The Role of DVRs in Copyright InfringementJuly 26, 2013

InFox Broadcasting v. Dish Network, Fox Broadcasting Company ("Fox") appealed a ruling by the District Court of Central District of California that Fox did not demonstrate a likelihood of success on most of its copyright infringement and breach of contract claims, and that Fox was not entitled to a preliminary injunction against Dish Network. The United States Court of Appeals for the Ninth Circuit affirmed the district court's ruling.

Fox owns copyrights to such television shows as Glee, Bones, The Simpsons, and Family Guy. Fox contracts with cable and satellite television providers to retransmit these shows for customer viewing. Fox also separately licenses its shows to companies such as Hulu, Apple, Netflix, and Amazon, which then sell or stream the shows over the internet.

In 2002, Fox and Dish Network entered into a contract that allowed Dish Network to retransmit Fox's shows to their customers. The contract provides that Dish Network shall not "distribute" Fox programs on an "interactive, time-delayed, video-on-demand or similar basis." It also provided that Dish Network will not "record, copy, duplicate and/or authorize the recording, copying, duplication or retransmission" of any part of Fox's signal. An amended version of the 2002 contract stated that Dish Network could provide Fox Video-on-Demand to its subscribers, but Dish Network had to disable the fast forward function during all advertisements.

Dish Network offers two devices that Fox claims constitute copyright infringement: the "Hopper" and "Joey." In pertinent part, the Hopper allows the customer to "hop" over commercials. The Hopper has a feature called PrimeTime Anytime, which allows the user to record prime time shows on their Hopper. Another added feature to the Hopper is the Autohop that allows users to automatically skip commercials. Autohop is only available online, and the morning after the prime time show had aired. To create the Autohop function, Dish Network has technicians manually watch the program each night and mark the beginning and end of each commercial.

Fox sued Dish Network alleging copyright infringement and seeking a preliminary injunction. The district court denied the preliminary injunction, concluding that Fox did not demonstrate a likelihood of success on either its copyright claims or its breach of contract claims.

To establish direct copyright infringement by reproduction, "the plaintiff must show ownership of the copyright and copying by the defendant." The district court concluded, and the parties did not dispute, that Fox did own the copyrights to the programs. The focus of the court was on the second prong, "copying by the defendant." The court noted that the user is "the most significant and important cause of the copy."

On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court.

The Ninth Circuit explained that infringement of the right of reproduction required copying by the defendant. Thus, the court dismissed Fox’s assertion that Dish was responsible for infringement because Dish’s program creates recordings only in response to the user’s command. The court concluded that "operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made." Thus, Fox failed to show that it had established direct copyright infringement.

Next the appellate court addressed the district court’s conclusion that Fox was unlikely to succeed in its contention regarding secondary liability. To establish secondary liability the party must first establish direct infringement by a third party. Fox established a prima facie case of direct infringement by Dish Network customers because Fox owns the copyrights to its shows and the users make copies. Dish Network had to rebut this by showing that their customers' copying was a "fair use." In affirming the district court, the Ninth Circuit stated "if recording an entire copyrighted program is a fair use, the fact that viewers do not watch the [commercials] not copyrighted by Fox cannot transform the recording into a copyright violation." Thus, any analysis of harm to Fox should exclude consideration of Autohop because ad-skipping does not implicate Fox's copyright interests. Since the alleged harm to Fox is from the automatic commercial skipping and not copying the programs, Fox failed to established secondary liability.

Finally, the Ninth Circuit addressed whether Fox could get a preliminary injunction based upon Dish Network allegedly breaching the 2002 and amended 2002 contract. The appellate court again affirmed the lower court's decision that a preliminary injunction was improper because the district court had not abused its discretion.