Dish Network 2001 Annual Report Download - page 100

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–35
infringe the networks’ copyrights. In November 1998, the networks and their affiliate groups filed a complaint against
EchoStar in Miami Federal Court alleging, among other things, copyright infringement. The court combined the case
that EchoStar filed in Colorado with the case in Miami and transferred it to the Miami court. The case remains pending
in Miami. While the networks have not sought monetary damages, they have sought to recover attorney fees if they
prevail.
In February 1999, the networks filed a “Motion for Temporary Restraining Order, Preliminary Injunction and
Contempt Finding” against DirecTV, Inc. in Miami related to the delivery of distant network channels to DirecTV
customers by satellite. DirecTV settled this lawsuit with the networks. Under the terms of the settlement between
DirecTV and the networks, some DirecTV customers were scheduled to lose access to their satellite-provided distant
network channels by July 31, 1999, while other DirecTV customers were to be disconnected by December 31, 1999.
Subsequently, PrimeTime 24 and substantially all providers of satellite-delivered network programming other than
EchoStar agreed to this cut-off schedule, although EchoStar does not know if they adhered to this schedule.
In December 1998, the networks filed a Motion for Preliminary Injunction against EchoStar in the Miami
court, and asked the court to enjoin EchoStar from providing network programming except under limited
circumstances. A preliminary injunction hearing was held on September 21, 1999. In March 2000, the networks filed
an emergency motion again asking the court to issue an injunction requiring EchoStar to turn off network programming
to certain of its customers. At that time, the networks also argued that EchoStar’s compliance procedures violate the
Satellite Home Viewer Improvement Act (“SHVIA”). EchoStar opposed the networks’ motion and again asked the
court to hear live testimony before ruling upon the networks’ injunction request.
During September 2000, the Court granted the Networks’ motion for preliminary injunction, denied the
Network’s emergency motion and denied EchoStar’s request to present live testimony and evidence. The Court’s
original order required EchoStar to terminate network programming to certain subscribers “no later than February 15,
1999,” and contained other dates with which it would be physically impossible to comply. The order imposes
restrictions on EchoStar’s past and future sale of distant ABC, NBC, CBS and Fox channels similar to those imposed
on PrimeTime 24 (and, EchoStar believes, on DirecTV and others). Some of those restrictions go beyond the statutory
requirements imposed by the SHVA and the SHVIA. For these and other reasons EchoStar believes the Court’s order
is, among other things, fundamentally flawed, unconstitutional and should be overturned. However, it is very unusual
for a Court of Appeals to overturn a lower court’s order and there can be no assurance whatsoever that it will be
overturned.
On October 3, 2000, and again on October 25, 2000, the Court amended its original preliminary injunction
order in an effort to fix some of the errors in the original order. The twice amended preliminary injunction order
required EchoStar to shut off, by February 15, 2001, all subscribers who are ineligible to receive distant network
programming under the court’s order. EchoStar appealed the September 2000 preliminary injunction order and the
October 3, 2000 amended preliminary injunction order. On November 22, 2000, the United States Court of Appeals
for the Eleventh Circuit stayed the Florida Court’s preliminary injunction order pending EchoStar’s appeal. At that
time, the Eleventh Circuit also expedited its consideration of EchoStar’s appeal.
Oral argument before the Eleventh Circuit was held on May 24, 2001. On September 17, 2001, the Eleventh
Circuit vacated the District Court’s nationwide preliminary injunction, which the Eleventh Circuit had stayed in
November 2000. The Eleventh Circuit also rejected EchoStar’s First Amendment challenge to the SHVA. However,
the Eleventh Circuit found that the District Court had made factual findings that were clearly erroneous and not
supported by the evidence, and that the District Court had misinterpreted and misapplied the law. The Eleventh Circuit
also found that the District Court came to the wrong legal conclusion concerning the grandfathering provision found in
17 U.S.C. § 119(d); the Eleventh Circuit reversed the District Court’s legal conclusion and instead found that this
grandfathering provision allows subscribers who switch satellite carriers to continue to receive the distant network
programming that they had been receiving. The Eleventh Circuit’s order indicated that the matter was to be remanded
to the District Court for an evidentiary hearing. On December 28, 2001, the Eleventh Circuit denied EchoStar’s request
for rehearing. The Eleventh Circuit issued its mandate on January 29, 2002, remanding the case to the Florida District
Court. Echostar cannot predict when an evidentiary hearing will be set before the District Court or when a trial will be