Is my car a "digital audio recording device?" The DC Circuit Court of Appeals rules that in-car CD-copying devices do not fall under the Audio Home Recording Act

Is it a "stretch" to apply AHRA to in-car CD copying devices?

For several years, automakers have offered a feature that allows consumers to copy the contents of CDs onto hard drives within the vehicles for playback without the CDs present. In 2014, the Alliance of Artists and Recording Companies (AARC) filed suits against General Motors, Ford, and Fiat Chrysler, as well as their suppliers of these recording devices, DENSO, Clarion, and an American subsidy of Mitsubishi; these suits were consolidated in 2015. The suit alleges that the recording devices featured in these vehicles are "digital audio recording devices" under the Audio Home Recording Act (AHRA).

Last month, the DC Circuit Court of Appeals affirmed the lower court ruling that these recording devices did not fall within the restrictive definitions of the AHRA; as a result, these automakers and suppliers are not required to pay royalties for copying performed by users using the devices, nor must they implement copying control technologies for these devices to comply with the act. Let's explore how the court reached this decision.

Background

The AHRA was the result of an intended compromise; lawmakers were forced to balance the concerns of two crucial interests. On one hand, there were the concerns of copyright holders regarding the rise of time-shifting and reproduction technologies.  On the other, the legislature considered the concerns of the burgeoning computer industry regarding the potential stifling of innovation that may result from restricting personal computers and computer storage media generally.

In order to understand the limited effect of the AHRA, this history and subsequent cases concerning the act must be considered.

Rise of Reproduction Technology

Prior to the advent of digital audio, analog audio reproduction had substantial fidelity issues; digital audio tape ("DAT") quickly became popular and was even "one of the first digital recording systems to become employed in archives in the late 1980s and 1990s due to their lossless encoding." In Sony Corporation of America v. Universal City Studios, Inc. (the Betamax case) the U.S. Supreme Court ruled that 'time-shifting' constitutes fair use. Nimmer on Copyright noted that the effect of the ruling was to embolden “DAT manufacturers to claim immunity” for home audio taping. This prompted the recording industry to lobby for legislation to curb high-quality audio reproductions.

Compromise and Resulting Text 

This Kat applauds the legislature that crafted the AHRA in striving to form a compromise between protecting the rights of authors while not restricting the innovation that put those rights at risk. The AHRA has a narrow scope, applying to a limited set of covered devices. The legislation that resulted has three primary features:

1. Manufacturers and consumers are free from liability for noncommercial uses of covered devices  to produce "digital or analog musical recordings."
2. Royalties are levied upon the sale of covered devices and recording media. 
3. Manufacturers and importers are required to implement a "serial copy management system." This would not allow subsequent reproductions from an earlier user reproduction, while allowing unlimited reproductions from a "first generation" copy.

The narrow scope came at the insistence of the computer industry, which received exemption from the act. Much of the compromise came in the narrow definitions of "digital audio recording device" (or, covered device) and "digital musical recording." "Digital audio recording devices" are those that have a "primary purpose" of making "digital audio copied recording[s]." "Digital musical recordings" are "material objects" in which "only sounds" and "no computer programs" are fixed. "Digital audio copied recordings" are reproductions in a "digital musical recording" format, made either from another "digital musical recording" or indirectly via transmission.

The 9th Circuit confirmed this in A&M Records, Inc. v. Napster, Inc., noting 

"[u]nder the plain meaning of the [AHRA's] definition of digital audio recording devices, computers (and their hard drives) are not digital audio recording devices."

In-Car CD Copying Devices

The lower court, the United States District Court for the District of Columbia addressed three issues on a motion for summary judgement:

1. Whether "digital audio copied recordings" are "digital musical recordings."
2. Whether the hard drives in defendant vehicles are "digital musical recordings," thus making the recording devices "digital audio recording devices."
3. Whether recording the audio to a partition with "only sounds" made the recording devices "digital audio recording devices" with the partitions serving as "digital musical recordings."

For the first question, the court offered the graphic below to explain the issue at hand: 

The question is whether the input on the left and the output on the right are the same; in particular, does the narrow definition of "digital musical recording" apply to "digital audio copied recordings?" The district court held that it does, restricting covered devices to those with a primary purpose of reproducing "digital musical recordings".

Second, because the hard drives in defendant vehicles contained programs and other non-audio material, the district court ruled that these were not digital audio recording devices, dispensing the second issue. 

As to the question of the partitions, the district court noted that these are not distinct, material objects. Thus, the partitions are not "digital musical recordings" and all claims regarding these reproduction devices - save for claims regarding reproductions to flash drives - were resolved.

DC Circuit Court Analysis

Following a 2018 appeal by AARC, the case came before the Court of Appeals in the District of Columbia Circuit. Last month, the court affirmed the rulings of the district court, solidifying another limitation to the AHRA.

Regarding the first issue, the court ruled that the text of the statute clearly supported the district court's ruling. The phrase, "directly from another digital musical recording" in the definition of "digital audio copied recording" indicates that these two terms are meant to be construed as identical. The circuit court ruled that the plain language of the AHRA called for this interpretation, rebuffing the AARC's arguments based on spurious legislative history; this preserves the restrictive "primary purpose" requirement of the statute.

For the second issue - the AARC's primary theory of liability - the court affirmed the lower court's ruling in no uncertain terms; the court held that "the undisputed evidence shows that the hard drives to which their devices reproduce audio CDs are not themselves digital musical recordings under the Act." Citing the Napster case and an earlier 9th Circuit decision, RIAA v. Diamond Multimedia Systems, the court quickly dispensed with this theory of liability.

The AARC provided this depiction of partitions

Turning to the third issue, AARC asked the court to construe hard drive partitions as distinct, material objects. Because the audio is recorded to a single partition that contains "only sound," this construction could make the relevant partition a "digital musical recording"; the device would therefore be a "digital audio recording device," subject to the Act.

The court found this argument "[m]etaphysically" interesting; despite this, it did not persuade the court. Much like how "tangible object" does not include a fish in the context of the Sarbanes-Oxley Act, the AHRA's definition of "material object" does not include partitions. The court looked to the types of recording media that congress intended to cover with the AHRA - e.g. CDs and DATs - to determine that partitions are not within the intent of the act; users do not interact with a partition as a "material object" as they would with a CD or cassette tape.

The court made a crucial distinction, however;  the holding that partitions are not "material objects" does not apply to the definition of the term with regards to phonorecords - only "digital musical recordings." This distinction leaves open the possibility that the producers of these devices and vehicles could be found liable for copyright infringement not through the AHRA; despite this possibility, the ruling is a win for the automakers as the AHRA remains narrow.

Issues Left Unaddressed

The court found it pertinent to specify four issues raised by this matter that the ruling does not address. First, while the court agreed with the 9th Circuit in Diamond that computer hard drives are not "digital musical recordings," it did not extend the holding to say that further reproduction to hard drives is also outside of the AHRA. This avoids the claim left open regarding flash drives, among other issues.

Second, the court did not address future or alternative technologies under the AHRA; this holding is limited to these automotive CD recording devices. Third, the court noted that this ruling does not exempt the automakers form liability altogether; rather, the court points back to the distinction raised regarding partitions. Lastly, the court concluded by noting that the AARC is free to seek a legislative solution.

Comment

Has the AHRA fallen?

Although the court did not address future or alternative technologies, this Kat is confident that it will not arise very often. With the advent of phones and music players with general purpose hard drives, as well as streaming services, consumers are interacting with AHRA covered devices less and less. Although the automakers may lose on the claim regarding flash drives, flash drives are capable of containing data beyond "only sounds" and thus may be exempted as well.

Regarding the court's reference to a legislative option, this Kat is doubtful that any such measure would pass in the near future. Despite the overwhelming support (410-6) in the House of Representatives, the small-claims copyright bill (CASE Act - earlier Kat post here) has been stalled in the Senate for months. It would be hard for this Kat to imagine the legislature exerting the political will to expand the AHRA as things currently stand.