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Tests on TV downloads, farmers’ debts

(NOTE TO READERS: A wave of computer glitches delayed this report on Monday’s orders by the Supreme Court.)


Barack Obama brought presidential campaigning fully into the Internet Age with digital creativity during his run for the White House. Now, his new Administration will get a chance to offer its legal views on new technology for downloading cable TV programs, for later or repeated viewing.   The Supreme Court on Monday sought the government’s views on a major issue of copyright law, in Cable News Network, et al., v. CSC Holdings, Inc., et al. (08-448).

That was one of two controversies on which the Justices asked the U.S. Solicitor General to offer advice. (See the post below for the filings on both cases.)  The other is a significant test of the responsibility for farmers’ debts, when the borrowers sell off cattle, milk or other farm products that were supposed to be collateral to secure loans.  That case, Fin-Ag, Inc., v. Pipestone Livestock Auction Market, et al. (08-576), seeks interpretation of the federal Food Security Act of 1985.

There is no timetable for the government’s repies, so the task of submitting those views clearly will fall to the Solicitor General’s office in the Obama Administration; only eight days remain in the Bush Administration.

The CNN case is, in some sense, a modern sequel to the breakthrough for consumers that originated in 1976 when Sony Corp. introduced Betamax, allowing users to use time-shifting devices to record TV programs for later viewing.  The Supreme Court, in Sony v. Universal City Studios in 1984, ruled that consumer time-shifting does not infringe copyright in the programs.  Since then, there have been two generations of successor technology.  The latest of those is at issue in the new case.

 The newest version available for time-shifting is the “Remote-Storage DVR,” or RS-DVR, developed by a New York-area cable TV company, Cablevision Systems Corp., and a subsidiary, CSC Holdings, Inc.  Instead of downloading a TV program through a set-top box and storing it on the consumer’s own computer memory, the RS-DVR copies it and then stores it on Cablevision’s hard drives in a central location.  The customer then can call it up from there, at any time, for viewing; only the customer who made a copy of a particular program can do so.

The legal issue in the case is whether Cablevision is itself a direct infringer of the copyright owned by producers of the TV programs, on the premise that it is allegedly doing the copying itself and then “performing” the protected works without the copyright owner’s permission.

The theory of CNN and other copyright owners is that the RS-DVR copies and performs when it uses data “buffers” that momentarily store and process tiny parts of program data as it travels through the system, in and out.  The theory of Cablevision — and the one that the Second Circuit Court accepted — is that it is the consumer who is doing the copying for time-shifting, and not Cablevision, so Cablevision is not a direct infringer.

The case has attracted a wide array of briefs from copyright owners, including those who own protected works in movies, cartoons, music and a variety of other creative endeavors.  All expressed concern that the new technology creates a law-free opportunity for using computers to avoid getting licenses and paying royalties.

In calling for the government’s views on this dispute, the Court noted that Chief Justice John G. Roberts, Jr., and Justice Samuel A. Alito, Jr., did not take part — presumably, because of investment holdings.

In the farmers’ debt case involving the 23-year-old Food Safety Act, the government will weigh in on a plea by a Midwestern agricultural loan company, Fin-Ag, that contends that a group of South Dakota dairymen sold off the cows that were collateral for $4.6 million in debt, and did so through an off-the-books “front” company with the practical effect that Fin-Ag is not going to collect on the loans.

Fin-Ag took the case to the Supreme Court to test the liability of livestock sale barns and a meat-packing company for the debts the dairymen had incurred with Fin-Ag, because the barns and the meat-packer bought the cattle from the “front” entity created by the dairymen.

Fin-Ag had filed reports with South Dakota state officials on the debts it was owed by the dairymen, but it did not include on those statements any indication of liability by the “front” company.  Because of that omission, the South Dakota Supreme Court ruled that, under the Food Safety Act, the debts of the dairymen did not travel with the cattle to the buyers.

If a lender does not record the actual name of a seller in debt when farm products pledged as collateral are sold, the state court ruled, then the lender has no right to the proceeds of such sales.  It ruled in three companion cases involving Fin-Ag and debts of the dairying family, the Berwald Brothers of Toronto, S.D.

In its appeal, Fin-Ag told the Supreme Court that the Minnesota Supreme Court has ruled just the opposite on the buyers’ liability, in a case that also involved loans by Fin-Ag.

Once the Supreme Court receives the federal government’s views on the two new cases, the Justices will decide whether to hear and decide them.

Among other developments at the Court on Monday:

** The Justices took no action on the third attempt by the Justice Department to revive a law that Congress passed in 1998 to ban minors’ access to sexually explicit material on the World Wide Web.  That law — the Child Online Protection Act – has been struck down repeatedly by the Third Circuit Court, most recently on the primary finding that it would ban a wide array of material on the Web that is legal for adults to view and read.  Congress passed the law in reaction to a 1997 Supreme Court ruling nullifying an earlier congressional attempt to shield minors from Internet pornography.  The Justices are likely to examine the case again at their private Conference on Friday; it is Mukasey (Attorney General) v. American Civil Liberties Union, et al. , 08-565).

** The Court denied review of a case seeking to test the constitutional right to privacy,when government officials release personal information about an individual, resulting in identity theft.  Without comment, the Justices declined to hear an appeal by a Cincinnati woman whose identity was stolen after a county court clerk posted her Social Security number and other identifying information on an Internet website. (Lambert v. Hartmann, 08-500).

** With Justice Alito not taking part, the Court refused to hear an appeal by Exxon Mobil Corp. (Exxon Mobil v. Federal Energy Regulatory Commission, 08-212) claiming that it may lose as much as $125 million in refunds it had expected in compensation for differences in quality in crude oil delivered by pipeline from fields in Alaska’s North Slope to Valdez, Alaska.

** The Court chose to bypass an appeal by a major automaker (General Motors v. Bryant, et al., 08-349), testing the constitutionality of the creation of a nationwide class to sue it over a claimed product defect, when a state court that approves the class has not decided whether home-state laws of the members of the class are so different that the case could not proceed on common legal issues.  The Arkansas Supreme Court upheld the creation of the class, allowing the case to proceed.