Rather than try to rehash something that I don’t know enough about to describe without making some errors, I’ll point you to a few places that discuss the high impact court ruling.

Essentially, the U.S. Court of Appeals ruled that the FCC had no rights in forcing manufacturers to include copy protection technology (specifically, the “broadcast flag”) that was intended on limiting unauthorized distribution of over-the-air TV on the internet. However, introduction and mandate acceptance of such broadcast flag would have prevented much innovation in the area by essentially blocking out Open Source/Free Software from using digital television by making the drivers difficult or impossible to write for.

Cory Doctorow has a good write up of the subject at Boing Boing: V-TV DAY: WE WON THE BROADCAST FLAG FIGHT! I suggest you take a look, as this ruling is huge in terms of consumer electronics for the next few years.

As it stands now, the FCC can regain this power to institute a broadcast flag only if congress explicitly passes a law granting them that authority. But no politician wants to pass a law breaking the TV’s of their voters. With any luck, it’ll be a dead issue.