Cartoon Network v. CSC Holdings: Remote DVR Does Not Violate Copyright Protections Afforded to Television Program Copyright Holders

In Cartoon Network v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008), the Second Circuit reversed a District Court’s ruling and determined that a remote-storage DVR service does not infringe on the reproduction and public performance rights of copyright holders. This significant holding, which will likely be referenced in a variety of future opinions, offers some interesting ramifications. It offers consumers an opening for increased flexibility in viewing choices, and offers developers of new technology a more generous interpretation of copyright law. Critics contend the ruling opens the door for new defenses for infringers and interprets copyright law in a fashion that impedes traditional copyright protection. Either way, the decision stands at the juxtaposition between existing copyright law and emerging technology.

Background

Defendant Cablevision Systems Corporation (“Cablevision”) offers a remote storage digital video recorder (“RS-DVR”) service – a cross between set-top DVR devices and video-on-demand services. Cablevision customers can program the RS-DVR to record and play back shows just like a regular DVR, except instead of storing the recorded shows on a set-top box, the RS-DVR stores the shows on Cablevision’s remote servers, obviating the need for a set-top box.

Cablevision’s service splits a broadcast feed into two streams, including a “buffer” copy that goes to a router where it is stored for no more than 1.2 seconds while the router checks to see whether any customer has requested to record that show.  If yes, the data is sent to that customer’s allocated hard disk. If no, the buffered stream is discarded.

The new service caught the attention of major broadcasters – CNN, Twentieth Century Fox, Cartoon Network, Paramount, Universal, Disney, and others – who joined together to file suit against Cablevision (collectively, the “plaintiffs”).  The plaintiffs claimed that Cablevision’s service would violate their reproduction rights in two ways—by storing the broadcast data briefly in the buffer and by subsequently storing it on hard disks on Cablevision’s own servers. The plaintiffs also claimed that Cablevision’s system would infringe on their public performance rights. Seeking declaratory and injunctive relief, the plaintiffs alleged that the RS-DVR was akin to video-on-demand (“VOD”) and, therefore, Cablevision should have to get additional licenses from the content providers before allowing the customers to watch the stored programs.

In its defense, Cablevision argued that its remote system and a traditional DVR were essentially the same, so it should not be required to pay license fees.

The Southern District of New York granted summary judgment in favor of the plaintiffs, ordering Cablevision to stop offering the RS-DVR service until it obtained licenses for the content. Cablevision appealed the decision to the Second Circuit, which published its opinion on August 4, 2008. Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2nd Cir. 2008).

The buffered data was not “fixed” and did not infringe on reproduction rights

Section 106 of the Copyright Act (the “Act”) grants copyright holders the exclusive right to reproduce the copyrighted work in copies. 17 U.S.C section 106(1). The Copyright Act defines “copies” as “material objects… in which a work is fixed by any method… from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. section 101.

The Act further states that “a work is fixed” …. “when its embodiment in a copy … is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” Id.

The District Court had found that the RS-DVR created copies as defined by the Act because the buffered data could be reproduced and therefore the data was “fixed” in the buffer. See Twentieth Century Fox Film Corp. v. Cablevision Sys. Corp. (Cablevision I), 478, F. Supp. 2d 607, 621-622 (S.D.N.Y. 2007).  In reaching this holding, the District Court relied upon the “RAM doctrine” established in MAI Systems v. Peak Computer, 991 F.2d 511 (9th Cir.) and its progeny. The MAI Court held that a software copy created in a computer’s RAM could be perceived, reproduced, or otherwise communicated, and was therefore “fixed” under the Act.

The Second Circuit disagreed, determining that the buffered data here did not constitute a “copy” as defined in the Act. Specifically, the Second Circuit stated: “Given that the data reside in no buffer for more than 1.2 seconds before being automatically overwritten, and in the absence of compelling arguments to the contrary, we believe that the copyrighted works here are not “embodied” in the buffers for a period of more than a transitory duration, and are therefore not ‘fixed’ in the buffers.” 536 F.3d at 130.

In reaching this determination, the Second Circuit narrowly interpreted MAI as standing only for the proposition that loading a program into a computer’s RAM can result in unlawful copying, but does not always constitute unlawful copying. Id. at 128. The Cartoon Network Court determined that the MAI parties and MAI Court really did not focus on or dispute the “transitory duration” element of fixation,¹ so reliance on MAI was misplaced in this case. Id.  The Second Circuit further discounted a Copyright Office Report which stated that a copy is “fixed” if it is embodied “for any amount of time” as incorrect because such an interpretation reads the “transitory duration” language out of the statute. Id. at 129.

Cablevision’s playback feature did not infringe on reproduction rights

The District Court had also determined that Cablevision violated the plaintiffs’ reproduction rights by storing and replaying programs at customers’ requests. The Second Circuit again disagreed with the District Court on this point, focusing on the question of whose volitional conduct actually causes the allegedly infringing copy to be made – Cablevision’s or the end-user’s. 536 F.3d at 131. Even though Cablevision designed, housed, and maintained the system, the Second Circuit determined that the end-user who actually presses the button on the remote is the volitional actor who creates the copy. Id. at 132.

The Cartoon Network Court likened the RS-DVR to “a VCR, a photocopier, or even a typical copy shop.”  Id. at 131. The owner of a copy shop makes copiers available to users who may use the copiers to infringe on copyrights, but that does not make the owner – who has no control over what his customers copy—directly liable for infringement. Id. at 131-132. Similarly, Cablevision makes the copying available to customers, but does not exert any substantial control over what they copy. Id. at 132.

The Second Circuit acknowledged that the facts gave rise to a question of Cablevision’s potential contributory liability for copyright infringement. Id. at 132-133.  However, the Second Circuit pointed out that the plaintiffs had alleged only direct infringement, not contributory infringement, thus an analysis of contributory liability for infringement was inappropriate.  Because the consumer, not Cablevision, performed the volitional act that created the copy, plaintiffs’ claim of direct infringement under this theory failed.  Id. at 133.

The playback did not infringe on the right of public performance

The Copyright Act grants to a copyright holder an exclusive right “to perform the copyrighted work publicly.” 17 U.S.C. section 106(4). The Act goes on to define a “public” performance, generally, as one that takes place in or is transmitted to a place open to the public, or at any place where a substantial number of persons outside of a normal circle of family and its social acquaintances is gathered. 17 U.S.C. section 101.

The plaintiffs argued, and the District Court had agreed, that Cablevision’s transmission of the stored data from its servers to the end-user’s television infringed the public performance right. Cablevision argued that it does not violate the public performance right because:  1) the end-user, not Cablevision, takes the volitional act that causes the transmission to take place; and 2) the transmission is not “to the public” as that term is defined in the Act.  Id. at 134.

The Second Circuit declined to address Cablevision’s first argument because it agreed with Cablevision’s second argument that the transmission was not “to the public.” Specifically, the Second Circuit took into account the “potential audience of a given transmission” and determined that because Cablevision encodes each storage request separately so that the stored show can only be delivered to and viewed by the individual user who made the copy, it could not be a “public” performance. Id. at 137.

In reaching this determination, however, the District Court warned that this holding “does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of its content and associating one unique copy with each subscriber to the network, or by giving their subscribers the capacity to make their own individual copies. We do not address whether such a network operator would be able to escape any other form of copyright liability, such as liability for unauthorized reproductions or liability for contributory infringement.” Id. at 139-140.

Conclusion – The opinion leaves open the door for revised interpretation with new developments in technology

The Cartoon Network opinion is significant, particularly in its narrow construction of MAI and in its detailed explanation of the applicable technology and how the law applies. Certainly, the opinion is good news for consumers seeking new ways to access and use digital information. And arguably, the District Court’s opinion may have chilled innovation in networking technologies; its reversal is positive for developers of those new technologies.

Still, the opinion opens up new questions that will need to be answered in future cases. For example, the Second Circuit was unable to complete the analysis of contributory infringement liability for companies like Cablevision, giving future plaintiffs an opening for new interpretations.

The case also leaves vague the definition of “transitory duration.” According to the Second Circuit, 1.2 seconds is not long enough, but there is not yet a clear standard for how long is long enough.

The Second Circuit itself admonished would-be delivery networks should not used this ruling to slip through infringement loopholes, as the advent of new uses of the technology and new developments in technology will most certainly cause courts to revisit these standards.

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Olivier Taillieu

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