Fox Broadcasting Co Inc v Dish Network LLC

Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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723 F.3d 1067
United States Court of Appeals,
Ninth Circuit.
FOX BROADCASTING COMPANY, INC.;
Twentieth Century Fox Film Corporation; Fox
Television Holdings, Inc., Plaintiffs–Appellants,
v.
DISH NETWORK L.L.C.; Dish Network
Corporation, Defendants–Appellees.
No. 12–57048. | Argued and Submitted
June 4, 2013. | Filed July 24, 2013.
Synopsis
Background: Network broadcaster, which owned
copyrighted television programs, brought action against
satellite-television multichannel video programming
distributor (MVPD), which retransmitted broadcaster's
programming to its subscribers via satellite pursuant to
retransmission consent contracts (RTC) with broadcaster,
alleging breach of contract and copyright infringement,
relating to MVPD's set-top box with digital video recorder
(DVR) and commercial-skipping capabilities. The United
States District Court for the Central District of California,
Dolly M. Gee, J., 905 F.Supp.2d 1088, denied broadcaster's
motion for preliminary injunction. Broadcaster appealed.
Holdings: The Court of Appeals, Thomas, Circuit Judge, held
that:
[1] broadcaster did not show likelihood of success on claim
for direct copyright infringement;
[2] broadcaster did not show likelihood of success on claim
for secondary copyright infringement;
[3] broadcaster did not show likelihood of success on breach
of contract claim alleging unauthorized copying by MVPD;
[4] broadcaster did not show likelihood of success on breach
of contract claim alleging unauthorized distribution;
[5] broadcaster did not show likelihood of success on breach
of contract claim alleging MVPD's failure to disable fast-
forward functionality during advertisements; and
[6] even if broadcaster was likely to success on copyright
and contract claims as to MVPD making “quality assurance”
copies of programming in order to test the functionality
of commercial-skipping feature, broadcaster did not show
likelihood of irreparable harm.
Affirmed.
West Headnotes (15)
[1] Injunction
Grounds in general; multiple factors
To obtain a preliminary injunction, a plaintiff
must demonstrate that: (1) it is likely to succeed
on the merits; (2) it is likely to suffer irreparable
harm in the absence of preliminary relief; (3) the
balance of equities tips in its favor; and (4) an
injunction is in the public interest.
Cases that cite this headnote
[2] Injunction
Grounds in general; multiple factors
A plaintiff may obtain a preliminary injunction
if it demonstrates: (1) serious questions§ going
to the merits; (2) a balance of hardships that tips
sharply towards the plaintiff; (3) a likelihood of
irreparable injury; and (4) the injunction is in the
public interest.
1 Cases that cite this headnote
[3] Federal Courts
Preliminary injunction; temporary
restraining order
Court of appeals reviews the denial of a
preliminary injunction for an abuse of discretion.
Cases that cite this headnote
[4] Federal Courts
Preliminary injunction; temporary
restraining order
On appeal from the denial of a preliminary
injunction, factual findings are reviewed for
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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clear error, and legal conclusions are reviewed
de novo.
Cases that cite this headnote
[5] Federal Courts
Preliminary injunction; temporary
restraining order
Court of appeals does not reverse the denial of a
preliminary injunction simply because the court
of appeals would have arrived at a different result
if it had applied the law to the facts of the case.
Cases that cite this headnote
[6] Copyrights and Intellectual Property
Preliminary injunction
District court's determination that network
broadcaster, which owned copyrighted
television programs, had not established a
likelihood of success on the merits, as element
for preliminary injunction, on its claim for direct
copyright infringement by reproduction, was not
an abuse of discretion, in broadcaster's action
against satellite-television multichannel video
programming distributor (MVPD), relating to
MVPD's set-top box with digital video recorder
(DVR) and commercial-skipping capabilities;
MVPD would be liable for direct infringement
only if it caused the copying, and while MVPD
exercised a degree of discretion over the copying
process, it created a copy only in response to a
customer's command. 17 U.S.C.A. § 501(a).
Cases that cite this headnote
[7] Copyrights and Intellectual Property
Nature and elements of injury
To establish a claim of copyright infringement by
reproduction, the plaintiff must show ownership
of the copyright and copying by the defendant,
i.e., that defendant caused the copying. 17
U.S.C.A. § 501(a).
Cases that cite this headnote
[8] Copyrights and Intellectual Property
Preliminary injunction
District court's determination that network
broadcaster, which owned copyrighted
television programs, had not established a
likelihood of success on the merits, as element
for preliminary injunction, on its claim for
secondary copyright infringement, was not an
abuse of discretion, in broadcaster's action
against satellite-television multichannel video
programming distributor (MVPD), relating to
MVPD's set-top box with digital video recorder
(DVR) and commercial-skipping capabilities;
while broadcaster made prima facie showing
of direct infringement by MVPD's customers,
MVPD could assert an affirmative defense of
fair use by its customers, commercial-skipping
did not implicate broadcaster's copyright
interest because broadcaster did not own
copyrights to the commercial advertisements,
customers' home viewing was noncommercial
use involving timeshifting, and alleged market
harm to broadcaster resulted from automatic
commercial-skipping, not the recording of
programs. 17 U.S.C.A. § 107.
Cases that cite this headnote
[9] Copyrights and Intellectual Property
Persons liable
Secondary liability for copyright infringement
does not exist in the absence of direct
infringement by a third party.
Cases that cite this headnote
[10] Copyrights and Intellectual Property
Fair use and other permitted uses in general
The effect of the use upon the potential market
for or value of the copyrighted work is the most
important element of fair use, as defense to
copyright infringement. 17 U.S.C.A. § 107(4).
Cases that cite this headnote
[11] Telecommunications
Injunction
District court's determination that network
broadcaster, which owned copyrighted
television programs, had not established a
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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likelihood of success on the merits, as element
for preliminary injunction, on its claim for
breach of retransmission consent contract (RTC)
based on unauthorized copying, was not an
abuse of discretion, in broadcaster's action
against satellite-television multichannel video
programming distributor (MVPD), relating to
MVPD's set-top box with digital video recorder
(DVR) and commercial-skipping capabilities;
contract restricted copying by MVPD but not
by MVPD's customers for their home use, and
while MVPD exercised a degree of discretion
over the copying process, its customers caused
the copying by issuing a command, to which
MVPD responded.
Cases that cite this headnote
[12] Telecommunications
Injunction
District court's determination that network
broadcaster, which owned copyrighted
television programs, had not established a
likelihood of success on the merits, as element
for preliminary injunction, on its claim for
breach of retransmission consent contract (RTC)
based on unauthorized distribution, was not an
abuse of discretion, in broadcaster's action
against satellite-television multichannel video
programming distributor (MVPD), relating to
MVPD's set-top box with digital video recorder
(DVR) and commercial-skipping capabilities;
contract prohibited distribution of programming
that was interactive, time-delayed, or video
on demand (VOD) but with an exception
for connecting the video replay equipment of
MVPD's customers, and the term “distribution”
was ambiguous, though MVPD's position that
the set-top box was not similar to interactive,
time-delayed, or VOD programming was
dubious.
Cases that cite this headnote
[13] Telecommunications
Injunction
District court's determination that network
broadcaster, which owned copyrighted
television programs, had not established
a likelihood of success on the merits,
as element for preliminary injunction, on
its claim for breach of letter agreement
modifying retransmission consent contract
(RTC), based on failure to disable fast-forward
functionality during advertisements, was not an
abuse of discretion, in broadcaster's action
against satellite-television multichannel video
programming distributor (MVPD), relating to
MVPD's set-top box with digital video recorder
(DVR) and commercial-skipping capabilities;
letter agreement concerned only video on
demand (VOD), and set-top box could be
considered a hybrid of a DVR and VOD that
was more akin to a DVR, since a customer of
MVPD had to enable the feature allowing the
recording of any and all primetime programming
on broadcaster's network every night of the
week.
Cases that cite this headnote
[14] Telecommunications
Injunction
Assuming that district court correctly concluded
that network broadcaster, which owned
copyrighted television programs, was likely to
succeed on merits of claims of direct copyright
infringement and breach of no-copying clause
in retransmission consent contract (RTC), as
element for preliminary injunction, district court
did not abuse its discretion in concluding
that broadcaster had not shown likelihood
of irreparable harm, as to satellite-television
multichannel video programming distributor
(MVPD) making “quality assurance” copies
of broadcaster's programming, to test the
functionality of commercial-skipping feature
in MVPD's set-top box with digital video
recorder (DVR) capabilities; harms alleged by
broadcaster, which were loss of control over
its copyrighted works and loss of advertising
revenue, did not flow from the quality
assurance copies themselves, but from the
entire commercial-skipping feature in the set-top
box, and monetary damages could compensate
broadcaster for its alleged losses.
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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Cases that cite this headnote
[15] Injunction
Injury, Hardship, Harm, or Effect
To obtain a preliminary injunction, a plaintiff
need not show that the action sought to be
enjoined is the exclusive cause of the injury.
Cases that cite this headnote
Attorneys and Law Firms
*1069 Paul M. Smith (argued), Jenner & Block LLP, New
York, New York; Richard L. Stone, Andrew J. Thomas,
David R. Singer, and Amy M. Gallegos, Jenner & Block LLP,
Los Angeles, CA, for Plaintiffs–Appellants.
E. Joshua Rosenkranz (argued), Peter A. Bicks, Elyse D.
Echtman, and *1070 Lisa T. Simpson, Orrick, Herrington
& Sutcliffe LLP, New York, NY; Annette L. Hurst and
William A. Molinski, Orrick, Herrington & Sutcliffe LLP,
San Francisco, CA; Mark A. Lemley and Michael H. Page,
Durie Tangri LLP, San Francisco, CA, for Defendants–
Appellees.
Robert A. Long, Jennifer A. Johnson, and David M. Zionts,
Covington & Burling LLP, Washington, D.C., for Amici
Curiae ABC Television Affiliates Association et al.
Jeffrey A. Lamken and Robert K. Kry, MoloLamken LLP,
Washington, D.C., for Amicus Curiae Cablevision Systems
Corp.
Mark J. Prak, Charles F. Marshall, Julia C. Ambrose, and
Laura S. Chipman, Brooks, Pierce, McLendon, Humphrey
& Leonard, LLP, Raleigh, NC; Jane E. Mago, Jerianne
Timmerman, Bart Stringham, and Benjamin F.P. Ivins,
National Association of Broadcasters, Washington, D.C., for
Amicus Curiae National Association of Broadcasters.
Kelly M. Klaus and Jonathan H. Blavin, Munger, Tolles &
Olson LLP, Los Angeles, CA, for Amici Curiae Paramount
Pictures Corp. et al.
Seth D. Greenstein and Robert S. Schwartz, Constantine
Cannon LLP, Washington, D.C., for Amici Curiae Computer
& Communications Industry Association et al.
Mitchell L. Stoltz and Corynne McSherry, Electronic
Frontier Foundation, San Francisco, CA; John Bergmayer,
Public Knowledge, Washington, D.C.; Betsy Rosenblatt,
Organization for Transformative Works, New York, NY, for
Amici Curiae Electronic Frontier Foundation et al.
Jason Schultz, Samuelson Law, Technology & Public Policy
Clinic, University of California, Berkeley, School of Law,
Berkeley, CA, for Amici Curiae law scholars and professors.
Appeal from the United States District Court for the
Central District of California, Dolly M. Gee, District Judge,
Presiding. D.C. No. 2:12–cv–04529–DMG–SH.
Before: SIDNEY R. THOMAS, BARRY G. SILVERMAN,
and RAYMOND C. FISHER, Circuit Judges.
Opinion
OPINION
THOMAS, Circuit Judge:
Dish Network offers two marsupial-inspired products: the
“Hopper,” which “hops” over commercials, and a companion
box known as a “Joey.” Fox Broadcasting Company
claims these products are contractually out of bounds and
constitute copyright infringement. The district court denied
the broadcaster's request for a preliminary injunction. We
have jurisdiction under 28 U.S.C. § 1292, and we affirm.
I
Plaintiffs Fox Broadcasting Company, Twentieth Century
Fox Film Corp., and Fox Television Holdings, Inc.
(collectively, “Fox”) own the copyrights to television shows
that air on the Fox television network. Its primetime lineup
includes shows such as Glee, Bones, The Simpsons, and
Family Guy. Fox contracts with cable and satellite television
service providers to retransmit Fox's broadcast signal for
the customers of these providers, known as multichannel
video programming distributors. Some such distributors also
offer Fox programming via video on demand. Fox separately
licenses its shows to companies such as Hulu, Apple, Netflix,
and Amazon, which sell Fox programs online or stream them
over the Internet.
One distributor that Fox contracts with is Dish Network,
the third-largest pay television service provider in the United
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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States. Dish retransmits Fox's broadcast signal under a
2002 contract with Dish's former parent company and
current technology *1071 vendor, EchoStar Technologies.
Among other things, the contract provides that Dish shall
not “distribute” Fox programs on an “interactive, time-
delayed, video-on-demand or similar basis,” though Dish
may “connect[ ] its Subscribers' video replay equipment.”
Dish also cannot “record, copy, duplicate and/or authorize
the recording, copying, duplication (other than by consumers
for private home use) or retransmission” of any part of Fox's
signal.
Fox and Dish have amended this contract several times, most
recently in a 2010 letter agreement. Under that agreement,
Dish could provide Fox Video On Demand to its subscribers,
but Dish had to “disable fast forward functionality during
all advertisements”; the contract stated “such fast-forward
disabling is a necessary condition to distribution of the
Fox broadcast content via [video on demand].” The 2010
agreement also forbids Fox and Dish from attempting to
“frustrate or circumvent” the contractual rights.
In March 2012, Dish released to its customers the Hopper,
a set-top box with digital video recorder (DVR) and video
on demand capabilities. The Hopper provides service to up
to four televisions in a home using companion boxes (known
as Joeys) wired to each television. Dish customers can also
watch Hopper content on their computers and mobile devices
using a product called the Sling Adapter.
At the same time it released the Hopper, Dish introduced a
feature called PrimeTime Anytime that works only on the
Hopper. PrimeTime Anytime allows a subscriber to set a
single timer to record any and all primetime programming on
the four major broadcast networks (including Fox) every
night of the week. To enable PrimeTime Anytime, a Hopper
user presses the “ * ” button on the remote control to
reach the PrimeTime Anytime setup screen. The user selects
“Enable,” and a new menu appears where the viewer can
disable recordings of certain networks on certain days of
the week and change the length of time that the shows are
saved (between two and eight days). By default, PrimeTime
Anytime records primetime shows on all four networks each
night of the week and saves all recordings for eight days.
1
Dish determines the start and end time of the PrimeTime
Anytime recordings each night and sometimes alters
these times to record programming outside the traditional
primetime window of 8 p.m. to 11 p.m. Eastern and Pacific
time Monday through Saturday and 7 p.m. to 11 p.m. on
Sunday (Primetime starts and ends one hour earlier in the
Mountain and Central time zones.). For instance, Dish altered
the times to accommodate Olympic programming on NBC
in summer 2012. If at least half of a program falls within
the primetime window, Dish includes the entire show in the
PrimeTime Anytime recording.
A user may start watching recorded programs immediately
after PrimeTime Anytime starts recording. The user must
enable PrimeTime Anytime at least 15 minutes before the
primetime recording begins and can cancel a PrimeTime
Anytime recording up to 15 minutes before the recording
begins; after that, a user can no longer cancel that day's
PrimeTime Anytime recording.
All PrimeTime Anytime recordings are stored locally on a
customer's Hopper for *1072 the preselected number of
days (typically eight), at which time they are automatically
deleted. Before that time, a customer cannot actually delete
or save a PrimeTime Anytime recording. Rather, if the
customer selects “Save” or “Save Series” from the PrimeTime
Anytime menu, an icon is created in the customer's “My
Recordings” folder, but the icon is simply linked to the
PrimeTime Anytime recording until the time of automatic
deletion, at which time a duplicate copy is created. Similarly,
if a customer “deletes” a show recorded through PrimeTime
Anytime, the icon for that show disappears from the user's
graphical user interface, but the recording remains on the
customer's hard drive until it is automatically deleted.
Dish customers can also use the Hopper to access pay-per-
view movies via video on demand, but Dish does not offer
video on demand from any of the four broadcast networks,
including Fox. Video on demand recordings are stored on
the user's hard drive in a file directory separate from the
PrimeTime Anytime and DVR recordings.
In May 2012, Dish started offering a new feature, AutoHop,
that allows users to automatically skip commercials.
AutoHop is only available on shows recorded using
PrimeTime Anytime, typically on the morning after the live
broadcast. It is not available for all primetime programs.
When a user plays back a PrimeTime Anytime recording, if
AutoHop is available, a pop-up screen appears that allows
the user to select the option to “automatically skip over”
commercial breaks. By default, AutoHop is not selected.
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If a customer enables AutoHop, the viewer sees only the
first and last few seconds of each commercial break. A
red kangaroo icon appears in the corner of the screen to
demonstrate that AutoHop is skipping commercials. Unlike
the 30–second skip feature available on many DVRs, once a
user has enabled AutoHop, the user does not press anything
to skip through commercials. AutoHop does not delete
commercials from the recording. Customers can see the
commercials if they manually rewind or fast-forward into a
commercial break.
To create the AutoHop functionality, Dish technicians
in Cheyenne, Wyoming manually view Fox's primetime
programing each night and technologically mark the
beginning and end of each commercial. The program
content is not altered in any way. The electronically
marked files are then uplinked in Wyoming and eventually
transmitted to subscribers in an “announcement” file that
Dish makes available to subscribers after the show has aired.
Simultaneously with the uplink, three “beta Hoppers” record
the Fox primetime block for transmissions in Kentucky,
Pennsylvania, and Florida to test the marking announcement.
These copies remain at the uplink facility and are used to
make sure the commercials have been accurately marked and
that no portion of the program has been cut off.
Fox sued Dish for copyright infringement and breach of
contract and sought a preliminary injunction. The district
court denied the motion. Fox Broad. Co. v. Dish Network,
LLC, 905 F.Supp.2d 1088 (C.D.Cal.2012). It held that Fox
did not demonstrate a likelihood of success on most of its
copyright infringement and contract claims. The exceptions
were Fox's claims regarding the quality assurance copies. In
making these copies, the court held, Dish likely breached its
contract with Fox and directly infringed Fox's reproduction
rights. Id. at 1102–06, 1108. Nonetheless, the court held that
Fox was not entitled to an injunction because it failed to
establish that it would likely suffer “irreparable harm” as a
result of those copies. Id. at 1109–11.
[1] [2] To obtain a preliminary injunction, Fox must
demonstrate that (1) it is *1073 likely to succeed on the
merits, (2) it is likely to suffer irreparable harm in the absence
of preliminary relief, (3) the balance of equities tips in its
favor, and (4) an injunction is in the public interest. Winter
v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct.
365, 172 L.Ed.2d 249 (2008).
2
[3] [4] [5] We review the denial of a preliminary
injunction for an abuse of discretion. Perfect 10, Inc. v.
Amazon.com, Inc., 508 F.3d 1146, 1157 (9th Cir.2007).
Factual findings are reviewed for clear error, and legal
conclusions are reviewed de novo. Id. We do not reverse
“simply because the appellate court would have arrived at a
different result if it had applied the law to the facts of the
case.” Sports Form, Inc. v. United Press Int'l, Inc., 686 F.2d
750, 752 (9th Cir.1982); see also United States v. Hinkson,
585 F.3d 1247, 1261–62 (9th Cir.2009) (en banc).
Applying this deferential standard of review, we hold that
the district court did not abuse its discretion in holding
that Fox did not demonstrate a likelihood of success on
its copyright infringement and breach of contract claims
regarding Dish's implementation of PrimeTime Anytime and
AutoHop. Furthermore, the district court did not err in holding
that Fox did not demonstrate a likelihood of irreparable harm
from Dish's creation of the “quality assurance” copies used
to perfect the functioning of AutoHop.
II
A
[6] [7] The district court did not abuse its discretion in
holding that Fox was unlikely to succeed on its claim of direct
copyright infringement regarding PrimeTime Anytime. “To
establish a claim of copyright infringement by reproduction,
the plaintiff must show ownership of the copyright and
copying by the defendant.” Kelly v. Arriba Soft Corp., 336
F.3d 811, 817 (9th Cir.2003); see also 17 U.S.C. §§ 106(1),
501(a).
In this case, the district court determined that Fox had
demonstrated ownership of the copyrights of some of the
shows. The court then focused on who made the copies
of Fox programs using PrimeTime Anytime: Dish or its
customers. The district court noted that the Second Circuit
had considered a similar question in Cartoon Network LP
v. CSC Holdings, Inc. (“Cablevision”), 536 F.3d 121 (2d
Cir.2008). The Second Circuit concluded that Cablevision's
remote-storage DVR system did not directly infringe the
plaintiffs' copyrights. Unlike a typical DVR system, in which
a customer's remote sends signals to the set-top box in her
home, users of Cablevision's remote-storage DVR system
sent signals to Cablevision's central facility, where a copy of
the program the viewer selected was created and stored on
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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Cablevision's central servers. Id. at 125, 130. The question
was “who made this copy”—the viewer or Cablevision? Id.
at 130. The Second Circuit held that much like a VCR user
makes the copy, so did the Cablevision customer. Id. at 131.
In this case, the district court found that “Dish exercises
a degree of discretion over the copying process beyond
that which was present in Cablevision.” Fox Broad., 905
F.Supp.2d at 1102. It pointed to the facts *1074 that Dish
decides how long copies are available for viewing, Dish
maintains the authority to modify the start and end times of
the primetime block, and a user cannot stop a copy from being
made once the recording has started. Id. at 1101–02. Yet the
court held that “at this stage of the proceedings,” it was “not
satisfied” that PrimeTime Anytime had “crossed over the line
that leads to direct liability.” Id. at 1102. The court held that
the “user, not Dish, must take the initial step of enabling”
PrimeTime Anytime. Id. “The user, then, and not Dish, is
‘the most significant and important cause’ of the copy.” Id.
(quoting Prosser & Keeton on Torts § 42).
The district court did not abuse its discretion in concluding
that Fox had not established a likelihood of success on
this claim. Infringement of the reproduction right requires
“copying by the defendant,” Kelly, 336 F.3d at 817 (emphasis
added), which comprises a requirement that the defendant
cause the copying. See Cablevision, 536 F.3d at 130
(explaining that direct infringement claim turned on “who
made” the copies). Fox argues that because Dish participates
in the operation of PrimeTime Anytime on a daily basis, Dish
made the copies, either alone or concurrently with its users.
However, operating a system used to make copies at the user's
command does not mean that the system operator, rather than
the user, caused copies to be made. Here, Dish's program
creates the copy only in response to the user's command.
Therefore, the district court did not err in concluding that the
user, not Dish, makes the copy.
That Dish decides how long copies are available for
viewing, modifies the start and end times of the primetime
block, and prevents a user from stopping a recording
might be relevant to a secondary or perhaps even a direct
infringement claim. Cf. Cablevision, 536 F.3d at 132–33
(finding that factors evidencing Cablevision's control over
copying process seemed “more relevant to the question of
contributory liability” but reserving the question “whether
one's contribution to the creation of an infringing copy may
be so great that it warrants holding that party directly liable
for the infringement, even though another party has actually
made the copy”). But these facts do not establish that Dish
made the copies. Therefore, the district court did not err in
holding that Fox did not establish a likelihood of success on
its direct infringement claim.
B
[8] [9] The district court did not abuse its discretion in
concluding that Fox was unlikely to succeed on its claim
of secondary copyright infringement for the PrimeTime
Anytime and AutoHop programs. “Secondary liability for
copyright infringement does not exist in the absence of direct
infringement by a third party.” A & M Records, Inc. v.
Napster, Inc., 239 F.3d 1004, 1013 n. 2 (9th Cir.2001).
Therefore, to establish secondary liability, Fox must establish
that Dish's users are infringing. There is no dispute that Fox
has established a prima facie case of direct infringement by
Dish customers because Fox owns the copyrights to its shows
and the users make copies. Thus, the burden shifts to Dish
to demonstrate that it is likely to succeed on its affirmative
defense that its customers' copying was a “fair use.” Perfect
10, 508 F.3d at 1158. Dish has met this burden.
As the district court recognized, the Supreme Court's analysis
in Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S.
417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984), provides strong
guidance in assessing whether Dish customers' copying of
Fox programs is a “fair use.” In Sony, the Supreme Court held
that Sony was not *1075 liable for secondary infringement
for manufacturing Betamax VCRs because customers used
the machines primarily for time-shifting, “the practice of
recording a program to view it once at a later time, and
thereafter erasing it.” Id. at 423, 104 S.Ct. 774. The Court
held that “even the unauthorized home time-shifting of
respondents' programs is legitimate fair use.” Id. at 442, 104
S.Ct. 774.
Fox and its amici argue that Dish customers use PrimeTime
Anytime and AutoHop for purposes other than time-shifting
—namely, commercial-skipping and library-building. These
uses were briefly discussed in Sony, in which the Court
recognized that some Betamax customers used the device
to avoid viewing advertisements and accumulate libraries
of tapes. In Sony, about 25 percent of Betamax users fast-
forwarded through commercials. Id. at 452 n. 36, 104 S.Ct.
774. Additionally, a “substantial number of interviewees had
accumulated libraries of tapes.” Id. at 423, 104 S.Ct. 774.
One user owned about 100 tapes and bought his Betamax
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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intending to “build a library of cassettes,” but this “proved
too expensive.” Id. at 423 n. 3, 104 S.Ct. 774. Because the
Betamax was primarily used for timeshifting, the Court in
Sony never expressly decided whether commercial-skipping
and library-building were fair uses. Cf. Metro–Goldwyn–
Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 931,
125 S.Ct. 2764, 162 L.Ed.2d 781 (2005) (explaining that
“[a]lthough Sony's advertisements urged consumers to buy
the VCR to ‘record favorite shows' or ‘build a library’ of
recorded programs, neither of these uses was necessarily
infringing” (citations omitted)).
Yet, as the district court held, commercial-skipping does not
implicate Fox's copyright interest because Fox owns the
copyrights to the television programs, not to the ads aired
in the commercial breaks. 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 recording
into a copyright violation. 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.
Thus, any analysis of the market harm should exclude
consideration of AutoHop because ad-skipping does not
implicate Fox's copyright interests.
Analyzing PrimeTime Anytime under the fair use factors,
Dish has demonstrated a likelihood of success on its
customers' fair use defense. As for the first factor, the
“purpose and character of the use, including whether such
use is of a commercial nature or is for nonprofit educational
purposes,” 17 U.S.C. § 107(1), Dish customers' home
viewing is noncommercial under Sony, which held that
“time-shifting for private home use” was a “noncommercial,
nonprofit activity,” 464 U.S. at 449, 104 S.Ct. 774. Here,
the district court found that PrimeTime Anytime is used for
time-shifting, and that the Hopper is available only to private
consumers. Fox Broad., 905 F.Supp.2d at 1098.
Sony also governs the analysis of the second and third factors,
the “nature of the copyrighted work” and “the amount and
substantiality of the portion used in relation to the copyrighted
work as a whole,” 17 U.S.C. § 107(2), (3). Sony held that
“when one considers the nature of a televised copyrighted
audiovisual work, and that time-shifting merely enables a
viewer to see such a work which he had been invited to
witness in its entirety free of charge, the fact that the entire
work is reproduced, does not have its ordinary effect of
militating against a finding of fair use.” 464 U.S. at 449–50,
104 S.Ct. 774 *1076 (citations omitted). The same analysis
applies here, and thus the fact that Dish users copy Fox's
entire copyrighted broadcasts does not have its ordinary
effect of militating against a finding of fair use.
[10] Finally, we consider the “effect of the use upon the
potential market for or value of the copyrighted work.” 17
U.S.C. § 107(4). This is the “most important element of
fair use.” Harper & Row Publishers, Inc. v. Nation Enters.,
471 U.S. 539, 566, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985).
Because Dish customers' taping is “for a noncommercial
purpose,” the likelihood of future market harm is not
presumed but “must be demonstrated.” Sony, 464 U.S. at 451,
104 S.Ct. 774. Fox “need only show that if the challenged
use ‘should become widespread, it would adversely affect
the potential market for the copyrighted work.’ ” Harper &
Row, 471 U.S. at 568, 105 S.Ct. 2218 (quoting Sony, 464 U.S.
at 451, 104 S.Ct. 774 (emphasis added by Harper & Row
Court)).
Because Fox licenses its programs to distributors such as
Hulu and Apple, the market harm analysis is somewhat
different than in Sony, where no such secondary market
existed for the copyright-holders' programs.
3
However, the
record before the district court establishes that the market
harm that Fox and its amici allege results from the automatic
commercial-skipping, not the recording of programs through
PrimeTime Anytime. Indeed, Fox often charges no additional
license fees for providers to offer Fox's licensed video on
demand, so long as providers disable fast-forwarding. This
indicates that the ease of skipping commercials, rather than
the on-demand availability of Fox programs, causes any
market harm. And as we have discussed, the commercial-
skipping does not implicate any copyright interest.
In arguing otherwise, Fox points to the district court's
market harm analysis in a different section of its opinion.
However, that analysis is not relevant to determining whether
PrimeTime Anytime causes market harm because that portion
of the opinion addresses a different question: whether the
“quality assurance” copies used to test AutoHop would harm
the market for Fox to license copies of its shows. Because the
quality assurance copies were used to perfect AutoHop, the
district court assessed whether AutoHop caused market harm
and found that Dish “harms Fox's opportunity to negotiate a
value for [authorized] copies and also inhibits Fox's ability
to enter into similar licensing agreements with others in the
future by making the copies less valuable.” Fox Broad.,
905 F.Supp.2d at 1105. However, the court's analysis of the
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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market harm caused by the quality assurance copies does not
affect the assessment of whether Dish customers' copying of
programs potentially causes market harm because the district
court correctly found that AutoHop, standing alone, does not
infringe.
Therefore, the district court did not abuse its discretion in
concluding that Fox was unlikely to succeed on its secondary
infringement claim.
C
[11] The question of whether Dish has breached its contract
with Fox is much closer. However, applying our very
deferential standard of review, we conclude that the district
court did not abuse its discretion in denying a preliminary
injunction based on the alleged contract breaches.
*1077 Fox first argues that Dish breached the portion of the
2002 contract that states:
EchoStar [now Dish] shall not, for pay
or otherwise, record, copy, duplicate
and/or authorize the recording,
copying, duplication (other than by
consumers for private home use) or
retransmission of any portion of any
Station's Analog Signal without prior
written permission of the Station,
except as is specifically permitted by
this Agreement.
Fox's argument as to why Dish allegedly breached this clause
is the same as its argument that Dish directly infringed its
copyrights. It does not argue that the contract's use of “record,
copy, duplicate” has a different meaning than the Copyright
Act's definition of “reproduce.” Given that Dish did not
directly infringe Fox's copyrights, the district court properly
concluded that Fox is unlikely to succeed on its claim that
Dish breached this clause.
[12] Second, Fox argues that Dish breached the following
provision in the 2002 contract:
EchoStar acknowledges and agrees
that it shall have no right to distribute
all or any portion of the programming
contained in any Analog Signal on
an interactive, time-delayed, video-on-
demand or similar basis; provided that
Fox acknowledges that the foregoing
shall not restrict EchoStar's practice
of connecting its Subscribers' video
replay equipment....
The district court construed the contract term “distribute”
to be analogous to the same word in the Copyright Act, 17
U.S.C. § 106(3). It held that distribution under the Copyright
Act required a copyrighted work to “chang[e] hands,” Fox
Broad., 905 F.Supp.2d at 1106, and Dish engaged in no
distribution because the PrimeTime Anytime copies “are
made by users, remain in private homes, and do not change
hands,” id. at 1107. Therefore, it held, Fox was unlikely
to prevail on its claim that Dish breached this contract
provision.
4
On appeal, Fox challenges this construction of
“distribute,” essentially arguing that the prohibition against
“distribut[ing]” Fox programming constitutes an agreement
that Dish would not make Fox programming available to
its subscribers. Fox's interpretation is plausible, but so is
the district court's. While the district court would not be
justified in holding that the meaning of the term “distribute”
was unambiguous or that, as a matter of law, any ambiguous
terms in the contract should be interpreted by looking to the
Copyright Act, we do not read the district court's opinion
as resting its decision on such grounds. In the proceedings
below, the parties did not argue about the meaning of
“distribute.” Absent any argument or extrinsic evidence on
this term, the district court did not err by looking to the
Copyright Act to interpret “distribute.” We express no view
on whether, after a fully developed record and arguments, the
district court's construction of “distribute” will prove to be the
correct one.
We are, however, dubious of Dish's position that PrimeTime
Anytime is not “similar” to “interactive, time-delayed, [or]
video-on-demand” programming, the distribution of which
is expressly prohibited by the 2002 contract. Dish has
convinced us that PrimeTime Anytime is not identical to
video-on-demand but is at a loss to explain why it is not
similar, and at oral argument, when pressed, Dish could not
provide even a single example of what would be considered
similar under the *1078 contract if not this. The contract is
written broadly, and Fox has a good argument that PrimeTime
Anytime is “similar,” even though not exactly the same, as
time-delayed or video-on-demand programming.
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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[13] Third, Fox argues that Dish breached a provision of a
2010 letter agreement that modified the 2002 contract. The
letter agreement permitted Dish to offer Fox's licensed video
on demand (VOD) service so long as Dish disabled fast-
forwarding during commercials:
DISH will disable fast forward functionality during all
advertisements; FBC and DISH may include a pre-roll
announcement prior to each show regarding the fast-
forward disabling. DISH and FBC will discuss in good
faith the timing of DISH's implementation of such fast-
forward disabling and messaging to consumers; provided
that DISH acknowledges and agrees that such fast-forward
disabling is a necessary condition to distribution of the Fox
broadcast content via VOD. (Emphasis added.)
The district court held that if PrimeTime Anytime is video
on demand, then Dish clearly breached the contract. The
court found this dispute “especially challenging because
[PrimeTime Anytime] is, in some ways, a hybrid of DVR and
VOD likely not contemplated by either party when the 2010
Agreement was drafted.” Fox Broad., 905 F.Supp.2d at 1109.
But the district court concluded that PrimeTime Anytime was
“more akin” to DVR than to video on demand. Id.
Because the district court based its interpretation on extrinsic
evidence, we review its holding for clear error. Miller v.
Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir.1985). The
district court's finding that PrimeTime Anytime was more
akin to a DVR than to video on demand was not clearly
erroneous. Because, unlike the relevant clause of the 2002
contract, this provision of the 2010 letter agreement does not
preclude Dish from enabling fast-forwarding on services that
are “similar” to video on demand, the district court did not
abuse its discretion in concluding that Fox was unlikely to
succeed on its breach of contract claim.
The fact that a Dish attorney referred to PrimeTime Anytime
as a “video-on-demand service” in a trademark application
supports Fox's claim that the parties would have understood
PrimeTime Anytime to be akin to video on demand.
Providing further support are Dish promotional materials that
repeatedly referred to PrimeTime Anytime providing “On
Demand access” or an “on demand library.” However, Dish
introduced evidence that programming distributors such as
itself and DirecTV have used the phrase “on demand” to refer
to DVR recordings, which are clearly not video on demand.
And the district court relied in part on the fact that a viewer
must enable PrimeTime Anytime before a show airs to view
it later, which is an important feature distinguishing DVR
from video on demand. Fox Broad., 905 F.Supp.2d at 1109.
Therefore, in light of the record before it, the district court
did not clearly err in concluding that PrimeTime Anytime was
more like DVR than video on demand.
Finally, Fox argues that Dish breached the portion of the 2010
letter agreement that provides that neither party may “take
any action whatsoever intended to frustrate or circumvent,
or attempt to frustrate or circumvent, the protections granted
to the other Party pursuant to any provision in this Letter
Agreement.” Contrary to Fox's argument, the record does not
indicate that Dish launched PrimeTime Anytime because it
was unwilling to comply with the requirements to offer Fox's
licensed video on demand service, rather than because Dish
lacked the technological *1079 capability to do so. On this
record, Fox has not demonstrated it is likely to succeed on
this claim.
Therefore, the district court did not abuse its discretion in
concluding that Fox did not demonstrate a likelihood of
success on its breach of contract claims.
III
[14] The district court held that Dish likely directly
infringed Fox's copyrights and breached the no-copying
clause of the 2002 contract by making “quality assurance”
copies to test the functioning of the AutoHop program.
However, it ultimately concluded that Fox did not
demonstrate a likelihood of irreparable harm absent an
injunction. Assuming, without deciding, that the district court
correctly decided that Fox was likely to succeed on the merits
of this claim, we agree with the district court that Fox did not
demonstrate a likelihood of irreparable harm resulting from
these copies.
These copies were made as part of Dish's process of
implementing the AutoHop program. As we have noted, Dish
creates marking announcements to signal to AutoHop when
to skip commercials. It then tests the accuracy of the marking
announcements using copies recorded through PrimeTime
Anytime. These copies remain at a Dish facility and are used
for “quality assurance” purposes only. A technician working
for Dish then plays back each recording, enables AutoHop,
and fast-forwards through each show segment just until the
point of each commercial break to ensure AutoHop is working
Fox Broadcasting Co., Inc. v. Dish Network L.L.C., 723 F.3d 1067 (2013)
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properly. If the marking announcements are correct, AutoHop
is made available to Dish customers at 3 a.m. Eastern time on
the morning following the live broadcast.
[15] In refusing to enjoin Dish from creating these copies,
the district court correctly concluded that the harms Fox
identified—including “loss of control over its copyrighted
works and loss of advertising revenue”—did not “flow from”
the quality assurance copies themselves, but from the entire
AutoHop program. Fox Broad., 905 F.Supp.2d at 1110–11.
While a plaintiff need not “show that the action sought to be
enjoined is the exclusive cause of the injury,” M.R. v. Dreyfus,
697 F.3d 706, 728 (9th Cir.2012), the district court did not
err in concluding that the quality assurance copies were not
a cause of Fox's alleged harm. That Dish used the copies in
the process of implementing AutoHop does not suggest that
those copies were integral to AutoHop's functioning. Rather,
the record demonstrates that the AutoHop announcement files
are created using an entirely separate process and the quality
assurance copies are used only to test whether this process is
working.
5
Furthermore, the district court did not err in holding that
monetary damages could compensate Fox for its losses
from the copies. See, e.g., L.A. Mem'l Coliseum Comm'n
v. Nat'l Football League, 634 F.2d 1197, 1202 (9th
Cir.1980) ( “[M]onetary injury is not normally considered
irreparable.”). To be sure, Fox does not license copies of
its programs for distributors to create ad-skipping software.
However, the lack of a licensing agreement that directly
corresponds to Dish's copying of Fox programs does not
mean it would be difficult to calculate damages. Fox's
existing licensing agreements could, at the very least,
constitute a starting point or an aid in calculating damages.
*1080 IV
Given our “limited and deferential” review of preliminary
injunction appeals, Sw. Voter Registration Educ. Project v.
Shelley, 344 F.3d 914, 918 (9th Cir.2003) (en banc) (per
curiam), and without determining the ultimate merits of the
case, Am. Trucking Ass'ns, Inc. v. City of L.A., 559 F.3d 1046,
1052 (9th Cir.2009), we conclude that the district court did
not abuse its discretion in declining to grant Fox a preliminary
injunction.
6
AFFIRMED.
Parallel Citations
2013 Copr.L.Dec. P 30,462, 107 U.S.P.Q.2d 1589, 41 Media
L. Rep. 2285, 13 Cal. Daily Op. Serv. 7776, 2013 Daily
Journal D.A.R. 9650, 58 Communications Reg. (P&F) 1249
Footnotes
1
Prior to July 2012, a viewer who enabled PrimeTime Anytime could not deselect any networks or days of the week, and could not
save recordings for fewer than eight days. The district court “examine[d] the propriety of the Hopper features in their current form, as
Dish has stated that it has no plans to return to its pre-July 20, 2012 practices.” Fox Broad. Co. v. Dish Network, LLC, 905 F.Supp.2d
1088, 1094 n. 6 (C.D.Cal.2012).
2
Alternatively, a plaintiff may obtain an injunction if it demonstrates (1) serious questions going to the merits, (2) a balance of hardships
that tips sharply towards the plaintiff, (3) a likelihood of irreparable injury, and (4) the injunction is in the public interest. Alliance
for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.2011). Because Fox does not argue that the balance of hardships tips
sharply in its favor, we do not consider its claims under this standard.
3
Instead, the Sony plaintiffs argued in part that the Betamax would reduce the audience for live television and movies, a fear the district
court described as lacking “factual basis.” 464 U.S. at 453, 104 S.Ct. 774.
4
Fox also argued below that Dish violated its right “to distribute copies ... of the copyrighted work to the public” under 17 U.S.C.
§ 106(3). The district court held that Fox was unlikely to succeed on this claim. Fox Broad., 905 F.Supp.2d at 1106. Fox has not
challenged this ruling on appeal.
5
Indeed, Dish has temporarily stopped making the quality assurance copies pending the outcome of this appeal.
6
The parties' motions for judicial notice are DENIED.
End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.