Watching a television program only to have it cut to commercial during a dramatic scene has always been a frustrating, yet accepted, experience for those of us watching primetime television - until now. The Dish Network recently released technology which allows viewers to skip through commercial breaks, much to the dismay of broadcast networks, and has led to a legal battle attempting to prevent its use.

The Dish Network (“Dish”) is a television service provider based in the United States which retransmits the broadcast signal of networks such as Fox, ABC, NBC and CBS to Dish subscribers.  In 2012 Dish introduced “the Hopper”, its new DVR and Video-on-Demand system. This system came with a feature known as “PrimeTime Anytime” which allows the user to record primetime programming, if the feature is enabled. Later that year Dish released another feature to the Hopper called the “AutoHop” which, if selected, skips over the majority of the commercial breaks of some primetime programs recorded by Primetime Anytime.

The release of this program resulted in controversy covered by the IPilogue last summer. Fox later sued Dish for copyright infringement and breach of contract in the District Court and attempted to obtain a preliminary injunction against the device's feature. The California Central District Court refused to grant this remedy and last week the United States Court of Appeals affirmed this decision.

In order to obtain a preliminary injunction in the United States, the claimant must be able to prove, among other items, that the claim will succeed on its merits. The Appellate court held that the District Court did not err in holding that Fox was unlikely to succeed on the claim of direct copyright infringement or secondary copyright infringement of their broadcast television programs.

The reasoning of the Appellate Court regarding the copyright arguments is based on the fact that direct infringement of the reproduction right would require copying by Dish. The AutoHop technology, however, only creates a copy in response to the user’s command. The user, therefore, causes the copies to be made. Since direct infringement looks at who made the copies, and Dish is not in a position to engage in the creation of a copy, the claim would necessarily fail.

Secondary liability for copyright infringement requires direct infringement by a third party. There was a prima facie case of direct infringement by a third party (Dish customers) and the burden was therefore on Dish to prove that this use fell within the exception of  "fair use,” similar to the Canadian Copyright Act exception to infringement in “fair dealing.” The District Court accepted Dish’s arguments outlining the likelihood of success of the consumer’s fair use defense. The court found that the purpose and character of the use was for a non-commercial, non-profit activity and that the application of the program simply enabled the consumer to see the work which he or she was already entitled to.

In examining the final step of the “fair use” test, the court looked at the effect of the use on the potential market for, or value of, the copyright-protected work. The court noted that Fox only owns the copyright interest to the television programs and not to the commercials which play during the break. On this basis it was determined that the analysis of market harm should necessarily exclude any consideration of the commercial-skipping feature of the Hopper as it does not implicate the copyright interests of Fox. Since Fox does not charge licence fees for providers offering their television programs as long as they disable a commercial-skip feature, the court found it unlikely that merely copying this work would cause any market harm. As a result, this use successfully fell within the copyright exception of “fair use.”

With this last refusal to grant an injunction the case may now proceed to trial, the outcome of which may substantially alter the broadcast industry. The AutoHop takes away incentive for advertisers to place ads in primetime shows and, as such, is set to considerably diminish advertising revenue for many networks. This technology represents such a threat that this may lead to two of the big four networks pulling their free over-the-air signal and become accessible through cable only. The climax is sure to be dramatic, and we've got our popcorn ready.