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Hopping Into A Lawsuit

Posted in Copyright Law, Entertainment Law

By Lisa Y. Wang

Back in the day when I used a VCR to record TV shows (one that forwarded through commercials by itself no less), it was impossible to imagine that something like TiVo and DVRs would be in over 50% of American homes. In May 2012, Dish Network took digital recording a step further. Its customers who subscribe to Hopper don’t even have to manually fast forward through the commercials using their remote control. The "Auto Hop" feature of the Hopper automatically skips through the commercials of the all the broadcast network’s prime time lineup by moving from segment to segment of the television show and skipping the ads. The AutoHop feature, coupled with Dish’s "PrimeTime Anytime" feature, essentially allows consumers to concurrently record all prime-time broadcasting programming on all four networks without watching a single commercial without having to move a finger. With Dish Networks’ $14 billion in annual revenue and 14 million subscribers, that’s a lot of commercial revenue going down the drain. As a result, Dish Network has been sued by all four major networks for copyright infringement, and its Chief Executive Officer Charles Ergen has been dubbed by The Hollywood Reporter as "The Most Hated Man in Hollywood." 

In November 2012, Fox Broadcasting filed for a preliminary injunction claiming that Dish Network committed contributory and direct copyright infringement. The judge did not issue the injunction because Fox could not show irreparable harm and sided with Dish. Dish claimed the defense of fair use, which allows for the limited use of copyrighted works without having to obtain permission. Dish argued that it is the customers, not Dish, who are copying the prime-time network broadcasts, and that copying constitutes fair use, and the court agreed. In finding that Dish was not secondarily liable for copyright infringement for their "PrimeTime Anytime" feature, the court cited the Supreme Court case Sony v. University City Studios, 464 U.S. 417 (1984).  Sony held that the copying of television programs by consumers for time shifting was fair use. Since the consumers were not liable for copyright infringement, it was not possible for Dish to be liable for secondary infringement.  Likewise, Dish was not liable for direct infringement by offering "PrimeTime Anytime" to its consumers because the consumer is the one who directs its Hopper to create copies of the broadcasts and Dish merely passively provides the technology used for copying. 

Although the court held that Dish’s copying for the AutoHop feature was not fair use, it still found that Dish was not liable for direct copyright infringement. Dish has to make quality assurance copies of the programming on its own servers to make sure that the AutoHop feature is working correctly. The court went through the four main fair use factors and found that they all cut against Dish. Dish’s copying was not transformative, the copied works were creative and fictional in nature, Dish copied the entirety of the work, and Dish’s copying affected the potential market or value of the copyrighted works. In particular, since Fox licenses copies of its programs to Netflix, Hulu, iTunes, and Amazon, the Hopper has an economic impact on Fox’s copyrights. However, since the AutoHop feature itself did not represent copyright infringement (only copies of the programs Dish makes to ensure that the AutoHop is functioning properly), the harm Fox would suffer as a result of that quality assurance copying was contractual in nature and it could be compensated with money damages.   

Fox immediately filed an appeal which is currently up before Ninth Circuit Court of Appeals. A group of law professors have filed a brief supporting Dish, claiming that Fox is "launching an assault on private-noncommercial time-shifting of television programs" and that the lawsuit poses a threat to fair use. Fox countered stating that its appeal does not challenge DVRs and the viewer’s ability to record programs for viewing later; instead, it is challenging Dish’s "wholesale copying of Fox’s copyrighted primetime programming in order to offer its subscribers an on-demand library of commercial-free programming, in violation of copyright law and its contractual obligations." Although Fox "lost" the first round, both sides are claiming victory. Fox is not discouraged by the ruling because the district court judge did find that Dish’s quality assurance copying violated the parties’ license agreement and other features could be construed as directly infringing Fox’s copyrights with the determining factor being whether Dish exercises control over the copying feature. She noted that some features, such as Dish deciding when prime time recordings occur, could be interpreted as exercising a significant degree of control. 

In early 2013, both parties filed their briefs before the Ninth Circuit with Fox slamming Dish’s "baseless accusations" that reversing the district court would imperil DVRs. Whoever the Ninth Circuit sides with, chances are both parties will appeal, so for now, no need to throw that Hopper away and enjoy prime time, any time, all the time, without a second of commercials.