Court yanks down FCC's broadcast flag

Just weeks before July deadline, an appeals court zaps federal anticopying rules for digital TV.

In a stunning victory for hardware makers and television buffs, a federal appeals court has tossed out government rules that would have outlawed many digital TV receivers and tuner cards starting July 1.

The U.S. Court of Appeals for the D.C. Circuit ruled Friday that the Federal Communications Commission did not have the authority to prohibit the manufacture of computer and video hardware that doesn't have copy protection technology known as the "broadcast flag." The regulations, which the FCC created in November 2003, had been intended to limit unauthorized Internet redistribution of over-the-air TV broadcasts.


What's new:
A federal appeals court has squelched an FCC rule that would have required TV gear to use copy protection technology known as a "broadcast flag."

Bottom line:
The ruling is a big setback for Hollywood studios, which sought to limit unauthorized Internet redistribution of over-the-air TV broadcasts. But it's a reprieve for makers of HDTV sets, PC tuner cards, and USB and Firewire tuners.

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"The broadcast flag regulations exceed the agency's delegated authority under the statute," a three-judge panel unanimously concluded. "The FCC has no authority to regulate consumer electronic devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission." (Click here for a PDF of the decision.)

One result of Friday's ruling is that, unless it's eventually overturned by a higher court, the fight over digital TV piracy will return to Capitol Hill. The D.C. appeals court noted that the FCC "has no power to act" until "Congress confers power on it" by enacting a law explicitly authorizing the broadcast flag.

Under the FCC rules, starting in July digital TV tuner manufacturers would have had to include the broadcast flag. The flag limits a person's ability to redistribute video clips made from the recorded over-the-air broadcasts.

But in January, a coalition of librarians and public interest groups against the regulations, arguing that they would sharply curtail the ability of librarians and consumers to make "fair use" of copyrighted works and would curb interoperability between devices.

Friday's ruling represents a sizable setback for the Motion Picture Association of America, which had lobbied for the broadcast flag rules and had intervened in the lawsuit to defend them. But it's a reprieve for makers of HDTV sets, PC tuner cards, and USB and Firewire tuners--which will no longer have to redesign their products to comply with FCC rules.

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James Burger, a lawyer at Dow, Lohnes and Albertson who opposed the broadcast flag on behalf of tech companies, said the FCC's legal theory was deeply worrying for computer makers.

"It would have turned the Federal Communications Commission into the Federal Computer Commission," Burger said. "Do you know of a computer now that doesn't touch the telecommunications infrastructure? The FCC was asserting jurisdiction over all information technology."

A digital game of capture the flag
Under the proposed rule, it would have become illegal to "sell or distribute" any product capable of receiving broadcast-flagged shows unless the product complies with the FCC's regulations.

Such products could handle flagged broadcasts only in specific ways set by the government. Those essentially include delivering analog output without copy protection, digital output to a few low-end displays, or high-quality digital output to devices that also adhere to the broadcast flag specification.

In general, consumers would have been able to record broadcast-flagged shows and movies, but would only be able to play them back on the same device. The FCC rules specify that all devices must uniquely link "such recording with a single covered demodulator product, using a cryptographic protocol or other effective means, so that such recording cannot be accessed in usable form by another product."

Broadcasters are not required to tag their shows and movies with the flag. It's up to each local station and network.

During oral arguments in February, the three judges on the appellate panel foreshadowed this week's decision by suggesting that the FCC had overstepped what the law permits.

"You're out there in the whole world, regulating. Are washing machines next?" asked Judge Harry Edwards. Quipped Judge David Sentelle: "You can't regulate washing machines. You can't rule the world."

Some manufacturers of HDTV tuner cards had planned to discontinue their current products because they did not recognize the broadcast flag.

"We don't support the flag in our current hardware, meaning that if there is flagged content, we'll ignore the flag," Nicholas Freeman of Elgato Systems said in an interview last month. "After July of this year, we wouldn't be able to manufacture it anymore."

Elgato sells the EyeTV line of products, which includes the EyeTV 500 HDTV tuner for the Macintosh. The EyeTV 500 does not abide by the broadcast flag restrictions.

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