for the time being. But what was most telling about the actual appeals court ruling was how the judges had to contort themselves into all sorts of odd ways to make such a ruling make sense under the law. The conclusion clearly made sense. Copyright law wouldn't make any sense at all if the length of a wire could change something from infringing to non-infringing. And yet, there were ways to read copyright law that would have found in favor of the networks. The issue is really twofold. First, technology advances faster than copyright law, and the conditions that were in place when the law was written aren't the same as what happens later. Second, to deal with this our esteemed elected officials simply apply duct tape-like patches to copyright law, adding new definitions and categories, that didn't exist before. But, then when new technologies come along, the question is what categories do the resulting outputs fall into, and the arguments are often about who gets to categorize the output to their benefit.
It appears that the US is not the only country going through this sort of debate. I've been alerted to a recent ruling in Singapore that actually comes to a different conclusion and finds infringing behavior on the part of the service provider. The story here is slightly different. In this case, the company is RecordTV -- a separate service, rather than provided by the cable company itself. Also, it's a web-based service, rather than a TV-based one. Users log in and can designate which shows (only from Singaporean channels that broadcast over-the-air) they want to record, and the service will record those shows and make them accessible to that user only for a limited amount of time. There is one
other complicating factor, in that the way RecordTV works has shifted over time. Initially it would record a show once and allow anyone who requested that recording to access the single file. But later it switched to keeping a separate recording of each show that someone requested, which seems massively inefficient in terms of storage.
What's stunning again, however, as you read through the ruling is how conflicted the judge appears to be. There's a ridiculous amount of "on the one hand, on the other hand, but on the other other hand"-type reasoning found throughout the ruling, which you can see below:
It's also interesting to see that, despite this ruling being in Singapore, under Singaporean rule, the discussion spends a lot of time looking at the Cablevision case in the US (and some other US and UK cases as well).
So, why does the judge come to a different conclusion? Well, it almost feels like it depended on which eventual flip of the coin came up which way. The judge agrees with the basic ruling in Cablevision that it is not the service provider who is liable for direct infringement. As in the Cablevision case, it's the end users who "pushes the button" and thus is actually responsible for the action. All good. But, the lawsuit also focused on a secondary level of infringement, and here the court found that RecordTV, while not liable for the actual recording, could be found liable of secondary infringement in the later transmission of the content.
This seems like a total headscratcher. So a user is responsible for recording the file, but not responsible for then accessing it (recognize that the user accessing the file is the same as the service provider transmitting it)? How does that make sense?
There is a second issue also, which is that the court had trouble with the fact that RecordTV meant to be a commercial enterprise in which it would make money by having ads. It used this issue as one of a few factors that removed a "fair dealing/fair use" defense by the company. Again, though, there's a lot of "on the one hand, on the other hand" type debates in the ruling until the judge basically says that under the law, as it stands, the site is guilty of infringement. But even it seems really troubled by what this means from a practical perspective:
I leave open the possibility that such a DVR or VCR product or service, operating remotely or locally, digitally or via analog means, could amount to fair dealing under our Copyright Act only for the non-commercial facilitation of end-users' time shifting. As we have seen earlier... it is inconsistent that the VCR is permitted to be sold at a price (in stores) but the [remote] DVR (through advertising revenue) is not, but until the occasion requires, I shall not make any pronouncements on this anomaly.
And there you are. Even the judge seems to recognize that it's silly to find one service infringing and the other not, but basically says that with the way copyright law is set up, that's the ruling that makes sense.
Finally, this should be worrisome on all sorts of levels for a variety of online services that seek to replicate perfectly legal analog equivalents. The fact that where a storage device is stored or how long a wire is could totally change the legality of a product should suggest that something is seriously wrong with copyright law.
from the more-focus-on-executing,-less-on-suing dept
TiVo has been spending a lot of effort suing others for patent infringement, but apparently not very much on actually improving their own services and giving customers a reason to buy them over the competition. So while it may be winning some of its patent lawsuits, it hasn't helped much for the business, which is rapidly bleeding customers and losing marketshare. TiVo basically created this market and owned it for years -- but then got complacent. Now, since it can't compete, it's gone to a litigation strategy. Perhaps it should have focused more on providing value and competing rather than suing.
It's becoming almost comical how often this happens: a new technology comes along for consuming/watching/listening/distributing some sort of entertainment content, and the industry freaks out. The technology is going to destroy the industry, and laws must be put in place, royalties must be paid, technology must be crippled, etc. And yet... the impending doomsday scenario never shows up. The player piano did not kill the sheet music market. The gramophone did not kill live concerts. The VCR did not kill the movie industry. And, here we are, with TV folks finallyrealizing that the DVR is not killing TV, but actually helping it. Basically, lots of people still watch ads, even if they're watching a time-delayed program. What's funny is that throughout the article you have execs insisting that this was a shock to everyone and no one could have predicted it. Except, of course, we wrote about the same basic thing three and a half years ago. But no one listens to us.
The article doesn't even mention the biggest benefit to DVRs -- even beyond the fact that people watching them still watch commercials: that it allows people to become more connected to certain shows, since they're less likely to ever miss an episode. That makes them more likely to watch those shows regularly (with or without the commercials). If someone can't keep up otherwise, they'll just let the show go entirely.
The other amusing finding in the article is that NBC's attempt to "DVR-proof" itself by moving Jay Leno to 10pm (on the theory that more people would watch it live when they couldn't fast forward through the ads) has totally backfired. That's because it also means that if people miss the show, they don't go back and watch it days later (who wants to watch stale jokes?) -- so fewer ads get watched in the long run (compared to a show that would be recorded and watched later). Oops. In the meantime, can we go back to those TV execs who were threatening to sue TiVo just a few years ago, and ask for an apology for wasting everyone's time?
For quite some time now, the MPAA has been asking the FCC for permission to break your TV, so you won't be able to record certain movies shown on TV. Specifically, it wants to be allowed to use something called "Selectable Output Control" to tell DVRs that they can't record a show. It's basically the whole "broadcast flag" concept all over again. The MPAA's argument for why it needs this makes no sense at all. It basically makes two arguments, neither of which are true. The first is that they need this in order to be able to put movies on TV earlier. This is not true. There's nothing stopping the studios from putting movies on TV earlier, other than a misguided fear that people will "pirate them." And that's the second problem: even the industry admits that the movies they'd release on TV are already pirated and available on file sharing networks, so it's not like having this would stop that. The movies will still get out there. SOC won't stop piracy at all -- but it will piss off a ton of people who bought a DVR expecting to be able to record what they want to watch.
"The MPAA has submitted no proof that grant of the waiver will serve the public interest at all. To the contrary, what proof exists in the record shows that the 'problem' of a longer window for release of movies to MVPDs than for release on DVDs is a business decision made by MPAA's members. Rather than shed crocodile tears for the poor shut-ins and busy parents who must either subscribe to NETFLIX to get the earlier window or wait a whole thirty days, MPAA's members could simply negotiate a shorter release window."
As Hollywood keeps asking for permission from the FCC to break your TV with Selectable Output Control, it's picked up an unsurprising ally. Cable companies. NCTA, the lobbying group that represents the cable industry has come out in favor of the request, claiming that it will let them offer movies earlier. This is a myth that they want regulators to believe. The MPAA and cable companies could offer up movies whenever they want. They just don't want people to record them, because they want to introduce yet another annoying window. So, they declare that they need to break your TV and DVR from recording. Hopefully, the FCC knows better than to break TVs and piss off so many people just because Hollywood is upset some people will want to record movies.
from the because-pissing-off-consumers-is-always-a-good-strategy dept
Every few months for the past year and a half or so, the MPAA has basically begged the FCC to let it make use of "selectable output control" on televisions to block DVRs from recording stuff shown on TV. The MPAA claims this is necessary to release certain movies on TV, but that's hogwash. Rather than focusing on what consumers want, the movie studios are simply trying to add in yet another "window" to try to squeeze more money out of people. And, of course, like any DRM system, it won't do a damn thing to stop file sharing of the content (all anyone needs is one copy, and by the time any movie is broadcast on TV, it's too late, the content is out there). All this would do is piss off legitimate viewers, who are pissed off because their TiVos didn't record some movie, despite it being on TV.
And all for what? It won't stop or even slow down file sharing. But it will piss off a lot of people. The MPAA insists that it physically cannot release movies on TV prior to its DVD release unless it gets this DRM enabled. But that's ridiculous. If the studios wanted to they could absolutely release the movies for TV viewing prior to the DVD release. It won't change a thing. But they really, really, really want to believe the myth that somehow file sharing magically goes away, and no legitimate customers get annoyed, when they try to lock up their content.
One of the more important copyright lawsuit decisions was last years appeals court ruling in the Cablevision remote DVR case, which we discussed at length at the time. Cablevision built a remote DVR system. It was almost exactly like a TiVo, except that the device sat in a Cablevision datacenter, rather than next to your television. Functionally, it was no different. It really was just the length of the wire and where the box sat. Now, using a DVR in your home to record TV is perfectly legal. But the TV networks hate that, even though DVRs may actually have helped the TV industry by making it easier for people to watch their favorite shows (no one ever said they were good at figuring out the big picture). So they sued Cablevision, claiming that because the box sat on Cablevision's property, it was no longer legal and now it was copyright infringement.
The networks love to set up absolutely ridiculous explanations like saying that Cablevision is like the person who sets up a gun to go off when a door opens, so it's not the person who opens the door who commits the murder, but the person who set it up. Except... that makes no sense. Murder is illegal. Recording a TV show for personal use is not. A more accurate analogy would be like setting up a pillow to fall on someone when you open the door. That's not illegal for either the person who opened the door, or the person who set it up... because the action (falling pillow/recording a show for personal use) is perfectly legal. But the networks want to ignore this, and tried to twist copyright law by saying that because Cablevision's remote DVR creates a buffer version for a fraction of a second, it's making a copy, and thus violating copyright law. Seriously.
While a district court bought the argument, the appeals court (thankfully) pointed out how ridiculous this interpretation of the law was, and said the device is legal. The networks are now appealing to the Supreme Court, and the court has asked the Obama administration for input. I know there's been massive lobbying from a lot of different parties trying to get the administration up to speed on the detailed issues, and hopefully the important points get across. While this may seem like a trivial issue, it could impact nearly every online service, that suddenly becomes liable for making a "buffer" copy on its own servers based on something you do on your computer. Lots of "cloud" computing services could suddenly face massive copyright liabilities.
Still... while we wait for the Supreme Court to go one way or the other with this, it appears that Cablevision has been negotiating a compromise on the device, which (as Broadband Reports notes) probably means making things a lot worse for consumers (funny how that works). Once again, we'd have a scenario where content companies are killing off innovation because they're unable to adapt themselves -- and that's a really sad outcome. However, it might also lead to an end of the lawsuit, which could leave the appeals court ruling standing (which would be a good thing, rather than risk a Supreme Court overturn).