Your old Betamax recorder may be technologically obsolete, but it’s still legally relevant. Betamax was part of a landmark copyright case nearly thirty years ago that held users could record broadcasted TV shows to watch at a later time. Due in part to that case, 21st Century Fox recently lost an appeal to overturn a lower court decision that denied Fox’s efforts to enjoin Dish Network’s DVR services known as the “Hopper”.
The Hopper acts, in many ways, like a modernized Betamax device: it allows Dish subscribers record TV shows for later viewing – a function called “time-shifting”. But, unlike the Betamax, the Hopper has an added feature – the “AutoHop”—that automatically skips over commercials in the recorded programming.
Fox claims that the satellite provider’s Hopper service infringes Fox’s copyrights in the programs broadcasted on the Fox Network. Last fall, a California district court judge refused to grant Fox an injunction early in the lawsuit that would keep Dish from offering the Hopper service. The lower court found that Fox failed to offer enough evidence to show it had a good shot at winning the case. The appeals court agreed.
Let’s pause and rewind a minute for some context.
Time-shifting is nothing new. Betamax offered the feature in the late 1970s – and it’s now offered by a variety of software developers, hardware vendors (like TiVo), and cable services (like Time Warner).
Copyright owners (like Fox) have long bristled at content recording devices. From their perspective, recording the content violates a key right protected by copyright – the right of reproduction. The Supreme Court weighed in on the debate in a 1984 decision involving the Betamax. According to the Court, individuals who record shows for personal use and later viewing are protected from copyright infringement by fair use. And, manufacturers of those devices like Betamax can’t be held liable for infringement simply because individuals choose to use the device in that way.
Fast-forward to the Hopper case.
Fox first claimed the ad-skipping device directly infringed its copyrighted programming, that it went beyond other “time-shifting” technologies blessed by courts. At least in part, the lower court agreed that Dish exercises some discretion over the copying process. Dish can decide how long copies are available for viewing, adjust the start and end times of the primetime block, and prevent users from stopping a copy from being made once the recording starts. But, according to the court, the evidence Fox presented didn’t necessarily prove that Dish crossed the line to direct infringement. Ultimately the user, not Dish, must take the initial step to activate the recording. Strike one against the preliminary injunction.
Fox then claimed the Hopper constituted contributory infringement. To prove it, Fox had to show that Dish’s subscribers infringe the copyright. Dish cited the Betamax decision to show its subscribers’ copying for time-shifting purposes was a “fair use”. The court agreed. Plus, although the Betamax decision didn’t directly address ad-skipping, the court reasoned if recording an entire copyrighted program for private use is protected by fair use, skipping the ads doesn’t transform it into a copyright violation. Strike two.
But the court left open a window for Fox’s copyright infringement claim. To ensure AutoHop removes only commercials and no portion of the scheduled programming, Dish employees review a “quality assurance” copy of the recordings. According to the court, because this quality assurance copy isn’t made for personal use or time-shifting purposes, it’s not necessarily protected by fair use and may be infringing. Even still, the court felt damages would suffice to right this possible wrong – an injunction would be overkill. And that’s strike three against the injunction.
For now, this potentially lucrative ad-skipping service will stay on the market. But stay tuned – this case could have a major impact on how we watch TV.