November 12, 2012 7:32pm PT by Eriq Gardner
Read the Ruling on Fox's Motion for an AutoHop Injunction
Last week, a California federal judge denied Fox's motion for a preliminary injunction against Dish Network's advertising-skipping DVR services known as "AutoHop" and "PrimeTime Anytime."
As The Hollywood Reporter first reported, the judge refused to block the service launched in March, but the judge also was inclined to accept certain copyright infringement theories from Fox.
The ruling (minus some redactions) has just been released, which clarifies what Judge Dolly Gee has actually said.
Dish has scored points by getting the judge to agree that Fox faces an uphill battle in arguing that Dish has committed contributory and direct infringement and breached the VOD provisions of the parties' contract on the basis of consumer time-shifting.
However, there's still some potential for a Fox win down the road, particularly because the judge isn't buying all of Dish's "fair use" defenses and seems troubled by the copies that Dish is making within its system, beyond what users intitiate. In fact, the judge has found that Fox is likely to beat Dish in court with respect to one of its contractual claims.
To be sure, since the purpose of the motion was to enjoin Dish's AutoHop, Fox suffered a loss here by not getting an injunction, which is why the network has already appealed the decision to the 9th Circuit.
In the ruling, Judge Gee rejects Fox's contention that it has a likelihood of success on its claims that Dish is vicariously liable for infringing acts of its subscribers. She notes that the Hopper is "only available to private consumers and the evidence does not suggest that consumers use the PTAT copies for anything other than time-shifting in their homes or on mobile devices."
She continues, "In the absence of any evidence of such direct infringement on the part of PTAT users, Dish cannot be responsible for 'intentionally inducing or encouraging direct infringement,' or for 'profiting from direct infringement while declining to exercise a right to stop or limit it.'"
Judge Gee then turns to the question that Fox has raised on whether Dish has directly infringed its copyrights. To answer this, the judge must first resolve whether Dish has control over the copying.
The judge seems unsure about this. She notes several features of Dish's system, including the satellite distributor deciding when primetime recordings start and end, maintaining the authority to modify those times according to the programs airing on a given night, and users not being able to stop a copy from being made during the copying process.
"It is clear that Dish exercises a degree of discretion over the copying process beyond that which was present in Cablevision," she says, referring to a landmark 2nd appellate case from 2009 that held that a remote-storage DVR hadn't violated copyright owners' rights. "Nevertheless, at this stage of the proceedings, the Court is not satisfied that PTAT has crossed over the line that leads to direct liability. Despite Dish's involvement in the copying process, the fact remains that the user, not Dish, must take the initial step of enabling PTAT after deciding that he or she wants to intiate the recording."
Next comes the question of whether the "AutoHop Copies," the ones within Dish's system made as an "intermediate" step to a user's time-shifting, constitute fair use.
The judge considers the four factors that inform such an analysis, finding there is little to support Dish's defense that fair use applies. She says the copies are "not transformative because they do not alter their originals 'with new expression, meaning, or message,'" that the "creative nature of the copyrighted works entitles [Fox's programs] to heightened protection," that the copies "duplicate the Fox Programs in their entirety," and that the system has an adverse impact on the potential market for the original.
On that latter point, Judge Gee notes that Fox licenses copies of its programs to Hulu, Netflix, ITunes, and Amazon, and that Dish has offered up the AutoHop in order to compete with other providers who pay for rights to use copies of Fox's programs.
"By making an unauthorized copy for which it has not paid and using it for AutoHop, Dish harms Fox's opportunity to negotiate a value for those copies and also inhibits Fox's ability to enter into similar licensing agreements with others in the future by making the copies less valuable," she writes.
As far as Dish's contract with Fox, Judge Gee takes a nuanced view. On one hand, the time-shifting done by consumers hasn't been established as a breach. But on the other, the copies made as part of the "quality assurance" AutoHop function might. The judge says these copies "unquestionably do constitute copies -- made by Dish" and that Fox has established a likelihood of success that such copies violate the contract.
Unfortunately for Fox, Judge Gee also finds that Fox hasn't established that it will suffer irreparable harm as a result of such copies.
She writes that Fox's evidence of irreparable harms seems to stem from the ad-skipping, but not the actual copies. "Because the alleged harms that Fox will suffer as a result of the QA copies is essentially contractual in nature, the Court finds that the injury is compensable with money damages and does not support a finding of irreparable harm."
Here is the full decision: