A Los Angeles federal judge has ruled in favor of the MPAA, granting a preliminary injunction against Zediva, a controversial business that resembles a combination of an old school Blockbuster video store and Netflix. Before delving into the judge’s reasoning, let’s recap what Zediva actually does, as explained previously by this blog and by a post from wired.com:
“the company literally rents you a DVD and a DVD player, with your computer, tablet or Google TV as the remote control. Unlike the other streaming movie services…Zediva’s servers have DVD drives and actual DVDS. So when you rent a movie, that disc goes out of circulation until you release it back to the company, just like in one of those increasingly rare real-world video stores. And like those video stores, Zediva doesn’t need to get permission from the studios to rent out discs, since once they buy the DVD they are free to rent it out or re-sell it, thanks to the first-sale doctrine in U.S. copyright law.”
So, Zediva’s business model is to capitalize on the release of new DVDs to retailers before such DVDs are distributed to potential competitors such as Netflix, Amazon, or iTunes. Because Zediva does not acquire licenses from Hollywood studios for its content, the crux of the judge’s decision was whether or not viewing a DVD streamed from Zediva’s server constituted a public or private performance. The judge decided that using Zediva’s service constituted a public performance, relying on On Command Video Corp. v. Columbia Pictures and old reports by the U.S. House of Representatives.
Techdirt blasts the judge’s narrow interpretation of the transmit clause and the brushing aside of the Cablevision decision. In Cablevision, content owners such as Fox, CNN, and Cartoon Network tried to block cable service providers from offering customers DVRs with full commercial-skipping control. Appellate Judge John M. Walker likened the case to prior litigation involving the advent of the VCR, finding Cablevision’s use of DVR did not constitute volitional conduct with the intention of violating copyright:
“An operator of the VCR, the person who actually presses the button to make the recording, supplies the necessary element of volition, not the person who manufactures, maintains, or, if distinct from the operator, owns the machine. We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer’s command.”
Walker, in Cablevision, took an approach that shows an appreciation for history and the inevitability of technological innovation. The wild popularity of Netflix, HBOgo, Hulu and tablets indicates that the future of home video is streaming technology; home video stores and DVD hard copy sales are a thing of the past.
In light of this, the Zediva suit is indicative of an industry caught flatfooted in a period of accelerating change. Seen in another light, the decision is an attempt to protect Hollywood’s ability to profit from other forms of download services.
But this is counter-intuitive. If courts had always viewed copyright infringement through the lens of protecting existing, profitable distribution mechanisms against new innovation, there would not be iTunes or Netflix today. The studios seem determined to shut down, rather than promote new technologies and avenues of revenue for copyright owners.
The legal resistance stemming from Los Angeles to tech innovation in the entertainment area occurs, of course, even as the volatile markets have provided an ironic coda in the music industry, where European import Spotify finally came to American shores after a protracted campaign and battle to acquire rights, and where domestic competitor Pandora has both thrilled and chilled with its IPO (which some said would be worth billions of dollars but has settled back to a $14-per-share morsel).
Just how long ago was it that the legal titans of the music business were slamming customers and tech companies with litigation, arguing that the only way to deal with interlopers on the transmission side or those who want music in a different way was to stomp them to the ground?