Bloomberg News

Dish Network Loses Court Bid to Dismiss L.A. Ad-Skip Case

July 10, 2012

Dish Network Corp. (DISH:US), the third- largest U.S. pay-television company, failed to persuade a federal judge in New York to stop broadcast networks from pursuing lawsuits in California over a Dish service allowing ad- free TV viewing.

U.S. District Judge Laura Taylor Swain in Manhattan ruled the copyright-infringement lawsuits will be tried in Los Angeles, where three major TV networks sued, and not in New York, where Dish filed its own complaint. Breach of contract claims between Dish and the networks will be heard in New York, she said.

“Dish’s filing was motivated by a fear of imminent legal action by the networks and was, thus, improperly anticipatory,” Swain said in her opinion yesterday. She said it was inappropriate to consolidate the cases in New York “because three of the sets of parties claiming injury have chosen another forum for their claims.”

TV networks including CBS Corp. (CBS:US), Comcast Corp. (CMCSA:US)’s NBC and News Corp. (NWSA:US)’s Fox sued Dish in May, claiming its new Auto Hop digital video-recording feature, which allows viewers to automatically skip through commercials on recorded programs, infringes their copyrights and breaches Dish’s contracts. They said Dish’s service “will ultimately destroy the advertiser- supported ecosystem” that networks depend on for revenue and seek a court order shutting down the service.

Network Contracts

Dish said New York was the proper venue for the litigation because its contracts with the networks call for any disputes to be tried there. The company also said it filed its complaint, seeking a ruling that its ad-skipping feature didn’t violate contracts or copyrights, 29 minutes before any of the networks sued to challenge it.

Dish sued in New York less than 24 hours after The Hollywood Reporter published an article, citing unidentified sources, stating that the networks were planning to sue, Swain said.

The networks are trying to stifle innovation, Dish said in its complaint. Auto Hop “complies with Dish’s bargained-for contractual rights,” it said. Dish said it pays the networks “hundreds of millions of dollars per year in retransmission fees, collected from its subscriber base, for the right to rebroadcast these signals.”

‘Remote Control’

“Regardless of the venue, we look forward to proceeding with this case,” R. Stanton Dodge, Dish’s general counsel, said in an e-mailed statement. “Dish will stand behind consumers and their right to skip commercials, something they have been doing since the invention of the remote control.”

Dish, based in Englewood, Colorado, introduced its new DVR, the Hopper, in March. It can record all the major networks’ primetime shows and store them for eight days after their initial broadcast. Auto Hop, introduced in May, allows viewers, with the touch of a button, to skip all the ads on recorded shows automatically, without having to manually fast-forward through them.

Fox said in its complaint that the Hopper is a “bootleg” video-on-demand service and that its contracts for such services with Dish “include prohibiting fast-forwarding through commercials.”

“We are pleased that the court has determined that Fox, as the true victim and plaintiff here, should have the right to proceed in its chosen forum,” Scott Grogin, a Fox spokesman, said in an e-mailed statement.

‘Breaching License’

“Dish Network has created and marketed a product with the clear goal of breaching its license with Fox, violating copyrights and destroying the fundamental underpinnings of the broadcast television business,” Grogin said.

Shannon Jacobs, a CBS spokeswoman, and John McKay, an NBC spokesman, said their networks won’t comment on the ruling.

The fourth major broadcast network, Walt Disney Co. (DIS:US)’s ABC, didn’t sue in Los Angeles. It’s a defendant in Dish’s complaint in New York. News Corp. and CBS are based in New York, Disney in Burbank, California, and Comcast in Philadelphia.

Karen Hobson, a spokeswoman for Disney, declined to comment on the decision.

Under the judge’s several-pronged ruling yesterday, copyright claims by CBS, Fox and NBC against Dish will be heard in California. The CBS and NBC contract claims and all ABC claims will be heard in New York.

Comcast, also a cable operator, and DirecTV (DTV:US), a satellite TV company, are the largest U.S. pay-TV providers.

The networks’ cases are Fox Broadcasting v. Dish Network LLC, 12-4529; NBC Studios LLC v. Dish Network Corp., 12-4536; and CBS Broadcasting Inc. v. Dish Network Corp., 12-4551, U.S. District Court, Central District of California (Los Angeles). The Dish case is Dish Network LLC v. American Broadcasting Cos., 12-04155, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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