How, Exactly, is Dish’s Auto Hop Illegal?

Over the past few months, Dish Network has come under significant scrutiny by the entertainment industry, press, and analysts for an innovative primetime recording and commercial-skipping feature it introduced in its new, whole home DVR. The networks have filed lawsuits and publicly admonished Dish, citing infringement and unlawful re-broadcasting. The press—while acknowledging the unarguable consumer benefits—appears to have written this off as something the courts are likely to crush. Even The Digital Media Zone’s own writers and show hosts disagree significantly on who’s in the right and who’s wrong here. But after reviewing the reports, filings, and patents behind this issue, I’m left asking, “how is this illegal?”

Background

Dish Network introduced Hopper, a whole-home DVR solution, in early January of this year at the Consumer Electronics Show. Hopper and its multi-room extender box, the Joey, let consumers watch live and locally-recorded television programming on multiple TVs throughout a home. We were particularly intrigued by Hopper’s innovative, new feature, PrimeTime Anytime, which optionally allows consumers to automatically record nearly all primetime shows every night on the four major networks’ local affiliates, retaining them to view for up to eight days.

Dish brought Hopper to market in March, following shortly thereafter with an additional new feature in May, Auto Hop. Auto Hop lets customers optionally skip commercials when playing back shows the day after they’ve been recorded by Hopper’s PrimeTime Anytime feature.

With consumers rejoicing and the press showering Dish’s innovations with praise, it took the major networks less than two weeks to start publicly reviling Dish and seeking legal guidance. Anticipating the impending storm, Dish pre-emptively filed for declaratory judgement and relief against the networks and a trial by jury. Within hours (minutes, actually), Fox, NBC, and CBS all filed suits against Dish.

Major Disruption

There’s no doubting that Dish’s PrimeTime Anytime and Auto Hop features are disruptive. PrimeTime Anytime lets consumers automatically record and watch nearly any of the last week’s primetime shows on demand. That’s a convenience the networks just don’t want you to have. Networks typically embargo new shows for 24 hours after they were originally aired, and even the networks’ own over-the-top venue, Hulu, has been forced into limiting in-week viewing to paid customers only.

Add Auto Hop into the mix, and now we’re talking about a serious disruption of the networks’ primary business model—advertising. With one setting, Dish customers can watch any show recorded by Hopper’s PrimeTime Anytime feature without commercials, as long as they watch it after 1:00 a.m. eastern time, the day after it was recorded.

DVR manufacturers have been offering 30-second skip features in their products for years, but Hopper is the first mainstream product with automatic skipping built right in. Cue the entertainment industry’s ire. And that’s entirely understandable. The music industry has been struggling for years to adjust to today’s digital distribution models; the movie industry—despite many consecutive years of record growth—continues to whine about piracy and the devaluation of content caused by the home video market; and the TV networks are still trying to find a formula that allows them to remain profitable while getting closer to the any-show-any-time-on-demand model that consumers are demanding.

So yes, automatic commercial skipping is a huge disruption to the broadcast networks’ business model, and Peter, Jeff, Les, and Bob, along with their respective boards and stockholders have every reason to be hopping mad about it. But how does that make it illegal?

The Claims

FOX Broadcasting was the first to file suit, just 29 minutes after Dish’s request for declaratory judgment. Their filing cites copyright infringement and breach of contract and argues that the Hopper’s PrimeTime Anytime feature is largely controlled by Dish and therefore shouldn’t be considered a DVR [or, presumably, be afforded any of the fair use precedents currently enjoyed by consumer DVRs]. Instead, they claim that Dish is creating and storing “bootleg” copies to create its own on-demand service. They also argue that commercial skipping circumvents FOX’s business model, and they even drag Sling back into the mix.

NBC followed less than an hour later with its suit, citing numerous complaints of copyright infringement. And less than an hour after that, CBS submitted its own filing, which, like NBC’s, cites copyright infringement, inducement of copyright infringement, contributory copyright infringement, and vicarious copyright infringement.

My Analysis

As I understand it, the complaints brought against Dish boil down to whether the technology behind Hopper and its PrimeTime Anytime and Auto Hop features violate negotiated re-broadcasting rights and copyrights.

Dish’s filing asserts that they have re-broadcasting agreements in place with all of the appropriate parties, and that the method by which customers can record primetime programming with PrimeTime Anywhere doesn’t infringe upon those agreements. The complaints against Dish, however, claim that because of the automatic nature of and segregated storage for PrimeTime Anytime, consumers aren’t actually recording this content themselves—Dish is. And thus, they argue, Dish is really offering an unlicensed on-demand video service.

I’m not a lawyer, nor am I a patent expert, but I do know how a DVR works, and that sounds like a twisted load of crap. PrimeTime Anytime is a feature that customers can optionally enable or disable. If enabled, it essentially creates what many DVR owners might think of as a “Season Pass” for everything on Prime Time. Whoa…that has to be a violation of something, right?

Then there’s the (presumably stronger) copyright argument. From everything I’ve read, the complaints about copyright violation come down to whether Dish is altering the content they have licensed for re-distribution. If Auto Hop in any way modified the recorded content, then this might be a concern. But the patent behind Dish’s commercial skipping technology show that’s simply not the case. The Hopper creates a commercial time index that it stores separately from the original program. The original program and recording is unaltered in any way. On playback, however, if the customer has Auto Hop enabled, the Hopper uses the separate time index data to jump over the recorded commercials. Customers can still watch the commercials, if they so choose, because they’re still there…unaltered.

And So It Begins

Judge Laura Taylor Swain denied Dish’s declaratory judgment claims, allowing the lawsuits against Dish to go forward. In fact, an initial discovery hearing was held this past week on August 1, at which Judge Swain directed the forthcoming submission of all functional requirements documents by Dish.

I’ve read the filings by Dish and the networks, and I’ve reviewed the patents behind the technologies in question. As I said before, I’m not a lawyer, and I’m not a patent expert. I do, however, understand how DVR technology works, and it seems to me, from the arguments in the networks’ complaints, that they are hoping or assuming the court does not.