Broadband Cable Association of Pennsylvania

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July 5, 2012

Los Angeles or New York? A federal judge in Manhattan soon will decide where Dish Network Corp.'s legal battle with major TV broadcasters over ad-skipping should be heard.

The argument over venue is pivotal in this case, as the decision is likely to have a bearing on which side prevails in the main lawsuit. That is because Dish's defense in the case, which concerns the satellite-TV company's new "Auto Hop" ad-skipping digital video recorder service, rests in part on a 2008 legal precedent set in federal court in New York. The precedent would be binding if the Dish case is heard in federal court in New York, lawyers say. That is where Dish in May pre-emptively filed suit, asking the court to affirm the legality of its technology. The case that set a precedent in New York involved a cloud-based DVR developed by Cablevision Systems Corp. Among the issues addressed in the Cablevision suit was whether the responsibility for choosing to make a recording of a TV show lies with the TV viewer or the cable operator. That question is also an issue in the Dish case.

While the precedent would be binding in New York, the Cablevision case won't necessarily have the same sway in the U.S. District Court in central California, which covers Los Angeles, where three major broadcasters want the Dish case to be heard. That is where they individually sued the satellite-TV provider, alleging copyright violation, shortly after Dish filed its suit. "There was a reason why [the broadcasters] forum shopped to California," said Dish Chairman Charlie Ergen in a recent interview. The outcome of the case, he said, depends to an extent on "where the court case is going to be" because of the Cablevision precedent in New York. "It is comical to claim that we are forum shopping when we are clearly based in California," said a spokesman for Fox, one of the broadcasters involved. "Dish is based in Colorado yet filed suit in New York. So it begs the question: Who is the one that's actually forum shopping?" Fox is a unit of New York-based News Corp., which also owns The Wall Street Journal. Fox is based in Los Angeles, but its sales team is in New York.

"Cablevision's network DVR did not single out broadcast channels, did not automatically record broadcast's highest value programming and automatically skip the ads that finance that programming, among other things," NBCUniversal, a unit of Comcast Corp., said in a statement. "Dish will find that its reliance on the Cablevision decision is misplaced." CBS Corp. and Walt Disney Co.'s ABC, both of which have sued, declined to comment. A federal judge in New York heard arguments over the venue last Monday and said she would decide within a week.

The Cablevision precedent is also cited by Web TV start-up Aereo in its legal battle with broadcasters. In the Cablevision lawsuit, several entertainment companies sued the cable operator, alleging copyright infringement, trying to block the rollout of what was called a "network DVR." Unlike traditional DVRs, which are devices in subscribers' homes, the network DVR offered digital video recording services from a central server-or cloud-based computer. Cablevision wanted to offer the service as a way to reduce the cost of deploying boxes to subscribers' homes.

After a years-long legal battle, Cablevision prevailed when the U.S. Supreme Court let stand the ruling in federal court in New York that said cable operators could store customers' copies of TV content on central servers. The condition was that operators had to keep separate copies of the programs for each user. Legal experts say the Cablevision case gives Dish support in justifying both its "Auto Hop" ad-skipping feature and a related recording feature called "PrimeTime Anytime," which allows customers to preset the automatic recording of broadcasters' prime-time programming, to be stored for eight days. The broadcasters claim both features violate copyright; Fox and ABC said Auto Hop also breaches license agreements.

Fox said in its suit that "it has not consented to the recording of its copyrighted programs by Dish, or to the distribution by Dish to its subscribers of all of Fox's prime-time programming for subsequent on-demand, commercial-free viewing." "When the viewer is in the PrimeTime Anytime mode, the viewer is not in any way selecting the individual programs to be copied or the individual commercials to be skipped," wrote CBS in its complaint. ABC wrote in its complaint that those "PrimeTime Anytime" shows are stored on a distinct, "Dish-controlled" portion of the DVR's hard drive separate from the part on which customers can store personal recordings.

Dish says there is no partition on its hard drive and that the choice to enable the recording or ad-skipping features rests with the consumer. Marc Reiner, an intellectual property attorney at Anderson Kill & Olick P.C. who isn't involved in the cases, said Dish's offerings "seem to be covered by the Cablevision case" because they are "activated by the end consumer, and the programs themselves were recorded on each individual consumer's hard drive and are only available to that consumer."

Cablevision has yet to roll out its network DVR to all its subscribers, and therefore hasn't heavily marketed the service, which it calls "DVR Plus." The company says it will be fully deployed later this year. Other cable operators also haven't rushed to offer a similar service. One deterrent, Time Warner Cable Chief Executive Glenn Britt said in a recent interview, is the requirement for maintaining individual viewer copies of each program recorded, which could strain network capacity. Wall Street Journal

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