Fox Appeals Denial of Injunction in Autohop Case

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.