Will the Aereo Ruling Cause Problems for Dish Network?

The satellite company is involved in multiple lawsuits that could be affected by the Supreme Court's decision.

Jul 7, 2014 at 8:01AM

When the Supreme Court ruled that the Aereo TV-streaming service violated U.S. copyright law, it specifically addressed the idea that the decision could impact other technology.

The majority ruling by Justice Stephen Breyer acknowledged concerns that the ruling "will impose copyright liability on other technologies, including new technologies, that Congress could not possibly have wanted to reach." However, the ruling also said, "we do not believe that our limited holding today will have that effect."

The decision may not cause any other services to shut down immediately, as Aereo has, but it may impact pending litigation against Dish Network (NASDAQ:DISH) and its "Hopper" service. Dish has been sued over Hopper for two reasons. The first -- that it allows users to skip commercials at the touch of a button -- is unlikely to be affected by the Aereo ruling. The second -- that it lets subscribers record all prime-time network television for multiple days and stream those shows to any connected device -- could be.

Dish's service is different from Aereo's, which streamed broadcast signals over the Internet under the guise that they were available free over the air. Because the company maintained an actual antenna for each user, Aereo claimed it was sending people what they already had rights to use. The Supreme Court did not buy that argument, instead ruling that Aereo was acting as a cable company without paying for re-transmission rights.

Dish is not doing anything close to that, but there were parallels in the legal cases, according to The Wall Street Journal. Both companies rested a big part of their legal arguments on a precedent involving server-based digital video recorders.

"Both also claimed to be simply equipment makers that consumers use, in an attempt to categorize their services in the realm of other consumer electronics such as videocassette recorders and digital video recorders," WSJ wrote. "Copyright-based legal challenges to such devices have failed in the past."

It didn't fail this time. That does not guarantee Dish will lose in court, but it does put added pressure on the company to reach a settlement with Comcast's (NASDAQ:CMCSA) NBC, Fox (NASDAQ:FOX), and CBS (NYSE:CBS). Dish and Walt Disney already reached a deal that settled a fourth lawsuit over the Hopper.

Fox has already tried to use the Aereo ruling to bolster its case. The network, which has an appeal pending on its request for a preliminary injunction against certain streaming features of the Hopper, filed a letter in an appeals court in California on the day of the Aereo ruling, citing the opinion and noting similarities in Dish's legal argument to the Aereo case. That appeal is scheduled for court on Monday, July 7.

Daniel Kline and Jake Mann debated whether the Aereo ruling would ultimately be bad news for Dish on Business Take, the show that gives you the Foolish perspective on the most important business stories of the week.

Dish is not Aereo
Aereo set out with a business model that had no room for compromise. The company charged a very low fee -- generally $12 a month -- which left little room to negotiate proper rights deals. Dish has been willing to anger the networks, but it has also shown a willingness to negotiate and make sensible deals. The Disney settlement called for the commercial skipping feature to not work for the first three days after a new show aired. It seems possible, even likely, that Dish will find a way to compromise with the networks that are already its partners.

"The major difference is Dish does pay retransmission fees for its base service," Kline said. "Hopper lets you grab all of this programming in a legal fashion ... and stream it to devices that maybe weren't intended. Maybe it's not illegal, but it does seem to violate the original intent of the deals."

Do you think Dish is breaking the law? Watch the video below and share your thoughts. 

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Daniel Kline has no position in any stocks mentioned. Jake Mann has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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