Appeals Court Tosses FCC's Broadcast Flag Rule

By Peter Kaplan

WASHINGTON (Reuters) - A U.S. appeals court on Friday struck down a Federal Communications Commission rule designed to limit people from sending copies of digital television programs over the Internet.

The U.S. Court of Appeals for the District of Columbia said the FCC had "exceeded the scope of its delegated authority" with the 2003 rule, which would have required TV set manufacturers to start using new anti-piracy technology by July 1.

"We can find nothing in the statute, its legislative history, the applicable case law, or agency practice indicating that Congress meant to provide the sweeping authority the FCC now claims over receiver apparatus," the three-judge appeals court panel said in its opinion.

FCC officials have said copyright protections were needed to help speed the adoption of digital television, which offers higher-quality signals and broadcasters said they would ask Congress to step in to address the matter.

The music industry has been plagued by consumers copying and sharing songs for free over the Internet, violating copyright laws. Hollywood wants to prevent similar problems with its programs as it rolls out more digital content.

"Without a 'broadcast flag,' consumers may lose access to the very best programming offered on local television," said National Association of Broadcasters President Edward Fritts. "We will work with Congress to authorize implementation of a broadcast flag..."

The FCC declined to comment.

The NBC Universal television network also argued the decision would hurt consumers.

"Today's court ruling imposes crippling restraints on the FCC's ability to effectively support the development of a safe, sustainable marketplace for the creation and distribution of digital TV broadcasting," said the network, a unit of General Electric Co.

Under the FCC rule, programers could attach a code, or flag, to digital broadcasts that would, in most cases, bar consumers from sending unauthorized copies over the Web.

The regulation required manufacturers of television sets that receive digital over-the-air broadcast signals to produce sets that can read the digital code. Consumers could record and copy shows but would have been limited from sending them.

Opponents complained the rule could raise prices to consumers and would set a bad precedent by allowing broadcasters to dictate how computers and other devices should be built.

The ruling brought praise from the American Library Association and other non-profits who brought the court challenge. They said the broadcast flag rule "seriously undermined" educators rights to distribute digital material.

"This is a big victory for consumers and libraries," the association's Washington office director, Emily Sheketoff, said in a statement.

A spokesman for the Motion Picture Association of America, which backed the restriction, was not immediately available for comment.

Copyright 2005 Reuters Limited.

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