The US Appeals Court for the DC Circuit has vacated the FCC's digital TV Broadcast Flag regulation. The court ruled that Congress never gave the Federal Communications Commission the authority to regulate consumer electronics devices with respect to what they do after a transmission has been received, which is what the Flag Order amounted to.

Under the rule, producers were to be required to embed a Broadcast Flag into programs transmitted via DTV signals. Even though a program, once transmitted, would reside on the playback device's hard drive, the user would be prevented from (for example) archiving it to a DVD in order to save hard drive space. A more detailed description of the regulation can be found here.

"In sum," wrote the Court in its decision on the case (American Library Association v. FCC), "because the rules promulgated by the Flag Order regulate demodulator products after the transmission of a DTV broadcast is complete, these regulations exceed the scope of authority Congress delegated to the FCC." The full text of the decision is available as a PDF file here.