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Fox Broadcasting Co. v. Dish Network, LLC
Court	United States Court of Appeals for the Ninth Circuit
Full case name	Fox Broadcasting Company, Inc.; Twentieth Century Fox Film Corporation; Fox Television Holdings, Inc. v. Dish Network L.L.C.; Dish Network Corporation
Decided	July 24, 2013
Citations	No. CV12-04529-DMG (SHx) (C.D. Cal. November 7, 2012) and No. 12-57048 (9th Cir. July 24, 2013)
Case history
Prior action	Appealed from C.D. Cal. (Case No. CV12-04529-DMG (SHx))
Subsequent actions	The plaintiff filed a petition for rehearing and rehearing en banc.)
Court membership
Judges sitting	Sidney R. Thomas, Barry G. Silverman, Raymond C. Fisher
Case opinions
Thomas
Keywords
Copyright, Fair Use, Commercial Skipping, Broadcasting, Video on Demand, Preliminary Injunction

Fox Broadcasting Co. v. Dish Network, LLC (9th Cir. 2013), was a intellectual property law case in which the United States Court of Appeals for the Ninth Circuit affirmed the United States District Court for the Central District of California ruling. In the case, Fox Broadcasting (Fox) sued Dish Network (Dish), alleging that Dish's set-top box which allowed the users to automatically record Fox's prime time programs and to automatically skip commercials included in the recordings constituted copyright infringement and breach of contract. The Court rejected Fox's motion for preliminary injunction against Dish, even though Dish was involved in the copying process and commercial skipping function.

Background

According to the courts' holdings, the factual background was as follows.

Hopper and PrimeTime Anytime

In March 2012, Dish started offering a set-top box with digital video recorder (DVR) feature and video on demand (VOD) feature called the Hopper. The Hopper had a function called PrimeTime Anytime (PTAT) which allowed users to automatically record all prime time programs from four major broadcasting networks including Fox. Users were able to determine whether or not to activate the PTAT functions and all recordings were done on user's Hopper, but the start time and the end time of the recordings and the programming schedules of the day were determined by Dish. PTAT recordings were automatically deleted after several days (the default setting was 8 days.).

AutoHop

In May 2012, Dish launched a new feature of Hopper, called AutoHop, which enabled a user who recorded prime time programs with PTAT to select whether to automatically skip all commercials included in those programs or not. The user could enable the AutoHop feature which would automatically skip all commercials. Dish transmitted the marking data, data that told the Hopper when the commercials began and ended, to PTAT users every day. The data were manually generated and examined by Dish's employees in order to assure its accuracy and quality; to do this Dish copied Fox's programs (QA copies) and used them internally. Regardless of AutoHop function, the Hopper retained all commercials until the TV program would be deleted when its retention period was expired. The AutoHop function offered users the ability to manually rewind or fast-forward the recordings which included the commercials.

Contracts

Fox claimed Dish breached three clauses of their contract; the first two clauses were in the Retransmission Consent (RTC) Agreement of 2002, and the last clause was in the Letter Agreement about VOD in 2010.

• EchoStar [now Dish] shall not, for pay or otherwise, record, copy, duplicate and/or authorize the recording, copying, duplication (other than by consumers for private home use) or retransmission of any portion of any Station's Analog Signal without prior written permission of the Station, except as is specifically permitted by this Agreement.
• EchoStar acknowledges and agrees that it shall have no right to distribute all or any portion of the programming contained in any Analog Signal on an interactive, time-delayed, video-on-demand or similar basis; provided that Fox acknowledges that the foregoing shall not restrict EchoStar's practice of connecting its Subscribers' video replay equipment....
• DISH will disable fast forward functionality during all advertisements; FBC and DISH may include a pre-roll announcement prior to each show regarding the fast-forward disabling. DISH and FBC will discuss in good faith the timing of DISH's implementation of such fast-forward disabling and messaging to consumers; provided that DISH acknowledges and agrees that such fast-forward disabling is a necessary condition to distribution of the Fox broadcast content via VOD. Dish did not offer Fox's programs via its VOD service.

Lawsuit

On May 2012, Fox sued Dish for copyright infringement and breach of contract. Fox sought a preliminary injunction to enjoin Dish from operating, distributing, selling, or offering PTAT, AutoHop and any comparable features.

District Court for the Central District of California

On November 7, 2012, the district court denied Fox's motion for preliminary injunction finding that 1)PTAT and AutoHop neither infringed on the copyright nor committed breach of contract; and 2)although QA copies constituted copyright infringement and breach of contract, the harm from the copies was not irreparable. For further discussion and details see the district court opinion.

Direct Infringement

Regarding the copies on the Hopper, Fox argued that Dish direct infringed on the copyright holders exclusive right to reproduction because Dish had an impermissible degree of control over the copying process of PTAT. The Court found that while Dish was substantially involved in the copying process on the users' PTAT, the involvement was not different from precedent non-infringement cases of Cartoon Network, LP v. CSC Holdings, Inc. and CoStar v. LoopNet, in which prior court judged that the individual users, and not the service providers were liable for infringing copies. The Court concluded that the person who copied Fox's program on the user's PTAT was user who initiated the command and not Dish.

The defendant, Dish, argued that the QA copies constituted fair use of 17 U.S.C. § 107. Referring to Sega v. Accolade, Dish argued that the copies were fair use because they were ultimately used for the user's fair use purpose (In Sega, the Ninth Circuit had judged that copying code for reverse engineering purpose was "intermediate copying," and protected by fair use.). The Court denied Dish's argument because the purpose and the effects on the economy of QA copies were fundamentally different from reverse engineering. The Court examined the four factors of fair use as follows:

1. Purpose and Character of the Use: the commercial purpose and non-transformative uses of the QA copies weighs against a finding of fair use.
2. Nature of the Copyrighted Work: the creative nature of the Fox's copyrighted works weighted against a finding of fair use.
3. Amount and Substantiality of Use: while the QA copies were used for the limited purpose of ensuring that the marking data is correct and were not distributed to the users, Dish entirely duplicated the Fox's programs. So, this factor weighted against a finding of fair use (but considerably less than the other three factors).
4. Effect of the Use on the Market: Fox licensed copies of its programs to other companies (e.g. Hulu, Netflix, iTunes, and Amazon) to offer its works to subscriber of those companies. The Court discussed that Dish offered AutoHop to its users in order to compete with those companies without providing payment for the license; the Court held that in doing so Dish harmed Fox's opportunity to negotiate with Dish or Fox's ability to enter into a similar licensing agreement with others in the future by making the copies less valuable.

In consideration of these factors, the Court concluded that QA copies did not constitute fair use and the Court found that Fox was likely to succeed on the merits of this infringement claim. However, the Court also found that Fox failed to demonstrate the irreparable harm requirement necessary to garner the preliminary injunction. The Court noted that the amount of money for licensing to other companies would show that the harm resulted from the AQ copies was also compensatable.

Additionally, Fox alleged that Dish infringed Fox's distribution right through use of PTAT copies and AutoHop. However, mentioning that all coping were conducted on the user's PTAT without "change hands" and that the only thing distributed from Dish to the users was the marking data, the Court denied Fox's claim.

Secondary Infringement

Citing Sony Corp. of America v. Universal City Studios, Inc., the Court concluded that the users' copying at home for the time shift purpose did not infringe Fox's copyright. Then, Dish's secondary liability was also denied.

Breach of Contract

Fox asserted that QA copies and PTAT violated the RTC Agreement. The Court, as similar as copyright infringement analysis, reasoned that while QA copies breached the contract, PTAT did not constitute the breach of the contract.

Next, Fox stated that PTAT was a VOD offering and breached the 2010 letter agreement. Dish maintained that AutoHop did not breach the contract for two reasons: 1) PTAT was not VOD but DVR; and 2) the VOD provision was an unenforceable option for Dish because of technological and logistical limitations. The Court concluded that Dish did not breach contracts because PTAT was not a VOD, but more akin to DVR since: 1) Dish hasn't decided what programs are available in the PTAT "library;" 2) the user would not be able to watch the program if he/she had not turned on the function in advance of the program aired on; and 3) Fox's programs were not transmitted from a remote library, but stored and played on the users' Hopper.

The Ninth Circuit Court of Appeals

Fox appealed to the Ninth Circuit. The Ninth Circuit reviewed the district court's decision with a very deferential standard of review, and affirmed it with the following reasons on July 24, 2013.

Direct Infringement about PTAT copies

The circuit Court found that the district court properly identified the user as the copier of Fox's programs on PTAT and affirmed the district court's holding. The Court also affirmed the district court's denial of motion for preliminary injunction requiring that making and using of QA copies.

Secondary Infringement about PTAT copies

The Court upheld the district court's decision that the copying of Fox's program by a user was a fair use. In addition, the Court mentioned that Fox did not own the copyrights to ads, and ads were not deleted from PTAT. Then, the Court noted that while Fox alleged the market harm resulted from ad-skipping function, any analysis of the market harm should exclude consideration of AutoHop because ad-skipping did not implicate Fox's copyright interests.

Breach of Contract

The Court supported the district court's decision of rejecting a preliminary injunction on the alleged contract breaches as well. The district court had interpreted “distribute” in the contract clauses to be analogous to the same word in the Copyright Act (17 U.S.C. § 106(3)), and constructed its analysis about copying on PTAT. Fox challenged this interpretation and construction, arguing that "distribute" meant "make available programs to users." At this point, the Court held that while Fox's interpretation was also plausible as the district court's, the parties had not argued about the meaning of "distribute" at a prior discussion, and any ambiguous terms in the contract should be interpreted by looking to the Copyright Act. Then, the Court affirmed the district court's construction.

Further, Fox stated that PTAT was "similar" to "interactive, time-delayed, [or] video-on-demand" services that were prohibited under the contract. In regards to this point, while Dish argued its service was not identical to time-delayed or VOD, it could not show why it was not similar to them. However, the Court held that the district court had judged without clear error when it had found PTAT was more akin to DVR than VOD.

Impact and reactions to the decision

James Grimmelmann, a professor at the University of Maryland Law School, commented to the ruling that the court would not count ad-skipping for purposes of copyright law, and predicted that it would impact on ad-supported content business.

Annette Hurst, an attorney for Dish said that the decision unequivocally showed that advertisements were a financing mechanism, but they were not part of the copyrighted work. Additionally, Corynne McSherry, an attorney of the Electric Frontier Foundation, which had noted an amicus brief to the Ninth Circuit, made a statement that the holding was "a victory for fair use and consumer choice," and ensures that "technology makers can develop and offer new tools and services without fear of crippling liability where those tools and services are capable of substantial non-infringing uses."

However, David Singer, an attorney for Fox, and other legal professionals pointed out that the result might be changed in succeeding trials because the Ninth Circuit applied a "deferential standard of review" to the request for a preliminary injunction, which required the plaintiff a very high bar to be granted.

Fox filed a petition for rehearing and rehearing en banc on August 7, 2013.

See also

• Standard of review
• Preliminary injunction
• Sony Corp. of America v. Universal City Studios, Inc.
• Sega v. Accolade
• Cartoon Network, LP v. CSC Holdings, Inc.
• CoStar v. LoopNet
• Criticism of Dish Network

External links

• Fox Official website
• Dish Official website

References

Category:Fair use case law Category:United States copyright law Category:United States copyright case law Category:United States intellectual property case law Category:United States Court of Appeals for the Ninth Circuit cases