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In re Autohop Litigation

United States District Court, S.D. New York

November 4, 2014

IN RE: AUTOHOP LITIGATION

MEMORANDUM AND ORDER[1]

KEVIN NATHANIEL FOX, Magistrate Judge.

This is an action by DISH Network L.L.C., a satellite television provider, seeking a declaratory judgment that it is in compliance with its retransmission agreements with CBS Corporation, CBS Broadcasting Inc., CBS Studios Inc. and Survivor Productions, LLC (collectively "CBS"). CBS brought counterclaims against DISH Network, L.L.C. and EchoStar Technologies LLC (collectively "DISH") for copyright violations, breach of contract and fraud. Before the Court is DISH's motion, pursuant to Rule 37 of the Federal Rules of Civil Procedure, to compel CBS "to produce documents responsive to DISH's Fourth Request for Production." CBS opposes the motion.

DISH's Contentions

According to DISH, CBS alleges in its counterclaims that DISH's Prime Time Any Time ("PTAT") and Autohop features that enable the user to skip commercials when playing certain recorded shows threaten to harm its licensing agreements with internet-based distributors such as Amazon, Netflix, Hulu and others. DISH contends that, in connection with those allegations, DISH requested, in its Fourth Request for Production, document request Nos.1[2] and 2, [3] CBS's retransmission consent agreements between CBS and multichannel video programming distributors ("MVPDs"), such as Comcast, Time Warner, DirecTV and DISH, "in effect as of January 1, 2012, " to the present. DISH asserts that the retransmission consent agreements, which form, in large part, the basis of the current "economic foundation" of broadcast network television, "authorize MVPDs to retransmit the broadcast networks' programming signals to their pay-television subscribers, for a significant fee. CBS publicly touts the importance of its steadily increasing retransmission consent fees to its economics."

According to DISH, after refusing initially to produce any responsive documents, CBS agreed to produce portions of retransmission consent agreements [REDACTED]. DISH asserts that such partial production "is wholly insufficient." It contends that the retransmission consent agreements, in effect as of January 1, 2012, are relevant to CBS's damages claim because they "can be used to quantify the value of the works both before and after the alleged infringement, " and especially to the fair use analysis, which is focused on the presence of harm to the value of the copyrighted works. DISH contends that, to show lack of harm to CBS "is to show that there was no material change in valuation of the works as a result of DISH's alleged infringement, " for which a "before-and-after comparison of CBS's retransmission consent agreements" will be used. [REDACTED]

DISH contends that the retransmission consent agreements, in effect as of January 1, 2012, are also relevant to CBS's breach of contract and fraud claims, because of what they say about home recording devices and commercial-skipping, as well as whether CBS has put a price on commercial-skipping. Moreover, "if the alleged cost of commercial-skipping is quantifiable, and, indeed, had been quantified, that precludes the issuance of a permanent injunction against AutoHop."

DISH contends that CBS should also produce its retransmission consent negotiation documents mentioning the Hopper, PTAT or AutoHop, as requested in DISH's Fourth Request for Production, document request Nos. 3, [4] 4[5] and 5.[6] DISH maintains that CBS cannot claim that PTAT and AutoHop threaten the economic foundation of broadcast television, "and refuse to produce documents mentioning PTAT or AutoHop in connection with its negotiations over agreements that are an important part of the economic foundation.'" What CBS and other MVPDs said and did concerning PTAT and AutoHop in the context of their negotiations "goes directly to CBS's allegations of harm from PTAT and AutoHop, " [REDACTED]. DISH is entitled to receive this information so it can rebut CBS's claim of harm from PTAT and AutoHop.

Furthermore, the requested documents are relevant to CBS's contract claim because CBS alleges "that advertising revenue from DISH subscribers viewing commercials is an essential element of its consideration under the parties' Retransmission Agreement." Thus, any negotiations that CBS had with other MVPDs mentioning PTAT and AutoHop "will likely be probative of whether CBS considers advertising viewing an essential element of its agreements with those other MVPDs, " and will reveal whether "CBS or any MVPD has attempted to put a price on AutoHop."

CBS's Contentions

CBS contends that its retransmission consent agreements are irrelevant for determining the fair market value of CBS's primetime programming on an on-demand, commercial-free basis. According to CBS, "the relevant market for determining fair market value is the actual or potential market for CBS primetime programming on an on-demand, commercial-free basis, " and, "it is the market for on-demand, commercial free playback that DISH's PTAT and AutoHop technologies threaten to supplant if these technologies were to become widespread." CBS maintains that "the retransmission market is not the market at issue in this litigation because it does not speak to the value of copying CBS primetime programming for on-demand, commercial-free playback." CBS already produced the relevant licensing agreements involving relevant markets, which are "its VOD [video-on-demand] and Internet license agreements for these on-demand, commercial-free markets." According to CBS, DISH "wants retransmission agreements that CBS has entered into both before and after PTAT and AutoHop were released to DISH customers in March and May of 2012, respectively." [REDACTED] There is nothing more that DISH is entitled to."

With respect to DISH's claim that retransmission consent agreements are relevant to CBS's contract and fraud claims, "DISH does not claim [REDACTED] that there even exists an ambiguity in the Retransmission Agreement that necessitates the need to consider extrinsic evidence, " or "explain how or why other retransmission agreements executed prior to the release of PTAT and AutoHop bear on the meaning' of the terms of the Retransmission Agreement at issue in this case." CBS contends that its negotiation documents from its retransmission consent agreements, which are "highly commercially sensitive and proprietary, " are also irrelevant, and [REDACTED].

DISH's Reply

According to DISH, CBS asserted in its fraud claim that if CBS had known about the PTAT and AutoHop features on the Hopper, it would not have entered into its retransmission agreement with DISH, or would have entered into an agreement on materially different terms. DISH contends:

In order to test this proposition DISH is entitled to production of the [retransmission consent] agreements that CBS entered into with other MVPDs both before and after the release of the PTAT and AutoHop features, in order to discover whether CBS has in fact prohibited similar DVR features in its contracts and, if it did not, whether CBS imposed materially different terms on those MVPDs. CBS's refusal to produce all of the [retransmission consent] agreements in their entirety, with all economic terms, deprives ...

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