Last year, the Supreme Court held, in American Broadcasting Companies, Inc. v. Aereo, that a distributor of copyrighted programming over the internet was liable for copyright infringement. Recently, the Central District of California distinguished Aereo in Fox Broadcasting Co. v. DISH Network LLC, holding that certain internet-based services of a satellite television provider did not infringe a content owner’s copyrights.
In Aereo, the Supreme Court held that the defendant’s product, which “streamed broadcast television to subscribers over the Internet” resulted in violations of the Copyright Act. The Court found that the internet streaming constituted a public performance, and that the defendant’s conduct was analogous to that of cable providers who, by statute, are subject to the Copyright Act. Therefore, because the defendant had no license to use plaintiff’s works, defendant was liable for copyright infringement. In further support of its holding, the Court observed that defendant distributed plaintiff’s works almost as soon as they were broadcast by the copyright owner, that defendant used its own servers—outside of the users’ homes—to deliver the works, and that defendant’s product “received programs that had been released to the public and carried them by private channels to additional viewers.”
Like the defendant in Aereo, the defendants in the DISH litigation also provide products and services that transmit copyrighted television programming via the internet. However, the DISH defendants do so in a two-step process, first transmitting the programming to subscribers’ set-top boxes via satellite, and then forwarding the programming to subscribers’ mobile devices via the internet. The plaintiffs acknowledge that defendants are licensed to complete the first step. Thus, the dispute in DISH centers on whether the defendants’ completion of the second step is outside the parties’ agreements and, under Aereo, violates copyright law.
The DISH opinion addresses (i) whether defendants’ products and services are a public performance of plaintiffs’ works (as set forth in Aereo), (ii) whether defendants engage in “volitional conduct” to enable the performance of plaintiffs’ copyrighted works, and (iii) whether the defendants are liable for secondary infringement. The DISH court found it important that, unlike the defendant in Aereo, defendants in the DISH litigation had a license to distribute plaintiffs’ copyrighted works, and that defendants transmit programming only to their subscribers. Moreover, unlike the device in Aereo, the majority of defendants’ products and services rely on equipment located in the subscribers’ homes, as opposed to centralized equipment maintained by the defendants. Because of this, the court found that these accused products and services do not resemble those of cable providers, and do not result in public performances of plaintiffs’ copyrighted works.
Additionally, the court found that with respect to the majority of the accused products and services, any copying is done by subscribers, not the defendants themselves. Because of this, the court found that defendants do not engage in “volitional conduct,” such that they are liable for direct copyright infringement. The court further held that any copying done by the subscriber constitutes fair use under Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 456, (1984), and thus the defendants are also not liable for secondary copyright infringement. Moreover, with respect to the accused “AutoHop Sling Adapter” (“AutoHop”) product, the court found that neither the defendants nor the subscriber engage in copying at all, as the AutoHop skips commercials, as opposed to recording programming.
While the DISH court found that defendants are not liable for copyright infringement for many of their accused products and services, the court did hold that certain Quality Assurance (“QA”) files, which contain plaintiffs’ programming and were copied directly by defendants (to ensure that the AutoHop feature correctly skipped commercials), did infringe plaintiffs’ copyrights. While defendants argued the QA files were subject to the fair use exception, claiming they were “intermediate copies” for use in developing “new, non-infringing technology,” the DISH court rejected this argument. The court held that, unlike other cases where “intermediate copies” were found to constitute fair use, the QA files are not “transformative” of the underlying work. Moreover, the court found that the unauthorized copies are likely have an adverse effect on the market for plaintiffs’ programming.
While the DISH court held that most of defendants’ accused products and services do not infringe plaintiffs’ copyrights, the court nonetheless held that some of these products and services breached the parties’ licensing agreements. For example, the defendants’ Hopper Transfer service, which allows a subscriber to transfer programming recorded on their home device to a mobile device for personal use, was found to not infringe plaintiffs’ copyrights, but was found to breach a “No-Copying Provision” contained in the parties’ licensing agreements.
Although DISH suggests that liability under the Copyright Act may be avoided by developing technology that eschews centralized equipment and leaves copying to the individual user, DISH nonetheless requires some license for the underlying copyrighted content. Firms seeking to rely on DISH therefore may not only need to be cognizant of the physical design of their products and services, but also may need to ensure that their licenses for copyrighted content are carefully drafted.