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When Fox sued DISH over its commercial-skipping DVR, the Hopper, the two most important issues Public Knowledge identified were (1) Whether users infringed copyright by recording programming and watching it later, without commercials, and (2) Whether DISH infringed copyright by creating and selling a DVR that gave users the ability to skip commercials. If these things were found to be infringing users' rights to watch TV in the manner of their choosing, and technology companies' ability to sell new and improved products, would both be in jeopardy. Thankfully, according to US District Court Judge Dolly Gee, the answer to both of those questions is no. It does not infringe copyright to skip commercials (even though doing so, obviously, requires making a copy of the programs in question), and DISH and companies like DISH can add new features to their DVRs without being found the be copyright infringers. This is a huge win.
On the first question, the Court found quite clearly that "Fox has identified no specific theory under which individual ... users could themselves be liable for copyright infringement without circumventing Sony." Sony is the "Betamax case" that found that home recording, and selling equipment that enables home recording, is legal. The Court here rightly found that there is no relevant difference between a VCR and a modern DVR, and that users can't be called copyright infringers just because they might skip past commercials--something they've always been able to do. Because users don't infringe, this also means that DISH can't be found to secondarily infringe, either.
On the second question, the Court also found that since users, and not DISH, are the ones that make the copies of programming on the Hopper DVR, that DISH can't be found to infringe, either. The Court found that while "Dish exercises more control over the copying process" than companies with other products, and that "Dish defines some of the parameters of copying for time-shifting purposes," nevertheless "it is ultimately the user who causes the copy to be made[.]" This is very important. Who is "doing" an action matters a great deal for copyright--broadcasters can't go around suing every last party that might help "cause" an infringement. Under the law, only the person who exercises "volitional conduct" that leads to an act that may or may not infringe can be directly liable for copyright infringement. Third parties, such as DISH, might be found liable under some secondary infringement theory--whereby they become liable for the actions of others--but the standard to meet that kind of liability is higher. (And here, since DISH's customers do not infringe, there is no direct liability, so there can never be secondary liability.)
There are a few other issues in this case. Some of them, like the contract disputes, don't raise many interesting questions of public concern. But one additional copyright wrinkle is that DISH does make some copies of copyrighted programming on its own premises, for Quality Assurance (QA) purposes. The court did not find that these QA copies are fair uses. But since this is a motion for a preliminary injunction, Fox needs to show that these copies cause it irreparable harm, in addition to infringing copyright. Since it did not do so, the Court still denied the preliminary injunction. The Court acknowledged that "the QA copies are used to perfect the functioning of AutoHop, a service that, standing alone, does not infringe." But the Court also writes that "[t]he fact that consumers ultimately use AutoHop ... for private home use, a fair use under Sony, does not render the intermediate copies themselves a fair use as well." In this situation, I think the Court got it wrong. While "intermediate copies" such as the QA copies might not always be fair uses, intermediate copies that enable fair uses should in general also be fair uses. But this issue, which is admittedly somewhat nuanced, can be hashed out in the appeal. This, like all fair use cases, requires a thorough weighing of several countervailing factors, and I'm confident that once the arguments have been put forth more fully, any judge will find the QA copies to be fair uses, as well.
More importantly on this point, and a big win for consumers and innovation, is that Judge Gee declined to simply take Fox's assertions of harm at face value. To win a preliminary injunction--which takes place before a full trial--a plaintiff must independently show that it is likely to win on the merits, that it will be irreparably harmed without an injunction, that the balance of the harms weigh in its favor, and the the public interest supports granting the injunction. If it fails to show any of these four points the injunction must be denied. Unfortunately, there's a tendency among some plaintiffs, and some judges, to collapse the factors into each other, leading to statements like "The public interest disfavors copyright infringement" and "Harms stemming from shutting down an infringing service are not cognizable." Courts would also simply assume, without argument, that any harm that results from "infringement" are irreparable. Judge Gee rejected that approach, finding rightly that while Fox might be able to point to some "harm," it is not irreparable, and cannot be presumed to be so. (DISH might be able to pay damages, for instance.) The fact that Fox has shown that it is "likely" to succeed on the issue of the QA copies does not mean that it is certain to succeed, and because Fox's "harms" are not irreparable, there is simply no reason to enjoin DISH's activities before it can more fully make its case.
This issue is far from over. In addition to the appeal, there's another District Court case that Public Knowledge will be following. But this decision, though not perfect, shows that common sense and viewer's rights have a very good chance of prevailing.