This particular case involved Universal City Studios and the Sony Corporation of America, and is most often referred to as "the Betamax case." In 1976, Sony introduced their Betamax VCR, and used the machine's ability to record television as a marketing strategy. Universal City Studios countered that Betamax's technological ability to copy programming for was a direct copyright infringement. Sony argued that their consumers had the right to record various programs in the privacy of their own home. Rulings and appeals were traded back and forth until the case reached the Supreme Court in 1984 The Court eventually ruled that the company itself could not be held accountable for its creation of a new technology, even if said technology is used for specific infringements of copyright law. As long as the technology can be used for legal purposes, then the manufacturer is not at fault for any user infringements. The court's reasoning behind this ruling was that the public should not be deprived of a productive technology simply because some users choose to use the product unlawfully. This case may in fact be the most important copyright infringement case in regards to how it affects and influences the decisions made regarding piracy and, specifically, peer-to-peer file sharing. Another extremely famous case of MGM versus Grokster used the ruling of this case to argue in their defense. It provides a great point of reference for my paper, as it shows the way in which the early beginnings of piracy were dealt with on a legislative basis.
In this case, Universal City Studios lays out its arguments against the commercialization of Sony’s Betamax. The essence of their reasoning is that owners of video tape recorders had been recording copy-righted material, which had been aired on television. This action, they claimed, infringed their copyrights, and thus Sony was liable for facilitating infringement by marketing the Betamax to consumers. Universal Studios sought relief for these damages through money damages and an injunction against the manufacture and marketing of Betamax recorders.
In its ruling, the court explained its reasoning for supporting the legality of the Betamax. It found that the average Betamax owner uses the device to record programs he cannot view as it is aired. This practice, termed "time-shifting," widens the audience for television media consumption. Thus, the majority of copyright owners didn’t even object to this use of the Betamax. However, there were two respondents in this case who did object to “time shifting” but were unable to prove that there was any material economic harm to their copyrights. The court decided that because there were “substantial non-infringing” uses of the Betamax, Sony was not liable and would be allowed to further manufacture and market the Betamax.
The dissenting opinion gives more detail in regards to the arguments made by Universal. The Studios claimed that video recorders would result in a decrease in revenue by reducing the marketability of their works in movie theaters and through diminished demand for prerecorded videotapes. They also feared that video recorders would decrease their viewing audience, and thus the licensing fees they could charge. While these damages could not be proved, the dissenters extolled the Studios view that as long as there exists a “reasonable possibility” of harm, then the use should be considered an infringement.
Importance for thesis:
This case demonstrates the thought process that media companies went through when considering how to react to the VCR. The emphasis that the Studios placed on protecting their current sources of revenue, despite the fact that they couldn’t prove the VCR even threatened these income streams, exemplifies their short sighted viewpoint. Additionally, the case demonstrates how media companies fixate on maintaining their current business models without considering the larger changing competitive landscape. The results of adopting this stance will allow me to demonstrate the negative consequences of trying to fight technological evolutions.