http://www.wired.com/news/politics/0,1283,67447,00.html***The case was the American Library Association versus the FCC and Motion Picture Association of America. The FCC had set a rule that beginning in JULY of this year, transmissions to homes would include a "broadcast flag" which would be read by equipment modified to read the flag and would prevent people from being able to copy and play digital transmissions except on the same device. For "fair use" of being able to create video clips, say, you wouldn't be able to create them, Jon Stewart style, and share them on the internet, because you would only be able to play back clips you recorded on the same device. The ALA sued and yesterday the court ruled that the FCC exceeded its authority to set rules-Watch now for the MPAA to try to push this through Congress.
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In a blow to the entertainment industry, a federal appeals court on Friday found that federal regulators overstepped their authority by requiring consumer-electronics manufacturers to help restrict digital home recording.
The U.S. Court of Appeals for the District of Columbia reversed a Federal Communications Commission order that required makers of consumer-electronics devices capable of receiving broadcast digital TV signals to recognize a "broadcast flag," which is code that allows content owners to place limits on redistribution of digital content streams. The rule was to apply to devices manufactured on or after July 1, 2005.
Specifically, the court admonished the FCC for exceeding what's known as its "ancillary authority" over some reception devices (consumer-electronics products) by trying to regulate a function not directly related to the actual transmissions themselves.
"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," the court stated (.pdf). "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."
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