fox v. dish - brief of defendants-appellees

No. 13-56818

IN THE

United States Court of Appealsfor the Ninth Circuit

__________________________________________

FOX BROADCASTING COMPANY, TWENTIETH CENTURY FOX FILM CORP.,AND FOX TELEVISION HOLDINGS, INC.,

Plaintiffs-Appellants,

v.

DISH NETWORK L.L.C., DISH NETWORK CORP.,AND ECHOSTAR TECHNOLOGIES L.L.C.,

Defendants-Appellees.__________________________________________

Appeal from the United States District Court for the Central District of CaliforniaCase No. 12-cv-04529, The Honorable Dolly M. Gee

BRIEF OF DEFENDANTS-APPELLEES

Annette L. HurstWilliam A. MolinskiORRICK, HERRINGTON & SUTCLIFFE LLP405 Howard StreetSan Francisco, CA 91045

Mark A. LemleyMichael PageDURIE TANGRI LLP217 Leidesdorff StreetSan Francisco, CA 94111

E. Joshua RosenkranzPeter A. BicksElyse D. EchtmanLisa T. Simpson ORRICK, HERRINGTON & SUTCLIFFE LLP51 West 52nd StreetNew York, NY 10019

Counsel for Defendants-Appellees

Case: 13-56818 02/14/2014 ID: 8980051 DktEntry: 16-1 Page: 1 of 73

No. 13-56818

IN THE

United States Court of Appealsfor the Ninth Circuit

__________________________________________

FOX BROADCASTING COMPANY, TWENTIETH CENTURY FOX FILM CORP.,AND FOX TELEVISION HOLDINGS, INC.,

Plaintiffs-Appellants,

v.

DISH NETWORK L.L.C., DISH NETWORK CORP.,AND ECHOSTAR TECHNOLOGIES L.L.C.,

Defendants-Appellees.__________________________________________

Appeal from the United States District Court for the Central District of CaliforniaCase No. 12-cv-04529, The Honorable Dolly M. Gee

BRIEF OF DEFENDANTS-APPELLEES

Annette L. HurstWilliam A. MolinskiORRICK, HERRINGTON & SUTCLIFFE LLP405 Howard StreetSan Francisco, CA 91045


E. Joshua RosenkranzPeter A. BicksElyse D. EchtmanLisa T. Simpson ORRICK, HERRINGTON & SUTCLIFFE LLP51 West 52nd StreetNew York, NY 10019



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CORPORATE DISCLOSURE STATEMENT

DISH Network L.L.C. is a wholly owned subsidiary of DISH DBS

Corporation, a corporation with publicly traded debt. DISH DBS Corporation is a

wholly owned subsidiary of DISH Orbital Corporation. DISH Orbital Corporation

is a wholly owned subsidiary of DISH Network Corporation, a corporation with

publicly traded equity (NASDAQ: DISH).

EchoStar Technologies L.L.C. is a wholly owned subsidiary of EchoStar

Corporation, a publicly traded company (NASDAQ: SATS).

E. Joshua RosenkranzPeter A. BicksElyse D. EchtmanLisa T. SimpsonORRICK, HERRINGTON & SUTCLIFFE LLP51 West 52nd StreetNew York, NY 10019


February 14, 2014

s/ Annette L. HurstAnnette L. HurstWilliam A. MolinskiORRICK, HERRINGTON & SUTCLIFFE LLP405 Howard StreetSan Francisco, CA 94105


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TABLE OF CONTENTS

Page

CORPORATE DISCLOSURE STATEMENT.........................................................i

TABLE OF AUTHORITIES...................................................................................iv

INTRODUCTION ....................................................................................................1

QUESTIONS PRESENTED.....................................................................................4

STATEMENT OF THE CASE.................................................................................5

Fox Authorizes DISH to Transmit Its Signal to Customers...........................5

Fox Challenges Two DISH Features: Sling and Hopper Transfers ..............5

Both Types of Place-shifting Technology Hit the Market in 2005................8

DISH Buys Sling and Integrates Sling Technology with DISH Products ................................................................................................9

The Parties Negotiate the October 2010 Agreement....................................10

DISH Continues to Create, Market, and Sell Products with Sling—Without Fox’s Objection....................................................................12

After Seven Years of Waiting, Fox Sues, Then Waits Another Nine Months Before Seeking to Enjoin the Place-Shifting Features .........12

The District Court Denies Fox’s Second Preliminary Injunction Motion ................................................................................................13

SUMMARY OF ARGUMENT..............................................................................14

STANDARD OF REVIEW....................................................................................18

ARGUMENT..........................................................................................................18

I. THE DISTRICT COURT WAS CORRECT—AND CERTAINLY DID NOT ABUSE ITS DISCRETION—IN CONCLUDING THAT FOX FAILED TO DEMONSTRATE A LIKELIHOOD OF IRREPARABLE HARM..............................................................................18

A. The District Court Correctly Stated and Applied the Law of Irreparable Harm. ...............................................................................19

1. The district court did not apply categorical rules. ...................21

2. The district court did not apply a heightened standard of proof. ........................................................................................26


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B. The District Court Did Not Abuse Its Discretion in Distinguishing Other Cases Where Fox Presented the Same Evidence of Harm...............................................................................33

C. The District Court Made No Factual Errors, Much Less Clear Errors. .................................................................................................35

1. The district court did not clearly err in finding that Fox failed to show irreparable harm to distributor relationships. ............................................................................36

2. The district court did not clearly err in finding that Fox failed to prove that any loss of advertising revenue defied calculation. ...............................................................................41

II. FOX IS UNLIKELY TO SUCCEED ON THE MERITS. ..........................43

A. Fox Waived Its Copyright Claim Against Hopper Transfers and in Any Event Cannot Prevail on a Copyright Claim Merely By Showing a Breach of Contract. ..........................................................44

B. Fox’s Theory of Direct Copyright Infringement Is Flawed...............46

1. Users, not DISH, are the ones who use Sling to send signals to computers and mobile devices.................................47

2. As Fox has previously admitted, Sling is not a public performance. ............................................................................52

C. Fox Is Unlikely to Succeed on Its Contract Claims...........................55

III. FOX CANNOT ESTABLISH THE OTHER FACTORS REQUIRED FOR INJUNCTIVE RELIEF. ......................................................................58

CONCLUSION.......................................................................................................60


iv

TABLE OF AUTHORITIES

Page(s)

CASES

ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc.,694 F.3d 1312 (Fed. Cir. 2012) ..........................................................................31

Am. Trucking Ass’ns, Inc. v. City of L.A.,559 F.3d 1046 (9th Cir. 2009) ............................................................................36

Am. Broad. Cos., Inc. v. Aereo, Inc.,712 F.3d 676 (2d Cir. 2013) .........................................................................52, 53

Anderson v. United States,612 F.2d 1112 (9th Cir. 1980) ............................................................................59

Cartoon Network LP v. CSC Holdings, Inc.,536 F.3d 121 (2d Cir. 2008) ...............................................................................52

Columbia Pictures Indus., Inc. v. Prof’l Real Estate Investors, Inc.,866 F.2d 278 (9th Cir. 1989) ..............................................................................52

eBay, Inc. v. MercExchange, L.L.C.,547 U.S. 338 (2006)..........................................................................14, 19, 20, 21

Flexible Lifeline Sys., Inc. v. Precision Lift, Inc.,654 F.3d 989 (9th Cir. 2011) ..............................................................................20

Flynt Distrib. Co. v. Harvey,734 F.2d 1389 (9th Cir. 1984) ............................................................................55

Fox Broad. Co. v. DISH Network, L.L.C.,905 F. Supp. 2d 1088 (C.D. Cal. 2012)..............................................................13

Fox Broad. Co. v. DISH Network, L.L.C.,No. 12-57048, 2014 WL 260572 (9th Cir. Jan. 24, 2014) ...............13, 48, 51, 56

Fox Television Stations, Inc. v. BarryDriller Content Sys., PLC,915 F. Supp. 2d 1138 (C.D. Cal. 2012)............................................22, 35, 50, 54

Fox Television Stations, Inc. v. FilmOn X,No. 13-758, 2013 U.S. Dist. LEXIS 126543 (D.D.C. Sept. 5, 2013) ..........54, 55


v

Gen. Motors Corp. v. Harry Brown’s, LLC,563 F.3d 312 (8th Cir. 2009) ..............................................................................59

Hearst Stations, Inc. v. Aereo, Inc.,No. 13-11649, 2013 U.S. Dist. LEXIS 146825 (D. Mass. Oct. 8, 2013)...........54

IBJ Schroder Bank & Trust Co. v. Resolution Trust Corp.,26 F.3d 370 (2d Cir. 1994) .................................................................................58

Kerr Corp. v. N. Am. Dental Wholesalers, Inc.,SACV 11-0313, 2011 WL 2269991 (C.D. Cal. June 9, 2011)...........................32

Los Angeles Mem’l Coliseum Comm’n v. Nat’l Football League,634 F.2d 1197 (9th Cir. 1980) ............................................................................30

M.R. v. Dreyfus,697 F.3d 706 (9th Cir. 2012) ..............................................................................18

MercExchange, L.L.C. v. eBay, Inc.,500 F. Supp. 2d 556 (E.D. Va. 2007) .................................................................31

Oakland Tribune, Inc. v. Chronicle Publ’g Co.,762 F.2d 1374 (9th Cir. 1985) ............................................................................31

On Command Video Corp. v. Columbia Pictures Indus.,777 F. Supp. 787 (N.D. Cal. 1991).....................................................................50

Perfect 10, Inc. v. Amazon.com, Inc.,508 F.3d 1146 (9th Cir. 2007) ......................................................................49, 51

Playboy Enters., Inc. v. Netscape Commc’ns Corp.,55 F. Supp. 2d 1070 (C.D. Cal. 1999)................................................................32

Playmakers LLC v. ESPN, Inc.,376 F.3d 894 (9th Cir. 2004) ..............................................................................18

Polymer Techs., Inc. v. Bridwell,103 F.3d 970 (Fed. Cir. 1996) ............................................................................31

Recording Indus. Ass’n of Am. v. Diamond Multimedia Sys. Inc.,180 F.3d 1072 (9th Cir. 1999) ........................................................................6, 51


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S.O.S., Inc. v. Payday, Inc.,886 F.2d 1081 (9th Cir. 1989) ............................................................................45

Salinger v. Colting,607 F.3d 68 (2d Cir. 2010) ...........................................................................20, 21

Sony Corp. of Am. v. Universal City Studios, Inc.,464 U.S. 417 (1984)........................................................................................6, 51

Sports Form, Inc. v. United Press Int’l, Inc.,686 F.2d 750 (9th Cir. 1982) ........................................................................34, 40

Stuhlbarg Int’l Sales Co. v. John D. Brush and Co.,240 F.3d 832 (9th Cir. 2001) ..............................................................................18

Sun Microsystems, Inc. v. Microsoft Corp.,188 F.3d 1115 (9th Cir. 1999) ................................................................15, 16, 45

Sw. Voter Registration Educ. Project v. Shelley,344 F.3d 914 (9th Cir. 2003) ..............................................................................36

United States v. Hinkson,585 F.3d 1247 (9th Cir. 2009) ......................................................................35, 40

Warner Bros. Entm’t, Inc. v. WTV Sys., Inc.,824 F. Supp. 2d 1003 (C.D. Cal. 2011)..................................................22, 35, 50

Winter v. Natural Resources Defense Council,557 U.S. 7 (2008)..........................................................................................14, 19

WNET Thirteen v. Aereo, Inc.,712 F.3d 676 (2d Cir. 2013) ..............................................................................54

Worldwide Church of God v. Phila. Church of God, Inc.,227 F.3d 1110 (9th Cir. 2000) ............................................................................45

WPIX, Inc. v. ivi, Inc.,691 F.3d 275 (2d Cir. 2012) .........................................................................22, 35

STATUTES

17 U.S.C. § 101........................................................................................................52

17 U.S.C. § 106............................................................................................16, 45, 46


vii

17 U.S.C. § 110........................................................................................................56

17 U.S.C. § 119........................................................................................................47

17 U.S.C. § 122........................................................................................................47

17 U.S.C. § 501........................................................................................................45

OTHER AUTHORITIES

Reply Br. for Pet’rs, Am. Broad. Cos., Inc. v. Aereo, Inc.,No. 13-461 (U.S. Dec. 23, 2013), 2013 WL 6729880 .................................53, 55

Pet. for Reh’g, Am. Broad. Cos. v. Aereo Inc.,722 F.3d 500 (2d Cir. 2013) (No. 12-2807-cv) (Apr. 15, 2013) ........................54

Nielsen, Any Way You Watch It: Nielsen to Incorporate Mobile Viewing Into TV Ratings and Dynamic Digital Ratings (Oct. 28, 2013), http://www.nielsen.com/us/en/newswire/2013/any-way-you-watch-it-nielsen-to-incorporate-mobile-viewing.html...................................................................43

Nimmer on Copyright (2013) .................................................................................46

Patry on Copyright (2013) .......................................................................................46


INTRODUCTION1

Where were you when we landed on the moon? When we found out who

shot J.R.? You were probably in your living room, glued to your television set. Or

else you missed it.

The VCR solved the problem. If you could not be on your couch for The

Cosby Show, you could just pop in a tape, set the VCR to record, and watch it later.

The VCR enabled what is called “time-shifting.” It enabled “place-shifting,” too.

You could tape Cosby on the living room VCR and watch it on the bedroom VCR.

Or you could bring the tape to the babysitting gig or on vacation and watch it on a

VCR there.

This appeal is about an updated version of place-shifting. It is also a rerun

of an old plot. Every time a technological advancement makes TV watching more

convenient for consumers, the broadcasters sue, insisting that the advance will be

the death of them. And each time their predictions of harm turn out to be

laughably wrong.

The pattern began in the early 1980s, when the entertainment industry

protested that home-recording technology would decimate the entire business.

Motion Picture Association of America President Jack Valenti famously testified

1 We cite Fox’s Opening Brief as “OB”; the Excerpts of Record as “ER”; and Supplemental Excerpts of Record as “SER.” District court docket entries are cited as “Dkt.”


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that “the VCR is to the American film producer and the American public as the

Boston strangler is to the woman home alone.” Dkt. No. 64, at 24 (Decl. of R.

Rapp). The Supreme Court rejected the legal argument and the VCR turned out to

be a boon for the entertainment industry. Id. at 25-26.

This appeal presents more—and equally baseless—hyperventilating about

the future effects of the latest generation of digital video recorders (“DVRs”). This

Court has already affirmed the denial of one preliminary injunction about some

features. Fox now appeals the denial of a second preliminary injunction in the

same case—on a motion that Fox did not bother bringing until nine months after

filing the lawsuit. This appeal challenges two place-shifting features, Sling and

Hopper Transfers, on DISH’s DVRs.

Both capabilities are nine years old. A company called Sling Media brought

the Sling feature to market in 2005. It gives the customer the capability to watch

live or pre-recorded TV shows on her computer or mobile device, through an

internet connection to her set-top box. DISH bought Sling Media for $380 million

in 2007, and has offered Sling to customers ever since. Hopper Transfers is a

portability feature, which customers use to transfer a copy of a recorded show from

a DVR to an iPad. DISH first offered this sort of portable-recording functionality

to its customers also in 2005.


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Sling and Hopper Transfers both make it easier to watch your shows where

and when you want. Everybody wins: Customers get more convenience, DISH

gets more satisfied customers, and networks get more eyeballs.

Suddenly, eight years after Sling and portability were introduced, Fox filed

this motion claiming that DISH’s latest version of these features was likely to

cause it irreparable harm in the coming months. It adduced not a shred of evidence

that it had already suffered harm. Not a hint of lost goodwill or an anecdote about

compromised royalty negotiations or revenue streams. This might be

understandable if Fox had rushed into court the moment Sling and portable

recordings hit the market. But eight years? If place-shifting really caused Fox

harm, Fox should be able to prove it.

Instead of evidence of actual harm over the past years, Fox offered five

hypotheses of future harm. It submitted them through two virtually identical

declarations from Fox executives. Fox is not ashamed to say that it recycled these

declarations from other cases, against other defendants, concerning different

technologies, before different judges. In this case, DISH submitted case-specific

expert reports, one from an economist who studies the television industry and

another from an electronics expert who testified that similar place-shifting

technology permeates the marketplace. The district court analyzed the record and


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found DISH’s showing more persuasive. The district court’s conclusions were

correct, and certainly not clearly erroneous.

Fox’s main attack on appeal is an assertion that the opinion applies sweeping

“categorical rules” and a “heightened standard” of proof. Fox must be reading the

wrong opinion. The opinion in the Excerpts of Record states the law flawlessly, as

Fox admits, and then lists factor after factor in support of its conclusion that Fox

failed to carry its burden as to each claimed harm. Nothing categorical about it.

As to the heightened evidentiary burden, the district court rejected each claimed

harm with ample citations to the evidence. Contrary to Fox’s assertion (at 7), no

one “move[d] the goalposts dramatically.” The goalposts are where they have

been since eBay. Fox just could not move the ball.

QUESTIONS PRESENTED

1. As Fox concedes, the district court correctly stated the law on

irreparable harm. It then carefully analyzed the record and the relevant case law

and rejected each of Fox’s predictions of irreparable harm as speculative,

unsupported by record evidence or remediable by money damages (or both). Did

the district court act within its discretion in denying a preliminary injunction?

2. The place-shifting features do not operate unless DISH customers

activate them and tell them what to do. And there is nothing “public” about a one-

to-one signal from a customer’s set-top box at home to her mobile device. Should


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this Court affirm on the alternative ground that Fox is unlikely to succeed on the

merits?

3. More than | | | | | | | | | families already use Sling technology, DISH

has invested hundreds of millions of dollars in it, and numerous other providers

offer comparable place-shifting technologies without complaint from Fox. Should

this Court affirm on the alternative ground that Fox cannot meet the remaining

requirements for a preliminary injunction?

STATEMENT OF THE CASE

Fox Authorizes DISH to Transmit Its Signal to Customers

DISH is a multichannel video programming distributor (“MVPD”), which

simply means that, like a cable company, it packages numerous broadcast and pay-

television channels for customers. ER 421. In order to include broadcast

programming in its offerings, DISH enters into contracts called retransmission

consent agreements. ER 421-22. DISH’s current retransmission agreement with

Fox dates back to 2002 (the “2002 RTC Agreement”). ER 423. Over the six years

preceding this lawsuit, DISH paid Fox almost | | | | | | | | | for retransmission

rights. ER 422. DISH’s customers, in turn, pay subscription fees to watch Fox

programming and other shows. ER 421.

Fox Challenges Two DISH Features: Sling and Hopper Transfers

This appeal concerns DISH’s latest generation DVR, called the “Hopper

with Sling.” ER 907. The Hopper integrates multiple technical functions into one


6

set-top box. It is a satellite receiver. It is also a DVR, which enables what the

Supreme Court has referred to as “time-shifting” of television viewing. Sony

Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 423 (1984). It also has

several features that give DISH customers the power to “place-shift” (or “space-

shift,” as it was previously called) their television viewing. See Recording Indus.

Ass’n of Am. v. Diamond Multimedia Sys. Inc., 180 F.3d 1072, 1079 (9th

Cir. 1999). Among them are the two features relevant here, called Sling2 and

Hopper Transfers.

Some customers would rather not purchase additional televisions for the

home. And some prefer to watch a program while they are on the porch or on the

road. The two place-shifting features that are at issue in this case are for them.

ER 845-46. Say, Grandma did not record the latest episode of Glee for the visit of

her teen granddaughter. Sling and Hopper Transfers save the day. With these

features, the granddaughter can use her iPad to watch shows recorded on her

Hopper back home. This type of place-shifting is hardly new: Even in the 1970s,

2 Fox refers to the Sling technology as “DISH Anywhere.” DISH Anywhere, however, encompasses not just Sling, but also features and services that have nothing to do with this dispute. It includes, for example, authorized online access to programming through the DISH website. We use the accurate terminology to describe the specific features Fox is challenging.


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TV viewers could record TV content on VHS or Betamax tapes and bring them to

Grandma’s house. ER 188.

Sling is like a portal to your TV screen. It basically takes what is playing on

your TV and transforms the signal so that it can play on your desktop computer,

laptop, or mobile device. Once enabled by the user, Sling gives the customer the

ability to view a live or pre-recorded program from the Hopper on another device

with an internet connection, whether in the next room or the next state. ER 928-

29. But you need an internet connection for Sling to work. Id. Hopper Transfers

is a different way of place-shifting, for situations when you don’t have an internet

connection, such as in the backyard, on an airplane, or even on a deserted island.

Hopper Transfers gives customers the power to use their iPads like they could once

use an ejectable VCR tape. ER 931. Specifically, it is a software feature that

provides you the capability to transfer a Hopper DVR recording to a mobile device

and view it on that device. Id.

Neither Sling nor Hopper Transfers is unique to DISH. DIRECTV’s

“Nomad,” TiVo’s “Stream,” Sony’s “Location Free,” Monsoon Media’s

“Vulkano,” and Elgato’s “EyeTV” are all internet-based place-shifting products.

ER 173-74. And both DIRECTV and TiVo beat DISH to the market with features

for transferring recorded programs to mobile devices. ER 851-52.


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At least on DISH devices, these place-shifting features are customer-

controlled, just like a VCR or DVR. The equipment is entirely within the

possession and control of the customer. Nothing happens automatically. DISH

cannot initiate a Sling session or transfer a program to a tablet. ER 180-81. For

each, the DISH customer takes multiple steps to set up the feature, choose the

show, and direct the device to place-shift. ER 187-88.

Both Types of Place-shifting Technology Hit the Market in 2005

Sling Media, Inc. first introduced Sling technology in June 2005 with the

launch of a product called the Slingbox, which has been continuously available

ever since. ER 925; ER 855-56. The Slingbox is a stand-alone device that

connects to any audiovisual equipment, including TVs, set-top boxes, DVRs, and

DVD players. ER 926. Also in 2005, DISH introduced a product called

PocketDISH, with portable-recording functionality comparable to Hopper

Transfers. ER 932. The PocketDISH is a handheld video viewer. Id. By

connecting it to a DVR, a DISH customer could transfer recorded programming

onto the PocketDISH for mobile viewing. Id. The PocketDISH was released to

compete with several other portable video devices that had just hit the market. ER

1307-08.

Fox employees were aware of these place-shifting technologies from the

start. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |


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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | ER 1421-22. That was eight years ago. Fox did

not sue.

Fox’s praise presaged a veritable tidal wave of immediate industry and

media applause for Sling. The Slingbox won an Emmy Award in January 2007 for

“Outstanding Achievement in Advanced Media Technology for the Creation of

Non-Traditional Programs or Platforms.” ER 1313. The same year, PC Magazine,

engadget, and Laptop Magazine all named it one of the best new products.

ER 926. No one could have doubted that Sling would attract a significant

consumer following. That was all seven years ago. Fox did not sue.

DISH Buys Sling and Integrates Sling Technology with DISH Products

In October 2007, DISH bought Sling Media for $380 million. ER 924.

Promptly thereafter, DISH informed Fox | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | ER 1474-75. Fox expressed no

concern—and filed no lawsuit.

Just over a year later, DISH followed through with its plan, announcing the

release of its ViP 922 DVR. ER 926. The 922 was the first “Slingloaded” DVR—


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that is, the first integrated satellite receiver, DVR, and Sling all-in-one. Id. The

praise continued. It won the “Best of CES Award” in the Home Video category.

ER 927. That was in 2009. Still no complaint, and no suit, from Fox. That same

year, the U.S. Copyright Office weighed in, praising Sling as technology that “uses

the Internet to make existing licensed programming available to individuals for

personal use in a controlled fashion and without the need for an additional license.”

ER 1210.

Responding to Sling’s growing popularity, DISH introduced the Sling

Adapter in 2010, a stand-alone piece of equipment that customers could connect

with certain DISH DVRs. ER 927. By the end of 2010, DISH customers could

enjoy Sling technology in a variety of ways—by purchasing a Slingloaded DVR,

by purchasing the Sling Adapter to add to a non-Slingloaded DVR, or by

purchasing a Slingbox from Best Buy. Fox lodged no objection to any of these

Sling options—and did not sue.

The Parties Negotiate the October 2010 Agreement

In mid-2010, DISH and Fox began to negotiate an extension to the 2002

RTC Agreement, ER 424, ultimately yielding what the parties call the “October

2010 Agreement.” Before the negotiations, Fox | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |


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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Id. The response: True, | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Id. It never did.

Fox’s first draft of the 2010 agreement said nothing about place-shifting

technology. Fox included only an “Other Technologies” provision that barred

DISH from | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | ER 424. This language said nothing about what subscribers could do

with the programming they had already paid to have delivered to their homes.

Indeed, DISH’s lead negotiator on the October 2010 Agreement | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | ER 425. Fox does not deny this.

Just to be sure, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | ER 425-26. Fox had no problem with this language.

Id. And | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a joint

press release that would tout DISH’s “ViP 922” as “the world’s only DVR with

built-in Sling functionality and PC Magazine’s ‘Editor’s Choice,” ER 427, 447,

487 (emphasis added).


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DISH Continues to Create, Market, and Sell Products with Sling—Without Fox’s Objection

In January 2012, DISH announced a DVR called “the Hopper Whole-Home

HD DVR,” which went on the market in March 2012. ER 924. While it did not

have Sling functionality built in, it was easy to add it simply by plugging in a fully

compatible Sling Adapter, ER 927, and meanwhile DISH continued to offer the

Slingloaded ViP 922 to its customers, ER 926. The next year, DISH introduced

the “Hopper with Sling.” ER 924-25. This latest Hopper has built-in Sling

functionality, just like the ViP 922. ER 925. It also has the Hopper Transfers

portable-recording feature. ER 924-25.

After Seven Years of Waiting, Fox Sues, Then Waits Another Nine Months Before Seeking to Enjoin the Place-Shifting Features

In May 2012, Fox filed this suit. Its complaint challenged two of the

Hopper’s recording and commercial-skipping features—called PrimeTime

Anytime and AutoHop. SER 15-20. The complaint also described DISH’s Sling

functionality, alleging that “DISH’s Sling Adapter redistributes and streams FOX’s

programming over the Internet in violation of copyright law and DISH’s

agreements with Fox.” SER 3-4; see SER 15, 16, 19. Fox did not think that Sling

presented any risk of imminent harm: It waited nine more months before filing

this preliminary injunction motion.


13

Not that Fox was shy about seeking emergency relief. Fox filed a first

preliminary injunction motion in August 2012, seeking to enjoin the other two

Hopper features. But the Sling Adapter was conspicuously absent from the

motion. The district court denied Fox’s first motion, Fox Broad. Co. v. DISH

Network, L.L.C., 905 F. Supp. 2d 1088 (C.D. Cal. 2012), and this Court affirmed,

Fox Broad. Co. v. DISH Network, L.L.C., No. 12-57048, 2014 WL 260572, at *1

(9th Cir. Jan. 24, 2014). Fox sought en banc review, but did not attract a single

vote. Id.

Only after losing its first preliminary injunction motion did Fox file a second

one seeking to enjoin place-shifting technology. ER 284, 286. By that point,

DISH had incorporated Sling functionality into the Hopper, as it had done years

before with the ViP 922. But Fox did not limit its motion to the Hopper. It argued

that any offering of Sling functionality to DISH subscribers was impermissible,

ER 222-23, and it sought to enjoin any DISH device that “[r]etransmit[s], or

13uthorize[es] subscribers to retransmit, Fox’s live broadcast signal over the

Internet.” ER 223. Fox also amended its complaint to challenge Hopper

Transfers, ER 1879-80, and moved to enjoin that feature, as well. ER 223.

The District Court Denies Fox’s Second Preliminary Injunction Motion

The district court denied the motion, finding that Fox failed to establish a

likelihood of irreparable harm. ER 304-12. Fox had advanced five theories of


14

harm. The district court separately analyzed the evidence on each and rejected

each in turn: (1) harm to its negotiations with other content distributors, which the

court rejected at ER 306-07; (2) loss of revenue from other online platforms,

rejected at ER 307-08; (3) loss of control over its copyrighted works, rejected at

ER 308-09; (4) piracy and security concerns, rejected at ER 309-10; and (5) loss of

advertising revenue, rejected at ER 310-11. We describe the district court’s

analysis below (at 35-43), particularly with regard to the only two theories—(1)

and (5)—on which Fox challenges the district court’s factual findings.

SUMMARY OF ARGUMENT

I.A. Fox does not dispute that the district court properly articulated the law

under eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 338 (2006), and Winter v.

Natural Resources Defense Council, 557 U.S. 7 (2008), and correctly identified the

“traditional principles of equity” governing “the decision whether to grant or deny

injunctive relief,” eBay, 547 U.S. at 394. Instead, it contends that the district court

applied impermissible categorical rules and a heightened evidentiary standard in

rejecting Fox’s hypothesized future harms as speculative, calculable, or both. Fox

is wrong. The district court carefully evaluated the record and rejected Fox’s

showing on multiple grounds, each of which was amply supported by DISH’s

countervailing evidence.


15

B. The district court did not abuse its discretion in distinguishing other

cases in which Fox presented the same evidence of harm. Fox’s delay in moving

for an injunction, DISH’s countervailing evidence, the relationship between the

parties, DISH’s ability to pay any eventual damage award, and key distinctions

between the business models in the cases all justify a different result.

C. The district court made no factual errors, much less clear ones. The

district court was correct to reject Fox’s theory that DISH’s features would harm

its negotiations with other distributors. Fox offered “no compelling evidence that

other [distributors] will demand rights that are yet to be established rather than wait

to see the result of this litigation.” ER 307. And, in any event, DISH’s expert

explained that any such harm would be calculable.

Nor did the district court err in rejecting Fox’s claims of harm to advertising

revenue. Fox’s argument is that Nielsen’s ratings do not measure viewing outside

of the home, so Fox will not receive credit for DISH customers who place-shift.

DISH’s expert skewered this contention by identifying ratings systems that do

account for such viewers, making any harm calculable.

II.A. Fox cannot prevail on its copyright claim merely by showing that

DISH exceeded the scope of its contractual license. It is black-letter law that

“before [the plaintiff] can gain the benefits of copyright enforcement, it must

definitively establish that the rights it claims were violated are copyright, not


16

contractual rights.” Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115,

1122 (9th Cir. 1999).

B. Fox cannot prevail on its theory of direct infringement without showing

that when DISH customers use Sling to send their programming to their own

mobile devices, DISH is “perform[ing] the copyrighted work publicly.” 17 U.S.C.

§ 106(4). But Fox’s theory is doubly flawed. First, DISH customers, not DISH,

are the ones who use Sling to send content to their mobile devices. So DISH

cannot be liable as a direct infringer under the Copyright Act. DISH is responsible

for the initial transmission of Fox’s content, and that transmission is fully

authorized. The customer does the rest. Thus, this case cannot be distinguished

from Fox I, in which this Court rejected Fox’s contention that DISH is doing the

copying when its customers use the Hopper’s time-shifting features. When it

comes to Sling, DISH does nothing more than provide customers their own

equipment for sending their content to themselves if they choose to do so.

Whether the equipment is used by consumers for time-shifting or place-shifting

does not matter. This cannot be direct infringement by DISH.

Second, as Fox’s counsel admitted in oral argument in another case, Sling is

also not a public performance within the meaning of § 106. What Fox has

recognized in other courts, but forgotten here, is that it is quintessentially private


17

when a customer uses Sling to send a signal to herself. Fox reads the words “to the

public” out of the statute.

C. Fox’s contract claims are meritless. By offering Hopper Transfers,

DISH does not “authorize the … copying” of Fox programming. In any event, the

contract expressly permits copying “by consumers for private home use,” which is

all Hopper Transfers does.

Fox’s contract challenge to Sling fares no better. By offering Sling, DISH

does not “authorize the … retransmission” of Fox’s signal. Again, merely offering

customers place-shifting features does not constitute authorization to place-shift

Fox programming. Nor, by offering Sling, does DISH | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | DISH does not do the

place-shifting when its customers use Sling—its customers do.

III. Fox cannot establish that the balance of hardships or public interest tip

in its favor either. DISH invested hundreds of millions of dollars bringing Sling to

its customers, and Fox now seeks relief that would alter the status quo by forcing

DISH to remove it from customers’ homes. Such extraordinary relief is

unwarranted, particularly in light of Fox’s eight-year delay in seeking injunctive

relief and the considerable public benefits of place-shifting technology.


18

STANDARD OF REVIEW

“[R]eview of an order denying a preliminary injunction is limited and

deferential.” Playmakers LLC v. ESPN, Inc., 376 F.3d 894, 896 (9th Cir. 2004)

(internal quotation marks omitted). The district court should not be reversed unless

it abused its discretion or based its decision on an erroneous legal standard or on

clearly erroneous findings of fact. Id.

The district court denied Fox’s motion because it found, as a factual matter,

that Fox’s theories of irreparable injury either are not likely to occur, or are

remediable with money damages. As Fox acknowledges (OB 40), this Court must

affirm as long as these determinations are not “illogical, implausible, or without

support.” M.R. v. Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012); Stuhlbarg Int’l Sales

Co. v. John D. Brush and Co., 240 F.3d 832, 841 (9th Cir. 2001).

ARGUMENT

I. THE DISTRICT COURT WAS CORRECT—AND CERTAINLY DID NOT ABUSE ITS DISCRETION—IN CONCLUDING THAT FOX FAILED TO DEMONSTRATE A LIKELIHOOD OF IRREPARABLE HARM.

Fox offers no sound reason for this court to substitute its judgment for the

district court’s. The district court correctly stated the law, as Fox concedes, and

did not adopt the “categorical rules” or “heightened standard” Fox claims to see in

the opinion. See § I.A. The district court also carefully—and correctly—

distinguished this case from other cases Fox cited, which as the Court explained,


19

were different cases, alleging different acts of infringement, by different

defendants, with different relationships to the accuser, on different facts, presented

to different fact-finders—all entitled to exercise their own discretion. See § I.B.

Ultimately, Fox tries the path of most resistance: lengthy sections arguing that the

district court got the facts wrong—albeit only on two of Fox’s five claims of harm.

But far from being clearly erroneous, each of the challenged findings was clearly

right. See § I.C.

A. The District Court Correctly Stated and Applied the Law of Irreparable Harm.

Fox’s main argument on appeal is that “the district court applied an

erroneous legal standard regarding … irreparable harm.” OB 23 (capitalization

omitted). But the argument gets off to an inauspicious start, because Fox admits

that the district court “correctly” described “the Supreme Court decisions in eBay,

Inc. v. MercExchange, L.L.C., 547 U.S. 338 (2006), and Winter v. Natural Res.

Def. Council, 557 U.S. 7 (2008),” and also correctly captured how the Ninth

Circuit has applied eBay, OB 23.

The district court consumed two pages laying out the legal principles it was

applying. ER 304-06. It started with an unobjectionable rendering of the Supreme

Court’s holding in eBay: “Although historically a showing of a reasonable

likelihood of success on a copyright infringement claim raised a presumption of

irreparable harm, that presumption no longer exists.” ER 304. That, as Fox


20

concedes (at 23), is what the Supreme Court meant when it rejected a rule that an

injunction should “automatically follow[] a determination that a copyright has been

infringed.” eBay, 547 U.S. at 394; see Flexible Lifeline Sys., Inc. v. Precision Lift,

Inc., 654 F.3d 989, 994-98 (9th Cir. 2011). The Supreme Court held that the

“decision whether to grant or deny injunctive relief rests within the equitable

discretion of the district courts,” but that courts should exercise such discretion

“consistent with the traditional principles of equity.” eBay, 547 U.S. at 392-93.

The district court then described the “traditional principles of equity” that

govern here. See ER 305. Fox does not dispute any principles that the district

court articulated nor suggest that the district court missed any. The district court

then addressed each distinct claim of harm, assessing the evidence and arguments

on both sides of the ledger. ER 306-11. It applied the undisputed law to the facts

of this case, preliminarily resolving factual disputes, ultimately to find that “[o]n

the present record, … Fox has not met its burden of showing that such harm is

likely in the absence of an injunction between now and trial.” ER 311-12. This is

a model of what eBay requires.

Fox’s challenge to the district court’s opinion starts (at 25-28) with an

exegesis of an eBay concurrence and another Circuit’s opinion about The Catcher

in the Rye. See Salinger v. Colting, 607 F.3d 68, 81 (2d Cir. 2010). Both opinions

recognize that injunctive relief has often been awarded in cases concerning


21

infringement of intellectual property and explain that eBay does not undermine

traditional principles of equity in such cases. eBay, 547 U.S. at 395 (Roberts, C.J.,

concurring); Salinger, 607 F.3d at 82. Both also acknowledge that “historical

practice … does not entitle a patentee to [an] … injunction or justify a general rule

that such injunctions should issue.” eBay, 547 U.S. at 395 (Roberts, C.J.,

concurring); Salinger, 607 F.3d at 82. In other words, they recognize that

presumptions do not run either way after eBay. Fox does not explain what else it

expects the reader to glean from its account of these opinions. They certainly do

nothing to undermine the district court’s articulation of the law.

Beyond that, Fox asserts two types of legal errors—that the district court

impermissibly applied “categorical rules,” e.g., OB 28, and a “heightened

standard,” OB 37. Both are meritless.

1. The district court did not apply categorical rules.

Fox argues that “the district court effectively created [two] categorical rules

of law that will disqualify from interim injunctive relief any copyright owner that

has exploited its works through licensing agreements with third parties or through

a contract with the alleged infringer.” OB 23-24. The operative word is

“effectively.” Fox does not quote one sentence from the opinion below that

bespeaks a “categorical rule.” Rather, Fox’s argument appears to be that some of

the facts that informed the district court’s opinion can arise in other cases—and if


22

they do they will yield the same result and therefore be “effectively” categorical.

The problem is that the district court did not treat any single fact as dispositive in

this case, and certainly did not suggest that it would reach the same conclusion in

every other case containing that fact. If it had adopted either categorical rule Fox

discerns, it would have written a much shorter opinion.

The keystone of Fox’s argument is a premise and conclusion it attributed to

the district court. The premise: “[T]he district court recognized that harm to Fox’s

business relationships with other distributors, loss of control over the dissemination

of its copyrighted works, and loss of advertising revenue all would qualify as

irreparable harm under well-settled precedents.” OB 28-29 (emphasis added). The

conclusion: “But the court then held those rules inapplicable to Fox because Fox

has an existing contractual relationship with Dish.” OB 29 (citing ER 307-09)

(emphasis added). That is doubly wrong. The district court did not suggest that

these sorts of harms “would qualify as irreparable harm under well-settled

precedents.” OB 28-29 (emphasis added). It held that these sorts of harms “can,

under certain circumstances, constitute irreparable harm,” citing the various cases

Fox invokes here. ER 305 (emphasis added) (citing WPIX, Inc. v. ivi, Inc., 691

F.3d 275, 285-86 (2d Cir. 2012); Fox Television Stations, Inc. v. BarryDriller

Content Sys., PLC, 915 F. Supp. 2d 1138, 1147 (C.D. Cal. 2012); Warner Bros.

Entm’t, Inc. v. WTV Sys., Inc., 824 F. Supp. 2d 1003, 1012 (C.D. Cal. 2011)). The


23

court’s whole point (à la eBay) was that there were no categorical rules either way.

So it obviously did not find any “rules inapplicable to Fox.” OB 29. Rather, as

noted above, the court found that “Fox has not met its burden” “[o]n the present

record.” ER 311-12 (emphasis added).

Let us begin with how the district court addressed the “existing contractual

relationship with Dish” when it discussed Fox’s allegations of harm to negotiations

with other cable and satellite TV companies. That was not even close to a

categorical rule. The district court relied explicitly on DISH’s expert testimony

proving that there was a robust market for exactly the functionality provided by

Sling and Hopper Transfers. ER 307. The court found that any damages could be

calculated based on reference to this market. Id. It then rejected, as a factual

matter, Fox’s unsubstantiated suggestion that other providers would demand

concessions, explaining that “Fox presents no compelling evidence that other

MVPDs will demand rights that are yet to be established rather than wait to see the

result of this litigation.” Id.

The court did not even mention Fox’s contractual relationship with DISH

until it turned to rebutting Fox’s argument that the court should find irreparable

harm here because other courts found that Fox had suffered irreparable harm in

other cases. ER 307. The district court distinguished those holdings because those

cases concerned services that captured television signals and resold them without


24

any license at all. Id. In contrast, DISH’s features, the court found, were just

“add-on[s]” to an existing relationship: Fox authorized DISH to distribute its

programming to DISH subscribers, and DISH subscribers, who pay for the

programming, were the only ones who could view it using Sling or Hopper

Transfers. Different case, different result. There is nothing “categorical” about it.

The same goes for Fox’s second imagined “categorical rule”: that injunctive

relief is always unavailable to any party who “has licensed its works to other

distributors.” OB 31 (capitalization omitted). Fox purports to find this categorical

rule in the district court’s discussion of Fox’s claim that DISH’s features will harm

revenues from other distribution platforms, such as iTunes and Amazon. ER 307-

08. As evidence of a categorical rule, Fox points to, but never quotes, one sentence

about possible “benchmarks.” OB 31 (quoting one word from ER 308). The

sentence reads: “Fox does not explain why its own Digital Download contracts

with companies like Apple could not serve as benchmarks in calculating any

damages caused by” Sling and Hopper Transfers. ER 308. Even considered in

isolation, that looks nothing like a categorical rule. It is just a common sense

observation that one way to calculate damages is to look at what Fox charges for

what Fox contends are similar offerings—and that “Fox does not explain” why

such an approach will not work here.


25

The sentence is even more innocuous when considered in context. It is

mixed in with no fewer than four other independent rationales for rejecting Fox’s

claimed harm: (1) a robust market for features similar to those offered by DISH

could provide benchmarks for valuation of the rights at issue; (2) Fox had not

demonstrated precisely how its revenue could be harmed by a shift away from a

service Fox offered for free; (3) it was unclear, considering the similar products on

the market, that DISH’s features would harm Fox; and (4) these sorts of features

have historically “increased viewership,” “25uthori[ing] viewer loyalty and

“25uthoriz[ing] revenue.” ER 308. There is nothing categorical about this multi-

factor analysis.

In the end, it is Fox who is proposing categorical rules. It asserts that

“[u]ltimately, what is at issue is Fox’s ability as a copyright owner to control how

and when its works are disseminated to consumers.” OB 32. Fox devotes five

pages to the overriding importance of this right, arguing (1) that interference with

the right “invariably causes injury that is difficult to quantify,” OB 33 (emphasis

added); and (2) that “money damages alone do not support or enforce” a copyright

owner’s right to exclude, OB 33-34. If those assertions are enough to justify an

injunction, then a copyright owner could presumptively secure an injunction in any

case—which is, of course, directly contrary to eBay.


26

2. The district court did not apply a heightened standard of proof.

Fox’s second asserted legal error is that the district court applied a

“heightened standard” of proof when it rejected Fox’s conclusory executive

declarations as speculative. OB 37. Here, again, Fox does not point to a sentence

in the district court’s opinion propounding a “heightened standard.” To the

contrary, the district court applied the very legal standards Fox articulates.

To begin, Fox notes that “the district court acknowledged in its Order [that]

a showing of present actual harm is not necessary to satisfy the irreparable harm

requirement for injunctive relief.” Id. Yet, in the next breath, Fox seems to fault

the district court for observing that DISH’s place-shifting technology has not

“‘already harmed’” Fox. Id. (quoting ER 311). Of course, as the district court

understood, the fact that no harm materialized in the first eight years is certainly

relevant to Fox’s prognostication that harm is likely to materialize between now

and trial. ER 311. Even discounting all those years, it is also relevant that Fox

showed up to oral argument in April 2013 unable to point to any actual harm that

had materialized in the 11 months since it filed this suit. ER 293.

Fox’s main complaint, however, relates to what it characterizes as the

district court’s conclusion “that Fox’s testimony about likely future harms was

inherently ‘speculative.’” OB 37 (quoting ER 311). Once again, Fox plucks a

single word—“speculative”—from the district court’s opinion. Id. Fox supplies


27

the word “inherently.” The relevant sentence is actually a response to Fox’s

argument that the testimony of DISH’s expert, Rapp, is speculative: “Fox

criticizes the Rapp declaration as speculative, but Rapp’s assessment of the facts is

no more speculative than [Fox executive Sherry] Brennan’s.” ER 311. Fox

objects on the ground that “[a] prediction of future harm based on firsthand

experience and common sense inferences from undisputed facts is not speculative.”

OB 38.

Fox seems to mean that the district court, as a matter of law, was required to

credit Fox’s evidence, just because it was based on a witness’s purported “firsthand

experience” and assertions of “common sense.” That cannot be. Assessment of

the specific evidence and the body of contrary evidence in the context of the

specific case is the classic exercise that eBay entrusts to the district court. That is

especially true here. These particular declarations practically begged for a back of

the hand. Though Sling and portable recordings had been around for eight years—

including in DISH’s devices—Fox adduced no evidence of imminent harm from

DISH’s latest Hopper beyond two declarations from Fox executives, one from

Sherry Brennan and a virtual carbon copy from Mike Biard. ER 225-38, 1795-

1804. These declarations amounted to little more than, “Trust us. We’ve been

around. We know what will happen.” Worse yet, Fox shamelessly admits that

these declarations were not even written about Sling and Hopper Transfers—or any


28

other sort of place-shifting device, for that matter—and were not prepared for this

case. They were recycled from other cases involving other technology where Fox

presented a “virtually identical” declaration from Brennan. OB 42. Instead of

dismissing these declarations out of hand, the district court considered them on the

merits, but found them unpersuasive in light of all the other evidence.

In asserting that the district court rejected Fox’s predictions because of a

heightened standard, Fox ignores all the reasons the district court gave for rejecting

the predictions on the merits.

Countervailing evidence of harm. First and foremost, Fox neglects to

mention the evidence DISH presented. ER 312. The evidence was qualitatively

and quantitatively superior to Fox’s. It came from Richard Rapp, an expert

economist, not a self-interested executive. ER 842-85. Rather than saying, “Trust

me,” Rapp backed up his predictions with reams of industry reports and

documents. He addressed Brennan’s theories of harm point by point and

dispatched each with concrete evidence about the very technologies in question.

For example, DISH’s experts skewered Brennan’s blithe, and unsupported,

assertion that “earlier Sling devices … were niche products that were not heavily

marketed.” ER 232. Rapp presented over ten pages of “products and services with

essentially the same functionality as the place-shifting features of DISH’s Hopper

with Sling DVR [that] have been available for years.” ER 849-63. DISH’s


29

electronics expert confirmed the ubiquity of similar technology. ER 180-84, 192-

97. And Rapp explained precisely why this mattered: It undercut the showing of

irreparable harm because it demonstrated that DISH had introduced “no new

capabilities to the market,” and because “the availability of place-shifting

capabilities from distributors and networks creates benchmarks for the valuation of

any alleged harmful effects.” ER 850.

Similarly, DISH refuted Brennan’s assertion that DISH has generated piracy

risks. All Brennan said was: “Dish’s contracts with Fox do not contain any

procedures or standards to protect Fox content from piracy when it is streamed

over the Internet or copied onto iPads, and Dish is under no enforceable obligation

to adhere to such procedures and standards.” ER 238. Fox does not specify what

“procedures and standards” it thought necessary. ER 883. But DISH responded

with specific procedures and standards it actually employs that fully guard against

piracy. It provided testimony explaining how Sling encrypts data, restricts access

through password protection, and limits usage to one viewer at a time. ER 930.

That testimony also detailed how Hopper Transfers prevents users from making

any further copy after transferring a show to the iPad and prevents a consumer

from copying shows in bulk and transferring the iPad to someone else, by

automatically making the transferred shows inaccessible when the iPad has not

connected to its companion Hopper for 30 days. ER 930-32. We describe some


30

further instances of DISH’s refuting Brennan’s professed theories of harm below

(at 36-43), in addressing Fox’s specific assertions of erroneous fact finding.

Adequacy of legal remedies. Fox also lost because it failed to demonstrate

“inadequacy of legal remedies.” Los Angeles Mem’l Coliseum Comm’n v. Nat’l

Football League, 634 F.2d 1197, 1202 (9th Cir. 1980). This might be another

story, the district court observed, if Fox had demonstrated that the harms it

predicted could not be calculated or if DISH were incapable of paying a damages

award. ER 311. But the district court repeatedly found that the claimed harms

could readily be calculated, ER 307, 308, 309, 310-11, as the Rapp declaration

confirmed, ER 865-82.

That is where the evidence of DISH’s contractual relationship with Fox and

Fox’s market activity came in—not as a categorical rule, see supra at 21-24, but as

concrete evidence of the adequacy of legal remedies. The district court had before

it the best evidence one could imagine that these parties know exactly how to

quantify the value of rights in Fox’s content, and that DISH has the wherewithal to

pay: the parties’ preexisting contractual relationship. DISH has paid Fox over

| | | | | | | | | | | | so far over the course of this contract for rights that the parties

reduced to dollar amounts. This “defined and monetized” relationship counsels

against injunctive relief. ER 307, 309.


31

The district court also had the best evidence that the parties could quantify

the value of place-shifting features: Fox equates DISH technology with other

offerings and it has no trouble putting a price tag on those technologies. Courts

consistently rely on this sort of evidence as proof that harm can be quantified. See,

e.g., ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1339-

40 (Fed. Cir. 2012) (damages “clearly quantifiable” where VOD technology

provider “sought to broadly and extensively license [its] technology”); Polymer

Techs., Inc. v. Bridwell, 103 F.3d 970, 974 (Fed. Cir. 1996) (“pattern of granting

licenses” evidence of lack of irreparable harm); MercExchange, L.L.C. v. eBay,

Inc., 500 F. Supp. 2d 556, 569-73 (E.D. Va. 2007) (“willingness to license”

undercuts irreparable harm).

Delay and approval. Finally, there is the problem of Fox’s delay. Fox

cannot credibly claim it needs emergency relief when it sat for eight years

watching Sling and portable-recording progress in the marketplace before seeking

an injunction. ER 311. “Plaintiff’s long delay before seeking a preliminary

injunction” is reason enough to deny the relief, because it “implies a lack of

urgency and irreparable harm.” Oakland Tribune, Inc. v. Chronicle Publ’g Co.,

762 F.2d 1374, 1377 (9th Cir. 1985). Before coming to court to disable Sling

functionality for more than | | | | | | | families that have come to rely on it, Fox


32

should at a minimum explain how this latest incarnation of place-shifting

technology differs from all of the others it found unobjectionable.

Here, the delay is compounded by Fox’s explicit approval—even praise—of

Sling. It is not like Sling was a secret. ER 926, 1395, 1400-13. It won an Emmy.

ER 1313| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

ER 1421. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

and Fox did not breathe a word of objection. ER 1474-75. Most recently, Fox’s

lawyers—the same lawyers filing Fox’s brief here—stood up at the Second Circuit

and declared that Sling “would not be a public performance” (contrary to what they

assert in this appeal). ER 1337.

Even if the years of delay leading up to this lawsuit could be excused, the

delay after Fox filed this suit is inexcusable. Fox moved to enjoin other DVR

features—but not the ones at issue now. It waited nine months to seek this

preliminary injunction—almost twice as long as the delays that have justified

denying relief in other cases. See, e.g., Kerr Corp. v. N. Am. Dental Wholesalers,

Inc., SACV 11-0313, 2011 WL 2269991, at *3 (C.D. Cal. June 9, 2011) (five-

month delay); Playboy Enters., Inc. v. Netscape Commc’ns Corp., 55 F. Supp. 2d

1070, 1080, 1090 (C.D. Cal. 1999) (five-month delay).

Fox frets that “[t]he district court’s standard … puts copyright plaintiffs in

an awkward ‘Catch-22’ situation.” OB 39. Plaintiffs who “move quickly … will


33

be denied injunctive relief because the harm is deemed ‘speculative.’ But if they

wait for the harm” to materialize, they will be accused of “wait[ing] too long to

take action.” OB 39-40. But Fox is in this predicament because it did not “move

quickly” and still could not produce evidence of actual harm or evidence that any

such harm will materialize. This is not a Catch-22. It’s Evidence 101.

* * *

In the end, Fox did not lose because the district court adopted “categorical

rules” or a “heightened standard.” Fox did not lose because of a “sweeping

departure from precedent.” OB 5. Fox lost because DISH presented concrete

expert evidence exposing Fox’s retread declarations as hollow. It lost because it

did not even try to demonstrate that its claimed harm was incapable of calculation,

given that it was setting licensing prices for conduct that it characterized as the

same. It lost because it sat on its hands. Each of these factors individually would

justify rejecting Fox’s testimony. But all of them together present an unassailable

case in support of the district court’s exercise of discretion.

B. The District Court Did Not Abuse Its Discretion in Distinguishing Other Cases Where Fox Presented the Same Evidence of Harm.

All this amply addresses Fox’s leitmotif that “[o]ther courts that have

addressed similar, unauthorized Internet streaming and distribution of television

programming … have reached the opposite conclusion,” OB 7, even in the face

“virtually identical” Fox declarations, OB 42. Fox asserts that “[o]n this record, it


34

was clear error and an abuse of discretion for the district court to inexplicably

reach the opposite result of its sister courts.” OB 44. Of course, the essence of

discretion is that different courts are allowed to reach different conclusions on

similar facts. See Sports Form, Inc. v. United Press Int’l, Inc., 686 F.2d 750, 752

(9th Cir. 1982). But the more important point is that far from being

“inexplicabl[e],” the district court explained—repeatedly and at length—exactly

why it found those cases distinguishable. ER 307, 309, 311-12.

First, “unlike here, the defendants” in those cases “presented little or no

evidence to refute the plaintiffs’ claims regarding irreparable harm.” ER 311.

Naturally, courts treat undisputed factual assertions differently than factual

assertions that have been decimated by an avalanche of countervailing evidence.

Second, as the district court pointed out, those cases did not have the delay

factor that is so damning here. ER 311. In those cases, the court could not say, as

the district court did here, that the challenged features “have been available on the

market since 2005” with “no evidence that [it] has already harmed its business.”

ER 311. Nor was there evidence of Fox lauding the challenged features or

renouncing its copyright infringement theory in open court.

Third, “virtually identical” declarations are worthless when there is nothing

“similar” about those other cases. Fox invokes cases concerning totally different

technologies and business models. In one case, the court found that the defendant


35

simply “captured and retransmitted” a broadcaster’s “copyrighted television

programming” and sold it “to paying … subscribers” without paying the plaintiff a

dime. ivi, 691 F.3d at 285. In another, the court found that defendants bought a

DVD of television programming and “stream[ed] the content of the DVD” to

paying customers, also without paying the copyright owner anything for the right

to transmit. WTV Sys., 824 F. Supp. 2d at 1006-07. Neither concerns the sorts of

one-to-one personal place-shifting technologies at issue in this case.

Fourth, as the district court noted, in those cases, unlike here, there was a

“likelihood that the defendants would ultimately be unable to satisfy a substantial

damages award,” which would have left them with no remedy. ER 311; see

BarryDriller, 915 F. Supp. 2d at 1147 (“[I]t is unlikely that Defendants’ start-up

companies would be likely to be able to satisfy the damages award.”); ivi, 691 F.3d

at 286 (“ivi would be unable to pay any substantial damages award should

plaintiffs prevail.”).

C. The District Court Made No Factual Errors, Much Less Clear Errors.

Fox challenges the district court’s analysis of two of the five categories of

claimed harm. Fox acknowledges (at 40) that this Court may not reverse the

district court’s findings unless they are “illogical, implausible, or without support

in inferences that may be drawn from facts in the record.” United States v.

Hinkson, 585 F.3d 1247, 1251 (9th Cir. 2009) (en banc). Yet, Fox merely reargues


36

the merits in the hopes of persuading this Court to reach a different conclusion,

which is beyond this Court’s “limited and deferential” review. Sw. Voter

Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003) (en banc)

(per curiam); see Am. Trucking Ass’ns, Inc. v. City of L.A., 559 F.3d 1046, 1052

(9th Cir. 2009) (appellate review does not extend to the “underlying merits of the

case”) (internal quotation marks omitted).

1. The district court did not clearly err in finding that Fox failed to show irreparable harm to distributor relationships.

Fox’s first factual argument is that the district court was wrong to conclude

that Fox’s predictions of harm to distributor relationships fell short. OB 40-49.

Specifically, Fox is concerned about “36uthorize[ions] with MVPDs” (such as

Time Warner) and “other distributors” who want to stream video (such as iTunes).

Here is the sort of hypothetical negotiation Fox is worried about with, say, Cox

Communications:

Cox: Of course, we’ll want to continue offering place-shifting functionality.

Fox: Sorry, you can’t. Not without an additional license fee.

Cox: But DISH does it for free.

Fox: Yes, and we’re suing DISH for it.

Cox: Well, the very fact that DISH is doing it makes those rights less valuable. So I want a concession.

From there the conversation can take two courses:


37

Scenario 1: Lost value

Fox: OK, we’ll knock $50,000 off our demand.

Scenario 2: Lost goodwill

Fox: No dice. You must pay for those rights.

Cox: Fine, but I’m annoyed.

We say “hypothetical,” because Fox produced no evidence that it had ever

had such a conversation in the eight years in which Sling and portable DVR

recordings have been on the market. And despite Fox’s assertion that it “expects to

negotiate dozens of new contracts with MVPDs and other distributors” in “the next

12-18 months,” OB 41, Fox produced no evidence that it had had any such

conversation in the 11 months from the time it sued until oral argument on its

preliminary injunction motion. That is reason enough to sustain the district court’s

conclusion that the harm is unlikely to materialize.

More importantly, the district court was justified in concluding that, if any

harm materializes, “damages are calculable.” ER 307. The district court

catalogued the variety of similar technologies on the market, noting the testimony

that “[m]ost major MVPDs launched [place-shifting] for tablets and phones,” as

well as “computers,” in the past few years. ER 306 (quoting ER 859). It then

observed “that, because many [place-shifting] services are already on the market,

any possible loss in bargaining power is either unlikely or can easily be measured.”


38

Id. In other words, there is already an industry norm and to the extent that Fox has

to start making concessions because of DISH’s conduct, the effect can be

measured. Obviously, Fox will know every time it has to say, “OK, we’ll knock

$X off our demand.” And it will also be able to figure out if its prices for

streaming rights start plummeting even without such a conversation.

Fox acknowledges that this last finding is fully supported by expert

testimony. OB 46 (citing ER 874-75). Nevertheless, Fox complains that the

finding is “illogical and implausible.” OB 44 (capitalization omitted). Fox tries to

capture the illogic in a rhetorical question: “[W]hy would a distributor pay for a

license, or agree to … burdensome conditions, if its direct competitor is freely

exploiting the exact same rights with no strings attached?” OB 45. There is at

least one simple answer. The competitor might agree to a license as this case plays

out to avoid the risk and expense of litigation. As Rapp explained, Fox’s lawsuit

would be enough to prevent DISH’s competitors from “claim[ing] compensation.”

ER 874. And if the competitor does demand a price concession, the damage is

easily calculable. It is all logical.

Fox next asserts that “[t]he district court’s findings regarding harm to Fox’s

distributor relationships are clearly erroneous because they are not supported by

evidence.” OB 46. But in the next sentence, Fox concedes that “[t]he court relied

… on the declaration of Richard Rapp.” Id. The multiple citations to Rapp’s


39

declaration throughout the relevant section of the opinion (ER 306-07) confirm that

the district court found support for every one of the findings summarized above.

Fox does not dispute the accuracy of any of the court’s citations to Rapp. It

just quibbles with a couple of points that it claims Rapp does not cover. First, Fox

asserts that “Mr. Rapp never refutes that Fox’s goodwill is being damaged,”

OB 46—presumably by the annoyance generated in Scenario 2 above. Fox is

wrong. Rapp explained: “That Fox brought this action against DISH should be a

complete answer to the conjecture that DISH’s competitors will blame Fox.”

ER 874. Not that the district court needed an expert to tell it how absurd Fox’s

suggestion is. Surely, Fox is not worried it would lose the customer: Cox is not

going to stop carrying Glee (and every other Fox show) just because Fox refuses to

make a DISH-related price concession.

The second quibble (at 48) relates to the district court’s observation that

“Fox presents no compelling evidence that other MVPDs will demand rights that

are yet to be established rather than wait to see the result of this litigation before

altering their contracts with Fox.” ER 307. Fox asserts that its “witnesses clearly

explained that during the coming year—i.e., before trial—| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OB 48. The

court was not required to credit that prediction, particularly because Rapp

predicted the opposite: “These Hopper with Sling DVR features that support


40

viewing on alternative devices have little potential for harming Fox’s relationships

with, or revenues generated from, distributors and advertisers.” ER 847.

Anyway, the district court did not need Rapp to say what was evident from

the record. Fox could not point to a single negotiation in the eight years that

preceded the filing of the complaint where anyone demanded a price concession

over place-shifting, nor a single negotiation in the 11 months after the filing of the

complaint, where anyone demanded a DISH-specific concession. So it was proper

for the district court to dismiss the conjecture that those conversations were about

to start happening.

In the end, Fox’s whole argument about the absence of record support is but

a veiled assertion that the district court erred in crediting Rapp over Fox’s

executives. Fox extols its executives as veteran negotiators who “know[] the

business models of Fox and its distributors,” OB 40-41, in contrast to Rapp “who

has never worked a day in the television distribution business,” OB 46. But that

choice lies firmly within the discretion of the district court, and could not be a

basis for appeal, even if Fox could persuade this Court that it “would have arrived

at a different result if it had applied the law to the facts of the case.” Sports Form,

Inc. v. United Press Int’l, Inc., 686 F.2d 750, 752 (9th Cir. 1982); see Hinkson, 585

F.3d at 1261-62.


41

Fox’s final argument on the distributor relationship is that the district court

“abused its discretion by completely ignoring Mr. Biard’s declaration.” OB 49.

The court did not ignore Biard. It mentioned him twice. ER 302, 303. That was

twice as many times as Fox mentioned him in the irreparable harm sections of its

PI papers (where he makes only one appearance—in the reply). As Fox’s own

treatment of Biard demonstrates, Biard added nothing to the irreparable harm mix.

Even on appeal, Fox describes Biard as merely “corroborat[ing] and bolster[ing]”

Brennan. OB 49. Everything the court said about Brennan applies with equal

force to Biard.

2. The district court did not clearly err in finding that Fox failed to prove that any loss of advertising revenue defied calculation.

Fox’s theory of lost ad revenues was based on its assertion that the major

metric on which Fox sets its advertising rate—Nielsen’s C3 metric—does not

measure “out-of-home viewing.” ER 310. From that premise, Fox argued that it

would never be able to demonstrate how much more in advertising dollars it should

get for DISH’s place-shifting features. The district court found that “Fox’s

prediction of falling advertising value without the ability to accurately calculate

damages is not adequately supported by the record.” ER 310-11. It gave two

independent reasons. Fox unpersuasively challenges each.


42

The district court’s first reason was that “other entities compensate for that

gap [in Nielsen data] and adequately capture trends in television viewing and, by

extension, advertising value.” ER 310 (citing ER 866-67). Fox argues that the

testimony on which the district court relied—again from Rapp—was not

sufficiently detailed to “explain[] how” that “viewership of Dish’s” features “can

be measured.” OB 52. And Fox then stretches this argument into an assertion that

“it is undisputed that … these harms are not currently quantifiable.” OB 54.

Rapp’s whole point was that the advertising Nielsen misses is quantifiable. The

district court was entitled to accept that testimony at the preliminary injunction

phase, particularly because Fox had the burden of proof and it offered no testimony

that the data Rapp referenced could not do the job.

Fox also asserts that the district court’s first response was irrelevant, because

“the issue is not whether someone, somewhere is capable of measuring” the use of

DISH’s place-shifting features to “view[] Fox Programs,” but only whether “the

viewing of those programs on mobile devices are counted by Nielsen’s C3 rating.”

OB 52. Fox is missing the district court’s point. Whether Nielsen counts that

viewing might support Fox’s assertion that it suffers harm through lost ad revenue.

But the court’s point was that Fox must also prove that the harm is irreparable. As

long as “someone, somewhere is capable of measuring” it, the loss is not

irreparable.


43

The district court’s second reason for rejecting Fox’s argument was that

“Nielsen has announced it will measure viewership delivered through online

connections beginning in fall 2013.” ER 310 (citing ER 867). Thus, advertising

data entities were “ready and willing to adapt to the new landscape” of mobile

viewing. Id. Fox does not deny that Rapp supported these findings. It faults Rapp

for relying on hearsay. But as an expert, Rapp is allowed to do so. Fed. R.

Evid. 703.

Fox also peers behind Rapp’s declaration, insisting that a cited article does

not fully support the timing of Nielsen’s measurement, and at most “reports

Nielson’s pledge to measure TV viewership on … mobile devices at some

unspecified time in the future.” OB 53-54. But the district court was entitled to

rely on Rapp’s testimony and not flyspeck based on the one source he decided to

cite. And besides, Rapp was right. Nielsen, Any Way You Watch It: Nielsen to

Incorporate Mobile Viewing Into TV Ratings and Dynamic Digital Ratings

(Oct. 28, 2013), http://www.nielsen.com/us/en/newswire/2013/any-way-you-

watch-it-nielsen-to-incorporate-mobile-viewing.html.

II. FOX IS UNLIKELY TO SUCCEED ON THE MERITS.

This Court can affirm without reaching the merits. But there are several

alternative grounds for affirmance on the merits of Fox’s copyright claims. As an

initial matter, Fox asserts that it can prevail on a copyright claim simply by proving


44

a breach of contract—which is its only basis for now asserting that Hopper

Transfers is infringing. That is wrong. Infra § II.A. So, too, is Fox’s theory of

direct infringement as to Sling. Infra § II.B. Fox’s breach of contract arguments,

which are inappropriate for injunctive relief, are also meritless. Infra § II.C.

A. Fox Waived Its Copyright Claim Against Hopper Transfers and in Any Event Cannot Prevail on a Copyright Claim Merely By Showing a Breach of Contract.

Fox’s opening argument on copyright infringement is that it can prove its

copyright claim merely by demonstrating that DISH violated a contract. OB 55-

56. That is its sole basis for arguing that DISH infringes by including the Hopper

Transfers features. But Fox did not press a copyright claim on Hopper Transfers in

its briefing below. See ER 11-28; ER 1521-26. And at oral argument it confirmed

as “[r]ight” the district court’s “understanding … that the Hopper Transfers part of

the claim relates to contract breach” and defense counsel’s understanding that

“there is no copyright claim being moved on when it relates to Hopper Transfers.”

ER 59.

In any event, Fox’s argument is absurd. A plaintiff cannot bypass the

elements of copyright infringement simply by proving breach of a contract, any

more than it can use a contract to bypass the elements of an antitrust violation. A

copyright claim has two elements: (1) that the plaintiff owns a copyright; and (2)

an invasion of one of the exclusive rights enumerated in § 106 of the Copyright


45

Act. See Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110,

1114-15 (9th Cir. 2000). As the copyright owner of certain programs, Fox has the

exclusive right, for example, to “reproduce the copyrighted work,” 17 U.S.C.

§ 106(1), to “distribute copies” of it, id. § 106(3), and to “perform the copyrighted

work publicly,” id. § 106(4). DISH is simply not “an infringer,” within the

meaning of the Copyright Act, unless it “violates any of the exclusive rights.”

17 U.S.C. § 501(a).

That is not to say that the language of a contract is always irrelevant in

copyright cases. A contract can become relevant to a copyright claim if the

defendant asserts a license as an affirmative defense to the infringement claim.

That was why the contract was relevant in each of the cases Fox cites. OB 55.

But, as is evident in each of those cases, a license is only a defense; it does not

magically erase the elements of a copyright claim. Worldwide Church of God, 227

F.3d at 1114.

This Court has repeatedly admonished that the breach of a license by itself

cannot establish copyright infringement: “[B]efore [the plaintiff] can gain the

benefit of copyright enforcement, it must definitively establish that the rights it

claims were violated are copyright, not contractual rights.” Sun Microsystems,

Inc. v. Microsoft Corp., 188 F.3d 1115, 1122 (9th Cir. 1999) (emphasis added); see

also S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1089 & n. 11 (9th Cir. 1989)


46

(concluding that the defendant “exceeded the scope of its license” and then

remanding for resolution of the “underlying question of whether [the defendant’s]

uses, unshielded by the contract, infringed [the plaintiff’s] copyright”). It is black-

letter law: “To be actionable as infringement, the conduct must implicate one of

the copyright owner’s enumerated rights.” 3 Nimmer on Copyright § 10.15[A][2]

n.10 (2013); see 2 Patry on Copyright § 5:118 (2013) (same). There are no

shortcuts.

Fox does not argue that DISH engaged in any of those acts of infringement

with respect to Hopper Transfers. And for good reason. Fox has no argument that

DISH is copying or publicly performing Glee when the user transfers a show from

one device to another in the privacy of her own home. Thus, even if it had

preserved the copyright argument, Fox could not prove copyright infringement as

to Hopper Transfers, period—regardless of what the contract says.

B. Fox’s Theory of Direct Copyright Infringement Is Flawed.

With respect to Sling, Fox’s copyright theory is direct infringement. It

cannot prevail on this theory without showing that when DISH customers use Sling

to send their programming to their own mobile devices, DISH is “perform[ing] the

copyrighted work publicly.” 17 U.S.C. § 106(4). Fox’s position is doubly flawed.

First, DISH is not the one sending a program when a customer uses Sling. Second,


47

even if DISH were doing so, using Sling to send a program from a customer to

herself is obviously not engaging in a public performance.

1. Users, not DISH, are the ones who use Sling to send signals to computers and mobile devices.

Let us be clear on who does what when a customer uses Sling. DISH

transmits Fox’s shows by satellite to the customer’s set-top box. There is no

dispute that this transmission is authorized. DISH pays | | | | | | | | | | | | for the

right to take Fox’s over-the-air broadcasts and beam them by satellite to its

customers; and DISH has a statutory license to make that “retransmission.” 17

U.S.C. §§119, 122. But, once the set-top box receives the signal for, say, The

Simpsons, DISH’s work is done.

From there, nothing else happens unless the customer intervenes to activate

a second signal—from the set-top box to her laptop or mobile device. She must

open the Sling software application, navigate the guide screens, and select the

show (or the recording) to be sent. ER 180-81. That second signal to the iPad is

not even in the same format as the satellite transmission from the satellite to the

set-top box. The Sling microchip takes the satellite signal (or DVR recording) and

converts it to a new format so that the program can travel using internet protocols.

Then, the Sling software creates a secure point-to-point tunnel for the Sling chip to

deliver that content to the laptop or iPad. ER 928-29.


48

Fox’s direct infringement theory depends on the proposition that DISH—and

not the consumer—caused that second signal to occur. Fox made that same

argument to this Court in Fox I with respect to PrimeTime Anytime recordings—

and the argument fails here for the same reason it failed before. The PrimeTime

Anytime feature provides customers a shortcut to program their DVRs to record

the primetime programming on up to four major broadcast networks and up to

seven nights a week. Fox I, 2014 WL 260572 at *4-7. Fox argued that DISH was

liable for direct infringement because DISH supplied the hardware and software

for the recording functionality and engaged in all sorts of activities to support it. In

rejecting Fox’s argument, this Court observed that the question on direct liability is

who “cause[d] the copying.” Id. at *5. DISH’s decision to offer the feature to its

customers, the Court explained, is not enough for direct liability. Because “Dish’s

program creates the copy only in response to the user’s command,” “the user, not

Dish, makes the copy.” Id. DISH therefore could not be a direct infringer.

The analysis is no different when a DISH subscriber decides to place-shift

The Simpsons using Sling. Here, too, once DISH sends the initial—and

indisputably authorized—transmission of The Simpsons to the customer’s set-top

box, it is the user, not DISH, who decides whether to place-shift it. This

subscriber-initiated event is completely independent of the initial satellite

transmission, and DISH causes none of it. Without her command, there is no


49

second signal. So DISH did nothing that Fox can complain about. Under Fox I,

and other cases, this simply cannot be direct infringement. See Perfect 10, Inc. v.

Amazon.com, Inc., 508 F.3d 1146, 1161 (9th Cir. 2007).

Fox seems to acknowledge this simple reality with respect to Slingbox (on

the market since 2005) and other competing place-shifting technologies. These

devices can be attached to any video source (including a Hopper), and Fox has no

objection. Presumably, that is because Fox acknowledges that the company that

supplied the technology is not sending anything from the set-top box to the iPad or

laptop. Fox offers no principle or case that would make otherwise lawful behavior

(of place-shifting from a set-top box to an iPad) unlawful simply because a

defendant also engages in another concededly lawful act (transmitting the

authorized signal by satellite to the set-top box): Two rights do not make a wrong.

Fox’s only argument for distinguishing this case from Fox I is this: “It is

well settled in this Circuit that when the issue is the public performance right, it

does not matter who presses the button.” OB 58. To be clear, Fox does not mean

that “this Circuit” has held that. Fox cites only district court cases for the

proposition that “when a service delivers video content over a wire (such as the

Internet) that consumers can access by turning on a device (such as a computer)

and selecting something to watch, the service—not the consumer—is doing the

transmitting.” OB 59.


50

Fox’s cases say no such thing. Each involves a defendant who acquired a

copy or captured a video signal meant for the private noncommercial use of the

viewer, and instead that defendant made a commercial use of that copy (or

signal)—by selling it to the viewers in another form—without ever paying for that

right. See Warner Bros. Entm’t Inc. v. WTV Sys., Inc., 824 F. Supp. 2d 1003,

1006-07 (C.D. Cal. 2011) (DVD copies of movies purchased and transmitted

without authorization from data center to customers); On Command Video Corp. v.

Columbia Pictures Indus., 777 F. Supp. 787, 789-90 (N.D. Cal. 1991) (video

cassette copies purchased and transmitted without authorization from VCRs in

hotel equipment room to hotel rooms); Fox Television Stations, Inc. v.

BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138, 1140 (C.D. Cal. 2012)

(broadcast television captured by centralized pool of antennas then transmitted

without authorization over the internet).

The trouble in those cases was that those services’ initial (and only)

transmissions, unlike DISH’s initial transmission, were completely unauthorized.

But none of Fox’s cases addresses what happens when a defendant pays for the

commercial right to transmit and exercises it, then the subscriber engages in a

separate private noncommercial act to use that content. These cases do not answer

the question of whether a party can be held responsible for direct infringement


51

when its only allegedly unlawful act is providing customers with their own

software and equipment to engage in a private noncommercial use.

But other cases do answer this question. They make clear that supplying

equipment to consumers who can use it to perform is not the same as doing, or

authorizing, the act under § 106. Sony Corp. of Am. v. Universal City Studios, Inc.,

464 U.S. 417, 786 (1984). The rule holds whether the means is a VCR, a DVR, or

a Sling adapter. Id. (marketing and selling a VCR does not amount to authorizing

copying); Fox I, 2014 WL 260572 at *4-7 (offering time-shifting features is not

equivalent to copying); see Recording Indus. Ass’n of Am. v. Diamond Multimedia

Sys., Inc., 180 F.3d 1072, 1079 (9th Cir. 1999) (holding that changing formats for

use on mobile MP3 player is lawful, observing that “The Rio merely makes copies

in order to render portable, or ‘space-shift,’ those files that already reside on a

user’s hard drive. Such copying is paradigmatic noncommercial personal use

entirely consistent with the purposes of the Act”) (citation omitted). This Court

has even applied the principle to internet hyperlinks: “HTML instructions that

direct a user’s browser to a website publisher’s computer that stores [a]

photographic image …. [are] not equivalent to showing a copy.” Perfect 10, 508

F.3d at 1161. This is an easy case under Sony, Fox I, and Perfect 10. When a

customer decides to use Sling, the customer is the one sending the program. DISH,

therefore, cannot be liable for direct infringement.


52

2. As Fox has previously admitted, Sling is not a public performance.

Even if DISH were the one sending the second signal, Fox’s infringement

theory must fail because such place-shifting does not amount to a public

performance under § 106(4). Under the so-called “transmit clause,” transmitting is

not a “public performance” unless a transmission is made “to the public.”

17 U.S.C. § 101. But there is nothing “public” when a single customer sends

something to himself. It is quintessentially private. As this Court has explained,

“public performance at least involves sending out some sort of signal via a device

or process to be received by the public at a place beyond the place from which it is

sent.” Columbia Pictures Indus., Inc. v. Prof’l Real Estate Investors, Inc.,

866 F.2d 278, 281 (9th Cir. 1989) (emphasis added). It is undisputed that Sling

place-shifting is a single, discrete signal, with a potential audience limited to

members of a single subscribing household who have already paid for that content.

Such private events cannot be public performances under the copyright law. See

Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121, 136 (2d Cir. 2008). To

conclude otherwise is to read the words “to the public” out of the statute.

Outside this case, Fox has been taking that position to every court that will

listen. As noted above (at 32), Fox said it to the Second Circuit in late 2012 when

it argued American Broadcasting Cos., Inc. v. Aereo, Inc., 712 F.3d 676 (2d Cir.


53

2013). Sling was not at issue, but it came up anyway in an exchange between

Judge John Gleeson (sitting by designation) and Fox’s counsel:

Judge Gleeson: Are you familiar with the device called the Slingbox?

Mr. Smith: I am, your Honor, yes.

Judge Gleeson: Now, if I were able to afford one, it would allow me to be able to take a broadcast and convert it to something on my laptop.

Mr. Smith: It would allow you to take a broadcast and send it on to the internet to one of your devices, yes.

Judge Gleeson: That wouldn’t be a public performance, my viewing of it on my laptop would not be a public performance?

Mr. Smith: The use of Slingbox may or may not involve some copyright infringement. It would not be a public performance, that’s correct.

Judge Gleeson: The potential audience is just me.

Mr. Smith: That’s correct.

ER 1336-37 (emphasis added).

Then, just four days after filing its opening brief in this case, Fox told the

United States Supreme Court, in its reply in support of certiorari in the Aereo case

that “it is Aereo’s business model—and not distinct technologies that allow

individuals to access content they have already paid for—that is at issue here….

Aereo and those technologies do not stand or fall together.” Reply Br. for Pet’rs at

4, Am. Broad. Cos., Inc. v. Aereo, Inc., No. 13-461 (U.S. Dec. 23, 2013), 2013 WL

6729880, at *4 (emphasis added). It made the same point in yet another way in its


54

rehearing petition, assuring the Second Circuit that holding that Aereo is a public

performance “does not mean that all retransmissions of over-the-air broadcasts,

such as from an individual’s living room into a bedroom, would be ‘to the

public.’” Pet. for Reh’g at 9 n.5, Am. Broad. Cos. v. Aereo Inc., 722 F.3d 500 (2d

Cir. 2013) (No. 12-2807-cv) (Apr. 15, 2013) (emphasis added).

Ordinarily, one would chalk up the conflicting positions between Aereo and

this case to different teams of lawyers addressing the issue at different times. But

these were the same lawyers discussing the same issues for the same client at the

same time—often only days apart.

Despite all these public assertions about limits on the public performance

right, Fox now argues that this case is the same as Aereo (and its 54uthorize54er

BarryDriller). OB 60-61. As noted above (at 49-50), the defendants in those cases

capture television signals with a pool of small antennas housed at a remote

centralized location. They do not pay for the content. And then they transmit the

content over the internet to any viewer willing to pay subscription fees.

BarryDriller, 915 F. Supp. 2d at 1140-41. Two cases have found that this business

model is not a public performance, WNET Thirteen v. Aereo, Inc., 712 F.3d 676,

696 (2d Cir. 2013); Hearst Stations, Inc. v. Aereo, Inc., No. 13-11649, 2013 U.S.

Dist. LEXIS 146825, at *14-15 (D. Mass. Oct. 8, 2013), and two others have

disagreed, BarryDriller, 915 F. Supp. 2d at 1143, 1146; Fox Television Stations,


55

Inc. v. FilmOn X, No. 13-758, 2013 U.S. Dist. LEXIS 126543, at *42-43 (D.D.C.

Sept. 5, 2013), leading to a Supreme Court showdown this Term. Even if Fox and

the other networks prevail in that case, that result will not, as Fox has elsewhere

admitted, affect Sling. Reply Br. for Pet’rs at 4, Am. Broad. Cos. v. Aereo, Inc.,

2013 WL 6729880, at *4.

What Fox recognizes before every other court is that if personal one-to-one

place-shifting is not private, then nothing is. Fox’s reading here cannot be right

because the statute’s text clearly contemplates that some transmissions will be “to

the public” and some will not. That position reads the words “to the public” right

out of the statute. But those words cannot be ignored, so Fox’s reading fails. And

because Sling plainly is one-to-one and private, Fox’s claim fails too.

C. Fox Is Unlikely to Succeed on Its Contract Claims.

Fox devotes a scant two paragraphs to its contract claims. OB 56. They

merit so little space because it is almost impossible to secure injunctive relief on a

contract claim, Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1395-96 (9th Cir.

1984), and because the contract claims are so weak, both as to Hopper Transfers

and Sling.

Hopper Transfers. Fox argues (at 56) that Hopper Transfers breaches the

provision stating that DISH “shall not … authorize the … copying” of Fox

programming. But DISH does not “authorize” its customers to copy Glee simply


56

by supplying equipment that they can use to transfer it to another device any more

than a VCR manufacturer authorizes consumers to copy particular shows merely

by providing the machinery with which to tape it. That was why the district court

and this Court both rejected the argument that Fox made in Fox I, based on the

same provision, that DISH was copying programs by providing the PrimeTime

Anytime feature that consumers activate. Fox I, 2014 WL 260572, at *8.

Moreover, the very same sentence permits copying by “consumers for

private home use,” ER 434, which is all Hopper Transfers provides DISH

customers with the ability to do. Fox seems to be arguing (at 56) that “private

home use” means something like “private use inside of the home.” But “home” in

this context does not mean “where you live.” Just as you can do homework in the

library and restaurants can serve home cooking, the word here is simply designed

to signify private noncommercial uses, as distinguished from public or commercial

ones. This dichotomy parallels the “homestyle exemption” in the Copyright Act,

which provides that the public performance right is not violated by television

viewing in a public place on a single receiving device of a type customarily used

for private viewing. In other words, your lap is not a “public place” just because it

is sitting in an airport with a laptop on it. 17 U.S.C. § 110(5).

Sling. Fox claims that Sling violates two provisions in the parties’ contracts.

It is wrong on both—and for some of the same reasons.


57

Fox first maintains (at 56) that DISH is violating a provision in the 2002

RTC Agreement that prohibits DISH from “57uthorize[ing] the … retransmission”

of Fox’s signal. ER 434. This is incorrect under the same “authorization”

principle noted immediately above: DISH is not authorizing any particular show

to be sent to any particular place just by supplying Sling functionality.

Fox is also reading the contract incorrectly. While the signal being sent

from the consumer’s set-top box to her iPad is distinct from DISH’s satellite

transmission to the set-top box, see supra at 46-48, it is not a “retransmission”

within the meaning of the contract. Sections 119 and 122 of the Copyright Act

grant DISH (and other satellite and cable companies) a compulsory license to

retransmit Fox’s signal (and those of other broadcast networks), so long as DISH

satisfies certain conditions and works out mutually satisfactory terms in a

Retransmission Consent Agreement, which it has. The retransmission that the

statute refers to, and that the contract has in mind, is a multicast transmission

provided to numerous customers. That provision merely forbids DISH to authorize

another provider to retransmit Fox’s signal to others. In other words, the provision

prohibits DISH from sublicensing its license. It does not prohibit DISH from

furnishing customers with devices that they can use to send the signals from their

set-top boxes to themselves.


58

That is why its own executives admitted in private internal correspondence

that Fox | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

ER 1477. It is also undoubtedly why Fox did not sue in the five years after DISH

acquired Sling in 2007, despite the fact that the 2002 Agreement was in effect at all

times. Fox’s conduct is the best reflection of its understanding of the 2002

Agreement. See IBJ Schroder Bank & Trust Co. v. Resolution Trust Corp., 26

F.3d 370, 374 (2d Cir. 1994) (internal quotation marks omitted).

For similar reasons, Sling does not violate the language in the October 2010

Agreement providing that | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | ER 455. This provision prohibits DISH from substituting

the internet for its satellite system as its means of delivering Fox’s broadcasts to

subscribers. As explained above (at 46-50), it is inapplicable to these features

because DISH does not do the place-shifting when customers use Sling and Hopper

Transfers—its customers do. And as discussed above (at 10-11), the parties

included the next sentence of the agreement to protect these customers’ | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The

provision simply does not prohibit Sling or Hopper Transfers.

III. FOX CANNOT ESTABLISH THE OTHER FACTORS REQUIRED FOR INJUNCTIVE RELIEF.

The balance of the hardships weighs heavily against injunctive relief.

Again, Fox is done in by its extraordinary delay. Sling technology has been used


59

by DISH’s customers for years. Sling Media has sold | | | | | | | | | | | | | | Slingboxes

and Sling Adapters, and DISH has distributed | | | | | | | | | ViP 922 Slingloaded

DVRs. ER 927-28. Fox’s proposed injunction would essentially require DISH to

rip Slingboxes, Sling Adapters, and Slingloaded DVRs out of its customers’

homes. ER 909. Thus, Fox asks not to preserve the status quo, but to alter it

dramatically. Mandatory injunctions like this “should not be issued unless the

facts and law clearly favor the moving party” and “are not granted unless extreme

or very serious damage will result.” Anderson v. United States, 612 F.2d 1112,

1114-15 (9th Cir. 1980). Fox does not come close to this showing.

The public interest also favors DISH. Sling and Hopper Transfers are

important technological innovations, facilitating consumer choice, connectivity,

mobility, and speech. Against this, Fox asserts nothing but the abstract public

interest in preventing copyright infringement. Fox is out for Fox, and Fox alone.

Its attempts to hamper technological innovation and curb consumer choice are

against the public interest. See Gen. Motors Corp. v. Harry Brown’s, LLC, 563

F.3d 312, 321 (8th Cir. 2009) (noting public interest in “consumer choice”).


CONCLUSION

For the foregoing reasons, this Court should affinn the district court's order

denying Fox's request for a preliminary injunction.

Annette L. Hurst William A. Molinski ORRICK, HERRlNGTON & SUTCLIFFE LLP

405 Howard Street San Francisco, CA 94105

Mark A. Lemley Michael Page DURIE T ANGRI LLP 217 Leidesdorff Street San Francisco, CA 94111

E.,Ypshua Rosen]p;afiz P~ter A Bicks/,.. ..

Elyse D. Echtman Lisa T. Simpson ORRICK, HERRINGTON & SUTCLIFFE LLP 51 West 52nd Street New York, NY 10019


60


STATEMENT REGARDING ORAL ARGUMENT

Pursuant to Federal Rule of Appellate Procedure 34(a), Appellees submit

that oral argument is not necessary to decide the issues in this case. But, should

the Court grant Appellants’ request, Appellees ask that the Court afford them

argument time as well.

Dated: February 14, 2014 Respectfully submitted,

s/ Annette L. HurstAnnette L. HurstORRICK, HERRINGTON & SUTCLIFFE LLP405 Howard StreetSan Francisco, CA 94105



CERTIFICATE OF RELATED CASES

Pursuant to Ninth Circuit Rule 28-2.6, I state that there are no related cases

pending in this Court.

The parties have litigated one prior appeal in this case, Fox Broad. Co. v.

DISH Network L.L.C., No. 12-57048. That appeal also concerned the denial of a

motion by Plaintiffs-Appellants to enjoin certain features Defendants-Appellees

offer in the DVRs they provide to their customers. In both motions, Plaintiffs-

Appellants invoke 17 U.S.C. § 106 of the Copyright Act and the same provisions

of the parties’ contractual agreements. This Court’s amended judgment affirming

the district court was filed on January 24, 2014, and the mandate issued February

4, 2014.





CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Fed. R. App. P.

32(a)(7)(B) because this brief contains 13,939 words, excluding the parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this

brief has been prepared in a proportionally spaced typeface using Microsoft Word

14 point Times New Roman font.





CERTIFICATE OF SERVICE

I hereby certify that I electronically filed the foregoing with the Clerk of the

Court for the United States Court of Appeals for the Ninth Circuit by using the

appellate CM/ECF system on February 14, 2014, which will accomplish service on

all counsel who are registered to receive service via CM/ECF.

I further certify that on February 14, 2014, a copy of the foregoing was

served by U.S. mail on:

Paul M. Smith via U.S. mailJENNER & BLOCK LLP1099 New York Avenue, NWSuite 900Washington, DC 20001

Respectfully submitted,




fox v. dish - brief of defendants-appellees

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