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Court Strikes Down Broadcast Flag

5/06/2005 11:47:00 AM Eastern

Washington — The U.S. Court of Appeals ruled that the Federal Communications Commission (FCC) exceeded its authority in ordering digital television products and connected devices to be equipped with so-called “Broadcast Flag” circuitry to prevent unauthorized redistribution of digital broadcast content over the Internet.

The court ruled that the FCC over stepped its authority by requiring flag technology in digital television devices, because the system is designed to act “after” a broadcast is received.

Nine parties, including the American Library Association and various consumer rights groups, who petitioned the court to block the FCC order, have feared the regulations would be used as an anti-copying tool, and that broadcasters and content owners were using the FCC as “a gatekeeper” to slow the implementation of new digital technologies that consumers can use to access legally obtained content.

“This clearly was a slam dunk in the favor of the consumer, libraries and civil liberties organizations,” said Gigi Sohn, president of Public Knowledge, a consumer rights advocacy association. “This case was more than just about the Broadcast Flag. It was about what the limits of the FCC’s powers should be over the Internet and new technologies.”

In its ruling issued Friday, the Court called the FCC’s view of its authority granted by Congress “extraordinary.”

“Because the Commission exceeded the scope of its delegated authority, we grant the petition for review, and reverse and vacate the Flag order insofar as it requires demodulator products manufactured on or after July 1 to recognize and give effect to the broadcast flag,” the U.S. Court of Appeals ruling stated.

In November 2003, the FCC adopted the “Broadcast Flag” regulations, requiring that digital television receivers and other devices capable of receiving digital television broadcast signals, manufactured on or after July 1, include technology allowing them to recognize the broadcast flag.

The Appeals Court ruling stated, “The [Commission’s] position in this case amounts to the bare suggestion that it possesses plenary authority to act within a given area simply because Congress has endowed it with some authority to act in that area. We categorically reject that suggestion. Agencies owe their capacity to act to the delegation of authority from Congress.”

Broadcasters, content holders and other parties pushing for the Flag will have to turn to Congress to make the regulation stick. Many expect broadcasters and Hollywood Studios to push Congress to expand the powers of the FCC to allow it regulate issues such as the Broadcast Flag in the future.

Sohn, of Public Knowledge, said her group will be vigilant to ensure consumers are given voice in such decisions.

Thomson, which has multiple business interests in broadcast television production in addition to TV set manufacturing through its TTE joint venture, said the Court decision will have no effect on TTE’s plans for its television sets, which have been Broadcast Flag compliant for over a year, said Dave Arland, a Thomson and TTE government affairs spokesman.

“However, Thomson has invested a lot of time and energy in support of the Broadcast Flag. Our SmartRight system was one of 13 content protection technologies approved to work with flag. While it is not clear what the next step will be from the Hollywood studios, we look forward to working with them to give the Commission the authority it will need to fully implement the flag,” Arland said.

The Consumer Electronics Association, which has members taking both sides of the Broadcast Flag issue, said of the decision: “Courts are right to be wary when government institutions seek to regulate the specific features and functions of safe, useful consumer technology. We look forward to studying the Court's ruling in greater detail with a focus on continuing efforts to preserve the freedom to innovate while protecting the interests of patent and copyright owners.”

The Association continued that the ruling “will have no impact” on the ongoing transition to digital television.

“Indeed, policy makers should continue to focus on the key issues that will help accelerate and ensure a consumer-friendly approach to the transition, specifically setting a hard date for ending analog television signals,” the CEA said.

Edward O. Fritts, National Assoication of Broadcasters president, lamented the possible result of the Court’s ruling.

“Without a 'broadcast flag,' consumers may lose access to the very best programming offered on local television,” said Fritts. “This remedy is designed to protect against unauthorized indiscriminate redistribution of programming over the Internet. We will work with Congress to authorize implementation of a broadcast flag that preserves the uniquely American system of free, local television.”

Similarly, the Motion Picture Association of America (MPAA) said the Court’s action was “disappointing,” adding that it “could create a digital television divide by slowing or eliminating access to high quality digital programming for some consumers.

“Television audiences – whether they subscribe to cable or satellite service or not - are benefiting from the higher quality picture of digital programming,” the MPAA said. “If the Broadcast Flag cannot be used, program providers will have to weigh whether the risk of theft is too great over free, off-air broadcasting and could limit such high quality programming to only cable, satellite and other more secure delivery systems.”

The MPAA said it would “continue working aggressively on all fronts to make sure consumers will have access to high-value content on broadcast television.”