Dish Hopper

Though broadcasters may jump up and down and say it’s not right, Dish Network may keep letting its customers leap past commercials in television programming with its “Hopper” ad-skipping service for now, says the U.S. Court of Appeals for the Ninth Circuit.  Fox Broadcasting Co., along with its affiliates, lost its appeal for a preliminary injunction against the service, because, the appellate court in Los Angeles held, the broadcaster failed to demonstrate it would succeed in its claims against Dish of copyright infringement and breach of contract.

Fox Broadcasting, Twentieth Century Fox Film Corp. and Fox Television Holding Inc. own the copyright to TV shows, such as Glee and the Simpsons, broadcast on its network. Fox contracts with cable and satellite television providers — including Dish — to retransmit its broadcast signal.  Fox claims that Dish’s Hopper, by permitting subscribers to bounce past commercials and watch desired programming ad free, breaches contract provisions that limit recording, copying and duplicating; it also asserts that the service breaches an amendment that Dish could provide Fox Video on Demand to its subscribers but had to “disable fast forward functionality during all advertisements.”

Fox had sued and, in the lower courts, failed to win a preliminary court order blocking Dish’s ad-skipping. That prompted its now also unsuccessful appeal.

The three-judge appellate panel also rejected Fox’s request for a preliminary injunction, affirming and echoing the district court decision.

Fox, to block even temporarily Dish’s Hopper, had to show it was: 1) likely to succeed in its case on the merits, 2) likely to suffer irreparable harm without relief  and 3) had the balance of equities tipping in its favor; the court also looked whether the requested injunction was in the public interest. The court said Fox failed on all elements, relying on the U.S. Supreme Court decision in Sony Corp. of America v. Universal City Studios Inc. There, the high court had found video recordings were legal. In the latest appellate opinion, written by U.S. District Judge Sidney R. Thomas, the Ninth Circuit said Fox’s infringement claims failed because the broadcaster’s copyrights cover its TV shows not its advertisements.  In keeping with the Sony precedent, if recording an entire television show can be deemed fair use, the recording isn’t an infringement merely because viewers skip commercials in it.

The court also saw Dish with likely success in prevailing with a fair-use defense, finding that customers’ home viewing, per the Sony case, could be deemed noncommercial; if customers copy programming in its entirety, this doesn’t defeat fair use and the broadcasters fail to show market harm because their copyright interest, again, rests in the shows, not the ads.

As for the breach of contract claim, the appellate judges said the lower court was within its discretion to deny a preliminary order barring Dish’s Hopper.

This was the second, recent ruling to deliver a blow to TV broadcasting, following Aereo’s win in April in the U.S. Court of Appeals in the Second District. There, the judges found lawful its retransmission of broadcasters’ programming via online streaming.  With this ruling, insiders speculate that cable companies and DVR providers will be encouraged to develop similar services; this, in turn, may erode further broadcasters’ potential revenues, especially from ads, and put them in a bind that likely will result, ultimately, in higher costs getting passed on to consumers.