The first district court opinion denied Fox's preliminary injunction. The Ninth Circuit reviewed the district court's decision with a very deferential
standard of review, and affirmed. The second district court decision granted to Dish partial summary judgment.
District Court for the Central District of California denied preliminary injunction On November 7, 2012, the district court denied Fox's motion for preliminary injunction finding that 1) PTAT and AutoHop neither infringed on the copyright nor committed breach of contract; and 2) although QA copies constituted copyright infringement and breach of contract, the harm from the copies was not irreparable. For further discussion and details see the district court opinion.
Copyright infringement Regarding the copies on the Hopper, Fox argued that Dish directly infringed on the copyright holders exclusive right to reproduction because Dish had an impermissible degree of control over the copying process of PTAT. The Court found that while Dish was substantially involved in the copying process on the users' PTAT, the involvement was not different from precedent non-infringement cases of
Cartoon Network, LP v. CSC Holdings, Inc. and
CoStar v. LoopNet, in which prior courts judged that the individual users, and not the service providers were liable for infringing copies. The Court concluded that the person who copied Fox's program on the user's PTAT was the user who initiated the command and not Dish. The defendant, Dish, argued that the QA copies constituted
fair use of . Referring to
Sega v. Accolade, Dish argued that the copies were fair use because they were ultimately used for the user's fair use purpose (In
Sega, the Ninth Circuit had judged that copying code for reverse engineering purpose was "intermediate copying," and protected by fair use.). The Court denied Dish's argument because the purpose and the effects on the economy of QA copies were fundamentally different from those of reverse engineering. The Court examined the four factors of fair use as follows: • Purpose and Character of the Use: the commercial purpose and non-transformative uses of the QA copies weighs against a finding of fair use. • Nature of the Copyrighted Work: the creative nature of the Fox's copyrighted works weighted against a finding of fair use. • Amount and Substantiality of Use: while the QA copies were used for the limited purpose of ensuring that the marking data is correct and were not distributed to the users, Dish entirely duplicated the Fox's programs. So, this factor weighted against a finding of fair use (but considerably less than the other three factors). • Effect of the Use on the Market: Fox licensed copies of its programs to other companies (e.g. Hulu, Netflix, iTunes, and Amazon) to offer its works to subscriber of those companies. The Court discussed that Dish offered AutoHop to its users in order to compete with those companies without providing payment for the license; the Court held that in doing so Dish harmed Fox's opportunity to negotiate with Dish or Fox's ability to enter into a similar licensing agreement with others in the future by making the copies less valuable. In consideration of these factors, the Court concluded that QA copies did not constitute fair use and the Court found that Fox was likely to succeed on the merits of this infringement claim. However, the Court also found that Fox failed to demonstrate the irreparable harm necessary to garner the preliminary injunction. The Court noted that the amount of money for licensing to other companies would show that the harm resulted from the QA copies was also compensable. Additionally, Fox alleged that Dish infringed Fox's distribution right through use of PTAT copies and AutoHop. However, mentioning that all copying were conducted on the user's PTAT without "change hands" and that the only thing distributed from Dish to the users was the marking data, the Court denied Fox's claim. Citing
Sony Corp. of America v. Universal City Studios, Inc., the Court concluded that the users' copying at home for the time shift purpose did not infringe Fox's copyright. Then, Dish's secondary liability was also denied.
Breach of contract Fox asserted that QA copies and PTAT violated the RTC Agreement. The Court, as similar to their copyright infringement analysis, reasoned that while QA copies breached the contract, PTAT did not constitute the breach of the contract. Next, Fox stated that PTAT was a VOD offering and breached the 2010 letter agreement. Dish maintained that AutoHop did not breach the contract for two reasons: 1) PTAT was not VOD but DVR; and 2) the VOD provision was an unenforceable option for Dish because of technological and logistical limitations. The Court concluded that Dish did not breach contracts because PTAT was not a VOD, but more akin to DVR since: 1) Dish hasn't decided what programs are available in the PTAT "library;" 2) the user would not be able to watch the program if he/she had not turned on the function in advance of the program aired on; and 3) Fox's programs were not transmitted from a remote library, but stored and played on the users' Hopper.
United States Court of Appeals for the Ninth Circuit affirmed District Court decision On July 24, 2013, the 9th Circuit affirmed the district court decision to dismiss Fox's motion for preliminary injunction.
Copyright infringement The 9th Circuit held that: • "[T]he district court did not abuse its discretion in holding that the broadcaster failed to demonstrate a likelihood of success on its copyright infringement and breach of contract claims regarding the television provider's implementation of the commercial-skipping products. As to a direct copyright infringement claim, the record did not establish that the provider, rather than its customers, made copies of television programs for viewing. The broadcaster did not establish a likelihood of success on its claim of secondary infringement because, although it established a prima facie case of direct infringement by customers, the television provider showed that it was likely to succeed on its affirmative defense that the customers' copying was a 'fair use'." In addition, the Court mentioned that Fox did not own the copyrights to ads, and ads were not deleted from PTAT; the Court further noted that while Fox alleged the market harm resulted from the ad-skipping function, any analysis of the market harm should exclude consideration of AutoHop because ad-skipping did not implicate Fox's copyright interests.
Breach of contract The Court supported the district court's decision to reject preliminary injunction on the alleged contract breaches as well. The district court interpreted "distribute" in the contract clauses to be analogous to the same word in the Copyright Act ((3)), and constructed its analysis about copying on PTAT. Fox challenged this interpretation and construction, arguing that "distribute" meant "make available programs to users". At this point, the Court held that while Fox's interpretation was as plausible as the district court's, the parties had not argued about the meaning of "distribute" at a prior discussion, and any ambiguous terms in the contract should be interpreted by looking to the Copyright Act. The Court then affirmed the district court's construction. Further, Fox stated that PTAT was "similar" to "interactive, time-delayed, [or] video-on-demand" services that were prohibited under the contract. Dish argued its service was not identical to time-delayed or VOD, but could not show why it was not similar. The Court, however, held that the district court correctly found PTAT more akin to DVR than VOD.
District Court for the Central District of California granting partial summary judgment On August 22, 2014, Fox moved for partial summary judgment on its claims. On January 12, 2015, the district court was granted in part. This decision came after Supreme Court decision in
American Broadcasting Cos. v. Aereo, Inc., but the district court ruled that Aereo did not overrule the volitional conduct doctrine to hold primary infringement of copyright. The district court expressed that "the volitional conduct doctrine is a significant and long-standing rule, adopted by all Courts of Appeal to have considered it, and it would be folly to presume that Aereo categorically jettisoned it by implication." The district court pointed out to the Supreme Court expressions that specifically cautioned that that was a "limited holding" and should not be construed to discourage or to control the emergence or use of different kinds of technology. The district court read Supreme Court's Aereo decision in a way that allows to distinguish between an Aereo kind of activity and other activities in which a company merely supplies equipment, like Dish case.
Copyright infringement Fox contended that through Dish Anywhere the company has publicly performed Fox's copyrighted programming by streaming over the Internet. The district court held that Dish Anywhere does not infringe Fox's public performance right because the service can only be used by subscribers to get access to their own recordings. The recording and the later transmission depend on the subscribers to engage in a volitional action. Therefore, there is no direct infringement from Dish. Neither there is a secondary infringement of the company because Dish's users do not publicly perform by using Dish Anywhere. Dish has license from Fox that allow it to transmit Fox's programing to its subscribers. When a user transmits programing from one device to another, she access in a different device to a something that already is in her possession, this action is not a public performance within the meaning of the statue. The court ruled that PTAT and Hopper Transfers do not directly infringe Fox's reproduction right because Dish does not engage in a volitional conduct. The recording is made in exclusive response to the user's command. While Dish sets some parameters of the PTAT service, the service operates automatically upon user request. The setting of the parameters is not enough to consider that Dish engage in a volitional conduct. In the case of Hopper Transfers, Dish has even less control. Neither the court found distribution right infringement by the act to make available the programing, because there is not actual dissemination of the programing (the copy does not change of hands). Finally, the court rejected Dish's secondary liability and held that PTAT and Hopper Transfers use by Dish's subscribers is fair use according Sony. The district court referred to its prior decision and deemed again as too speculative the potential market harm alleged by Fox for the use of PTAT. Fox contended that AutoHop infringes on its reproduction right by skipping Fox's own commercials. The district court held that AutoHop neither copies nor distributes anything, it just skips ads and therefore does not infringe Fox's copyright. Fox contended that QA copies infringe its reproduction right. Following its preliminary injunction decision analysis, the district court agreed with Fox. The district court pointed out that Fox would negotiate a licensing agreement or royalty payment for the right to copy Fox programming in any manner. Dish QA copies would impair Fox's ability to monetize that use. Therefore, Dish was held liable for direct copyright infringement for the reproduction of the QA copies.
Breach of contract Fox contended that Dish distributed Fox's programing over the Internet in breach of contractual provisions. The District Court concluded that Dish's users retransmits Fox's programing within the contractual authorization provided by Fox. Nothing in the parties' agreement expressly limits retransmission to the context of a DBS-based multicast. Dish does not distribute Fox's programing; it is the user who transmits the programing to herself or other members of her household, which does not fulfill the meaning of distribution in the statue. However, the district court held that Dish Anywhere and Hopper Transfers breach the No Copying provision of the parties' agreement because Dish's subscribers can place-shift outside their homes. Fox did not give Dish its consent to offer this service to subscribers for use outside home. Fair Use is an affirmative defense to copyright infringement, but parties are free to bargain away their rights to make fair use of copyrighted material under contractual agreements. The district court denied the summary judgment in this point because considered that there was a triable issue of fact as to the damages flowing from the breach. Fox also contended that PTAT infringes the Non-Distribution Provision. The district court held that Dish did not distribute anything, because PTAT automatically recorded already permissible content to a subscriber and does not disseminate those recordings beyond user's home. Fox contended that the QA copies breached the No-Copying Provision. The district court agreed with Fox considering that there is a breach of contract remedy to solve the dispute. The reasonable amount of royalties that Dish should pay for the period that used QA copies is a triable issue of fact. ==Impact and reactions to the decision==