The Supreme Court joined one of the country's most ferocious and most talked about business law controversies yesterday by announcing that it will review the 1981 appeals court ruling making home videotaping of copyrighted programs a violation of federal law.
An opinion is expected within a year, and it could have a significant economic impact on one of the country's fastest growing industries, on the prices paid by millions of Americans for videotape and tape recorders, and on the health of the entertainment industry, which brought the legal action to combat what it says is the substantial revenue loss it suffers as a result of home copying.
Supporters of competing legislation on the Hill have cast the debate in terms of the consumer's "right" to record programs versus the "rights" of creative artists to the fruits of their creativity.
The debate at the court, however, will be over statutory interpretation. The U.S. Court of Appeals for the 9th Circuit ruled last October that, even when taping is done for private use in the home, it infringed the copyrights on the programs and movies held by the studios and production companies that made them. In the absence of a specific congressional exemption for home videotaping, the appeals court said the copyright laws protect the television programs, including broadcasts of movies, just as they protect a novel or a poem from unauthorized republication.
The decision held the home taping industry responsible for the infringement and, if the decision is allowed to stand, it could be made to pay millions of dollars in damages to copyright holders and perhaps a future royalty fee. The primary impact on the 12 million Americans who videotape and watch home videotapes would be in the passing on of those costs by the industry.
The ruling came in response to a suit brought by Universal City Studios Inc. and Walt Disney Productions against Sony Corp. and companies that help to market Sony's Betamax recording and playback units, including the advertising agency Doyle Dane Bernback Inc., Associated Dry Goods Corp., Federated Department Stores Inc. and others.
Sony and its allies immediately appealed to the Supreme Court, noting that the appeals court ruling, if allowed to stand, also could be extended to home taping of music.
At issue before the justices are questions of statutory interpretation, a judicial concept called "the fair use doctrine" that permits limited forms of reproduction and that Sony says applies to home videotaping, and conflicting arguments about "contributory infringement," under which Sony was held responsible for contributing to infringement actually carried on by the home tapers.
The ruling also prompted a flurry of proposals in both houses of Congress and one of the most intense and expensive lobbying efforts of the current session.
Some of the bills simply exempt home video recording from liability under the copyright laws. Others would require payment of royalty fees by the videotape industry to provide compensation to the copyright holders.
If passed on to the consumer, that could mean additional costs for purchasers of blank videotapes, which sell for $10 to $20 already and for purchasers of recorders. The music and record industry also has joined the fray, seeking compensation for losses due to home taping of music, which has been going on for decades.
Both sides had statements ready for release immediately after yesterday announcement that the high court will review the earlier ruling. Jack Valenti, president of the Motion Picture Association of America, said Congress should not accelerate its consideration of legislation. He said the motion picture and television industry supports a "compromise" providing compensation to the copyright owners.
"This issue falls within the congressional province, not a judicial one," Valenti said.
Kenji Tamiya, president of Sony Corp. of America, said that it was "appropriate that an issue of such widespread impact should be reviewed by the nation's highest court" and expressed strong opposition to legislation that would "impose a royalty tax on home recording devices and blank tapes."