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Hopping Mad: Fox/Dish Dispute Asks Ninth Circuit What is a Permissible Copy under Copyright Act

07 January 2013
In March 2012, Dish Network (Dish) made its “PrimeTime Anytime” (PTAT) feature available to subscribers with a “Hopper” set-top box. Once activated by the subscriber, PTAT’s default settings cause the Hopper to record the major television networks’ entire primetime schedules every day of the week, and to retain the recordings for eight days (after which they are automatically deleted). Dish later added an “AutoHop” feature that allows users to automatically skip the commercials in PTAT recordings.
Hopping Mad: Fox/Dish Dispute Asks Ninth Circuit What is a Permissible Copy under Copyright Act

Claiming these features (i) infringe their copyrights in (and breach Dish’s license for) the programming being recorded, and (ii) eviscerate the advertiser-supported business model on which broadcast television is based, Fox sued Dish in Los Angeles federal court to enjoin Dish from offering the PTAT and AutoHop enhancements. The District Court concluded that one aspect of the AutoHop feature (but not the PTAT) likely infringes Fox’s copyrights, but denied Fox’s motion because Fox had not established irreparable harm, necessary for injunctive relief. Fox’s appeal gives the Ninth Circuit Court of Appeals the opportunity to weigh in on important copyright issues.

Copyright Infringement

In rejecting Fox’s assertion that the PTAT feature constituted direct infringement by Dish, the Court relied heavily on the Second Circuit’s opinion in Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”). There, a cable company’s “Remote Storage DVR System,” which allowed customers to record programming on hard drives housed and maintained by the cable company, did not constitute copying by the cable company due to the absence of sufficient volitional conduct on the cable company’s part. The Cablevision court held that there was a “significant difference . . . between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct.” Id. at 131.

The District Court acknowledged that Dish decided which networks are recorded, when the primetime recordings start and end, and the length of time each copy is available for viewing and so exercised more control over the PTAT copying process than was the case in Cablevision. Nevertheless, the District Court concluded that Dish had not “crossed over the line that leads to direct liability” because it is the subscriber, not Dish, who “must take the initial step of enabling PTAT . . . .”

Assuming that Dish’s subscribers were responsible for the PTAT copying, Fox also argued that Dish was secondarily liable for such copying. The Court rejected that assertion based on the Supreme Court’s 1984 “Sony-Betamax” holding that the copying of television programming by VCR users constituted a “fair use.” Fox argued that the Sony-Betamax decision was merely concerned with the “time-shifting” of individual programs, and was not dispositive of the “fundamentally different use of copyrighted programming” that PTAT/AutoHop presented (i.e., recording all Fox programs every night and eliminating all commercials on playback). But the Court summarily concluded, without engaging in a “fair use” analysis, that individual PTAT users could not be liable for direct infringement (which is a precondition to any secondary liability on Dish’s part) without circumventing Sony-Betamax.

The Court, however, found that Fox was likely to prevail on its claim that Dish directly infringed Fox’s copyrights when its technicians made quality assurance (QA) copies of the copyrighted programming used to ensure that the AutoHop feature works properly and that no portion of the programming is eliminated. In so concluding, the Court also rejected Dish’s defense that the QA copies constitute a “fair use” of Fox’s copyrighted programming.

Irreparable Harm

Notwithstanding the determination that Fox had established a reasonable likelihood of success on the merits of one of its copyright infringement claims, the Court refused to preliminarily enjoin Dish because Fox had not established that it would suffer irreparable harm. Fox had submitted evidence of irreparable harm flowing from the ad-skipping use to which the QA copies are put, but the Court drew a distinction between the QA copies (which constituted the infringing activity but did not themselves result in any irreparable harm) and the ad-skipping result (which gave rise to irreparable harm but was not itself an infringing activity), even though the QA copies are used to perfect the functioning of the ad-skipping feature.

Fox’s Appeal

Fox has since appealed the denial of its motion. Its brief raises the following copyright issues for the Ninth Circuit’s review: (i) whether the Cablevision decision should be rejected to the extent it places undue emphasis on who “presses the button” in determining who made the copy, (ii) whether the Supreme Court’s Sony-Betamax opinion immunizes subsequent technologies that permit “library building” for the purpose of skipping commercials (rather than merely permitting consumers to “time-shift” specific, limited programming), and (iii) whether a copyright owner’s loss of control over the timing and manner in which its works are distributed constitutes “irreparable harm.”

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