Jun 29, 2006 (06:06 PM EDT)
Media Distribution Rights: Here Come The Judges (And Congress)

Read the Original Article at InformationWeek

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Not since Universal City Studios and Walt Disney Productions sued Sony to prevent it from selling its Betamax video recorder back in 1976 has the industry been more on fire about the rights of consumers to legally copy media in the home for their own use.

At issue: whether the courts will focus on consumer behavior rather than the technological capabilities of the devices they use. Although the industry has been pointing to the Betamax case (decided more than 20 years ago by the Supreme Court in favor of Sony) as a legal landmark decision that clearly said manufacturers were not liable if their devices were used in illegal copying, the Grokster ruling in 2005 sent a chill through the market.

The Betamax ruling made it possible for consumers to record media as long as it was strictly for personal use. As long as there was "substantial" use of the recording devices in fair-use copying, companies producing devices couldn't be sued.

If Betamax had been decided in favor of the movie studios, there would have been a virtual stop to the devices that have been developed since that time, such as VCRs, rental movies, home DVDs, digital video recorders, MP3 players, and even PCs, says Fred von Lohman, a senior staff attorney with the Electronic Frontier Foundation.

"Instead of manufacturers being able to design and build the products that they thought the American marketplace wanted, they would basically be told by the content producers what features would and wouldn't be permitted," says Lohman.

It all comes down to an issue called "inducement." As decided in Betamax, device manufacturers couldn't be sued just because a device could be used to cheat the system. In other words, the onus of illegality rested on the people who engaged in illegal activity, not on the device itself.

But last year, with the Grokster ruling, the Supreme Court appeared to reverse this precedent by agreeing with content providers that peer-to-peer companies such as Grokster could be held responsible for copyright piracy on their networks.

This could potentially establish a number of significant hurdles that manufacturers would have to jump over in order to bring a legal device to market. "It's truly a jungle of complications that all these devices have to navigate to be successful," says Phillip Swann, president of TVPredictions.com.

Moreover, multiple bills are now in progress in Congress that would further erode the rights of consumers to copy, move, or share media for their own personal use.