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David Hosp and Ed Weiss offer their perspectives on the Cablevision case
By Paul Cathcart – Edited by Ryan Ward

On Thursday, November 4th, JOLT and the Cyberlaw Clinic at the Berkman Center for Internet and Society hosted a talk by David Hosp and Ed Weiss, two attorneys who worked on opposite sides of the “Cablevision” case, Cartoon Network v. CSC Holdings, 536 F.3d 121 (2008). In that case, the Second Circuit held that Cablevision’s “Remote Storage” Digital Video Recorder (RS-DVR) system did not directly infringe the copyright interests of Cablevision’s content providers. JOLT Digest previously reported on the Second Circuit’s decision when it was released in August 2008.

The two speakers took turns discussing their experience on the case.

Legal Landscape: Hosp, a partner at Goodwin Procter in Boston and trial counsel for Cablevision, began by establishing the relevant legal landscape as it existed before trial.

‒      Indirect Infringement: In the 1984 “Betamax” case, the Supreme Court had held that in selling home video tape recorders, Sony did not indirectly infringe the copyrights owned on television programs recorded by some of their customers. Sony Corp. of Amer. v. Universal City Studios, Inc., 464 U.S. 417 (1984). At the time, there was no other market for this time-shifted content, and the individual consumer’s use was, generally speaking, held to be fair use. The technology, moreover, was capable of “substantial noninfringing uses.” Grokster, by contrast, was held liable for indirect infringement in 2005 because the whole purpose of their peer-to-peer file sharing system was to enable infringement. MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

‒      Direct Infringement: During the “Betamax” litigation, the lower court held that Sony did not directly infringe plaintiffs’ copyrights by selling Betamax recorders because Sony was not “pushing the button.” This point was never taken up on appeal. The Internet gave rise to other paradigm cases in this area, in which the machine used was owned by the defendant but the defendant’s role was more or less passive. In 1995, the Northern District of California held that ISP Netcom, by merely providing a machine on which a third-party could make copies, did not directly infringe copyright because there was no “volitional act” on their part. Religious Tech. Ctr. v. Netcom On-Line Commun. Servs., 907 F. Supp. 1361 (N.D. Cal. 1995). The Fourth Circuit upheld this principle in 2004, even though defendant CoStar had not complied with all requirements of the Digital Millenium Copyright Act’s “safe harbor” provisions. CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. Md. 2004)

Business Landscape: Weiss, who was Senior Vice President and Deputy General Council at Time Warner Inc. during “Cablevision,” summarized the state of the business at the time. Big media was in a state of disruption, and “established business models loathe disruptive technologies. … There’s a tremendous amount of inertia in the industry.” Regarding RS-DVR, Time Warner was “conflicted,” since they had both content and cable interests. They had previously looked into a “head end based architecture” like RS-DVR in 2001 (called Maestro), but decided that they “really needed to have licenses from programmers” — licenses which the programmers were largely unwilling to provide.

Technology at Issue: Hosp described Cablevision’s RS-DVR idea. They would “move the DVR ‘recording’ part to the head” of the distribution chain, which would cut the costs associated with console shipping, remote setup, and remote maintenance. From the customer standpoint, the system would appear the same. The question was did this violate copyright.

Assessing the Legal Risks: Indirect infringement was Hosp and his team’s first concern. The Court’s “Betamax” analysis was dated, and the business landscape had changed drastically. Duration and cost of litigation were also a worry. If the length of the process matched “Betamax,” the case would be irrelevant before it was over.

In considering the potential of a direct infringement claim, Hosp’s team focused on the details of the architecture. According to Hosp, a favorite metaphor for thinking about this is the copy store: Is the copy machine in front of the counter and operated by customers, or is it behind the counter with the employee pushing the button? In light of the copyright issues, the plan for RS-DVR was to allocate exclusive server space to each user, rather than have a few central copies available for push-button delivery. “If 3 million people in the New York area decide to DVR ‘Desperate Housewives,’ … there are 3 million copies of that show.” This plan came with its own set of legal problems. Notably, if each copy constituted a separate instance of potential infringement, the statutory damages alone would be massive.

Press Release: To test the waters, Cablevision came up with a proposed architecture, issued a press release, and “let everybody get really pissed off.”

Copyright Owner Response: On Time Warner’s end, Weiss said there was a feeling that the line had to be drawn. Cablevision’s system was different from popular video-on-demand (“VOD”) services, because VOD content is licensed and there is “consideration flowing.” There are “constant fights” between content and cable companies (citing the recent public feud between Fox and Cablevision), and Time Warner was concerned with this perceived “land grab” by Cablevision.

Like their opponents, Weiss and Time Warner were wary of prolonged litigation. In order to minimize expenses, Time Warner decided to only file a claim for direct infringement by Cablevision, restricting the question to “who’s pushing the button.”

The Litigation: As a result of Time Warner’s decision to only bring direct infringement claims, Hosp said there were almost no truly disputed factual issues. While “zealous advocacy” inevitably prolonged agreement over the characterization of facts, there was no disagreement about how the technology worked. The case went through a modified summary judgment process including expert testimony and cross-examination. Certain facts were stipulated, and Judge Chin of the Southern District of New York was empanelled to make credibility and factual determinations within specified parameters.

Weiss said that his side wanted to make the hearing as fact-based as possible in order to better shield its decision on appeal. They highlighted the steps that went into the RS-DVR system – including the creation of ephemeral, buffer copies – before user input even occurred. They also noted that Cablevision, while ultimately making RS-DVR functionality available for all channels, had previously considered including only a smaller number of channels.

In the end, Judge Chin held against Cablevision. As Hosp recounted, Chin reasoned that the RS-DVR system isn’t the same as a set-top box, that Cablevision decides which stations are recorded, and that Cablevision “makes” the copies that live on the server. This activity was enough to satisfy “volitional conduct” and constitute direct copyright infringement. On appeal, however, the Second Circuit came to the opposite conclusion and found no direct copyright infringement by Cablevision.

Reflections: At the beginning of the event, Weiss noted how bizarrely simple this case seems years later. It was ultimately about “who’s pushing the button.” Hosp described it as “more fun than I can express,” despite the “insane schedule.” He mentioned how relatively cooperative both sides were, and noted that “everyone involved just wanted an answer.” Weiss concluded the event by saying that, “in litigations like this, the coordination among twenty-five entertainment companies is more excruciating than dealing with the other side.”

Paul Cathcart is a 1L at the Harvard Law School.

Posted On Nov - 7 - 2010 Comments Off

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