When Time Warner CEO Jeff Bewkes first spelled out his vision for TV Everywhere in March 2009 he clearly had in mind an orderly system of permissions and licensed use-cases that would extend the basic structure and economics of the pay-TV business into the emerging world of digital platforms and mobile devices. Online access to network content would be restricted to authenticated pay-TV subscribers and TV service providers would need to secure additional rights before introducing new features or capabilities to their systems.
The ultimate goal, apart from preserving the industry’s lucrative business model, was to create new, high-margin licensing opportunity for the networks based on rights that would be clearly distinguished from the linear retransmission rights under which pay-TV providers traditionally have operated. And from the networks’ point of view, TV Everywhere has rolled out more or less according to Bewkes’ plan. As we saw in the resolution of the CBS-Time Warner Cable retransmission dispute last month the networks have largely been able to keep on-demand digital rights for themselves even as they demand higher fees from service providers for linear rights.
At the same time, however, a very different, more ad hoc vision of TV Everywhere has been slowly emerging in the courts, which could eventually undermine the networks’ leverage over TV Everywhere rights. Unlike Bewkes’ vision, in which all new use-cases for TV content would be discretely licensed, the courts are carving out a growing list of use-cases that do not need to be licensed, either because they fall within consumers’ fair use rights or because they are technically distinguishable from the exclusive rights granted to copyright owners by copyright law. Though many of the cases are still in their early stages, and the rulings so far could yet be overturned by higher courts, the trend is not running in the networks’ favor.
The legal trend actually began in 2008, before Bewkes articulated his vision for TV Everywhere, when the federal Second Circuit Court of Appeals handed down its decision in the Cablevision remote DVR case. Cablevision’s system allowed consumers to designate programs to be recorded on Cablevision’s servers. As designed, each recording initiated by the consumer created a discrete copy of the program, which could only be accessed by the consumer that initiated it. On playback, Cablevision then streamed that copy back to the consumer.
While consumer’s right to time-shift TV programming has been recognized since the Supreme Court’s ruling in the Betamax case in 1984, the networks claimed that playback from Cablevision’s remote servers comprised an unlicensed public performance. The Second Circuit disagreed, however, ruling that since the consumer initiated the recording, and only that consumer could view it, there was no public performance to license. Among other things, the ruling introduced the novel legal concept of a non-infringing, technically private performance from a remote source of a copyrighted work.
Aereo then took that concept and ran with it, designing its system on a blueprint provided by the Second Circuit’s ruling in Cablevision. When the inevitable lawsuit against Aereo reached the Second Circuit, the court upheld its own precedent, noting “Plaintiffs have provided us with no adequate basis to distinguish Cablevision from the Aereo system.” For now at least, the Aereo case has added place-shifting to mobile devices to the list of TV use-cases which do not require a license from the copyright owner.
In July, the Ninth Circuit adopted the same non-infringing, consumer-initiated recording formulation in denying Fox Broadcasting’s request for an injunction against Dish Network’s Hopper DVR with Auto-Hop, which bulk-records prime time programming and automatically skips the commercials during playback. According to Fox, the Hopper created a kind of set-top video-on-demand system for which Dish needed a license. The court disagreed, at least at this stage of the proceedings, ruling that since the consumer initiated the recordings they fell within permissible time-shifting copies and do not require a license.
Then last week, a federal district court in California declined Fox’s request for an injunction in a separate case aginst the Hopper With Sling DVR, which allows consumers to access their time-shift recordings remotely, adding at least for now the ability to access set-top recordings remotely to the list of use-cases that do not require a license.
Perhaps the networks should stop bringing lawsuits before things really get out of hand.