Two of the three judges on the District of Columbia Circuit panel said the FCC never received permission from Congress to undertake such a sweeping regulation, which is intended to encourage the purchase of digital TV receivers that curb Internet distribution of over-the-air broadcasts of programming such as movies and sports.
"You're out there in the whole world, regulating. Are washing machines next?" asked Judge Harry Edwards. Quipped Judge David Sentelle: "You can't regulate washing machines. You can't rule the world."
In November 2003, the FCC said that every product sold in the United States after July 2005 that can receive digital TV broadcasts or digital TV streams must be able to recognize a "broadcast flag." Such products--ranging from TV sets to computer tuners made by Elgato Systems and Hauppauge Computer Works--are permitted to deliver high-quality digital output only to devices that also adhere to the broadcast flag specification.
The groups challenging the FCC's broadcast flag regulation include the American Library Association, the Association of Research Libraries, the Medical Library Association, Public Knowledge and the Electronic Frontier Foundation. They argue that the FCC exceeded its authority, that Congress should be responsible for making copyright law, and that librarians' ability to make "fair use" of digital broadcasts will be unreasonably curtailed.
But one of the judges, Sentelle, suggested that the library and other nonprofit groups challenging the FCC's rule would not suffer the kind of particular harm necessary to allow the case to proceed.
"You have to have a harm that distinguishes you from the public at large," Sentelle said during oral arguments. "If there is not a particularized harm, you do not have standing...There may be someone from the industry who can come forward." Edwards also said he was concerned about the groups' "standing," referring to the judicially recognized right to sue. Special rules exist for organizations suing federal agencies.
From the perspective of the entertainment industry, the broadcast flag is needed to encourage over-the-air distribution of valuable content. Without the FCC's action, the Motion Picture Association of America has argued, the threat of Internet piracy would imperil the future of digital TV.
