‘FAMILY MOVIE’ BILL CLEARS HOUSE COMMITTEE

Voting to send the Family Movie Act of 2004 (HR-4586) to the full House, the Committee rejected 3 amendments that would have defined the type of content to be filtered, required the filtering technology to be licensed royalty-free and set a 3-year sunset on the legislation. The bill -- co-sponsored by Subcommittee Chmn. Smith (R-Tex.) and Rep. Boucher (D-Va.) and introduced last month (CED June 18 p3) -- retained restrictions on the use of filtering software, mainly in the areas of public display and creating derivative works.

HR-4586 adds a provision to copyright and trademark law to that skipping or “making limited portions of audio or video content” in a movie “imperceptible” doesn’t violate the copyright owner’s exclusive rights. It passed despite objections from some Committee members that passage would influence pending litigation between Hollywood groups and filtering advocates, as well as court-ordered private negotiations toward a settlement.

As passed, the bill would make movie filtering legal as long as display of an altered work is limited to private home viewing.

Public display of an altered version outside the home -- such as in a movie theater, social club or religious organization -- is prohibited. Additionally, the bill bars making a permanent copy or “derivative work” from the altered version. That restriction applies to home viewers as well as companies whose filtering technology is used. Filtering providers would be required to provide clear and conspicuous notice to viewers that the altered movie isn’t the performance intended by the director or copyright holder. Companies failing to provide that notice would be subject to a civil suit by the copyright owner, with damages up to $1,000 for each copy of a work that has been filtered. That requirement applies only to filtering technology or products manufactured at least 180 days after enactment.

Additionally, the bill would prohibit distribution of edited versions of movies by mail or on the Internet. Besides the prohibition against making permanent of “fixed” copies of any altered versions of movies, the bill would outlaw adding new material of any type -- audio or video -- to a motion picture, as well as colorizing a b&w film. The use of filtering on a pirated copy of a movie also is barred.

With the bill headed for the floor, the most prominent beneficiary would be ClearPlay, which provides the filters for DVDs viewed through PCs or the recently discontinued RCA player. But the Salt Lake City company faces litigation that could be more troublesome than suits Hollywood filed against it and other filter providers.

In May, ClearPlay and co-founders Lee and Matthew Jarman were sued for patent infringement, misappropriating trade secrets and breach of contract. The suit, filed in U.S. Dist. Court, Miami, by Boca Raton, Fla.-based Nissim, asks for preliminary and permanent injunctions against the manufacture of sale of devices that use the ClearPlay filters, including RCA’s DRC232N DVD player. It also seeks confiscation and destruction of devices said to infringe 4 Nissim patents, triple damages under federal law, double damages under Fla. law, and court costs. Although the amount of damages wasn’t specified, Nissim’s suit claimed losses “estimated to exceed tens of millions of dollars.” ClearPlay has denied the charges.

Nissim -- which claims more than 20 U.S. patents and others pending on various aspects of the DVD format -- cited 4 that cover skipping or filtering of content it alleged ClearPlay infringed. One of the patents is part of the DVD specification and enables the hardware to play more than one version of a movie contained on a single disc -- for example, omitting certain content to render an R-rated movie from the NC-17 version. The other 3 patents pertain to filtering separate from the physical DVD, but applied to the DVD’s content from an outside source, such as a another disc or a software download. Those patents aren’t part of the DVD spec, but apply to a system Nissim has been marketing since 1997, called CustomPlay. It enables a viewer to set preferences to either play or omit a variety of content on the discs, such as profanity, sexual or violent content, among others.

In charging misappropriation of trade secrets and breach of contract against ClearPlay, Nissim said it was approached in Jan. 2000 by Matthew Jarman to learn more about CustomPlay, and in return for the information the Jarmans signed a confidentiality agreement. After the ClearPlay filtering system for PCs was launched in March 2001, Nissim informed ClearPlay it was infringing the company’s patents and demanded it stop or license the technology, Nissim said. Licensing discussions failed, and subsequent warnings to ClearPlay went unheeded, Nissim said. It charged that during that time, ClearPlay was working with RCA parent Thomson on a DVD player that would incorporate the ClearPlay PC filters “that ClearPlay and its principals knew constitute an unlicensed infringement of the Nissim patents.”

In a statement explaining its decision to discontinue the ClearPlay DVD player, Thomson said: “Thomson was recently notified by Nissim of their claims regarding unlicensed infringement of Nissim’s U.S. patents by ClearPlay. Therefore after completing shipment of its first run of RCA DVD players equipped with the ClearPlay parental control feature… we are no longer distributing this model. We will continue to monitor the litigation situation between Nissim and Clearplay.” Reacting to the Nissim suit and withdrawal of the RCA player, ClearPlay said it would continue to develop and support filters for the RCA players. The company also said additional ClearPlay-enabled products were scheduled for U.S. introduction later this year, and it would expand internationally next year.

The controversy over content filtering goes back to 2002, when a retailer that edited movies at customers’ request -- CleanFlicks -- sued the Directors Guild of America (DGA) and 16 movie directors, seeking a ruling that the practice was legal. The DGA countersued CleanFlicks, and added Utah-based ClearPlay and others to the complaint of copyright and trademark infringement. The MPAA joined the suit in Dec. 2002.

ClearPlay countersued separately in early 2003, claiming the directors and studios had overstated their rights under copyright law and seeking a summary judgment that movie filtering software was lawful. The company further claimed its software doesn’t physically alter movies, but merely uses a DVD’s time-codes to mark frames to be skipped or audio to be muted. It also argued that the content owners and producers have no right to control how customers view the DVD movies they've purchased or rented. No trial dates have been set in either Hollywood related case.