Dish Network 2015 Annual Report Download - page 165

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-61
petition for rehearing and rehearing en banc, which was denied on January 24, 2014. The United States Supreme
Court granted the Fox plaintiffs an extension until May 23, 2014 to file a petition for writ of certiorari, but they did
not file one. As a result, the stay of the NBC plaintiffs’ action expired. On August 6, 2014, at the request of the
parties, the Central District of California granted a further stay of all proceedings in the action brought by the NBC
plaintiffs, pending a final judgment on all claims in the Fox plaintiffs’ action. The Fox action was dismissed on
February 11, 2016. We and the NBC plaintiffs have until February 26, 2016 by which to file a status report
indicating our intended course of action. No trial date is currently set on the NBC claims.
In addition, on February 21, 2013, the Fox plaintiffs filed a second motion for preliminary injunction against: (i) us
seeking to enjoin the Hopper Transfers feature in our second-generation Hopper set-top box, alleging breach of their
retransmission consent agreement; and (ii) us and EchoStar Technologies L.L.C. seeking to enjoin the Slingbox
placeshifting functionality in our second-generation Hopper set-top box, alleging copyright infringement and breach
of their retransmission consent agreement. On September 23, 2013, the California court denied the Fox plaintiffs’
motion. The Fox plaintiffs appealed, and on July 14, 2014, the United States Court of Appeals for the Ninth Circuit
affirmed the denial of the Fox plaintiffs’ motion for a preliminary injunction as to the Hopper Transfers feature and
the Slingbox placeshifting functionality in our second-generation Hopper set-top box.
On January 12, 2015, the Court ruled on the Fox plaintiffs’ and our respective motions for summary judgment,
holding that: (a) the Slingbox placeshifting functionality and the PrimeTime Anytime, AutoHop and Hopper
Transfers features do not violate the copyright laws; (b) certain quality assurance copies (which were discontinued
in November 2012) do violate the copyright laws; and (c) the Slingbox placeshifting functionality, the Hopper
Transfers feature and such quality assurance copies breach our Fox retransmission consent agreement. At the
parties’ joint request, the Court had stayed the case until January 15, 2016. Pursuant to a settlement between us and
the Fox plaintiffs, we, EchoStar Technologies L.L.C. and the Fox plaintiffs filed a motion to dismiss with prejudice
all of our respective claims pending in the California court. The Court ordered such dismissal on February 11, 2016.
New York Actions. Both the ABC and CBS parties filed counterclaims in the New York action adding copyright
claims against EchoStar Technologies L.L.C., and the CBS parties filed a counterclaim alleging that we fraudulently
concealed the AutoHop feature when negotiating the renewal of our CBS retransmission consent agreement. On
November 23, 2012, the ABC plaintiffs filed a motion for a preliminary injunction to enjoin the Hopper set-top
box’s PrimeTime Anytime and AutoHop features. On September 18, 2013, the New York court denied that motion.
The ABC plaintiffs appealed, and oral argument on the appeal was heard on February 20, 2014 before the United
States Court of Appeals for the Second Circuit. Pursuant to a settlement between us and the ABC parties, during
March 2014, the ABC parties withdrew their appeal to the United States Court of Appeals for the Second Circuit;
we and the ABC parties dismissed without prejudice all of our respective claims pending in the United States
District Court for the Southern District of New York; and the ABC parties granted a covenant not to sue. Pursuant
to a settlement between us and the CBS parties, on December 10, 2014, we and the CBS parties dismissed with
prejudice all of our respective claims pending in the New York Court.
We intend to vigorously prosecute and defend our position in this case. In the event that a court ultimately
determines that we infringe the asserted copyrights, or are in breach of the retransmission consent agreement, we
may be subject to substantial damages, and/or an injunction that could require us to materially modify certain
features that we currently offer to consumers. In addition, as a result of this litigation, we may not be able to renew
our retransmission consent agreement and other programming agreements on favorable terms or at all. If we are
unable to renew these agreements, there can be no assurance that we would be able to obtain substitute
programming, or that such substitute programming would be comparable in quality or cost to our existing
programming. Loss of access to existing programming could have a material adverse effect on our business,
financial condition and results of operations, including, among other things, our gross new subscriber activations
and subscriber churn rate. We cannot predict with any degree of certainty the outcome of this suit or determine the
extent of any potential liability or damages.