The Law and Business of Social Media
March 04, 2015 - Copyright

With Highly Anticipated Copyright Decision, The AutoHop Litigation Is Coming to a Close

In 2012, DISH Network announced two novel product offerings that would result in considerable backlash from the four major broadcast television networks and set in motion a three-year, wide-ranging, multi-front battle with the networks. As the dust now begins to settle, the copyright litigation has resulted in important precedents that will help define the boundaries under the Copyright Act for the multi-channel programming distribution industry.

DISH Introduces PrimeTime Anytime and AutoHop

On Jan. 9, 2012, at the Consumer Electronics Show (CES) in Las Vegas, DISH unveiled its PrimeTime Anytime service. In connection with its two-terabyte Hopper DVR, PrimeTime Anytime allows DISH subscribers, with a few pushes of a button, to copy up to eight days of ABC, NBC, CBS and Fox primetime programs. Once initiated, the service continually makes copies of the primetime lineup going forward, with the last eight days available for the subscriber.

About four months later, on May 10, 2012, DISH introduced AutoHop, which works in conjunction with the PrimeTime Anytime service and allows subscribers, with the single push of a button, to replay those network programs without advertisements. Viewed as a serious threat to their advertising supported revenue model, the introduction of this ad-skipping technology pushed the major networks to take action.

On May 24, 2014, the networks launched litigations. In the Central District of California, Fox, NBC, and CBS, each in separate cases, filed copyright infringement complaints against DISH. See, Fox Broad. Co. v. Dish Network LLC, 2:12-cv-04529-DMG-SH (C.D. Cal.), NBC Studios LLC v. Dish Network Corp., 2:12-cv-04536-DMG-SH (C.D. Cal.), and CBS Broad. Inc. v. Dish Network Corp., 2:12-cv-04551-DMG-SH (C.D. Cal.). On the same day, DISH — apparently seeking the protection of the then more favorable Second Circuit authority, including Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (the “Cablevision decision”) — preemptively moved for declaratory judgments against ABC and the other networks in the Southern District of New York. See, Dish Network, L.L.C. v. Am. Broad. Cos., Inc., 1:12-cv-04155-LTS-KNF (S.D.N.Y.).

Ultimately, the cases proceeded on two tracks, with the Fox and NBC cases proceeding in California before the Honorable Dolly M. Gee, and the ABC and CBS cases proceeding in New York before the Honorable Laura Taylor Swain.

While the networks also pursued breach of contract claims arising out of their existing agreements with DISH, the focus here is on the core copyright claims. Counterparties like DISH and the networks will often agree to expand or limit their own rights under the Copyright Act depending on their own commercial interests, but the more lasting legacy of the AutoHop cases will be the copyright precedents they have established.

DISH Wins the Early Rounds In California

On Aug. 22, 2012, Fox made the first move and sought a preliminary injunction against DISH’s PrimeTime Anytime and AutoHop services. Fox suffered an early defeat. On Nov. 7, 2012, the district court denied Fox’s motion for preliminary injunction, finding that Fox had not established a likelihood of success on the merits of its claims with respect to those two services. Fox Broad. Co. v. Dish Network, L.L.C., 905 F. Supp. 2d 1088, 1111 (C.D. Cal. 2012)

First, with respect to the claims that DISH directly infringed Fox’s copyrights in offering the PrimeTime Anytime service, the district court held, relying on the Cablevision decision, that because the subscriber is the one who decides whether to initiate the PrimeTime Anytime service, the subscriber not DISH is the one who makes the copies. The district court also held that notwithstanding the extent of DISH’s control over which programs get recorded and the subscriber’s inability to stop a recording in progress, DISH is not “the most significant and important cause” of the copying.

Second, with respect to the claims that DISH was secondarily liable under the Copyright Act for the conduct of its subscribers, the district court held that to establish derivative copyright infringement, direct infringement by a third party must be established. The district court held that DISH subscribers’ conduct is no different than that of the consumers in the Supreme Court’s decision in Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984) (the ” Betamax” case), which involved copying programs to Betamax tapes with the ability to skip ads. Because the DISH subscribers would not be liable for direct copyright infringement, the district court held that DISH cannot be liable for secondary or derivative copyright infringement.

Fox immediately appealed the decision to the Ninth Circuit. Again, Fox lost. On July 24, 2013, the Ninth Circuit held that Fox did not demonstrate a likelihood of success on its copyright infringement claims regarding the PrimeTime Anytime and AutoHop services. Fox Broad. Co. v. Dish Network L.L.C., 747 F.3d 1060 (9th Cir. 2014) (as amended). The Ninth Circuit, citing the Cablevision decision with approval, held that Fox failed to demonstrate a likelihood of success on its direct copyright infringement claim regarding PrimeTime Anytime, because infringement would require DISH to cause the copying, but here, because DISH’s program creates the copy only in response to the subscriber’s command, the subscriber causes the copying. The Ninth Circuit further held that Fox was unlikely to succeed on its claim of secondary copyright infringement for the PrimeTime Anytime and AutoHop services. The court held that advertising skipping does not implicate Fox’s copyright interest, because Fox does not own the copyrights to the ads aired during commercial breaks. While Fox would later note that it in fact owns a copyright interest in ads promoting Fox programs, the district court would hold that the Ninth Circuit’s holding on the merits of Fox’s ad-skipping claims would have resulted in the same outcome.

Fox Expands Litigation Scope

DISH Anywhere and Hopper Transfers

On Feb. 21, 2013, during the appeal of the earlier preliminary injunction decision, Fox expanded the litigation by amending its complaint to include two additional DISH product offerings.

First, with respect to DISH’s second-generation Hopper set-top box, loaded with Hopper, Sling and DISH Anywhere, which allows subscribers to view broadcast signals over the Internet, Fox claimed that DISH publicly performs Fox’s copyrighted works by streaming them over the Internet and is secondarily liable for the conduct of its subscribers.

Second, with respect to a service called Hopper Transfers, which allows subscribers to copy programs saved on their Hopper DVRs to mobile devices, thereby enabling them to watch programs where they may not have Internet connectivity, Fox alleged that this service violated Fox’s exclusive right to reproduce the works and made DISH secondarily liable for the conduct of its subscribers.

As it had with respect to PrimeTime Anytime and AutoHop, Fox moved for a preliminary injunction on the DISH Anywhere and Hopper Transfers products. On Sept. 23, 2013, without reaching the question of whether Fox was likely to prevail on the merits of its claims, the district court again denied Fox’s preliminary injunction motion. The district court held that “[i]f a plaintiff fails to establish that a significant threat of irreparable harm exists, the Court need not reach the likelihood that he would be successful on the merits of his claims.” Fox Broad. Co., Inc. v. Dish Network, L.C.C., No. CV 12-04529 DMG (SHx), 2013 U.S. Dist. LEXIS 187499 (C.D. Cal. Sept. 23, 2013)

As before, Fox immediately appealed to the Ninth Circuit. Fox lost again. On July 14, 2014, the Ninth Circuit, in a summary six-paragraph order, affirmed the district court’s decision focusing on the failure to show irreparable harm without discussing the merits of Fox’s claims. Fox Broad. Co. v. Dish Network L.L.C., No. 13-56818, 2014 U.S. App. LEXIS 13348 (9th Cir. July 14, 2014).

DISH Also Prevails in the Early Rounds in NY

Separately, on Nov. 23, 2012, in its case pending in the Southern District of New York, ABC also moved for a preliminary injunction against DISH based on the PrimeTime Anytime and AutoHop features. ABC’s preliminary injunction motion met the same fate as Fox’s motion.

On Sept. 18, 2013, the district court denied ABC’s motion for a preliminary injunction. DISH Network, L.L.C. v. ABC, Inc. (In re AutoHop Litig.), No. 12 Civ. 4155 (LTS) (KNF), 2013 U.S. Dist. LEXIS 143492 (S.D.N.Y. Sept. 18, 2013). With respect to ABC’s direct infringement claim, the district court found that ABC had failed to demonstrate “likelihood of success on its direct copying cause of action because the evidentiary record indicates, and the Court finds, that the consumer makes the copy [such that there] is thus no factual basis upon which DISH could be found liable for direct infringement of ABC’s right of reproduction.” With respect to the secondary infringement claim, the district court found that DISH had “demonstrated that it is likely to succeed in carrying its burden of demonstrating that its subscribers’ time-shifting constitutes fair use [and that] ABC has failed to demonstrate that it is likely to succeed on the merits of its claim of secondary or vicarious infringement.”

ABC appealed the decision. While the Second Circuit heard oral argument on Feb. 20, 2014, the court never got the opportunity to decide the appeal.

ABC and CBS Settle With DISH

On March 3, 2014, ABC and DISH issued a press release announcing that the parties had reached a settlement of the dispute in connection with the renewal of the carriage agreement. Of critical importance to DISH, the agreement granted DISH the “rights to stream cleared linear and video-on-demand content from the ABC-owned broadcast stations, ABC Family, Disney Channel, ESPN and ESPN2, as part of an Internet delivered, IP-based multichannel offering.” Thus, the renewal agreement set the groundwork for DISH to be able to launch its Sling TV, which is a first of its kind over-the-top offering that includes ESPN sports programming. Of critical importance to ABC, DISH agreed to “disable AutoHop functionality for ABC content within the C3 ratings window.” Thus, DISH subscribers would now have to wait until three days had passed before they could play back primetime ABC programming while automatically skipping the advertisements.

Similarly, on Dec. 6, 2014, CBS and DISH issued a press release announcing a renewal of their carriage agreement and the settlement of the litigation. The parties announced that “[t]he agreement will result in dismissal of all pending litigation between the two companies, including disputes over PrimeTime Anytime and AutoHop [and that as] part of the accord, DISH’s AutoHop commercial-skipping functionality will not be available for CBS Television Network-owned stations and affiliates during the C7 window.” Thus, DISH subscribers would now have to wait until seven days had passed before they could play back primetime CBS programming while automatically skipping the advertisements.

The Fox Summary Judgment Decision

On Aug. 22, 2014, in the California action, Fox and DISH filed opposing motions for summary judgment on Fox’s copyright claims with respect to the AutoHop, PrimeTime Anytime, DISH Anywhere, and Hopper Transfers product offerings.

On Oct. 17, 2014, the district court, from the bench promising a written decision to follow, provided the parties with its tentative decision on the claims. With respect to each of the core product offerings, the district court noted that she was inclined to rule in favor of DISH.

On Jan. 12, 2015, the district court issued its written summary judgment decision under seal. Shortly thereafter, DISH and Fox filed a joint stipulation noting that the current Fox carriage agreement expires on Oct. 29, 2015, that “DISH has settled similar disputes with both ABC and CBS in the context of renewals of their respective … agreements,” and that the parties “believe it highly likely that the negotiation later this year of a renewal of their 2010 agreement will result in resolution of this lawsuit.” The parties proposed keeping the summary judgment order under seal during the stay, claiming that “unsealing the Order may impair the parties’ ability to reach a resolution of the case.”

Although it granted the stay motion, the district court denied Fox’s and DISH’s request to keep the summary judgment order under wraps. On Jan. 21, 2015, the district court unsealed its written summary judgment decision, which revealed a clean sweep for DISH on Fox’s copyright claims regarding the core product offerings, AutoHop, PrimeTime Anytime, DISH Anywhere, and Hopper Transfers.

In reaching the decision, the district court rejected the expansive reading of the Supreme Court’s decision in ABC, Inc. v. Aereo, Inc., 134 S. Ct. 2498 (2014) that Fox advocated. While Fox argued the Aereo decision was a “game-changer,” the district court disagreed, noting the Supreme Court’s “effort to cabin the potential overreach of its decision” and its express admonition that “its ‘limited holding’ should not be construed to ‘discourage or to control the emergence of use of different kinds of technologies.'” The district court found that Aereo should be limited to companies that engage in conduct like Aereo, stating that “Aereo’s holding that entities bearing an ‘overwhelming likeness’ to cable companies publicly perform within the meaning of the Transmit Clause does not extend” to DISH’s product offerings.

Contrary to Fox’s suggestion, the district court further expressly held that the volitional conduct doctrine survives the Aereo case. The district court held “[t]he volitional conduct doctrine is a significant and long-standing rule, adopted by all Courts of Appeal to have considered it, and it would be folly to presume that Aereo categorically jettisoned it by implication.”

What Lies Ahead

With CBS and ABC having already settled with DISH and a settlement with Fox likely to be completed before the expiration of the parties’ current carriage agreement in October 2015, NBC would then be left as the last remaining network with which DISH has not reached an accord.

In comparison to these other networks, NBC has not been active in the litigation. Pursuant to an Aug. 6, 2014 stipulation between the parties, the NBC action was stayed until a final judgment in the Fox action. To date, no action has been taken to lift the stay. In light of the March 2013 acquisition of NBC by Comcast, it is questionable whether NBC has the same interest in pressing copyright claims that, if successful, could limit the rights of a programming distributor like Comcast. Thus, one would imagine that DISH and NBC will likely also reach an accord.

If the recent summary judgment decision in the Fox action marks the end of the road for the litigation, these rulings with respect to ad-skipping, the automated wholesale copying of programming blocks, and place-shifting devices such as DISH Anywhere and Hopper Transfers, will likely provide greater license for distributors to offer these products to their subscribers and limit the copyright owners’ ability to prevent the distribution of their works through new distribution channels.

This article originally appeared in the Intellectual Property Strategist.