Ruling: Cablevision may introduce remote DVR

Court of Appeals overturns lower court's ruling

In a ruling against the major entertainment conglomerates, a federal court of appeals said Monday that Cablevision can introduce a remote-storage DVR system.

The decision to overturn a lower court's ruling against Cablevision's so-called "Network DVR" is almost certain to be appealed and the matter could end up in the U.S. Supreme Court.

The Network DVR lets Cablevision's digital subscribers record and play back TV programming -- just as with a TiVo and other DVRs -- only the content is stored on remote servers and not on the hard drives of individual set-top boxes.

In overturning a March 2007 ruling against Cablevision, the appeals court gave a greenlight to cable companies that want to roll out DVR service without having to supply upgraded boxes, an arrangement that could substantially increase the adoption of DVR functionality.

Analyst Craig Moffett of Bernstein Research called the decision "a momentous reversal of a prior ruling" that could "in short order" put DVRs in 60% of U.S. cable households, whereas they are now in 25%.

"With the stroke of a pen, the appeals court has opened the door to a massive increase in the penetration of DVR capabilities," he said. "Core among these is ad-skipping."

Cablevision first said in 2006 that it planned a remote-storage DVR, known as RS-DVR, prompting a lawsuit from the likes of News Corp., Time Warner, Walt Disney, Viacom, Universal and CBS, with the entities claiming infringement of their copyrighted intellectual property.

The studio arms of those conglomerates argued that an RS-DVR was akin to an unauthorized VOD service, and 17 months ago U.S. District Court Judge Denny Chin agreed.

Now, though, a three-judge panel reversed the decision on the grounds that subscribers, not Cablevision, would control the recording of TV shows, making the service little different from a traditional DVR or even a VCR.

"The district court erred in concluding that Cablevision, rather than its RS-DVR customers, makes the copies carried out by the RS-DVR system," the appeals court said.

The appeals court also rejected the claim that recording something via RS-DVR amounted to a public performance of copyrighted work, since the TV shows are simply meant to be viewed by the subscribers who recorded them.

"We are reviewing the court's decision and will be considering all legal options," the MPAA said in statement issued Monday.

Cablevision COO Tom Rutledge vindicated Moffett's assertion that the court's decision would lead to a surge in DVR use.

"This is a tremendous victory for consumers, which will allow us to make DVRs available to many more people, faster and less expensively than would otherwise be possible," he said.