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Technology vs. Content

In 1984, the U.S. Supreme Court “Betamax” ruling allowed our industry to innovate and grow, propelling us from $22 billion in 1984 sales to $121 billion in sales this year.

In that landmark decision, the Court not only held the VCR was a legal product, but it created a simple test by which all product introductions are measured: Is the product capable of significant non-infringing uses? This standard gave innovators a bright line test for new products that allow for the creative and flexible use of content.

That crisp legal test is now under attack. On March 29, the Supreme Court heard arguments in the Grokster case, a conflict focused on peer-to-peer file sharing, but also about whether the “Betamax” standard should be changed to consider the manufacturer’s “intent,” the product’s commercial viability and even whether a different design could have been used that would have blocked copying of content.

Since the 1984 Court decision, the content lobby has been brutal in its scorched-earth strategy to control our products and customers. The copyright lobbyists convinced Congress to expand copyright terms, criminalize infringement and ban any technology that decrypts a copyright protection scheme for fair use purposes. MPAA and RIAA members have even sued some 10,000 Americans for “piracy” without showing that these consumers had any intent to profit!

If successful, expect companies selling new technologies to face lawsuits with massive discovery on the question of what the creators and marketers “intended” when they created the product or service.

CE Has Cooperated
The industry has compromised mightily and addressed specific content industry concerns. We agreed to restrict serial copies from digital audio recording products and pay a royalty fee on audio recorders. We agreed to a DVD standard restricting DVD duplication. We agreed to a broadcast flag identifying and restricting broadcast content from being re-sent over the Internet. And we agreed to a series of complex rules on connecting digital video products so marked content cannot be duplicated.

These concessions have not been rewarded. Not only have our concessions confused our customers on how to use our products and what they can do with them, but they have not satiated the content lobby’s voracious appetite for mandates and restrictions on technology. This insatiable lobby has repeatedly returned to Congress with Draconian proposals that could cripple new product introductions. The “Hollings bill” would have made the government mandate a copyright protection technology and the ill-fated “Induce Act” would have created a new way to sue technology innovators and marketers.

Now the content lobby is asking the Supreme Court to create a new intent-based test for evaluating the legality of new technology. If successful, expect companies selling new technologies to face lawsuits with massive discovery on the question of what the creators and marketers “intended” when they created the product or service. If there are memos or e-mails saying it would be used to organize, edit, time-shift or place-shift content without the permission of a copyright owner, then costly lawsuits will be the norm and new and smaller companies will either not get funded or be litigated out of existence. Remember Replay?

This is not a theoretical debate. Many of the 2005 International CES Innovations winners were products managing, storing or moving content to a different device or place. Delphi’s XM2Go, HD Radio’s features, Slingmedia, the networked jukebox and scores of other products are tied to a consumer’s ability to enjoy copyrighted content when, where and how they desire. If we allow the content community to veto our new technologies, we are failing our customers, our companies, our industry and our commitment to a better world.

By Gary Shapiro, President & CEO, Consumer Electronics Association

This material has been adapted from VISION — a bi-monthly magazine of the Consumer Electronics Asssociation

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