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Appeals Court Refuses Fox Effort to Stop Dish’s Ad-Skipping Feature

The broadcast networks suffered another legal setback in their effort to stop Dish Network’s automatic ad skipping feature, as an  appellate panel refused to put a halt to the satcaster’s service.

The 9th Circuit Court of Appeals ruled in favor of Dish, upholding a lower court ruling in which a district court judge refused to issue a preliminary injunction to stop features of Dish’s Hopper DVR service, which includes Primetime Anytime and AutoHop. Broadcasters say that the features — which record entire clocks of programming and the option of having commercials skipped — undermines their business model.

The ruling was definitive in siding with U.S. District Court Judge Dolly Gee, concluding that she did not “abuse her discretion” in refusing to issue a preliminary injunction to stop Dish’s Hopper features. The three-judge panel said that Fox, in claiming direct copyright infringement, “did not establish that [Dish], rather than its customers, made copies of television programs for viewing.” It also held that Fox did not establish a likelihood of success on its secondary infringement claim — in other words, that Dish was responsible for its customers’ infringement — because the satcaster “was likely to succeed” in its defense that the customers’ copying was a “fair use.’

“If recording an entire copyrighted program is a fair use, the fact that viewers do not watch the ads not copyrighted by Fox cannot transform the programming into a copyright violation,” the 9th Circuit panel said. “Indeed, a recording made with PrimeTime Anytime still includes commercials; AutoHop simply skips those recorded commercials unless a viewer manually rewinds or fast forwards into a commercial break.”

The appellate court is the latest blow to the broadcast networks in their legal efforts to limit the reach of startup technology that that  seems crafted to push the limits of copyright law, threatening a business model that relies on advertising and retransmission fees. Last week, the 2nd Circuit Court of Appeals refused Fox’s request to rehear its challenge to Aereo, the startup that offers subscribers digital streams of station signals. Broadcasters have been unsuccessful in obtaining an injunction to halt Aereo, and  Fox said that it is considering taking the case to the Supreme Court.

Fox said in a statement, “We are disappointed in the court’s ruling, even though the bar to secure a preliminary injunction is very high. This is not about consumer choice or advances in technology. It is about a company devising an unlicensed, unauthorized service that clearly infringes our copyrights and violates our contract. We will review all of our options and proceed accordingly.”

At an appellate hearing in June, a three-judge panel raised questions of just how different Dish’s AutoHop feature, along with its PrimeTime Anytime service, were from a regular DVR. In the hearing, Fox’s legal team emphasized that Dish was in violation of retransmission agreements to only offer video-on-demand services of their programming that disabled the fast-forward function during the commercials. But Dish contented that the Hopper is an enhanced DVR, and challenged whether Fox could obtain a preliminary injunction in a contract claim if it had not proven copyright infringement.

“This decision is a victory for American consumers, and we are proud to have atood by their side in this important fight over the fundamental rights of consumer choice and control,” Dish’s executive vice president and general counsel, R. Stanton Dodge, said in a statement.

Aereo and Dish relied in part on a 2008 decision by the 2nd Circuit which held that Cablevision was within legal bounds of its offering of a remote DVR, in which subscribers sent commands to record programming that was then saved at a central storage facility. Fox tried to establish that in contrast to Cablevision’s case, Dish was in control of what was recorded, noting that with PrimeTime Anytime, the satcaster decides how long programs were available for viewing and modifies the start and end times of the primetime block. “But these facts do not establish that Dish made the copies,” the appellate judges wrote. Instead, they cited the Supreme Court’s 1984 Sony Betamax decision, which allowed for private home taping of programming as a fair use.

Fox had claimed copyright infringement in part because Dish makes “quality assurance” copies of primetime programming to make sure that its AutoHop featuring is working. But the appeals judges sided with Gee in concluding that. even though Dish “likely” infringed in such cases, Fox had not shown that it would suffer “irreparable harm” if Dish’s copying were allowed to continue. Moreover, they saw a difference between making quality assurance copies, and the AutoHop service overall. The appellate judges wrote that “AutoHop, standing alone, does not infringe.”

Although the judges indicated that Fox had a “much closer” case in proving Dish violated contract agreements, which restricted the satcaster’s offering of video-on-demand services, they sided with Gee in concluding that PrimeTime Anytime was “more like DVR than video-on-demand.”



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