Cablevision Network DVR in Court’s Hands

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If all goes according to its new plan, Cablevision Systems Corp. would begin marketing its disputed network-based digital video recorder service by Thanksgiving.

Faced with litigation from broadcast networks, cable outlets and Hollywood studios, the cable operator dropped plans to test the service starting this month and instead agreed last week to an expedited review of its plans in court.

If the case stays on track at the U.S. District Court for the Southern District of New York, Judge Denny Chin said last week that he’ll hold a hearing in which he could rule on the case on Oct 30 or Oct. 31.

<p>Cablevision’s Fast Track</p><p>U.S. District Court Judge Denny Chin’s schedule for expediting a hearing on the legality of recording shows for customers on servers in a network.</p>

June 15

Document production begins

July 19

Status conference

July 31

Discovery of relevant information complete

Aug. 14

Memoranda for summary judgement requests due

Sept. 14

Opposing memoranda due

Sept. 28

Replies due

Oct. 31

Case to be ready for hearing

But some attorneys are predicting that no matter which side wins at the initial hearing, the dispute could drag on for more than a year, eventually making its way to the U.S. Supreme Court.

“I think this will go all the way [to the Supreme Court], and even then it may not be decided until Congress steps in,” said Bruce Sunstein, an attorney at Boston based firm Bromberg & Sunstein.

The debate over whether pay-TV providers should be permitted to allow customers to store programming on remote servers on their networks will force Congress to update copyright laws, he added.

Kagan Research analyst John Mansell concurred, predicting the appeals process could take at least a year.

The delay impacts not only Cablevision. Comcast Corp., Time Warner Cable and other cable operators are waiting for the suit to be resolved before pursuing their own network recording services, a feature which could help cable compete against DirecTV Inc., EchoStar Communications Corp. and telephone firms.

Cablevision is hedging its bets. The company began marketing traditional set-top-based digital video recorders just two weeks ago, shortly after the lawsuit was filed.

Cablevision executives believe the network DVR product, called “RS-DVR,” would allow it to more efficiently deliver DVR service to all digital-cable households, by allowing subscribers to store programming on remote servers.

While Cablevision says that a network DVR will perform just like DVRs contained in set-tops from Scientific-Atlanta Inc., Motorola Inc. and other vendors, the networks and studios argue that the network DVR concept is actually a video-on-demand service that would require rights agreements with program producers.

In a counterclaim Cablevision filed at the court last week, the company compared its network digital recorder to the Sony Betamax, other videotape recorders and traditional set-top box DVRs.

Cablevision cites 1984’s landmark Sony vs. Universal City Studios case, in which the Supreme Court ruled that allowing consumers to record TV shows and movies on VCRs was a “fair use” of copyrighted programming.

“The technology that consumers use to time-shift television programming has progressed (from the Betamax to the VCR and now the DVR), but the principle that time shifting is fair use has remained settled under Sony, and the provision of technology to allow consumers to time shift has remained unchallenged,” Cablevision told the court.

Judge Chin noted in his scheduling order last Wednesday that Cablevision has “stated that it will not be asserting a 'fair use’ defense against claims for direct infringement.”

But Sunstein said he believes “fair use” will still be a key point of debate in the case. “It hinges on Cablevision being able to say that kind of [network DVR] usage by the consumer is fair, and they’re just providing the technology for it. It’s not what they [Cablevision] are doing is fair-use, per say.”

The parties are scheduled to complete the exchange of discovery evidence by the end of July, and file legal briefs with the court in August and September.

Twentieth Century Fox Film Corp., Universal City Studios, Paramount Pictures, Disney Enterprises, CBS, ABC Inc. and NBC studios filed a suit seeking an injunction that would block Cablevision from rolling out the RS-DVR on May 24. Two days later, Turner Broadcasting System Inc.’s Cartoon Network and Cable News Network filed their own suit against Cablevision, which has been combined with the original complaint.

The decision for networks from Time Warner Inc.’s Turner Networks Group to join the case may generate internal debate with corporate sister Time Warner Cable.

Time Warner Cable chief technology officer Mike LaJoie last week compared Cablevision’s network DVR concept to his company’s “Start Over” service, which allows digital-cable subscribers that miss the beginning of a program to watch the show from the beginning. But LaJoie noted that the difference with Start Over is that Time Warner Cable secured rights deals with programmers before launching the service.

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