Federal court rules in favor of Indy company

A federal appeals court in Florida has upheld an Indianapolis-based company’s right to sell distant networking programming to its customers, finding the company was acting in accordance with the Satellite Home Viewer Act (SHVA).

The unanimous opinion from the 11th Circuit Court of Appeals Monday, CBS Broadcasting Inc., et al. v. EchoStar Communications d.b.a. DISH Network, et al. No. 07-10020, ruled National Programming Service (NPS), a proposed intervenor-cross-appellant on the case, has the right to lease satellite equipment from EchoStar Communications Corp. even though EchoStar was involved in a lawsuit and had an injunction in place prohibiting the company from transmitting network programming to served and unserved customers.

Under SHVA, satellite carriers like NPS are able to get a compulsory, statutory license to engage in secondary transmission of copyrighted programming to unserved households – those that are unable to receive network programming at a specified level of intensity through the use of conventional rooftop antennas.

NPS saw an opportunity to step into the business after the injunction was placed against EchoStar. In 2006, NPS reached a deal with EchoStar about leasing its satellite equipment, which allowed NPS to use EchoStar’s satellite transponder to retransmit distant network programming to unserved households that signed with NPS.

In 1998, several television networks and their affiliates sued EchoStar in the U.S. District Court for the Southern District of Florida claiming the company improperly provided distant network programming to served households – subscribers to the DISH Network satellite brand. An injunction was entered to stop the company from providing the programming under the SHVA’s statutory license.

After the deal was reached between NPS and EchoStar, the television networks accused NPS of violating the injunction. The Florida federal court and now the 11th Circuit have ruled in favor of NPS.

The appellate court ruled NPS was lawfully transmitting network signals to unserved households pursuant to the act, said Todd Vare, partner at Barnes & Thornburg’s intellectual property department who represented NPS in the suit.

“It’s an important ruling in terms of how the court interpreted the statute,” he said, adding it “allowed NPS to lease satellite equipment from somebody else without that somebody else somehow being subject to the statute.”

The ruling also touched upon a public policy issue in the small-dish market. There were only two competitors – DISH Network and DIRECTV. If the injunction issued against EchoStar applied to NPS, then customers would have been left with only one provider and it would have essentially created a monopoly in the small-dish market, Vare said.