The decision is a victory for the consumer-electronics industry, which is entangled in a dispute with major content providers about where responsibility lies for protecting copyrighted material in the digital age.
In April, a federal magistrate ordered Santa Clara-based Sonicblue to create software that would monitor every show that customers watch, every commercial they skip and any programming they transmit to others via the Internet.
The information was then to be given to networks and studios who are suing Sonicblue.
Paramount Pictures Corp., Disney Enterprises Inc., the three major television networks and 23 other entertainment companies sued Sonicblue and its ReplayTV subsidiary last fall, arguing their latest digital video recorder contributes to copyright infringement by allowing users to skip commercials and to use the Internet to share recorded material.
Sonicblue has publicly portrayed the suit as an attack on consumer privacy, saying the entertainment industry is trying to force the firm to spy on its customers. Individual files on consumer behavior could be matched with identities in a violation of privacy, the company contends.
"The judge has shown she has respect for consumers' rights," Andy Wolfe, Sonicblue's chief technology officer, said Monday in response to the court's decision.
But in her ruling released late Friday, Judge Florence-Marie Cooper avoided any legal discussion of the privacy issue. Instead, she said the order would have required Sonicblue to create data for plaintiff lawyers that does not currently exist.
"A party cannot be compelled to create, or cause to be created, new documents solely for their production," she wrote in her decision. "Defendants would be required to undertake a major software development effort, incur substantial expense, and spend approximately four months doing so."
The entertainment companies can obtain information about how customers use their ReplayTV devices by conducting traditional surveys, she said.
Digital video recorders store TV programming on a hard drive instead of video tape. SonicBlue's ReplayTV 4000 also connects to the Internet and allows users to send files ranging from personal photos to full-length copyrighted movies over the Web.
The company also promotes the device as letting users watch recorded shows without commercials. One in five DVR owners never watch any commercials, according to a recent survey by NextResearch, a research firm in Memphis.
