The consumer electronics industry enjoyed a record sales year in 2004, the 20th anniversary of the Supreme Court's Betamax decision. It's no accident that the decision, which enabled home recording rights, set the stage for the industry's spectacular growth over the past two decades.
Nevertheless, industry representatives still spend enormous time and effort in the nation's capital fighting efforts to undercut or roll back “Betamax” and protecting consumers' rights to use their products.
“Overall, it was a good year for the tech industry,” noted Michael Petricone, Consumer Electronics Association's (CEA) government affairs VP, “but the proposed 'Induce Act' posed the greatest single legislative threat we've faced in years.”
The legislation Petricone referred to was the “Inducing Infringement of Copyrights Act of 2004” (S.2560), which was originally drafted with the objective to differentiate between objectionable and legitimate conduct; to preserve the essence of the Betamax decision; and to avoid a flood of litigation. Unfortunately, a revised draft of the bill relied on a vague and indeterminate standard.
“It would have created a broad new cause of action against a wide range of companies and individuals,” Petricone said, “and would have a truly chilling effect on the innovation that is the lifeblood of our industry. The way the bill was written, legal action could have been taken not only against manufacturers of many electronic products, but also against venture capitalists, journalists and advertisers.”
CEA led a coalition of companies and organizations in opposition to the bill. “Groups that aren't always on the same side of issues came together,” Petricone said, including the Electronic Frontier Foundation, the American Conservative Union, the Wall Street Journal and The New York Times. The outcry succeeded in keeping the bill from coming before Congress as it was drafted, but the issue is sure to keep rearing its head in coming years. “Unfortunately, in Washington, no bad idea is ever dead forever,” Petricone noted, “but this one seems to be dead for now. But the good news is that there's an increased sensitivity in Congress to the complexity of intellectual property issues and the need to balance the rights of copyright holders with fair use.”
Another bill threatening to rollback or impede home recording rights was the Intellectual Property Protection Act (H.R. 2391). CEA supported the bill in part, but expressed serious reservations especially as the original bill was rewritten. In November, CEA's president/CEO Gary Shapiro issued a statement that compared the proposed legislation to a Clint Eastwood movie: “Some of it's good. Some of it is bad. And some of it is ugly.”
Specifically, CEA objected to changes that would make technology that allows commercial skipping legally suspect, provisions that would have taxpayers funding copyright enforcement for major multinational corporations and to overly broad definitions of what constitutes illegal downloading.
Shapiro pointed out that there are many factors other than downloading impacting recording industry revenues, that technology offers consumers greater access to a broader range of music than ever before and new opportunities for the content community. “This omnibus bill would create a new category of criminal activity and restrict technology and consumer behavior. The House and Senate should carry this bill over in to the next Congress where each of its pieces can be given careful consideration in regular order.”
There was a lot of digital television activity in Congress and the FCC during the past year too. In July, CEA applauded the Senate Commerce Committee vote allowing digital satellite providers to offer a network HD feed to consumers who are unable to receive their local broadcaster's digital signal.
The Satellite Home Viewer Extension and Rural Consumer Access to Digital Television Act of 2004 brought “millions of rural Americans one step closer to making the analog-to-digital transition,” Shapiro said at the time. He complimented “the Senate Commerce Committee for recognizing the importance of delivering HDTV to all American living rooms.”
At the FCC and in Congress consideration of a “hard deadline” for the broadcasters' return of analog spectrum, probably by 2009, seems to be gaining momentum, spurred by the approach of the original 2006 deadline, exasperation with what some view as the slow pace of the transition, and pressure to get the spectrum back and auctioned to for providers of new wireless services.
For CEA, this year promises to be just as active on the regulatory and legislative fronts. There are issues surrounding regulation of new services like Voice over Internet Protocol (VoIP) and reconsideration of elements of the Digital Millennium Copyright Act (DMCA) and the 1996 Telecommunications Act.
A major challenge facing regulators and legislators is the rapid pace of change. One stark indication is this: The Telecom Act of 1996 did not consider the impact of the Internet. In fact, the Internet is never mentioned.
Other issues that will demand attention in the coming months include the simple logistics of moving people and products freely in a truly global marketplace in an uneasy age where security is paramount. Visas for foreign-born workers and access to U.S. ports for product shipments remain a high priority. The consumer electronics industry relies on free movement of goods, people and services worldwide, and CEA will work with appropriate government entities to keep them all moving and secure.
The complex intellectual property issues, with the delicate balance between the rights of consumers and copyright holders, will continue to dominate discussions, and CEA will continue to encourage government entities to resist restrictive legislation and regulations, foster a level playing field, and let the markets develop and decide new technologies' future.