We've written before about some of the problems with the current state of regulation in the entertainment industry. There are still a lot of problems to be addressed, but for now, the FCC's Broadcast Flag proposal is no longer one of them.

By way of introduction, the broadcast flag system was meant to mandate that media hardware produced after July 1, 2005 had to have the ability to recognize a standard electronic flag that could be used to determine what end users can and cannot do with certain programs or broadcasts. On its face, this mandate sacrificed the fair use rights of consumers in favor of the profits of the media companies. From the Electronic Frontier Foundation:

Today, you can use any device you like with your television: VCR, TiVo, DVD recorder, home theater receiver, or a PC combining these functions and more. A year from now, when the FCC's broadcast flag mandate [PDF] takes effect, some of those capabilities will be forbidden.

Responding to pressure from Hollywood, the FCC has adopted a rule requiring future digital television (DTV) tuners to include "content protection" (aka DRM) technologies. Starting next year, all makers of HDTV receivers must build their devices to watch for a broadcast "flag" embedded in programs by copyright holders. When it comes to digital recording, it'll be Hollywood's DRM way or the highway. Want to burn that recording digitally to a DVD to save hard drive space? Sorry, the DRM lock-box won't allow it. How about sending it over your home network to another TV? Not unless you rip out your existing network and replace it with DRMd routers. Kind of defeats the purpose of getting a high definition digital signal, doesn't it?

On May 6, though, a Federal Appeals Court struck down the broadcast flag. The EFF reports on the decision (PDF):

In a landmark case, the US Court of Appeals for the DC Circuit today struck down the "Broadcast Flag," an FCC rule that would have crippled digital television receivers beginning on July 1st.

The Broadcast Flag rule would have required all digital TV receivers, including televisions, VCRs, and personal video recorders like TiVo, to be built to read signals embedded in over-the-air broadcast television shows that would place certain limitations on how those shows could be played, recorded, and saved. The sale of any hardware that was not able to "recognize and give effect to" the Broadcast Flag, including currently existing digital and high-definition television (HDTV) equipment and open source/free software tools, would have become illegal.

The Electronic Frontier Foundation (EFF) joined Washington DC-based advocacy group Public Knowledge in fighting the rule in the courts, together with Consumers Union, the Consumer Federation of America, the American Library Association, the Association of Research Libraries, the American Association of Law Libraries, the Medical Library Association, and the Special Libraries Association. The coalition argued that the rule would interfere with the legitimate activities of technology innovators, librarians, archivists, and academics, and that the FCC exceeded its regulatory authority by imposing technological restrictions on what consumers can do with television shows after they receive them.

The court agreed, ruling unanimously that the FCC overstepped its authority when it asserted control over the design of any device capable of receiving HDTV signals.

Though the tactics and the argument are different, this is basically the same thing that the entertainment industry tried to do to VCRs back in the 1980s. That decision was made in favor of the consumers, and the media giants have hardly collapsed into ruin. We've also seen pushes recently to make digitally recorded programs "expire" after a set amount of time (for example, last week's episode of the Sopranos would be erased from your TiVo once the new episode was aired). These are all attempts to regulate the perfectly legitimate fair use of recordings in order to prevent the merest possibility of misuse, and they need to be shot down.

Even with the flag knocked down in court, the fight is far from over. Because we all know that, when you feel your industry is being "threatened" by new technology, you should obviously lobby for legislation against the new technology. The media companies will no doubt be swarming all over Congress in an attempt to push through legislation that allows them to follow through on their plans. We'll be watching.