Amicus Curiae Brief — Cable News Network, Inc. v. CSC Holdings, Inc. (No. 08-448)

Supreme Court. U.S.

OD race

\9 \L MAY 2 9 2009

OFFICE OF THE CLERK

No. 08-448

Jn the Supreme Court of the Cited States

CABLE NEWS NETWORK, INC., ET AL., PETITIONERS

v.

CSC HOLDINGS, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURLAE

ELENA KAGAN

Solicitor Geveral

Counsel of Record

MICHAEL F. HERTZ

Acting Assistant Attorney

General

MALCOLM L. STEWART

Deputy Solicitor General

Tosby J. HEYTENS

Assistant to the Solicitor

Gene ral

SCOTT R. MCINTOSH

SARANG VIJAY DAMLE

Attorneys

De partinernl of Justice

Washington, I ALZ0-000]

(IYO? ) 45 ] A JO | 7

QUESTIONS PRESENTED

A copyright holder has the exclusive rights “to repro-

duce the copyrighted work in copies” and, in the case

of audiovisual works and other specified classes of

works, “to perform the copyrighted work publicly.” 17

U.S.C. 106(1) and 106(4). Respondents intend to offer a

remote-storage digital video recorder (RS-DVR) service

that would allow subscribers to record television pro-

grams when they air and watch the programs at a later

time. The questions presented are as follows:

1. Whether respondents would directly infringe peti-

tioners’ reproduction rights when the RS-DVR system

makes copies of programs and stores those copies on

computer hard drives located at facilities owned by re-

spondents.

2. Whether respondents would directly infringe peti-

tioners’ reproduction rights when the RS-DVR system,

as part of its normal operations, temporarily stores in

data buffers small portions of all programs that respon-

dents broadcast.

3. Whether respondents would directly infringe peti-

tioners’ public-performance rights when the RS-DVR

system transmits previously recorded programs to a

subscriber at the subscriber's request.

TABLE OF CONTENTS

Page

PN ns oe eee eee ee Ete 1

EIOOIGE CCS.Ga be bb oo a ee eee ee oe eee re 6

A. This case does not satisfy the Court’s traditional

criteria for granting a writ of certiorari ............. d

1. The Second Circuit's decision does not conflict

with any decision of this Court or another court

OC GOGO 3 nk Fi vaxks dea ta eee ee

h

. The parties’ stipulations would make this case

an unsuitable vehicle for examining the issues

raised by network-based recording and play-

REM BROKING os ok oa iw eo ed Ee a bee id 1]

B. On the merits, the Second Circuit reasonably and

narrowly resolved the issues that were presented

ee ee ee ee a a ee oe oe a er oe ey oe ee oe es ee ae ek a ee ae re ee ee ee es te

TABLE OF AUTHORITIES

(Cases:

Columbia Pictures Indus., Inc. v. Professional Real

E'state Investors, Inc., 866 F.2d 278 (9th Cir. 1989) ... 10

Columbia Pictures Indus., Inc. v. Redd Horne, Ine.,

SD Fe Ee Ca Be i a ea se oe beni eles 10

CoStar Group, Tne. v. Loopnet, lne., 375 F.3d 544

REVAL ANG BOOD pies pd ceeds bis ues Leake ea tee 8

MAI Sys. Corp. v. Peak Computer, Ine., 991 F.2d

511 (9th Cir. 1993), cert. dismissed .................. i)

Metro-Goldiwyn-Mayer Studios, Inc. v. Grokster,

Lim. Tals Us 2s Pe et os oe a ee 15, 22

New York Times Co. v. Tasini, 533 U.S. 483 (2001) .... 8.9

(111)

IV

Cases

Continued: Page

On Command Video Corp. v. Columbia Pictures

Indus., 777 F. Supp. 787 (N.D. Cal. 1991) ........... 10

Paramount Pictures Corp. v. RePlayTV, Inc.,

298 F. Supp. 24 921 (C.D. Cal. 2004) ............... 17

Playboy Enter., Inc. v. Webbworld, No. 98-10097

Cee Aa, Se Ce ROPE kk ww cc ee de kee re bee a eee 8

Princeton Univ. Press v. Michigan Document Servs.,

99 F.3d 1381 (6th Cir. 1996), cert. denied, 520 U.S.

PEG LAMEED Saies baker d epee he here eke eer ee 13

Religious Tech. Ctr. v. Netcom On-Line Comme’n.

Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) ....... 8

Sony Corp. v. Universal City Studio, Inc., 464 U.S.

eh. : ann cE nore np, 9, 12, 15, 21

Stenograph L.L.C. v. Bossard Assoc., Inc.,

oe 6 hoe Ae rere rer eer re 10

Storage Tech. Corp. v. Custom Hardware Eng’g &

Consulting Inc., 421 F.3d 1307 (Fed. Cir. 2005) ...... 10

Video Pipeline, Inc. v. Buena Visata Home Enter.,

Inc., 192 F. Supp. 2d 321 (D.N.J. 2002), aff'd, 342

F.3d 191 (3d Cir. 2003) cert. denied, 540 U.S. 1178

EEE a eon pnd ne hs ee Re eae ee eer eae 10

Statutes:

Copyright Act, 17 U.S.C. 101 et seq.:

a Ree ica a ee ee oe eae eee eee 3, 5, 20

ae A GSE 2 | A EUR ga DUPE te 3

17 U.S.C. 10601) Lapp ae ree ee

17 U.S.C. 201(e) i Ss, 9

Miscellaneous: Page

Cable Passes Satellite In DVR, Wireless Satellite &

Broad. Newsletter, July 1, 2007, available in 2007

Jn the Supreme Court of the Gnited States

No. 08-448

CABLE NEWS NETWORK, INC., ET AL., PETITIONERS

Vv.

CSC HOLDINGS, INC. , ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is filed in response to the Court’s order in-

viting the Solicitor Generai to express the views of the

United States. In the view of the United States, the pe-

tition for a writ of certiorari should be denied.

STATEMENT

1. Respondents operate cable television systems.

Petitioners own the copyrights to numerous programs,

which they provide to respondents for broadcast pursu-

ant to various licensing arrangements. Pet. App. 2a.

In March 2006, respondents announced plans to offer

a service called a remote-storage digital video recorder

(RS-DVR). In May 2006, petitioners filed suit against

respondents in federal district court, alleging that the

proposed RS-DVR service would infringe petitioners’

copyrights. Less than a month later, the parties stipu-

lated that petitioners would assert only claims of direct

(])

2

(rather than secondary) liability, and that respondents

would not assert any fair-use defense. Pet. App. 3a, 44a,

H0a-61 a.

2. The district court granted summary judgment to

petitioners, concluding that respondents would violate

petitioners’ copyrights at three points during the opera-

tion of the RS-DVR system. Pet. App. 48a-80a.

a. The district court held that the creation and stor-

age of recorded programs on computer hard drives lo-

cated at facilities owned by respondents would violate

petitioners’ exclusive right “to reproduce the copyright-

ed work in copies or phonorecords.” 17 U.S.C. 106(1).

The parties “agree[d]” that the critical question was

“who” should be deemed to “make” those copies. Pet.

App. 64a. The district court concluded that respondents

would be “doing the copying” because the RS-DVR

would be a “service” rather than a “stand-alone” piece of

equipment. /d. at 66a-68a. The court emphasized that

respondents would have “ongoing participation * * *

in the recording precess,” id. at 67a, and “unfettered

discretion in selecting the programming that [they]

would make available for recording through the RS-

DVR,” 7d. at 71a.

b. Petitioners’ second claim involves data buffering.

Cable systems aggregate feeds from various content

providers and send the aggregated data stream to sub-

scribers. To operate the RS-DVR, respondents would

split the aggregated data stream into two identical

streams and send one stream to the RS-DVR system,

which would perform a series of digital operations. At

several points, the RS-DVR system would temporarily

hold snippets of programming data in a series of data

buffers. No data would be held in any buffer for longer

than 1.2 seconds, and existing data would be erased and

3

overwritten when new data entered the buffer. Pet.

App. 5a, 54a.

The district court concluded that the key question

was whether the buffered data would be “fixed.” Pet.

App. 72a-74a. The Copyright Act defines “copies” as

“material objects * * * in which a work is fixed,” and

it states that “[a] work is ‘fixed’ * * * when its embodi-

ment in a copy or phonorecord * * * is sufficiently

permanent or stable to permit it to be perceived, repro-

duced, or otherwise communicated for a period of more

than transitory duration.” 17 U.S.C. 101. The district

court concluded that the buffered data would satisfy

that definition because those data would be used to

“make permanent copies of entire programs” and there-

fore would be “capable of being reproduced.” Pet. App.

73a.

ce. The district court also held that the transmission

of previously recorded programs from respondents’ hard

drives to a subscriber’s television would constitute an

unauthorized public performance of petitioners’ copy-

righted works. Pet. App. 75a-80a. The Copyright Act

states that “[t]o perform or display a work ‘publicly’”

includes “transmit[ting] or otherwise communicatling]

a performance or display of the work * * * to the pub-

lic * * * whether the members of the public capable of

receiving the performance or display receive it in the

same place or in separate places and at the same time or

at different times.” 17 U.S.C. 101(2). In the district

court’s view, respondents “would transmit the same pro-

yram to members of the public, who [would] receive the

performance at different times, depending on whether

they view the program in real time or at a later time as

an RS-DVR playback.” Pet. App. 77a.

4

3. The court of appeals reversed. Pet. App. la-42a.

a. The court of appeals held that respondents would

not directly infringe petitioners’ reproduction rights

when the RS-DVR system copies and stores programs

at a customer’s request. Pet. App. 18a-27a. The

court acknowledged that respondents have “design[ed],

hous[ed], and maintain[ed]| a system that | would] exist |

only to produce a copy,” id. at 20a, but concluded “that

an RS-DVR customer [would not be] sufficiently distin-

guishable from a VCR user to impose liability as a direct

infringer on a different party for copies that [would be]

made automatically upon that customer’s command,” ?d.

at 21a. The court recognized that respondents would

“halve] significant control over the content recorded by

[its] customers” on the RS-DVRK system, but it observed

that such control would be “limited to [determining] the

channels of programming available to a customer and

not to the [selection of particular] programs.” /d. at 23a;

see ibid. (distinguishing video-on-demand service, where

respondents “actively select[| and make|] available be-

forehand the individual programs available for view-

ing”). The court of appeals concluded that it “need not

decide today whether one’s contribution to the creation

of an infringing copy may be so great that it warrants

holding that party directly liable for the infringement,

even though another party has actually made the copy.”

Id. at 26a.

b. The court of appeals held that “the acts of buffer-

ing in the operation of the RS-DVR [would] not cre-

ate copies, as the Copyright Act defines that term.”

5

Pet. App. 18a.’ The court concluded that the statutory

definition of “fixed” “imposes two distinct but related

requirements.” /d. at lla. The first, which the court of

appeals referred to as the “embodiment requirement,”

is that “the work must be * * * placed in a medium

such that it can be perceived, reproduced, etc., from that

medium.” /bid. The second, which the court referred

to as the “duration requirement,” is that the work “must

remain thus embodied ‘for a period of more than transi-

tory duration.’” /bid. (quoting 17 U.S.C. 101).

The court of appeals determined that the buffer data

created by the RS-DVR system would satisfy the em-

bodiment requirement but not the duration require-

ment. Pet. App. 16a-18a. The court noted that, in the

RS-DVR system, “[n]lo bit of data [would] remainf{] in

any buffer for more than a fleeting 1.2 seconds,” and

that “each bit of data [would be] rapidly and automati-

cally overwritten as soon as it |was] processed.” Jd. at

17a. The court stated that the inquiry was “necessarily

fact-specific,” and that “other factors not present here

may alter the duration analysis significantly.” /bid.

ce. The court of appeals held that the transmission of

a previously recorded program to a subscriber at the

subseriber’s request would not infringe petitioners’

public-performance rights. Pet. App. 27a-42a.. The

court construed the Copyright Act to require an “exam

in{ation of] who precisely is ‘capable of receiving’ a par-

ticular transmission of a performance.” /d. at 30a. It

agreed with respondents that “because each RS-DVR

Given that holding, the court of appeals concluded that it was “un-

necessary * to determine whether any copies produced by buf-

fering data would be de minimis.” Pet. App. 18a.

~ The court assumed for purposes of its decision that respondents

would “makef[ |" the relevant transmissions. Pet. App. 28a.

6

transmission is made using a single unique copy of a

work, made by an individual subscriber, one that can be

decoded exclusively by that subscriber’s cable box, only

one subscriber is capable of receiving any given RS-

DVR transmission.” /d. at 30a-31la; accord 7d. at 36a,

39a, 41a.

DISCUSSION

Network-based technologies for copying and replay-

ing television programming raise potentially significant

questions, but this case does not provide a suitable occa-

sion for this Court to address them. The Second Circuit

is the first appellate court to consider the copyright im-

plications of network-based analogues to VCRs and set-

top DVRs, and its decision does not conflict with any

decision of this Court or another court of appeals. The

parties’ stipulations, moreover, have removed two criti-

cal issues—contributory infringement an?! fair use—

from this case. That artificial truncation of the possible

grounds for decision would make this case an unsuitable

vehicle for clarifying the proper application of copyright

principles to technologies like the one at issue here.

From the consumer’s perspective, respondents’ RS-

DVR service would offer essentially the same functional-

itv as a VCR ora set-top DVR. And although seattered

language in the Second Circuit’s decision could be read

to endorse overly broad, and incorrect, propositions

about the Copyright Act, the court of appeals was care-

ful to tie its actual holdings to the facts of this case. The

petition for a writ of certiorari therefore should be de-

nied.

7

A. This Case Does Not Satisfy The Court’s Traditional Cri-

teria For Granting A Writ Of Certiorari

I. The Second Circuit’s decision does not cenflict with

any decision of this Court or another cuurt of appeals

a. The Second Circuit is the first appellate court to

address the copyright implications of the shifi from a

set-top-based to a network-based system of enabling

consumers to record and play back television programs

of their own choosing. The decisions on which petition-

ers rely addressed different technologies and arose in

different factual contexts. As a result, there is no con-

flict between the outcome of this case and any previous

decision.

The Second Circuit’s decision, however, is unlikely to

be the last appellate ruling to address these issues.

Other cable providers may initiate services that are sim-

ilar to respondents’ RS-DVR. Analogous issues also

may arise with respect to other network-based services

for copying and playing back copyrighted works.’ De-

ferring review of the legal issues raised by various

network-based playback technologies would allow those

issues to be more fully explored by litigants and the

lower courts. This Court would then be in a better posi-

tion to address the legal significance, if any, of the dif-

ferences between various technologies and services.

' One example may be music lockering services, which permit users

to upload files to a remote computer server and stream that music to a

personal device over the Internet. The general development of cloud

computing, which is an umbrella term for services where programs or

files are stored remotely and accessed via the Internet or other means,

may generate similar issues.

8

b. None of the Second Circuit’s specific holdings in

this case conflicts with any holding of this Court or an-

other court of appeals.

i. The Second Circuit held that, “on the facts of this

case, copies produced by the RS-DVR system [would be]

‘made’ by the RS-DVR customer, and [respondents’ |

contribution to this reproduction * * * [would] not

warrant the imposition of direct liability.” Pet. App.

26a-27a. Petitioners acknowledge that the court of ap-

peals’ analysis of this issue is consistent with Religious

Technology Center v. Netcom On-Line Communication

Services, Inc., 907 F. Supp. 13861 (N.D. Cal. 1995), and

CoStar Group, Inc. v. Loopnet, Inc., 373 F.3d 544 (4th

Cir. 2004), and they do not assert that it eonfliets with

any published decision of another court of appeals.’

Contrary to petitioners’ contention (Pet. 15, 21-22,

25, 28), the Second Circuit’s decision in this case does

not conflict with New York Times Co. v. Tasini, 533 U.S.

483 (2001). As framed by the parties, the critical issue

here is “who” would “make” the copies that would be

stored on the RS-DVR system. Pet. App. 64a; accord id.

at 19a. No similar question was presented in Tasin?.

The Court in Tas?ni construed 17 U.S.C. 201(e),

which authorizes publishers of collective works, in cer-

tain specified circumstances, to reproduce and distribute

articles written by freelance authors. The Court held

Petitioners’ reliance (Pet. 28-29) on the Fifth Circuit’s unpublished

decision in Playboy Enterprises, ne. v. Webbworld, No. 98- 10097, 1999

WL 25053 (Jan. 8, 1999) (per curiam), is misplaced. Even a genuine

conflict between a published decision and an unpublished decision would

not warrant this Court's review. In any event, because the Fifth Cir-

cuit’s decision in Webbwor/d states, in its entirety. “|wle affirm essen-

tially for the reasons stated by the trial judge,” ¢d. at *1, itis impossible

to identify the precise basts for the Fifth Circuit’s decision.

9

that Section 201(c) did not apply to the creation of copies

of individual articles for inclusion in certain databases

and the distribution of those copies to database users.

Tasini, 533 U.S. at 488. As petitioners point out (Pet.

21-22), this Court rejected the argument that, under

Sony Corp. v. Universal City Studios, Ine., 464 U.S. 417

(1984), the publishers “could be liable only under a the-

ory of contributory infringement.” Tasinz, 533 U.S. at

504. But the premise of the Court’s analysis was that

the publishers had made copies of the articles that they

were selling. See id. at 491 (stating that copies were

made “when, as permitted and facilitated by the Print

Publishers, {the Electronic Publishers] placed the Arti-

cles in [certain] databases”); 2d. at 504 (“it is the copies

themselves, without any manipulation by users, that fall

outside the scope of the § 201(c) privilege”). By con-

trast, in this case, “who makes the copies?” is the funda-

mental question.

ii. The Second Circuit’s rejection of petitioners’ buff-

ering claim does not cenflict with MAT/ Systems Corp. v.

Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993). The

court of appeals distinguished, rather than disagreed

with, the decision in MAI Systems. As it explained (Tet.

App. 12a-13a), MAJ Systems involved the loading of

software into a computer’s random access memory so

that the defendant’s employee could service the com-

puter. Recognizing that the courts in MA/ Systems and

iis progeny had not analyzed the statute’s “transitory

duration” language or considered whether that language

imposes a separate “duration requirement” (in addition

to an “embodiment requirement”) the Second Circuit

reasonably declined to read those decisions as holding

10

sub silentio that no such requirement exists. /d. at 12a.°

The Second Circuit’s conclusion that the duration re-

quirement that it found in the statute probably would

have been satisfied in MAT Systems, see id. at 13a, 17a,

further underscores the lack of any conflict. Finally, the

Second Circuit noted that “unlike the data in cases like

MAT Systems, which remained embodied in the com-

puter’s RAM memory until the user turned the com-

puter off,” the buffered data in respondents’ RS-DVR

system would be “rapidly and automatically overwritten

as soon as it [was] processed.” Jd. at 17a.

iii. Petitioners are also wrong in asserting (Pet. 34-

36) that the Second Circuit’s public-performance holding

conflicts with decisions addressing situations in which an

alleged infringer acquired individual copies of a work

and made the same copies available to members of the

public. See Columbia Pictures Indus., Inc. v. Profes-

sional Real Estate Investors, Inc., 866 F.2d 278, 279

(9th Cir. 1989); Columbia Pictures Indus., Inc. v. Redd

Horne, Inc., 749 F.2d 154, 157 (3d Cir. 1984); Video

Pipeline, Inc. v. Buena Vista Home Enter., Inc., 192 F.

Supp. 2d 321, 328 (D.N.J. 2002), aff’d, 342 F.3d 191 (3d

Cir. 2003), cert. denied, 540 U.S. 1178 (2004); On Com-

mand Video Corp. v. Columbia Pictures Indus., T77 F.

Supp. 787, 788 (N.D. Cal. 1991). The Second Circuit

stated repeatedly that its public-performance holding

” Although it referred to “MAJ Systems and its progeny,” Pet. App.

12a-13a. the Second Circuit did not specifically discuss Storage Tech-

nology Corp. v.Custom Hardware Engineering & Consulting, [ne.,421

F.3d 1307 (Fed. Cir. 2005), or Stenograph L.L.C. v. Bossard Associates,

Ine., 144 F.3d 96 (D.C. Cir. 1998). Like MAI Systems, however, those

decisions involved the loading of software from a computer's hard clrive

into random access memory and neither specifically addressed the

meaning of the “transitory duration” language in 17 U.S.C. 101.

i]

turned on three critical facts, 7.e., that “each RS-DVR

playback transmission is made [1] to a single subscriber

[2] using a single unique copy [3] produced by that sub-

scriber.” Pet. App. 41a; accord 72d. at 30a-31a, 36a, 39a.

The court of appeals specifically distinguished Redd

Horne and On Command on the ground that those cases

involved “successive transmissions to different viewers

* * * using a single copy of a given work.” /d. at 40a.

2. The parties’ stipulations would make this case an

unsuitable vehicle for examining the issues raised by

network-based recording and playback systems

Petitioners argue that the Court should use this case

to “set a standard for copyright protection in the mar-

ketplace of automated access to and delivery of copy-

righted works.” Pet. 23. This case, however, presents

an unsuitable vehicle for clarifying the applicable legal

framework because the parties’ agreement not to liti-

gate two critical issues—secondary liability and fair

use—distorts the questions that remain and would pre-

vent the Court from seeing whole the fundamental con-

troversy in this case.

a. Less than a month into this litigation, the parties

stipulated that petitioners would not pursue any claims

based on principles of secondary liability, and that re-

spondents would not raise any fair-use defense. Pet.

App. 6la. As aresult, neither the district court nor the

court of appeals addressed those issues, and this Court

would have no opportunity to consider them if it granted

review. This case therefore presents no opportunity for

the Court to “have the final say” (Pet. 23) even as to the

legality of the particular (and currently unique) RS-

DVR service that respondents seek to offer.

12.

b. The parties’ stipulation also exaggerates the sig-

nificance of the tssues that remain» For example, the

Second Circuit’s holding that subscribers rather than

respondents would “make|] the copies” in the RS-DVR

system (Pet. App. 8a; see id. at 22a-244) does not pur-

port fully to establish respondents’ liability under the

Copyright Act. Instead, it sets only the internal bound-

ary line between direct liability and various kinds of sec-

ondary liability. /d. at 24a (“Most of the facts found

dispositive by the district court * * * seem to us more

relevant to the question of contributory liability.”). This

Court has stated that “the lines between direct infringe-

ment, contributory infringement and vicarious liability

are not clearly drawn,” Sony, 464 U.S. at 435 n.17 (cita-

tion omitted). The precise location of those lines has

assumed dispositive significance here only because peti-

tioners agreed not to pursue secondary-liability claims.

Cf. Pet. App. 24a (“to the extent that we may construe

the boundaries of direct. lability more narrowly, the doc-

trine of contributory liability stands ready to provide

adequate protection to copyrighted works”). In a more

usual copyright suit, a court would have the opportunity

to review a range of liability claims, each of which poten-

tially would provide some perspective on the others.

The parties’ stipulation prevents that from happening

here.

Respondents’ failure to preserve any fair-use defense

likewise would hinder this Court’s ability to consider the

various issues raised by services like the RS-DVR. This

Court ruled in Sony that the manufacturer and seller of

VCRs could not be held lable for copyright infringe-

ment because “time-shifting” by consumers constituted

a fair use of copyrighted broadcasts. 464 U.S. at 447-

456. This Court has never addressed, however, whether

13

a commercial actor who is charged with direct infringe-

ment may defend on the ground that he performed the

copying at the behest of a customer who himself would

have a fair-use defense.” Because of respondents’ agree-

ment not to assert a fair-use defense in this case, the

question whether respondents or their customers would

“make” the non-transient copies in the RS-DVR system

has assumed great significance. The importance of that

issue would be diminished if not eliminated, however, if

commercial actors who make copies to facilitate their

customers’ time-shifting were held to be entitled to their

customers’ fair-use defense.

The parties’ agreement not to litigate fair-use issues

also affects the analysis of petitioners’ buffering claim.

If the creation and storage of non-transient copies on

the RS-DVR system’s hard drives were determined not

to violate petitioners’ exclusive rights under the Copy-

right Act—either because such copies were deemed to

have been made by consumers and would be a fair use

similar to the use found to be fair under Sony, or be-

cause a third party is entitled to a fair-use defense when

it makes copies on behalf of a consumer whose own copy-

ing would be a fair use—then too the ancillary creation

of transient “buffer” copies arguably would be a fair use

as well. And if that were the case, the question whether

" Petitioners cite (Pet. 20-21) Princeton Lin Lversity Press v. Micha-

gan Document Services, 99 F.3d 1381 (6th Cir. 1996) (en bane), cert.

denied, 520 U.S. 1156 (1997), as evidence that it is “well-settled” that

commercial copiers cannot invoke their customers’ fair-use defense.

The 6-5 division in that case, however, indicates that the issue is sus-

ceptible to leyitimate disagreement. Compare id. at 1389, with id. at

1393-1394 (Martin, C.J.. dissenting). 7d. at 1395 (Merritt, J.. joined by

Daughtry, J., and Moore, J., dissenting), and td. at 1401 (Ryan, -I..

joined by Daughtry, J., dissenting).

14

the buffered data in the RS-DVR system would be

“fixed” would lose most if not all significance.

Finally, respondents’ waiver of any fair-use defense

affects petitioners’ public-performance claim. When a

subscriber engages in time shifting, recording the pro-

gram and playing it back are two sides of the same coin.

If fair-use principles would excuse a cable company from

liability for unauthorized reproduction when an RS-DVR

system copies and stores a program on a hard disk at a

subscriber’s behest, the same principles might excuse

the company from liability for unauthorized public per-

formance when the system transmits the program to the

subscriber for playback. Here too, the parties’ agree-

ment to litigate the case without reference to fair-use

principles has elevated to great importance a question

that otherwise might have been insignificant.‘

B. On The Merits, The Second Circuit Reasenably And Nar-

rowly Resolved The Issues That Were Presented To It

1. For the last 30 years, consumers have been able

to record televised programs and to play back the re-

corded programming at a later time. Respondents’ pro

posed RS-DVR service is part of a broader transition

from analog to digital recording and playback, and from

business models where consumers purchase a tangible

item to those where they pay for a service.

The first commercially available system for

consumer-driven recording and playback was the VCR,

which was introduced during the 1970s and recorded

programs on magnetic tape cassettes. In Sony, supra,

' The significance of the Second Circuit’s public-performance ruling

also would be diminished if the subscriber were deemed to be the one

“performing” the work—an argument that respondents raised but the

court of appeals did not reach. Pet. App. 28a.

15

copyright holders sued a VCR manufacturer, asserting

that its customers were engaged in copyright infringe-

ment and that the manufacturer was secondarily liable

because it had sold the devices that performed the copy-

ing. This Court rejected the claim. The Court held that

the manufacturer of a staple article of commerce is not

a contributory infringer if its product is “capable of com-

mercially significant noninfringing uses,” Sony, 464 U.S.

at 442, and that VCRs had several commercially signifi-

cant noninfringing uses, including consumer “time-shift-

ing,” id. at 447-456. See Metro-Goldwyn-Mayer Studios

Inc. v. Grokster, Ltd., 545 U.S. 913, 931-935 (2005) (elab-

orating on Sony’s contributory-infringement reasoning).

Since Sony was decided, the VCR has gradually

given way to digital video recorders (DVRs), which re-

cord programming on hard drives in a digital format.

The first DVRs were sold directly to consumers, and

consumers may still purchase set-top DVRs from com-

panies like TiVo and Phillips. In addition, many cable

and satellite companies—including respondents—now

lease devices that combine the functionality of a cable

box and a set-top DVR, and the vast majority of DVRs

are now leased rather than purchased. By 2007, there

were approximately 26 million DVRs in the United

States, and some experts estimate that 9% of United

States households will have DVRs by 2010. Cable

Passes Satellite In DVR, Wireless Satellite and Broad-

casting Newsletter, July 1, 2007, available in 2007

WLNR 160588389.”

~ Petitioners emphasize (Pet. 20, 25) that, unlike the VCR manufuc-

turer at issue in Soy, respondents not only provide the equipment that

would be used to make copies through the RS-DVR service, but also

select the content that would be available for copying. The same is true,

however, when a cable company leases a set-top DVR to its subscriber.

16

2. In addition to leasing equipment that allows con-

sumers to record television programming as it airs

for later viewing, many cable companies—including

respondents-—also provide programming to subscribers

through video-on-demand (VOD) systems. In a VOD

system, a cable company stores a selection of programs

at its headquarters and makes those programs available

to most or all of its subscribers. A subscriber navigates

an on-screen menu using a remote control and selects a

program, which is ‘transmitted to the subscriber’s televi-

sion over the company’s cable network. Unlike with a

VCR or set-top DVR, a customer who uses a VOD ser-

vice need not previously have recorded the program in

question, and he may be able to view programs that ei-

ther never aired at all or would not have been available

as part of the subscriber’s cable package. Pet. App. 6a,

49a.

The disagreement between the district court. and the

court of appeals in this case turned in large measure on

whether respondents’ RS-DVR service is more closely

analogous to a set-top DVR or toa VOD service. Com-

pare Pet. App. 21a, 23a, with id. at 68a-69a. Respon-

dents prefer the former analogy given that petitioners

have never alleged that respondents and similar compa-

nies are violating the Copyright Act by leasing set-top

DVRs to their subscribers.” Petitioners insist on the

In addition, as the court of appeals pointed out, although respondents

determine “the channels of programming available to a customer,” they

have “no control over what programs are made available on individual

channels or when those programs will air.” Pet. App. 23a.

’ An argument could be made that Sony's holding should be limited

to cases where a defendant engages in a one-time sale and has no ongo-

ing relationship with its customers or continuing control over the device

at issue. Petitioners have litigated this suit. however, on the implicit as-

17

latter, VOD service analogy for converse reasons: Re-

spondents have negotiated licenses with petitioners for

the VOD services that they currently offer, see zd. at

49a, and respondents do not suggest that they could con-

tinue offering VOD services without the licenses.

3. a. The question whether respondents’ RS-DVR

service would be more analogous to a set-top DVR or to

a VOD service is particularly significant with respect

to the first question presented. As the parties have

framed that issue, the dispositive question is “who”’—

respondents or their subscribers—should be deemed to

“make[] the copies” of programs that would be saved on

the RS-DVR system’s hard drives and available for later

playback. Pet. App. 64a; see 7d. at 18a-19a. Petitioners

do not dispute that the copies created by a VCR or set-

top DVR are “made” by the subscribers, who both select

sumption that respondents’ leasing of set-top DVRs to their subscribers

does not violate the copyright laws (ef. note 8, supra), and the court of

appeals decided the case on that understanding. If the legality of cable

operators’ leasing of set-top DVRs is thought to be beyond reasonable

dispute. the decision whether to analogize the RS-DVR system to those

devices or a VOD service takes on particular importance. On the other

hand, if the potential Copyright Act challenge to such leasing arrange-

ments is thought to be substantial, petitioners’ failure to contest that

point would make this case an especially poor vehicle for clarifving the

applicable law in this area.

Although DVRs have been sold since 1999, Pet. App. 50a, no federal

court has addressed whether the seller or lessor of set-top DVRs may

be held liable for copyright infringement. In 2001, copyright holders

sued the manufucturer of the RePlayTV DVR. Unlike other DVRs,

that device enabled users to skip commercials automatically and send

recorded programs to other users. The plaintiffs voluntarily dismissed

that suit prior to judgment after the original manufacturer declared

bankruptey and its assets were sold to another company, which discon

tinned the challenged features. See Paramount Pictures Corp. v.

RePlayTV, Ine., 298 F. Supp. 2d 921, 923-924 (C.D. Cal. 2004).

18

the programs to be recorded and push the buttons that

operate those machines. Respondents likewise do not

deny that cable providers “make” copies when they pro-

vide VOD service.

Accepting the dispute as so framed, the court of ap-

peals reasonably concluded that the subscriber—who

would both select the programs to be copied and press

the button triggering the actual recording—would

“make” the copies that would be stored in the RS-DVR

system. Respondents’ RS-DVR service would replicate

the basic capabilities and limitations of a VCR or a set-

top DVR, and it would lack much of the functionality

offered by a VOD system. Like a VCR or set-top DVR,

the RS-DVR would permit subscribers to view only pro-

grams that already have been broadcast and that sub-

scribers could have chosen to view in real time under the

terms of their cable packages. Pet. App. 6a, 23a. The

RS-DVR also would permit subscribers to view only pro-

grams that they personally and previously had directed

the system to copy, and it would not allow them to view

portions of a program that had aired prior to the sub-

scriber pressing the “record” button. /d. at 6a.

To be sure, respondents’ RS-DVR service would dif-

fer from a set-top DVR in that the tangible devices that

would perform the copying and playback would be lo-

cated in respondents’ facilities rather than in a sub-

scriber’s home. That shift from local to network-based

recording and playback, however, appears largely irrele-

vant to the determination of who would “make” the cop-

ies. With respect to the photocopying of written mate-

rial, an individual who both selects the pages to be cop-

ied and operates the duplicating machine is naturally

said to “make” the copies, whether the photocopier ts

located in the individual’s home or at a self-service copy

19

shop. There is no evident reason for a different result

here. See Pet. App. 22a.

Petitioners also overstate the scope of the Second

Cireuit’s holding. The court of appeals announced no

“categorical exemption from direct liability” (Pet. 24) for

providers of automated services and it did not “as-

sume[]” (Pet. 19 n.4) that only one person can “make” a

particular copy. To the contrary, the Second Circuit ex-

pressly limited its decision to “the facts of this case”

(Pet. App. 26a), and it appears to have assumed that

more than one party can potentially be held liable as a

direct infringer with respect to a single copy. Sec zd. at

26a-27a (“copies produced by the RS-DVR customer

{would be] ‘made’ by the RS-DVR customer, and [respon-

dents’| contribution to this reproduction by providing

the system does not warrant the imposition of direct lia-

bility”) (emphasis added).'° The Second Circuit simply

resolved a narrow question about a discrete technology

in the terms that it had been framed by the parties.

b. The Second Circuit’s buffering holding was simi-

larly, and appropriately, limited. The court of appeals

observed that, in respondents’ RS-DVR system, “[n]Jo bit

of data [would] remain{j in any buffer for more than a

fleeting 1.2 seconds.” Pet. App. 17a. The court found it

“fair to assume tnat,” in MAJ Systems, “the [relevant]

program was embodied in the RAM for at least several

minutes.” /d. at 15a. But the court of appeals did not

LO . vo

For example, if one person selects the programs or documents to

be copied, but hires someone else to push the buttons used to operate

the relevant copying machine, it is possible that both could be held

liable as direct infringers for any copyright violations that their conduct

entails. Under respondents’ proposed RS-DVR system, however, sub

scribers would perform both aspects of the copying

20

adopt any categorical rule that an embodiment period of

“1.2 seconds” is always too short, or that a period of

“several minutes” is always long enough, to render a

particular copy “fixed” under 17 U.S.C. 101. To the con-

trary, the court emphasized that the proper inquiry “is

necessarily fact-specific” and that “other factors not

present here may alter the duration analysis signifi-

cantly.” Pet. App. 17a. Such caution was particularly

appropriate with respect to buffering data because “[al]l]

digital devices”—including set-top DVRs—buffer data

as part of their normal operations. /d. at 54a.

ec. The analogy between respondents’ RS-DVR ser-

vice and a set-top DVR is weakest with respect to the

public-performance issue because the operation of the

former, unlike the latter, would clearly involve a “trans-

mission.” See 17 U.S.C. 101 (“To ‘transmit’ a perfor-

mance or display is to communicate it by any device or

process whereby images or sounds are received beyond

the place from which they are sent.”); Br. in Opp. 26-27.

Thus, even if the subscriber would “make” the copies

used in the RS-DVR system, respondents might still

violate the Copyright Act if they “transmitted” those

copies “to the public.” Some language in the court of ap-

peals’ opinion could be read to suggest that a perfor-

mance !s not made available “to the public” unless more

than one person is capable of receiving a particular

transmission. See, e.g., Pet. App. 36a (“under the trans-

mit clause, we must examine the potential audience of a

given transmission by an alleged infringer to determine

whether that transmission is ‘to the public.’”); id. at 41a

(“we find that the transmit clause directs us to identify

the potential audience of a given transmission”). Such

a construction could threaten to undermine copyright

protection in circumstances far beyond those presented

21

here, including with respect to VOD services or situa-

tions in which a party streams copyrighted material on

an individualized basis over the Internet.

Taken as a whole, however, the court of appeals’

analysis of the public-performance issue should not be

understood to reach VOD services or other circumstanc-

es beyond those presented in this case. The Second Cir-

cuit repeatedly explained that its rejection of petition-

ers’ public-performance claim depended on a range of

factors: not only that each transmission would be sent

to a single recipient, but also that (1) each transmission

would be made using a unique copy of the relevant pro-

gram; and (2) each transmission would be made solely to

the person who had previously made that unique copy.

See, e.g.. Pet. App. 30a-31a, 36a, 39a, 41a. By limiting its

holding to circumstances in which those two additional

features are present, the Second Circuit sustained the

legality of respondents’ proposed RS-DVR service with

out casting doubt on the widespread premise that VOD

and sinvilar services involve public performances.

Petitioners also contend (Pet. 37) that, under the

court of appeals’ decision, respondents could provide

VOD services without a license by establishing a system

in which the subscriber “will simply send an electronic

request first to ‘copy’ and then to ‘play’ the desired

work.” But even assuming that the subscriber in that

scenario would be deemed to “make” the copy, the legai-

ity of his conduct would be suspect at best, because he

would be not simply time-shifting but instead copying

programs that he was not otherwise entitled to view.

Compare Sony, 464 U.S. at 449. And if the subscriber’s

own copying would violate the Copyright Act, respon-

dents and similar cable providers would be subject to

secondary liability for inducing and facilitating that vio-

22

lation. Cf. Grokster, 545 U.S. at 984-937. Indeed, the

court of appeals “emphasize[d]” that its decision-“does

not generally permit content delivery networks to avoid

all copyright liability by making copies of each item of

content and associating one unique copy with each sub-

scriber to the network, or by giving their subscribers

the capacity to make their own individual copies.” Pet.

App. 4la-42a. Thus, while some aspects of the Second

Circuit’s reasoning on the public-performance issue are

problematic, the court’s ultimate holding is less far-

reaching than petitioners suggest and is insufficiently

important to warrant this Court’s review, especially in

a case that does not satisfy the Court’s traditional crite-

ria for granting a writ of certiorari.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

ELENA KAGAN

Solicitor General

MICHAEL F. HERTZ

Acting Assistant Attorney

General

MALCOLM L. STEWART

Deputy Solicitor General

Toby J. HEYTENS

Assistant to the Solicitor

General

SCOTT R. MCINTOSH

SARANG VIJIAY DAMLE

Allorneys

MAY 2009

The Assistant Attorney General is recused in this case