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Cablevision Loses Network-DVR Case

Hopes by Cablevision Systems to deploy a network-based digital-video recorder service were set back Thursday after a federal court ruled in favor of major TV networks and Hollywood studios that had argued that the cable distributor’s network DVR would violate copyright laws.

The U.S. District Court for the Southern District of New York ruled in favor of Twentieth Century Fox Film, Universal City Studios, Paramount Pictures, Disney Enterprises, CBS, ABC , NBC Studios and Turner Broadcasting System’s Cartoon Network and CNN, which sued Cablevision in May.

“We are disappointed by the judge’s decision and continue to believe that remote-storage DVRs are consistent with copyright law and offer compelling benefits for consumers, including lower costs and broader availability of this popular technology,” Cablevision said in a prepared statement Thursday night.

The ruling is not only a setback for Cablevision, but for other major cable operators that were hoping to deploy their own network DVRs if Cablevision’s attempt proved successful.

While Comcast, Time Warner Cable and other major cable distributors didn’t follow suit with plans for their own network DVRs, some operators cheered the strategy, which could allow cable operators to market DVR services widely and more efficiently than deploying individual DVRs in households.

“I think it’s a great idea and I really applaud the things that [Cablevision chief operating officer] Tom [Rutledge] and Cablevision are doing, including the DVR,” Comcast chief operating officer Steve Burke said. “If it happens, which I predict it will, it’s a tremendous competitive advantage versus satellite ... I’m sure the rest of the industry will follow.”

Cablevision first announced plans to deploy a network DVR last March. While the networks and studios sued the company two months later, Cablevision argued that its network DVR product, called “RS-DVR,” wouldn’t violate copyright laws since it would perform similar to DVRs installed in individual homes.

In their lawsuit, Fox, NBC and other plaintiffs argued that Cablevision’s network-DVR concept was actually a video-on-demand service -- which requires license deals with programmers -- masked as a DVR.

“Cablevision's proposed service is an unauthorized video-on-demand service that would undermine the video-on-demand, download, mobile-device and other novel and traditional services that plaintiffs and other copyright owners have developed and are actively licensing into the marketplace,” the plaintiffs complained in the suit.

In its ruling Thursday, the U.S. District Court ruled that Cablevision’s RS-DVR would violate copyright law, since it would rely on technology and hardware embedded in its network.

Some industry observers have said previously that they expected the network-DVR case to eventually make its way to the U.S. Supreme Court. Cablevision said it may appeal the case.

“We are currently reviewing the opinion and assessing all of our options, including an appeal, while we continue to deploy conventional set-top-box DVRs,” Cablevision said in a prepared statement.

In the meantime, Cablevision continues to market Scientific Atlanta DVRs to its iO: Interactive Optimum digital-cable customers. To date, the company has installed about 500,000 DVRs in homes in its New York metropolitan-area footprint.