RECORDING TV shows and skipping the commercials that come with them may become more pervasive in the wake of a new court ruling that blesses a new networked form of digital video recorder.
The United States Court of Appeals for the Second Circuit in New York said Monday that the so-called network DVR, which records programs on a faraway computer rather than on the device itself, does not violate copyright law.
The ruling, a turning point in a two-year legal battle, represented a major victory for Cablevision, which wants to offer network DVR services through its existing set-top boxes. It also dealt a significant blow to the media companies that had sued to stop the technology, which include Turner Broadcasting and the major TV networks.
For most consumers, the decision does not make much difference. If Cablevision ultimately builds out the system it has in mind, it will simply make it easier for Cablevision customers who do not own DVRs to get recording capabilities through their cable boxes.
In May 2006, when Turner Broadcasting filed the initial copyright infringement suit, DVRs were in 1 out of 14 homes with televisions in the United States. The technology has rapidly gained household share, and is now present in one in four homes. The growing prevalence of the technology has made Cablevision’s initial ambitions seem slightly less threatening and radical.
The Turner suit was joined by 20th Century Fox, CBS, ABC, NBC, and other plaintiffs. They jointly alleged that the network DVR technology violated copyright laws by storing television recordings on a central server. In March 2007, a lower court agreed with the media companies, saying that use of the technology “would be engaging in unauthorized reproductions and transmissions” of copyrighted content.
But Cablevision appealed, and Monday’s ruling by John M. Walker Jr., a Second Circuit judge, declared that the technology “would not directly infringe” on the media companies’ rights.
The media companies will now consider appealing to the United States Supreme Court. “We respectfully disagree and are considering the appropriate next steps in this matter,” James Anderson, a spokesman for Turner, said in a statement.
Network DVRs could add recording functionality to the tens of millions of digital set-top boxes in living rooms and bedrooms across the country, and only a simple software upgrade would be needed. Tom Rutledge, Cablevision’s chief operating officer, called the decision a “transformative opportunity” for the cable industry.
“We can now provide high-quality DVR capabilities to almost all of our customers in a very short period of time,” he said. “It changes cable’s competitive posture against satellite; it makes the services less expensive to provide; and it makes it easier to upgrade the services.”
Most DVRs, popularized by TiVo, rely on an internal hard drive to record television episodes. They enable users to play back programming and fast-forward past ads. The network DVRs developed by Cablevision have the same capabilities but without the hard drive. Instead, they record the programs on the cable operator’s centralized servers, saving money and avoiding the trouble of installation.
“Cablevision has been innovative here, and I think other cable companies will follow them,” said Tom Eagan, a senior media analyst at Collins Stewart. (Comcast and Time Warner, which are the country’s two largest cable providers and potential beneficiaries, declined to comment.)
Cablevision says it has not yet determined whether it will introduce the network DVR service to its 3.1 million cable customers. But Craig E. Moffett, an analyst at Sanford C. Bernstein & Company, said the ruling could have “seismic implications across the media landscape.”
“In short order, effective DVR penetration could now jump to north of 60 percent of cable households (that is, all digital cable subscribers),” Mr. Moffett wrote in a report. “That means a huge increase in the number of viewing hours per day potentially subject to ad-skipping.”
Network DVRs also prop open the door to new methods of advertising. Cablevision could insert ads dynamically, customizing and updating commercial pods for different consumers and at different times.
“It allows advertisers to do things they can’t do on a physical DVR,” Mr. Rutledge said. “Let’s say you record an episode of ‘Lost.’ Three months later you want to play it back. The advertising that was on ‘Lost’ is stale and no longer applies, but the capability to refresh the advertising exists if the content owner wants to do that with the cable operator.”
Given the two-year dispute, though, it is hard to imagine the major media companies hurrying to sign up.
In court, the media companies argued that network DVRs were tantamount to video-on-demand, and that they should receive license fees for the recording.
Cablevision and the appeals court disagreed. The company noted that each user would record programs on his or her own individual server space, making it a DVR that, as Mr. Moffett put it, has a “very long cord.”