The INDUCE Act (IICA) and the Broadcast Flag

A little over a week ago, I discussed how the IICA (née INDUCE Act) might end up extending the already overbroad Broadcast Flag Treaty (INDUCE Act + Broadcast Flag Treaty = ???). Today I continue my series on how various aspects of the copyright law may interact with the INDUCE Act by discussing the FCC's domestic broadcast flag regulation. Read on...

First, a caveat. Although the broadcast flag walks like copyright regulation and quacks like copyright regulation, the FCC assures us it is not copyright regulation and makes no changes to copyright law. This is good, because the FCC doesn't have authority to regulate copyright (FCC Sued Over Broadcast Flag - Yay! and Significant Procedural Victory in Broadcast Flag Lawsuit).

Anyway, since the broadcast flag is not actually copyright law, the INDUCE Act will not directly affect it. However, enforcement of the broadcast flag will certainly be affected. After all, in its order, the FCC found (among other things) that (Report and Order and Further Notice of Proposed Rulemaking):

We recognize that piracy concerns are likely to be addressed through a number of approaches, including consumer education, law enforcement, and changed business models. In order to effectively address these concerns, however, we believe that technological steps must be taken now before the DTV transition matures any further. [emphasis added]

If a company violates the broadcast flag, not only will they be in trouble with the FCC, but the FCC's findings in the broadcast flag report will be cited as evidence against them in an INDUCE Act infringement suit. Reasonable men would have taken the FCC's findings into account, wouldn't they? And the government wouldn't be wrong about the steps that "must be taken" to reduce piracy, would they? Thus, violators of the broadcast flag regulations will not only get FCC fines, but would likely be easily nailed by a subsequent civil infringement lawsuit (with its massive penalties). Ouch.

Also, imagine if we are lucky and the courts force the FCC to abandon broadcast flag regulation. This wouldn't happen for months. In the meantime, many companies are gearing up to produce HDTV equipment that meets broadcast flag requirements. Indeed, some companies are already selling such compliant equipment and would continue to do so even in the absence of FCC requirements. However, what happens to the companies that decide not to go along with the broadcast flag regulations once they are eliminated? Again, the FCC's own findings would be used as evidence in an INDUCE Act case against those who don't play along with broadcaster's DRM fantasies. The INDUCE Act might be enough for the copyright holders alone to force consumer electronics companies into compliance with the broadcast flag, even if the FCC couldn't require it.

Another possible effect of the broadcast flag regulation in light of the INDUCE Act is that the Act may close the broadcast flag export loophole (Broadcast Flag Loophole Watch - Manufacture for Export). If the broadcast flag regulations are necessary domestically, I'm not sure why they wouldn't be similarly necessary for those devices exported overseas. Now, maybe the FCC doesn't see why we should cripple our sales to countries overseas, but why should Hollywood be so reticent? After all, we know what all those lousy Canadians who live near the border will do with their HDTV tuners ... they'll capture US HDTV video signals and pirate them!