Last year, Fred raised the issue of commercial skipping under FECA. One of the provisions of that act was to legalize the skipping of "limited portions" of a work in the context of profanity filters. The Copyright Office reasoned that this exemption didn't apply to commercial skipping, however, because "the commercials are, themselves, separate and independent motion pictures for the purposes of the Copyright Act, and thus the Act would immunize skipping of "limited portions" of commercials, but not entire commercials."
I'm not quite sure I can get my head around their reasoning. It seems to me that, if the broadcast and commercial are truly independent, skipping the commercials wouldn't be an issue. The issue at hand was whether transformative actions like skipping commercials or censoring profanity constituted an authorized derivative work. If you view the show and commercials as independent works, then you shouldn't need FECA to legalize this at all. Since when can't you skip an entire work?
There is little doubt that the commercial would already be protected on its own. ndeed, I think the compilation classification is probably appropriate, but I still fail to see how this distinction fundamentally changes the fact that the commercial is still a "limited portion" of the compilation. Section 103 explicitly states that protection in the compilation is "independent of, and does not affect or enlarge the scope, duration, ownership ... of any protection in the preexisting material". This also raises the question of whether the requisite originality has been met in arranging the compilation.
This suggests to me that, either way you look at it, commercial skipping should be covered. One relevant point that Fred raised afterwards was that in the course of time-shifting a reproduction is necessarily made, and it is worth noting that the analysis may change if you're not reproducing the compilation in its entirety.
More recently was a Syracuse Law Review article that suggests that TiVo is guilty of inducing infringement under a Grokster analysis. The premise is that skipping commercials constitutes infringement and by encouraging their users to skip commercials the DVR makers are inducing infringement. (I couldn't seem to find a link online, but you can find it on Lexis for sure, 56 Syr. L. Rev. 27).
Rebecca Tushnet dismisses Ned's analysis that TiVO is liable because they are "profiting at the expense of television networks" (Ned's words), pointing out that there is, after all, "no such thing as a natural right to a business model".
It seems the burden is pretty high here to show inducement. First you have to prove that actual infringement occured, and you can probably guess where I fall on that question based on my earlier analysis. Ned focuses on the reproduction issues that Fred raised, and I'll concede that it's at least plausible that some court will find infringement here (although I have said in the past that I believe the reproduction right should be relaxed in the digital context).
Then you have to show under a Grokster analysis that the DVR makers actively induced infringement. The test, as described in the opinion:
We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties
Ned offers evidence that Tivo encourages its users to record works that would include protected works. That would be fine if he was was alleging that time-shifting itself was infringing. For the issue of commercial skipping, Ned says "nevertheless, an argument can be made that the mere presence of QuickSkip is sufficient to find that Microsoft and ReplayTV encourage users to do so."
I really think type of analysis completely misses the point of Grokster. The active inducement test was a way to punish the bad actors as evidenced by their actions, not the mere presence of a feature.