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In Wake of Aereo, California District Court Finds DISH Networks' New Technologies Do Not, For the Most Part, Violate the Copyright Act

By Barry Werbin and Bryan Meltzer, Herrick, Feinstein LLP

As technological advancements change the way we watch television programming, media networks and broadcasters continue to struggle with new legal issues relating to those technologies. Following the Supreme Court's recent rejection of Aereo's business model in American Broadcasting Company, Inc. v. Aereo, Inc., 134 S.Ct. 2498 (2014) (finding its online streaming of unlicensed over-the-airways television programming to subscribers constituted a public performance in violation of the Copyright Act), Central District of California Judge Dolly M. Gee recently held in Fox Broadcasting Co. v. Dish Network LLC, No. 12-4529 (C.D. Cal. Jan. 20, 2015 [unsealed]) that DISH Network LLC's ("DISH") new technologies did not, for the most part, violate the Copyright Act, but did, for the most part, breach DISH's 2002 Retransmission Consent Agreement with Fox Broadcasting Co. ("Fox") ("RTC Agreement").

Fox claimed that five of DISH's technological innovations and/or practices violated the Copyright Act and the parties' agreements. In particular, Fox took issue with the following DISH products: (1) DISH Anywhere using Sling technology ("DISH Anywhere"), which enables DISH subscribers to access live and recorded programming remotely on their computers and mobile devices; (2) PrimeTime Anytime ("PTAT"), which enables subscribers to record all prime time programming shown on the four major networks; (3) AutoHop, which is a feature of PTAT that enables subscribers to automatically skip commercials while watching recorded shows; (4) Quality Assurance ("QA") copies, which are DISH's internal recordings of shows used to test AutoHop prior to its delivery to subscribers; and (5) Hopper Transfers, which allows subscribers to transfer copies of DVR recordings to their mobile devices for later viewing.

In a heavily redacted decision dated January 12, 2015, Judge Gee rejected the vast majority of Fox's copyright claims because she found that, unlike in Aereo, where Aereo itself publicly performed the copyrighted broadcast content by initiating the transmission of copyrighted works, DISH's products simply facilitated its consumer subscribers' ability to transfer and/or copy programming that they already lawfully possessed and for which DISH held a license for similar initial retransmission of the programming to its users via satellite. For instance, Judge Gee held that DISH Anywhere, PTAT and Hopper Transfers did not directly infringe on Fox's copyrights since it was the subscriber, and not DISH, who engaged in the volitional conduct required for a copyright claim (i.e., the copying or transferring of the copyrighted material).

Although Judge Gee found that DISH's subscribers engaged in volitional conduct, she also held that their conduct did not actually infringe on Fox's copyrights, and therefore, DISH was not liable for secondary infringement. In particular, the court found that the subscribers' use of DISH Anywhere to transmit rightfully possessed programming to their own computers and devices did not constitute a "public" performance (i.e., a transmission to a large number of members of the pubic who are unknown to each other) as required for an infringement under the Copyright Act (in contrast to Aereo, where the Supreme Court found that Aereo was engaged in a public performance).

Judge Gee also found that the subscribers' use of PTAT and Hopper Transfers constituted fair use under Section 107 of the Copyright Act because, although a secondary market for Fox's programming exists (through outlets such as Hulu, Netflix, etc.), the potential harm to Fox was too speculative to cause an infringement. Moreover, Judge Gee stated that Hopper Transfers by its very nature constitutes fair use because it simply permits "non-commercial time-and place-shifting of recordings already validly possessed by subscribers, which is paradigmatic fair use under existing law." Harking back to the Supreme Court's seminal decision in Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984), because she found that the subscribers were not liable for infringement, Judge Gee held that DISH was not liable for inducing or encouraging any infringement.

In addition, Judge Gee also held that Auto Hop (i) did not infringe on Fox's copyrights because it did not copy or distribute the material but instead simply skipped commercials, and (ii) did not violate the Copyright Act's compulsory licensing framework for secondary transmission of network stations by satellite providers because by simply skipping commercials, it did not "change, delete, or add anything to the commercials at issue."

While coming close, DISH did not, however, pitch a perfect game with respect to Fox's copyright claims. Indeed, Judge Gee held that DISH's QA copies infringed on Fox's copyrights because DISH simply copied the copyrighted material for a commercial use, which here was found not to be a fair use. In fact, the court noted that a secondary market for the copies existed and Fox could have negotiated with DISH over the right to make such copies available.

Moreover, as successful as DISH was with Fox's primary copyright claims, it was arguably just as unsuccessful with Fox's contract claims. Indeed, Judge Gee found that a number of DISH's products breached the RTC Agreement.

First, Judge Gee agreed with Fox that DISH Anywhere breached the "no copying" provision of the RTC Agreement, which prohibited the copying of content other than for in-home use. Judge Gee rejected DISH's argument that the in-home exception was intended to include "private, non-commercial use" (like with mobile devices) because she found that if DISH wanted to incorporate future technologies, it should have bargained for such language.

Second, Judge Gee similarly found that the QA copies clearly breached the "no copying" provision of the RTC Agreement. While DISH argued that its vendor did the copying, Judge Gee found that DISH's authorization of such copying constituted a breach.

Finally, the court held that Hopper Transfers violated the same "no copying" provision because DISH authorized its subscribers to copy Fox's copyrighted programs to their devices by providing them with both the means and permission to make such copies.

On the other hand, Judge Gee found that PTAT did not breach the "no distribution" provision of the RTC Agreement because it did not deliver the programming to more than one person, and instead just recorded specific programming to which the subscribers already had access. In addition, DISH Anywhere did not violate the "other technologies" provision of the parties' 2010 Letter Agreement, which amended the RTC Agreement, because, under the plain terms of the Agreement, the subscriber and not DISH retransmitted the copyrighted programming. DISH's facilitation of such transmissions did not breach the agreement.

In sum, Judge Gee found that companies like DISH can innovate in ways that do not violate the Copyright Act. Those companies, however, must make sure that their own contracts do not prohibit them from making such advancements. To that end, as Judge Gee recommended, companies should bargain for contractual language that accounts for "future technologies not then contemplated." Either way, though, the decision will likely be more popular with the innovators than the copyright owners.

The long-running DISH court battle and Judge Gee's latest decision provide a window into the future of TV. While networks can legally innovate new ways to deliver programming to their customers, they and their distribution partners will need to draft future agreements affording themselves the flexibility to keep up with technological advancements.

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This page contains a single entry from the blog posted on January 28, 2015 8:47 PM.

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