Playback of Films on Cablevision's Remote Storage DVR System Not Copyright Infringement, Second Circuit Rules

Holding:

In this appeal, the U.S. Court of Appeals for the Second Circuit reversed a decision of the Southern District of New York and held that Cablevision Systems Corp. ("Cablevision") did not commit direct copyright infringement through the playback of copyrighted movies via its "Remote Storage Digital Video Recorder" ("RS-DVR") – a technology that lets customers store recorded films on a central server, rather than on a hard drive in the customers’ home, like standard DVRs. Plaintiffs-appellees, producers of copyrighted movie and television programs that they provide to Cablevision, filed the underlying copyright infringement suit, contending that the operation of the RS-DVR system would directly infringe their copyrights through unauthorized reproductions and public performance of their protected works. The U.S. District Court for the Southern District of New York found in favor of plainitffs-appellees. On appeal, however, the Second Circuit reversed the summary judgment award. Specifically, the Second Circuit found that it is the customer, and not Cablevision, who does the unauthorized copying, the same way that a VCR user who operates the VCR machine is the one who makes "copies" of the video cassette. Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, the Second Circuit concluded that such transmissions are not performances “to the public,” and therefore do not infringe any exclusive right of public performance. On the basis of the foregoing, the Second Circuit issued summary judgment to defendant-appellant Cablevision.

Detailed Summary:

In March 2006, defendant-appellant Cablevision, an operator of cable television systems, announced the advent of its new “Remote Storage” Digital Video Recorder System (“RS-DVR System “).  As designed, the RS-DVR System allows Cablevision customers who do not have a stand-alone DVR to record cable programming on central hard drives housed and maintained by Cablevision at a “remote” location. Opinion, pp. 4-5.

Cablevision customers may then receive playback of those programs through their home television sets, using only a remote control and a standard cable box equipped with the RS-DVR System software. Cablevision notified its content providers, including plaintiffs, of its plans to offer the RS-DVR System , but it did not seek any license from them to operate or sell the RS-DVR System .

Plaintiffs, who hold the copyrights to numerous movies and television programs, sued Cablevision for declaratory and injunctive relief. They alleged that Cablevision’s proposed operation of the RS-DVR would directly infringe their exclusive rights to both:  (1)  reproduce;  and (2) publicly perform their copyrighted works.  Plaintiffs alleged theories only of direct infringement, not contributory infringement, and defendants waived any defense based on fair use. Id.

Ultimately, the District Court awarded summary judgment to the plaintiffs and enjoined Cablevision from operating the RS-DVR S ystem without licenses from its content providers. Id., referring to Twentieth Century Fox Film Corp. v. Cablevision Sys. Corp. (“Cablevision I”), 478 F. Supp. 2d 607 (S.D.N.Y. 2007).  On appeal, the issues for resolution were whether playback of RS-DVR copies was infringement and whether Cablevision violated the Copyright Act by engaging in unauthorized performances of copyrighted works through such playback.

By way of background,  after a RS-DVR System user selects a program to record, and that program airs, a copy of the program resides in Cablevision’s server, such copy unauthorized by the copyright holder. The question is, did Cablevision or the user make this copy?  If it is Cablevision, plaintiffs’ theory of direct infringement succeeds; if it is the user, plaintiffs’ theory fails because Cablevision would then face, at most, secondary liability. As noted, plaintiffs disavowed a claim based on secondary liability.

In resolving this first issue in favor of Cablevision, the Second Circuit likened Cablevision’s service to a photocopying center: by selling access to a system that automatically produces copies on command, Cablevision more closely resembles a store proprietor who charges customers to use a photocopier on the premises ; it was incorrect to say, without more, that such a proprietor “makes” any copies when his machines are actually operated by his customers. Id., p. 25, referring to Religious Technology Center v. Netcom On-Line Communications Services, 907 F. Supp. 1361 (N.D. Cal. 1995). Stated another way, a RS-DVR System user is not sufficiently distinguishable from a VCR user to impose liability on the VCR provider for copies made by the end user. Id., p. 23.  Therefore, the Second Circuit concluded that copies produced by the RS-DVR System are “made” by the Cablevision customer, and Cablevision’s contribution to this reproduction by providing the system does not warrant the imposition of direct liability. The Second Circuit reversed the District Court’s holding and awarded Cablevision summary judgment on this point.

With regard to the second issue, plaintiffs argued that Cablevision violated the Copyright Act by engaging in unauthorized public performances of their works through the RS-DVR users’  playback of the RS-DVR copies. The Copyright Act grants a copyright owner the exclusive right, “in the case of . . . motion pictures and other audiovisual works, to perform the copyrighted work publicly.” Id., pp. 29-30, citing 17 U.S.C. § 106(4). Section 101, the definitional section of the Act, explains that “[t]o perform or display a work ‘publicly’ means (1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” It was undisputed that the RS-DVR playback results in the transmission of a performance of a work - the transmission from Cablevision’s server to a customer’s television set. Cablevision contended, however, that (1) the RS-DVR customer, rather than Cablevision, does the transmitting and th ereby the performing and (2) the transmission is not “to the public” under the transmit clause of the Act.

Because each RS-DVR System playback transmission is made to a single user as copied by that user for later viewing, the Second Circuit held that those transmissions are not performances “to the public,” and therefore do not infringe any right of public performance. Thus, Cablevision was entitled to summary judgment on this point as well.

Of note, the Second Circuit cautioned that this holding does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of 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. Finding that Cablevision’s RS-DVR System technology and use by Cablevision’s customers does not directly infringe plaintiffs’ exclusive rights to reproduce and publicly perform their copyrighted works,  the Second Circuit granted summary judgment to Cablevision with respect to both rights in this unique situation.

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