Ad Concerns Won’t Take Down Dish’s Hopper

(CN) - Fox is unlikely to succeed with claims that Dish Network's new ad-skipping service, the Hopper, violates copyright law, the 9th Circuit ruled Wednesday.

The Hopper and its companion services PrimeTime Anytime and AutoHop allow Dish subscribers to record network shows and skip over the commercials the next morning.

Fox, CBS and NBC sued Dish in California last year, claiming copyright infringement and breach of contract. Dish filed a dueling complaint in Manhattan seeking a ruling that it had not violated any copyrights.

U.S. District Judge Dolly Gee denied Fox's request for a preliminary injunction in Los Angeles, finding the broadcaster's arguments for direct and secondary copyright infringement unconvincing. Gee determined that, since the user, not Dish itself, instigated the recording and commercial-skipping, the company had no "direct liability."

Since the user's copying of the programs also falls under "fair use," there is no secondary infringement either, Gee found.

The federal appeals court in Pasadena unanimously affirmed on Wednesday. It said Fox was unlikely to succeed on most of it claims, though the company's case for breach of contract was a close call.

"That Dish decides how long copies are available for viewing, modifies the start and end times of the primetime block, and prevents a user from stopping a recording might be relevant to a secondary or perhaps even a direct infringement claim," Judge Sidney Thomas wrote for a three-judge panel. "But these facts do not establish that Dish made the copies. Therefore, the district court did not err in holding that Fox did not establish a likelihood of success on its direct infringement claim."

Allowing customers to skip commercials also does not "transform the recording into a copyright violation," according to the ruling.

"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," Thomas wrote.

Fox presented a "much closer" question, however, by accusing Dish of breaching a 2010 contract that forbade video on demand. Nevertheless, the panel found that broadcaster was unlikely to succeed here as well.

"The District Court held that if PrimeTime Anytime is video on demand, then Dish clearly breached the contract," Thomas wrote. "But the district court concluded that PrimeTime Anytime was 'more akin' to DVR than to video on demand."

This is an early battle in what is likely to be a long war, and the case is being watched closely by broadcasting and Internet companies, fair-use advocacy groups, and legal scholars.

"We are disappointed in the court's ruling, even though the bar to secure a preliminary injunction is very high," Fox spokesman Scott Grogin said in an email. "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."

Dish Executive Vice President and General Counsel R. Stanton Dodge said the company was happy with the ruling.

"The courts continue to reject Fox's efforts to deny our customers' access to PrimeTime Anytime and AutoHop," he said in a statement.

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