While I agree with Mark Cuban that the lawsuit is a mistake, I thought it was worth discussing why - from a legal perspective - the network DVR is an issue.
Copyright gives the owner a limited monopoly over a few aspects, most notably the ability to reproduce and distribute the work.
In a "normal" DVR, there are two points where these rights come into play: a reproduction and distribution in the initial broadcast, and a reproduction when saving to the hard drive. (Under current case law, even taking a digital file and loading it into memory to play is technically a "reproduction", fixed for purposes of copyright). The former is obviously licensed by the copyright holder. What allows the latter is a concept known as fair use. (Remember, I said it was a limited monopoly).
There are four factors to determining whether something qualifies as fair use:
- the purpose and character of the use
- the nature of the work
- the amount used
- the effect on the market for the work
None of these factors are dispositive, but the personal element of time-shifting with a DVR (or in the past with a VCR) is what really makes the difference. It's not a commercial use (i.e., for home viewing) and doesn't affect the market for the television show (if anything, it may have a positive effect on the market because you may watch something you otherwise wouldn't).
The network DVR, which Mark Cuban calls a "virtual DRR", is a little different. Instead of broadcasting (allowed by explicit or implicit license) and leaving the second reproduction up to the user (allowed as a fair use), the "second" reproduction is instead happening on Cablevision's central servers. Ultimately, the behavior is more like Video On Demand (VOD) than a "recorder".
It's a subtle, but important difference - and shifts the fair use analysis.
Unlike when I record something on my own DVR, the use is now commercial in nature. Or as the court put it:
[I]t is a complex system that involves an ongoing relationship between Cablevision and its customers, payment of monthly fees by the customers to Cablevision, ownership of the equipment remaining with Cablevision, the use of numerous computers and other equipment located in Cablevision's private facilities, and the ongoing maintenance of the system by Cablevision personnel.
Additionally, it can arguably have a negative impact on the market. If you have all of HBO's content available even if you didn't record it, HBO is probably going to lose subscribers to its premium "HBO On Demand" service. having HBO's content "on demand", even if you didn't record it, hurts the market for HBO On Demand, which it charges a premium for.
Now, I say "arguably" there because I buy into Mark's idea that "employed content is always a better business model than unemployed content". And to reiterate, I am for uses like this, and I think we'll eventually get there. The only problem is, like with music, the business models and the underlying laws haven't quite caught up to the technology.