Network Copyright Wars: “The Hopper,” Ad-Skipping DVR, In and Out of Court

The embittered battle between Dish Network and American Broadcasting Companies has given a public face to the struggle between the entertainment and technology industries over the role of copyright in media.

In this battle, however, theoretical copyright interests are secondary to networks’ central business concern: profit. The future of advertising in major network television could seriously impact the bottom line.  The ad-skipping and mobility features of Dish Network’s product “The Hopper” are a challenge to both advertising revenue as well as the revenue from services such as Hulu Plus, which, unlike The Hopper, provide the networks with licensing fees for mobile services.

The Hopper

In March 2012, Dish rolled out the hopper with a slate of entertaining (if not widely-played) ads.  It received largely positive reviews in the ensuing year.  Hopper users can record and watch their shows as played on live television, the critical difference from most digital recording devices being that the Hopper skips advertisements automatically.  The Sling feature, “Primetime Anytime”, enables customers to simply plug in the Sling device to view recorded content on iPads, iPhones, and the like: the service much easier to use than other versions of Sling which are not integrated into dvr devices, at least according to one review.

Some History

This is not the first time major networks and advertisers have taken to the courts, concerned that new technology would interfere with their business model.  In Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984), also known as the Betamax case, the Supreme Court held that the sale of Betamax video recording devices did not constitute contributory infringement because they were capable of substantial noninfringing uses, such as program time-shifting.

The current battle has another somewhat analogous legal predecessor.  In 2001, Replay TV attempted to implement a similar feature called AutoSkip to their DVR system, allowing viewers to skip ads.  Several major networks filed suit against SONICblue, emphasizing that the technology could negatively impact advertising revenue, which the plaintiffs called the “lifeblood of most television channels.” However, the case never fully resolved the issue. In 2003, the company entered bankruptcy, received a stay from the court, and sold ReplayTV to D&M holdings, which released subsequent versions of the DVR system without the Autoskip feature.

In the Courtroom

In May 2012, Dish Network filed suit in the Southern District of New York, seeking  declaratory judgment that the technology did not infringe any copyright or licensing agreements with American Broadcasting Companies and “several Fox entities” as well as to enjoin the Networks’ suit in California. However, the court granted CBS’s motion for dismissal.

Fox also filed suit in May 2012 in the Central District of California, alleging copyright infringement and breach of contract. Fox sought statutory damages as well as injunctive relief. Fox described the Primetime Anytime service as Dish’s “own bootleg broadcast video-on-demand service” that “makes an unauthorized copy of the entire primetime broadcast schedule for all major networks every night.”  According to Fox’s complaint, “DISH is undermining legitimate consumer choice by undercutting authorized on-demand services and by offering a service that, if not enjoined, will ultimately destroy the advertising-supported ecosystem.”  In addition, Fox stated that Dish’s Internet steaming and distribution services competed “unfairly with licensed providers such as iTunes and Amazon.”

The district court denied an injunction, finding that “Fox ha[d] failed to establish that it is likely to suffer irreparable harm in the absence of an injunction.” Fox appealed the decision to the U.S. Court of Appeals in San Francisco, which has yet to make a judgment. More recently, in February, Fox sought a preliminary injunction to block the “on-the-go” feature that Dish recently added to the Hopper, called “Dish Anywhere.”

A Very Public Fight

Ironically, CBS’s non-legal battles with Dish and the Hopper take the form of advertising, media and promotion—the very thing the Dish users can opt to do away with. In January, the Consumer Electronics Association (CEA) cut ties with CNET, a consumer electronics review site, after CBS, CNET’s parent corporation, prohibited the CNET editorial team from giving the Hopper a “Best in Show” award at the 2013 Consumer Electronics Show.  While CBS characterized the prohibition as a response to the illegality of the Hopper, the economic threat to network television’s advertising revenue seems a more likely culprit. In a USA Today column, Gary Shapiro, CEA President and CEO, pummeled the CBS intervention as an assault on CNET’s journalistic credibility. “CBS [was] destroying its reputation for editorial integrity in an attempt to eliminate a new market competitor” Shapiro concluded. As an interesting aside, Gannett Company, which owns USA Today, entered the lawsuit against Dish in September 2012.

In February, the New York Times’ Media Decoder blog captured a Twitter battle between Dish Network and CBS concerning the Hopper. Dish claims to have sponsored Kaley Cuoco, also known as Penny from “The Big Bang Theory,” to tweet “Amazing! Watching live TV anywhere on the #Hopper looks pretty awesome!” After Cuoco removed the tweet, Dish’s chief executive took to Twitter, writing, “It’s disappointing that CBS –once the exemplar of editorial independence and innovation—continues to hold back progress from consumers.” Several hours later, CBS responded via statement, “Once again, Joe Clayton demonstrates his dubious gift for hyperbole and hucksterism.  No demands were made, but it’s clear that Dish’s culture of fabrication is alive and well.” The author, Brian Stelter, observed, “This isn’t really about Ms. Cuoco, it’s about copyright and consumer rights.”  He pithily sums up the Hopper battle at the end of the post: “Just because people can skip ads doesn’t mean they always do.  But the Hopper makes it easy to skip ads automatically—and that’s what the networks fear.”

However, while Dish characterizes the Hopper as reasonable reaction to where, when and how consumers want to watch shows, CBS has refused to air advertisements featuring the Hopper, a move that will be irrelevant to Hopper customers.

 

Cite as: Rosalind Schonwald, Network Copyright Wars: “The Hopper,” Ad-Skipping DVR, In and Out of Court, Berkeley Tech. L.J. Bolt (April 25, 2013), http://btlj.org/?p=2785.
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