F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

F O X B R O A D C A S T I

N G C O M P A

N Y , I N C .; T W E N T I E T H C E

N T U R Y F O X F I L M C O R

P O R A T I O N ; F O X T E L E V I S I O N H O L D I

N G S , I N C ., Plaintiffs-Appellants

,

v

.

D I S H N E T W

O R K L .L .C.; D I S H N E T W O R K C O R P O R A T I O N , Defendants-Appellees

. N o. 12-57048

D.C. No. 2:12-cv-04529- DMG-SH

ORDER AND AMENDED OPI NI ON

A ppeal from the United States District Court for the Central District of California Dolly M. Gee, District J udg e, Presiding

Arg ued and Submitted J u ne 4, 2013—Pasadena, California

F iled J uly 24, 2013 A mended J anuary

24, 2014

B efore: Sidney

R. Thomas, B arry

G. Silverman, and Ray mond C. F isher, Circuit J udg es.

Opinion by

J udg e ThomasF O X B R O A D C A S T I

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SUMMARY *

C opyright / P relim inary Injunction

The panel filed an order deny in g p e titions for panel rehearing a n d r ehearing en banc and amending its opinion affirming the district court’s d enial of a broadcaster’s request for a preliminar y i n

junction in a copy

rig ht infring ement

a ction reg a

rding a pay television p rovider’s products t h at skipped over commercials.

I n its amended opinion, the p a n e l h eld that the district
court did not abuse its discretion in holding that the broadcaster failed to demonstrate a likelihood of success on its copy rig ht infring ement a

n d breach of contract c laims
reg arding the television provider’s impleme n tation of the commercial-skipping products. As to a direc t copy rig ht infring ement c laim, the record did not establish that the provider, rather than its customers, made copies of television
prog r ams for viewing

. The broadcaster did n ot establish a likelihood of success on its claim of secondary infring ement because, althoug h it established a p r i m a facie case of direct infring ement by customers, the television provider showed that it was likely to succeed on its affirmative defense that the customers’ copy ing was a “fair use.” Apply ing a “very deferential” standard of review, the panel concluded that the district court di d not a buse its discretion in deny ing a preliminary injunction based on the alleg e d c o ntract b reaches.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.F O X B R O A D C A S T I

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The panel also he l d t h at the broadcaster failed to demonstrate a likelihood o f irreparable harm from the provider’s creation of television-show copies u sed to perfect the functioning of one of its commercial-skipping products.

COUNSEL

Paul M. Smith ( arg ued), J e n n e r & B lock L L P, New York, New Y ork; Richard L

. Stone, Andrew J

. Thomas, D av id R. Sing er, and Amy M. G alleg os, J enne r & Bl o ck L L P, L os Ang eles, California, for Plaintiffs-Appellants.

E. J oshua Rosenkranz ( a rgued), Peter A. B icks, Ely se D

. Echtman, and L isa T. Simpson, Orri c k

, Herring ton & Sutcliffe L L P, New York, New York; Annette L

. Hurst a nd W illiam A. Molinski, Orrick, Herring ton & Sutcliffe L L P, San F rancisco, California; Mark A. L emley and Michael H

. P age , Durie T ang ri L L P, San F rancisco, California, for Defendants-Appellees.

Robert A. L o ng , J ennifer A

. J o hnson, and David M. Z ionts, Coving ton & B urling L L P, W ashing ton, D.C., for Amici Curiae AB C Television Affiliates Association et al.

J effrey A. L amken and Robert K. Kry
, MoloL a mken L L P, W a shing ton, D.C., for Amicus Curia e Cablevision Sy stems Corp.

Mark J

. Prak, Charles F. M a rshall, J u lia C. A mbrose, a nd L aura S. Chipman, B rooks, Pierce, McL endon, Humphrey & L eonard, L L P, Raleig h, North Carolina; J ane E. Mag o, J erianne T immerman, B art String ham, and B enj a m i n F

. P. I vins, National A ssociation o f B roa dcasters, Washing ton,F O X B R O A D C A S T I

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D.C., for Amicus Curiae National Association o f B roadcasters.

Kelly M. K laus a

nd J onathan H. B lavin, Mung er, Tolles & Olson L L P, L o s Ang eles, California, for Amici Curiae Paramount Pictures Corp. et al.

Seth D

. Greenstein and R o b er t S. Schwartz

, Constantine Cannon L L P, W ashing ton, D.C., for Amici Curiae Computer & Communications I ndustry Association et al.

Mitchell L

. Stoltz and Cory nne McSherry

, Electronic F rontier F ound a tion, San F rancisco, California; J ohn B e rg may er, Public Kn o w ledg e, W a shing ton, D.C.; B etsy Rosenblatt, Org a niz ation for Tr an s formative W orks, New York, New York, for Amici Curiae Electronic F rontier F oundation et a l.

J ason Schultz

, Samuelson L aw, Technolog y & Public Policy Clinic, University of California, B erke l e y , School of L aw, B erkeley

, California, for Amici Curiae law scho l ar s a nd professors.

ORDER

The opinion f

iled J u ly 24, 2 013, 723 F .3d 1 0 67, i s amended as follows:

At 723 F .3d 1 067, 1074, a t the end of the first parag raph, f o llowing the parenthetical “ (quoting Prosser & Keeton o n Torts § 42)” insert the following as a footnote:

Althoug h the district court misquoted Prosser & Keeton’s treatise, it did not abuse i t s d iscretion in concluding that theF O X B R O A D C A S T I

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user is “the most ‘sig n ificant and important’ cause of the
copy .”

W ith the opinion as amended, the panel has unanimously voted to deny the petition f or rehearing

. J udg es Thomas a nd Silverman voted to deny the p etition for rehearing en banc and J u dg e F isher recommended voting to deny the petition for r ehearing en banc. The f ull court has been advised of the
pe t ition for r ehearing e n banc, and no judg e of the court has requested a vote on the petition for rehearing en banc. Fe d

. R. App. P. 35(b).

The petition for r ehearing and t h e petition f or rehearing en banc are DENIED

.

No further petitions for re hearing or rehearing en banc will be entertained.

OP INION

THOMAS, Circuit J udg e :

Dish Network offers two marsupial-inspir e d products: the “Ho p p er,” which “ h o ps” over commercials, and a companion box known as a “ J o ey .” F ox B roadcasting Company claims th es e products are c ontractually o ut o f bounds and constitute copy ri g ht infring ement. The district
court d enied the broadcaster’s request for a preliminary injunction. W e have jurisdiction under 28 U.S.C. § 1292, a nd we affirm.F O X B R O A D C A S T I

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I

Plaintiffs F ox B roadcasting Company
, Twenti e t h C e n t ury F ox F ilm Corp., a

nd F o x Television Holding s , I nc. (collectively , “F ox ”) own the copy rig hts to television shows that a ir on the F ox tel e v i s i o n network. I ts primetime lineup i n c ludes shows such as Glee

, Bones
, The Simpsons
, a n d Family Guy

. F ox contracts w ith cable and satellite television service providers to retransmit F ox ’s broadcast sig nal for the
customers of these providers, k n own a s multichannel video
prog r amming d istributors. Some such distributors also offer F ox prog ramming via video on demand. F ox separately licenses its shows to c ompanies such as Hulu, Apple, Netflix

, and Amaz on, which sell F ox prog r ams online or stream them over the I nternet.

One distributor that F ox contracts with is Dish Network, the third-larg est pay television service provider in the United States. Dish retransmits F ox ’s broadcast sig nal under a 2002

c ontract with Dish’s former parent company and current technol o gy vendor, EchoStar Technolog ies. Among other thing s, the contract provides that D i s h s hall not “distribute” F ox prog rams on a

n “ interactive, time-delay ed, vide o-ond e m a nd or similar basis,” thoug h Dish may “connect[ ] i t s Subscribers’ v ide o r eplay e quipment.” Dish also cannot “rec o rd

, copy , duplicate and/or authoriz e the recording

, copy ing

, duplication (other than by consumers for private home use) or retransmission” of any part of F ox ’s sig n al.

F ox and Dish hav e a m e n ded this c ontract several times,
most recently in a 2010 letter ag reement. U nder that
ag reement, Dish could provide F ox V ideo On Demand to its

s u b scribers, but Dish had to “disable fast forw a r d functional i t y during a ll advertisements”; the contract statedF O X B R O A D C A S T I

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“such fast-forward disabling is a necessary c ondition to distribution o f t h e F ox broadcast content via [ video on demand] .” The 2010 ag reement also forbids F o x and Dish fr o m a ttempting to “frustrate or c ircumvent” the contractual rig hts.

I n March 2 012, Dish r eleased to its customers the Hopper,

a set-top box with dig ital video recorder (DVR) a nd video on demand c apabilities. The Hopper provides service t o u p to four televisions in a home using companion box es (known a s J oey s) w ired to each televisio n

. D ish customers can also watch H opper content on their computers and mobile devices using a product called the Sling Adapter.

At the same time it released the H opper, Dish introduced

a feature called PrimeTime Any time t hat works only on the Hopper. PrimeTime A ny time allow s a s u bscriber to set a sing le timer to record any and all primetime prog ramming on the four major b roadcast networks ( includi n g Fo x ) every nig ht of the week. To enable PrimeTime Any time, a Hopper

user presses the “*” button on the remote control to reach the PrimeTime Any

time setup screen. The user selects “Enable,” and a new menu appears w h er e the viewer can disable recording s of certain networks on c e r t a in day s of the week and chang e the leng th of time that t h e shows are saved (between two and e ig ht day s). B y de f a u l t , PrimeTime Any time records primetime shows on all four n etworks e ach nig ht of the week and saves all recording s for eig ht day s. 1

1 P rio r to J u ly 2 0 1 2
, a v iew er w h o en ab led P rim eT im e A n y tim e co u ld

n o t d eselect an y n etw ork s o r d ay s o f th e w eek

, an d c o u l d n o t sav e

reco rd in g s f

o r f ew er th an eig h t d ay s. T h e d istrict co u rt “ ex am i n e[d ] th e p ro p riety o f th e Ho pp er f

eatu res in th eir cu rren t f

o rm , as Dish h as stated th at i t h as n o p lan s to retu rn to its p re- J u l y 2 0
, 2 0 12 p ractices.” Fo xF O X B R O A D C A S T I

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Dish determines the start and end time of the PrimeTime Any time recording s each nig h t and sometimes a lters these times to record pro g ramming outside the traditional primetime window of 8 p .m. to 1 1 p.m. Eastern and Pacific time Monday throug h Saturday and 7 p.m. to 11 p.m. on Sunday (Primetime starts a nd ends one hour earlier i n the Mountain and Cent r a l time z ones.). F or instance, Dish altered the times to accommodate Oly mpic prog ramming on NB C in su m m e r 2012. I f a t least half of a prog ram f alls within the primetime window, Dish includes the entire show in the PrimeTime Any

time recording

.

A user may start watching recorded prog rams immediately after PrimeTime A ny time starts recording

. The

user must enable Pr i m e Ti me Any time at least 15 minutes before the primetime recording beg ins and can cancel a PrimeTime Any

time recording u

p t o 15 minutes b efore the recording b e gi n s ; after that, a u ser can n o long er cancel that day ’s PrimeTime Any

time recording

. All PrimeTime Any

time recording s are stored locally on

a customer’s H o p p e r for the preselected number o f day s (ty pically eig ht), at which time they are automatically deleted. B efore th a t time, a customer cannot actually delete

or save a PrimeTime Any time recordi n g. Rather, if the
customer selects “Save” o r “Save Series” from the PrimeTime A ny

time menu, an icon is created in the customer’s “ My Recording s” folder, but the icon i s s imply linked to the PrimeTime Any time recording until the time o f automatic d eletion, at which time a duplicate copy is c reated. Similarly

, if a customer “deletes” a show recorded throug h

Bro a d

. Co

. v. Dish Netwo rk, LLC
, 9 0 5 F. Su p p

. 2 d 1 0 8 8
, 1 0 94 n .6 (C.D. Cal. 2 0 1 2 ).F O X B R O A D C A S T I

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PrimeTime Any

time, the icon for that show disappears from the user’s g raphical user interface, but the recording remains

on the customer’s hard drive until it is automatically deleted.

Dish c ustomers can also use the H opper to access pay

per-view m o v ies v ia video on demand, but Dish does not offer video on demand from a n y o f t h e four broadcast
networ k s, including F ox

. Video on demand recording s a re stored on the user’s hard drive in a f i l e directory separate from the PrimeTime Any time and DVR recording s.

I n May 2 012, Dish started offeri n g a new feature, AutoH op, that allows u sers to automatically skip commercials. AutoHop is only a vailable on shows recorded using PrimeTime Any

time, ty pically on the morning after the live broadcast. I t is not available for all primetime prog r a ms. W h en a user play s b ack a PrimeTim e A ny time r ecording

, if AutoHop is available, a pop-up screen appears that allows the

user to select the option to “automatically ski p o ver” commercial breaks. B y

default, AutoHop is not selected.

I f a customer enables AutoHop, the viewer sees only the first a nd last few seconds of e ach commercial break. A red kang aroo icon a p p ears in the corner of the screen to demonstrate that AutoHop is skipping commercials. Unlike the 30-second skip feature available o n many D V R s , once a

user has enabled AutoHop, the u ser does not press a ny thing
to skip throug h commercials. Au t oHop does not delete commercia ls from the r ecording

. Customers can see the commercials if they manually r e w i n d or fast-forward into a commercial break.

To create the AutoHop functionality

, Dish technicians in Chey enne, W y oming manually view F ox ’s p rimetimeF O X B R O A D C A S T I

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prog r aming each n i gh t and technolog ically mark the beg inning and end of each commercial. The prog ram c ontent is not altered in any way

. The electronically marked files a re then u plinked in W y o ming a

nd eventually transmitte d to subscribers in an “announcement” f i l e that Dish makes available to subscribers after the show ha s a ired. Simultaneously with the uplink, three “beta H oppers” record the F ox primetime b lock f o r transmissions in Kentucky

, Pennsy lvania, and F lorida to test the marking a nnouncement. These copies remain at the uplink facility and a r e u sed to make sure the c ommercials have been accurately marked a nd that no portion of the prog r am has been cut off.

F ox sued Dis h f

or copy rig ht infring e ment and breach o f
contract and soug h t a preliminary injunction. The dis t rict
court denied the motion. Fox Broad

. C o. v

. D ish Network, LLC
, 905 F

. Supp. 2d 1088 (C.D. Cal. 2012). I t held that F ox did not d emonstrate a likelihood of succ ess on most of its
copy rig ht infring ement and contract claims. The ex ceptions

were F ox ’s claims reg arding the q uality assurance copies. I n making these copies, the court held, Dish likely breached its
contract with F ox and directly infring ed F ox ’s reproduction rig hts. Id. at 1102–06, 1108. Nonetheless, the court held that F ox was not entitled to an injunct i o n b e cause it f a iled to establish th a t i t would likely suffer “irreparable harm” a s a result of those copies. Id. at 1109–11.

To obtain a preliminary injunction, F ox must demonstrate that ( 1) it is likely

to succeed on the merits, (2) it is likely to suffer irreparable h arm in the absence o f preliminary relief, (3) the b alance of equities tips in its favor, and ( 4 ) a nF O X B R O A D C A S T I

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i n j u n ction is in the public interest. W inter v. Natural Re s

. Def. Council, Inc. , 555 U.S. 7, 20 (2008). 2

W e review the denial o f a p reliminary injunction for an abuse of discretion. Per

f e c t 1 0, Inc. v. Amazon.com, Inc.
, 508 F .3d 1146, 1157 (9th Cir. 2007). F actual findin gs a re reviewed for clear error, and leg al conclusions a r e reviewed d e novo. Id. W e do not r everse “simply b e cau s e t h e appellate court would h ave ar r i v e d at a different result if it had applied the law to the facts of the case.” Sports F o rm, Inc. v. United Press Int’l, Inc.
, 686 F .2d 750, 7 52 ( 9 th Cir. 1982); see also Un ited States v. Hinkson

, 585 F .3d 1247, 1261–62 (9th Cir. 2009) (en banc).

Apply ing this deferential standard of review, we h old that the district court did not abuse its discretion in holding that F ox did not demonstrate a likelih o o d of success o n its
copy rig ht infring ement and breach of contract c laims
reg arding Dish’s implementation of PrimeTime Any time a nd AutoHop. F urthermore, the district court d i d n o t err in holding that F ox did not demonstrate a likelihood o f irreparable harm from Dish’s creation of the “quality

ass urance” copies u sed to p e r fect the functioning o f AutoHop.

2 A ltern ativ ely

, a p lain tif

f m ay ob tain an in

j u n ctio n if it d em o n strates (1 ) serio u s q u estio n s g o in g to th e m erits, (2 ) a b alan ce o f h ard sh i p s th at tip s sh arp ly to w ard s th e p lain tif f

, (3 ) a l ik elih oo d o f i rrep arab le in j u ry , an d (4 )
t h e in j u n ctio n i s in th e p u

b lic in terest. Allia n ce fo r th e W i l d Ro ckie s v

. C o t t rell

, 6 3 2 F.3 d 1 1 27
, 1 13 5 (9 th Cir. 2 0 1 1 ). B ecau se F o x d o es n o t arg u e th at th e b alan ce o f h ard sh ip s tip s sh arp ly in its f av o r, w e d o n o t

co n sid er its claim s u n d er th is stan dard

.F O X B R O A D C A S T I

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II

A

The district court did not a buse its discretion in ho l d i n g that F ox was unlikely to succeed o n its claim o f direct
copy rig ht infring ement reg arding PrimeTime Any time. “To establish a claim of copy

r ig ht infring ement by

reproduction, the plaintiff must show ownersh i p o f the copy rig ht a nd
copy ing b y the defendant.” Kelly v. Arriba Soft Cor p. , 336 F .3d 811, 817 (9th Cir. 2 003); s e e a lso 1 7 U .S.C. §§ 106(1), 501(a).

I n this c ase, the district court determined that F ox h ad demonstrated ownership o f the copy rig hts of some of the shows. The court then f

o cused o n who made the copies o f F ox prog rams using P r i m eTime Any time: Dish or its
customers. T he district court noted that the Second C i r cuit had considered a similar q uestion in Cartoon Network LP v

. CSC Holdings, Inc. ( “Cablevision”)

, 536 F.3d 121 (2d Cir. 2 008). T he Second Circuit c oncluded that Cablevisio n ’s remote-storag e DVR sy stem did not d irectly infring e the plaintiffs’ c opy

rig hts. Unlike a ty

pical DVR sy ste m , i n which a customer’s remote sends sig nals to the set-top box in her h ome, users of Cablevision’s remote-storag e DVR sy stem sent sig nals to Cablevision’s central facility

, where a copy o f the prog ram the viewer selected was created and stored on Cablevision’s central servers. Id. at 125, 130. The question was “ who made this c opy ” – the viewer or Cablevision? Id.
at 1 30. The Second Circuit h el d that much like a VCR user makes the copy , so did the Cablevision customer. Id. at 131.

I n t h i s case, the district court f ound that “Dish ex ercises

a d eg ree o f discretion over the copy ing process bey ond t h atF O X B R O A D C A S T I

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which was present in Cablevision .” Fox Broad.

, 905 F

. Supp. 2d at 1102. I t pointed to the f acts that Dish decides h ow long copies are available f

or viewing

, Dish maintains the authority
to modify the start and end times of the p rimetime b lock, a nd

a user cannot stop a copy from being made once the recording has started. Id. at 1101–02

. Yet the court held that “at this stag e o f the proc e e ding s,” it was “ not satisfied” that PrimeTime A ny

time had “crossed over the line that leads to direct liability .” Id. a t 1102. The court held that the “user,
not Dish, m u s t t a ke the initial step of enabling ” PrimeTime Any time. I d. “The user, then, and not Dish, i s ‘ t h e m o st sig nificant and import a n t cause’ o f the copy .” Id. (quoting Prosser & Keeton on Torts § 42). 3

The district court did n ot a b use its discretion in concluding that F ox had not established a likelihood o f

success o n this claim. I nfring ement of the reproduction rig ht requires “copy

ing by the defendant,” Kelly

, 3 3 6 F. 3 d at 817 (emphasis a dded), which c omprises a requirement that the defendant cause the c opy ing

. See Cabl e v i s i o n , 536 F .3d at 130 (ex plaining that direct infring ement c l a i m turned on “ who made” the copies). F ox arg ues that because Dish participates in the operation o f PrimeTime Any time o n a daily basis, Dish made the copies, either a lone o r concurrently with its users. However, operating a sy stem u sed to make copies a t the user’s command does not mean that the sy st em operator, rather than the user, caused c opies to be made. Here, D ish’s
prog r am creates the copy only in response to the user’s command. Therefore, the district court did not err in concluding that the user, not Dish, makes the copy

.

3 A l t h ou g h th e d istrict co u rt m isq u o ted P ro sser & Keeto n ’ s treatise, i t d id n o t ab u s e its d iscretio n in co n clu d i n g th at th e u ser is “ t h e m ost

‘ sig n if ican t an d im

p o rtan t’ cau se o f

th e co p y .”F O X B R O A D C A S T I

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That Dish decides how long copies are availa b le for viewing

, modifies the start and end times of the primeti me block, a nd prevents a user from stopping a recording mig ht be relevant to a secondary or p erhaps even a direct infring ement claim. Cf. Cablevision

, 5 3 6 F

. 3d a t 132–33 (finding that factors evidencing Cablevision’s control o v e r copy ing
process seemed “ more relevant to the question of contributory liability ” but reserving the question “whether o ne’s contribution to the creation of an in fring ing copy may be so g reat that it warrants h olding that party directly liable for the infring ement, even thoug h anot her party has actually made the copy ”). B ut these f

ac t s do not establish that Dish made the c opies. Therefore, the district court did not err in holding that F ox did not establish a likelihood of success on its direct infring ement claim.

B

The district court did n ot abuse its d iscretion in concluding that F ox was unlikely to suc c e ed o n its c laim o f secondary copy

righ t infring ement for the PrimeTime An y t i me and AutoHop prog rams. “Secondary liability for
copy rig ht infring ement does not ex ist in the absence of direct infring ement by a third party .” A & M Records, I

n c. v. Napster, Inc.
, 23 9 F. 3 d 1004, 1 0 13 n.2 (9th Cir. 2001). Therefore, to e stablish secondary liability

, F ox must establish that Dish’s users are infring ing

. There is no dispute that F ox has established a prima facie case of direct infring ement by Dish customers because F ox owns the copy rig hts to its shows and the users make copies. T hus, the b urden shifts to Dish to demons t r a t e that it is likely to succeed on its affirmative defense that its customers’ copy ing was a “fair use.” Perfect 10 , 508 F .3d at 1158. Dish has met this burden.F O X B R O A D C A S T I

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As the district court r ecog niz ed, the Supreme Court ’s analy sis in Sony Corp. of

Am. v. U niversal City Studios, Inc.
, 4 6 4 U.S. 417 (1984), p rovides strong g uidance in assess i n g whether Dish customers’ copy ing of F ox prog rams is a “fair use.” I n Sony
, the Supreme Court held that Sony was not liable for secondary infring e ment for manufacturing B etamax VCRs because cust o mers used the machines primarily for time-shifting

, “ the p ractice of recording a prog ram to view it

once at a later time, and thereafter e rasing it.” Id. at 423. The Court held that “even the unauthoriz e d home time-shifting o f respondents’ prog rams is leg itimate fair use.” Id. at 442.

F ox a nd its amici arg ue that Dish customers use PrimeTime Any

time and A utoHop for purposes o ther than time-shifting – namely

, commercial-skipping and library

building

. These uses were briefly d iscussed in Sony
, in which the Court recog niz ed that some B etamax customers used the device to avoid viewing advertisements and ac cu m ulate libraries o f tapes. I n Sony
, about 25 percent of B etamax users fast-forwa

r d ed throug h commercials. Id. at 452 n.36. Additionally

, a “substantial number of interviewees h ad accumulated libraries of tapes.” Id. at 423. O ne user owned about 100 tapes and boug ht his B etamax intending to “build

a library of cassettes,” but this “ proved too ex pensive.” Id. at 423 n .3. B ecause the B etamax was primarily used for timeshifting

, the Court i n S

o n y never ex pressly d ecided whether commercial-skipping and library -building were fair uses. Cf. Metro-Goldwyn-Mayer Studios Inc. v. Gr o ks ter, Ltd.

, 545 U.S. 913, 9 31 (2005) (ex plaining that “[ a] lthoug h Sony ’s advertisements u r ge d consumers to buy the VCR to ‘record favorite shows’ or ‘build a library ’ of recorded prog r a ms, neither of these uses was necessarily infr i ng ing ” (citations omitted)).F O X B R O A D C A S T I

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. D I S H N E T W O R K 16

Yet, as the district court h eld, c o mmercial-skipping does not implicate F ox ’s copy

rig ht interest because F o x owns the
copy rig hts to the television prog rams, not to the ads aired in the commercial breaks. I f recording an entire copy righ t ed
prog r am is a fair use, the f ac t that v iewers do not watch the ads not copy

r ig hted by F ox cannot transform the recording into a copy

rig ht violation. I ndeed, a recording ma d e with PrimeTim e A ny

time still includes commercials; AutoHop simply skips those recorded commercials unless a v iewer manually r ewinds or fast-forwards into a commerc i al break. Thus, any analy sis of the m a rket harm should ex clude consideration of AutoHop because ad-skipping d o es not implicate F ox ’s copy

rig ht interests.

Analy z ing PrimeTime Any

time u nder the fair use factors, Dish has demonstrated a likeli hood of success on its customers’ fair use defense. As for the f i rst factor, the “purpose and character of the use, including whether such use is of a commercial nature or is f or no nprofit educational purposes,” 17 U.S.C. § 107(1), Dish c u stomers’ home viewing is n o ncommercial under Sony
, which h e ld that “timeshifting for private home use” was a “noncom mercial, nonprofit activity ,” 4 6 4 U.S. a t 449. Here, the district court found that PrimeTime A ny time is u sed f

o r time-shifting

, a

nd that the Hopper i s a v ailable o nly to private consumers. Fox Broad. , 905 F . Supp. 2d at 1098.

Sony also g overns the analy sis of the second a nd third factors, the “nature of the copy rig hted work” and “ the amount and substantiality of the portion used in relatio n t o the
copy rig hted work as a whole,” 17 U.S.C. §§ 107( 2 ), (3). Sony held that “when one considers the nature of a televised
copy rig hted audiovisual work, and that time-shifting merely enables a viewer to see such a w o r k which he had beenF O X B R O A D C A S T I

N G C O

. V

. D I S H N E T W O R K 17

i n v ited to witness in its entirety free of charg e, the fact that the entire work is re p r o d u c e d, does not have its ordinary effect of militating ag ainst a finding of fair use.” 4 64 U.S. at 449–50 (citations omitted). The same analy sis applies here,

a nd thus the fact that Dish users copy F ox ’s e n t i r e copy rig hted broadcasts d o es not have its ordinary effect o f militating ag ainst a finding of fair use.

F inal l y , w e consider the “effect of the use u pon the
p o t ential market for o r value of the copy rig hted wor k

. ” 17 U.S. C

. § 1 0 7 (4). This is the “most important element o f fair use.” Harper & Row Publishers, Inc. v. Nation Enters.
, 471 U.S. 539, 566 (1985). B ecau s e D i sh customers’ taping is “ for a n oncommercial purpose,” the likeli h ood of future market harm is not p re s u med but “must be d e monstrated.” Sony
, 464 U.S. at 451. F ox “ n e e d only show that if the challen ge d use ‘should become widespread, it would adversely affect the potential market for the copy rig h ted

w o r k

. ’” Harper & Row
, 471 U.S. at 568 (quoting S ony , 464 U.S. at 451 (emphasis added by Harper & Row Court)).

B e cause F ox licenses its prog rams to distributors such a s Hulu and A pple, the market h arm analy sis is somewhat different than in Sony
, where no such secondary market

ex isted for the copy

rig ht-holders’ prog rams. 4 However, the record b efor e the district court establishes that the market harm that F o x and its amici alleg e results from the automatic commercial-skipping

, not the recording of p rog rams throug h PrimeTime Any

time. I ndeed, F ox often charg es no additional license f e e s f o r providers to offer F ox ’s licensed video on

4 In stead

, th e S

o n y plain tif f s arg u ed in part th at th e B etam a x w ou ld red u ce th e au d ien ce f

o r liv e telev isio n an d m o v ies, a f ear th e d istrict co u rt d escrib ed as lack in g “ f

actu al b asis.” 4 6 4 U.S. at 4 5 3

.F O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 18

demand, so long as p roviders disable f a s t-forwarding

. This indicates th a t the ease of skipping commercials, rather than the o n-demand availability of F ox prog rams, c au ses any market harm. And as w e have discussed, the commercialskipping does not implicate any copy r ig ht interest.

I n a rg uing otherwise, F ox points to the district court’s market harm analy sis in a different section of its opinion. However, that analy sis is not relevant to determining whether PrimeTime Any

time causes market harm because that portion of the opinion addresses a different q uestion: w h e t h e r the “quality assurance” copies used to test AutoHop would harm
t h e m arket for F ox to license copies o f its shows. B ecause the quality assurance copies were used to pe r fect A utoHop, the district court assessed whethe r A u t oHop caused market harm a nd found that D ish “harm s Fo x ’s opportunity to neg otiate a value for [ authoriz ed] c o p ies and al s o inhibits F ox ’s ability to e nter into similar licensing ag reements with others in the future by making the copies less valuable.” Fox B r oad.

, 905 F

. Supp. 2d at 1105. However, the court’s analy sis o f the market harm caused b y t h e q uality a ssurance copies does not a ffect the assessment of whether Dish customers’ copy ing of prog rams potentially causes m arket harm b ecause the district court c o rrectly found that A utoHop, standing alone, does not infring e.

Therefore, the district c ourt did not abuse its discretion in concluding that F ox was unlikely to succeed on its secondary infring ement claim.

C

The question of whether Dish has brea c h e d i ts contract with F ox is much clo s e r

. H owever, apply ing o ur veryF O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 19

d e f e rential standard of review, w e conclude that the distr i ct court did not abuse its discretion i n deny ing a preliminary injunction based on the alleg ed contract breaches.

F ox first arg ues that Dish breached the portion of the 2002 contract that states:

EchoStar [ now Dish] shall not, for pay o r otherwise, record, copy , duplicate and/or authoriz e the recording

, c opy ing, duplication (o t h e r than by consumers for private home use) or retransmission of any portion o f any Station’s Analog Sig nal w ithout prior w ritten permissio n o f the Station, ex cept as is specifically

permitted by

this Ag reement.

F ox ’s arg ument as to why Dish a lleg e d l y breached this clause is the same as its arg ument that Dish directly infring ed its copy rig hts. I t does not arg ue that the contract’s u s e o f “record, copy , duplicate” has a differ e n t m eaning than the Copy rig ht Act’s definition of “reproduce.” Given that Dish did not directly infring e F ox ’s copy r i g hts, the district court properly concluded that F ox is unlikely to succeed on its claim that Dish breached this clause.

Second, F ox arg ues that Dish breached the following provision in the 2002 contract:

EchoStar acknowledg es and ag rees that it shall have n o rig ht to distribute all or any portion of the prog ram ming contained in any Analog Sig nal on an in t e r a c tive, time-delay ed, video-on-demand or similar basis; provided that F ox acknowledg es that the f o reg oingF O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 20

shall n ot r estrict EchoStar’s practice o f connecting its Subscribers’ vide o replay equipment . . . .

The district court construed the contract term “distribute”
to be anal o gous to the same word in the Copy rig ht Act, 17 U

. S

. C

. § 106(3). I t held that distribution under the Copy rig ht Act r equired a copy rig hted work to “chang [ e] hands,” Fox Broad

. , 9 05 F

. Supp. 2d at 1106, and Dish
eng ag ed in no distribution because the PrimeTime Any time copies “are made by users, remain in private ho m e s , a nd do
not chang e hands,” id. at 1107. Therefore, it held, F o x was unlikely to prevail o n its claim that Dish breached this contract provision. 5

O n appeal, F ox challeng es this construction o f “distribute,” e ssen t ially arg uing that the prohibition ag ainst “distribut[ ing ] ” F ox prog ramming c ons t i t utes an ag reement that D ish would not make F ox prog rammi n g available to its subscribers. F ox ’s interpretation is plausible, but s o i s the district court’s. W hile the d istrict c ourt would not be justified in holding that the meaning of the term “ distrib u t e ” was unambig uous or that, as a matter of law, any ambig uous terms in the contr a ct s h ould be interpreted by looking to the Copy rig ht Act, we do not read the district court’s opinion as resting its decision o n such g rounds. I n the proceeding s below, the parties d i d not arg ue a bout the meaning o f “distribute.” A b sent any arg ument or ex trinsic e vidence on

5 Fo x al s o a r gu e d b elo w th at Dish v io lated its rig h t “ to d istrib u te

co p ies

. . . o f th e co p y

rig h ted w o rk to t

h e p u b lic” u n d er 17 U.S.C. § 1 0 6 (3 ). T h e d istrict co u rt h eld th at Fo x w as u n lik ely to su cceed o n th is claim

. Fo x Bro a d

. , 90 5 F. Su

p p

. 2 d at 1 1 0 6

. Fo x h as n o t ch allen g ed th is

ru lin g o n ap peal.F O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 21

this term, the district court did n ot err by looking to the Copy rig ht Act to interpret “distribute.” W e ex press no view

on whether, after a fully developed record and arg uments, the district cou r t ’s c onstruction of “ distribute” will prove to be the correct one.

W e are, however, dubious of Dish’s position that PrimeTime A ny

time is not “similar” to “interactive, time- delay ed, [ or] video-on-demand” prog ramming

, the distribution of which is ex p r es sly prohibited by the 2002
contract. Dish has convinced us that PrimeTime Any time is
not identical to v ideo-on-demand but is at a loss to e x plain why it is not similar

, and at oral arg ument, wh e n p r e ssed, Dish could not provide even a sing le ex ample of what would be considered similar under the c o ntract if not this. The
contract is written broadly

, and F ox has a g ood arg u ment that PrimeTime Any

time is “similar,” e ven thoug h not ex actly the same, as time-delay

ed or video-on-demand prog ramming

.
Third, F o x a r gu es that Dish b reached a provision of a 2010 letter ag reement that modified t h e 2002 contract. The letter ag reement p e r

mitted Dish to offer F ox ’s licensed video

on demand (VOD) servi c e so long as Dish disabled fastforwarding during commercials:

DISH will di s a b l e f a s t f o r ward functionality durin g all a dvertisements ; F B C

a n d D I S H m a y i n c l u d e a p r e

- r o l l
announcement prior to ea ch show reg arding the fast-forwa

r d disabling

. DI SH a

nd F B C will d i s cuss in g ood faith the timing o f D I SH’s implementation of such fast-forward disabling and mes sag ing to consumers; provided that DISH a c k

nowledges and agreesF O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 22

that such fast-forward disabling is a necessary condition to distribution of the Fox broadcas t content v ia VOD

. (Emphasis added.)

The d istrict court held that if PrimeTime Any time is video

on d e m a n d, then Dish clearly breached the contract. The
court fo und this dispute “especially challeng ing because [ PrimeTime Any

time] is, in some way s, a hy brid of DVR a

nd VOD likely not c ontemplated by either party when the 2010 Agr e e ment w as drafted.” Fox Broad.

, 905 F

. Supp. 2d at 1109. B u t the district court concluded that PrimeTime Any time was “more akin” to DVR than to video on demand. Id.

B e cause the district court b ased its interpretation on

ex trinsic evidence, w e review its holding for clear error. Miller v. Safeco Title Ins. Co.
, 7 58 F .2d 364, 367 ( 9 t h C i r. 1985). The district court’s finding that PrimeTime Any

time

w a s more akin to a D VR than to v ideo on demand was not clearly e rroneous. B ecause, unlike the relevant clause of the 2002 contract, this provision of the 2 010 letter ag reement does not preclude Dish f rom e nabling fast-forwarding on services that are “sim i l a r” to video on demand, the district
court d id not abuse its d iscretion in concluding that F ox was unlikely to succeed on its breach of contract claim.

The fact that a Dish attorney referred t o PrimeTime Any time as a “video-on-demand service” i n a trademark application supports F ox ’s claim that the parties would have understood PrimeTime Any ti m e t o be akin to v ideo on demand. Providing further support are Dish promotio nal

ma terials that repeatedly referred to PrimeTime Any time providi ng “On Demand a c cess” or an “on demand library

. ”F O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 23

However, Dish int r o duced evidence that prog ramming distributors such as itself and DirecTV have used the phrase “on demand” to refer t o DVR recording s, which are clearly
not video o n d emand. And the district court relied in part on the fact that a viewer must enable PrimeTime Any time before

a show airs to view it l a t er, which is a n important feature disting uishing DV R f

ro m video o n demand. Fox. Broad.

, 905 F

. Supp. 2d a t 1 1 0 9

. Therefore, in lig ht of the record before it, the district court d id not clearly err in c oncl u d i n g that PrimeTime A ny

time was more like D V R than video on demand.

F inally

, F ox a

rg ues that Dish breached the portion of the 2010 letter ag r eement that provides that nei ther p arty may “take any action w h a t soever intended to frustrate o r circumvent, or attempt to f r u s t rate or circumvent, the protections g ranted to the o ther P arty pursuant to any provision in this L e tter Ag reement.” Contrary to F ox ’s
arg ument, the record does not indicate that Dish launched PrimeTime Any

time because it was unwilling to comply with the requirements to offer F ox ’s licensed vide o o n demand service, r ather than because Dish lacked the technolog ical capability to do so. On this record, F ox has not demonstrated it is likely to succeed on this claim.

Therefore, the district c ourt d id not abuse its discretion in concluding that F ox did not d e m o nstrate a likelihood o f success on its breach of contract claims.

III

The d istrict court held that Dish likely directly infring ed F ox ’s copy

r ig h ts and breached the no-copy ing clause o f the 2002 contract by making “q u a lity assurance” copies to testF O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 24

the f unctioning of th e AutoHop prog ram. However, it ultima t e ly c oncluded that F ox d id not demonstrate a likelihood o f irreparable harm absent an in j u nction. Assuming

, without d e c iding

, that the district c ourt correctly decided that F ox was likely to succeed on the merits of t h i s

c l a i m , we ag r ee with the d istrict court that F ox did not demonstrate a likel i h o od of irreparable harm r esulting from these copies.

These co p i e s were made as p art of Dish’s process o f implementing the AutoHop pr o gr a m

. As we have n oted, Dish cr ea t e s marking announcements to sig n al to AutoHop when to skip c omm e r c i a l s

. I t then tests the accuracy o f the marking an n ouncements using copies recorded throug h PrimeTime Any

time. These copies remain at a Dish facility and a re u sed for “quality assurance” purposes only

. A technician working f

or Dish then play s back each recording

, e nables AutoHop, and fast-forwards throug h e ach show
seg ment just until the point o f each co m m e r c i al break to

ensure AutoHop is w orking properly

. I f the marking

a n nouncements are correct, AutoHop is made available t o Dish customers at 3 a.m. Eastern time on the m o r n i ng following the live broadcast.

I n refusing to enjoin Dish f rom creating these copies, the district co u rt correctly concluded that the harms F ox identif i ed

– including “loss of control over its copy rig h ted works a nd loss of advertising revenue” – did not “flow from”
t h e quality assurance copies themselves, but from the ent i r e AutoHop prog ram. Fox Broad.

, 9 05 F

. Supp. 2d at 1110–11. W h ile a plaintiff need not “show that the action soug h t to be enjoined is the ex clusive cause o f the injury ,” M.R. v

. Dreyfus

, 697 F .3d 706, 728 (9th Cir. 2011), the district court did not err in concluding that the quality assurance copiesF O X B R O A D C A S T I

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. V

. D I S H N E T W O R K 25

were not a cause of F ox ’ s alleg ed harm. That Dish used the copies in the process of implementin g A u toHop does not sug g est that those copies were integ ral to Au t o Hop’s functioning

. Rather, the record demonstrates that the AutoHop announcement files are created using a n entir ely separate process and the quality a ssurance copies are used only to test whether this process is working

. 6

F urthermore, the district court did not err in holding that monetary damag es could compensate F ox for its losses from the copies. See, e.g. , L.A. Mem’l Coliseum Comm’n v. Nat’l Football League
, 634 F .2d 1197, 1 202 ( 9 th Cir. 1 980) (“[ M] onetary injury is not normally considered irreparable.”). T o be sure, F ox does not license c opies of its prog rams f o r distributors to create ad-skipping software

. H owever, the lack of a licensing ag reement that directl y corresponds to Dish’s copy ing of F ox prog rams do e s n o t m ean it would be difficult to calculate damag es. F ox ’ s e x isting licensing
ag reements could, at the very least, constitute a starting point or an aid in calculating

damag es.

IV

Given our “limited and d eferential” review of preliminary injunction appeal s , Sw. Voter Registration Educ. Project v

. Shel l e y , 3 4 4 F .3d 914, 9 18 (9th Cir.2003) (en banc) (per curiam), and witho u t determining the ultimate merits o f the
case, Am. Trucking Ass' ns, In c. v. City of L.A.
, 559 F .3d

6 In d eed

, Dish h a s tem

p o rarily sto p p ed m ak in g th e q u ality assu ran ce

co p ies p en d in g th e o u t co m e o f th is ap peal.F O X B R O A D C A S T I

N G C O

. V

. D I S H N E T W O R K 26

1046, 1052 (9th Cir. 2 009), we conclude that the district court did not abuse its discretion in d eclining to gr a n t F ox a preliminary

injunction. 7

AF F IRMED.

7 T h e p arties’ m o tio n s f

o r j u d icial n o tice are DENIED

.