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Federal Court Won't Block Dish's Hopper

Updated 1 p.m. ET

A federal appeals court has declined to block Dish Network's
Hopper AutoHop ad-skipping DVR function, upholding a districtcourt's denial of a preliminary injunction.

Fox, which sued for breach of contract and copyright
infringement, claims the Hopper violates copyright law and Dish's contract with
the broadcaster. Fox had asked the Ninth Circuit Court of Appeals to reverse a
California District Court's refusal to grant a preliminary injunction while the
underlying suit is being decided.

A three-judge panel of Ninth Circuit held that "the
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."

The decision was not on the merits of the case, but the
court did provide some language both Dish and Fox can point to.

In language that squares with Dish's and the District
court's assertion that the Cablevision decision -- the ruling that remote DVR
functionality was not a performance subject to copyright -- applied here, Judge
Sidney Thomas wrote: "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....If recording an entire copyrighted
program is a fair use [Sony Betamax case], the fact that viewers do not watch
the ads not copyrighted by Fox cannot transform the recording into a copyright

In language that Fox can point to in its breach of contract
claim, Thomas also wrote: "We express no view on whether, after a fully
developed record and arguments, the district court's construction of 'distribute'
will prove to be the correct one," said Thomas. But added: "We are,
however, dubious of Dish's position that PrimeTime Anytime [an automatic
broadcast network prime time recording feature] is not 'similar' to
"interactive, time-delayed, [or] video-on-demand" programming, the distribution
of which is expressly prohibited by the 2002 contract. Dish has convinced us
that PrimeTime Anytime is not identical to video-on-demand but is at a loss to
explain why it is not similar, and at oral argument, when pressed, Dish could
not provide even a single example of what would be considered similar under the
contract if not this. The contract is written broadly, and Fox has a good
argument that PrimeTime Anytime is 'similar,' even though not exactly the same,
as time-delayed or video-on-demand programming."

Fox was not happy with the ruling.

"We are disappointed in the court's ruling, even though
the bar to secure a preliminary injunction is very high," said Fox in a
statement. "This is not about consumer choice or advances in
technology.  It is about a company devising an unlicensed,
unauthorized service that clearly infringes our copyrights and violates our
contract. We will review all of our options and proceed accordingly." That
could include seeking full-court review of the three-judge panel decision.

"Dish is pleased that the Ninth Circuit Court of
Appeals has affirmed the district court's 2012 order denying Fox's
preliminary injunction motion," said Dish executive VP/general counsel R. Stanton
Dodge. "In so doing, the courts continue to reject
Fox's efforts to deny our customers' access to PrimeTime Anytime and
AutoHop -- key features of the Hopper Whole-Home HD DVR. This decision
is a victory for American consumers, and we are proud to have stood by
their side in this important fight over the fundamental
rights of consumer choice and control."