Fox Broad. Co. v. Dish Network L.C.C.
By Charlie Stiernberg – Edited by Laura Fishwick
Fox Broad. Co. v. Dish Network L.C.C., No. CV 12-04529 DMG (C.D. Cal. Nov. 12, 2012)
Slip opinion (hosted by Scribd)
The District Court for the Central District of California denied plaintiff Fox Broadcasting Company’s (“Fox”) motion for preliminary injunction against defendant Dish Network’s (“DISH”) “PrimeTime Anytime” (“PTAT”) and “AutoHop” set-top box (“STB”) features, finding that while Fox established a likelihood of success on the merits of some of its claims, it failed to demonstrate irreparable harm in the absence of an injunction.
Addressing the merits of each of Fox’s claims, Judge Dolly M. Gee held that Fox failed to establish a likelihood of success on the merits of its derivative infringement, reproduction right and breach of contract vis-à-vis PTAT, and distribution right claims, but successfully established a likelihood of success on the merits with respect to its reproduction right and breach of contract claims vis-à-vis the AutoHop feature. However, because the alleged harms that Fox would suffer were essentially contractual in nature, the court found that the injuries would be compensable with money damages and would therefore not support a finding of irreparable harm.
The Hollywood Reporter provides an overview of the order. Techdirt opines that the decision was a net win for DISH and criticizes the court’s fair use analysis with respect to the AutoHop feature. FierceCable includes a short statement from DISH Executive Vice President and General Counsel, R. Stanton Dodge.
Fox is one of four broadcast networks that enter into Retransmission Consent (“RTC”) contracts with cable and satellite provides, including DISH. In a 2010 Letter Agreement amending their RTC, Fox and DISH agreed that DISH could provide Fox video-on-demand (“VOD”) to its subscribers with the proviso that “fast-forward disabling is a necessary condition to distribution of the Fox broadcast content via VOD.” Fox Broad. Co. v. Dish Network L.C.C., No. CV 12-04529 DMG, slip op. at 4 (C.D. Cal. Nov. 12, 2012). In January 2012, DISH unveiled the PTAT feature, which allows subscribers to set a single timer on their STB to record all primetime programming on any of the four major broadcast networks, including Fox, each night of the week. Four months later, DISH announced the AutoHop feature, which allows users to skip commercials in PTAT recordings with a click of their remote control. For quality assurance (“QA”) purposes, DISH retains a temporary copy of the PTAT recording at its uplink facility to ensure that no portion of the programming is cut out with the commercials. Fox filed a complaint alleging derivative and direct copyright infringement and breach of contract claims and sought a preliminary injunction enjoining the PTAT and AutoHop features.
Beginning with Fox’s derivative infringement claims, the court relied primarily on Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) to find that, like Betamax VCR users 30 years ago, PTAT customers’ time-shifting was a fair use. Absent the predicate direct infringement, DISH could not be liable for derivative infringement.
With respect to Fox’s reproduction right claim against PTAT, the court held that while DISH exercised a degree of discretion over the copying process beyond that which was present in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”), the user, and not DISH, still had to take the initial step of enabling PTAT to initiate a recording. The court then applied the four fair use factors and determined that Fox had shown a likelihood of success on the merits of its reproduction right infringement claim against the AutoHop QA copies. In so holding, the court placed primary significance on the fourth factor (effect of the use on the market), reasoning that other providers, such as Hulu, Amazon, iTunes, and Netflix, had to license copies of Fox programs to provide similar features.
In addressing the distribution right claims, the court found that no distribution had taken place because no unauthorized copies of any copyrighted works had “change[d] hands.” Fox, slip op. at 25. A PTAT-enabled STB records the primetime programming locally, in the user’s house.
Finally, the court analyzed Fox’s breach of contract claims. Judge Gee held that the PTAT feature is permissible under the RTC Agreement, because it is a time-shifting fair use. On the other hand, the she held that the AutoHop QA copies did constitute a breach of the RTC Agreement, because they were not a fair use. Neither the PTAT nor the AutoHop features constituted a breach of the 2010 Letter Agreement prohibiting fast-forwarding of VOD programming, however, because the court found that DISH’s service was more akin to that of DVR than VOD.
Despite Fox’s demonstration of a likelihood of success on the merits of some of its claims, the court denied injunctive relief on the grounds that the alleged harms were contractual in nature and therefore compensable with money damages.
Though the court’s order does not constitute a final judgment in the case, it is significant in that Judge Gee suggests an extension of the Second Circuit’s reasoning in Cablevision to cover situations in which the service provider has more control in making copies of copyrighted works.