Appeals Court debates FCC authority in broadcast flag case

A U.S. appeals court panel has ruled that the FCC crossed the line in requiring new broadcast flag technology to be installed in next-generation television devices by July 1
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A three-judge U.S. appeals court panel last week challenged FCC regulations requiring certain video devices to include broadcast flag technology that could prevent them from copying digital television programs and distributing them over the Internet.

Two of the judges were openly hostile toward the FCC. U.S. Circuit Judge Harry T. Edwards told the commission that it crossed the line in requiring the new anti-piracy technology in next-generation television devices. He questioned the FCC’s authority to impose regulations affecting television broadcasts after such programs are transmitted to viewers.

The FCC’s lawyer, Jacob M. Lewis, acknowledged the agency had never exercised such ancillary power but maintained it was permitted by Congress since lawmakers didn’t explicitly outlaw it.

If allowed by the courts, broadcast flag technology will be required after July 1 for televisions equipped to receive digital signals, as well as many personal computers and VCR-type recording devices. The rule would permit entertainment companies to designate, or flag, programs to prevent viewers from copying shows or distributing them over the Internet.

David B. Sentelle, another circuit judge, agreed with Edwards. Sentelle acknowledged entertainment companies could be reluctant to broadcast high-quality movies or TV shows that can’t be protected against copyright violators but said that wasn’t the FCC’s problem.

Though the court’s majority took issue with the FCC, they also questioned the legal basis for the lawsuit before them. Consumers groups, including library associations, contested the FCC requirements in the lawsuit, asserting that the rules will drive up prices of digital television devices and prevent consumers from recording programs in ways permitted under copyright laws.

The lawyer for the consumers groups, Pantelis Michalopoulos, argued that the broadcast flag could preclude libraries from copying television programs for educational or teaching purposes.

However, Judge Sentelle questioned whether the consumer and library groups could lawfully challenge the FCC decision, since the rules in question affect television viewers broadly. Appeals court procedures require groups to be able to show a particular injury before judges will consider a case; the FCC did not argue this point.

If the appeals panel decides that the consumers groups can’t contest the FCC requirements, it would dismiss the case regardless of any concerns about the anti-piracy technology.

To the entertainment industry, the FCC’s flag rule is a necessary precondition to its participation in the DTV transition. Motion picture studios have argued that without the rule, content creators would have no incentive to provide digital content over the airwaves, because viewers could simply pull video streams off the air and redistribute them to millions of viewers over the Internet.

Fritz Attaway, a vice president and Washington general counsel for the MPAA, the motion picture trade association, said that without the broadcast flag, high-value content would migrate to where it could be protected, shutting other services out.

A decision by the court is expected within weeks.

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