fox v. dish - brief of plaintiffs-appellants
DESCRIPTION
Fox appeals district court's denial of preliminary injunction.TRANSCRIPT
No. 13-56818
IN THEUNITED STATES COURT OF APPEALS
FOR THENINTH CIRCUIT
FOX BROADCASTING COMPANY, TWENTIETH CENTURY FOXFILM CORP., AND FOX TELEVISION HOLDINGS, INC.,
Plaintiffs-Appellants,
v.
DISH NETWORK L.L.C., DISH NETWORK CORP., AND ECHOSTARTECHNOLOGIES, L.L.C.
Defendants-Appellees.
On Appeal from the United States District Courtfor the Central District of California
Case No. 12-cv-04529District Judge Dolly M. Gee
BRIEF OF PLAINTIFFS-APPELLANTS
Richard L. StoneAndrew J. ThomasDavid R. SingerAmy M. GallegosJENNER &BLOCK LLP633 West 5th St., Suite 3600Los Angeles, CA 90071
Paul M. SmithJENNER &BLOCK LLP1099 New York Avenue, NW,Suite 900Washington, DC 20001
Attorneys for Plaintiffs-AppellantsFox Broadcasting Company, Twentieth Century Fox Film Corp.,
and Fox Television Holdings, Inc.
REDACTED
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CORPORATE DISCLOSURE STATEMENT
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, and
to enable the Court to evaluate possible disqualification or recusal, Appellants
certify as follows: Appellants Fox Broadcasting Company, Twentieth
Century Fox Film Corp., and Fox Television Holdings, Inc. are each indirect,
wholly-owned subsidiaries of Twenty-First Century Fox, Inc., a publicly-
traded company. No publicly held company owns 10 percent or more of
Twenty-First Century Fox, Inc.'s stock.
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TABLE OF CONTENTS
JURISDICTIONAL STATEMENT ............................................................... 1
STATEMENT OF ISSUES PRESENTED ..................................................... 2
INTRODUCTION .......................................................................................... 4
STATEMENT OF THE CASE ....................................................................... 7
STATEMENT OF FACTS ............................................................................. 9
A. Fox Carefully Controls And Licenses Its ValuablePrograms To Third Parties, Giving Consumers NumerousChoices About Where, When And How They WatchThem...........................................................................................9
B. Fox's Limited Grant Of Rights To Dish Prohibits InternetRetransmission .........................................................................11
C. Dish Retransmits Fox's Signal Over The Internet WithoutA License ..................................................................................12
D. The RTC Agreement Prohibits Dish From AuthorizingThe Copying Of Fox Programs For Viewing Outside TheHome ........................................................................................14
E. With Hopper Transfers, Dish Is Authorizing ItsSubscribers To Copy Programs For Use Outside TheHome ........................................................................................15
F. The District Court's Denial Of Fox's Preliminary
Injunction Motion .....................................................................16
SUMMARY OF ARGUMENT .................................................................... 18
iii
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ARGUMENT................................................................................................ 22
I. Standard of Review ..................................................................22
II. The District Court Applied An Erroneous Legal StandardRegarding The Irreparable Harm Element Of ThePreliminary Injunction Test ......................................................23
A. The Supreme Court In eBay Condemned The KindOf Categorical Approach Employed By The DistrictCourt................................................................................24
B. The District Court's Ruling That Fox's ContractualRelationship With Dish Precludes Fox FromEstablishing Irreparable Harm Is Precisely The TypeOf Categorical Rule The Supreme Court Rejected IneBay.................................................................................28
C. The District Court's Ruling That Fox CannotEstablish Irreparable Harm Because It Has LicensedIts Works To Other Distributors Is Also The TypeOf Categorical Rule The Supreme Court Rejected IneBay.................................................................................31
D. By Treating Fox's Testimony About Future HarmAs Speculative, The District Court Imposed AHeightened Standard For Injunctive Relief ThatDeparts From The Traditional Equitable Rule ................37
III. The District Court's Factual Findings Were ClearlyErroneous..................................................................................40
A. The District Court Erred In Finding No Threat OfIrreparable Harm To Fox's Distributor Relationships ....40
(1) Fox's Irreparable Harm Evidence Exceeds ThatWhich Other Courts Have Relied On In SimilarCi~cumstances .................................................................40
iv
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(2) The Court's Finding Of No Ha~^m To Fox'sDist~ibuto~ Relationships Is Illogical AndImplausible ......................................................................44
(3) The Court's Finding Of No HaNm To Fox'sDistributor Relationships Is Not Supported ByEvidence ..........................................................................46
(4) The Court Ignored Key Evidence ....................................49
B. The District Court Erred In Finding No Threat OfIrreparable Harm To Fox's Commercial AdvertisingBusiness........................................................................... 5 0
IV. Fox Will Succeed On Its Copyright Infringement AndBreach Of Contract Claims ......................................................55
A. Dish Is Exceeding The Scope Of Its License ..................55
B. Dish Is Infringing The Public Performance Right ...:......56
C. Dish Cannot Claim Its Subscribers Are "Doing" TheTransmitting ....................................................................58
D. Dish Cannot Claim Its Internet Retransmissions Are«Private" ..........................................................................60
V. The Balance Of Harms Decidedly Favors An Injunction........62
VI. The Public Interest Favors An Injunction ................................63
CONCLUSION ............................................................................................. 64
v
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TABLE OF AUTHORITIES
Cases Pa e s
Adams v. Freedom Forge Copp.,204 F.3d 475 (3d Cir. 2000) ...............................................................................37
Adobe Sys. Inc. v. One Stop Micro, Inc.,84 F. Supp. 2d 1086 (N.D. Cal. 2000) ................................................................54
Alliance fog the Wild Rockies v. Cottrell,632 F.3d 1127 (9th Cir. 2011) ............................................................................22
American Broadcasting Cos., Inc. v. Ae~eo, Inc.,874 F. Supp. 2d 373 (S.D.N.Y. 2012), aff'd 722 F.3d 500 (2d. Cir.2013) ...........................................................................:.......................................59
Associated Gen. Cont~acto~s of Cal., Inc. v. Coalition fog Econ. Equity,950 F.Zd 1401 (9th Cir. 1991) ............................................................................37
Associated Press v. Otter,682 F.3d 821 (9th Cir. 2012) ..............................................................................23
Cadence Design Sys., Inc. v. Avant! CoNp.,125 F.3d 824 (9th Cir. 1997) ..............................................................................62
Capitol Records, LLC v. ReDigi, Inc.,934 F. Supp. 2d 640 (S.D.N.Y. 2013) ................................................................32
Cartoon Network LP, LLLP v. CSC Holdings, Inc.,536 F.3d 121 (2d Cir. 2008) ("Cablevision") .....................................................57
Crowe & Dunleavy, P.C. v. Stidham,640 F.3d 1140 (10th Cir. 2011) ..........................................................................37
Diamontiney v. Borg,918 F.2d 793 (9th Cir. 1990) ..............................................................................39
eBay, Inc. v. Bidder's Edge, Inc.,100 F. Supp. 2d 1058 (N.D. Cal. 2000) ..............................................................34
vi
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eBay, Inc. v. MercExchange, LLC,401 F.3d 1323 (Fed. Cir. 2005) ..........................................................................24
eBay v. Me~cExchange, L.L.C. ,547 U.S. 388 (2006) .................................................................................... passim
Eldred v. Ashcroft,537 U.S. 186 (2003) ......................................................................................62, 63
Flexible Lifeline Sys. v. Precision Lift, Inc.,654 F.3d 989 (9th Cir. 2011) ............................................................23, 26,27, 28
Fox Broadcasting Co. Inc. v. Dish Network, L.L.C.,905 F. Supp. 2d 1088 (C.D. Cal. 2012) ........................................................21, 54
Fox Television Stations, Inc. v. Ba~ryDrilleN Content Sys., PLC,915 F. Supp. 2d 1138 (C.D. Cal. 2012) ...................................................... passim
Fox Television Stations, Inc. v. FilmOn X LLC(D.D.C.) ........................................................................................................42, 43
Fox Television Stations, Inc. v. FilmOn X LLC,-- F. Supp. 2d --, 2012 WL 4763414 (D.D.C. Sept. 5, 2013), appealdocketed, No. 13-7146 (D.C. Cir. Sept. 20, 2013) ("FilmOn") .................. passim
Frank Music Copp. v. Metro-Goldwyn-MayeN, Inc.,772 F.2d 505 (9th Cir. 1985) ..............................................................................30
Gilder v. PGA Tour, Inc.,936 F.2d 417 (9th Cir. 1991) ..............................................................................38
Glens Falis Indemnity Co. v. American Seating Co.,248 F.2d 846 (9th Cir. 1957) ..............................................................................47
Harper &Row Publishers, Inc. v. Nation Enters.,471 U.S. 539 (1985) ............................................................................................30
Helash v. Ballad,638 F.2d 74 (9th Cir. 1980) ................................................................................46
Herb Reed Enters. v. Florida Entm 't Mgt. ,2013 WL 6224288 (9th Cir. Dec. 2, 2013) ...................................................26, 34
vii
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Jacobsen v. Katze~,535 F.3d 1373 (Fed. Cir. 2008) ..........................................................................33
LGS Architects, Inc. v. Concordia Homes of Nev.,434 F.3d 1150 (9th Cir. 2006) ............................................................................30
M.R. v. Dreyfus,697 F.3d 706 (9th Cir. 2012) ............................................................39, 40, 44, 54
Martin v. F~^anklin Capital Corp.,546 U.S. 132 (2005) ............................................................................................26
MDYlndus., LLC v. Blizzard Entm't, Inc.,629 F.3d 928 (9th Cir. 2010) ........................................................................30, 55
Myers v. United States,652 F.3d 1021 (9th Cir. 2011) ............................................................................48
New York Trust Co. v. Eisner,256 U.S. 345 (1921) (Holmes, J.) .......................................................................26
Oakland Tribune, Inc. v. Chronicle Pub. Co.,762 F.2d 1374 (9th Cir. 1985) ............................................................................37
Omega Importing Corp. v. Petri-Kine Camera Co.,451 F.2d 1190 (2d Cir. 1971) (Friendly, C.J.) ....................................................27
On Command Video Copp. v. Columbia Pictures Indus.,777 F. Supp. 787 (N.D. Cal. 1991) .....................................................................58
Perfect 10, Inc. v. Google, Inc. ,653 F.3d 976 (9th Cir. 2011) ..............................................................................28
Pimental v. Dreyfus,670 F.3d 1096 (9th Cir. 2012) ............................................................................23
P~esidio Components, Inc. v. Am. Tech. Ceramics Corp.,702 F.3d 1351 (Fed. Cir. 2012) ..........................................................................34
Pyro Spectaculars North, Inc. v. Souza,861 F. Supp. 2d 1079 (E.D. Cal. 2012) ..............................................................38
viii
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Rent-A-Center, Inc. v. Canyon Tel. &Appliance Rental, Inc.,944 F.2d 597 (9th Cir. 1991) ........................................................................38, 49
Robert Bosch LLC v. Pylon Mfg. Corp.,659 F.3d 1142 (Fed. Cir. 2011) ..........................................................................34
S.O.S., Inc. v. Payday, Inc.,886 F.2d 1081 (9th Cir. 1989) ............................................................................55
SalingeN v. Golfing,607 F.3d 68 (2d Cir. 2010) .....................................................................26, 27, 33
Security-First National Bank of Los Angeles v. Lutz,322 F.2d 348 (9th Cir. 1963) ..............................................................................47
Silvers v. Sony Pictures Entm't, Inc.,402 F.3d 881 (9th Cir. 2005) ..............................................................................32
Stinnett v. Damson Oil Copp.,648 F.2d 576 (9th Cir. 1981) ..............................................................................46
Stuhlbarg Intl Sales Co. v. John D. Brush & Co.,240 F.3d 832 (9th Cir. 2001) ........................................................................28, 38
Sun Microsystems, Inc. v. Microsoft Corp.,188 F.3d 1115 (9th Cir. 1999) ......................................................................29, 54
Treasure Valley Potato Bargaining Ass 'n v. Ore-Ida Foods, Inc.,497 F.2d 203 (9th Cir. 1974) ..............................................................................38
Triad Sys. Corp. v. Southeastern Express Co.,64 F.3d 1330 (9th Cir. 1995) ........................................................................61,62
Wainer Bros. Entm 't, Inc. v. WTV Sys., Inc. ,824 F. Supp. 2d 1003 (C.D. Cal. 2011) ...................................................... passim
Winter v. Natural Res. Def. Council, Inc.555 U.S. 7 (2008) ..........................................................................................22, 23
Wisdom Impost Sales Co. v. Labatt Brewing Co.,339 F.3d 101 (2d Cir. 2003) ...............................................................................22
ix
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STATUTES
17 U.S.C. § 106(4) ...................................................................................................56
17 U.S.C. §§ 111, 115, 118, 119, 122 ......................................................................30
17 U.S.C. § 201(d) ...................................................................................................32
17 U.S.C. § 502(a) ...................................................................................................29
28 U.S.C. § 1292(a) ...................................................................................................1
28 U.S.C. § 1331 ........................................................................................................1
28 U.S.C. § 1367 ........................................................................................................1
Copyright Act, 17 U.S.C. § 101 ...............................................................1, 56, 60, 61
OTHER AUTHORITIES
3 M. Nimmer & D. Nimmer, NIMMER ON COPYRIGHT § 10.15 [A](2012) ..................................................................................................................55
4 M. Nimmer & D. Nimmer, NIMMER ON COPYRIGHT § 13.05 (2013) ...................30
11 A C. Wright, A. Miller, et al., FEDERAL PRACTICE AND PROCEDURE2948.1 (2013) ......................................................................................................39
Federal Rule of Appellate Procedure 4(a)(1)(A) .......................................................1
Federal Rule of Appellate Procedure 32(a)(7)(C) ...................................................65
Federal Rule of Appellate Procedure 34(a) .............................................................64
http://mediadecoder. blogs.nytimes.com/2013/02/21 /tvs-connected-to-the-Internet-to-be-counted-by-nielsen/ ............................................................... 53
x
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JURISDICTIONAL STATEMENT
This is an action for violations of the Copyright Act, 17 U.S.C. Section
101, and breach of contract. The district court had jurisdiction over the
copyright claims under 28 U.S.C. Section 1331 and the contract claims under
28 U.S.C. Section 1367. The court denied the preliminary injunction sought
by Plaintiffs-Appellants Fox Broadcasting Company, Twentieth Century Fox
Film Corporation, Inc. and Fox Television Holdings, Inc. (collectively,
"Fox") on September 23, 2013. ER 298-312. Fox timely filed its notice of
appeal on October 22, 2013. Fed. R. App. P. 4(a)(1)(A); ER 313-332. This
Court has jurisdiction under 28 U.S.C. Section 1292(a).
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STATEMENT OF ISSUES PRESENTED
1. Fox's license with Dish does not permit and expressly prohibits
Dish from streaming Fox's programming over the Internet or authorizing
digital copies for mobile viewing. Other courts that have addressed such
unauthorized streaming or copying have found Fox, as a copyright owner,
irreparably harmed by it. The Supreme Court has rejected categorical rules
for in-eparable harm. Did the district court abuse its discretion by
categorically rejecting irreparable harm to Fox from the same kind of
unauthorized exploitation of its copyrighted programming by Dish because:
(a) Fox has licensed its programming for some uses to Dish and (b) Fox has
also exploited the rights at issue through licenses with other distributors?
2. Proof of actual, present harm or a certainty of future harm is not
required for a preliminary injunction; a plaintiff need only show a "significant
risk" of harm. Two Fox executives testified that Dish's unauthorized
exploitation of Fox programs would usurp Fox's control over the licensing of
its programs, disrupt Fox's distribution relationships, and undermine Fox's
ability to measure and sell commercials. Did the district court abuse its
discretion by improperly requiring Fox to prove actual, existing, certain injury
and by dismissing competent evidence of likely future harm as "speculative"?
2
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3. Other appellate and district courts have found that where an
infringer streams Fox's television programs over the Internet or otherwise
distributes them without authorization, the infringer irreparably harms Fox by
undermining Fox's negotiations with authorized licensees- and by
circumventing Nielsen's viewership ratings metrics that advertisers and Fox
depend on. Here, Fox submitted the same evidence of irreparable harm as it
did in the other cases. Did the district court abuse its discretion by
disregarding this competent evidence and instead relying on the unsupported,
speculative opinion of Dish's retained economist?
J
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INTRODUCTION
This appeal addresses fundamental questions about what showing a
copyright owner must make to satisfy the irreparable harm requirement of the
traditional four-part equitable test for injunctive relief — an issue this Circuit
has not addressed since it held in 2011 that under the Supreme Court's
decision in eBay v. Me~cExchange, L.L.C., 547 U.S. 388 (2006), copyright
plaintiffs no longer benefit from a presumption of irreparable harm once they
have established a likelihood of infringement.
Fox makes its popular television programming available to consumers
in many ways by, among other things, licensing it to subscription television
distributors such as Dish. Dish has no ownership interest in Fox's programs.
Instead, Fox grants Dish the limited right to distribute Fox's programs via
satellite television. The license expressly prohibits Dish from retransmitting
or authorizing anyone to retransmit Fox's signal over the Internet. It also
prohibits Dish from authorizing anyone to copy Fox's programs other than for
private, in-home use.
In January 2013, Dish launched two new unlicensed services for its
subscribers that brazenly violate both of these express restrictions. "Dish
Anywhere" streams live television programming over the Internet to Dish
4
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subscribers, and "Hopper Transfers" enables Dish subscribers to copy Fox's
programs onto their iPad tablets for viewing outside the home.
Fox sought to preliminarily enjoin these new infringing services
pending trial, and the district court denied the motion. The court did not
question Fox's likelihood of prevailing on the merits of its breach of contract
and copyright infringement claims —with good reason. Two weeks before
Dish announced its new services, another court in the Central District of
California had confirmed in a published decision that streaming Fox's
programs over the Internet and to mobile devices without permission is
copyright infringement. Fox Television Stations, Inc. v. BarryDriller Content
Sys., PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012).1 Dish's conduct
constitutes copyright infringement for the same reasons and for the additional
reason that it exceeds the scope of its narrow license from Fox.
The district court based its decision to deny an injunction on an
unprecedented, artificially narrow view of irreparable harm. Although the
court's order appears on the surface to be limited —touching only one part of
the four-factor preliminary injunction standard —the court's analysis in fact
represents a sweeping departure from precedent in this and other circuits
applying the irreparable harm requirement.
~ That decision is currently on appeal to this Court. Oral argument was heard
on August 27, 2013.
5
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Although it purported to follow eBay's four-part injunction standard,
the district court in fact contradicted eBay's core holding that categorical rules
(either for or against injunctions) have no place in the irreparable harm
analysis. The district court instead concluded that because Fox has chosen to
exploit its copyrights through an existing license agreement with Dish and
through licenses with other distributors like Amazon and Apple, all of Fox's
injuries are necessarily quantifiable and thus redressable by money damages.
The perverse effect of this application of eBay is that Fox and other copyright
owners who exploit their works are categorically disqualified from obtaining
interim injunctive relief merely because they have existing contractual
relationships with the infringer or other licensed distributors.
The district court further erred by dismissing the testimony of senior
Fox executives concerning the likely future consequences of Dish's new
services as inherently speculative. In doing so, the court inaugurated a new,
heightened requirement for showing irreparable harm in copyright cases,
effectively replacing the requirement that the plaintiff show a significant risk
of harm that is difficult to calculate with a requirement that the plaintiff show
actual, present harm or certain future harm. The district court failed to
recognize that the interests at stake in a case involving the infringement or
breach of a right to exclude —the essence of any property right, including
D
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copyright —are qualitatively different from those that may be at stake in an
ordinary commercial dispute.
Other courts that have addressed similar, unauthorized Internet
streaming and distribution of television programming or movies have reached
the opposite conclusion, finding a clear threat of irreparable harm to copyright
owners — in some cases based on the exact same evidence that Fox proffered
here. The district court's legal errors move the goalposts dramatically for
copyright owners who serve the purposes underlying the Copyright Act by
disseminating their creative works. They contravene the key teaching of the
Supreme Court's decision in eBay and make the district court an outlier. This
Court should reverse.
STATEMENT OF THE CASE
Fox distributes its popular television programming to consumers on
cable and satellite television, as well as other media formats such as video-on-
demand ("VOD"), digital downloads, and Internet streaming. Dish, a satellite
television provider, obtained a narrow license from Fox that includes a
limited set of rights and excludes other forms of distribution.
This is the second appeal involving Dish's breach of the parties'
licensing agreement and infringement of Fox's copyrights. In early 2012,
rather than accepting Fox's license for VOD that prohibits fast-forwarding of
7
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commercials, Dish launched an unauthorized service ("Primetime Anytime")
which automatically records all primetime network shows for later viewing
on demand and which includes a feature ("AutoHop") that automatically
eliminates all commercials when those shows are viewed. Fox moved to
preliminarily enjoin these services in May 2012. The district court denied
Fox's motion, and this Court affirmed. Fox filed a petition for en Banc
review and, on August 30, 2013, Dish was ordered to file a response. See
Case No. 12-57048, Dkt. No. 99. Dish filed its response on September 20,
2013 and, with leave of court, Fox filed a reply on September 26, 2013.
In January 2013, Dish launched its next generation set-top-box, the
"Hopper with Sling" and two new, unauthorized services — "Dish Anywhere"
and "Hopper Transfers." Even though the parties' license agreement
prohibits Dish from streaming Fox programs over the Internet or authorizing
copies of the programs to be made for viewing on iPads, Dish Anywhere
streams Fox's programs over the Internet and Hopper Transfers authorizes
Dish subscribers to copy Fox's programs onto their iPads.
On February 21, 2013, Fox filed a First Amended Complaint and then
moved to preliminarily enjoin Dish's new 2013 services. The motion was
argued on April 19, 2013. On September 23, 2013, the district court denied
the motion solely on the grounds that Fox had not shown a threat of
,~
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irreparable harm, after assuming Fox's likelihood of success on the merits.
This appeal followed.
STATEMENT OF FACTS
A. Fox Carefully Controls And Licenses Its Valuable Programs
To Third Parties, Giving Consumers Numerous Choices
About Where, When And How They Watch Them.
Fox owns the copyrights in numerous broadcast television programs,
including popular and critically acclaimed series such as Glee, The Simpsons,
Family Guy, Touch, and Bones (the "Fox Programs"). ER 226. Fox spends
hundreds of millions of dollars producing and acquiring the rights to the Fox
Programs. ER 1797-1798, 226. Fox gives consumers an unprecedented range
of options for viewing its programs through numerous licensed channels,
using some of the latest technology. ER 228-229. Fox does so by selectively
licensing its programs to television, Internet, and other distributors. Id.; ER
The main distribution channel for Fox Programs is the Fox Network,
one of the four major commercial broadcast networks in the United States.
ER 1797, 226-227. With more than 200 local station affiliates (some of
which are owned by Fox), the Fox Network broadcasts programming over the
airwaves to virtually anyone with a working antenna and a television. ER
1797. Consumers may also watch the Fox Network through paid
E
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subscriptions to cable, telco and satellite television distributors like Dish. ER
228. On behalf of the television stations it owns, Fox grants these
multichannel video programming distributors ("MVPDs") the right to
retransmit Fox's broadcast signal to their subscribers in exchange for a fee.
Id.
Fox also licenses third parties, including some MVPDs, the right to
distribute Fox Programs through newer forms of media, such as VOD,
Internet streaming, and digital downloads. ER 228-231. For example, Fox
authorizes Hulu and Amazon to stream Fox Programs over the Internet, and it
authorizes Apple to offer downloadable versions of Fox Programs through
iTunes. Id. Fox carefully orchestrates where and when its programs can be
viewed, streamed, downloaded, and purchased so that it can earn different
revenue streams from its programs. ER 227, 229-231, 1800.
Notwithstanding these important revenue streams, most of Fox's
programming costs are borne by advertisers who pay for the right to show
advertisements during commercial breaks in the programs. ER 1799.
Advertisers pay more money to have their advertisements displayed during
television programs with higher viewership and, specifically, programs with
high viewership of commercials. ER 227-228. The most influential
commercial viewership and impressions rating to advertisers is the "C3"
10
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rating generated by Nielsen Media Research ("Nielsen"). Id. C3 quantifies
the average number of commercials viewed during a particular program when
it airs on standard television and for the next three days (to capture data from
viewers who watch the program later on their DVRs). Id.
B. Fox's Limited Grant Of Rights To Dish Prohibits
Internet Retransmission.
Dish is authorized to retransmit the Fox Network broadcast signal via
satellite television pursuant to a 2002 license agreement (the "RTC
Agreement"). ER 1800, 1805-1819. Under a 2010 amendment, Dish agreed
ER 1802, 1831.
Id. (emphasis added).
Dish also agreed not to authorize others to retransmit Fox's signal. The
RTC Agreement states that Dish "shall not, for pay or otherwise, .
authorize the ...retransmission of any portion any [Fox-owned] Station's
Analog Signal without prior written permission." ER 1800-1801, 1810-1811 .
11
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C. Dish Retransmits Fox's Signal Over The Internet Without A
License.
On January 7, 2013, at the Consumer Electronics Show ("CES") in Las
Vegas, Dish announced its new service for streaming live television over the
Internet, which it calls the "Dish Anywhere Experience." The centerpiece of
Dish Anywhere is the second generation Hopper set-top box, called "Hopper
with Sling." ER 1534-1535, 1542-1543. Dish's January 7, 2013 press release
says that subscribers will now be able to "[w]atch live and recorded television
anywhere on Internet-connected tablets, smartphones and PCs at no additional
charge using the Hopper's built-in Sling capabilities and the new Dish
Anywhere app." Id. According to Dish, the technology works by "encoding
and redirecting ...alive or recorded TV signal from the Hopper to Internet-
connected iOS and Android tablets and smartphones." Id. This means Dish
is now retransmitting Fox's broadcast signal over the Internet.
Though Dish had offered streaming devices before (including the
standalone Sling Adapter and a discontinued Sling-enabled DVR), they were
niche products that Dish's CEO Joe Clayton admits that Dish "really didn't
tell a lot of people about." ER 1539; Lodged DVD, Video 5. As of late 2012,
of Dish subscribers were using Dish's earlier (now
discontinued) version of aSling-enabled DVR. ER 1541, 1791-1794. Now,
12
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Mr. Clayton explained, Dish is "trying to commercialize our technology at a
much higher level than we've done in the past." ER 1539.
In a slew of promotional videos, Dish emphasizes that its new service is
not the same as previous streaming devices. Instead, the second-generation
Hopper set-top box is "an amazing new product." ER 1538; Lodged DVD,
Video 2. Mr. Clayton bragged that "this new Dish Anywhere capability is
now much easier to use" than Dish's earlier Sling devices. ER 1537-1538;
Lodged DVD, Video 1. Mr. Khemka differentiated Dish's new service from
other streaming services that require "extra hardware," "separate apps," or are
limited to "in-home viewing only." ER 1539; Lodged DVD Video 4.
Dish's Chief Marketing Officer also promised to "kick off a massive
marketing campaign promoting how the incredible platform continues to
redefine the in-home, and the out-of-home entertainment experience." ER
1538; Lodged DVD, Video 2. In February 2013, Dish announced a "new
multimillion-dollar national marketing campaign" including "a series of
television, radio, print and digital advertisements" highlighting "the Hopper's
new built-in Sling capabilities and the new Dish Anywhere app." ER 1537,
1559-1560.
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D. The RTC Agreement Prohibits Dish From Authorizing The
Copying Of Fox Programs For Viewing Outside The Home.
The RTC Agreement bars Dish from authorizing the recording of Fox
Programs, other than by consumers for private home use (the "No-Copying
Clause"):
EchoStar [Dish's predecessor] shall not, for pay or
otherwise, record, copy, duplicate andlor authorize
the recording, copying, duplication (other than by
consumers for private home use) or retransmission
of any portion of any Station's Analog Signal
without prior written permission.
ER 1800-1801, 1810-1811 (emphasis added).
Consistent with its agreement with Fox, Dish's Residential Subscriber
Agreement also makes clear that subscribers do not have the right to copy
programs for use outside their homes:
Private Home Viewing Only. DISH Network
provides Services to you solely for viewing, use and
enjoyment in your private home. You agree that no
Services provided to you will be viewed in areas
open to the public, commercial establishments or
other residential locations. Services may not be
rebroadcast or performed, and admission may not be
charged for listening to or viewing any Services. If
your Services are viewed in an aYea open to the
public, a commercial establishment or another
residential location, we may disconnect your
Services .. .
ER 1742 (emphasis added).
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E. With Hopper Transfers, Dish Is Authorizing Its Subscribers
To Copy Programs For Use Outside The Home.
At CES, Dish also announced the launch of Hopper Transfers. Hopper
Transfers allows subscribers to make copies of programs on their Apple iPad
tablets. ER 1544. Once a copy of a program is saved locally to the
subscriber's iPad, the subscriber can watch it even if she is someplace where
there is no Internet connection, like an airplane. In Dish's press release, Mr.
Khemka announced:
Hopper Transfers completes the TV Everywhere
equation by giving DISH customers the ability to
take their recorded television programs and watch
them even when no Internet connection is available,
such as on a plane For the first time,
customers can truly enjoy their DISH service
anytime, anywhere.
ER 1544 (emphasis added).
Likewise, Dish's website advertises that with Hopper Transfers you can
"simply transfer your recorded TV programs to your iPad with our free app
before yoi~ leave the house and you can enjoy your favorite movies or shows
on flights or keep your kids entertained dining a long road trip." ER 1550
(emphasis added). A person who has left the house and is watching a copy of
a Fox program on an airplane or on a long road trip is, by definition, not at
home. Thus, the copy Dish is authorizing that person to make with Hopper
Transfers is not limited to "private home use," as the No-Copying Clause
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requires. Like Dish Anywhere, Hopper Transfers is only available to current,
paying Dish subscribers. ER 301-302 (Order at 4-5).
F. The District Court's Denial Of Fox's Preliminary Injunction
Motion.
The district court correctly found that subscribers with Dish Anywhere
can watch live television (including the Fox Programs) over the Internet. ER
301 (Order at 4). The district court also found that Hopper Transfers "allows
Dish customers to copy pre-recorded programs from their DVRs to Apple
iPad tablets so they can be viewed ̀ on the go."' ER 302 (Order at 5).
The district court further recognized that Dish's "right to retransmit the
Fox broadcast is governed by [the RTC] Agreement," including the No-
Copying Clause and No-Internet Clause. ER 302 (Order at 5). The district
court nevertheless chose to bypass the issue of Fox's likelihood of success on
the merits to reach the conclusion that "even assuming that Fox is likely to
succeed on the merits of its claims," ER 312 (Order at 15), Fox failed to show
that its threatened harms were the type of injuries that justify injunctive relief.
ER 304 (Order at 7)
Paradoxically, the district court acknowledged that nearly all of the
harms identified by Fox have been found by other district courts in this
Circuit to be irreparable, thus justifying injunctive relief. See ER 305 (Order
at 8) ("District courts in this circuit have recognized that harms such as loss to
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advertising revenue, harm to existing licensing agreements, and loss of
control over the dissemination of copyrighted works can, under certain
circumstances, constitute irreparable harm.") (citing Fox Television Stations,
Inc. v. Ba~ryDrille~ Content Sys., PLC, 915 F. Supp. 2d ll38, 1147 (C.D.
Cal. 2012); Warner Bros. Entm't, Inc. v. WTV Sys., Inc., 824 F. Supp. 2d
1003, 1012 (C.D. Cal. 2011)). Additionally, the court observed that the
"Second Circuit has also found that similar intangible injuries can support the
issuance of a preliminary injunction." Id. (citing WPIX, Inc. v. ivi, Inc., 691
F.3d 275, 285-86 (2d Cir. 2012)).
Nonetheless, the district court purported to distinguish each of those
decisions on the ground that "[i]n those cases . . .the defendants had no
preexisting business relationship with Fox." ER 307-309 (Order at 10-12). In
other words, because Fox had previously granted Dish a narrow license to
televise the Fox Programs via Dish's satellite television service, the district
court concluded that Dish may now exceed the scope of its license and exploit
Fox's programming in violation of that license without being enjoined.
The district court also noted Fox's concern that because Dish's Internet
streaming and file-copying services were unlicensed, Fox had no way to
ensure that its valuable programs were being protected against piracy and
security risks. ER 309 (Order at 12). Yet the court brushed off these
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concerns as speculative because of Dish's non-binding assurances that it is
protecting Fox's valuable works from piracy. ER 309-310 (Order at 12-13).
Finally, the court recognized that Dish's new, unauthorized services are
not currently measured by C3, the metric relied on by advertisers when
valuing commercial advertising time on television. Yet, even though Dish's
services presently undermine the measurement of commercial viewing on the
Fox Network, the district court dismissed the need for injunctive relief
because Nielsen has supposedly made a "pledge" to modify its measuring
system at some undisclosed time in the future. ER 310 (Order at 13).
Recognizing the speculative nature of Nielsen's "pledge" to measure online
television streaming, the district court nevertheless concluded that "it strongly
suggests that the entities that gather advertising data are ready and willing to
adapt to the new landscape." ER 310 (Order at 13). Thus, in the district
court's view, even if Fox will be harmed in some incalculable way between
now and the time of trial, an injunction is not warranted because those harms
might not continue forever.
SUMMARY OF ARGUMENT
Other district and appellate courts that have addressed unauthorized
Internet streaming and distribution of Fox's television programs have
repeatedly found a threat of irreparable harm to Fox. Nonetheless, the district
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couz-t here believed that because Fox has an existing licensing relationship
with Dish and also licenses its programming to other distributors, all of Fox's
injuries are necessarily quantifiable. The court effectively ruled that
copyright owners who exploit their works are no longer entitled to interim
injunctive relief. This was legal error.
The district court's ruling ignores the Supreme Court's instruction that
categorical rules should never be applied in an irreparable harm analysis. It
also conflicts (1) with the law of this Circuit that exceeding the scope of a
copyright license is copyright infringement, and (2) with the Copyright Act's
express authorization of injunctive relief as a remedy for infringement. By
foreclosing injunctive relief as a remedy to copyright owners who sue their
infringing licensees, the court erroneously imposed a de facto compulsory
license that is not authorized by statute.
The district court also erred by finding that because Fox licenses
Internet streaming and other distribution rights to third parties, the harms
from Dish's unauthorized exploitation of the Fox Programs are, as a matter of
law, quantifiable. But Fox is not arguing that its irreparable harm stems from
unpaid royalties; Fox is irreparably injured because it has lost its fundamental
right to exclude Dish from unlicensed exploitation of the Fox Programs,
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including in direct competition with authorized uses by other, licensed
distributors.
The district court also applied an erroneous legal standard by
dismissing the testimony of knowledgeable Fox executives as speculative. It
found that Fox failed to establish that its business was "already harmed" or
that there was any threat of harm "beyond the word of its executives." ER
311 (Order at 14). But proof of actual harm or certainty of future harm is not
required for a preliminary injunction. A plaintiff need only show a
"significant risk" of harm, and there is nothing speculative about executives'
first-hand testimony explaining how their business relationships will be
undermined by the defendant's illegal conduct. If Fox were required to wait
until all of its injuries actually materialized, that would defeat the purpose of a
preliminary injunction.
The district court also erred by relying on factual findings that are
illogical, implausible, and not supported by evidence. Fox's executive and
industry veteran, Sherry Brennan, testified that if Dish is allowed to continue
streaming Fox's programs over the Internet between now and trial, other
licensed distributors will demand concessions in their upcoming negotiations
with Fox to mitigate the risk of losing subscribers to Dish. This will
negatively impact Fox's business relationships and negotiations in ways that
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cannot be quantified. Other courts have relied on the same exact evidence
when enjoining unauthorized Internet streaming of Fox's programs. Yet the
district court here assumed that because Fox licenses Internet streaming rights
to third parties, its injuries are all calculable. This was clear error because the
threat to third-party relationships is a different harm than the loss of license
fees Dish might have been required to pay Fox. Without explanation, the
court also ignored the declaration of Michael Biard, the Fox executive who
leads Fox's negotiations with distributors. This was clear error in and of
itself.
Lastly, the district court erred in finding no threat of irreparable harm to
Fox's commercial advertising business. It is undisputed that advertisers rely
on Nielsen's "C3" metric to quantify how many people watch advertisements
during a Fox Program and to determine how much to pay for those ads. It is
also undisputed that C3 does not measure viewership of Dish's new,
unlicensed services. Thus, Dish's conduct necessarily threatens Fox's
commercial advertising business. Nonetheless, the court discounted these
injuries on the grounds that companies other than Nielsen offer services that
measure Internet streaming. Even if true, this is irrelevant because C3 —
which does not measure Dish's new services — is what advertisers rely on.
The district court also relied on the triple hearsay of Dish's expert for the
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proposition that Nielsen has supposedly "pledged" to begin measuring
Internet streaming at some time in the future. But an unsupported,
speculative promise about measurements advertisers may not accept does
nothing to curb the imminent threat Fox faces between now and the time of
trial.
ARGUMENT
I. Standard of Review
To prevail on a motion for a preliminary injunction, the movant must
show that it "is likely to succeed on the merits, that [it] is likely to suffer
irreparable harm in the absence of preliminary relief, that the balance of
equities tips in [its] favor, and that an injunction is in the public interest."
Winter v. NatuNal Res. Def. Council, Inc. 555 U.S. 7, 20 (2008).
Alternatively, an injunction should issue if there are "serious questions going
to the merits" and a "balance of hardships that tips sharply towards the
plaintiff," so long as the plaintiff "also shows that there is a likelihood of
irreparable injury and that the injunction is in the public interest." Alliance
for the Wild Rockies v. Cottf~ell, 632 F.3d 1127, 1134-35 (9th Cir. 2011). This
standard applies to injunction motions arising from both copyright and breach
of contract claims. It is well established that a preliminary injunction may
issue to prevent a breach of contract —particularly where, as here, the contract
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is governed by New York law, which permits injunctive relief in breach-of-
contract cases. See, e.g., Wisdom Import Sales Co. v. Labatt Brewing Co.,
339 F.3d 101, 107-08 (2d Cir. 2003).
An order denying a preliminary injunction is reviewed for abuse of
discretion. Associated Press v. Otter, 682 F.3d 821, 824 (9th Cir. 2012). In
deciding whether the district court has abused its discretion, the Court reviews
legal issues de novo and findings of fact for clear error. Id. "A decision
based on an erroneous legal standard or a clearly erroneous finding of fact
amounts to an abuse of discretion." Id. (quoting Pimental v. Dreyfus, 670
F.3d 1096, 1105 (9th Cir. 2012)).
II. The District Court Applied An Erroneous Legal Standard
Regarding The Irreparable Harm Element Of The Preliminary
Injunction Test.
The district court correctly observed that, following the Supreme
Court's decisions in eBay v. MercExchange, L.L.C., 547 U.S. 388 (2006), and
Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008), the Ninth Circuit now
requires that a plaintiff in a copyright infringement case must satisfy the
traditional four-factor test employed by courts of equity for injunctions. See
ER 304 (Order at 7); Flexible Lifeline Sys. v. Precision Lift, Inc., 654 F.3d
989, 998 (9th Cir. 2011). As explained below, in its zeal to apply eBay,
however, the district court effectively created categorical rules of law that will
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disqualify from interim injunctive relief any copyright owner that has
exploited its works through licensing agreements with third parties or through
a contract with the alleged infringer, even one that expressly prohibits the
infringing conduct at issue.
Because the district court's over-reading of eBay would deprive entire
classes of copyright owners from meaningful injunctive relief before trial, this
Court should reverse the district court's decision and restore the proper
balance to the traditional equitable standard for the granting of preliminary
injunctions in copyright cases.
A. The Supreme Court In eBay Condemned The Kind Of
Categorical Approach Employed By The District Court.
In eBay, the Supreme Court rejected the application of categorical rules
either against or in favor of injunctions, seeing such rules as incompatible
with the traditional four-factor test "historically employed by courts of
equity." 547 U.S. at 390, 393-94. In that case, the holder of a business
method patent for an electronic marketplace sued eBay for patent
infringement. After a jury found that eBay had infringed the patent, the
district court declined to issue a permanent injunction, based on its conclusion
that a "plaintiff's willingness to license its patents" and its "lack of
commercial activity in practicing the patents" would be sufficient to establish
that the plaintiff would not suffer irreparable harm in the absence of an
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injunction. See id. at 393 (quoting 275 F. Supp. 2d 695, 712 (E.D. Va.
?003)). The Federal Circuit reversed, applying what it termed the "general
rule that courts will issue permanent injunctions against patent infringement
absent exceptional circumstances." Id. at 391 (quoting eBay, Inc. v.
MercExchange, LLC, 401 F.3d 1323, 1339 (Fed. Cir. 2005)).
The Supreme Court held that neither the district court nor the appellate
court had "fairly applied [the] traditional equitable principles" regarding
injunctive relief. 547 U.S. at 393. The Court criticized the district court for
"adop[ting] certain expansive principles suggesting that injunctive relief
could not issue in a broad swath of cases." Id. The Court explained that
"traditional equitable principles do not permit such broad classifications" and
held that to the extent the district court had adopted such a "categorical rule,"
its analysis "cannot be squared with the principles of equity adopted by
Congress [in the Patent Act]." Id. The Supreme Court then criticized the
Federal Circuit for "depart[ing] in the opposite direction" from the four-factor
test by applying a presumption in favor of injunctive relief: "Just as the
District Court erred in its categorical denial of injunctive relief, the Court of
Appeals erred in its categorical grant of such relief." Id. at 393-94.
In a concurring opinion, Chief Justice Roberts, joined by Justices Scalia
and Ginsburg, emphasized that the Court's decision did not mean that district
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courts were left to write on a "clean slate" in applying the four-factor
equitable test. "Discretion is not a whim," the Chief Justice advised, "and
limiting discretion according to legal standards helps promote the basic
principle of justice that like cases should be decided alike." 547 U.S. at 395
(quoting Martin v. Franklin Capital Copp., 546 U.S. 132, 139 (2005)).
Noting that since at least the early nineteenth century, courts have
granted injunctive relief upon a finding of infringement in the "vast majority
of patent cases," the Chief Justice observed that, while this "long tradition of
equity practice" may not entitle a prevailing plaintiff to a permanent
injunction, it nevertheless should inform the application of the equitable test
"given the difficulty of protecting a right to exclude through monetary
remedies." Id. at 395 (emphasis in original). "[I]n this area as others," the
Chief Justice concluded, "`a page of history is worth a volume of logic." Id.
(quoting New York Trust v. Eisner, 256 U.S. 345, 349 (1921) (Holmes, J.)).
This Court and other circuits have now held that eBay applies in
copyright cases. See, e.g., Flexible Lifeline , 654 F.3d at 998 (collecting
cases); Salinge~ v. Colting, 607 F.3d 68, 81 (2d Cir. 2010); see also Herb
Reed Enters. v. Florida Entm't Mgt., 2013 WL 6224288, at *8 (9th Cir. Dec.
2, 2013) (holding that eBay applies to injunctions in trademark cases).
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In Salinge~, the Second Circuit undertook a careful analysis of the
impact of eBay on preliminary injunctions in copyright cases. The Salinge~
court concluded that the historical practice favoring preliminary injunctions in
copyright cases should still inform trial courts' decisions — in large part
because copyright ultimately involves a "right to exclude" and courts
traditionally have recognized "`the difficulty of protecting a right to exclude
through monetary remedies."' See 607 F.3d at 82 (quoting eBay, 547 U.S. at
395 (Roberts, J., concurring)). Accordingly, the Salinger court advised that,
even without the former presumption of irreparable harm, "[a]s an empirical
matter," it "may well be the case" that "most copyright plaintiffs who have
shown a likelihood of success on the merits would ... be irreparably harmed
absent preliminary injunctive relief." Id. at 82. The Salinger court noted that
"[h]arm may be irremediable, or irreparable, for many reasons, including that
a loss is difficult to replace or difficult to measure, or that it is a loss that one
should not be expected to suffer." Id. at 81. The court further noted that such
harm is particularly likely to arise in the context of copyright infringement
claims, because "to prove the loss of sales due to infringement is .
notoriously difficult." Id. (quoting Omega Importing Corp. v. Petri-Kine
Cafne~a Co., 451 F.2d 1190, 1195 (2d Cir. 1971) (Friendly, C.J.)).
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In reaching the same conclusion about eBay's application to copyright
cases, this Court cited Salinger with approval and discussed at length the
Supreme Court's warning in eBay against relying on categorical rules either
in favor of or against the granting of injunctive relief. See Flexible Lifeline,
654 F.3d at 995, 998-99. Courts in this Circuit also have consistently
confirmed that the showing required of a plaintiff seeking injunctive relief is
merely "a likelihood of irreparable harm," not the existence of manifest
current harm or a certainty of future harm. E.g., id. at 998; Perfect 10, Inc. v.
Google, Inc., 653 F.3d 976, 979 (9th Cir. 2011); Wainer Bros. Entm't Inc. v.
WTV Systems, Inc., 824 F. Supp. 2d 1003, 1012 (C.D. Cal. 2011).2
B. The District Court's Ruling That Fox's Contractual
Relationship With Dish Precludes Fox From Establishing
Irreparable Harm Is Precisely The Type Of Categorical Rule
The Supreme Court Rejected In eBay.
As described above, the district court recognized that harm to Fox's
business relationships with other distributors, loss of control over the
dissemination of its copyrighted works, and loss of advertising revenue all
2 This Court's recent decision in Herb Reed Enterprises is also instructive.
The Court reversed the granting of an injunction where the district court made
no factual findings at all, and its analysis of irreparable harm was not
"grounded in any evidence or showing offered by [the plaintiffJ." Id. at *8-9.
This Court nevertheless made clear that a plaintiff need only show "likely,"
not certain, irreparable harm, and reaffirmed that "[e]vidence of loss of
control over business reputation and damage to goodwill could constitute
irreparable harm." Id. at *8 (citing Stuhlba~g Intl Sales Co. v. John D. Bush
& Co., 240 F.3d 832, 841 (9th Cir. 2001)).
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would qualify as irreparable harm under well-settled precedents. See, supra,
Statement of Facts, Part G; see also ER 305 (Order at 8). But the court then
held those rules inapplicable to Fox because Fox has an existing contractual
relationship with Dish. ER 307-309 (Order at 10-12). This is a non sequitur.
The fact that Fox and Dish are parties to the RTC Agreement, for example,
does nothing to prevent the potential harm that Fox has identified to its
relationships with other television distributors and other licensees. In
addition, the fact that the parties have a contractual relationship does not
mean that the harm caused by the defendant's infringement necessarily is
easily calculable based on the contract. Here, the contractual relationship
flatly prohibits the exploitation of the rights at issue. Similarly, Dish's
unauthorized streaming of Fox's copyrighted works to Internet devices
prevents Fox from exercising any control by way of contractual provisions
that could ensure compliance with strict anti-piracy and security procedures.
More fundamentally, the district court's approach effectively moves the
goalposts for an entire category of copyright plaintiffs —those that license
their works or have contractual agreements with the alleged infringer. By
thus making injunctive relief unavailable in "a broad swath of cases," the
district court did exactly what the Supreme Court cautioned against in eBay.
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Nothing in the Copyright Act or existing case law supports such a rule.
To the contrary, the statute expressly provides for injunctive relief. See 17
U.S.C. § 502(a). And it is settled law in this Circuit that a party to a
contractual license agreement may be found liable for copyright infringement
where it exceeds the scope of its granted rights. See, e.g., Sun Microsystems,
Inc. v. Microsoft Copp., 188 F.3d 1115, 1121 (9th Cir. 1999) ("[i]f ... a
license is limited in scope and the licensee acts outside the scope, the licensor
can bring an action for copyright infringement"); see also MDYlndus., LLC v.
Blizzard Entm't, Inc., 629 F.3d 928, 939-41 (9th Cir. 2010); LGS Architects,
Inc. v. Concordia Homes of Nev., 434 F.3d 1150, 1154-57 (9th Cir. 2006);
Frank Music CoNp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 511 (9th
Cir. 1985).
By foreclosing preliminary injunctive relief for copyright owners who
sue their licensees for copyright infringement and for breach of their license
agreements, the district court also imposed a de facto compulsory license,
permitting the defendant to infringe through trial — a period that could last
months or even years —with only the consequence that it might have to make
a payment of some sort at the conclusion of the case. Compulsory licenses,
however, are rare under copyright law and historically have been imposed
only by Congress in the form of detailed and carefully calibrated statutory
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schemes. See, e.g., 17 U.S.C. §§ 111, 115, 118, 119, 122; Harper &Row
Publishers, Inc. v. Nation Enters., 471 U.S. 539, 569 (1985) ("Congress has
not designed, and we see no warrant for judicially imposing, a ̀ compulsory
license."'); see also 4 M. Nimmer & D. Nimmer, NIMMER ON COPYRIGHT
§ 13.05 (2013) (noting that judicially created compulsory licenses are
exceedingly rare).
C. The District Court's Ruling That Fox Cannot Establish
Irreparable Harm Because It Has Licensed Its Works To
Ot{ie~ Distributors Is Also The Type Of Categorical Rule The
Supreme Court Rejected In eBay.
The district court also held Fox could not establish likely irreparable
injury based on evidence of harm to its relationships with other distributors of
its programming via Internet streaming and downloads, such as iTunes and
Amazon, because those agreements might provide "benchmarks" for
calculating damages. ER 308 (Order at 11). This analysis completely
misapprehends Fox's position. Fox did not argue that Dish Anywhere and
Hopper Transfers cause irreparable injury in the form of unpaid royalties —
indeed, the new Dish services at issue were expressly prohibited under the
agreement. Instead, Fox demonstrated that Dish, by offering a competing
unlicensed service to its subscribers, is devaluing the rights to Fox's
programming, which will negatively impact Fox's future negotiations with
potential licensees. ER 236; see also BarryDrille~, 915 F. Supp. 2d at 11.47
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(offering an unauthorized service that is directly substitutable for the services
offered by Fox's legitimate licensees puts "pressure on those licensing
relationships"). As shown by the Biard and Brennan Declarations submitted
by Fox, these harms to license negotiations cannot be measured or
recompensed by reference to royalty rates or other monetary terms in existing
license agreements. See ER 1802-1803, 233, 235-236.
It should be beyond dispute that by licensing its programs to others in a
carefully controlled way, Fox is not waiving its right to enjoin copyright
infringement. See, e.g., Capitol Records, LLC v. ReDigi, Inc., 934 F. Supp.
2d 640, 654 (S.D.N.Y. 2013) (copyright owner "does not forfeit its right to
claim copyright infringement merely because it permits certain uses of its
works"). As the WPIX v. ivi district court emphasized in a decision praised
by the Second Circuit as "thorough and carefully[]considered," 691 F.3d at
278, the defendant "cannot seriously argue that the existence of thousands of
companies who legitimately use plaintiffs' programming and pay full freight
means that ivi's illegal and uncompensated use does not irreparably harm
plaintiffs." 765 F. Supp. 2d 594, 619 (S.D.N.Y. 2011) (emphasis in original).
Ultimately, what is at issue is Fox's ability as a copyright owner to
control how and when its works are disseminated to consumers. The
Copyright Act grants the copyright owner the right to license "any
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subdivision" of its exclusive rights. 17 U.S.C. § 201(d). Those rights "may
be chopped up ... no matter how small." Silvers v. Sony Pictures Entm 't,
Inc., 402 F.3d 881, 884, 887 (9th Cir. 2005). Accordingly, as courts in this
Circuit have consistently recognized, copyright owners like Fox "have the
exclusive right to decide when, where, to whom, and for how much they will
authorize transmission of their Copyrighted Works to the public." Warne
Bros. Entm't v. WTV Sys., 824 F. Supp. 2d 1003, 1012 (C.D. Cal. 2011)
(citations omitted). This exclusive control over the manner in which
copyrighted works are exploited commercially is an exercise of Fox's
fundamental "right to exclude" that is inherent in the concept of copyright as
a property right.3
As the Second Circuit recognized in Salinger, interfering with a
copyright owner's ability to control the timing and channels of distribution for
its work invariably causes injury that is difficult to quantify. 607 F.3d at 82
(noting that courts traditionally have recognized "the difficulty of protecting a
right to exclude through monetary remedies") (internal quotation and citation
omitted); see also id. at 81 (infringement of copyright owner's "right not to
3 Broadcast television is not analogous to a piece of technology where a
patent owner might license the same rights to all comers for a set price. The
ability of a broadcaster to control the timing of and manner in which its
programs are distributed is essential to the broadcast television business
model because it is the way in which broadcasters generate multiple revenue
streams from their content. ER 236-237 (Brennan Decl. ¶¶ 25-29).
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speak, for even minimal periods of time, unquestionably constitutes
irreparable injury") (internal quotations and citations omitted). As the Federal
Circuit has explained, "Copyright licenses are designed to support the right to
exclude; money damages alone do not support or enforce that right."
Jacobsen v. Katzer, 535 F.3d 1373, 1381-82 (Fed. Cir. 2008).
The Federal Circuit has recognized in the analogous patent context that
the absence of a presumption of irreparable harm does not mean "that courts
should entirely ignore the fundamental nature of patents as property rights
granting the owner the right to exclude." Robert Bosch LLC v. Pylon Mfg.
Copp., 659 F.3d 1142, 1149 (Fed. Cir. 2011). Observing that "the axiomatic
remedy for trespass on property rights is removal of the trespasser," the
Federal Circuit has held that courts therefore should be guided by the
"historical practice of protecting the right to exclude through injunctive relief
...given the difficulties of protecting this right solely with monetary relief."
Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 702 F.3d 1351, 1362
(Fed. Cir. 2012).4
4 In the district court proceedings, Dish objected that any consideration of the
importance of a copyright owner's right to exclude would result in a de facto
return to presuming irreparable harm. But that is plainly incorrect. There are
many situations where a copyright owner might establish a likelihood of
infringement but be unable to show likely irreparable harm, such as (1) where
a licensee has infringed by exceeding the scope of its license but the
agreement spells out monetary penalties or consequential damages for such
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In the copyright context, WTV Systems is directly on point. There, the
defendants operated an unauthorized service that transmitted plaintiffs'
copyrighted movies over the Internet. 824 F. Supp. 2d at 1005-08. The court
observed that "[e]ach of the Plaintiffs has its own strategy for structuring their
respective distribution windows" for when their motion pictures are released
in theaters, on cable or satellite television, on VOD, online, or on DVD, and
held that the defendants, by prematurely making the Plaintiffs' works
available on the Internet without authorization, "interfere[d] with Plaintiffs'
ability to control the use and transmission of their Copyrighted Works,
thereby causing irreparable injury to Plaintiffs." Id. at 1006, 1012-13
(emphasis added).
Recognizing the importance of control in this sense, courts across the
country in the past two years that have considered services engaged in
unauthorized Internet streaming of copyrighted works have found irreparable
harm —based on the same kinds of injuries and testimony that Fox's
executives proffered here. See WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 286 (2d
Cir. 2012) ("ivi") (broadcast networks would be irreparably harmed by
breach; (2) where a copyright owner has expressed a willingness to license its
works to the world for free and without restriction; (3) where the copyright
owner has offered to license its works at a set price to all comers (e.g., eBay,
Inc. v. Bidder's Edge, Inc., 100 F. Supp. 2d 1058, 1067-68 (N.D. Cal. 2000));
or (4) where the copyright owner fails to provide any evidence of harm (e.g.,
Herb Reed Enters., 2013 WL 6224288, at *8-9).
35
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unauthorized Internet streaming service); Fox Television Stations, Inc. v.
FilmOn X LLC, -- F. Supp. 2d --, 2012 WL 4763414, at * 15-16 (D.D.C. Sept.
5, 2013), appeal docketed, No. 13-7146 (D.C. Cir. Sept. 20, 2013)
("FilmOn") (same); Fox Television Stations, Inc. v. BarryDriller Content
Sys., 915 F. Supp. 2d 1138, 1147 (C.D. Cal. Dec. 27, 2012), appeal docketed
sub nom., Fox Television Stations, Inc. v. Aereokiller, LLC, Nos. 13-55156,
13-55157 (9th Cir. Jan. 25, 2013) ("Barr~yDriller") (same).
Finally, the district court also rejected Fox's loss-of-control argument
by invoking the parties' contractual relationship, noting that "only paying
Dish subscribers can access the Services." ER 309 (Order at 12). This is
doubly erroneous. First, it claims to address only one possible type of harm
from loss of control —namely, the inability to stop ongoing, viral piracy of
copyrighted content on the Internet. As explained above, there is much more
to a copyright owner's exercise of control over its works, such as the right to
choose some licensees and exclude others, and the right to decide where,
when, and how its copyrighted works are exploited. The district court
completely overlooked this point.
Second, the court's reference to the RTC Agreement underscores the
non-monetary nature of the harm caused by Dish's infringement because Dish
is engaging in precisely the conduct that Fox sought to control (and prohibit)
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through express, nonmonetary terms set forth in the RTC Agreement,
including the obligation that Dish
, and the
obligation not to authorize subscribers to copy Fox Programs for viewing
outside the home (the No-Copying Clause). See, supra, Statement of Facts,
Parts D, F.
D. By Treating Fox's Testimony About Future Harm As
Speculative, The District Court Imposed A Heightened
Standard For Injunctive Relief That Departs From The
Traditional Equitable Rule.
As the district court acknowledged in its Order, a showing of present
actual harm is not necessary to satisfy the irreparable harm requirement for
injunctive relief. Nor is a certainty of future harm required. Instead, the
moving party need only show a "likelihood" or "significant threat" of
irreparable injury. ER 304 (Order at 7 (quoting Oakland Tribune, Inc. v.
Chronicle Pub. Co., 762 F.2d 1374, 1376 (9th Cir. 1985)).
Nonetheless, the district court applied the wrong legal standard. It
rejected testimony of Fox's knowledgeable and experienced executives on the
ground that it failed to show that Dish's new services have "already harmed"
Fox and that Fox's testimony about likely future harms was inherently
"speculative." ER 311 (Order at 14). The court fundamentally misconstrued
what it means for evidence to be unduly speculative in the context of a
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preliminary injunction proceeding. A prediction of future harm based on
firsthand experience and common sense inferences from undisputed facts is
not speculative. To the contrary, it is well established that the moving party
need only show a "significant risk" that it will experience "harm that cannot
be compensated after the fact by monetary damages." Crowe & Dunleavy,
P. C. v. Stidham, 640 F.3 d 1140, 1157 (10th Cir. 2011); Adams v. Freedom
Forge Corp., 204 F.3d 475, 484-85 (3d Cir. 2000) (same); Associated Gen.
Contractors of Cal., Inc. v. Coalition for Econ. Equity, 950 F.2d 1401, 1410
(9th Cir. 1991) (same).
Irreparable harm is frequently defined as an injury that cannot be
"remedied by a damage award" alone. Rent-A-Center, Inc. v. Canyon Tel. &
Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991). This includes
"damages (that) would be difficult to valuate." Id. As this Court has long
recognized, "injury sometimes occurs whose measure is uncertain, and a
threat of injury may be quite real even though the measure of the threatened
injury defies calculation." Treasure Valley Potato Bargaining Assn v. Ore-
Ida Foods, Inc., 497 F.2d 203, 218 (9th Cir. 1974) (emphasis added).
Accordingly, intangible injuries, such as "lost contracts and customers, and
harm to [a company's] business reputation and goodwill" qualify as
irreparable harm. Stuhlba~g Intl Sales Co. v. John D. Bush & Co., 240 F.3d
38
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832, 838 (9th Cir. 2001); Rent-A-Center, 944 F.2d at 603.5 In sum, the fact
that damages are difficult to quantify makes them irreparable, not unduly
speculative. Gilder v. PGA Tour, Inc., 936 F.2d 417, 423 (9th Cir. 1991).
This rule comports with the purpose of a preliminary injunction, which
is to provide speedy, effective relief in advance of trial and to nip unlawful
conduct in the bud before it can cause significant injury. To require proof that
the plaintiff already has suffered actual harm or that future harm is certain —
as the district court effectively did in its Order below — "would defeat the
purpose of the preliminary injunction, which is to prevent an injury from
occurring." Diamontiney v. Borg, 918 F.2d 793, 795 (9th Cir. 1990); accord
11A C. Wright, A. Miller, et al., FEDERAL PRACTICE AND PROCEDURE
§ 2948.1 (2013) ("the injury need not have been inflicted when application is
made or be certain to occur; a strong threat of irreparable injury before trial is
an adequate basis").
The district court's standard thus puts copyright plaintiffs in an
awkward "Catch-22" situation: if they move quickly, without waiting for the
full harm threatened by the defendant's conduct to become manifest, they will
5 Indeed, in one case relied on by the district court, Pyro Spectaculars North,
Inc. v. Souza, 861 F. Supp. 2d 1079 (E.D. Cal. 2012), the court in fact granted
a preliminary injunction based on evidence that the defendant's conduct
threatened to disrupt the plaintiff's relationship with its customers. Id. at
1092.
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be denied injunctive relief because the harm is deemed "speculative." But if
they wait for the harm to become present and palpably painful, they will be
subject to arguments that injunctive relief should be denied because they
waited too long to take action.
III. The District Court's Factual Findings Were Clearly Erroneous.
"A district court abuses its discretion if it bases its decision on .. .
clearly erroneous findings of fact." M.R. v. Dreyfus, 697 F.3d 706, 725 (9th
Cir. 2012) (internal quotations and citations omitted). In determining whether
there was clear error, the Court of Appeals looks at whether the trial court's
ruling "resulted from a factual finding that was illogical, implausible, or
without support in inferences that may be drawn from the facts in the record."
Id. (internal quotes and cites omitted).
A. The District Court Erred In Finding No Threat Of
Irreparable Harm To Fox's Distributor Relationships.
(1) Fox's Irreparable Harm Evidence Exceeds That Which
Other Courts Have Relied On In SirnilaY Circumstances.
In support of its preliminary injunction motion, Fox submitted the
declaration of Michael Biard, Fox's Executive Vice President, Distribution.6
ER 1795-1863. Mr. Biard is personally involved in Fox's contract
negotiations with MVPDs, including cable and satellite television providers
6 Mr. Biard was recently promoted to President, Distribution.
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like Dish, as well as third-party distributors such as Hulu, Apple, and
Amazon. ER 1796-1797 (Biard Decl. ¶¶ 2-3). He has been negotiating such
deals for more than 10 years, typically as the "lead negotiator," and knows the
business models of Fox and its distributors. Id.
Mr. Biard explained that
ER
1803. Based on his 10-plus years of experience and dealings with these
programming distributors, Mr. Biard testified that
. He explained that Dish's competitors
" because
. Id. According
to Mr. Biard,
ER 1803-1804.
Fox also submitted the declaration of Sherry Brennan, Fox's Senior
Vice President, Distribution Strategy and Development. ER 225-265. Ms.
Brennan is an industry veteran with decades of experience, extensive
knowledge of Fox's distribution strategy, and personal knowledge of Fox's
negotiations with its programming distributors. ER 226, 228-231, 235.
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Ms. Brennan explained how Dish's unauthorized conduct threatens
authorized distributors and their relationships with Fox: "If Dish is streaming
live Fox programming over the Internet to its subscribers, other MVPDs will
demand the same rights or other concessions to help mitigate the risk of
losing subscribers to Dish." ER 235. Based on her 24 years of combined
experience working for Fox (as well as MVPDs), Ms. Brennan is "certain that
Dish's continuing ability to stream Fox's live programming over the Internet
without authorization will be a factor in [Fox's upcoming] negotiations." Id.
In the past 12 months, Ms. Brennan submitted virtually identical
testimony in support of Fox's efforts to stop unauthorized Internet streaming
of Fox's programming in Los Angeles and Washington, D.C. In BarryDriller
(C.D. Cal.), Judge Wu readily accepted Ms. Brennan's testimony as sufficient
proof of irreparable harm. See 915 F. Supp. 2d at 1147. Relying solely on
Ms. Brennan's declaration, Judge Wu concluded that an unauthorized
retransmission service "damages Plaintiffs' goodwill" with its MVPD
distributors and "puts the same kind of pressure" on Fox's relationships with
Internet and digital distributors such as Hulu and Apple. Id. (recognizing that
unauthorized Internet streaming threatens these relationships "to a greater
degree, because the services are more directly substitutable")
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In Fox Television Stations, Inc. v. FilmOn X LLC (D.D.C.), Judge
Collyer also relied on Ms. Brennan's declaration testimony and found that
unauthorized Internet streaming irreparably harms Fox because it threatens to
negatively impact Fox's upcoming negotiations with licensed MVPDs and
other distributors. 2013 WL 4763414 at * 15-16. The court expressly rejected
the defendant's claims that Ms. Brennan's statements about negative impacts
on Fox's business relationships were speculative and held that Ms. Brennan's
testimony showed that "irreparable injury is likely in the absence of an
injunction." Id. at * 16 (italics in original). Judge Collyer also held that harm
to contractual relationships and negotiations was not quantifiable and, thus,
warranted injunctive relief. Id.
Other courts in this Circuit and elsewhere similarly have held that a
copyright owner is irreparably harmed when a service provider streams its
video content over the Internet without authorization because the copyright
owner's relationships and negotiations with authorized licensees are
negatively affected. WTV Sys., 824 F. Supp. 2d at 1012 (finding that unlawful
streaming service would harm "Plaintiffs' relationships, including the
goodwill developed with their licensees"); ivi, 691 F.3d at 285 (unauthorized
streaming service would irreparably harm broadcasters by devaluing the live
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programming and thereby "undermining existing and prospective
retransmission fees, negotiations, and agreements").
Here, Fox proffered more evidence of threatened harm than it did in
FilmOn and Ba~~yD~iller because it also submitted the declaration of
Mr. Biard, Fox's lead contract negotiator, to corroborate and bolster
Ms. Brennan's testimony. On this record, it was clear error and an abuse of
discretion for the district court to inexplicably reach the opposite result of its
sister courts. ER 306-307 (Order at 9-10).
(2) The Court's Finding Of No Harm To Fox's Distributor
Relationships Is Illogical And Implausible.
The district court's factual findings are clearly erroneous because they
are "illogical [and] implausible." Dreyfus, 697 F.3d at 725. The court agreed
with Dish that because some programming distributors are authorized to
stream Fox Programs over the Internet or distribute downloadable versions to
consumers, "any possible loss in bargaining power is either unlikely or can
The district court sought to distinguish this case from those involving
unauthorized Internet streaming services that have no preexisting business
relationship with Fox. ER 307 (Order at 10). In those cases, there was an
added threat that paying subscribers of an MVPD would cancel their
subscriptions, which in turn would reduce Fox's revenues from subscriber
fees. By comparison, subscribers that use Dish Anywhere and Hopper
Transfers are already paying customers that subscribe to Dish (which benefits
Fox). This may be true, but it is irrelevant. Just because Fox suffers
additional harms when a complete stranger steals its copyrighted
programming, it does not mean that Fox is not suffering different, but equally
harmful, injuries where, as here, its own distributor hijacks its programming.
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easily be measured." ER 306 (Order at 9). This misses the point. The fact
that Fox may have licensed these rights to Dish's competitors is precisely
why Dish's unauthorized exploitation of the same rights will negatively
impact Fox's upcoming negotiations with legitimate distributors. In other
words, why would a distributor pay for• a license, or agree to numerous
contract terms and burdensome conditions, if its direct competitor is freely
exploiting the exact same rights with no strings attached? The fact that other
distributors follow the rules and respect Fox's copyrights makes it more likely
— not less likely —that their relationships with Fox will be negatively
impacted by Dish's rogue conduct. See Bar~yDriller, 915 F. Supp. 2d 1138,
1147 (recognizing that if defendant exploits plaintiffs' works without paying,
"Plaintiffs' existing and prospective licensees will demand concessions to
make up the loss of viewership to non-paying alternatives"); ivi, 691 F.3d at
286 (finding that unauthorized exploitation of copyrighted programs threatens
to irreparably harm Fox's relationship with current licensees and, therefore,
the "strength of plaintiffs' negotiating platform and business model would
decline").
Furthermore, even if the value of the services unlawfully exploited by
Dish could be measured, as the district court assumed (ER 307 (Order at 10)),
this would not account for the negative impact on Fox's negotiations and
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relationships with other distributors that will occur between now and the time
of trial. These unique harms —which Ms. Brennan explains cannot be
quantified in dollars and cents —are separate and distinct from the harm of
Dish not paying Fox for certain rights that it is exploiting. ER 235.
(3) The Court's Finding Of No Harm To Fox's Distributor
Relationships Is Not Supported By Evidence.
The district court's findings regarding harm to Fox's distributor
relationships are clearly erroneous because they are not supported by
evidence. The court relied exclusively on the declaration of Richard Rapp, an
economist hired by Dish for this litigation. ER 306 (Order at 9). Rapp —who
has never worked a day in the television distribution business and has no
experience negotiating television distribution deals —submitted an 81-
paragraph declaration to rebut Fox's evidence of irreparable harm. Only two
short paragraphs of Mr. Rapp's declaration address the threat of harm to
Fox's negotiations with distributors between now and trial, and neither one
supports the district court's findings. ER 874-875.
In Paragraph 58, Mr. Rapp claims that any harm to Fox's goodwill
caused by disrupted relationships will supposedly be remedied because, if Fox
prevails at trial, it "will result in payment to Fox which would approximately
compensate imbalances between DISH and other MVPDs." ER 874. This is
meaningless. Mr. Rapp never refutes that Fox's goodwill is being damaged,
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nor does he explain how that injury could possibly be measured in the form of
a "payment." Id. Instead, Mr. Rapp ironically speculates that the harm to
Fox's distributor relationships is quantifiable merely because it might
someday result in a monetary award. This sort of circular, conclusory
reasoning cannot outweigh the corroborated, first-hand testimony of
experienced industry participants, Mr. Biard and Ms. Brennan. See Stinnett v.
Damson Oil Copp., 648 F.2d 576, 581 (9th Cir. 1981) (findings were clearly
erroneous because they were "wholly unsupported by evidence"); Helash v.
Ballard, 638 F.2d 74, 75 (9th Cir. 1980) (factual findings were clearly
erroneous because they were "totally unsupported by record evidence");
Security-Fist National Bank of Los Angeles v. Lutz, 322 F.2d 348, 356 n.1
(9th Cir. 1963) (factual finding is clearly erroneous if it contradicts the only
evidence in the record on point); Glens Falis Indemnity Co. v. American
Seating Co., 248 F.2d 846, 849 (9th Cir. 1957) (factual finding that is
unsupported by evidence is clearly erroneous).
In Paragraph 59, Mr. Rapp posits that any agreements between Fox and
its MVPD distributors "that come up for renewal prior to the time of trial will
result in negotiations that account for prevailing market conditions." ER 874-
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875.8 But this is precisely what Fox is worried about: the prevailing market
includes Dish's streaming and copying of Fox's programs without a license,
payment of consideration, or adherence to Fox's terms and conditions. If Fox
prevails at trial, it will be stuck with new agreements that were adversely
impacted by these "prevailing" adverse market conditions. If anything,
Paragraph 59 of Mr. Rapp's declaration supports Fox's claim of irreparable
harm because he concedes the effects of Dish's unlawful conduct will be
baked into Fox's distribution agreements entered into between now and the
time of trial.
Inexplicably, the district court's order also states that "Fox contends
that Dish's competitor MVPDs will only ̀ demand the same rights or other
concessions' if [Dish's] 2013 Services are found to be unlawful," and that Fox
presented no evidence that MVPDs will make these demands between now
and the time of trial. ER 307 (Order at 10) (citing Brennan Decl. ¶ 22, ER
235) (emphasis added). Fox never said that. Instead, Fox's witnesses clearly
explained that during the coming year — i.e., beforetrial —
ER 1802-1803, 233, 235-236. Because the district court's findings
g Mr. Rapp ignores Fox's related claim that
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misconstrue Fox's evidence and are unsupported by Dish's evidence, they are
clearly erroneous.
(4) The Court Ignored Key Evidence.
The district court also abused its discretion by completely ignoring
Mr. Biard's declaration without explanation. ER 305 (Order at 8). See Myers
v. United States, 652 F.3d 1021, 1036 (9th Cir. 2011) (factual findings were
clearly erroneous because they ignored key evidence). Unlike Mr. Rapp,
Mr. Biard is Fox's lead negotiator for distribution agreements with personal
knowledge of Fox's distributor relationships and, therefore, has a factual basis
for his testimony and opinions. ER 1796-1797, 1803-1804. Mr. Biard stated
that Dish's new unauthorized services will negatively impact his upcoming
negotiations with MVPDs and other distributors and could force Fox to make
concessions that it would not otherwise have made. ER 1803-1804. These
consequences are irreparable because they are difficult, if not impossible, to
quantify. Rent-A-Center, 944 F.2d at 603 (irreparable harm includes
"damages [that] would be difficult to valuate"). Mr. Biard's testimony
corroborates and bolsters Ms. Brennan's testimony, which, standing alone,
was sufficient to prove irreparable harm in FilmOn and Ba~ryDriller. It was
clear error for the district court to ignore it for no articulated reason.
..
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B. The District Court Erred In Finding No Threat Of
Irreparable Harm To Fox's Commercial Advertising
Business.
Advertisers pay more to have their ads displayed during Fox Programs
with higher viewership and an appealing demographic profile (e.g., viewers
aged 18-49 years). ER 227-228, 233-234. It is undisputed that Nielsen's C3
metric is "the most influential" commercial viewership rating and the one
"primarily relied upon by advertisers in deciding what rates to pay" for TV
ads. ER 233 (emphasis added).
Nielsen's C3 rating currently measures standard television and DVR
viewing in the home only and does not include out-of-home viewing such as
Internet streaming. ER 233. Therefore, it is also undisputed that Dish's
unauthorized Internet streaming of Fox Programs and distribution to mobile
devices is not captured by C3 and necessarily results in an undercount of
viewers watching TV ads on the Fox Network (and their demographic
profiles). ER 233. Courts consistently have recognized that a loss of
measured viewers impacts the value of TV ads and the willingness of
advertisers to buy them, all of which are difficult to quantify and constitute
irreparable harm. See BarryD~iller, 915 F. Supp. 2d at 1147 (relying on
Sherry Brennan's declaration, finding irreparable harm, and holding that
"[b]ecause Defendants divert users who would otherwise access Plaintiffs'
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content in a way that includes the users in the measurement of the audience
for purposes of advertising revenue calculation, Defendants' service also
harms Plaintiffs' position in their negotiations with advertisers"); FilmOn,
2013 WL 4763414 at * 15 (relying on Ms. Brennan's declaration and holding
that unauthorized Internet streaming service irreparably harmed Fox because
it diverts viewers from distribution channels measured by Nielsen ratings,
which are by far the most significant viewership measurements relied upon by
advertisers in determining what to pay); see also ivi, 691 F.3d 275, 285-86
(holding that unauthorized retransmission of Fox's programming over the
Internet would "weaken plaintiffs' negotiating position with advertisers and
reduce the value of [their] local advertisements")
Despite Fox's unrebutted evidence and case law directly on point, the
district court here erroneously reached the opposite conclusion. The court
relied on two findings that are unsupported by evidence, speculative, and
illogical.
First, the district court, relying exclusively on the declaration of
Mr. Rapp, Dish's retained economist, found that "although Nielsen does not
currently capture all data relevant to valuing advertising time, other entities
compensate for that gap and adequately capture trends in television viewing
and, by extension, advertising value." ER 310 (Order at 13); ER 865-867.
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But Mr. Rapp provides nothing more than generalized statements that
viewership of digital download and online VOD services can be measured; he
never states that viewership of Dish's unauthorized, live Internet streaming
service or Hopper Transfer copies can be measured. ER 865-867.9 If Fox
prevails at trial, Mr. Rapp never explains how Fox could go back in time and
calculate the number of Dish Anywhere and Hopper Transfers viewers who
watched Fox Programs, let alone the ads during those programs, during the
period between now and the time of trial.
Mr. Rapp's testimony (and, by extension, the district court's analysis)
also skirts the most important point: the issue is not whether someone,
somewhere is capable of measuring live Internet streaming or mobile device
viewing of Fox Programs; the issue is whether the live Internet streaming of
Fox Programs and the viewing of those programs on mobile devices are
counted by Nielsen 's C3 rating, the metric primarily relied on by advertisers
when deciding how much to pay Fox and other broadcasters for TV ads. ER
233-234. Therefore, Mr. Rapp's irrelevant statements about other measuring
services do not, as a matter of logic or fact, rebut Fox's evidence of
irreparable harm.
Mr. Rapp also ignores the fact that Nielsen's C3 rating includes
demographic information that is valuable to Fox's advertisers. He does not
identify any competing ratings services that measure the demographics of live
television programming that is streamed over the Internet.
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Second, the district court based its finding of no irreparable harm to
Fox's advertising business on the belief that "Nielsen ...will measure
viewership delivered through online connections beginning in fall 2013." ER
310 (Order at 13). The court also found that Nielsen's supposed "pledge at
least demonstrates that the trend in viewing practices is not going unnoticed,
and it strongly suggests that the entities that gather advertising data area ready
and willing to adapt to the new landscape." ER 310 (Order at 13). These
findings —which rest entirely on Paragraph 42 of Mr. Rapp's declaration —are
wholly unsupported. Paragraph 42 is not Mr. Rapp's expert opinion; it is an
inaccurate, partial recitation of a New York Times article reporting that
Nielsen has begun measuring viewership on Internet-connected television
sets. ER 867. ~ ~
Putting aside the impropriety of using an expert as a mere conduit for
triple hearsay, the article did not say that Nielsen is measuring viewership on
services such as Dish Anywhere or Hopper Transfers that stream Fox's
programming over the Internet to viewers and otherwise make them available
for viewing outside the home. Rather, the article reports Nielsen's pledge to
to The documents cited in Mr. Rapp's declaration were not attached to his
declaration. However, a copy of the New York Times article relied on by
Mr. Rapp (and the district court) can be found at
http://mediadecoder.blogs.nytimes.com/2013/02/21/tvs-connected-to-the-
internet-to-be-counted-by-nielsen/.
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measure TV viewership on iPads and other mobile devices at some
unspecified time in the future. Assuming for the sake of argument that
Nielsen may, one day, begin measuring Dish Anywhere or Hopper Transfers
as part of the C3 metric, none of this rebuts the fact that between now and the
time of trial, Fox is not getting credit for (or demographic information about)
viewership of its programs on the unauthorized Dish Anywhere and Hopper
Transfer services. The district court's generalized observation that "entities
that gather advertising data are ready and willing to adapt to the new
landscape" hardly compensates Fox for the undisputed, irreparable harm it
faces right now. ER 310 (Order 13).
In summary, it is undisputed that advertisers rely on C3 to determine
advertising rates; that Dish's unauthorized streaming and iPad copying of
Fox's programming is not presently captured by C3; and that these harms are
not currently quantifiable. Therefore, it was clearly erroneous and an abuse
of discretion for the district court to rule that Fox's claim of harm is "not
adequately supported by the record." ER 311 (Order at 14); Dreyfus, 697
F.3d at 725 (trial court commits clear error when its factual findings are
"illogical, implausible, or without support in inferences that may be drawn
from the facts in the record").
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IV. Fox Will Succeed On Its Copyright Infringement And Breach
Of Contract Claims.
While the district court did not discuss the merits of Fox's copyright
and breach of contract claims, Fox clearly demonstrated a likelihood of
success. Because Fox has shown both a threat of irreparable harm and a
likelihood of success on the merits, the district court's denial of Fox's
preliminary injunction motion was an abuse of discretion.
A. Dish Is Exceeding The Scope Of Its License.
As the district court and this Court have previously held, "[a] licensee
infringes the owner's copyright if its use exceeds the scope of its license."
Fox Broadcasting Co. Inc. v. Dish Network, L.L.C., 905 F. Supp. 2d 1088,
1097 (C.D. Cal. 2012) (quoting Adobe Sys. Inc. v. One Stop Micro, Inc., 84 F.
Supp. 2d 1086, 1092 (N.D. Cal. 2000)); Sun Microsystems, Inc. v. Microsoft
Copp., 188 F.3d 1115, 1121 (9th Cir. 1999) ("[i]f ... a license is limited in
scope and the licensee acts outside the scope, the licensor can bring an action
for copyright infringement"); S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081,
1088 (9th Cir. 1989) ("copyright licenses are assumed to prohibit any use not
authorized"); see also 3 M. Niminer & D. Nimmer, NiNtiviER oN CoPY~~xT
§ 10.15[A] (2012) (same); MDYlndus., LLC v. Blizzard Entm't, Inc., 629
F.3d 928, 939-41 (9th Cir. 2010) (breach of contractual conditions that limit
scope of license is copyright infringement).
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The RTC Agreement states that Dish
." ER 1802, 1831. ~ 1 The agreement further states that Dish "shall
not ...authorize the ...retransmission" of Fox's programming. ER 1800-
1801, 1805-1819. The same contract provision also prohibits Dish from
authorizing the recording of Fox Programs, other than by consumers for
private home use. Id.
By its own admission, Dish now offers its subscribers "live and
recorded television anywhere on Internet-connected tablets, smartphones and
PCs." ER 1534-1535, 1542-1543. With Hopper Transfers, Dish authorizes
its subscribers to "take their recorded television programs and watch them
even when no Internet connection is available, such as on a plane." ER 1544.
By expressly breaching the conditions of its license agreement with Fox —and
doing precisely what Fox prohibited —Dish is exceeding the scope of its
license and infringing Fox's copyrights. As such, Fox is likely to succeed on
the merits of its contract of contract claims and it copyright infringement
claims.
11 The agreement goes on to provide that "nothing contained herein shall be
deemed to restrict rights under applicable law," but as we show infra, Dish
has no extra-contractual right under the Copyright Act to retransmit programs
to its customers.
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B. Dish Is Infringing The Public Performance Right.
As a copyright owner, Fox has the exclusive right to perform its
copyrighted works publicly.'Z 17 U.S.C. § 106(4). In the case of an
audiovisual work like a television show, to "perform" the work means "to
show its images in any sequence or to make the sounds accompanying it
audible." 17 U.S.C. § 101. As is relevant here, to perform a work "publicly"
means to "transmit or otherwise communicate a performance of the work .. .
to the public, by means of any device or process." Id.
A service that retransmits live broadcast television signals to
subscribers over the Internet is publicly performing the programs contained in
the signal. See ivi, 691 F.3d at 278; BarryD~ille~, 915 F. Supp. 2d at 1143-46;
FilynOn, 2013 WL 4763414 at * 12-15; see also WTV Sys., 824 F. Supp. 2d at
1008-09 (streaming movies to subscribers over the Internet is a public
performance). In Ba~~yD~ille~, Judge Wu explained why this is. The
Copyright Act protects copyrighted works, such as episodes of copyrighted
television programs. Ba~r~yDriller, 915 F. Supp. 2d at 1143-46. When a
broadcast signal is retransmitted over the Internet so that the programs
contained in that signal can be viewed by members of the public, this is a
public performance. Id.; see also FilmOn, 2013 WL 4763414 at * 13-14; WTV
12 Fox owns valid copyrights in the programs at issue. ER 226, 239-262.
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Sys., 824 F. Supp. 2d at 1010. Thus, if a service streams live broadcast
programming over the Internet into homes or to mobile devices without
permission from the owner of the copyrights in the programs, the service is
infringing the copyright owner's exclusive right to perform the works
publicly. See ivi, 691 F.3d at 278-79; Ba~ryDriller, 915 F. Supp. 2d at 1143-
46; FilmOn, 2013 WL 4763414, at * 13-14; see also WTV Sys., 824 F. Supp.
Zd at 1009. Consequently, because Dish is undisputedly retransmitting Fox's
live broadcast signal over the Internet without Fox's permission, Dish is
committing copyright infringement.
C. Dish Cannot Claim Its Subscribers Are "Doing" TheTransmitting.
In the proceedings below, Dish argued that, under Cartoon Network
LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)
("Cablevision"), it cannot be a direct infringer because its subscribers are
actually the ones who "do" the retransmitting when they log onto Dish
Anywhere and select programs to view live. ER 395. Dish claims that under
Cablevision's "volitional conduct" rule, the subscriber who presses the button
to watch a Fox program live over the Internet is the one who is retransmitting
Fox's broadcast signal. This argument fails.
It is well settled in this Circuit that when the issue is the public
performance right, it does not matter who presses the button. Multiple courts
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have held that when a service delivers video content over a wire (such as the
Internet) that consumers can access by turning on a device (such as a
computer) and selecting something to watch, the service —not the consumer —
is doing the transmitting. Just because a consumer must press a button to turn
on the device and/or select something to watch does not mean that she is
transmitting the program to herself. See WTV Sys., 824 F. Supp. 2d at 1009-
10 (service that streamed movies over the Internet to subscribers' computers
was transmitting the movies, and the fact that its customers "initiate the
transmission by turning on their computers and choosing which of plaintiffs'
[c]opyrighted [w]orks they want to watch is immaterial"); On Command
Video Corp. v. Columbia Pictures Indus., 777 F. Supp. 787, 789-90 (N.D.
Cal. 1991) (system that transmitted movies from a central VCR to hotel room
televisions was transmitting the movies, and "the fact that hotel guests initiate
this transmission by turning on the television and choosing a video is
immaterial"); see also Bar~i^yD~iller, 915 F. Supp. 2d at 1140-41 (where
defendants retransmitted broadcast programming via miniature antennas
individually assigned to subscribers, court gave no credence to defendants'
characterization of the system as merely offering "user-directed private
viewing[s]"). This Court should reject out of hand any attempt by Dish to
claim that it cannot be directly liable for violating Fox's exclusive public
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performance rights because its subscribers are allegedly doing the
transmitting.' 3
D. Dish Cannot Claim Its Internet Retransmissions Are"Private."
Relying on the aberrant, and much-criticized, American Broadcasting
Cos., Inc. v. Ae~eo, Inc., 874 F. Supp. 2d 373 (S.D.N.Y. 2012), aff'd 722 F.3d
500 (2d. Cir. 2013), Dish has also argued that it is not publicly performing the
Fox Programs because its Internet retransmissions must be viewed as
separate, private streams from each user's set-top box to her computer or
mobile device. This is the argument Judge Wu rejected in BarryD~iller (and
which is presently on appeal before this Court). See also FilmOn, 2013 WL
4763414 at * 14 (following BarryDriller).
In BarryDriller, the defendants, like Dish here, offered a service that
allowed customers to watch live broadcast television over the Internet. See
915 F. Supp. 2d at 1139-44. The Ba~~yDriller defendants argued that there
was no public performance because each customer watching television over
the Internet was receiving a signal streamed from her personal miniature
antenna-and-DVR setup. Id. The only difference between this case and
Ba~ryD~iller is that the Ba~ryDrille~ defendants used personal antennas and
13In any event, as discussed above, authorizing others to retransmit Fox's
programming over the Internet would still constitute a breach of the RTCAgreement.
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Dish is using set-top boxes it leases to its subscribers. In a carefully reasoned
opinion, Judge Wu analyzed the language and history of the Copyright Act
and concluded that it did not matter how many separate transmissions were
involved or whether- the transmissions carne from separate sources — if the
service is transmitting a single copyrighted work (i.e., a television program)
to members of the public, then it is publicly performing that work. Id. at
1144-45.
Judge Wu's analysis comports with the plain language of the Copyright
Act, which states that to perform a work publicly is to "transmit or otherwise
communicate a performance of the work ... to the public, by means of any
device o~ process." 17 U.S.C. § 101 (emphasis added). Here, Dish is
offering a service where, for a monthly subscription fee, subscribers receive
broadcast television signals over the Internet. The "device or process" Dish
uses to transmit those signals consists ofDish-provided set-top boxes that
encode the television signals and send them over the Internet. By means of
this "device or process," Dish is transmitting copyrighted Fox Programs to its
subscribers, who are members of the public. And, as Judge Wu explained,
"[t]he statute provides that the right to transmit is exclusive ̀ whether the
members of the public capable of receiving the performance or display
receive it in the same place or in separate places and at the same time or at
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different times."' Id. at 1144-45 (quoting 17 U.S.C. § 101); see also FilmOn,
2013 WL 4763414 at * 13 (same). Accordingly, Dish is publicly performing
the programs.
V. The Balance Of Harms Decidedly Favors An Injunction.
Any claim by Dish that it will be harmed if it cannot continue
retransmitting Fox's live broadcast programming over the Internet or allowing
it to be copied onto subscribers' iPads should be disregarded. Dish is not
supposed to be offering this service or offering Hopper Transfers in the first
place. Not only that, Dish obviously assumed the risk that it would be
enjoined when it chose to launch an unauthorized Internet streaming service
and to promote its illegal service with amultimillion-dollar marketing blitz,
while it was already in copyright litigation with Fox. The balance of harms
weighs in favor of an injunction. Triad Sys. Corp. v. Southeastern Express
Co., 64 F.3d 1330, 1338 (9th Cir. 1995) (defendant "cannot complain of the
harm that will befall it when properly forced to desist from its infringing
activities"); see also Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824,
830 (9th Cir. 1997) ("[w]here the only hardship that the defendant will suffer
is lost profits from an activity which has been shown likely to be infringing,
such an argument in defense merits little equitable consideration") (quoting
Triad Sys. Copp., 64 F.3d at 1338).
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VI. The Public Interest Favors An Injunction.
The Supreme Court has made clear that upholding copyright protection
is in the public interest. Eldred v. Ashcroft, 537 U.S. 186, 212 n.18 (2003).
The ivi court recently reaffirmed the strong public interest in protecting a
copyright holder's exclusive interests and a "public interest in rewarding and
incentivizing creative efforts." 691 F.3d at 287. The "public has a
compelling interest in protecting copyright owners' marketable rights ...and
the economic incentive to continue creating television programming"
because, without these protections, the "store of knowledge" may be
diminished, and "encouraging the production of creative work ...ultimately
serves the public's interest in promoting the accessibility of such works." Id.
"Plaintiffs are copyright owners of some of the world's most recognized and
valuable television programming," and plaintiffs' works "provide[] a valuable
service to the public, including, inter alia, educational, historic and cultural
programming, entertainment, an important source of local news critical for an
informed electorate, and exposure to the arts." 691 F.3d at 288. As the
Second Circuit cautioned, if the plaintiffs' works can be copied and streamed
over the Internet against their will, their "desire to create original television
programming surely would be dampened." Id. at 288. Here, as in ivi and the
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other cases cited above where infringement has been enjoined, the public
interest strongly favors an injunction to protect Fox's rights in its valuable
television programming.
CONCLUSION
For the foregoing reasons, the district court's order denying a
preliminary injunction should be reversed.
December 19, 2013 Respectfully Submitted,
By: ~Richard L. Stone
Richard L. StoneAndrew J. ThomasDavid R. SingerAmy M. Gall-egosJEIVIVEx & BLocK LLP633 West 5th Street, Suite 3600Los Angeles, CA 90071
Paul M. SmithJErIr1ER & BLocK LLP1099 New York Avenue, NW,Suite 900Washington, DC 20001
Attorneys for Appellants
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STATEMENT REQUESTING ORAL ARGUMENT
Pursuant to Federal Rule of Appellate Procedure 34(a), Appellants
request that oral argument of this appeal be permitted. Oral argument will
assist this Court in deciding the appeal.
December 19, 2013 Respectfully Submitted,
By: ZRichard L. Stone
Richard L. StoneAndrew J. ThomasDavid R. SingerAmy M. GallegosJEIvivEx & BLocK LLP633 West 5th Street, Suite 3600Los Angeles, CA 90071
Paul M. SmithJEIVIVER & BLocx LLP1099 New York Avenue, NW,Suite 900Washington, DC 20001
Attorneys fog Appellants
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CERTIFICATE OF COMPLIANCE
I certify that, pursuant to Federal Rule of Appellate Procedure
32(a)(7)(C) and Ninth Circuit Rule 32-1, the foregoing Opening Brief is
proportionately spaced, has a typeface of 14 points or more, and contains
13,843 words.
December 19, 2013 Respectfully Submitted,
B ~ Z ~'~y~Richard L. Stone
Richard L. StoneAndrew J. ThomasDavid R. SingerAmy M. Gallegos.TENNER &BLOCK LLP633 West 5th Street, Suite 3600Los Angeles, CA 90071
Paul M. SmithJErrlvEx & BLocK LLP1099 New York Avenue, NW,Suite 900Washington, DC 20001
Attorneys for Appellants
..
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CERTIFICATE OF RELATED CASES
Pursuant to Ninth Circuit Rule 28-2.6, Counsel for Appellants states
that there are no related cases pending in this Court.
December 19, 2013 Respectfully Submitted,
By:Richard L. Stone
Richard L. StoneAndrew J. ThomasDavid R. Sing erAmy M. GallegosJENNER &, BLOCK LLP633 West 5th Street, Suite 3600Los Angeles, CA 90071
Paul M. SmithJENNER &BLOCK LLP1099 New York Avenue, NW,Suite 900Washington, DC 20001
Attorneys for Appellants
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CERTIFICATE OF SERVICE
I hereby certify that on December 19, 2013, a copy of the foregoing
Brief of Plaintiff-Appellants was served by U.S. Mail and Messenger.
ORRICK, HERRINGTON & SUTCLIFFE LLP (*VIA MESSENGER)William A. Molinski (Bar No. 145186)777 South Figueroa Street, Suite 3200Los Angeles, California 90017
Annette L. Hurst (Bar No. 148738)405 Howard StreetSan Francisco, California 94105-2669
E. Joshua RosenkranzPeter A. BicksElyse D. EchtmanLisa T. Simpson51 W. 52nd St.New York, New York 10019
DURIE TANGRI LLPMark. A. Lemley (Bar No. 155830)Michael Page (Bar No. 154913)217 Leidesdorff StreetSan Francisco, California 94111
(*VIA U.S. MAIL)
(*VIA U.S. MAIL)
(*VIA U.S. MAIL)
December 19, 2013 Respectfully Submitted,
B ~~'`~'Y•
Richard L. Stone
Richard L. StoneAndrew J. ThomasDavid R. Sing erAmy M. GallegosJENrrEx & BLocx LLP633 West 5th Street, Suite 3600Los Angeles, CA 90071
Paul M. SmithJENNER &BLOCK LLP1099 New York Avenue, NW,
.:
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Suite 900Washington, DC 20001
Attorneys for Appellants
.•
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CERTIFICATE FOR BRIEF IN PAPER FORMAT
(attach this certificate to the end of each papeY copy b~ie~
9th Circuit Case Number(s): 13-56818
I, Jean M. Doherty ,certify .that this brief is identical to
the version submitted electronically on [date] Dec 19, 2013
Date December 19, 2013
Signature s/ Jean M. Doherty
(either manual signature or "s/" plus typed name is acceptable)
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