A federal judge in Los Angeles reversed a magistrate’s April 2002 order compelling a defendant video technology company, SONICblue, Inc., to collect consumer usage information from its users and produce that data to plaintiffs. The decision by U.S. District Court Judge Florence-Marie Cooper agreed with defendant SONICblue, Inc., maker of ReplayTV4000, a sophisticated new digital video recorder. The court found that the magistrate’s order requiring SONICblue to collect and produce usage information that never existed, and requiring defendant to affirmatively create and produce it would be contrary to law.
The issue arose in a copyright infringement lawsuit brought against SONICblue by 28 television and movie studios to halt the sale of its bestselling new digital video recorder. They claim ReplayTV4000 allows consumers to send movies and shows over the Internet via a "Send Show" feature, thereby redistributing the content without paying for a license. The magistrate’s order, now rescinded, would have mandated integration of a court-ordered consumer usage monitoring software that could later power an electronic infringement alarm on behalf of the copyright-holding studios. SONICblue’s response was to acknowledge that "If somebody wants to violate copyright law they certainly could do so, just like they can with many other technologies, but we don't feel that the device itself in any way encourages people to do so," said Andrew Wolfe, SONICblue’s Senior Vice President and Chief Technology Officer. The studios also contend that ReplayTV4000 unlawfully undermines their revenue model by empowering consumers to skip past television commercials.
The magistrate’s order unleashed the wrath of privacy advocates. "To require companies to spy on their customers in order to report suspicious activity to the movie studios is a complete invasion of privacy, particularly to those individual customers who don't even have the option of opting-out," said Robin Gross, attorney for the Electronic Frontier Foundation.
Why This Matters: This case walks, talks and quacks like the second coming of the Sony Betamax case — when in the early 1980s the entertainment industry opposed the widespread use of VCRs before it realized that the sale and rental of movie videos would become a primary source of revenue. What makes this case far more dangerous for the advertising industry, however, is the technology that allows Replay owners to "zap" out commercials with simple programming commands. If such behavior becomes widespread, it undermines the very foundation of how advertising is measured and priced. It is a very serious problem than can never be quantified without knowing how consumers who own the devices interact with it, and for now, court does not deem it appropriate to start collecting that data.
This article originally appeared in ADLAW By Request, a publication of Hall Dickler Kent Goldstein & Wood LLP.
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