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Dish Network’s “Hopper” Free to Skip Commercials as Ninth Circuit Rejects Fox’s Case for Preliminary Injunction

Copyright Patent Telecommunications
Fox Broadcasting Co. v. Dish Network By Simon Heimowitz – Edited by Samantha Rothberg Fox Broadcasting Co. v. Dish Network, No. 12-57048 (9th Cir. July 24, 2013) Slip Opinion, hosted by [caption id="attachment_3623" align="alignleft" width="150"] Photo By: pop culture geek - CC BY 2.0[/caption] The United States Court of Appeals for the Ninth Circuit affirmed a district court decision to deny Fox Broadcasting Company’s (“Fox”) request for a preliminary injunction against Dish Network’s (“Dish”) “AutoHop,” a product associated with Dish’s “Hopper.” The Hopper allows subscribers to automatically record Fox’s primetime television shows and then view them with the commercials fast-forwarded, without manual user involvement. The Ninth Circuit held that the district court did not abuse its discretion in deciding that Fox “did not demonstrate a likelihood of success on its copyright infringement and breach of contract claims regarding Dish’s implementation of [two television recording products].” Fox Broadcasting Co. v.  Dish Network, No. 12-57048, slip op. at 10 (9th Cir. July 24, 2013). The court determined that Dish Network was not responsible for directly infringing Fox’s copyright because the consumer initiates the copying process, not Dish Network. Id. at 12. The court also ruled that Dish would not be held liable for secondary infringement because although Fox carried its burden of proving direct infringement by consumers, Dish successfully raised an “affirmative defense that its customers’ copying was a ‘fair use.’” Id. at 13 (citation omitted). The court affirmed that Fox was unlikely to succeed on its breach of contract claims against Dish, noting that the commercial-skipping function of the Hopper product “does not implicate Fox’s copyright interest because Fox owns the copyrights to the television programs, not to the ads aired in the commercial breaks.” Id. at 14–15. The Ninth Circuit considered a number of related precedents in determining that the Hopper’s noncommercial time-shifting function was non-infringing fair use. See id. at 13–15. The New York Times and Reuters provide an overview of the case. Ars Technica features an analysis of the decision and provides detailed context regarding the rancorous history between Dish and major TV networks over the Hopper. Dish Network offers two products:  the “Hopper” digital video recorder (“DVR”) and PrimeTime Anytime. Id. at 6. These products allow subscribers to record primetime and other television programs for viewer playback. Id. In May 2012, Dish added the “AutoHop,” which gives PrimeTime Anytime subscribers the option of viewing recorded primetime shows with the commercials “automatically skip[ped] over.” Id. at 8. This new feature catalyzed Fox to bring suit against Dish Network in district court, claiming copyright infringement and breach of contract and seeking a preliminary injunction against Dish. The district court denied Fox’s preliminary injunction, holding that Fox did not meet its burden of “demonstrating a likelihood of success on most of its copyright infringement and contract claims.” Id. at 9. Although Fox did meet its burden concerning one aspect of the suit — that Dish Network breached its contract with Fox by making “quality assurance copies” — the court held that the degree of “irreparable harm” that Fox would suffer due to the copies was insufficient to warrant a preliminary injunction. Id. Fox appealed the lower court’s decision and the Ninth Circuit affirmed. Applying a deferential standard of review, the appellate court held that the lower court did not abuse its discretion in denying the injunction. The court reasoned that Fox’s copyright claim would likely fail because Dish could not be directly liable for infringement. Id. at 12. The customer, not Dish as the service operator, was found the “most significant and important cause” of the copying, since the “user, not Dish, must take the initial step of enabling Prime Time Anytime.” Id. (citations omitted) (internal quotation marks omitted).  In determining that Dish was not secondarily liable for infringement, the court looked to guidance from Supreme Court precedent in finding that Dish’s customers’ copying was a “fair use.” Id. at 13. Copying for purposes of noncommercial time-shifting is protected fair use, and the ad-skipping feature that Dish provided could not be challenged because Fox’s only copyright interest was in the television programs; Fox owned no interest in the commercials. Id. at 15. For the breach of contract claim, the court reasoned that AutoHop did not breach the provision in the contract that stated that Dish must “disable fast forward functionality during all advertisements . . . .” Id. at 20. That provision covered only video on demand content, and PrimeTime Anytime more closely resembled DVR than video on demand. Id. at 20–22. The Ninth Circuit’s decision is significant because it may create opportunities for pay-tv service providers to maneuver more freely in the time-shifting and ad-skipping domain. Reuters reports that Stanton Dodge, Dish’s general counsel, called the decision “a victory for consumers in an ‘important fight over the fundamental rights of consumer choice and control.’”