Today, in American Library Association, et al. v. Federal Communications Commission, the U.S. Court of Appeals for the D.C. Circuit blocked the FCC's "Braodcast Flag" rules. The controversial rules required digital television receivers (DTVs) to embed code into all transmitted programs that would prevent redistribution of the programs. This code is also known as a "flag."

When the Commission enacted the broadcast flag regulations in 2003, it did so under the ancillary jurisdiction of Title I of the Communications Act of 1934. Title I states that the FCC "may exercise ancillary jurisdiction only when two conditions are satisfied: 1) the Commission's general jurisdictional grant under Title I covers the regulated subject, and 2) the regulations are reasonably ancillary to the Commission's effective performance of its statutorily mandated responsibilities."

The Court held that while Title I does authorize the FCC to regulate a DTV apparatus during transmission, it does not authorize regulation of an apparatus after transmission is complete. Thus, "there is no statutory foundation for the broadcast flag rules, and consequently the rules are ancillary to nothing."

End result: the FCC's Flag Order is reversed and vacated insofar as it requires demodulator products manufactured on or after July 1, 2005 to recognize and give effect to the broadcast flag.