Some clarity may finally emerge around promoting DVRs as commercial killers.

Stewart SchleyFrom the evil Dr. Caligari of the silent film era to the freaky Ghostface of the modern “Scream” film series, Hollywood has produced an impressive lineup of scary characters over a 90-year run of horror movie-making. But no fictitious villain ever elevated Hollywood’s chill meter as high as a real-life industry entrant that made its premiere 13 years ago at the Consumer Electronics Show.

The upstart electronics platform was known as Replay Networks. Devised by Anthony Wood, now the CEO of Internet video receiver maker Roku, Replay was one of two prominent makers of “personal video recorders” that stormed the 1999 CES. The other was TiVo, of course. Both had disruption written all over them, but it was Replay’s brash promotion of an automated commercial-skipping feature that made it stand out as a television industry nightmare.

It seemed perfectly fitting, then, that attorneys for Paramount Pictures chose Oct. 31, 2001 – Halloween – as the day to file a lawsuit against SonicBlue, the owner of Replay Networks.

The objective of the legal challenge, which Paramount led on behalf of a group of powerful television interests, including Disney and CBS, wasn’t to take issue with the nifty digital video recording functionality pioneered by Replay Networks and TiVo. The U.S. Supreme Court’s ruling in the 1984 “Betamaxcase” had already established that TV viewers were within their rights to make personal copies of TV shows using videocassette recorders. Replay’s PVR was simply a better mousetrap for achieving the same result.

The lawsuit, instead, aimed to banish the idea that PVRs – the acronym would soon morph to DVR – could be intentionally promoted to enable and encourage blatant skipping of commercials. Advertising, after all, represented a vital revenue source for television producers and networks. To eliminate commercials so easily from the viewing experience threatened to choke off an essential lifeline for television in general.

As Paramount’s attorneys put it: “Defendants’ unlawful scheme attacks the fundamental economic underpinnings of free television and basic non-broadcast services and, hence, the means by which plaintiffs’ copyrighted works are paid for.”

This declaration of war on the lifeblood of television, the complaint argued, was an attack on the underlying copyrighted video content itself. Kill one, the argument went, and you’ve killed the other.

“By eliminating the embedded advertising, defendants’ copying-and-commercial-deletion feature will (as to those viewers who employ the feature) eliminate the source of payment to the copyright owner for the very program being viewed,” the complaint said.

It was a forceful argument, and one that deserved its day in court. Just how much could technology twist and bend the original product of TV distributors to suit the whims of viewers? Everyone from the studios to the Electronic Frontier Foundation, guardsman for viewer rights, wanted to know the answer.

And in the end … nobody found out. SonicBlue’s 2003 bankruptcy filing and the sale of Replay’s assets to Japan’s D&M Holdings did to Paramount’s lawsuit what the teenager Nancy Thompson did to child killer Freddy Krueger in the original “Nightmare on Elm Street” – vanquished the villain. A second attempt to get some sort of legal closure in the case also fizzled after the studios refused to sue a group of Replay customers who had sought a judgment.

Since the Replay imbroglio, DVR makers, including cable’s set-top manufacturers, have been careful not to publicly promote commercial-skipping capabilities. But the issue rose to the forefront again in May when Dish Network introduced a DVR capability it calls Auto Hop, which blacks out commercials from certain broadcast network TV programs the device automatically records.

The feature was immediately denounced by several TV network executives as an affront to the ecosystem, and it could provoke a legal challenge. If that happens, some clarity may finally emerge around promoting DVRs as commercial killers. If it doesn’t, the issue will be just like Freddy Krueger: bound to return.