8/4. The U.S. Court of Appeals (1stCir) issued its opinion in Coxcom v. Chafee, affirming the summary judgment of the District Court for a cable television company against sellers of electronic devices that prevented the cable company from receiving pay per view billing information from subscribers' set top boxes.

Background. Coxcom is a cable television company. It leases set-top boxes to its subscribers that descramble incoming signals so that programming can be viewed. These boxes also transmit information from the subscribers to Coxcom, including billing information for pay per view programming.

Jon Chaffee, Amy Chaffee, and Ramalda Bou, the defendants below, and appellants in this appeal, sold digital cable filter devices that block low frequency signals. Coxcom's system uses these signals for transmitting pay per view billing information. That is, the defendants sold devices that enabled Coxcom's customers to avoid being billed for watching pay per view programs.

Coxcom filed a complaint in U.S. District Court (DRI) against these defendants alleging violation of the Cable Communications Policy Act of 1984, at 47 U.S.C. § 553(a), and the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA), at 17 U.S.C. § 1201.

Coxcom also sought and received an ex parte temporary restraining order that enjoined the defendants from further sales of the filters, and allowed Coxcom to seize defendants' business records and computers.

The District Court granted Coxcom's motion for summary judgment on the issue of liability under both claims. Following an evidentiary hearing on the issue of damages, the District Court awarded Coxcom $35,000 in statutory and enhanced damages under Section 553, $105,000 in statutory and enhanced damages under the DMCA, and $196,586.11 in attorney's fees and costs against Jon and Amy Chafee. Bou's involvement was less, and the District Court awarded Coxcom a total of $5,500 from her.

The three defendants brought the present appeal. The Court of Appeals affirmed.

Section 553. 47 U.S.C. § 553(a)(1) provides that "No person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law."

The Subsection 553(a)(2) provides that "For the purpose of this section, the term “assist in intercepting or receiving” shall include the manufacture or distribution of equipment intended by the manufacturer or distributor (as the case may be) for unauthorized reception of any communications service offered over a cable system in violation of subparagraph (1)." (Parentheses in original.)

In the present case, the devices sold by the defendants did not intercept any signals. Moreover, the pay per view programs were provided by Coxcom at the request of subscribers. The devices interfered with the billing for those programs. Hence, the defendants argued that the reception was authorized, and that the statute pertains only to unauthorized reception of signals from Coxcom, and not signals going from the subscriber to Coxcom.

The Court of Appeals labeled this a "transparent attempt at wordplay".

The Court of Appeals held that the statute reaches the sale of these devices. It wrote that "Section 553 liability is thus not limited to situations where cable services have actually been intercepted; liability exists where a plaintiff proves that a defendant intended to assist in the unauthorized reception of cable services."

The Court continued, "A subscriber using a filter to view pay-per-view ``receives´´ programming. That programming is unauthorized, because the subscriber has interfered with the cable company's billing mechanism in contravention of the subscriber's contract with the cable company. The filter itself may not act upon the reception of cable programming, but the record is clear that a filter is ``equipment´´ that ``assists´´ a subscriber in ``unauthorized reception´´ of pay-per-view programming, in violation of Section 553."

The Court of Appeals also rejected the defendants' argument that their devices were not "intended" by them to be used for unauthorized reception within the meaning of subsection 553(a)(2). That is, they sold devices with an instruction sheet that contained a statement that the devices would block transmission of billing information, so users should notify their cable company of their pay per view use.

The Court of Appeals was also unimpressed with this argument.

DMCA. The Court of Appeals also affirmed the judgment for Coxcom on the DMCA claim.

Subection 1201(a)(1)(A) provides, in part, that "No person shall circumvent a technological measure that effectively controls access to a work protected under this title."

Subection 1201(a)(2) provides that "No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that--
  (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;
  (B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or
  (C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title."

This issue turned on whether what the defendants did constitutes circumventing a technological protection measure. The Court of Appeals, with little discussion, concluded that it did.

Subsection 1201(a)(3) defines "circumvent a technological measure" to mean "to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner".

The Court of Appeals concluded that the Coxcom's "pay-per-view delivery and billing system that scrambles pay-per-view programming unless subscribers choose to purchase and view it" constituted a "technological measure" within the meaning of the statute, and that the defendants' engaged in acts to "avoid" and "bypass" within the meaning of the statute.

This case is Coxcom, Inc. v. Jon Chafee, et al., U.S. Court of Appeals for the 1st Circuit, App. Ct. Nos. 07-2030 and 07-2031, appeals from the U.S. District Court for the District of Rhode Island, Judge William Smith presiding. Judge Howard wrote the opinion of the Court of Appeals, in which Judges Torruella and Lipez joined.

8/4. The U.S. Court of Appeals (2ndCir) issued its opinion [44 pages in PDF] in Cartoon Network v. CSC Holdings, reversing the judgment of the District Court, and holding that CSC's Remote Storage Digital Video Recorder (RS-DVR) system does not violate the Copyright Act by infringing plaintiffs' exclusive rights of reproduction and public performance.

Cablevision Systems Corporation (CSC) is a cable television company. It developed a RS-DVR for its subscribers.

Unlike video cassette recorders (VCRs), which use a device connected to the consumer's television and store programs on cassettes, and digital video recorders (DVRs), such as those made by Tivo, which store programs on consumers' drives, Cablevision's RS-DVR stores programs on drives housed and maintained by Cablevision.

The plaintiffs are the Cartoon Network and other content companies. They license content to Cablevision, but have not licensed storage and playing of their programs by use of Cablevision's RS-DVR system.

The plaintiffs filed a complaint in U.S. District Court (SDNY), seeking declaratory and injunctive relief, alleging that Cablevision's RS-DVR system would directly infringe their copyrights both by making unauthorized reproductions, and by engaging in public performances, of their copyrighted works.

17 U.S.C. § 106 provides, in part, that "the owner of copyright ... has the exclusive rights to do and to authorize any of the following ... (1) to reproduce the copyrighted work in copies or phonorecords ... (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly".

The District Court granted summary judgment to the plaintiff content companies, and enjoined Cablevision from operating its RS-DVR system without first obtaining licenses from the plaintiff content companies. The District Court's opinion is reported at 478 F. Supp. 2d 607.

The Court of Appeals wrote this summary of the District Court's holding. "First, by briefly storing data in the primary ingest buffer and other data buffers integral to the function of the RS-DVR, Cablevision would make copies of protected works and thereby directly infringe plaintiffs’ exclusive right of reproduction under the Copyright Act. Second, by copying programs onto the Arroyo Server hard disks (the ``playback copies´´), Cablevision would again directly infringe the reproduction right. And third, by transmitting the data from the Arroyo Server hard disks to its RS-DVR customers in response to a ``playback´´ request, Cablevision would directly infringe plaintiffs’ exclusive right of public performance." (Parentheses and internal quotations in original.)

The Court of Appeals reversed.

First, the Court of Appeals held that Cablevision's acts of buffering in the operation of its RS-DVR system do not create copies, within the meaning of the Copyright Act, and hence, Cablevision would not violate the plaintiffs' exclusive right of reproduction under Section 106(1).

Second, the Court of Appeals held that Cablevision would not engage in direct copyright infringement of the plaintiffs' reproduction right when a copy of a program is made, because Cablevision's subscribers, not Cablevision, would make the copy. Moreover, Cablevision's providing of the RS-DVR system does not warrant the imposition of direct liability. Cablevision would at most be secondarily liable. But, the plaintiffs did not raise secondary liability.

Third, the Court of Appeals held that the playback of stored programs would not violate the plaintiffs' exclusive right "to perform the copyrighted work publicly" because the playback would not be to the public.

The Court of Appeals concluded that because "Cablevision’s proposed RS-DVR system would not directly infringe plaintiffs' exclusive rights to reproduce and publicly perform their copyrighted works, we grant summary judgment in favor of Cablevision with respect to both rights."

The Court of Appeals received several amicus curiae briefs. See for example, brief [45 pages in PDF] of a group of law professors urging reversal.

See also, brief [47 pages in PDF] of the Center for Democracy and Technology (CDT), Public Knowledge (PK), Computer and Communications Industry Association (CCIA), Electronic Frontier Foundation (EFF), Cellular Telecommunications Industry Association (CTIA), Consumer Electronics Association (CEA), Home Recording Rights Coalition (HRRC), and others, urging reversal of the District Court.

In contrast, see brief [PDF] of the Progress & Freedom Foundation (PFF) urging affirmance.

Gigi Sohn, head of the PK, stated in a release after the Court of Appeals released its opinion that "This decision is a great victory for innovation, technological progress and consumers' rights."

She added that the "content industry, in suing Cablevision, once again overreached in its goal to limit the personal uses of increasingly popular technology. We hope this case will be another signal to Hollywood to scale back its attacks on consumer-friendly technologies."

The PFF amicus brief, written by Solveig Singleton, argued that "Skewing the inquiry to avoid imposing liability on a sophisticated business venture here is not necessary to keep the ``balance´´ of copyright. Rather, it would exacerbate the difficulties faced by content owners today in developing new licensed distribution channels, without gain in the long run for consumers or new distribution technologies. Going forward, services like Cablevision's are of little value without licensed content, and consumers' ultimate interest is in preserving market mechanisms such as licensing that enable creators to get paid. Most importantly, broad exemptions from liability can disable licensing markets, which ultimately serve consumers and innovative distributors as well as content creators and producers."

This case is Cartoon Network LP, et al. v. CSC Holdings, Inc., et al., U.S. Court of Appeals for the 2nd Circuit, App. Ct. Nos. 07-1480-cv(L) and 07-1511-cv(CON), appeals from the U.S. District Court for the Southern District of New York, Judge Denny Chin presiding. Judge John Walker wrote the opinion of the Court of Appeals, in which Judges Sack and Livingston joined.

8/1. Rep. John Dingell (D-MI) and other leaders of the House Commerce Committee (HCC) sent a bipartisan letter [PDF] to Google, Yahoo, Microsoft, and 30 other internet companies regarding "the growing trend of companies tailoring Internet advertising based upon consumers' Internet search, surfing, or other use".

The letter is signed by Rep. Dingell (at right), Rep. Joe Barton (R-TX), Rep. Ed Markey (D-MA) and Rep. Cliff Stearns (R-FL), the Chairman and ranking Republicans on the HCC and its Subcommittee on Telecommunications and the Internet.

The four wrote that "questions have been raised regarding the applicability of privacy protections in the Communications Act of 1934, the Cable Act of 1984, the Electronic Communications Privacy Act, and other statutes to such practices, and whether legislation is needed to ensure that the same protections apply regardless of the particular technologies or companies involved."

They then propound 11 written interrogatories, most of which are multipart, to be answered in writing by each of the companies within one week -- Friday, August 8, 2008.

They ask, "Has your company at any time tailored, or facilitated the tailoring of, Internet advertising based on consumers' Internet search, surfing, or other use?"

They then ask the companies to describe the nature and extent of their practices.

Some of the information sought is privileged. For example, the four ask, "Has your company conducted a legal analysis of the applicability of consumer privacy laws to such practice? If so, please explain what that analysis concluded." They also ask the companies to disclose privileged attorney client communications pertaining to opt-out notices.

The four HCC leaders sent their letter to America Online (AOL), AT&T, Bresnan Communications, Bright House Networks, CableOne, Cablevision, Cbeyond, CenturyTel, Charter, Citizen Communications, Comcast, Covad, Cox, Earthlink, Google, Insight, Knology, Level 3, Mediacom, Microsoft, PAETEC, Qwest, RCN, Suddenlink, Time Warner Cable, tw telecom, WideOpenWest, TDS Telecom, United Online, Windstream Communications, Verizon, XO Communications, and Yahoo.

See also, HCC release.

8/4. The Federal Communications Commission (FCC) has scheduled an event titled "Open Meeting" for Friday, August 22, 2008. On August 4 it released a document [PDF] titled in part "Tentative Agenda". It lists seven items.

1. This tentative agenda discloses that the FCC may adopt a Memorandum Opinion and Order on Reconsideration regarding "issues raised in petitions for reconsideration of the Roaming Report and Order".

The FCC adopted its roaming order on August 7, 2007, and released the text [73 pages in PDF] on August 16, 2007. It is FCC 07-143 in WT Docket No. 05-265. It provides that CMRS carriers have roaming obligations as to Title II services. See also, story titled "FCC Adopts CMRS Roaming Order and NPRM" in TLJ Daily E-Mail Alert No. 1,623, August 15, 2007.

See, SpectrumCo's October 1, 2007, petition for reconsideration [18 pages in PDF], Sprint Nextel's October 1, 2007, petition for reconsideration [10 pages in PDF], T-Mobile USA's October 1, 2007, petition for reconsideration [9 pages in PDF], MetroPCS's October 1, 2007, petition for reconsideration [27 pages in PDF], and Leap Wireless's September 28, 2007, petition for reconsideration [26 pages in PDF].

And see, AT&T's November 6, 2007 opposition [16 pages in PDF] and SouthernLINC's November 6, 2007 opposition [27 pages in PDF].

2. This tentative agenda discloses that the FCC may adopt a Notice of Proposed Rulemaking (NPRM) and Order regarding "the operation of broadcast low power auxiliary stations (including wireless microphones) within the 700 MHz Band". (Parentheses in original.)

For discussions of this issue see March 10, 2008, essay by Michael Marcus titled "Wireless Mics are a Legitimate Use of Spectrum: They Deserve More from FCC than Benign Neglect that Allows Most Users Only Criminal Spectrum Squatting", and March 25, 2008, essay by Harold Feld of the Public Knowledge titled "The 19 Billion Dollar Loophole".

See also, 47 C.F.R. § 74.802.

3. This tentative agenda discloses that the FCC may adopt a NPRM that requests public comments regarding "implementing the New and Emerging Technologies (NET) 911 Improvement Act of 2008".

On July 23, 2008, President Bush signed into law HR 3403 [LOC | WW], the "New and Emerging Technologies 911 Improvement Act of 2008". See, White House release.

This bill requires interconnected VOIP service providers to provide 911 and E911 services. The FCC already mandated this by rulemaking in 2005. This bill affirms, revises, and further defines the legal framework. It also requires the FCC to write implementing regulations.

The FCC adopted its 911 VOIP order on May 19, 2005, and released the text [90 pages in PDF] on June 3, 2005. See story titled "FCC Releases VOIP E911 Order" in TLJ Daily E-Mail Alert No. 1,148, June 6, 2005. See also, stories titled "FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers", "Summary of the FCC's 911 VOIP Order", "Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority", and "More Reaction to the FCC's 911 VOIP Order", in TLJ Daily E-Mail Alert No. 1,139, May 20, 2005.

4. This tentative agenda discloses that the FCC may adopt a Notice of Inquiry (NOI) that requests public comment regarding "ways to improve the management and administration of the Universal Service Fund".

5. This tentative agenda discloses that the FCC may adopt a Fourth Report & Order that amends Part 76 of the FCC's rules regarding carriage of digital television broadcast signals. See, 47 C.F.R. Part 76. Subpart D pertains to carriage of television broadcast signals.

6. This tentative agenda discloses that the FCC may adopt an Order regarding "Fireside Media and its participation in Auction No. 37". See, FCC's web page for Auction 37.

7. This tentative agenda discloses that the FCC may adopt a Notice of Apparent Liability for Forfeiture and Order for DTV Tuner Violation.

The House is in recess until September 8. Some Republicans continue to speak on the House floor urging Rep. Nancy Pelosi (D-CA), the Speaker of the House, to reconvene the House to address energy policy and vote on HR 6566 [LOC | WW], the "American Energy Act".

The Senate will meet at 10:00 AM in pro forma session only.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Qualcomm v. Broadcomm, App. Ct. No. 2007-1545. Location: Courtroom 402, 717 Madison Place, NW.

6:30 - 8:30 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host an event titled "Happy Hour". For more information, contact Devin Crock at dcrock at kelleydrye dot com or Tarah Grant at tsgrant at hhlaw dot com. Location: Tony and Joe’s Seafood Place at the Georgetown Waterfront, 3000 K St., NW.

Deadline to submit comments to the Department of Justice (DOJ) in response to its notice of proposed rulemaking regarding inspection of records relating to the depiction of simulated sexually explicit performances. See, notice in the Federal Register, June 6, 2008, Vol. 73, No. 110, at Pages 32262-32273. This notice states that this "means conduct engaged in by real human beings, not conduct engaged in by computer-generated images".

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Second Further Notice of Proposed Rulemaking regarding assignment of Educational Broadband Service (EBS) spectrum in the Gulf of Mexico. The FCC adopted this item on March 18, 2008, and released the text [111 pages in PDF] on March 20, 2008. This item is FCC 08-03 in WT Docket Nos. 03-66; 03-67, and 02-68, IB Docket No. 02-364, and ET Docket No. 00-258.

CANCELLED. 1:00 PM. The Department of Health and Human Services' (DHHS) American Health Information Community's (AHIC) Electronic Health Records Workgroup may meet. AHIC meetings are often noticed, but cancelled. Location: Switzer Building, 330 C St., SW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding competitive bidding procedures for Auction 85, regarding LPTV and TV Translator Digital Companion Channels. See, notice in the Federal Register, July 24, 2008, Vol. 73, No. 143, at Pages 43230-43235.

10:00 AM. Deadline to submit comments to the Office of the U.S. Trade Representative (OUSTR) regarding its Special 301 Out of Cycle Review of Taiwan. This pertains to the adequacy and effectiveness of intellectual property protection and enforcement in Taiwan. See, notice in the Federal Register, July 21, 2008, Vol. 73, No. 140, at Pages 42378-42379.

TIME? The U.S. Patent and Trademark Office's (USPTO) Patent Public Advisory Committee (PPAC) will meet. Location:?

Day one of a two day conference hosted by the U.S. Patent and Trademark Office (USPTO) titled "13th Annual Independent Inventors Conference". See, USPTO release. Location: USPTO, Alexandria, VA.

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its request for comments regarding information collected in Board of Patent Appeals and Interferences (BPAI) actions. See, notice in the Federal Register, June 9, 2008, Vol. 73, No. 111, at Pages 32559-32561.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its SP 800-124 [48 pages in PDF] titled "Guidelines on Cell Phone and PDA Security (Draft)".

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Second Further Notice of Proposed Rulemaking regarding post-reconfiguration 800 MHz band plans for the Puerto Rico region. See, notice in the Federal Register, July 14, 2008, Vol. 73, No. 135, at Pages 40274-40276.

Day two of a two day conference hosted by the U.S. Patent and Trademark Office (USPTO) titled "13th Annual Independent Inventors Conference". See, USPTO release. Location: USPTO, Alexandria, VA.

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its notice of proposed rulemaking (NPRM) regarding revising the Trademark Rules of Practice to set forth the requirements for signature of documents filed in the USPTO, recognition of representatives, and establishing and changing the correspondence address in trademark cases. See, notice in the Federal Register, June 12, 2008, Vol. 73, No. 114, at Pages 33345-33356.

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its notice of proposed rulemaking (NPRM) regarding amending the Trademark Rules of Practice to clarify certain requirements for applications, intent to use documents, amendments to classification, requests to divide, and Post Registration practice. See, notice in the Federal Register, June 12, 2008, Vol. 73, No. 114, at Pages 33356-33372.

Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its further notice of proposed rule making (FNPRM) regarding service rules for licensed fixed and mobile services, including Advanced Wireless Services (AWS), in the 1915-1920 MHz, 1995-2000 MHz, 2155-2175 MHz, and 2175-2180 MHz bands. This FNPRM is FCC FCC 08-158 WT Docket Nos. 07-195 and 04-356. See, original notice in the Federal Register, June 25, 2008, Vol. 73, No. 123, at Pages 35995-36013, and notice of extension in the Federal Register, July 14, 2008, Vol. 73, No. 135, at Pages 40271-40272.

6:00 - 9:15 PM. Part one of a two part continuing legal education (CLE) seminar hosted by the DC Bar Association titled "Software Patent Primer: Acquisition, Exploitation, Enforcement, and Defense". The speakers will be Martin Zoltick (Rothwell Figg), Stephen Parker (Watchstone P&D), Brian Rosenbloom (Rothwell Figg), and David Temeles (Bean Kinney & Korman). The price to attend ranges from $105 to $160. For more information, call 202-626-3488. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

8/4. Rita Lewis was named Senior Vice President of the National Cable & Telecommunications Association (NCTA). She will manage the NCTA's government relations team. She has replaces Steve Vest. See, NCTA release.

8/4. Steve Vest joined Time Warner as Senior Vice President for Global Public Policy.

7/31. Herbert Allison was elected to the Board of Directors of Time Warner. He was Chairman, President and Chief Executive Officer of Teachers Insurance and Annuity Association -- College Retirement Equities Fund (TIAA-CREF) until April of 2008. See, TW release.

8/4. Jane Creel was named Vice President for Finance and Operations of the Technology Policy Institute (TPI).

8/1. The Government Accountability Office (GAO) released a report [59 pages in PDF] titled "Information Technology: Agencies Need to Establish Comprehensive Policies to Address Changes to Projects’ Cost, Schedule, and Performance Goals". This report states that "about 48 percent of the federal government’s major IT projects have been rebaselined". It adds that "Of those rebaselined projects, 51 percent were rebaselined at least twice and about 11 percent were rebaselined 4 times or more."

8/1. The Government Accountability Office (GAO) released a report [52 pages in PDF] titled "Veterans Affairs: Continued Action Needed to Reduce IT Equipment Losses and Correct Control Weaknesses", another in a series of GAO reports on theft, loss and misappropriation of information technology (IT) equipment at the Department of Veteran's Affairs. It states that as of May 15, 2008, "approximately 62,800 recorded IT equipment items could not be located, of which over 9,800 could have stored sensitive information. Because VA does not know what, if any, sensitive information resided on the equipment, notifications to potentially affected individuals could not be made".

8/1. Chandresh Shah and Gerald Morris each pled guilty in U.S. District Court (SDCal) to one count of conspiracy to illegally distribute controlled substances in connection with their participation in an internet based pharmacy. Matthew Friedrich, the acting Assistant Attorney General in charge of the Criminal Division, stated in a Department of Justice (DOJ) release that "By prescribing drugs to patients they had never even met, much less diagnosed, these two physicians facilitated the illegal sale of pharmaceuticals over the Internet."

Tech Law Journal publishes a free access web site and subscription e-mail alert. The basic rate for a subscription to the TLJ Daily E-Mail Alert is $250 per year. However, there are discounts for subscribers with multiple recipients. Free one month trial subscriptions are available. Also, free subscriptions are available for journalists, federal elected officials, and employees of the Congress, courts, and executive branch. The TLJ web site is free access. However, copies of the TLJ Daily E-Mail Alert are not published in the web site until one month after writing. See, subscription information page.

Contact: 202-364-8882.
P.O. Box 4851, Washington DC, 20008.

Privacy Policy
Notices & Disclaimers
Copyright 1998-2008 David Carney, dba Tech Law Journal. All rights reserved.