Last week, television broadcaster Fox (collectively referring to plaintiffs Fox Broadcasting Company, Twentieth Century Fox Film, and Fox Television Holdings) appealed a California District Court's decision denying its motion for a preliminary injunction against satellite provider Dish Networks for claims involving Dish's new "Primetime Anytime" ("PTAT") and Autohop services.
Dish rolled out both services earlier this year. PTAT automatically records television programs aired during primetime by the four major broadcasters to a Dish subscriber's DVR, while Autohop automatically removes commercials from these recordings. Fox sued Dish, alleging copyright infringement and breach of contract in connection with these two services.
Noting that these services caused harm to its broadcasting model by reducing the value of ad revenues and diminishing the market for VOD and ultra-premium shows (such as you'd find availabe on iTunes or Amazon), Fox moved for a preliminary injunction against Dish. However, last month, the District Court denied the injunction, and Fox appealed the decision to the Ninth Circuit.
The marquee issue on appeal is that the District Court erred in holding that Dish's customers, and not Dish, are responsible for the copies being made, meaning Dish is not a direct infringer. The court reached this conclusion largely by adopting and relying on a broad interpretation of the Second Circuit's 2008 decision in Cartoon Network v. CSC Holding ("Cablevision"). Fox also argues that the court erred when it didn't find a likelihood of success on the merits of its contractual claims against Dish, when it dismissed Fox's secondary liability claims, and when it found a lack of irreparable harm to support a preliminary injunction.
In Cablevision, broadcasters sued a cable service for copyright infringement after it unveiled a remote DVR service. One of the claims was that Cablevision was directly liable for the copies made onto the remote DVR units, but the Second Circuit rejected this argument, holding that the copies were made under the volition of Cablevision customers.
The District Court here relied on Cablevision to reach a similar conclusion: it does not matter how much control Dish exerts over its Autohop service, including controlling exactly what is copied and when, the copies ultimately are made through the volition of Dish users. Parallels can be drawn with another case involving internet streaming service Aereo, currently on appeal to the Second Circuit, where the District Court held that Aereo users provided the necessary volition for copies made by Aereo.
This litigation, like that involving Aereo, illustrates the challenge courts face in separating form from function. The contours of the public performance right are becoming increasingly important to define as online streaming becomes more popular and media continues to converge. At times, interpreting the statutory language and case law can seem like untying a Gordian knot. But I think it is possible to settle on a sound interpretation by staying true to the principle that broadcasters have the right and ability to control how their programs are distributed to the public while at the same time ensuring the ability of third parties to provide downstream functionality that does not encroach on the broadcasters' rights.
This is the logic that can be seen from the Supreme Court's Betamax case, which imported patent law's "staple article of commerce" doctrine to limit secondary liability for manufacturers when their products are "capable of commercially significant noninfringing uses." There, the Court noted that this doctrine "must strike a balance between a copyright holder's legitimate demand for effective — not merely symbolic — protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce."
One might even see this logic applied in Cablevision, though that decision has drawn criticism from some. There, the Second Circuit held that a Cablevision customer is not "sufficiently distinguishable from a VCR user" to impose liability on Cablevision even though its remote DVR is housed within its own facilities. In this sense, Cablevision represents an extension of the Betamax decision. As noted above, the challenge is to apply case law like this — and, it should be noted, both these cases in particular relied heavily on the specific facts involved — in a way that makes sense and adheres to the principles of copyright law.
Taking these principles into consideration, it is difficult to support the District Court's ruling here. Fox notes that the District Court's broad interpretation of Cablevision would create a loophole in copyright law that would shield just about any service from liability.
For example, any website selling pirated music, movies, or television would be immune from direct liabilty as long as it required the user to click a button before it copied a file or streamed a song, movie, or show. Any cable, satellte, or Internet television retransmitter would be free to distribute copyrighted television programs without a license because viewers must press a button to turn on their television sets.
In other words, the District Court elevated form over function by streching Cablevision's holding on "volitional conduct" — a holding not necessarily supported by statutory text — into a blanket immunity against liability so long as a service requires some type of user input. As noted above, Dish designed a system that copies specific programs, at specific times, leaving the user to choose only whether she wishes to activate the service or not.
Similar cases against Dish in connection with these services have been brought by the three other major broadcasters. Those cases are still in earlier stages than Fox's, so the proceedings here will likely inform the outcomes of those cases.