May 25, 2006 at 1:44 PM EST - Updated July 27 at 3:57 PM
On May 24, the United States Court of Appeals for the 11th Circuit affirmed the District Court's conclusion that EchoStar engaged in a "willful or repeated" violation of the Satellite Home Viewer Acts.
The 11th Circuit also held that the District Court erred in not finding a "pattern or practice" of statutory violations, and in not barring EchoStar from further use of the license. Accordingly the Court order the entry of a nationwide injunction barring the provision of distant network programming pursuant to the Act's statutory license.
The case involved complaints by network stations, CBS Broadcasting, Inc. ("CBS") and Fox Broadcasting Company ("Fox"), and network affiliate associations, ABC Television Affiliates Association, CBS Television Network Affiliates Association, FBC Television Association, and NBC Television Affiliates Associati on (collectively, "networks"), that EchoStar is retransmitting their programs to "served" households in violation of the Satellite Home Viewer and Satellite Home Viewer Improvement Acts (collectively "the Act") and thereby infringing their exclusive right, under the Copyright Act, to control the retransmission of their programs. The Act permits the transmission of distant network signals to "unserved households," including households that do not receive a Grade B signal; have obtained a waiver from the local network station; and certain households that do not receive a Grade A signal and received a distant network signal as of a date certain in 1999.
In 2001, the 11th Circuit vacated a district court's preliminary injunction upholding the networks' claims and ordering EchoStar to cease transmitting the programs to served households, and remanded the case to the district court for a trial on the networks' application for injunctive relief pursuant to the Act. On remand, the district court found at the conclusion of a bench trial that EchoStar had not satisfied its statutory burden of proving that the households at issue were unserved and that the evidence indicated that EchoStar had been retransmitting the networks' programs to thousands of served households.
The networks asked the district court permanently to enjoin EchoStar from any use of the Act's statutory license for distant network programming, but the district court denied their request. The district court did, however, issue an injunction ordering EchoStar to use an alternate method for determining what constituted unserved households. EchoStar appealed the court's injunctive order and its grant of summary judgment on EchoStar's counterclaims. The networks cross-appealed contending that the district court was required as a matter of law to permanently enjoin the carrier from using the statutory license.
In today's opinion, the 11th Circuit affirmed the district court's conclusion that EchoStar engaged in a "willful or repeated" violation of the Act. The 11th Circuit also held that the district court erred in not finding a "pattern or practice" of statutory violations, and in not barring EchoStar from further use of the license. Accordingly, the court ordered the entry of a nationwide injunction barring the provision of distant network programming pursuant to the Act's statutory license. Finally, in favor of EchoStar, the 11th Circuit reversed the district court's determination that EchoStar's use of two vendors to determine eligibility was unlawful.
In finding that EchoStar engaged in a "pattern or practice" of violating the Act, the 11th Circuit noted that an analysis of EchoStar's April 2002 subscriber list, viewed most favorably to EchoStar, indicated that on a nationwide basis EchoStar is presumptively providing illegal service to 26.5% of its subscribers receiving ABC distant network programming, 26.9% for CBS, 20.2% for Fox, and 28.1% for NBC. The court went on to state: "Indeed, based on the district court's findings, we seem to have discerned a ‘pattern' and ‘practice' of violating the Act in every way imaginable. . . . EchoStar has disregarded the limitations of its statutory license and sought to avoid its obligations under the Act at every turn." More specifically, the Court found that EchoStar violated the Act in the following ways:
overriding compliance determinations of ineligibility
making pledges under oath to terminate ineligible subscribers and then failing to present any evidence that this corrective action was taken,
blatantly disregarding FCC alterations to the ILLR model after it was specifically put on notice of such changes,
failing to disconnect subscribers it initially recognized to be ineligible for grandfather status based on an atextual "reinterpretation" of the statutory provision.
Finally, the 11th Circuit agreed with the networks and held that the Act mandated an injunction upon a finding of a "pattern or practice" of violations and, accordingly, ordered the district court to issue a nationwide permanent injunction.
<<CBS Broad. Inc. v. EchoStar Comm. Corp., 11th Cir. Docket No. 03-13671 (May 23, 2006).pdf>>
Christopher J. Sadowski | Pillsbury Winthrop Shaw Pittman LLP