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April 24, 2014

No Preliminary Injunction Over Commercial Hopping

The U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s denial of a request for a preliminary injunction sought by a broadcaster in a copyright infringement and breach of contract lawsuit against Dish Network over its ad-skipping (Hopper) product.  Fox Broadcasting Co. v. Dish Network L.L.C., Case No. 12-57048 (9th Cir. July 24, 2013) (Thomas, J.).  The Ninth Circuit agreed with the district court that the broadcaster/plaintiff, Fox, was not likely to succeed with its copyright infringement claims, and that while there was a likelihood of success in one breach of contract claim, the harm was not irreparable.

In January 2012, Dish began marketing to its customers a set-top digital recording device, “the Hopper,” which provided DVR and video-on-demand capabilities.  Dish also offered a feature called “PrimeTime Anytime” (PTAT) which, when enabled by a subscriber, recorded on the Hopper all primetime programming on any of the four major broadcast networks, including Fox.  Dish determined the start and end times for PTAT, and the programs were stored locally on the Hopper.  In May 2012, Dish began offering “Auto-Hop,” a feature that allowed subscribers to automatically skip over commercials in the recorded PTAT programming. 

Fox sued Dish for direct and derivative copyright infringement, as well as for breach of contract.  The 9th Circuit held that the district court did not abuse its discretion in holding that Fox was unlikely to succeed on its direct infringement claim.  Although Dish controls the start and end times of the primetime block, decides how long the copies are available on the Hopper, and blocks a user from stopping a recording once started, the user must enable the feature.  The 9th Circuit affirmed the district court’s reasoning that the user, and not Dish, is “the most significant and important cause” of copying Fox’s content through the PTAT feature. 

With regard to derivative infringement, the 9th Circuit held that Fox was unlikely to succeed in establishing the necessary predicate claim of direct infringement against the PTAT users.  Following the Supreme Court’s seminal decision in Sony Corp. of America v. Universal City Studios, Inc., the 9th Circuit found that subscribers used the Hopper for time-shifting purposes, a fair use, and therefore were not liable for direct infringement.  Further, the circuit court held that Auto-Hop does not implicate Fox’s copyright interests, because Fox owns copyrights to the programs, not the skipped advertisements.  Accordingly, the 9th Circuit agreed with the district court that Fox was unlikely to prove derivative infringement against Dish.

Under a deferential standard of review, the 9th Circuit also held that the district court had not erred in denying an injunction based upon the breach of contract claims.  While Fox was likely to succeed on at least one of the claims, the harm was not irreparable, and therefore did not warrant preliminary injunction relief.

Practice Note:  Fox has petitioned the 9th Circuit for rehearing and en banc review.

© 2014 McDermott Will & Emery

About the Author

Bryan James, McDermott Will Emery Law Firm, Patent Attorney
Associate

Bryan James is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Silicon Valley office.  Bryan focuses his practice on intellectual property litigation.

During law school, Bryan was the chief articles editor for the Texas Intellectual Property Law Journal as well as a member of the Intellectual Property Law Society and the Asian Law Students Association.  Additionally, he served as a law clerk in the Office of the General Counsel at The University of Texas and a summer associate at McDermott.

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