On January 24th, the Ninth Circuit denied a petition for rehearing en banc in Fox Broadcasting v. Dish Networks. The decision was, however, amended slightly from the original opinion, released last July.

Fox Broadcasting v. Dish Network involved satellite television provider Dish’s Hopper, a set-top device with digital video recording (DVR) and video on demand (VOD) capabilities. Relevant to this discussion, Dish began providing its Hopper customers with a service called “PrimeTime Anytime” (PTAT). PTAT, when enabled, automatically recorded all primetime (8 p.m.-11 p.m.) programming from the four broadcast networks (ABC, CBS, NBC, and Fox). The recordings are saved locally on a customer’s Hopper for a predetermined amount of time (typically 8 days), after which they are automatically deleted.

Fox sued for copyright infringement, alleging, in part, that Dish directly infringed its reproduction right when it made PTAT copies of Fox television programs. Fox sought a preliminary injunction

The District Court in Dish concluded that “at this stage of the proceedings, the Court is not satisfied that PTAT has crossed over the line that leads to direct liability. Despite Dish’s involvement in the copying process, the fact remains that the user, not Dish, must take the initial step of enabling PTAT after deciding that he or she wants to initiate the recording. The user, then, and not Dish, is the ‘most significant and important cause’ of the copy.” This, despite the fact that Dish designed, houses, and maintains the system that creates the copies. The court also did not consider the following facts indicative of causation:

  • “Dish decides which networks are available on PTAT and has defaulted the PTAT settings to record all four networks.”
  • “Dish also decides the length of time each copy is available for viewing: PTAT recordings are automatically deleted after expiration of a certain number of days, and a user may neither delete nor preserve the original PTAT copy before that time.”
  • “Dish decides when primetime recordings start and end each night, and it maintains the authority to modify those times according to the particular programs airing that night. Additionally, the user cannot stop a copy from being made during the copying process, but must wait until the recording ends before disabling the link.”

The Ninth Circuit affirmed this result, saying “the district court did not err in holding that Fox did not establish a likelihood of success on its direct infringement claim.”

The “volitional conduct” test relied upon by both courts is idiosyncratic within the larger contours of tort law, and neither court explains why it decided to extend the test so far beyond previous applications. I’ve detailed some criticisms of the opinion when the original decision was released last summer. But today I want to head overseas and look at a recent case where a court got it right.

TV Now

In 2012, an Australian court considered a very similar question. Telecom service provider Optus created “TV Now”, a service that enables customers to watch and record television broadcasts through a mobile device or personal computer. It was sued by a group of sports leagues for infringing its copyright in broadcast football games. The trial court judge held that Optus was not liable for infringement, relying in part on the US court decision in Cablevision and analogizing the service to a VCR or DVR. The decision was appealed.

The primary issue on appeal was “who ‘does’ the act of copying.” The appellate court said “the rival contenders are Optus, the subscriber, or Optus and the subscriber jointly.”

The court first considers the case that the copies were made solely by the subscriber. This approach is based on the premise that “Optus makes available to a subscriber a facility (a service) which enables the subscriber as and when he or she is so minded to use that facility to record broadcasts and later to view them. The copies that are made are the result of the subscriber’s use of the facility though the actual making of them requires Optus’ technology to function as it was designed to.” This is the position taken by the trial court judge, which said that to “make” a copy means “’to create’ by selecting what is to be recorded and by initiating a process utilising technology or equipment that records the broadcast”, a conception the court here said “robs the entirely automated copying process of any significance beyond that of being the vehicle which does the making of copies.”

Besides the analogy of Optus as a DVR operated by a subscriber, the trial court judge also saw the subscriber choosing to copy as “the last ‘volitional act’ in the sequence of acts leading to a copy being made and, for that reason, is significant in determining the identity of the maker.” The appellate court found these arguments less than compelling.

It noted too the trial court’s citation to Cablevision and the “volitional conduct concept.” However, the court viewed this concept as relevant only when there is a need to distinguish between direct and contributory liability—which is the case in U.S. jurisprudence but not under Australian law. The court added, referring to the academic criticism of the Cablevision decision, “It equally is not apparent to us why a person who designs and operates a wholly automated copying system ought as of course not be treated as a ‘maker’ of an infringing copy where the system itself is configured designedly so as to respond to a third party command to make that copy.”

The court concluded:

[W]e consider that Optus’ role in the making of a copy – ie in capturing the broadcast and then in embodying its images and sounds in the hard disk – is so pervasive that, even though entirely automated, it cannot be disregarded when the “person” who does the act of copying is to be identified. The system performs the very functions for which it was created by Optus. Even if one were to require volitional conduct proximate to the copying, Optus’ creating and keeping in constant readiness the TV Now system would satisfy that requirement. It should also be emphasised that the recording is made by reason of Optus’ system remaining “up” and available to implement the subscriber’s request at the time when its recording controllers poll the user database and receive a response indicating that a recording has been requested. What Optus actually does has –

a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner … trespassed on the exclusive domain of the copyright owners: CoStar Group Inc v LoopNet Inc, 373 F3d 544 at 550 (4th Circ. 2004).

… Put shortly Optus is not merely making available its system to another who uses it to copy a broadcast. Rather it captures, copies, stores and makes available for reward, a programme for later viewing by another.

The real question for the court was whether Optus alone is liable or whether Optus and the subscriber are jointly liable. And here, the court indicated that the latter was most likely (since only Optus was named as a defendant, it was not strictly necessary for the court to resolve the question of the subscriber’s liability.) Said the court:

If one focussed not only upon the automated service which is held out as able to produce, and which actually produces, the copies but also on the causative agency that is responsible for the copies being made at all, the need for a more complex characterisation is suggested. The subscriber, by selecting the programme to be copied and by confirming that it is to be copied, can properly be said to be the person who instigates the copying. Yet it is Optus which effects it. Without the concerted actions of both there would be no copy made of a football match for the subscriber. Without the subscriber’s involvement, nothing would be created; without Optus’ involvement nothing would be copied. They have needed to act in concert to produce – they each have contributed to – a commonly desired outcome. The subscriber’s contributing acts were envisaged by the contractual terms and conditions. How they were to be done were indicated by the prompts given on the Optus TV Now TV guide page. The common design – the production of the selected programme for transmission to the subscriber – informed the solicitation and the taking of a subscription by the subscriber; it was immanent in the service to be provided.

The Australian court’s conclusion seems to hew more closely to general principles of tort law. Though the issue is settled, for now, in the Ninth Circuit, the Second Circuit is set to take up the issue soon in a parallel case involving the same Dish services and the other three major broadcast networks. Last October, the Southern District Court of New York denied a preliminary injunction against Dish in part because it agreed that the customer, not Dish, made the PTAT copies. That decision has been appealed, and oral arguments are set for next week.

18 Comments

  1. Terry–
    So you think that we ought to ban xerox machines?

      • Terry–
        It is not apparent to me why the company that designs and leases a wholly automated xerox copying system ought of course not be treated as a ‘maker’ of an infringing xerox where the system itself is configured designedly so as to respond to a third party command to make that xerox.

        Perhaps you’d like to explain?

        • You’re all over the place. First you’re talking about “ban[ning] xerox machines”, then you’re talking about a “company that designs and leases a wholly automated xerox copying system.” What exactly are you asking? Someone who makes the xerox? Someone who leases the xerox? Or someone who only does both?

          • Xerox — the actual company, apparently both makes and leases the machines. Let’s start there. Setting aside the difference between hardcopies and tv programs, how do you distinguish these things?

          • The primary inquiry would likely revolve around proximate causation.

    • Anonymous,

      Your comment is intrusive, and irrelevant to the article. Instead you attack the writer, rather than comment on the merits of the cases and the appeals. FYI, a Xerox, is a trademark brand. A copy on a Xerox system is called a photocopy or a mimeograph, not a xerox. Again, go to Groklaw and comment there where there’s plenty of “Kleenexes” and “Band Aids”.

  2. Terry–
    You say that the Australian court got it right. In the case of a xerox machine which is built by, leased by, and presumably as an adjunct of the leasing arrangement, serviced by, Xerox; which is therefore performing the very function for which the machine is created, and which Xerox has created and kept in constant readiness, if used in a manner which infringes copyright, do you think that Xerox ought to be liable? If not, how are you distinguishing that case from those discussed in your piece?

    Ed–
    Analogies are central in American law. Lawyers constantly try to gain the benefit of helpful precedents by showing how they are similar to the case they are arguing, and constantly try to avoid the threats of harmful precedents by distinguishing their cases from those. It is in no way irrelevant to inquire how a ruling finding against online DVRs might affect other technologies that may be used for copying. I do not believe I have attacked Terry merely by asking for his learned opinion. I am honestly interested.

    As for your comment about the word XEROX, there is no obligation of which I am aware for ordinary persons to respect trademarks in casual conversation. Indeed, genericide is a feature of trademark law and one which comes about precisely due to consumers ignoring the rules that govern those engaged in business, and doing as they like. The word xerox is so well known as a noun, for the output of photocopiers, as a verb, for the use of photocopiers, and as another noun, for photocopiers themselves, that the Xerox company has long tried in a Canutian fashion to hold back the tide with a veritable flood of counter-advertising and awareness campaigns for which I do not give a fig. Even the dictionary is happy to report on the casual use of this term. You may call them what you like, and rest assured, I will too.

    tl;dr — Get a life.

    • You say that the Australian court got it right. In the case of a xerox machine which is built by, leased by, and presumably as an adjunct of the leasing arrangement, serviced by, Xerox; which is therefore performing the very function for which the machine is created, and which Xerox has created and kept in constant readiness, if used in a manner which infringes copyright, do you think that Xerox ought to be liable? If not, how are you distinguishing that case from those discussed in your piece?

      I don’t speak for Terry, but I think the answer is kind of obvious. If I lease a Xerox machine, I can copy whatever I want, and Xerox has no control over the copy machine while the copies are made. With a remote DVR, the service tells me what can be copied, even supplying the content to be copied, and maintains complete control over the copy machine while the copies are made. If both cases, Xerox or the DVR service are the cause-in-fact of the copying. But, as Terry said, the difference is that with a Xerox machine, Xerox is not the proximate cause of the copying, while with the remote DVR, the service is the proximate cause of the copying. What’s being applied is the volitional conduct test, which looks at which party or parties legally cause the copying. Since the DVR service proximately causes the copying while Xerox does not, the DVR service is directly causing the copying while Xerox is not.

    • In your hypothetical, I would say Xerox ought not be liable. The distinction again has to do with proximate causation, a flexible concept with no set rules or bright lines.

      Let me ask you this. Assuming you would also not think Xerox ought be liable in your hypothetical, what if we change a few things? Xerox leases a copier to a customer, but rather than the machine being located on the customer’s premises, it is located in the Xerox headquarters. The customer doesn’t have physical access to the machine, indeed, the building itself is accessible only by Xerox employees. The customer also cannot use the machine to make copies of his own materials. Instead, Xerox provides the customer with a list of (copyrighted) works that are located on Xerox servers which can be copied by the customer. Through a website interface, the customer can select a work press a button that says “copy”, at which point an automated process kicks in (granted, the copier is acting more like a printer at this point), copying the work and shipping it via mail to the customer. Should Xerox be liable then? If not, why not; if so, what is the distinction between that lease and the lease you originally posited?

      • Terry–
        “Xerox leases a copier to a customer, but rather than the machine being located on the customer’s premises, it is located in the Xerox headquarters. The customer doesn’t have physical access to the machine, indeed, the building itself is accessible only by Xerox employees.”

        No need to change so much to accomplish that; it’s entirely possibly that even if the machine was on the user’s premises that they would not be allowed to open it up and mess around with it, lest they make the Xerox technician’s job harder. And even if we do change that aspect of the hypo, well, it’s not hard to see that trends are changing and that client/server computing models are coming back into fashion. It’s common for xerox machines to be connected to the Internet now, so that you can copy something and email it to yourself, or just use it as a big printer. Why not combine that with trendy cloud services and stick most of the logic of the machine at Xerox headquarters (where it can be most easily maintained, and most easily get features added to it in software, perhaps for a modest additional charge), with the scanning platen and printing drum not otherwise directly connected to one another. I would bet good money that at least one company has entertained the idea. (And IIRC, there were businesses offering similar things as substitutes for fax machines as far back as the dot com boom)

        So long as use of the machine is controlled by the user, so long as they’re up to date on their lease, and Xerox doesn’t exercise a lien by disabling it via their servers, I don’t see a problem so far.

        “The customer also cannot use the machine to make copies of his own materials. Instead, Xerox provides the customer with a list of (copyrighted) works that are located on Xerox servers which can be copied by the customer.”

        Here you have overshot, I think. For most of the cloud DVR services I know of, users can record any channel they like which they receive. Obviously there are technological limits to the equipment — a xerox machine can no more copy smell than a TV DVR can turn a comic book into those dismal Marvel cartoons from the 60s — but this shouldn’t be read as the DVR maker imposing choices on the user. The closest case is Fox v. Dish, where only a few channels get recorded. However, I wonder whether Dish only ever intends to have these channels recorded, or whether, based on the ratings of their users (which surely overwhelmingly show these channels and these times to be the most popular) they have started there, and plan to expand their program as their resources allow?

        But let’s set that aside too. What I’m reminded of is Princeton University Press v. Michigan Document Services. As you’ll no doubt recall, there a copy shop that xeroxed books for college classes was found liable for infringement. But left unanswered was the question as to whether the students in the classes could’ve made their own copies (instead of buying ready-made copies) and escaped liability. What if MDS had purchased copies of the relevant books and rented them (book rental being permissible under first sale) to students under the condition that they not leave the store with them? While it is certainly likely that the students would copy them, it isn’t a forgone conclusion, and in any case, it would be up to the student at that point. It still seems to be that the person who presses the button is at the end of the chain of proximate cause.

        “Through a website interface, the customer can select a work press a button that says “copy”, at which point an automated process kicks in (granted, the copier is acting more like a printer at this point), copying the work and shipping it via mail to the customer.”

        Copiers can already email documents. It wouldn’t surprise me if an industrial strength copier could today be integrated with automated printing and packaging machines to do exactly that. I don’t know that it’s been done; there may not be enough call for it, but I generally expect a copier to automatically copy and deliver copies to me when I stand in front of it. If it can be more convenient by giving me my copies at my desk so that I need not schlep them down the hall, why would copyright stand in the way of this? If it’s distribution (or performance for tv) distance doesn’t matter IIRC.

        So while there might be a couple of technical hang-ups here or there caused by the inexactness of analogies, I don’t see liability for Xerox given your hypo.

        Dan–
        It’s not unusual for courts to cite foreign opinions if they find it useful. The novelty of cloud DVRs probably prompted the Australian court to look for any guidance that anyone could provide. It’s not binding precedent but it may be influential.

        • What if MDS had purchased copies of the relevant books and rented them (book rental being permissible under first sale) to students under the condition that they not leave the store with them? While it is certainly likely that the students would copy them, it isn’t a forgone conclusion, and in any case, it would be up to the student at that point. It still seems to be that the person who presses the button is at the end of the chain of proximate cause.

          Your hypo reminds me of the “Make-A-Tape” case: http://scholar.google.com/scholar_case?q=360+F.Supp.+821&hl=en&as_sdt=8000006&case=2860567318810437565&scilh=0

          • Devlin–
            That’s an interesting case which I had not been aware of. Thanks for the link. Of course, after the Betamax and Diamond Rio cases came along, I think that Make-A-Tape would not fare so well. And if we were to relitigate Make-A-Tape today with the same facts but the current law, the AHRA would likely moot the whole thing, but that’s not really relevant to the current discussion. (In fact, I once toyed with the idea of opening a used CD store and bundling all purchases with an AHRA-compliant CDR, an accurate restatement of section 1008, and a flyer reminding customers that the store buys good quality used discs for good prices. But then mp3s came along and there was obviously no point.)

  3. First, I don’t understand why an Australian court would reference a U.S. case. Also, I’ve never used a DVR, let alone a remote DVR. I still use and maintain a VCR. So that tells you my rate of adoption of new gadgets. But, all these qualifiers aside, The Australian decision seems to me to implicate pencil manufacturers as my using the pencil to copy Catcher in the Rye when I was 16 “was immanent in the service to be provided” by the pencil manufacturer. Location of the device seems to have no bearing on proximate causation (and, yes, I have read Aristotle on causation).

  4. I’m not sure I understand the facts of the TV Now case from your summary. You merely say it allows users to “watch and record.” That makes it sound like your (and the Australian courts’) position would also hold the manufacturer of a conventional DVR (or even a VCR) to be the party making copies when a consumer uses a DVR to record. Am I misunderstanding?

  5. Perhaps you’re no longer monitoring comments here, since it’s been 5 days with no response to my prior question. I have two other questions, though.

    1) You say “Dish designed, houses, and maintains the system that creates the copies.” I get “designed.” There’s no question that Dish (or its agent) did that. But “houses” and “maintains?” The “system” that creates the copies is a set-top box, which exists in consumer homes. So I don’t see how Dish “houses” it. So far as “maintains” go, this is true if what you mean is the ordinary control an operator has over a set-top box connected to their network (software updates, etc.). But I’m not clear just what you mean by “maintains.”

    2) Let’s suppose you are correct in your view that Dish and the user jointly make the copies. Does it matter? If the copies are made for the benefit of the user, and the user has the right to make and use those copies (after all, PTAT couldn’t be a clearer instance of time-shifting, with its automatic deletion), can it be that Dish’s action in jointly making those copies is, nonetheless, an infringement?

    • Let me ask you this. When, if ever, do you think an online video provider should be directly liable for copyright infringement? Let’s say, for example, that XYZ has an extensive collection of movies and TV series on an online server that it provides access to for a fee. If a user clicks “download” or “watch”, it is the user, not XYZ who is making the copy or performing the work, no? And users are able to rent movies and TV series and watch them, so why does it matter what location that transaction occurs?

      • Is this in response to one of my questions above? If so, I’m not clear which one.

        Anyway, this is a question I’ve been thinking about, in a form. (I don’t think of it as when do I think a video provider should be directly liable, but rather, when do I think they are directly liable. Should be is a very different issue, and one which I don’t think is relevant, because I don’t think it’s appropriate to try to interpret the law to produce a result of what I think should or shouldn’t be, in any sense of what is morally correct.)

        I don’t think it really matters whether there’s a fee or not. If I set up a server, enabling the public to access to media that I place there, I think that I am the party transmitting. So if my server enables a watch function, then that transmission is a performance, and I am performing the media selected by the recipient. If I don’t have a license, then I am directly infringing.

        If my server enables just a download function, on the other hand, the transmission is not a performance (under current precedent), so I don’t need a license. And assuming that the user actually stores the downloaded file (the expected case), it is the user who makes that copy, not me. So I don’t think I directly infringe. On the other hand, if neither I nor the user have a license/right for that copy to be made, I would expect I am secondarily liable, for contributory and/or induced infringement.

        But again, I’m not sure what your question has to do with my questions. Was it somehow in response to my last question above?