Last week, we wrote about the ruling in the lawsuit Fox filed against DISH over its Autohopper feature -- which automatically skips commercials on TV shows it records as part of its "Prime Time Any Time" feature (recording all prime time TV from the four major networks to the local DVR hard drive). As we noted, the judge refused to issue an injunction, but both sides claimed victory. Reading between the lines we said it appeared that Fox mostly lost, and its only wins were pretty small. The (slightly redacted) ruling has now been released and it confirms that prediction.

Fox is definitely the loser here. In fact, it looks like our original statements about the case, when it was first filed, turned out to be accurate. Fox's claims that recording the entire prime time lineup is a "bootleg" copy was a direct challenge to the ruling in the Betamax case, and the judge here relied heavily on that ruling in rejecting Fox's arguments. Furthermore, in our original analysis, we pointed out that the ruling about Cablevision's remote DVR should apply here as well, since the key issue there was who pressed the button -- and with "Prime Time Any Time" (PTAT) and the Autohopper technology, it's still the consumer doing it. The court is having none of that:

Here, the parties agree that the Hopper is only available to private consumers and the evidence does not suggest that consumers use the PTAT copies for anything other than time-shifting in their homes or on mobile devices. In fact, Fox has identified no specific theory under which individual PTAT users could themselves be liable for copyright infringement without circumventing Sony. In the absence of any evidence of such direct infringement on the part of PTAT users, Dish cannot be responsible for "intentionally inducing or encouraging direct infringement," or for "profiting from direct infringement while declining to exercise a right to stop or limit it." Grokster, 545 U.S. at 930. In Grokster, unlike this case, owners of a peer-to-peer file-sharing program were liable for derivative copyright infringement because they knowingly and intentionally induced users to copy and distribute copyrighted works over the network, which indisputably constituted infringement on the part of the users. Id. at 939-41. Here, the record is devoid of any facts suggesting direct infringement by PTAT users. Fox has therefore failed to establish a likelihood of success or to raise serious questions on the merits of its derivative infringement claims.

Shorter version: no, Fox can't do an end-run around the ruling that made it clear that the VCR was legal. Users here aren't really doing anything different (time shifting programming) as was found legal in the Sony Betamax case. Basically, it's a reminder that basic time shifting isn't infringement. Since nothing the end-user does is infringing here, it completely demolishes Fox's ridiculous theory that DISH is "inducing" infringement by removing commercials. All in all a good finding.

So how is it that Fox claimed victory? It's something of a minor side issue, and I'm not even convinced the court got this one right either. Basically, as part of the process of making sure that its Autohopper (commercial skipping) feature is working properly, DISH also records the prime time lineup itself and has people monitoring to see if the automated Autohopper is correctly finding the beginnings and endings of commercial breaks. If the machine is messing up, the human monitor can try to "correct" the timing. It's a "quality assurance" effort. And it's that copy that the court says might be infringing (and potentially a violation of the contract between the two parties). Leaving aside the contract issue, even the copyright claim here seems questionable. The key case here is the Sega v. Accolade case in which the court said that a copy made in process -- an "intermediate" copy -- which was not actually used in the final product, could be protected by fair use.

The court then does a four factor fair use analysis though, as with most fair use analyses, how you apply the factors can lead you to a very different conclusion. The key one here is the final factor -- the "effect of the use on the market." The court finds this one to favor Fox:

Here, the QA copies are used to perfect the functioning of AutoHop, a service that, standing alone, does not infringe. The record shows, however, that a market exists for the right to copy and use the Fox Programs: Fox licenses copies of its programs to companies including Hulu, Netflix, iTunes, and Amazon to offer viewers the Fox Programs in various formats. .... In fact, the record suggests that Dish chose to offer AutoHop to its subscribers in order to compete with other providers who pay for the rights to use copies of the Fox Programs through licensing agreements. Unlike these providers, however, Dish does not pay for the right to copy the Fox Programs for any purpose. By making an unauthorized copy for which it has not paid and using it for AutoHop, Dish harms Fox's opportunity to negotiate a value for those copies and also inhibits Fox's ability to enter into similar licensing agreements with others in the future by making the copies less valuable. Therefore, the Court finds that the fourth factor also militates against finding that the QA copies constitute a "fair use" under the Copyright Act.

I don't quite get this analysis though. Because, remember, we're just talking about the QA copies here, not the final product that consumers use. So I don't actually see how the above applies. Those QA copies aren't being used to compete against Hulu, Netflix, iTunes or Amazon. And I don't see how anyone could conclude that Fox would license special QA copies only for DISH to see how its ad skipper is working. So the analysis here just seems off. If the court has already decided that the final product isn't infringing, how is it that this temporary copy -- used only to check on quality control of the ad skipping -- which itself is not infringing -- suddenly becomes infringing. It seems like DISH could make a strong argument on appeal that this part of the ruling doesn't make much sense.