The US Copyright Office delivered a memo on the FCC’s set-top box NPRM that casts doubt on its lawfulness. Four members of Congress – Representatives Blackburn, Butterfield, Collins, and Deutch – had asked the Copyright Office for an expert opinion on the NPRM and the underlying legal issues, and the CO was happy to comply.

I’m surprised that the FCC didn’t exercise similar diligence before publishing its NPRM; it’s clear that the STB plan has significant legal issues. For starters, the CO points out that the NPRM’s arguably laudable goal of creating STB competition runs roughshod over creator’s rights:

The Office’s principal reservation is that, as currently proposed, the rule could interfere with copyright owners’ rights to license their works as provided by copyright law, and restrict their ability to impose reasonable conditions on the use of those works through the private negotiations that are the hallmark of the vibrant and dynamic MVPD marketplace.

Copyright Conditions of Use

The NPRM doesn’t appear to appreciate that copyright has a very broad scope:

The rights protected by the Copyright Act are “exclusive” to the copyright owner, meaning that the copyright owner generally has full control as to whether or how to exploit his or her work, including by entering into licensing agreements. As a leading treatise explains, the default rules within the Copyright Act are only a “starting point,” with “collaborators…free to alter this statutory allocation of rights and liabilities by contract.” Importantly, as noted above, a copyright owner has the exclusive right “to authorize” the reproduction, distribution, public performance, or public display of a copyrighted work, or to prepare a derivative work, as well as to perform those acts directly. This language in section 106 affords the copyright owner the sole right to license another to use the work, as well as the right to impose conditions on such use under the license. Moreover, the right to authorize use of a work encompasses the right to grant licenses to some parties and not others, or to decline to license a work at all.

Conditions of use can be very important to rights holders. The creator of a children’s program would not want, for example, her work to appear in a program guide next to an ad for a slasher movie. Such conditions are often written into contracts between creators and cable companies, but the NPRM would circumvent them. Similarly, the rights holder can choose the parties with which it chooses to do business and those it doesn’t. These relationships even extend to conditions applied by contract to apps that cable companies create for streaming boxes  such as Roku and TiVo. Their scope extends all the way from the creator to the consumer as well as to all parties and devices in the path.

What Contracts Specify

So when the FCC introduces a new device and a new party in this path by regulation, it is disrupting a body of law and practice that it is clearly not authorized to alter. The CO presents a list of conditions from public comments that should clue the FCC into the issues. Licenses include such terms as:

• The kinds of platforms and devices to which the programs may be delivered
• Requirements related to advertising, including limitations on an MVPD’s ability to replace advertising or add additional advertising as part of the program, and restrictions on embedded advertising in the MVPD’s program guide or user interface (e.g., preventing adult programming from being advertised when a user is browsing children’s programming)
• The works that may be made available to subscribers to be played on demand (rather than as part of linear programming), and any promotional consideration related to on­ demand works, such as advertising for, and placement of, television shows and movies in the on-demand menu
• Channel lineup requirements, including agreements relating to the types of channels that will be grouped together (“neighborhooding”) and requirements that certain channels be provided together as a package (“bundling”)
• Time-limited licensing arrangements, including “windowing” or “tiering” agreements that allow certain programs to be shown by certain providers or platforms before they are more widely distributed, or expiration terms for content provided on-demand
• Requirements for content protection, including specific security measures the MVPDs must adopt for each kind of platform
• Conditions the MVPDs are required to include in downstream agreements with third­ party platform developers ( g., Amazon Fire TV, Roku, Apple TV) before allowing installation of MVPD applications (e.g., the Xfinity app) on those platforms, such as requirements to exclude applications used for the consumption of pirated works
• Stipulations that the MVPDs will refrain from engaging in activities that might otherwise be considered fair use of the copyrighted works

The Law is Whatever the Nobles Do

The CO points out that firms who build devices under the conditions created by the NPRM would not even be in a position to know the contract terms prevailing between the MVPD and the creator, let alone to comply with them:

In its most basic form, the rule contemplated by the FCC would seem to take a valuable good-bundled video programming created through private effort and agreement under the protections of the Copyright Act-and deliver it to third parties who are not in privity with the copyright owners, but who may nevertheless exploit the content for profit. Under the Proposed Rule, this would be accomplished without compensation to the creators or licensees of the copyrighted programming, and without requiring the third party to adhere to agreed-upon license terms.34 Indeed, a third party without access to the governing agreement between a content programmer and the MVPD would have no way of knowing all of the requirements and limitations imposed under that license. As a result, it appears inevitable that many negotiated conditions upon which copyright owners license their works to MVPDs would not be honored under the Proposed Rule.

So how does a company comply with conditions that aren’t known to it? This reminds me of Adam Marcus and Barbara Esbin’s brilliant critique of Kevin Martin’s net neutrality rules, “‘The Law Is Whatever the Nobles Do’: Undue Process at the FCC”. The paper recounts a Kafka tale about laws that “are a mystery confided to the nobility,” a kind of secret code that forces others to study the behavior of the nobility to know how they should behave.

Advocacy Blowback

Proponents of the NPRM were quick to jump on the Copyright Office with their usual eloquence. Mike Masnick, the editor of TechDirt, accused the CO of lying: “Why Is The Copyright Office Lying To Protect The Cable Industry’s Monopoly Stranglehold Over The Cable Box?” The allegation that cable has a monopoly over STBs is nonsense, of course, as my experience with CableCARD devices proves; I wouldn’t have been able to watch TV for the past 15 years without a cable company STB if there were a monopoly. Masnick is neither a lawyer, a technologist, nor an economist, so he relies on the legal musings of advocacy groups aligned with Internet advertising networks such as Public Knowledge.

Cory Doctorow delivered another reaction, in language even more bizarre than Masnick’s: “Copyright Office to FCC: Hollywood should be able to killswitch your TV.” Doctorow invokes the trite old trope about the Internet and cable TV, claiming that “If the law were actually as the Copyright Office says it is, the Internet as we know it would be impossible—or it would look a lot like today’s cable TV.” Of course, STBs aren’t so much a part of the Internet as they are…wait for it…the essence of cable TV. So if the Copyright Office wants cable TV to look like cable TV, it’s probably on the right track according to law. Doctorow is also neither a lawyer, a technologist, nor an economist, so he relies on the always copyright-unfriendly EFF for his legal reasoning.

Fair Use: The Magic Wand of Copyright

The sources Masnick and Doctorow cite argue that fair use abolishes the obligation for third parties to honor copyright protections, contrary to the Copyright Office’s analysis of the limits of that old saw. Public Knowledge claims:

Under the Copyright Office’s analysis, the interests of consumers are irrelevant, and fair use is an obstacle to be overcome. This letter is another example of how the Copyright Office has become dedicated to the interests of some copyright holders — as opposed to providing an accurate interpretation of copyright law.

It’s unclear why the Obama Copyright Office who take sides on this question, but that’s the unsupported claim PK asks us to believe. EFF is only slightly more coherent:

The Copyright Office’s letter implies that cable and content companies could create new rights for themselves just by writing them into private contracts between each other: the right to control which “platforms and devices” customers can use, the right to limit time-shifting and other fair uses, and the right to “exclude” other software from a customer’s device. While private companies are free to negotiate conditions like these between each other, nothing in the law gives copyright holders the power to impose those conditions on the whole world, snuffing out the rights of users.

EFF then descends into the comments cited by Doctorow on the Internet vs. cable TV. The notion of fair use is important in copyright law; it was debated ad nauseum during the SOPA/PIPA fight.

The Tension Between Goals and Possibilities

It seems to me that the issue here is the conflict between the desire of the FCC to increase competition in a market that is necessarily constrained by copyright law and the rights of creators to distribute their work only where, when, and how they choose. While Congress may have to power to modify the Copyright Act to make the NPRM lawful, it hasn’t done so. And even if Congress wanted to create vibrant market for video piracy products, it would still be restrained by the Constitution’s Article I, Section 8 dictate to Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

The Internet and information technology in general provide with the power to redistribute creative works in any number of novel and interesting ways. Indeed, the CO mentions piracy boxes common outside the US:

It is worth noting that there already exists today a variety of third-party set-top box devices, mainly produced overseas, that are used to view pirated content delivered over the internet. A reasonable concern is that, in response to the Proposed Rule, this market might expand to encompass devices designed to exploit the more readily available MVPD programming streams without adhering to the prescribed security measures.

But as we learned in the SOPA fight, the organizations who oppose restrictions on digital piracy often regard digital theft as an exercise of free speech. There’s a difference, obviously, between a device with substantial non-infringing uses and one that is designed primarily for infringement.

The NPRM enables the piracy economy at the expense of the rights of creators to control their speech and to make a living, which is what the Constitution mandates. So it seems that some of our piracy advocates may not have read the Constitution. I’m happy to share this copy with them.

UPDATE: Chairman Wheeler acknowledges the Copyright Office’s status as a genuine expert agency and vows to take their criticisms to heart:

“The NPRM is designed to smoke out these kinds of issues so that you can be responsive to them,” Wheeler told reporters during a Q&A session after the FCC’s August open meeting. “So my read of the Copyright Office letter is that they’re worried that what we do would, ‘deliver [programming] to third parties who are not in privity with the copyright owners.’” 

“We will not create a rule that forces that to happen,” Wheeler said. “Again, that’s what this process is all about — tell us these things, and let us fix them.”

So that looks like progress. But I don’t expect the piracy bullies to follow suit.