The 9th Circuit agrees: Fox cannot stop the Hopper…for now. At stake is the future of how we watch TV: whether DVRs can automatically remove commercials from network shows. Dish Network says yes; Fox says no. While standard DVRs allow users to record, fast-forward and skip ahead, Dish Network’s Hopper takes it one step further by automatically recording primetime shows with the commercials already skipped. Dish Network calls it AutoHopping. Fox calls it bootlegging, and has sued for copyright infringement and breach of contract (Fox Broadcasting Co. et al. v. Dish Network et al., No. CV 12–04529 (C.D. Cal. 2012); and No. 12-57048 (9th Cir. 2013)).
Fox makes money by selling advertising during its programming, primarily through commercials. This revenue in turn funds Fox programming like Glee, The Simpsons and Family Guy. Without ad-revenue from commercials, Fox says that its whole business “ecosystem” would be destroyed.
The Hopper records primetime shows in a commercial-free format. Dish Network claims that this is analogous to VCRs because its auto-hopping service just shifts the time when a viewer would normally watch a show. Indeed, the Supreme Court has previously ruled that recording content on video tapes was not copyright infringement and just “time-shifting.” Like DVRs, VCRs similarly allow viewers to watch one show and record another. VCR users are also able to watch recordings at their own convenience and fast-forward through commercials.
Dish Network has taken that Supreme Court ruling as a green light. It says that its customers, not Dish Network itself, are responsible for the copies. Fox disagrees and argues that Dish Network makes and is responsible for those copies. It also asserts that Dish Network induced, encouraged and materially contributed to its users infringing Fox’s copyrights. Fox further argues that Dish Network violated its contracts that prohibit making unauthorized copies and retransmitting programming. It says that Dish Network created a service that is more like video-on-demand than a VCR, which at minimum would violate those agreements.
Like the lower court, the 9th Circuit Court of Appeals also denied Fox’s request for a preliminary injunction. First, it found that Dish Network did not do the copying; its customers did. It reiterated that “[t]he user,…not Dish, is the most significant and important cause of the copy” because the user initially enables the ad-skipping feature and decides to watch the programming. Thus, it said Dish Network did not exercise sufficient control over the copying to be found liable for copyright infringement.
Next it stated that Dish Network was not liable for its customers’ recordings because shows are saved locally, like video tape recordings, and are not for commercial use, so they are thus protected fair uses. Even eliminating commercials from the recording does not change the analysis because “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.” Because these recordings are just another form of “time-shifting,” and the ads themselves are not copyrightable, the court said auto-hopping is likely fair use under copyright law.
However, whether Dish Network violated its contract with Fox “is much closer,” the 9th Circuit said. That contract forbid fast-forwarding commercials in “video-on-demand” services. The court ultimately did not overturn the lower court’s decision that the technology was more akin to DVRs than video-on-demand. But it did question Dish Network’s inability to answer how its service was not “similar” to “video-on-demand,” and acknowledged that a more developed record in the lower court will help clarify the issue.
The 9th Circuit did find that Dish Network likely breached the contracts by making copies for “quality assurance purposes” that supposedly aid in verifying the ad-skipping is working properly, but agreed with the lower court that Fox would likely not suffer irreparable harm as a result.
ABC, NBC and CBS had filed a joint amici brief supporting Fox’s position, as well as each filing similar suits against Dish Network. Dish Network in turn sued the networks seeking a ruling that it is not infringing. Now that the preliminary injunction was denied by the 9th Circuit, litigation on the merits will continue in the district court.