First the good news:  It seems clear from published reports of this morning's argument that at least two members of the DC Circuit don't think the FCC has jurisdiction to issue the flag rules. 

"You're out there in the whole world, regulating. Are washing machines next?" asked Judge Harry Edwards. Quipped Judge David Sentelle: "You can't regulate washing machines. You can't rule the world."

That's great.  And it has enormous implications for the future of internet regulation.  The FCC is using the same "ancillary jurisdiction" argument to support its efforts in "social policy" regulation of IP-enabled services.  Now the FCC will have to rethink -- and will have to go up on the Hill to seek statutory authority.  This will be a battle. 

Now, the bad news.  It sounds as if Judge Sentelle didn't think much of plaintiffs' standing (ability to claim injury and seek the help of the courts) to challenge the broadcast flag rules.  It seems to me that the libraries certainly have special injury here -- they won't be able to make fair use of materials in ways that otherwise are guaranteed them.  Because the library association is a plaintiff in the flag case, there's a good chance that they can answer the standing questions that were raised today.  And I'm also hopeful that the DC Circuit judges involved wouldn't have said so much about the merits of the jurisdiction arguments if there wasn't standing to begin with.

On balance, it's a great day for the internet.  If only some consumer electronics manufacturers would see their longterm interests more clearly -- it has to be more important to be able to innovate in ways consumers will like than to build to a required standard that no consumer wants.  There is no market demand for the broadcast flag.