The Dish Network (“Dish”) is a television service provider based in the United States which retransmits the broadcast signal of networks such as Fox, ABC, NBC and CBS to Dish subscribers.  In 2012 Dish introduced “the Hopper”, its new DVR and Video-on-Demand system. This system came with a feature known as “PrimeTime Anytime” which allows the user to record primetime programming, if the feature is enabled. Later that year Dish released another feature to the Hopper called the “AutoHop” which, if selected, skips over the majority of the commercial breaks of some primetime programs recorded by Primetime Anytime.

The release of this program resulted in controversy Fox later sued Dish for copyright infringement and breach of contract in the District Court and attempted to obtain a preliminary injunction against the device's feature. The California Central District Court and last week the United States Court of Appeals .

In order to obtain a preliminary injunction in the United States, the claimant must be able to prove, among other items, that the claim will succeed on its merits. The Appellate court held that the District Court did not err in holding that Fox was unlikely to succeed on the claim of direct copyright infringement or secondary copyright infringement of their broadcast television programs.

The reasoning of the Appellate Court regarding the copyright arguments is based on the fact that direct infringement of the reproduction right would require copying by Dish. The AutoHop technology, however, only creates a copy in response to the user’s command. The user, therefore, causes the copies to be made. Since direct infringement looks at who made the copies, and Dish is not in a position to engage in the creation of a copy, the claim would necessarily fail.

Secondary liability for copyright infringement requires direct infringement by a third party. There was a prima facie case of direct infringement by a third party (Dish customers) and the burden was therefore on Dish to prove that this use fell within the exception of  ",” similar to the Canadian Copyright Act exception to infringement in “.” The District Court accepted Dish’s arguments outlining the likelihood of success of the consumer’s fair use defense. The court found that the purpose and character of the use was for a non-commercial, non-profit activity and that the application of the program simply enabled the consumer to see the work which he or she was already entitled to.

In examining the final step of the “fair use” test, the court looked at the effect of the use on the potential market for, or value of, the copyright-protected work. The court noted that Fox only owns the copyright interest to the television programs and not to the commercials which play during the break. On this basis it was determined that the analysis of market harm should necessarily exclude any consideration of the commercial-skipping feature of the Hopper as it does not implicate the copyright interests of Fox. Since Fox does not charge licence fees for providers offering their television programs as long as they disable a commercial-skip feature, the court found it unlikely that merely copying this work would cause any market harm. As a result, this use successfully fell within the copyright exception of “fair use.”

With this last refusal to grant an injunction the case may now proceed to trial, the outcome of which The AutoHop takes away incentive for advertisers to place ads in primetime shows and, as such, is set to considerably diminish advertising revenue for many networks. This technology represents such a threat that this may lead to two of the big four networks and become accessible through cable only. The climax is sure to be dramatic, and we've got our popcorn ready.

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From the perspective of the networks, this service could potentially destroy "the fundamental underpinnings of the broadcast television ecosystem” said Fox representative .  Their main concern is that, from the perspective of an ad company, people who own DISH DVRs won’t be watching any ads in their recorded shows with this feature.  As a result, ad companies might not be so willing to pay for ad space during the broadcast of these shows.  Since selling ad space is a network’s main source of revenue, they stand to lose a lot of money if advertisers are concerned about the AutoHop feature.

That reasoning however, might be somewhat flawed.  While it is true that the AutoHop feature allows a viewer to skip ads on recorded programs, it does not affect television viewed in primetime.  That same point is one made by (senior vice president of programming at DISH) when he said, “AutoHop needs to be put in perspective: the majority of our viewers watch their primetime shows live or during the same evening -- the time that is most valuable to advertisers. We chose to incorporate AutoHop as a next day feature and only if enabled by the consumer”.  Since the new feature only applies to recorded programs, it isn’t fundamentally different from viewers choosing to fast-forward through advertisements manually.  “Customers have been skipping commercials since the birth of the remote control” says and he asserts that this new feature will just make it easier for viewers to do what they have been doing for ages.

With both parties looking for a ruling as to the legality of this feature, we should examine the potential success of their claims.  First off, the networks will need to prove that commercials are a part of the compilation work that is their broadcast.  A compilation work is defined in as “a work formed by the collection and assembling of pre-existing materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship”.  In this case, the pre-existing materials would be each separate advertisement and the show itself.  Networks would have to argue that the arrangement of the program and the ads is sufficiently to be considered a separate work apart from the individual materials. Secondly, the networks have to prove that the rights they sold to DISH were to retransmit and make copies ONLY of the compilation work that is their broadcast, and not of the show without commercials.  This argument’s success will depend on the wording of the network’s contract with DISH.  Thirdly, the networks would have to prove that the AutoHop feature violates one of the rights stated in section 106 of U.S. copyright law.

Fortunately for DISH, even if the networks manage to succeed in establishing the first two elements, the third is an issue, because the AutoHop feature doesn’t create a of the broadcast.  All the feature does is automatically skip parts of the fully copied broadcast; a copy which DISH has been licensed to create. The networks will be left with trying to claim that a viewer watching an AutoHopped recording somehow falls within the category of a public performance.  This is an argument which will likely fail.

It may not come to a decision however if the networks choose to approach the problem in a different way.  Billionaire suggests that the networks should propose a settlement where DISH can pay them a premium and air shows without commercials.  This way, the networks might recuperate any lost advertising revenue and the viewers can get TV shows without commercials.  , a media analyst suggests that DISH might be willing to disable the feature if the networks are willing to reduce the cost of DISH airing their shows.  It seems like negotiation may be a better option for these networks, because the legal ruling likely won’t be in their favour. 

Adam Stevenson is a JD candidate at Western University

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