BROADCAST FLAG LICENSING PROVISIONS COULD CREATE MONOPOLIES

The competitive issues are raised by several provisions of the agreements that companies would have to sign to use the broadcast flag technology, notably the nonassertion provisions, according to Jonathan Rubin. He wrote the report for Washington-based AAI, which calls itself independent, nonprofit, and an alternative to conservative think tanks. The nonassertion provisions mean a person buying the broadcast flag technology license couldn’t benefit from any of its own patents, even if it later determined that they were improperly included in the broadcast flag technology itself, Rubin said. Licensees also wouldn’t be able to benefit financially from improvements they make to the broadcast flag technology. Patent-holders say the nonassertion provisions are needed to prevent licensees and others from improperly blocking use of the flag, but the AAI said the provisions “go far beyond what is necessary.”

Several provisions of the content protection licenses are “anticompetitive, and in fact, are aberrant and atypical,” the AAI said in an ex parte filing. It said they may violate the Sherman Antitrust Act, and the “monopoly” owners of the flag technology could “use their market power to stifle competition.”

Antitrust protections for broadcast flag “can be feasibly adopted” as a precondition to approving the flag technology, AAI said, and “the potential anticompetitive harm from failing to do so greatly outweighs the cost of any delay that may arise.” It said the FCC “has a public interest duty to perform a competitive analysis” of the content protection market.

But the FCC “may not have the expertise to decide the competitive effect” of the nonassertion provisions, Rubin told us. At the same time, the FTC and Justice Dept. are working on policies involving the relationship between intellectual property and antitrust, he said; the FCC could be effectively preempting that long-delayed study by ruling on the broadcast flag. The bottom line, Rubin said, is that the govt. needs to do a competitive analysis of the flag: “We don’t care who does it.”

The analysis doesn’t have to significantly delay the broadcast flag, Rubin said. He said FCC options might include: (1) Approving the flag with the condition that the nonassertion provisions get further antitrust approval. (2) Including a provision sunsetting the nonassertion provisions after a year or so. (3) Delaying the flag approval briefly pending the competitive review.

The NFL and MLB said they support the broadcast flag but object to proposals by TiVo and others that would allow TiVo owners to use the Internet to distribute TV shows to up to 19 other persons. NFL Comr. Paul Tagliabue called the TiVo plan a “very important issue” that would endanger the current system of only providing game broadcasts to specific regions: “We could even be forced to rethink our strong preference for keeping most of our games on free broadcast television.”

TiVo-based redistribution of TV programs is different from mass redistribution such as that of ICraveTV, Tagliabue acknowledged, but he said “hundreds or thousands of TiVo subscribers making content available to up to 19 people each… would add up to widespread, and we believe ‘indiscriminate,’ redistribution very quickly,” resulting in “widespread copyright infringement schemes.”

Sports bars and others could use the Internet redistribution to get free access to programming they're not otherwise entitled to, without paying regular fees, MLB said in its ex parte filing. MLB and the NFL said the problems could be largely solved by requiring “proximity controls,” which would use credit card or other authorizations to assure that programming isn’t being distributed outside the region it’s meant for.