Illustration by David Plunkert

ReplayTV 4000, an advanced digital video recorder introduced in 2001 by ReplayTV Network Inc., of Cupertino, Calif., was an early victim of the rising legislative tide. Like its competitor TiVo, from TiVo Inc., Alviso, Calif., the ReplayTV 4000 recorded television programs to a hard drive and allowed the viewer to watch the show at a later time—the kind of time shifting the Supreme Court approved as a fair use of the Betamax. The ReplayTV had two additional unique features: it could automatically skip commercials, and it could also relay a recorded program to another ReplayTV unit in the home or elsewhere on the Internet.

These new capabilities did not please Hollywood. Jamie Kellner, then CEO of Turner Broadcasting System Inc., called skipping commercials “theft” and, along with 28 entertainment companies including major movie studios and television networks—such as Disney, Paramount, Time Warner, Fox, Columbia, ABC, NBC, and CBS—sued ReplayTV for contributing to copyright infringement. Though the company might have prevailed in the end based on the Betamax precedent, ReplayTV ultimately ended up in bankruptcy before it could have its day in court. The company that rescued ReplayTV from bankruptcy, D&M Holdings Inc., Tokyo, settled the case in 2005 by pledging not to include the commercial-skipping and the show-forwarding features in its future models.

None of the DVRs on the market today, from TiVo, ReplayTV's successors, or elsewhere, such as from cable companies, offer these features. Although nothing currently stops a technically savvy hobbyist from turning a personal computer with a TV tuner card into a ReplayTV 4000–like video recorder, the legislative tide may soon threaten these tinkerers as well, as we'll explain.

The DVD, introduced in 1996, quickly became one of the most successful consumer products of all time. It revolutionized the market for home movie viewing and enabled new, portable devices to be created; it also gave rise to new distribution schemes like the Netflix subscription service and its many imitators.

But for consumers, the DVD format left room for improvement. Copy-protection schemes implemented in the DVD format at Hollywood's insistence made it difficult to reproduce movies, in whole or in part. So DVD owners who wanted to copy a few movies onto a laptop computer for a long trip—and to leave the drive and discs themselves at home—couldn't. Furthermore, region codes locked discs to specific areas of the world, blocking travelers from picking up new discs or trying foreign selections.

In 1999, a team that included Jon Lech Johansen, a young Norwegian programmer, cracked the DVD copy-protection technology. Johansen explained how to do it on his Web site, and programs soon developed to enable direct copying of a DVD. A group of movie studios complained to legal authorities in Norway, and the Norwegian prosecutor charged Johansen with a crime. The court cleared him after years of legal battles. However, Johansen's Web site addressed technologically savvy users, not the average consumer looking to make a quick copy of one of the Barney movies.

In 2003, 321 Studios, of St. Charles, Mo., launched a software product called DVD X Copy for these more typical DVD owners. The company built in aggressive measures to prevent piracy, including an antipiracy splash screen that appeared when viewing any copy and watermarks that would enable copies to be traced back to those who made them. The management at 321 Studios hoped that these cooperative measures would stave off Hollywood's wrath.

The company was wrong. Before the DMCA, 321 Studios would have been on relatively safe legal ground. From the time of the Betamax case, U.S. courts had made it clear that copying devices were legal so long as they had any substantial lawful use. But the DMCA changed the rules. When the movie studios sued 321 Studios, the Hollywood contingent did not argue that any of their movies had been unlawfully copied. Instead, it said that the product circumvented a “technical protection measure,” which in this case was the Content Scramble System (CSS) on DVDs.

The CSS is the scheme Hollywood uses to encrypt movies on DVDs. Decryption requires a key, which manufacturers of DVD players obtain by signing a license with the DVD Copy Control Association, a consortium of movie studios, including Fox and Warner, and technology providers, such as Intel and Toshiba. This license, in turn, forbids licensed devices from making digital copies of DVD content or from offering playback modes that the studios disapprove of. (DVD recorders can copy only unencrypted digital material, such as home movies.) The licensing rules and DMCA put companies like 321 Studios in a quandary. If they signed the license in order to obtain the CSS decryption keys, the document prohibited them from using those keys in software capable of copying a DVD. If they didn't sign the license and forged ahead anyway, deriving the CSS keys on their own, they risked prosecution or a civil suit under the DMCA for circumventing the CSS. After consideration, 321 Studios opted to go forward without a license. The DMCA quickly washed away DVD X Copy. After the movie studios prevailed in court in 2004, manufacturers pulled DVD X Copy and similar ripping tools off the U.S. market.

Though DVD-copying software has been swept off U.S. retail shelves, plenty of it escaped to higher ground. Freeware DVD-copying applications like DVD Shrink, MacTheRipper, and HandBrake wander the Web. To escape the Hollywood hunters, most live on Web servers located outside the United States.

Unencumbered digital television tuners are a bit higher up on the beach, yet they represent another class of products that may be eliminated by legislation. These peripherals slip into a computer's PCI card slot or hook up to a USB port to enable it to receive digital television broadcasts, turning a PC into a TV or video recorder. The cards, which cost from $100 to $350, came to market in 2004 from a variety of manufacturers, including ATI, Dvico, Elgato, and pcHDTV. With a tuner card, a hobbyist can build his or her own DVR.

The entertainment companies do not like the flexibility of these home-built machines—or, more significant to them, the flexibility of the machines that consumer electronics manufacturers could offer under the current copyright law and its Betamax rule.

Envisioning a world in which copyrighted works are indiscriminately distributed on the Internet, the entertainment industry looked for ways to force limitations into the design of these devices. Hollywood went first to the U.S. Federal Communications Commission (FCC) to demand a “broadcast flag mandate,” that is, a requirement that every device capable of receiving digital television broadcasts incorporate restrictions against redistribution of those programs. Such a law would give Hollywood a say in the design of all the new hardware consumers would need to make DTV work. The mandate would require devices capable of receiving over-the-air DTV signals to detect and respond to a flag, known officially as the Redistribution Control Descriptor, in the broadcast stream. The flag indicates that the owner of the rights to the transmission has imposed restrictions on its copying or redistribution. The mandate required that the technology designed to detect the flag and implement the restrictions be embedded in every tuner that has digital outputs.

Hollywood lobbyists actually convinced the FCC to impose broadcast flag regulations in 2003, but a U.S. Court of Appeals found that the Commission lacked the authority to regulate the internal workings of televisions. Hollywood is now asking Congress to give the FCC that legal authority by passing the Audio Broadcast Flag Licensing Act of 2006, sponsored by Rep. Michael Ferguson (R-N.J.).

If Congress does enact these broadcast flag regulations, existing tuner cards will ignore the flag, but it will be unlawful to manufacture any new cards without the feature. Products that would have to be redesigned in response to the flag mandate would include the wide variety of inexpensive tuner cards available today, as well as TV hard disk digital recorders, DVD recorders, and any other hardware or software that would make it possible to receive or view digital broadcast television. The broadcast flag law would force designers of tomorrow's digital television devices to either implement one of a limited list of approved content-protection technologies to restrict flagged broadcasts or hire lawyers to seek FCC approval for any newly developed content-protection mechanism. Neither option would ensure backward-compatibility with existing high-definition televisions or interoperability with the other digital media equipment consumers might have already purchased. These requirements would inevitably mean higher costs for technology developers and would handicap the introduction of new features. And all this would happen without stopping those who are truly determined to redistribute HDTV programming.

Like the DMCA's provisions, broadcast flag legislation, if established in the United States, is likely to proliferate around the world.