Civil and consumer rights groups have won in the Broadcast Flag case!
Read the 34-page decision by the DC Circuit Court of Appeals: American Library Association v. Federal Communications Commission [PDF].
UPDATE For those who are unfamiliar with the Broadcast Flag, it was ... it was a regulation promulgated by the FCC at the request of Hollywood that would have required all HDTV receivers to incorporate certain copy controls. Starting this July, all HDTV receivers sold in the US would be required to enforce restrictions on copying HDTV broadcasts that were tagged with the "Broadcast Flag." Although you might be able to record HDTV shows, you wouldn't be able to make additional copies for personal use (such as watching in another room) without a lot of hassle, if it was possible at all, not to mention taking a copy to watch at a friend's house. The ramifications of this authority grab by the FCC were enormous, since it would have, among other things, essentially given them the power to control significant aspects of the design of anything capable of using HDTV signals, i.e., modern PCs.
The FCC argues that the Commission has "discretion to exercise broad authority over equipment used in connection with radio and wire transmissions, when the need arises, even if it has not previously regulated in a particular area. FCC Br. at 17. This is an extraordinary proposition. The [Commissions] position in this case amounts to the bare suggestion that it possesses plenary authority to act within a given area simply because Congress has endowed it with some authority to act in that area. We categorically reject that suggestion. Agencies owe their capacity to act to the delegation of authority from Congress. See Ry. Labor Executives Assn, 29 F.3d at 670. The FCC, like other federal agencies, literally has no power to act . . . unless and until Congress confers power upon it. La. Pub. Serv. Commn v. FCC, 476 U.S. 355, 374 (1986). In this case, all relevant materials concerning the FCCs jurisdiction including the words of the Communications Act of 1934, its legislative history, subsequent legislation, relevant case law, and Commission practice confirm that the FCC has no authority to regulate consumer electronic devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission.
Because the Commission exceeded the scope of its delegated authority, we grant the petition for review, and reverse and vacate the Flag Order insofar as it requires demodulator products manufactured on or after July 1, 2005 to recognize and give effect to the broadcast flag. [emphasis in original]
Congrats to everyone involved! Expect press releases from various interested parties soon.
UPDATE 0910; 0940 (more links); 1005 (more links); 1040 (more links, intro); 1120 (more links)
Read on for News and More Highlights from the decision...
News Reports and Commentary:
For more resources on the Broadcast Flag, you shouldn't miss EFF's resource page: Join the Liberation Front of Television Digital!
Or Public Knowledge's: Broadcast Flag Court Challenge
C|Net News: Court says FCC's 'broadcast flag' is toast
Copyfight's Donna Wentworth likes the "elephant in a mousehole" quote: Court on Broadcast Flag: You Can't Hide Elephants in Mouseholes
BoingBoing's Cory Doctorow: V-TV Day: We Won the Broadcast Flag Fight!
Good AP wirestory on SFGate.com: Court Blocks TV Anti-Piracy Tech Rules
Coalition of the Swilling: Well Now, THAT'S a Smack Down If I Ever Saw One
Jeff Jarvis has some recommendations for the FCC: Broadcast Flag at Half-Staff
Jarvis points to a recent Radio Monitor report where Commissioner Adelstein acknowledges that the Broadcast Flag may fold and suggests the FCC look into other ways to stop piracy (Adelstein: Court May Overturn "Broadcast Flag"). This is an issue that will certainly be getting a lot of attention now. Encrypted broadcasts, perhaps?
Howard Bashman has a lot of links: D.C. Circuit Strikes down Federal Communications Commission's "Broadcast Flag" Regulations
Dan Gillmor is always worth reading: A Win for Fair Use, Consumer Rights
Mike Godwin, who is part of Public Knowledge, which organized the case, has thanks and a request for donations: The Broadcast Flag Has Been Lowered
IPTA has its own set of key quotes from the decision: DC Circuit strikes broadcast flag regs
Slashdot: Your Rights Online: FCC Broadcast Flag Struck Down
Ars Technica has a good, short summary: Appeals Court Kills Broadcast Flag.
Law Prof. Susan Crawford has some good things to say about application of this ruling to other realms: DC Circuit to FCC: Back Off
She notes that "today's opinion signals that the FCC should act with self-restraint." It may signal that, but the FCC isn't known for such restraint.
Wendy Seltzer at EFF's Deeplinks: Waving Flags of Victory
Key Passages of the Ruling:
The Commission recognized that it may exercise ancillary jurisdiction only when two conditions are satisfied: (1) the Commissions general jurisdictional grant under Title I covers the regulated subject and (2) the regulations are reasonably ancillary to the Commissions effective performance of its statutorily mandated responsibilities. See 18 F.C.C.R. at 23,563. The Commissions general jurisdictional grant under Title I plainly encompasses the regulation of apparatus that can receive television broadcast content, but only while those apparatus are engaged in the process of receiving a television broadcast. Title I does not authorize the Commission to regulate receiver apparatus after a transmission is complete. As a result, the FCCs purported exercise of ancillary authority founders on the first condition. There is no statutory foundation for the broadcast flag rules, and consequently the rules are ancillary to nothing. Therefore, we hold that the Commission acted outside the scope of its delegated authority when it adopted the disputed broadcast flag regulations.
The ruling was challenged on three grounds:
(1) the Commission lacks statutory authority to mandate that demodulator products recognize and give effect to the broadcast flag; (2) the broadcast flag regime impermissibly conflicts with copyright law; and (3) the Commissions decision is arbitrary and capricious for want of reasoned decisionmaking.
However, the court only decided the first issue:
On the merits, we hold that the FCC lacked statutory authority to impose the broadcast flag regime. Therefore, we grant the petition for review without reaching petitioners other challenges to the Flag Order.
Standing, of course, was a major issue for the court. In fact, they had requested additional briefing on the issue. Needless to say, given the outcome, they did find standing. The standing issue ultimately rested on whether any of the petitioners could show particularized harm. The FCC did not dispute standing, but the MPAA
did. Though I obviously concur in the outcome, I wish there had been a little more explanation here, however.
Intervenor MPAA, which does challenge petitioners standing, argues that any injury suffered by the Libraries following the FCCs implementation of the broadcast flag regulations will be due solely to the independent . . . decisions of third parties not before this Court. MPAA Supp. Br. at 6. In other words, MPAA assumes that, because hardware manufacturers eventually might be able to gain approval for apparatus that allow for greater distribution of broadcast content in a manner that is consistent with the Flag Order, it will be the unavailability of this new technology and not the agencys enforcement of the broadcast flag rule that causes injury to petitioners. Thus, under MPAAs view, redress for petitioners must come from the hardware manufacturers, not the FCC. This is a specious argument.
There is clearly a substantial probability that, if enforced, the Flag Order will immediately harm the concrete and particularized interests of the NCSU Libraries. Absent the Flag Order, the Libraries will continue to assist NCSU faculty members make broadcast clips available to students in distance education courses via the Internet, but there is a substantial probability that the Libraries will be unable to do this if the Flag Order takes effect. It is also beyond dispute that, if this court vacates the Flag Order, the Libraries will be able to continue to assist faculty members lawfully redistribute broadcast clips to their students.
The standard of review is always at issue. Normally, regulatory decisions are entitled to significant deference from the courts. Not, however, when the issue is whether the regulatory authority actually has authority in the first place. Oh, sweet irony, a previous case in which the MPAA argued that the FCC did not have authority is used as precedent (Motion Picture Assn of America, Inc. v. FCC [PDF]
As the court explained in Motion Picture Assn of America, Inc. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002) (MPAA), an agencys interpretation of [a] statute is not entitled to deference absent a delegation of authority from Congress to regulate in the areas at issue. The court observed that the Supreme Courts decision in Mead reinforces the command in Chevron that deference to an agencys interpretation of a statute is due only when the agency acts pursuant to delegated authority.
The question thus becomes whether the FCC had ancillary jurisdiction to decide the Broadcast Flag. The answer, of course, was no.
The insurmountable hurdle facing the FCC in this case is that the agencys general jurisdictional grant does not encompass the regulation of consumer electronics products that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission. Because the Flag Order does not require demodulator products to give effect to the broadcast flag until after the DTV broadcast has been completed, the regulations adopted in the Flag Order do not fall within the scope of the Commissions general jurisdictional grant. Therefore, the Commission cannot satisfy the first precondition to its assertion of ancillary jurisdiction.
The court engages in a relatively lengthy discussion of the major precedents involving the FCC's ancillary jurisdiction. The court reads these precedents as encouraging caution in granting such jurisdiction and distinguishes them based upon "one simple fact":
[T]he Flag Order does not require demodulator products to give effect to the broadcast flag until after the DTV broadcast is complete. The Flag Order does not regulate the actual transmission of the DTV broadcast. In other words, the Flag Order imposes regulations on devices that receive communications after those communications have occurred; it does not regulate the communications themselves. Because the demodulator products are not engaged in communication by wire or radio when they are subject to regulation under the Flag Order, the Commission plainly exceeded the scope of its general jurisdictional grant under Title I in this case.
The court deconstructs the FCC's rejoinder that they have statutory authority to regulate all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission.
The statute does not give the FCC authority to regulate any apparatus that is associated with television broadcasts. Rather, the statutory language cited by the FCC refers only to apparatus that are incidental to . . . transmission. In other words, the language of § 153(33) and (52) plainly does not indicate that Congress intended for the Commission to have general jurisdiction over devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission....
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. And the agencys strained and implausible interpretations of the definitional provisions of the Communications Act of 1934 do not lend credence to its position. As the Supreme Court has reminded us, Congress does not . . . hide elephants in mouseholes.
There is also more reliance on the MPAA case (Oh, sweet irony!):
In Motion Picture Assn, this court concluded that the Commission lacked authority under Title I of the Communications Act to promulgate regulations that significantly implicated program content. Focusing specifically on 47 U.S.C. § 151, which is part of Title I and which the FCC conceded was the only possible source of authority that could justify its adoption of the video description rules at issue in the case, we explained:
Under [§ 151], Congress delegated authority to the FCC to expand radio and wire transmissions, so that they would be available to all U.S. citizens. Section  does not address the content of the programs with respect to which accessibility is to be ensured. In other words, the FCCs authority under [§ 151] is broad, but not without limits. 309 F.3d at 804 (full citations omitted) (citing Midwest Video I, 406 U.S. at 667-68, and Southwestern Cable, 392 U.S. at 172).Just as no provision in Title I addresses program content, no provision in Title I addresses requirements for demodulator products not engaged in communication by wire or radio.
The court then goes on to stomp on the FCC's position by pointing out that Congress felt it necessary to give the FCC jurisdiction over receivers in particular legislation. If the FCC already had authority, why did Congress do this?
It turns out, however, that subsequent legislation enacted by Congress confirms the limited scope of the agencys ancillary jurisdiction and makes it clear that the broadcast flag regulations exceed the agencys delegated authority under the statute.....
The All Channel Receiver Acts limited and explicit grant of authority to the Commission over receiver equipment clearly indicates that neither Congress nor the Commission assumed that the agency could find this authority in its ancillary jurisdiction. It also confirms the Commissions absence of authority to regulate receiver apparatus as proposed by the broadcast flag regulations in the Flag Order. If the Commission had no ancillary jurisdiction to regulate the quality of UHF reception, it cannot be doubted that the agency has no ancillary authority to regulate consumer electronic devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission.
There is another example of Congressional action cited, but one is enough here. A very nice decision.