The Ninth Circuit court of appeals understood correctly what the primary use of Betamax would be, but they believed that personal home recording was not fair use, and was thus copyright infringement. They interpreted the law as only allowing libraries to record TV or radio broadcasts.

The Supreme Court ruling for this case found that time-shifting was fair use, but only by a narrow 5-4 margin. Fair use could have gone in a completely different direction over the last 40 years if just one judge had voted differently on Betamax.

We have to remember that at the time of the decision, there really wasn't any source of things to copy with a Betamax recording device besides commercial broadcast TV and other copyrighted materials.

Camcorders and such devices where you could make your own content were very rare, if available at all.