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hmm...this paper has no footnotes...looks like there should be some...i bet i could get the author to repost a copy with citations if she knew of a free online anonymous publisher......any ideas, friends?
The Invalidity of the FCC’s Broadcast Flag Rule – Sony v. Universal, FDA v. Brown & Williamson Tobacco, and other Possible Battles
In early November 2003, the Federal Communications Commission published its final broadcast flag rule in the Federal Register. The Rule would require hardware manufacturers to include circuitry in their products to recognize the media industry’s ATSC Flag, and not record if the flag is set to “on.” This requirement effectively terminates what the Supreme Court has determined to be a “fair use” of broadcast material, keeping consumers from time-shifting any materials a distributor chooses to flag. Not only does the rule put the FCC squarely in the middle of a contentious issue in intellectual property law, legislative wrangling preceding the rule calls into question its propriety under agency jurisprudence. The FCC rule may be invalid for lack of enactment power by the agency.
I. Sony v. Universal Studios (1984) and the Need For Congressional Action
Sony held that Congressional action was necessary to ban the sale of recording equipment with substantial noninfringing uses on copyright bases, because to sanction or limit the sale of these “staple articles of commerce” based on a copyright claim would require a careful reanalysis of fair use, for which the court deferred to Congress. Congress deserves deference on intellectual property issues because of its constitutional authority and its institutional competence to resolve complicated balancings of interests. Since time-shifting was deemed noninfringing fair use, and thus “a significant portion of the product's use [was] noninfringing,” VCR manufacturers could not be held contributorily liable for the product's infringing uses unless Congress changed what fair use meant. Indeed,
One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible. It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be reversed. It is so ordered.
This principle holds true today as it did then—indeed, the Digital Video Recorders (DVRs) regulated by the Broadcast Flag Rule are essentially digital VCRs—and Congressional action is just as necessary here because the fair use analysis calls for just a sensitive balancing of interests. The FCC has now gone behind Congress’s back and implemented a rule that the Legislature decided last term would be bad policy. The legislature is the best determiner of difficult policy questions, not the FCC, and the only body entrusted by the Constitution to make these complex decisions. The same reasons the Sony court deferred to Congress are reason why future courts should not defer to the FCC. However, Sony alone will probably only inform a court that the broadcast flag is bad policy; another avenue is necessary to convince a court to nullify the agency rule.
Opponents of the new rule can do more than complain that the FCC broadcast flag rule is a slap in the face to the Sony Court’s reasoning and values. A party challenging the validity of the rule—e.g., a defendant hailed into court for selling nonconforming DVRs, or a party looking for declaratory relief—could point to FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 120 S.Ct. 1291 (2000), and claim a lack of authority of the FCC to enact the Broadcast Flag rule. This short paper will examine the applicability and robustness of this case relative to possible challenges to the rule.
II. FDA v. Brown & Williamson Tobacco (2000) – Two Inquiries
In this battle between the tobacco companies and the Food & Drug Administration, the FDA claimed it had jurisdiction to regulate tobacco products. The Court examined two factors in determining the agency’s jurisdiction to enact that regulation, and determined that the FDA did not have the power necessary to regulate cigarettes. These two factors will both cut against a finding that the FCC had jurisdiction to implement their broadcast flag.
The first relevant inquiry is whether Congress has directly spoken to the issue, either in the statute forming the agency, or in subsequent legislation. This inquiry is crucial, given that “regardless of how serious the problem an administrative agency seeks to address … it may not exercise its authority in a manner that is inconsistent with the administrative structure that Congress enacted into law.” This is because “an administrative agency's power to regulate in the public interest must always be grounded in a valid grant of authority from Congress.” If Congress has not given regulatory power to an agency, that agency cannot simply assume that power.
To determine whether the statute creating the FDA included in its grant the power to regulate tobacco, the Court focused on the act’s “essential purpose” and the “mission” that it laid out for the FDA, and determined that it was not the FDA’s job to regulate tobacco. As for subsequent legislation, Congress had “foreclosed the removal of tobacco products from the market,” because it had visited the issue of banning tobacco and declined to do so. Rather, given the great economic value of the tobacco industry, Congress had decided to require only labeling and advertising restrictions; Congress’s intent was that tobacco continue to be sold in America.
Second, J. O’Connor tells us that courts must “be guided to a degree by common sense as to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency.” In FDA, the Court found it highly unlikely that an issue that had so divided citizens and the legislature could be so easily, or wisely, decided by bureaucrats. Also, the fact that Congress had relied on the FDA’s assertion of a lack of jurisdiction in regulating tobacco after creating the FDA showed that Congress apparently agreed: “Congress' tobacco-specific legislation has effectively ratified the FDA's previous position that it lacks jurisdiction to regulate tobacco.”
III. The Balancing of Interests Within the Senate: The CBDTPA and the “Subsequent Legislation” Prong of FDA’s First Inquiry
Just as in FDA, an agency has been precluded from enacting a ban on an important economic article because Congress has “considered and rejected” a bill that “would have given the agency such authority.” Just as in FDA v. Brown & Williamson Tobacco—where Congress held hearings on whether to ban a specific, important article of commerce and declined—here Congress declined to ban the sale of DVRs that could be used to record “flagged” programs.
On March 21, 2002, Sen. Fritz Hollings introduced S.2048 – the Consumer Broadband and Digital Television Promotion Act. The CBDTPA would have required hardware manufacturers to include computers in their products that would recognize a “Broadcast Flag” and not record if this flag were set to “on.” The discussion that went into this legislation, and the fact that the bill “went nowhere,” shows that Congress not only considers copyright beyond the FCC’s jurisdiction, but that Congress has also already balanced the interests necessary to make a broadcast flag comply with Sony, and decided against doing so.
The reviews had been mixed at the hearings Hollings held a few weeks earlier, but showed that Congress was willing to listen. However, trouble soon brewed for the flag. Two lobbying groups—who thought the first round of hearings were “stacked”—and the Senate Judiciary Committee strongly resisted the CBDTPA. These groups eventually caused its demise once the bill was referred to the Senate Commerce Committee.
Senator Hollings crafted the bill with the help of the MPAA and Jack Valenti – who one may remember likened the Betamax VTR to the “Boston Strangler” – at the insistence of large corporations (e.g., Disney and News Corp, owner of FOX networks). It was Hollings’ and the broadcaster’s contention that piracy made distributing their content a losing proposition, and said they would refuse to do so. Some noted that the content industry had said the same thing about compact discs and VTRs.
Consumer rights groups took umbrage at the possibility that fair use time-shifting might be nullified. Gene Kimmelman of Consumers Union warned that “until broadcast flag software and hardware that still allows for fair use is developed, legislation would harm consumers,” and it was said that “the bill violates individuals' rights to flexible use of the copyright works they buy.” The Electronic Frontier Foundation organized an email campaign; eventually spurring more than 3,300 letters to the Senate Judiciary Committee opposing the Hollings bill.
The Judiciary Committee took note of the encroachment on its jurisdiction: Patrick Leahy, chair of the committee, claimed its heavy involvement in intellectual property law “since 1816.” Indeed, the Judiciary Committee posted many of the EFF’s letters on its website. Eventually, Leahy proclaimed that “No [broadcast flag] legislation will pass Congress this year”; Leahy’s jealousy was important since any legislation Hollings introduced would have had to go through the Judiciary Committee. Hollings said of Leahy’s committee “while they know the law, they don't know the business.” He might have chosen his words more carefully, because Leahy’s threats successfully helped keep the CBDTPA in the Commerce Committee, where Republican Senators could be influenced by the technology industry until Hollings departed the Senate.
The technologists had some of loudest voices, besides Hollings’, in the Senate, and reminded Congress that what they were really doing was balancing interests in an intellectual property setting, and tinkering with one of the country’s most important economic sectors. This group focused on “building a competitive marketplace absent government intervention,” and “letting a thousand flowers bloom.” Trade associations repeated the chant: the Information Technology Association of America said the bill was a "one-size-fits-all solution to the problem of digital piracy," and the Computer & Communications Industry Association said it would force poorly designed and unworkable standards on the industry, and “stifle creativity in product development.” The players forming the new technologies and new markets also formed a trade group, the Alliance for Digital Progress, including Microsoft, Dell Computer, Hewlett-Packard, and Apple Computer, to “fight government copy-protection mandates” and press for private-sector methods of solving the "problem with digital piracy." Intel’s Les Vadasz reminded the Senators that IT is “twenty times the size of Hollywood, fast moving, and highly innovative,” asking those present at hearings, “Please don't tamper with the dynamics of the technology industry.” The techies also had their think tank: the Cato Institute predictably pushed for less government interference and an industry solution.
The one-two punch of free speech and a free market rang true with Senators, led by Republicans John McCain and Oren Hatch. These senators voiced “concerns about possibility of [the] federal government’s mandating technical solutions in place of a marketplace solution” at the March Commerce Committee hearings, and wanted to preserve “technological innovation.” Interestingly, Republican congressman have tended to be good for Silicon Valley. After the Republicans swept the Congressional elections, McCain replaced Hollings as the head of the Commerce Committee and the Senate, and Hatch replaced Leahy as the head of the Judiciary Committee. Hollings’ bill was finished. The CBDTPA languished in the Commerce Committee, never to even directly face Leahy’s wrath. All that was left now for a defeated and committee-less Hollings was to ask the FCC to go behind Congress’s back.
In later October 2003, after losing both the broadcast flag battle and his position at the head of the Commerce Committee, Sen. Hollings asked FCC Chairman Mike Powell to implement the broadcast flag, Congress’ decision to decline passing that regulation notwithstanding. Powell decided to act with “blinding speed” by Washington standards, and published a proposed rule in early November. By December 3rd the agency made the rule final.
The history of this bill should impress on any court reviewing the FCC’s action that FDA should be applied, and that the legislative history of the CBDTPA is controlling. That the bill was rejected by the power struggle that is Congress’ method of balancing interests should show that the FCC has been precluded from enacting a broadcast flag, because Congress has addressed the specific issue and declined to regulate. Indeed, the fact that Congress thought it relevant that both tobacco and DVRs were both of high economic value to the country makes FDA an even better case for an anti-broadcast flag party, considering that Court’s focus on the economic importance of tobacco in addition to its political importance. The tech lobby certainly did its job.
IV. A “Common-Sense” Analysis of the FCC’s Jurisdiction
J. O’Connor found it odd in FDA that an issue of such “political and economic importance” would be left to an administrative agency. We have already seen how Congress, especially its more conservative members, thought this issue economically important. Focusing on the political importance of the issue, we now examine more closely Congress’ belief that a broadcast flag would also implicate intellectual property law.
A. Jurisdiction Jealousy
Balancing of interests in intellectual property law, and copyright in particular, is one of the most hotly contested issues today. As with tobacco in FDA, where, given tobacco's unique political history, as well as the breadth of the authority that the FDA had asserted, a Court here should not defer to the agency's expansive construction of the statute, but rather to Congress' judgment. And Congress’ judgment was that a broadcast flag was under the purview of the Judiciary Committees of both the Senate and the House.
The Senate Judiciary Committee certainly thought that a broadcast flag was beyond the ken of the FCC, and so did its counterpart in the House. Again, another Republican lines up against the flag—this time House Judiciary Courts, Internet & Intellectual Property Subcommittee Chairman Lamar Smith after Hollings called on the FCC to do his dirty work: "My Subcommittee has great interest in the FCC's announcement because the agency may issue rules that impact the Copyright Act and involve my subcommittee's jurisdiction.”
Even more telling, though, Senate Judiciary Chairman Leahy and House Judiciary Chairman James Sensenbrenner declared in a joint letter to FCC Chairman Powell that “"[N]o express authority is provided to address the complex issues of intellectual property matters in general or digital broadcast copy protection in particular.” These are the very people in Congress who are to decide the issue of whether the FCC has jurisdiction to require a broadcast flag, and they announced that the agency does not have that power. As J. O’Connor said, courts “must be guided to a degree by common sense as to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency.” In this case common sense would tell any reasonable judge that when the senior House and Senate Judiciary Chairmen claim jurisdiction over the issue in a letter to the FCC, to the exclusion of the FCC’s power over that issue, that power has not been delegated.
Even Jack Valenti and the MPAA admitted that this bill implicated intellectual property concerns: in the first round of hearings he called for both the Senate Commerce Committee and the Judiciary Committee to “be involved because these goals are umbilically connected to the oversight jurisdiction of both committees.” Hollings agreed, noting that the Judiciary Committee had a “role” in the debate, and that they “knew the law.”
B. Ratifying the FCC’s Denial of Jurisdiction
Congress ratified the FDA’s declarations that they had no jurisdiction over tobacco when it decided to fill the gap in tobacco regulation by legislation. Similarly here, the FCC has repeatedly said it does not have jurisdiction over intellectual property issues, and the explicit purpose of the CBDTPA was to “provide for the adoption of conforming standards and rules … and authorize … the FCC to revise implemented standards and rules through rulemaking.” That Sen. Hollings later acted as if he thought the FCC had the power to not only revise rules, but to provide for their adoption, is of no consequence—the introduction of the CBDTPA was a ratification of the FCC’s position that it lacked authority.
V. Other Issues – Getting with the Program, Anarchic Libraries, and Revisiting Eldred
Why the constant urge to regulate? Some think that the content industries should adapt to new technologies, instead of trying to displace them using the courts and the legislature. For example, House Judiciary Chair said of the RIAA a month after the introduction of the CBDTPA that they "ought to take a page out of what the movie industry did 20 years ago with VCRs….The movie industry ended up getting several kicks of the cat.” Indeed, the reason new technologies take off is the demand for what they provide, and a powerful player should be able to take advantage of that demand, given a modicum of vision and enough initiative to make something of the opportunity. Research and development on how to take advantage of new technology costs might not cost less than teams of lawyers and lobbyists (but it probably would), but the payoff can be potentially huge.
It’s possible to forget exactly why all this matters, sometimes. Will there be any effect on people if they lose their “record” button? Indeed, any such effects may be hardly discernable on a small scale, especially if people get used to not having such buttons. However, the effects of giving ever more control to the content “industry” can already be seen in today’s centralized media, and will only get worse as we continue to limit the meaning of terms like “public domain” and “fair use.” As Siva Vaidhyanathan notes, “We’ve put ourselves in a really ugly situation. … [W]e’ve forgotten that a regulatory system like copyright was designed to encourage creativity, to encourage the dissemination of knowledge. These days, copyright is so strong and lasts so long that it’s counterproductive to those efforts.” Prof. Vaidhyanathan’s observation rings all the more true when one considers that now copyright is being enforced with hardware and software that is so “strong” it has no fair use escape hatches, and that “lasts so long” as to be eternal. Indeed, underregulation may be a better situation than gross overregulation, because true culture, on which a strong democracy of educated people relies, always bubbles up from the bottom. A system that gives private parties full discretion to lock up a public good cannot be tolerated.
In Eldred v. Ashcroft, Prof. Lawrence Lessig tried to press this Jeffersonian free speech-education-democracy line, saying that the extended term was another example of corporate control of America’s culture. Justice Ginsberg and the Supreme Court disagreed; they didn’t buy the cultural anarchy argument, at least not as framed. For J. Ginsberg, the idea-expression distinction and fair use exceptions took care of free speech concerns. J. Breyer even says that “fairly read, the Court has stated that Congress' actions under the Copyright/Patent Clause are, for all intents and purposes, judicially unreviewable.” But J. Ginsberg disagrees: copyrights are not “categorically immune from challenges under the first amendment.” J. Ginsberg leaves the door open to closely examining free speech issues in extraordinary copyright cases, where Congress has “altered the traditional contours of copyright protection.” The interesting argument here is that either Congress has allowed technology measures eliminating fair use to be mandated, in which case First Amendment concerns would be addressable under Eldred, or that the legislature has not allowed these measures to be mandated, in which case the Court could apply a FDA jurisdictional analysis to invalidate the flag.