Court Says Broadcasters Can't Use Copyright To Block Commercial Skipping

Copyright

from the good-court-rulings dept

This morning there was a huge victory for common sense in the Ninth Circuit appeals court ruling in the Fox v. Dish case over Dish’s AutoHopper technology. As you may recall, pretty much all the major broadcasters sued Dish a year ago, claiming that its AutoHopper technology with the PrimeTime Anytime feature — which would record the entire primetime lineup, and allow Dish customers to watch everything (starting the next day) while automatically skipping the commercials — was infringement (and breach of contract). As we noted at the time, the broadcasters’ arguments made very little sense. The basis of the argument was that skipping commercials is a form of copyright infringement. We couldn’t see how skipping commercials violated the copyright in any way at all, and while Fox pretended it won the initial ruling at the district court level, the reality was that Dish won big.

Fox immediately appealed, and Dish has won big yet again with this latest ruling, which is a huge victory for common sense. The court makes a number of important findings, nearly all of them good and sensible. To be specific, the nature of this ruling was over whether or not the broadcasters could get an injunction to block Dish from offering this technology while the case was ongoing, but the court rejected it, saying that the broadcasters “did not demonstrate a likelihood of success.” This means the full trial can still go forward, but the technology can still be offered during that trial. However, the fact that both the district court and the appeals court have clearly stated that they don’t see a likelihood of the broadcasters succeeding shows that the broadcasters are likely to be wasting a lot of time and money only to lose.

The key point in this case: skipping commercials is not copyright infringement. For years, Hollywood has tried to claim that skipping commercials is a form of copyright infringement. All the way back in 2002, a TV exec claimed that skipping commercials was a “theft” (even merely going to the bathroom during a commercial). A couple years later they even tried to get Congress to pass a law explicitly banning commercial skipping (sponsored by Orrin Hatch, of course). Without that, they’ve just been pretending that commercial skipping must be illegal. In court, the TV networks have argued that anything that hurts their business model must be illegal.

Thankfully, the court laughs at this argument, as it should. Among other things, it notes that since the broadcaster doesn’t even hold the copyright on the commercial, the commercial skipping issue isn’t their copyright issue at all. Furthermore, because it’s already been established (thank you Betamax case) that recording a show for the purpose of time shifting is perfectly legal fair use, then removing the commercials from such a show is also fair use:

Yet, as the district court held, commercial-skipping does not implicate Fox’s copyright interest because Fox owns the copyrights to the television programs, not to the ads aired in the commercial breaks. If recording an entire copyrighted program is a fair use, the fact that viewers do not watch the ads not copyrighted by Fox cannot transform the recording into a copyright violation. Indeed, a recording made with PrimeTime Anytime still includes commercials; AutoHop simply skips those recorded commercials unless a viewer manually rewinds or fast-forwards into a commercial break. Thus, any analysis of the market harm should exclude consideration of AutoHop because ad-skipping does not implicate Fox’s copyright interests.

To get to this point, the court reinforces two other important rulings: obviously, the Sony Betamax ruling, which it cites repeatedly to remind the broadcasters that recording shows for time shifting is perfectly legal. While this ruling is well known, recent cases have been trying to chip away at that ruling, so having the court reaffirm some key aspects of that ruling is definitely very important. Perhaps more important, is that the court reaffirms the famed Cablevision case, that said a remote DVR is not infringing in part because the recording is done at the user’s discretion. That ruling is from the Second Circuit, and just recently we’ve seen some maximalists trying to argue that pretty much every other circuit would disagree with that ruling. Except… here the Ninth Circuit seems to have no problem with it.

In this case, the district court determined that Fox had demonstrated ownership of the copyrights of some of the shows. The court then focused on who made the copies of Fox programs using PrimeTime Anytime: Dish or its customers. The district court noted that the Second Circuit had considered a similar question in Cartoon Network LP v. CSC Holdings, Inc. (“Cablevision”), 536 F.3d 121 (2d Cir. 2008). The Second Circuit concluded that Cablevision’s remote-storage DVR system did not directly infringe the plaintiffs’ copyrights. Unlike a typical DVR system, in which a customer’s remote sends signals to the set-top box in her home, users of Cablevision’s remote-storage DVR system sent signals to Cablevision’s central facility, where a copy of the program the viewer selected was created and stored on Cablevision’s central servers. Id. at 125, 130. The question was “who made this copy” – the viewer or Cablevision? Id. at 130. The Second Circuit held that much like a VCR user makes the copy, so did the Cablevision customer.

[….] The district court did not abuse its discretion in concluding that Fox had not established a likelihood of success on this claim. Infringement of the reproduction right requires “copying by the defendant,” Kelly, 336 F.3d at 817 (emphasis added), which comprises a requirement that the defendant cause the copying. See Cablevision, 536 F.3d at 130 (explaining that direct infringement claim turned on “who made” the copies). Fox argues that because Dish participates in the operation of PrimeTime Anytime on a daily basis, Dish made the copies, either alone or concurrently with its users. However, 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. Here, Dish’s program creates the copy only in response to the user’s command. Therefore, the district court did not err in concluding that the user, not Dish, makes the copy.

Looks like other courts aren’t quite so down on the Cablevision ruling after all…

The appeals court also does a full fair use analysis (given the above) and finds that there’s a very strong fair use argument by Dish. It basically follows the Betamax ruling, noting that home recording and time shifting are noncommercial uses and covered by fair use. On the fourth factor — the question on the “impact of the market,” the court points out that the only real “impact” would be because of the commercial skipping, and as already established, Fox has no copyright interest in the commercials.

However, the record before the district court establishes that the market harm that Fox and its amici allege results from the automatic commercial-skipping, not the recording of programs through PrimeTime Anytime. Indeed, Fox often charges no additional license fees for providers to offer Fox’s licensed video on demand, so long as providers disable fast-forwarding. This indicates that the ease of skipping commercials, rather than the on-demand availability of Fox programs, causes any market harm. And as we have discussed, the commercialskipping does not implicate any copyright interest.

There was, also, a slightly lesser issue of whether or not this whole setup violates Dish’s contract with Fox, and once again, the court sides with the district court’s ruling. It basically notes that part of the contract claim is really no different than the copyright claim, and they already explained why that’s bogus. The other contract claims fall aside based on similar arguments.

There’s also a much more narrow issue of whether or not the “quality assurance” copies that Dish makes for itself (to test if the commercial skipping is working properly) violates the contract. This was the one point where the district court sorta kinda went against Dish (and why Fox ridiculously declared victory when the original ruling came out). Here, again, the court rules very narrowly that these copies might infringe on Fox’s copyright, but that there’s no irreparable harm from those recordings, since they’re just used for quality assurance.

Basically, this is yet another complete win for Dish, with the appeals court confirming everything the district court had to say, and highlighting the importance of both the Betamax ruling and the Cablevision ruling in ensuring that basic innovations like the VCR, DVR and the Dish AuthoHopper can continue to advance the public’s enjoyment of television content.

Filed Under: autohopper, broadcasters, commercial skipping, copyright, fair use, primetime anytime, remote dvr
Companies: cablevision, dish, fox