July 24, 2013 8:24am PT by Eriq Gardner
Fox Loses Appeal Asking for Injunction Against Dish's 'Hopper' Ad-Skipper
On Wednesday, the Ninth Circuit Court of Appeals rejected Fox's appeal over a federal judge's decision to deny enjoining Dish Network's advertising-skipping DVR services known as "AutoHop" or "Hopper" or "Primetime Anytime."
The broadcasters sued Dish with the contention that the service constituted an unlicensed on-demand service that violated its copyrights and breached contracts.
Last autumn, U.S. District Court Judge Dolly Gee in Los Angeles refused to grant an injunction at the early stages of the lawsuit because Fox hadn't demonstrated a likelihood of success on its claims. Today, an appeals court says the judge didn't abuse the discretion in finding that the record hadn't established that the broadcaster would win its direct and contributory infringement claims.
Fox said in a statement following the ruling:
"We are disappointed in the court’s ruling, even though the bar to secure a preliminary injunction is very high. This is not about consumer choice or advances in technology. It is about a company devising an unlicensed, unauthorized service that clearly infringes our copyrights and violates our contract. We will review all of our options and proceed accordingly."
Dish's general counsel R. Stanton Dodge had his own reaction:
"This decision is a victory for American consumers, and we are proud to have stood by their side in this important fight over the fundamental rights of consumer choice and control."
Here is the full ruling with further details below.
Several lawsuits are proceeding against Dish after the satcaster launched a product with storage so immense that it allowed consumers to save about a week's worth of primetime programming. Using AutoHop allows customers to forward through the commercials. Fox's lawsuit against Dish has gone furthest. Another case in California brought by NBC against Dish was stayed pending the Ninth Circuit ruling. And in New York, CBS and ABC are making their own push to stop Dish's DVR.
In analyzing the dispute, courts have had to address each of the many claims brought over the ad-skipper.
Fox challenged the technology as directly infringing its copyrighted programming. Fox was successful in getting Judge Gee to acknowledge that Dish exercised control over the copying process that went beyond other technologies that have been judicially blessed -- in particular, Cablevision's remote-storage DVR. But the judge also held that "at this stage of the proceedings," it was "not satisfied" that Dish's product had "crossed over the line that leads to direct liability," because the "user, not Dish, must take the initial step of enabling" the ad-skipper.
Looking at that ruling, Ninth Circuit judge Sidney Thomas writes that the district court didn't abuse discretion.
"Infringement of the reproduction right requires 'copying by the defendant," says the ruling. "Fox argues that because Dish participates in the operation of PrimeTime Anytime on a daily basis, Dish made the copies, either alone or concurrently with its users. However, operating a system used to make copies at the user’s command does not mean that the system operator, rather than the user, caused copies to be made. Here, Dish’s program creates the copy only in response to the user’s command."
Next came the analysis over whether Dish's product constituted contributory infringement. To prove that, Fox would have to demonstrate that Dish's customers are infringing copyright. But Judge Thomas says that Dish has met its burden of demonstrating that customers' copying was a "fair use" and uses the Supreme Court's landmark decision over Sony's Betamax VCR in support. That case held that the making of individual copies for purposes of time-shifting was in bounds.
"Fox and its amici argue that Dish customers use PrimeTime Anytime and AutoHop for purposes other than time-shifting – namely, commercial-skipping and library building," writes the judge. "These uses were briefly discussed in Sony, in which the Court recognized that some Betamax customers used the device to avoid viewing advertisements and accumulate libraries of tapes."
Even though the Supreme Court didn't expressly render an opinion on ad-skipping, the Ninth Circuit has a tough time believing that Fox is going to win on the contributory infringement claim. The opinion continues:
"If recording an entire copyrighted program is a fair use, the fact that viewers do not watch the ads not copyrighted by Fox cannot transform the recording into a copyright violation. Indeed, a recording made with PrimeTime Anytime still includes commercials; AutoHop simply skips those recorded commercials unless a viewer manually rewinds or fast-forwards into a commercial break. Thus, any analysis of the market harm should exclude consideration of AutoHop because ad-skipping does not implicate Fox’s copyright interests."
The Ninth Circuit then goes through the factors that comprise a potential fair use and gives victory to Dish. The satellite company still faces potential liability for the "quality assurance" copying that happens within its system on the road towards allowing its customers to skip ads, but that issue doesn't directly tie into Fox's market harm, and thus, can't lead to an injunction because the broadcaster can't demonstrate irreparable harm.
Finally, after addressing the copyright claims, the Ninth Circuit also looks at the contract breach allegations. Here, Judge Thomas says "the question of whether Dish has breached its contract with Fox is much closer" and says he is "dubious of Dish's position" that the technology is not "similar" to a "video-on-demand" service that was expressly prohibited in a 2002 contract.
Nevertheless, despite the skepticism, based on the evidence thus far, and the trial judge's noted discretion, Fox can't surpass the high bar needed to make a contractual claim add up to an injunction. "The district court did not clearly err in concluding that PrimeTime Anytime was more like DVR than video on demand," says the ruling, which also discusses Fox's other theories on how Dish has breached several programming distribution contracts.