D.C. Circuit Vacates FCC's Digital Television "Broadcast Flag" Regulations
In response to a challenge by a public interest coalition and as widely predicted, the D.C. Circuit last Friday vacated the FCC’s Order adopting the “broadcast flag” rules as beyond its statutory authority. In November 2003, the FCC adopted the broadcast flag rules mandating that a wide array of digital devices recognize and honor a signal marking over-the-air digital television broadcasts with a code against indiscriminate redistribution. These rules would have required that certain digital equipment manufactured after July 1, 2005, recognize the flag at the point of reception of the television broadcasts and to restrict further use after reception and demodulation. See Update dated Nov. 7, 2003.
The FCC had imposed redistribution controls for digital television broadcasts at the urging of the Motion Picture Association of America (MPAA) and other content owners to prevent video file sharing over the Internet from becoming as easy and widespread as music file sharing has become. Last August, the FCC issued an order approving thirteen content protection technologies for use in devices manufactured after July 1, 2005, as adequate for carriage and reception of unscreened digital broadcasts or broadcasts marked with the broadcast flag so as to prohibit Internet redistribution. See Update dated Aug. 24, 2004.
In early 2004, shortly after the broadcast flag rules were adopted, a public interest coalition composed of libraries and consumer groups formally challenged the rules in the U.S. Court of Appeals for the D.C. Circuit arguing primarily that the FCC lacked jurisdiction to adopt rules that govern television reception equipment in the absence of specific congressional authority, like the Congressional authority given to the FCC when it ordered all television receivers to have tuners capable of receiving UHF broadcasts.
A three-judge panel of the D.C. Circuit heard oral argument this past February. Although it was apparent that the judges believed the FCC did not have jurisdiction to adopt the broadcast flag rules, the Court ordered further briefing on the issue of whether any of the petitioners had the legally required standing to challenge the rules. In the opinion issued last Friday, the Court found that at least one of the petitioning libraries had standing and then unanimously stuck down the rules, as expected, finding that the “broadcast flag regulations exceed the [FCC’s] delegated authority” under the Communications Act.
The FCC had argued that it had “ancillary jurisdiction” to adopt the broadcast flag rules under the Communications Act because it conceded that it had no express congressional directive to do so. The Court firmly rejected the Commission’s argument, finding that the “general jurisdictional grant does not encompass the regulation of consumer electronics products that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission.” Accordingly, the Court found that without specific congressional directive to regulate television reception products, there was no statutory foundation for the flag rules and “consequently the rules are ancillary to nothing.” Without the required connection to a specific grant of authority, the Court easily found that the FCC exceeded its jurisdiction and vacated the FCC’s order adopting the rules.
The Court did not reach the petitioners’ other challenges to the rules based on the Copyright Act and certain aspects of administrative law. Nonetheless, it seems certain that the Court’s suggestion that congressional action is needed will result in legislative proposals authorizing rules that prohibit Internet redistribution of digital television broadcasts after they are received on a consumer’s television set. However, unless Friday’s decision is stayed or is changed by Congress, the broadcast flag rules will be unenforceable.
Please contact us if you would like additional information.