CBS Seeks to Unwind Retrans Agreement With Dish Network

Dish Logo New - H 2012

Dish Logo New - H 2012

The war between CBS and Dish Network over the ad-skipping AutoHop has just taken another explosive turn.

On Tuesday, in a lawsuit where Dish has asked a New York federal judge to declare its technology legal under copyright law, CBS is asking the judge's permission to file new counterclaims.

The new claims add a cause of action for fraudulent concealment. CBS says it learned during the litigation more about what Dish allegedly hid during 2011 negotiations for a new retransmission agreement. According to the network, Dish knew that it was planning on launching the AutoHop but "deliberately chose to conceal this fact from CBS."

CBS adds, "Had Dish disclosed during the negotiations the material facts that it had developed AutoHop and intended to provide its subscribers with AutoHop, CBS would not have entered into the Retransmission Agreement on the terms set forth in the current agreement."

As part of the relief now being requested, CBS says it is entitled to rescission of the retransmission agreement or damages caused by the concealment. This is a step above the relief requested in the original lawsuit back in May where CBS merely sought an injunction prohibiting further infringement of its copyrights.  If successful, CBS could theoretically have its deal with Dish voided, potentially blacking out its network on Dish's system and forcing Dish back to the negotiating table. Read the counterclaims here.

CBS' latest move comes in the midst of an escalating war of words between the two sides.

Earlier in the month, CNET announced that Dish Network's "Hopper with Sling" product wouldn't be eligible for its "Best of CES Awards." CBS Interactive, parent company of CNET, said in a statement that the product “was removed from consideration due to active litigation involving our parent company CBS Corp.”

Dish CEO Joe Clayton reacted by putting out his own statement, saying, "We are saddened that CNET’s staff is being denied its editorial independence because of CBS’ heavy-handed tactics. This action has nothing to do with the merits of our new product."

Over the weekend, Dish took out a full-page ad in The New York Times that proclaimed Hopper with Sling the "Best of Show" with an asterisk. "What's an asterisk doing in our award?" the ad reads. "CBS will go to any lengths to keep you from enjoying ad-skipping technology -- even so far as to censor its own writers and throw their decision to name Hopper Best in Show."

Now, CBS has amended its counterclaims against Dish.

According to the network's legal documents, during 2011 retransmission negotiations, the parties discussed Dish's existing and future systems, services and features.

The papers quote a December 16, 2011 email from CBS executive vp Martin Franks to Dish executive David Shull that allegedly made it clear that CBS was not "looking to have this arrangement include new businesses that DISH may choose to enter into in the future, whether they be Netflix-like businesses, new mobile services, or other new platforms."

CBS says that put Dish on notice, and that at a negotiating session in Denver two days later to discuss final terms, Dish didn't disclose that it had developed the AutoHop nor made any reference to existence of such a system. Three days after that, Dish chairman Charles Ergen was involved in a meeting, and the parties got to see the Hopper's logo in the form of a stuffed animal in the form of a kangaroo, but CBS still says it wasn't made aware of a system being developed to record and playback primetime broadcast programming on a commercial-free basis.

"During discovery in this action," says CBS in the latest legal papers, "it has been revealed that during 2011, DISH initially intended to release the Hopper in February 2012 with both PrimeTime Anytime and AutoHop services included. Thus, during the negotiation of the Retransmission Agreement, DISH intended to offer the AutoHop service as part of the Hopper, but deliberately chose to conceal this fact from CBS."

The network says that Dish had a duty to disclose material facts before the parties executed the retransmission agreement.

CBS is just one of the networks angry with Dish over the Hopper.

Another lawsuit from Fox Broadcasting is proceeding on the other coast in California. After a judge there denied a preliminary injunction, Fox appealed the ruling up to the 9th Circuit. The appeal is pending.

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