In an ongoing battle between owners of television program copyrights and the entrepreneurs who develop innovative technologies to widely distribute their work to viewers, on January 18 and 20, 2011 the Supreme Court of Japan heard two cases involving the “space shifting” of streamed television programs, or the transfer of programs to remote receivers around the world for recording and viewing.1

With many Japanese living outside Japan, including in the United States, a considerable number of these ex-patriots are eager to watch Japanese television programs in their homes. Until recently, rental videocassettes in overseas Japanese markets catered to this need. Typically, those cassettes contained dated programming, but new streaming technology provides a more technologically advanced and timely option.

Some years ago, Sony released “location free” devices that consist of a recorder/transmitter and a receiver/controller. The recorder electronically transfers the recorded content to a remote receiver controlled by a user. This constitutes “space-shifting.” One of the defendants in the recent cases is an entrepreneur who used Sony’s location free technology to enable users to watch television programs on demand via the Internet. The other defendant had developed an original space-shifting technology similar to Sony’s and a new business model to meet the demand for streaming broadcasts. At first, these devices were intended for personal use, allowing users to watch programs not only in their living room, but in other locations in their homes. Programs could also be watched while travelling or at a location outside the home, such as a cafe or a hotel, using a wireless network through a laptop or hand-held gaming device, such as a portable Sony PlayStation.

Unlike other copyright systems, Japan’s copyright law has no provision for fair use;2 instead, it allows individual exemptions and private duplication of a copyrighted article. Therefore, Sony’s location free technology, or similar technology, in and of itself is not illegal. Just like a video or DVD recorder, Sony’s location free technology is perfectly legal.  

Some entrepreneurs have commercialized the use of space-shifting technology internationally, allowing users to record television programs while abroad. Under this new business model, these entrepreneurs have made improvements to location free devices or have developed their own devices, and sold or leased these devices to Japanese families going abroad. Previously, and as long as purchasers left their recorders at a family member’s house, for example, their use was deemed to be private and no cause for concern.  

In the first stage of this business, a provider who was brought before the court kept the user’s recorders (equipped with the transmitting functions) on its own business premise. In other words, the provider supplied an antenna, a splitter and a centralized network system, managed by the provider, on site. Users, on the other hand, took their receivers (with their control functions) abroad, set their recorders to record streamed programs via the Internet, downloaded the programs to their receivers and played them.  

The Tokyo District court held that this enterprising business directly violated copyright law by supervising and facilitating users’ duplication of copyrighted content, thereby earning a profit for its service.3 Under Japanese copyright law, direct infringement is eligible for injunction, whereas contributory infringement is hardly recognized. Thus, copyright holders wishing to pursue injunctive relief must sue infringers on the grounds of direct infringement.  

Consequently, after studying several court cases, the entrepreneurs devised a new business model in which recording devices were sold or leased to users, and users controlled their recorders directly via their own remote control units, thereby enabling users to record programs will from the service provider’s offerings. This eliminated the drawbacks of the previous centralized recording system. In this new plan, users operated their own recorders and controllers one-on-one, which is analogous to leaving a recorder in a family member’s house while one is overseas. When hearing these types of cases, the lower courts’ decisions have been inconsistent, but the recent Supreme Court rulings have at least for the moment resolved any ambiguity over the permissible use of recorders to capture and stream televised content.

The Supreme Court … held that, because the provider received ground-based broadcasting and input data to the recorders on its site, and that without such assistance users could not duplicate programs, the provider played an instrumental role in the duplication of copyrighted content.

In one case, broadcasting companies insisted that their interactive transmission rights4 and rights of making contents transmittable5 had been infringed. In this case, on January 18, 2011, the Supreme Court held that by connecting to the Internet the recorders could automatically transmit content to the users on demand, and by inputting streaming content continuously to recorders the provider had directly infringed such rights. The case was remanded to the Tokyo High Court.6

In an earlier case, on January 27, 2009, the Tokyo High Court decided that the provider only aided users’ legitimate private duplication based on the highly improved and developed new technology, and that no illegal acts were committed.7 But, on January 20, 2011, the Supreme Court overturned this decision and held that, because the provider received ground-based broadcasting and input data to the recorders on its site, and that without such assistance users could not duplicate programs, the provider played an instrumental role in the duplication of copyrighted content. Therefore, the provider was found to have directly infringed the owner’s duplication rights and the case was remanded to the Tokyo High Court.8

Understandably, these decisions have disappointed entrepreneurs who provide space-shifting services and/or rental or sale of these devices. The new technology, admired by the Tokyo High Court in this area, will become less available because Sony has decided to withdraw location free technology from the market.

These recent Japanese Supreme Court decisions on space-shifting are facing criticism on the grounds that their range is still vague and the law will have negative effects on innovative business models by penalizing streaming content service providers. Additionally, the new case law appears to reward major television broadcasters for their chronic failure to innovate and develop new business models to meet the needs of the public whom they ostensibly exist to serve. This appears to be an area of the law where entrepreneurs will continually strive to develop new business models to implement space shifting technology and courts will struggle to keep up.