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IP/Entertainment Case Law Updates

EchoStar Satellite, LLC v. Viewtech, Inc., et al.

The district court held that a satellite system operator has standing to sue under Section 1201 of the Digital Millennium Copyright Act even though it is not a copyright holder.

EchoStar, operator of the DISH satellite broadcast system, claimed that Viewtech distributed “free-to-air” receivers that, when used with pirated software, allow users to intercept and steal EchoStar’s encrypted programs. EchoStar sued Viewtech for violating the anti-circumvention provisions of the Digital Millennium Copyright Act, 17 U.S.C. §1201(a)(2) and §1201(b)(1). Viewtech argued that EchoStar lacked standing to file suit under §1201 of the DMCA because it is not the copyright owner of the content that is broadcast over the EchoStar system.

EchoStar argued that any person who has been injured by a violation of §1201 has standing to sue, and the court agreed. Noting that the Ninth Circuit has not addressed the issue of standing under the DMCA, the court cited several district court cases that had found the plain language of the statute (“any person injured by a violation of section 1201 or 1202 may bring a civil action”) does not explicitly state that recovery is limited to copyright holders and that non-copyright owners have standing to pursue DMCA claims.

In addition, the court dismissed EchoStar’s claim under §605(a) of the Communications Act of 1934 because that section applies only to “communication by radio,” which does not include satellite signals once they reach the wire-distribution system, and found that Viewtech’s conduct was covered only by §605(e)(4), which applies to the unauthorized decryption of “direct-to-home satellite services.” In reaching this conclusion, the court noted that the Ninth Circuit has not addressed the specific issue of what constitutes the interception of a “communication by radio” and that there was a split among the circuits regarding the scope of §605. Specifically, the Second Circuit is of the view that “once a satellite transmission, always a satellite transmission” and has held that §605 applies to claims against sellers of cable television descramblers that intercept satellite transmissions after reaching the cable system’s wire-distribution phase. In contrast, the Third Circuit has taken a narrower view and held that once a satellite transmission reaches a cable system’s wire distribution phase it is no longer within the scope of §605. The court followed the Third Circuit precedent, in part because to hold otherwise would threaten the two-tiered approach established by Congress.

The court also rejected Viewtech’s argument that EchoStar’s state claims for unfair competition and unjust enrichment were pre-empted by the Copyright Act, finding that the state claims relate to a breach of EchosStar’s security measures and do not fall within the subject matter of copyright. In reaching this holding, the court noted the lack of any prior cases within the Ninth Circuit addressing whether encrypted satellite signals fall within the “subject matter” of copyright law and agreed with and followed district court decisions from the Fourth and Fifth Circuits holding that satellite signals do not fall within the subject matter of the Copyright Act.