Petition for Writ of Certiorari — Echostar Communications Corp. v. CBS Broadcasting Inc.

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Saas RISE IR es TEENA REISE MN abe se or omer ee eae

Supreme Court, U.S

cy, FILED

92145 0 mar 28202

OFrioe OF The CLES

No.

In The

Supreme Court of the United States

ECHOSTAR COMMUNICATIONS

CORPORATION, et al.,

Petitioners,

CBS BROADCASTING INC., et al.,

Respondents.

— -

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Laurence H. Trise* CYNTHIA A. RICKETTS

Hauser Hall 420 DonaL_p A. WALI

1575 Massachusetts Avenue Desora L. VeRbIER

Cambridge, Massachusetts Squire, SANDERS &

02138 Dempsey L.L.P.

(617) 495-4621 Two Renaissance Square

sient of Morand 40 North Central Avenue,

¥ Suite 2700

Davip K. Moskowitz Phoenix, Arizona 85004

ECHOSTAR COMMUNICATIONS (602) 528-4000

SeeATICN T. Wave WEtcH

5701 South Santa Fe Drive

Littleton, Colorado 80120

(303) 723-1000

T. Wape WELCH & ASSOCIATES

2401 Fountainview, Suite 215

Houston, Texas 77057

(713) 952-4334

Counsel for Petitioners

COCKLE LAW BRIEF PRINTING CO, (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Is 17 U.S.C. § 119(a)(2)(B), part of the Satellite Home

Viewer Act of 1988, an unconstitutional abridgement

of speech under the First Amendment because (a) it is

a content-based, speaker-specific restriction that

implements a congressional preference for the speech

of local television broadcasters by requiring satellite

carriers to block distant broadcast signals from all but

a small group of households that would otherwise

receive them, and (b) it is not narrowly tailored to a

substantial governmental interest and therefore fails

intermediate First Amendment scrutiny?

Is § 119(a)(2)(B) categorically immune from First .

Amendment scrutiny because it is structured as an

exception to a statutory copyright license, a question

related to the second question presented in Eldred v.

Ashcroft, 239 F.3d 372 (D.C. Cir. 2001), cert. granted,

534 U.S. __ (U.S. Feb. 19, 2002) (No. 01-618)?

PARTIES TO THE PROCEEDINGS AND

CORPORATE DISCLOSURE STATEMENT

Petitioners are EchoStar Communications Corpora-

tion, d/b/a DISH Network; EchoStar Satellite Corpora-

tion; Satellite Communications Operating Corporation;

and DirectSat Corporation.

Respondents are CBS Broadcasting Inc.; Fox Broad-

casting Company; ABC, Inc.; National Broadcasting Com-

pany, Inc.; CBS Television Network Affiliates Association;

FBC Television Affiliates Association; ABC Television

Affiliates Association; NBC Television Affiliates; and the

United States of America.

Petitioner EchoStar Communications Corporation,

d/b/a DISH Network, is a publicly held corporation that

has issued securities to the public. Financiere De Video-

communication owns 10 percent or more of petitioner

EchoStar Communications Corporation’s stock. Finan-

ciere De Videocommunication is a wholly owned subsid-

iary of Groupe Canal+, which in turn is a wholly owned

subsidiary of Vivendi Universal. Vivendi Universal has

issued securities to the public. Petitioner EchoStar Satel-

lite Corporation is a subsidiary of EchoStar Broadband

Corporation, which in turn is a subsidiary of EchoStar

Communications Corporation. Petitioner Satellite Com-

munications Operating Corporation is a subsidiary of

EchoStar Communications Corporation. Petitioner

DirectSat Corporation was a subsidiary of, but merged

into, EchoStar Satellite Corporation, effective March 12,

1999.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED .........................

PARTIES TO THE PROCEEDINGS AND CORPO-

RATE DISCLOSURE STATEMENT ...............

6 ge

CONSTITUTIONAL AND STATUTORY PROVI-

B. The Statutory Copyright License.............

C. Course of Proceedings and Disposition Below .

REASONS FOR GRANTING THE PETITION .......

I. Review Is Necessary To Establish That A

Speaker-Specific Restriction On “Distant”

Broadcast Speech In Order To Promote “Local”

Broadcasting Content Is A Content-Based Limit

On Speech That Triggers Strict First Amend-

SU 0 avs a ss Se g'en bux doe sb vs cokes

A) The Statute Is A Content-Based Restriction

That Violates The First Amendment ......

B) Section 119(a)(2)(B) Warrants Strict Scrutiny

Because It Singles Out Particular Speakers

WE III onc an kn sc ccccccswcnccncce..

TABLE OF CONTENTS -— Continued

Page

Il. Review Is Warranted Because the Eleventh Cir-

cuit Articulated A New, Watered-Down Version

of Intermediate Scrutiny ..................545- 19

III. Review Is Warranted To Establish That

§ 119(a)(2)(B) Is Not Immune From First

Amendment Scrutiny Even Though It Is Struc-

tured As An Exception To A Statutory Copy-

TATE LAGIIIG oo neck ccc acacccarandzansontnases 25

CRIN occ cA plesdeddscadeneekacdaernneees 30

TABLE OF AUTHORITIES

Page

Cases

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484

SOW URD A650 kad 6b oa eR ed EE EA REA eae 20, 23, 29

Arkansas Writers’ Project, Inc. v. Ragland, 481 U.S.

se yo Pe ee eee ar merry ee en ea 18

Bailey v. Morales, 190 F.3d 320 (5th Cir. 1999)........ 20

Bartnicki v. Vopper, 532 U.S. 514, 121 S. Ct. 1753

GES 4 cet svenwsesaeuad secede sve hae esa eee 20

Board of Trustees v. Fox, 492 U.S. 469 (1989).......... 19

Bolger v. Young’s Drug Products Corp., 463 U.S. 60

(RPE ccc n eed edanewasedeanak dere ea Olesen 23

Century Communications, Corp. v. FCC, 835 F.2d 292

(PA. SE TDs vaenvaena cheese adkoneee eee 20

Cincinnati v. Discovery Network, 507 U.S. 410 (1993)..23, 24

Edenfield v. Fane, 507 U.S. 761 (1993) ................ 20

Eldred v. Ashcroft, 239 F.3d 372 (D.C. Cir. 2001),

cert. granted, 534 U.S. __ (U.S. Feb. 19, 2002)

(POG, OREN) 6. os Pag nacukcooeeks oeiee eee passim

FCC v. League of Women Voters, 468 U.S. 364 (1984)

First National Bank of Boston v. Bellotti, 435 U.S. 765

(OSV O) « sake nccnceeeed cana l seen oo 16, 18

Fox Television Stations, Inc. v. FCC, 280 F.3d 1027

(Ee... Coe. FO. TS, Bee esse seins eee 20

Greater New Orleans Broadcasting Ass’n, Inc. v.

United States, 527 U.S. 173 (1999) ......22ceccecess 23

TABLE OF AUTHORITIES — Continued

Page

Harman v. City of New York, 140 F.3d 111 (2d Cir.

BOG co ccccscccedcesnctveadendgenenseeveseteastuss 20

Harper & Row, Publishers, Inc. v. Nation Enterprises,

G71 US. Soe CRP st ccstestgoscnussusss 8, 25, 26, 27

Hurley v. Irish-American Gay, Lesbian & Bisexual

Group of Boston, 515 U.S. 557 (1995)............ 12, 16

Ibanez v. Florida Department of Business & Profes-

sional Regulation, 512 U.S. 136 (1994).............. 20

Leathers v. Medlock, 499 U.S. 439 (1991).............. 17

Legal Services Corp. v. Velazquez, 531 U.S. 533 (2001) . 29

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 121 S

CR. GERG CAGE) 6c sé cncnccetseobeuaeeeaeiesaeeee 20, 24

Madison School District v. Wisconsin Employment

Relations Commission, 429 U.S. 167 (1976).......... 18

Minneapolis Star & Tribune Co. v

Minnesota Com-

missioner of Revenue, 460 U.S. 575 (1983)

ery? 18, 19

Pacific Gas & Electric Co. v. Public Utilities Commis-

sion of California, 475 U.S. 1 (1986)................ 16

Pearson v. Edgar, 153 F.3d 397 (7th Cir. 1998)........ 20

Perry v. Sindermann, 408 U.S. 593 (1972).... ........ 29

Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767

CESGG) «5 oocincss00000080400406bh00neeeacarineneewns 18

Police Department of Chicago v. Mosley, 408 U.S. 92

(RDFA) a cvccnvcssesnoceceuuecuaeeaneaanuteeeneeieen 18

Rosenberger v. Rector & Visitors of the University of

Virginia, 515 U.S. 819 (1995)

Rubin v. Coors Brewing Co., 514 U.S. 476 (1995) ...20, 23

Vil

TABLE OF AUTHORITIES - Continued

Ruggiero v. FCC, 278 F.3d 1323 (D.C. Cir. Fe

2002)

Rust v. Sullivan, 500 U.S. 173 (1991)

bh. &

San Francisco Arts & Athletics, Inc. v. United States

Olympic Committee, 483 U.S. 522 (1987)

Satellite Broadcasting & Communications Associ

v. FCC, 275 F.3d 337 (4th Cir. 2001)

Time Warner Entertainment Co. v. FCC. 240

1126 (D.C. Cir. 2001)

Turner Broadcasting System, Inc. v. FCC, 512

622 (1994)

Turner Broadcasting System, Inc. v. FCC, 520

F.3d

Passi

passim

li S WEST, Inc. v. FCC, 182 F.3d 1224 (10th Cir

1999) 95

United States v. O'Brien, 391 U.S. 367 (1968) passim

Linited States v. Playboy Entertainment Group, In

529 U.S. 803 (2000)... 17

United Video, Inc. v. FCC, 890 F.2d 1173 (D.C. Cir

1989) S

Ward v. Rock against Racism, 491 U.S. 781 (1989).. 24

FEDERAL STATUTES

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TABLE OF AUTHORITIES - Continued

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Intellectual Property and Communications

Omnibus Reform Act of 1999, Pub. L. No.

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FEDERAL RULES

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UniteD STATES CONSTITUTION

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TABLE OF AUTHORITIES —- Continued

Page

OTHER AUTHORITIES

DIRECTV Press Release, DIRECTV Announces

Fourth Quarter and Year-End 2001 Subscriber

Growth; Strong Performance Exceeds Expectations;

DIRECTV Ends Year with 10.7 Million Customers

a EE 645 rns Bana sd es A 7

EchoStar Press Release, EchoStar Reports Record

Fourth Quarter Revenue, EBITDA; EchoStar’s

DISH Network Satellite TV Service Reaches 7 Mil-

lion Customer Milestone (Feb. 28, 2002) ............. 7

ee SS ee ea area rare 14

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Pa SU, DO MMI ec vet acc cdeexd cen cesaaas 6, 14, 19

Kathleen M. Sullivan, Unconstitutional Conditions,

ee Pee. Bi, TE a CD oo ek a aes orice dads 29

Lawrence Lessig, Lecture: Copyright’s First Amend-

ment, 48 U.C.L.A. L. Rev. 1057 (June 2001)........ 15

Neil Weinstock Netanel, Locating Copyright Within

the First Amendment Skein, 54 Stan. L. Rev. 1

Cowra seen es cuetbok sade euaerer sks a3, 38, 27

Se Se | Mere ee, ee ee reer err errr e rer rer re 22

Stephen G. Breyer, The Uneasy Case for Copyright:

A Study of Copyright in Books, Photocopies, and

Computer Programs, 84 Harv. L. Rev. 281 (1970) .... 27

MONE Riaz ashe en Se

TABLE OF APPENDICES

Appendix A

Opinion of the United States Court of Appeals

for the Eleventh Circuit, Filed September 17,

i | EVES TEETER TET LCE CTT e eT rere TTT eT Troe la

Appendix B

Unreported Opinion of the United States Dis-

trict Court for the Southern District of Florida,

POO: SONNE FO, BOO oo i-nn es seeds candids sixes 46a

Appendix C

Preliminary Injunction, Filed September 29,

y | PET COTE ETE TET TCE EET Cee TTC TT eee ee 73a

Appendix D

Amended Preliminary Injunction, Filed October

Se Sy kee Ree ER EG ork NS Bare ae 86a

Appendix E

Order of the United States District Court for the

Southern District of Florida further amending

Preliminary Injunction, Filed October 26, 2000.... 99a

Appendix F

Order of the United States Court of Appeals for

the Eleventh Circuit granting stay of Prelimi-

nary Injunction, Filed November 22, 2000....... 108a

Appendix G

Order of the United States Court of Appeals for

the Eleventh Circuit denying Petition for

Rehearing and Rehearing en banc, Filed Decem-

ee SR ee eh Ulan ue esau s «eater ees 110a

Appendix H

Relevant Constitutional Provisions .............. 112a

Appendix I

SRE VOIE SUMNIOTY COGDS a oc 6k cs bo kc cee en ec eces 113a

PETITION FOR A WRIT OF CERTIORARI

Petitioners respectfully petition for a writ of certiorari

to review the decision of ‘the United States Court of

Appeals for the Eleventh Circuit.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Eleventh Circuit (“Eleventh Circuit”) is reported at 265

F.3d 1193 (11th Cir. 2001), and reprinted at Pet. App.

la-45a. The Eleventh Circuit’s Orders staying the prelimi-

nary injunction pending appeal and denying the petition

for rehearing and rehearing en banc are reprinted at Pet.

App. 107a-108a and 109a-11la, respectively. The United

States District Court for the Southern District of Florida’s

Orders granting preliminary injunction, the Preliminary

Injunction, and the Amended Preliminary Injunction are

unreported and are reprinted at Pet. App. 46a-72a,

73a-85a, and 86a-98a, respectively. The district court's

Order denying stay and further amending its Preliminary

Injunction is appended at Pet. App. 99a-106a.

STATEMENT OF JURISDICTION

The Eleventh Circuit’s decision was entered on Sep-

tember 17, 2001. Petitioners’ timely petition for rehearing

and rehearing en banc was denied on December 28, 2001.

This Court has jurisdiction pursuant to 28 U.S.C. § 1254(1).

Pursuant to Rule 29.4(b), petitioners state that the Eleventh

Circuit granted the motion of the United States of America

to defend the constitutionality of the Federal Act under 28

U.S.C. § 2403(a), and that the United States is a party to

this action as a respondent.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The First Amendment to the United States Constitu-

tion provides in pertinent part that “Congress shall make

no law .. . abridging the freedom of speech, or of the

press....” U.S. Const. amend. I. The full text is set forth

in Pet. App. 112a. The Copyright Clause provides that

“Congress shall have the power . . . to promote the Pro-

gress of Science and useful Arts by securing for limited

Times to Authors and Inventors the exclusive Right to

their respective Writings and Discoveries.” U.S. Const. art.

I, § 8, cl. 8. The full text is set forth in Pet. App. 112a. The

pertinent statutory provisions, 17 U.S.C. § 119, 17 U.S.C.

§ 122, 47 U.S.C. § 338 and 47 U.S.C. § 339, are set forth at

Pet. App. 113a-142a.

STATEMENT OF THE CASE

A. Introduction.

This case presents a First Amendment challenge to 17

U.S.C. § 119(a)(2)(B), part of the Satellite Home Viewer Act

of 1988 (“SHVA”), as amended.! The statute impermissibly

favors local programming by precluding satellite carriers

from offering distant network programming to “served

households” as defined in the statute. See 17 U.S.C.

§ 119(a)(2)(B) & (d)(10). The so-called “unserved house-

hold” restriction, which prefers “local” broadcast pro-

gramming to “distant” programming, is demonstrably

content-based. It deprives millions of American house-

holds of the opportunity to obtain distant network pro-

gramming and reflects a paternalistic governmental

judgment that viewers should watch local programming

even if they prefer distant network programming.

The court of appeals sustained the statute by misap-

plying this Court’s decisions in Turner Broadcasting System,

Inc. v. FCC, 512 U.S. 622 (1994) (“Turner I”), and Turner

Broadcasting System, Inc. v. FCC, 520 U.S. 180 (1997)

(“Turner II”). The Court should grant review to establish

1 This petition raises no question regarding SHVA’s

provisions for retransmission of “superstations” and Public

Broadcasting Service programming. See 17 U.S.C. § 119(a)(1).

the proposition that a speaker-specific, content-based stat-

ute designed to favor “local” broadcast television over

“distant” broadcast television contravenes the First

Amendment.

The court of appeals also treated 17 U.S.C.

§ 119(a)(2)(B) as if it were not a restriction on speech: “the

Act does not threaten [EchoStar’s] free speech rights but

actually permits more speech than EchoStar would consti-

tutionally be entitled to under the Copyright Act.” Pet.

App. 34a. This Court should grant review to establish that

First Amendment protections cannot be circumvented

through the artifice of a statutory copyright license. The

fallacy in the court of appeals’ elevation of form over

substance is confirmed by this Court’s recognition of the

intersection between First Amendment and copyright

principles in granting certiorari in Eldred v. Ashcroft, 239

F.3d 372, 375 (D.C. Cir. 2001), cert. granted, 534 U.S. __

(U.S. Feb. 19, 2002) (No. 01-618), which presents the ques-

tion (in Question 2 of the Questions Presented) of whether

the Copyright Term Extension Act of 1998 is “categorically

immune from challenges under the First Amendment.”

The certiorari petition in Eldred cited the Eleventh Circuit's

opinion in this very case as evidence of a circuit split on

granted outright, this petition for certiorari should be held

in abeyance pending the disposition of Eldred.

B. The Statutory Copyright License.

Section 119(a)(2)(A) licenses satellite companies to

retransmit network broadcast stations’ programming with-

out having to negotiate separate permission from each

holder of a copyright interest in each individual program.

Congress protected the interests of such holders by requir-

ing payment of a statutory royalty for each recipient of

each program. See 17 U.S.C. § 119(b). The statute was

remedial, for Congress recognized that broadcast networks

and their affiliates were unfairly restricting access to net-

work programming and were collectively refusing to nego-

tiate with satellite providers for retransmission rights to

network signals.

Section 119(a)(2)(B), however, excludes “served”

households from that license. Section 119(a)(2)(B) specifies:

The statutory license provided for in subpara-

graph (A) shall be limited to secondary transmis-

sion to persons who reside in unserved

households.

Section 119(d)(10) defines an “unserved household” as one

that:

(A) Cannot receive, through the use of a con-

ventional outdoor rooftop receiving antenna, an

over-the-air signal of grade B intensity ... of a

primary network station affiliated with that net-

work. .. .

Signal strength is determined separately for each network

at each household, creating a significant administrative

burden for carriers.

By contrast, cable companies had enjoyed a much

broader statutory license for twelve years under the Copy-

right Act of 1976, 17 U.S.C. § 111, which they successfully

wielded to obtain a market share of 80% of U.S. house-

holds that subscribe to multichannel television program-

ming. Satellite carriers, however, received a license of

considerably narrower scope than that afforded to cable

companies.

The statute limits satellite retransmission to the “sma!]

percentage of television households [that] cannot now

receive clear signals embodying the programming of the

three national television networks.” H.R. Rep. No. 100-887,

pt. I at 18 (1988). The plain purpose of that limitation is to

protect local network stations and local programming.

Congress was concerned that if satellite carriers transmit-

ted distant network signals to households already

“served” by local network stations, the result would be

“an erosion of audiences for such local stations because

ia. > ieee 2

their programming would no longer be unique and dis-

tinctive.” H.R. Rep. No. 100-887, pt. II, at 26. Congress

reaffirmed this purpose in 1994 when it extended the

original six-year license, stating:

In order to protect local network stations from

the importation of distant network stations of the

same network, the Act restricts such importation

to those households that cannot receive a particu-

lar local network station either through over-the-

air antennas or cable.

H.R. Rep. No. 103-703, at 6 (1994) (footnote omitted).

To comply with § 119, EchoStar was forced to block

most of its subscribers from receiving the many network

stations it carries.2 “Unserved” households could lawfully

receive such signals from any network station, whether

distant or local, but “served” households could receive no

network broadcasting by satellite. Thus, distant and local

network stations were both available to “unserved” satel-

lite subscribers, whereas the only options for “served”

households were local network affiliates, viewed over-the-

air or by cable.

The Satellite Home Viewer Improvement Act of 1999

(hereinafter “SHVIA”) revised the licensing scheme,

amending both the Copyright Act (Title 17 U.S. Code) and

the Communications Act (Title 47 U.S. Code).3 The SHVIA

continued to restrict the satellite carriers’ copyright license

* Satellite programming (for example, HBO) is available to

all households that have compatible receivers. Thus, to limit

access (for example, to only those paying the additional fee for

HBO), EchoStar must block the ability of the receiving

equipment (the satellite dish and box in the home) to accept and

convert into viewable form the signal for that channel. The

“unserved household” restriction thus requires that each

“served” household’s receiving equipment block the network

stations’ signals.

3 The SHVIA comprised Title I of the Intellectual Property

and Communications Omnibus Reform Act of 1999, Pub. L. No.

106-113, 113 Stat. 1501.

under § 119 to “unserved households,” and to define

“unserved households” as those unable to receive a Grade

B signal from a local network broadcast station. 17 U.S.C.

§§ 119(a)(2)(B), 119(d)(10), 47 U.S.C. § 339(b).

At the same time, the SHVIA created a new and

additional statutory license permitting retransmission of

local broadcast programming without regard to the

“served” or “unserved” nature of the subscribing house-

hold, and without any obligation to pay royalties. 17

U.S.C. § 122. This “local-into-local” copyright license is

conditioned on a carrier’s retransmitting all the requesting

broadcast stations in any local market where it uses the

“local-into-local” license. 47 U.S.C. § 338. The Conference

Report on the 1999 amendments explained the new

license:

[T]he Conference Committee reasserts the impor-

tance of protecting and fostering the system of

television networks as they relate to the concept

of localism. It is well recognized that television

broadcast stations provide valuable program-

ming tailored to local needs, such as news,

weather, special announcements and information

related to local activities. To that end, the Com-

mittee has structured the copyright licensing reg-

ime for satellite to encourage and promote

retransmissions by satellite of local television sta-

tions to subscribers who reside in the local mar-

kets of those stations.

H.R. Rep. No. 106-464, at 92 (1999). With respect to distant

network retransmissions, it retained the limited license of

§ 119 for distant network service only “to those homes

which cannot receive the local network television sta-

tions.” Id. at 93.

Congress recognized in 1999 that many “unserved”

homes would actually be able to receive local network

programming under the new “local-into-local” license. 47

U.S.C. § 339(a)(1)(B). Nonetheless, the definition of

“unserved” remains the sole determinant of a satellite

customer’s ability to subscribe to distant network pro-

gramming. As amended in 1999, therefore, the SHVIA

provides satellite carriers with two conditional copyright

licenses:

— Under § 122, a license to retransmit local net-

work broadcast programming royalty-free to

all households in a licensed market; and

- Under § 119, a paid license to retransmit dis-

tant network programming, but only to

“unserved” households - even if those house-

holds can and do receive local network pro-

gramming via satellite under the § 122

license.

A satellite carrier is forbidden from retransmitting distant

network programming to households that are outside the

statutory definition of “unserved.”

The practical effect of the statutory scheme is to

silence a substantial amount of speech and to establish a

paternalistic governmental preference for local broadcast-

ing content. The scheme potentially affects not only the 17

million existing satellite viewers,4 but the untold millions

more who either do not subscribe to a satellite carrier

because they would be ineligible to receive distant net-

work programming or who subscribe but are nonetheless

denied the distant programming of their preference. To

comply with the restrictions on its speech, EchoStar must

carry all requesting broadcast stations for each of the 35

local markets it serves, and at the same time it must block

subscribers from receiving those stations that are outside

their own local markets. Viewers who meet the definition

4 See DIRECTV Press Release, DIRECTV Announces Fourth

Quarter and Year-End 2001 Subscriber Growth; Strong Performance

Exceeds Expectations; DIRECTV Ends Year with 10.7 Million

Customers (Jan. 8, 2002); see also EchoStar Press Release, EchoStar

Reports Record Fourth Quarter Revenue, EBITDA; EchoStar’s DISH

Network Satellite TV Service Reaches 7 Million Customer Milestone

(Feb. 28, 2002).

8 -

of “unserved households” can subscribe to such distant

broadcast programming; the rest cannot.

C. Course of Proceedings and Disposition Below.

On November 5, 1998, respondents, composed of the

major networks and associations of network affiliates (col-

lectively, “the Networks”), filed their lawsuit below, alleg-

ing that EchoStar was providing distant network

programming to “served” households in violation of the

SHVA and seeking a nationwide preliminary injunction.

On September 17, 1999, EchoStar moved for judgment on

the pleadings on the ground that the “unserved house-

hold” restriction violates the First Amendment.

On September 29, 2000, the district court granted a

nationwide preliminary injunction, and, in so doing,

denied EchoStar’s motion for judgment on the pleadings.

The district court’s entire First Amendment discussion

was:

In effect, EchoStar seeks to “make commercial

use of the copyrighted works of others. There is

no first amendment right to do so.” United Video,

Inc. v. FCC, 890 F.2d 1173, 1191 (D.C. Cir. 1989).

Therefore, the Court will deny EchoStar’s

Motion.

Pet. App. 68a-69a.

EchoStar timely appealed, and the court of appeals

reversed and vacated the injunction, remanding for an

evidentiary hearing on the injunction issues. With respect

to the First Amendment, however, the court of appeals

ruled on the merits that 17 U.S.C. § 119(a)(2)(B) is constitu-

tional. Pet. App. 32a-39a. The court of appeals was openly

dubious that EchoStar could assert any First Amendment

claim at all, opining that Harper & Row, Publishers, Inc. v.

Nation Enterprises, 471 U.S. 539 (1985), “rejected the sug-

gestion that the First Amendment requires broader excep-

tions to the copyright laws than those explicitly conferred

by Congress.” Pet. App. 33a.

The court of appeals nonetheless purported to evalu-

ate the “unserved household” restriction under the inter-

mediate First Amendment scrutiny prescribed by United

States v. O’Brien, 391 U.S. 367, 377 (1968). It had no eviden-

tiary record on which to base such an evaluation; the

district court had merely deciined to grant EchoStar’s

motion for judgment on the pleadings. Even so, the court

of appeals found that the restriction on distant broadcast

network retransmission serves “the limited goal of provid-

ing access to network programming for households that

cannot otherwise receive such programming, . . . while

creating the least possible interference with the Networks’

copyrights.” Pet. App. 36a. It asserted that “[s]uch precise

tailoring certainly survives scrutiny, intermediate or other-

wise,” and thus pronounced EchoStar’s First Amendment

challenge “meritless.” Id. at 38a-39a.

The court of appeals directed the district court to

apply 17 U.S.C. § 119(a)(2)(B) to EchoStar on remand. The

district court will do so as part of an evidentiary hearing

to be conducted on the requested injunction. The court of

appeals has conclusively resolved EchoStar’s constitu-

tional objections.

EchoStar sought rehearing and rehearing en banc of

the First Amendment question on October 9, 2001, which

the Eleventh Circuit denied without opinion on December

28, 2001. Pet. App. 109a-111a.

REASONS FOR GRANTING THE PETITION

This case squarely presents the issue this Court

reserved in Turner I, 512 U.S. 622 (1994), and Turner II, 520

U.S. 180 (1997): whether a statute designed to promote

“local” broadcast television content at the expense of “dis-

tant” broadcast speech contravenes the First Amendment.

The Eleventh Circuit summarily upheld such a speaker-

specific statutory scheme, one avowedly designed to limit

“distant” broadcast speech in favor of “local” broadcast

television, even though all of the Justices writing in Turner

I indicated that such a law would impose what they

deemed a content-based restriction on protected speech.®

This Court should grant review to establish that the chal-

lenged statute, 17 U.S.C. § 119(a)(2)(B), is invalid under the

First Amendment.

This Court should also grant review because the court

of appeals promulgated a new standard for judging con-

tent-neutral restrictions on speech under intermediate

First Amendment scrutiny. The court of appeals upheld 17

U.S.C. § 119(a)(2)(B) without demanding any substantial,

non-speculative evidence of an important governmental

interest to which the restriction on speech was narrowly

tailored.

Finally, review should be granted to establish that

§ 119(a)(2)(B) is not immune from First Amendment scru-

tiny simply because it is structured as an exception to a

statutory copyright license. The Eleventh Circuit’s holding

that the statute “does not threaten [EchoStar’s] free speech

rights” (Pet. App. 34a) elevates form over substance and

ignores the statute’s practical effect on expression. It also

raises questions akin to those posed in Eldred.

If the ruling below is allowed to stand, satellite car-

riers and viewers will continue to have their television

programming options curtailed by a licensing scheme that

dramatically reduces the total amount and variety of avail-

able speech. The statute prefers local over distant pro-

gramming, “unserved” viewers over “served” viewers,

and cable television operators over competing satellite

carriers. The question presented thus has enormous impli-

cations for millions of viewers and for the marketplace of

ideas available to the American public.

Absent review by this Court, the Eleventh Circuit's

decision will be the last word on the First Amendment

rights of satellite carriers. Together, EchoStar and

5 See Turner I, 512 U.S. at 643 n.6 (dictum) (Justices

Kennedy, Rehnquist, Blackmun, Stevens and Souter); 512 U.S. at

676-78 (Justices O’Connor, Scalia, Thomas and Ginsburg); 512

U.S. at 688 (Justice Ginsburg).

at’

DIRECTV hold the licenses for all 96 available frequencies

for the provision of direct broadcast satellite service across

the continental United States. EchoStar and the parent of

DIRECTV have agreed to merge the two satellite carriers

into one entity, subject to review by the Federa! Communi-

cations Commission (“FCC”) and antitrust regulators.

Accordingly, it is highly unlikely that any other court of

appeals will ever be presented with the questions raised

here.

This Court’s review is urgently warranted. At mini-

mum, the petition for certiorari should be held in abeyance

pending the disposition of Eldred.

I. Review Is Necessary To Establish That A Speaker-

Specific Restriction On “Distant” Broadcast Speech

In Order To Promote “Local” Broadcasting Content Is

A Content-Based Limit On Speech That Triggers

Strict First Amendment Scrutiny.

Retransmission of television programming is speech

entitled to First Amendment protection. The Eleventh Cir-

cuit was unwilling to hold at the threshold that EchoStar’s

programming actually constitutes “speech” or that the

challenged statute imposes any burden on speech, Pet.

App. 34a n.22, 38a n.24. In that respect, the decision below

squarely conflicts with this Court’s decisions in Turner

Broadcasting. As the Fourth Circuit recently observed in

Satellite Broadcasting & Communications Association v. FCC,

275 F.3d 337 (4th Cir. 2001), petition for cert. filed, __

U.S.L.W. __ (U.S. March 7, 2002) (No. 01-1332), which

addressed a First Amendment challenge to a different

section of the SHVIA:

[Bloth satellite carriers and cable operators

engage in speech protected by the First Amend-

ment when they exercise editorial discretion over

the menu of channels they offer to their sub-

scribers. Insofar as the carry one, carry all rule

seeks to influence the exercise of that discretion,

it is open to challenge under the First Amend-

ment.

Id. at 352-53 (citation omitted).

The role of satellite carriers in selecting which stations

and programming to carry is equivalent to that of the cable

operators the Court discussed in Turner I, where all nine

Justices agreed:

There can be no disagreement on an initial prem-

ise: Cable programmers and cable operators

engage in and transmit speech, and they are

entitled to the protection of the speech and press

provisions of the First Amendment. Through

“original programming or by exercising editorial

discretion over which stations or programs to

include in its repertoire,” cable programmers and

operators “seek to communicate messages on a

wide variety of topics and in a wide variety of

formats.”

Id. at 636 (citations omitted). As Justice O’Connor

explained in her separate opinion,

Selecting which speech to retransmit is, as we

know from the example of publishing houses,

movie theaters, bookstores, and Reader’s Digest,

no less communication than is creating the

speech in the first place.

Id. at 675 (O’Connor, J., concurring in part and dissenting

in part). Accord, Hurley v. Irish-American Gay, Lesbian &

Bisexual Group of Boston, 515 U.S. 557, 570 (1995). The

programming choices made by satellite carriers and

viewers are no less valuable under the First Amendment

than those of cable operators and cable viewers, or those

of publishers and readers. Any other view would conflict

with the premise underlying the second question pre-

sented by Eldred, which involves the First Amendment

protection to which retransmission of copyrighted material

is entitled in light of the Copyright Term Extension Act of

1998. As a content-based restriction that discriminates

between classes of speakers, § 119(a)(2)(B) demands strict

scrutiny.

;

A) The Statute Is A Content-Based Restriction That

Violates The First Amendment.

The statutory scheme here recognizes two distinct

categories of satellite programming, distant and local, and

accords them radically different treatment. Under § 122,

local programming can be provided royalty-free to all

households, without regard to the Strength of the broad-

cast signal each household receives. Distant programming,

on the other hand, may be offered under § 119 only to

those subscribers meeting the complex definition of

“unserved,” and then only for a fee. The statutory scheme

prevents satellite carriers from providing “distant” speech

to households that are deemed “served.”

The effect of this distinction is magnified by the

SHVIA. Under 47 U.S.C. § 338, a satellite carrier using the

§ 122 local programming license must carry the signals of

all requesting local stations in each area where it carries

one such station. Section 119(a)(2)(B), however, prohibits a

carrier from transmitting these same Signals to its cus-

tomers in other parts of the country unless they are

“unserved.” This compels EchoStar to block the signals of

numerous broadcast stations from all but a select few of its

subscribers outside each station’s local area. This scheme

thus limits the total broadcast transmissions available to

the vast majority of satellite subscribers, requiring them to

accept only local network programming when they could

easily receive distant network programming as well.

This reduction in the quantity and variety of speech

available to satellite customers is based solely on whether

network programming is distant or local. “Served” house-

holds have fewer total sources-of information and cannot

opt for distant broadcast variants in liey of or in addition

to their local network stations.

The indisputable basis for the restrictions on “distant”

programming is Congress’ preference for the content of

local television broadcasters: “[Local] stations provide pro-

gramming tailored to local needs, such as news, weather,

special announcements and information related to local

activities.” H.R. Rep. No. 106-464, at 92 (1999). Further:

when a satellite television operator distributes

out-of-market, or distant, network signals to

households that can otherwise receive local sig-

nals over-the-air, the local broadcast station’s

viewership (and hence, advertising revenue) nec-

essarily declines. The unserved household limita-

tion therefore has helped to preserve local

affiliates’ bargained-for exclusivity, and in doing

so, promoted the development of local program-

ming and free, over-the-air television.

H.R. Rep. No. 106-79, at 13 (1999). When the SHVIA

combined the restricted license for distant programming

with an unrestricted royalty-free license for local program-

ming, the Conference Committee said the resulting system

“furthers the congressional policy of localism and diver-

sity of broadcast programming, which provides locally-

relevant news, weather, and information. ...” H.R. Rep.

No. 106-464, at 102.”

6 The House Commerce Committee report addressed an

alternate bill, proposed H.R. 851, which would have removed the

“unserved household” restriction and provided a nationwide

programming. The bill called for equalizing the copyright

licenses on the ground that “[i]t is illogical to place territorial

restrictions on compulsory licenses, given that they are designed

to effectuate telecommunications policy goals (e.g., localism, and

the viability of free, over-the-air television), and not copyright

interests.” H.R. Rep. No. 106-79, at 26. House Report 851 would

have required the FCC to issue regulations similar to those

governing cable operators. Id. at 25-26. House Report 851 would

have served the interest of protecting local stations through

exclusivity rules, but would have been less restrictive of

protected speech than the “unserved households” limitation.

7 As the House Commerce Committee acknowledged, note

6 supra, these stated goals have nothing to do with the exercise of

powers granted to Congress under the Copyright Clause. Thus, it

This legislative history confirms what the very nature

of the statute reflects: Congress chose to restrict distant

satellite retransmissions out of concern that, if given a

choice, satellite viewers might prefer distant content over

that of their own local stations. Acting out of a misplaced

paternalism, Congress declined to allow viewers that

choice.® Its licensing scheme is therefore facially content-

based under this Court’s Turner decisions.

In Turner I, all members of the Court recognized that

programming addressing “local news and informational

needs” represents a content-based category of speech. The

majority made this observation in describing two statutory

provisions that would require cable companies to carry

certain otherwise ineligible broadcast stations based on

FCC findings addressing “local news and informational

needs” and giving “attention to the value of localism.”

Turner I, 512 U.S. at 643 n.6. The majority said, “We recog-

nize that this aspect of [the challenged statute] appears to

single out certain low-power broadcasters for special bene-

fits on the basis of content.” I[d.9 Tustice O’Connor’s

is questionable whether the “unserved household” restriction

was even within Congress’ power to enact. See Lawrence Lessig,

Lecture: Copyright’s First Amendment, 48 U.C.L.A. L. Rev. 1057,

1062 (June 2001); see also Neil Weinstock Netanel, Locating

(Oct. 2001).

8 By co-opting viewers’ choices, Congress disregarded the

basic tenet of First Amendment jurisprudence “that government

officials should treat citizens as fundamentally rational, autonomous

agents, capable of weighing the value and probity of speech for

themselves.” Netanel, 54 Stan. L. Rev. at 34. If local programming is

as valuable and desirable as Congress has posited, then its

viewership would not “necessarily decline” in the face of available

distant programming, as Congress assumed. Cf. H.R. Rep. No.

106-79, at 13.

9 The Court did not deal with this issue directly because

the district court had not addressed it and the parties gave it

only “glancing reference.” Turner I, 512 U.S. at 643-644 n.6. The

opinion for four members of the Court was more

explicit.!° Believing that the entire statute reflected a pur-

pose to promote local broadcasting, she characterized such

a purpose by saying:

Preferences for diversity of viewpoints, for local-

ism, for educational programming, and for news

and public affairs all make reference to content.

They may not reflect hostility to particular points

of view, or a desire to suppress certain subjects

because they are controversial or offensive. They

may be quite benignly motivated. But benign

motivation, we have consistently held, is not

enough to avoid the need for strict scrutiny of

content-based justifications.

Turner I, 512 U.S. at 677 (O’Connor, J., concurring in part

and dissenting in part). Accord, id. at 686 (Ginsburg, J.,

concurring in part and dissenting in part) (“[A]n inter-

twined or even discrete content-neutral justification does

not render speculative, or reduce to harmless surplus,

Congress’ evident plan to advance local programming.”);

see also Pacific Gas & Elec. Co. v. Public Utils. Comm’n of

California, 475 U.S. 1, 20 (1986) (plurality opinion) (“the

State’s asserted interest in exposing appellant’s customers

to a variety of viewpoints is not - and does not purport to

be — content neutral”); First Nat'l Bank of Boston v. Bellotti,

majority found that the remaining must-carry rules did not

trigger strict scrutiny because Congress had acted not to

manipulate locally available content but rather to ensure the

continued availability of free over-the-air television

programming for those who did not subscribe to cable, by

safeguarding the economic viability of the over-the-air stations.

See Turner I, 512 U.S. at 646; see also id. at 649, 652, 658-59; Turner

II, 520 U.S. at 225-29 (Breyer, J., concurring in part). As the Court

later summarized, “[t]he Government’s interest in Turner

Broadcasting was not the alteration of speech.” Hurley, 515 U.S.

at 577.

10 Justices Scalia and Ginsburg joined in Justice O’Connor’s

separate opinion, and Justice Thomas joined in the portion

relevant here. Turner I, 512 U.S. at 674.

‘

;

435 U.S. 765 n.30 (1978) (governmental attempt to restrict

the voices of some in order to “enhance the relative

voices” of less readily heard speakers “contradicts basic

tenets of First Amendment jurisprudence”) (internal quo-

tation marks omitted); Time Warner Entm’t Co. v. FCC, 240

F.3d 1126, 1131 (D.C. Cir. 2001) (regulation of cable opera-

tors “solely in the interest of diversity” lies at “the outer

limits of Congress’ power”).

Because § 119(a)(2)(B) put in place a content-based

system of copyright licensing that restricts speech, it

demands strict scrutiny under the First Amendment. The

Eleventh Circuit’s decision presents this Court with the

opportunity to resolve the issues left open in the Turner

Broadcasting decisions regarding the government's author-

ity to restrict speech in the name of broadcast “localism.”

B) Section 119(a)(2)(B) Warrants Strict Scrutiny

Because It Singles Out Particular Speakers For

Restriction.

This Court’s review is also called for because of the

Speaker-specific nature of the restriction on speech. While

“served” satellite subscribers are precluded from receiving

distant network broadcasts, the same is not true for cable

subscribers. The copyright license for cable operators, in

17 U.S.C. § 111, contains no “unserved household” limita-

tion, nor any similar distinction between cable operators’

license to transmit local programming and their license to

transmit distant programming.

As this Court has observed, “[rlegulations that dis-

criminate among media, or among different speakers

within a single medium, often present serious First

Amendment concerns,” for they “threaten[ ] to ‘distort the

market for ideas.’ ” Turner I, 512 U.S. at 659, 660 (quoting

Leathers v. Medlock, 499 U.S. 439, 448 (1991)). “Laws

designed or intended to suppress or restrict the expression

of specific speakers contradict basic First Amendment

principles.” United States v. Playboy Entm’t Group, Inc., 529

U.S. 803, 812 (2000). Speaker-specific restrictions on

expression have always triggered exacting First Amend-

ment scrutiny, for “[iJn the realm of protected speech, the

[government] is constitutionally disqualified from dictat-

ing the subjects about which persons may speak and the

speakers who may address a public issue.” Bellotti, 435 U.S. at

784-85 (emphasis added).?}

In imposing a disproportionate burden on one group

of speakers, the “unserved household” restriction ulti-

mately limits the choices available to listeners. And, like

the selective tax exemptions held invalid in Arkansas

Writers’ Project, Inc. v. Ragland, 481 U.S. 221 (1987), and

Minneapolis Star & Tribune Co. v. Minnesota Comm'’r of Reve-

nue, 460 U.S. 575 (1983), this selective license scheme, by

granting preferential treatment to cable operators, neces-

sarily causes concern about improper government motive.

See Netanel, 54 Stan. L. Rev. at 59. Absent any “special

characteristic” of satellite carriers justifying the distinc-

tion,!2 the very fact of such differential treatment

11 See also Philadelphia Newspapers, Inc. v. Hepps, 475 U.S.

767, 777 (1986) (describing Bellotti as involving a “speaker-

based restriction”); Madison Sch. Dist. v. Wisconsin Employment

Relations Comm'n, 429 U.S. 167, 176 (1976) (public board may not

“discriminate between speakers” at its meetings); Police Dep’t of

Chicago v. Mosley, 408 U.S. 92, 96 (1972) (“[W]e have frequently

condemned .. . discrimination among different users of the

same medium for expression.”); Ruggiero v. FCC, 278 F.3d 1323,

1330 (D.C. Cir. Feb. 8, 2002) (invalidating as First Amendment

and equal protection violation federal statute prohibiting

anyone who had ever operated unlicensed station from

obtaining low-power FM radio license, “as it restricts future

lawful speech (licensed broadcasting) and applies to a limited

class.”).

12 No justification for the discrimination was offered or

considered below. Moreover, Congressional statements about

the SHVIA belie the possibility that any “justified differential”

exists. The Conference Committee stated to the contrary that

“[t]he proposed licenses place satellite carrier [sic] in a

CES Bsns at BN TEN

“suggests that the goal of the regulation is not unrelated to

suppression of expression, and such a goal is presump-

tively unconstitutional.” Minneapolis Star, 460 U.S. at 585.

The Eleventh Circuit never demanded any explanation

for the discriminatory treatment of speech by satellite

carriers. Accordingly, this Court’s plenary review is

required.

II. Review Is Warranted Because the Eleventh Circuit

Articulated A New, Watered-Down Version of Inter-

mediate Scrutiny.

Although the court of appeals purported to apply the

intermediate scrutiny standards of O’Brien, 391 U.S. 367

(1968), in fact the court of appeals created a wholly new

test that conflicts with decisions of this Court and with

decisions in other circuits. Under O’Brien, a statute regu-

lating conduct in a manner that affects expression com-

ports with the First Amendment only if: (1) it furthers an

important or substantial governmental interest; (2) the

governmental interest is unrelated to the suppression of

free expression; and (3) the incidental restriction on speech

is no greater than is essential to the furtherance of that

interest. 391 U.S. at 377; see also Turner I, 512 US. at 661-62;

Turner II, 520 U.S. at 189; Board of Trustees v. Fox, 492 U.S.

469, 478 (1989).

The burden of meeting these standards is on the pro-

ponents of the challenged law. At the threshold, they

“must demonstrate that the recited harms are real, not

merely conjectural, and that the regulation will in fact

alleviate these harms in a direct and material Way.” Turner

[, 512 U.S. at 664-65. Further, they must show that “Con-

gress has drawn reasonable inferences based on substan-

tial evidence,” for “[w]hen trenching on first amendment

interests, even incidentally, the government must be able

comparable position to cable systems, competing for the same

customers.” H.R. Rep. No. 106-464, at 101.

to adduce either empirical support or at least sound rea-

soning on behalf of its measures.” Turner I, 512 U.S. at 666

(citations omitted) (quoting Century Communications, Corp.

v. FCC, 835 F.2d 292 (D.C. Cir. 1987)); see also Turner II, 520

U.S. at 195 and 237 (O’Connor, J.) (citations omitted). Even

in the commercial speech context, this Court has instructed

that the government’s burden “is not satisfied by mere

speculation or conjecture,” Edenfield v. Fane, 507 U.S. 761,

770 (1993), or by “anecdotal evidence and educated

guesses.” Rubin v. Coors Brewing Co., 514 U.S. 476, 490

(1995).

The court of appeals minted a new standard that does

not comply with any of these requirements. The court of

appeals itself described the record as “sparse.” Pet. App.

13 See also Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 121

S. Ct. 2404, 2425 (2001) (invalidating restriction on speech where

the government did not “carefully calculat[e] the costs and

benefits associated with the burden on speech imposed by the

regulations,” even though the government adduced numerous

empirical studies and extensive market data to support its

judgment) (internal quotation omitted); Bartnicki v. Vopper, 532

U.S. 514, 121 S. Ct. 1753, 1764 n.18 (2001) (“mere speculation or

conjecture” insufficient); 44 Liguormart, Inc. v. Rhode Island, 517

U.S. 484, 505 (1996) (no “findings of fact, or indeed any

evidentiary support whatsoever”); Ibanez v. Florida Dept. of Bus.

& Prof’l Reg., 512 U.S. 136, 143 (1994) (“unsupported assertions”

are “insufficient” to justify restrictions on speech); Fox Television

Stations, Inc. v. FCC, 280 F.3d 1027 (D.C. Cir. Feb. 19, 2002)

(FCC’s failure to repeal national television station ownership

rule and cable/broadcast cross-ownership rule was arbitrary

and capricious in violation of APA); Bailey v. Morales, 190 F.3d

320, 324 (5th Cir. 1999) (invalidating a regulation of

chiropractors’ advertising, which was based on nothing beyond

“common sense” and anecdotal evidence); Pearson v. Edgar, 153

F.3d 397, 402 (7th Cir. 1998) (rejecting proposed governmental

interest due to state’s failure to proffer evidence to support it);

Harman v. City of New York, 140 F.3d 111, 122 (2d Cir. 1998) (“the

government cannot rely on assertions, but must show a basis in

fact for its concerns”).

32a. Yet, the court of appeals demanded neither “empirical

support” nor “sound reasoning” to justify the “unserved

household” restriction. In fact, the record contains no evi-

dence at all in support of the challenged law, and there is

no legitimate basis here for concluding that such a restric-

tion satisfies any of the three O’Brien elements. The court

of appeals’ approach amounts to ill-disguised rationality

review.

The court of appeals declared that the restriction

serves “the limited goal of providing access to network

programming for households that cannot otherwise

receive such programming, . . . while creating the least

possible interference with the Networks’ copyrights.” Pet.

App. 36a. Certainly, the license in § 119(a)(2)(A) expands

network programming to those who otherwise could not

receive it. But confining the license to “unserved households,”

a step separately effected by § 119(a)(2)(B), both patently

limits speech and fails to protect copyrights. The same

distant programming is already statutorily licensed for

retransmission in other markets, and § 119(a)(2)(B) simply

serves to reduce the royalty payments to copyright owners

protected by the statute. The goal of compensating holders

of copyrights is addressed the same way in § 119 as in

§ 111, the cable operators’ license provision: royalty pay-

ments in proportion to the number of viewers receiving

the licensed broadcasts. Under the SHVIA, the much

larger group of households receiving local network pro-

gramming under § 122 generates no royalty for copyright

holders. The current licensing scheme thus provides a

narrow license for distant broadcast retransmissions,

which generates royalties for copyright holders, and a

much broader license for local transmissions, which does

not.

None of this explains the “unserved household” restric-

tion in § 119(a)(2)(B), which simply and directly prevents

many subscribers from receiving distant network pro-

gramming. There is no record to demonstrate that the

restriction is aimed at serving any government interest

| |

beyond satisfying the impermissible paternalistic prefer-

ence for “local” broadcast speech —- an interest manifestly

not unrelated to suppression of free expression. There is

certainly no record to show that the challenged restriction

was occasioned by any genuine harm or threat,!4 or that

the restriction would actually reduce any real threat, or

that the resulting deprivation is no greater than necessary.

Indeed, nothing in the Eleventh Circuit opinion or the

record here suggests that the “unserved household”

restriction actually serves even its stated purposes “in a

direct and material way,” as O’Brien requires. Turner I, 512

U.S. at 664. The structure and language of the current

statutory scheme reveal that in fact the opposite is true.

Under the SHVIA, for example, many “unserved house-

holds” now obtain local network programming via satel-

lite through the § 122 license, but also remain eligible to

receive distant network programming under § 119(a)(2)(B).

Thus, contrary to the Eleventh Circuit’s stated premise, the

§ 119(a)(2) license no longer serves only households that

cannot otherwise receive local network programming. See

Pet. App. 35a. Among households that can receive local

broadcast retransmissions under § 122, the statute arbi-

trarily distinguishes between “unserved households,”

which are permitted to receive distant in addition to local

programming, and “served” households, which are not.

In reality, then, the statutory scheme neither limits

distant programming to viewers otherwise lacking access

to network television, nor assures protection for copyright

holders with respect to all or even most satellite

14 The legislative history, in fact, suggests the absence of a

real harm. The Senate Commerce Committee repeatedly

observed that the local network affiliates appearing before it

had “failed to present convincing evidence to show that the

current degree of distant carriage poses any realistic threat to

the maintenance of a healthy, local over-the-air broadcasting

system.” S. Rep. No. 106-51, at 7 (1999). Accord, id. at 8.

retransmissions. In this context, the “unserved household”

restriction suffers from precisely the same fundamental

irrationality that defeated the federal ban on alcohol-con-

tent labeling in Rubin, 514 U.S. 476 (1995). In Rubin, this

Court found that the challenged statute could not “directly

and materially advance its asserted interest because of the

overall irrationality of the Government’s regulatory

scheme.” 514 U.S. at 488. “There is little chance that

§ 205(e)(2) can directly and materially advance its aim,

while other provisions of the same Act directly undermine

and counteract its effects.” Id. at 489 (Thomas, J., writing

for eight members of the Court). Following the same rea-

soning, this Court in Greater New Orleans Broadcasting

Ass'n, Inc. v. United States, 527 U.S. 173 (1999), found that a

section of the Federal Communications Act, in the context

of the whole regulatory scheme, was “so pierced by

exemptions and inconsistencies that the Government can-

not hope to exonerate it.” Id. at 190. The Court further

criticized the regulation because it “distinguishes among

the indistinct, permitting a variety of speech that poses the

same risks the Government purports to fear, while ban-

ning messages unlikely to cause any harm at all.” Id. at

195.1° Here, as in Rubin and Greater New Orleans Broadcast-

ing, the patent mis-matches on the face of the current

licensing scheme demonstrate that § 119(a)(2)(B) does not

further an important or substantial government interest

and fails to meet the very first O’Brien test.1¢

*S See also 44 Liquormart, 517 U.S. at 507 (invalidating

restriction on commercial speech, where “the State’s own

showing reveals that any connection between the ban and a

significant change in alcohol consumption would be purely

fortuitous”); Cincinnati v. Discovery Network, 507 U.S. 410, 427

(1993) (even a restriction on commercial speech failed where

“the regulation ‘provided only the most limited incremental

support for the interest asserted’.”) (quoting Bolger v. Young’s

Drug Products Corp., 463 U.S. 60, 73 (1983)).

16 Indeed, “the patent overinclusiveness and under-

inclusiveness” of § 119(a)(2)(B) in relation, to its asserted

This same incongruity precludes any finding that the

statute is “narrowly tailored” to serve its purportedly

content-neutral purpose, as O’Brien requires. The “fit”

requirement is not satisfied unless the challenged provi-

sion “promotes a substantial government interest that

would be achieved less effectively absent the regulation.”

Turner I, 512 U.S. at 662 (quoting Ward v. Rock against

Racism, 491 U.S. 781, 799 (1989)). Since § 119(a)(2)(B) does

not effectively serve a legitimate government interest at

all, any burden it imposes on protected speech is neces-

sarily greater than the Constitution allows.” Moreover, a

regulatory system similar to that governing cable

retransmissions, which provides exclusivity within a 35-

mile radius for local network programming, but allows

non-identical distant network programming, is an obvious,

less speech-intrusive alternative. The blunderbuss

“unserved household” restriction thus plainly fails the

narrow tailoring requirement.'!®

purpose “suggests that the Government’s purpose is not

substantial.” FCC v. League of Women Voters, 468 U.S. 364, 386,

385 n.16 (1984).

17 The majority opinion in League of Women Voters reflects

this logic, holding that “the manifest imprecision of the ban

imposed . . . reveals that its proscription is not sufficiently

tailored to the harms it seeks to prevent to justify its substantial

interference with broadcasters’ speech.” 468 U.S. at 392.

18 See Lorillard, 533 U.S. 525, 121 S. Ct. at 2426 (State failed

to consider less burdensome alternatives, such as tailoring the

restrictions to “advertising and promotion practices that appeal

to youth, . . . while permitting others”); id. at 2438 (Thomas, J.,

opinion concurring in part and concurring in the judgment)

(regulations “fail the narrow tailoring inquiry” because “the

State should have examined ways of advancing its interest that

do not require limiting speech at all”); 44 Liquormart, 517 U.S. at

507 (plurality opinion) (ban not tailored because of “alternative

forms of regulation that would not involve any restriction on

speech”); id. at 528-29 (O’Connor, J., concurring) (noting

“availability of less burdensome alternatives”); Discovery

ht On Re eel Da att a hes

5 ee Ae

Finally, the restriction violates the requirement that its

purpose be “unrelated to the suppression of free expres-

sion.” O'Brien, 391 U.S. at 377; see also Turner I, 512 US. at

622; Turner II, 520 U.S. at 189. For, as we have seen, the

restriction at issue here is directly related to the suppres-

sion of distant network programming. That is its specific

purpose. Because satellite signals are carried nationwide,

EchoStar must block distant signals from many subscribers

who could otherwise receive them. No law that so patently

effects a “net decrease in the amount of available speech”

can be viewed as unrelated to the suppression of free

expression. Cf. Turner I, 512 US. at 647.

The Eleventh Circuit disregarded these established

principles in upholding § 119(a)(2)(B) under intermediate

scrutiny. In so doing, it created a new constitutional test

that conflicts with thé decisions of this Court and with

decisions of other circuits.

III. Review Is Warranted To Establish That

§ 119(a)(2)(B) Is Not Immune From First Amend-

ment Scrutiny Even Though It Is Structured As An

Exception To A Statutory Copyright License.

The Eleventh Circuit held that § 119 “does not threat-

en... free speech rights but actually permits more speech

than EchoStar would constitutionally be entitled to under

the Copyright Act.” Pet. App. 34a. The court of appeals

purported to apply Harper & Row, 471 U.S. 539 (1985).

According to the Eleventh Circuit, Harper & Row “rejected

the suggestion that the First Amendment requires broader

exceptions to the copyright laws than those explicitly con-

ferred by Congress.” Pet. App. 33a.

Network, 507 U.S. at 416-17 (considering less burdensome

alternatives); see also U S WEST, Inc. v. FCC, 182 F.3d 1224,

1238-39 (10th Cir. 1999), cert. denied, 120 S. Ct. 2215 (2000) (“the

FCC’s failure to adequately consider an obvious and

substantially less restrictive alternative . . . indicates that it did

not narrowly tailor the . . . regulations” restricting speech).

To be sure, by definition any statutory copyright

license permits the licensee “more speech” or more lis-

teners than the Copyright Act would otherwise allow. That

is a tautology. But whether the limits Congress has placed

on such a license are constitutional is another question

entirely. That the copyright law as a whole may be a

universal, content-neutral statute ignores the issue here:

whether the content-based, speaker-specific nature of the

“unserved household” limitation on speech contained in

§ 119(a)(2)(B) is unconstitutional. This Court should grant

review to contirm that Harper & Row did not, as the

Eleventh Circuit erroneously believed, create a categorical

First Amendment exception for laws enacted under the

This case plainly raises a question akin to the second

of the two questions on which this Court granted certiorari

in Eldred - namely, whether the Copyright Term Extension

Act of 1998 is “categorically immune from challenges

under the First Amendment.” While Eldred involves the

question of temporal extensions of copyright protection,

this case involves geographical extensions of copyright to

prohibit satellite carriers from providing “distant” broad-

cast speech to “served” households.

A copyright exception to the First Amendment would

be particularly anomalous because Congress, through the

allocation of copyright prerogatives, “distributes speech

entitlements that enable certain speakers to maintain their

19 Harper & Row held that the fair use exception to

right of the defendant to report news about a public figure. 471

U.S. at 560. It did not adopt or approve a general rule that the

fair use exception provides all the First Amendment protection

the Constitution requires. To the contrary, it declined to adopt a

sweeping rule that any use of copyrighted material should be

viewed as “fair use” if it concerns a public figure. Id. Far from

creating a copyright exception to the First Amendment, the

Court simply declined to “create what amounts to a public

figure exception to copyright.” Id.

sith Rein atin es

seis

US ee hid once eh LU el EDL eet AO aie

Sante Seine Pe AO

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market position and restrain competition.” Netanel, 54

Stan. L. Rev. at 62. Use of the copyright laws for “the

management and allocation of . .. communicative channels

ha[s] far-reaching effects [on] the shape of public dis-

course.” Id. at 64. From the perspective of listeners, audi-

ences, and the marketplace of ideas, the copyright laws

have the potential to limit speech by preventing

retransmission of communication. For this reason, mem-

bers of this Court have taken the view that courts should

“hesitate to extend or strengthen” copyright protections.

See Stephen G. Breyer, The Uneasy Case for Copyright: A

Study of Copyright in Books, Photocopies, and Computer Pro-

grams, 84 Harv. L. Rev. 281, 284 (1970). At a minimum,

each legislative decision to make governmental machinery

available to enforce copyrights must be seen as a form of

State action to be tested against applicable constitutional

standards.

The First Amendment and the Copyright Clause serve

congruent purposes not because of a categorical copyright

exception to the First Amendment but because “copyright

is intended to increase and not to impede the harvest of

knowledge.” Harper & Row, 471 U.S. at 545. As the con-

gressional proponents of the SHVA in 1988 acknowledged,

“the primary objective of our copyright laws is not to

reward the author, but rather to secure for the public the

benefits from the creations of authors.” H.R. Rep. No.

100-887, pt. I, at 10. Indeed, “[t]he Framers intended copy-

right itself to be the engine of free expression.” Harper &

Row, 471 U.S. at 558. Rather than restricting speech, “[t]he

rights conferred by copyright are designed to assure con-

tributors to the store of knowledge a fair return for their

labors.” Id. at 546. In the case of satellite retransmissions,

that “fair return” is provided by royalty payments incor-

porated in the license of 17 U.S.C. § 119.

The aims of copyright law parallel those of the First

Amendment, which this Court has described as “assuring

that the public has access to a multiplicity of information

sources” and ensuring “ ‘the widest possible dissemina-

tion of information from diverse and antagonistic

sources.’ ” Turner I, 512 U.S. at 663 (citation omitted); see

also Turner II, 520 U.S. at 190, 192 and 226-27 (Breyer, 'J.,

concurring in part). As the Turner decisions indicate, the

freedoms to select, transmit, and receive speech under

First Amendment protection are just as vital to this coun-

try’s communication marketplace as is nurturing new

creation by a grant of copyright royalties. Copyright law

protects “expression, not ideas”; the First Amendment

protects both.2° Thus, the First Amendment is necessarily

implicated when Congress enacts a copyright law

restricting mass communication, even though the law

may be described as an economic regulation. In\Turner I,

eight members cf this Court acknowledged that a statute

aimed at purely economic concerns still merits close First

Amendment examination if it expressly governs the com-

munications media:

[L]aws that single out the press, or certain ele-

ments thereof, for special treatment “pose a par-

ticular danger of abuse by the state,” and so are

always subject to at least some degree of height-

ened First Amendment scrutiny.

512 U.S. at 640-41 (internal citation omitted).

Nor can such First Amendment concerns be swept

aside simply because a copyright license may be charac-

terized as a benefit. Even if Congress was not required to

extend the statutory license in § 119(a)(2)(A), having cho-

sen to do so, it may not shield the separate “unserved

household” restriction of § 119(a)(2)(B) from First Amend-

ment scrutiny. Under settled principles respecting “uncon-

stitutional conditions,” the government may not condition

a benefit on a requirement that “the beneficiary surrender

20 First Amendment scrutiny was applied without

question, for example, to a suit challenging the U.S. Olympic

Committee’s statutory power to control use of the word

“Olympic,” even though the Court found that the restriction did

not prevent the challenger from conveying the substance of its

message. San Francisco Arts & Athletics, Inc. v. United States

Olympic Comm., 483 U.S. 522, 538-39 (1987).

a constitutional right, even if the government may with-

hold that benefit altogether.” Kathleen M. Sullivan, Uncon-

stitutional Conditions, 102 Harv. L. Rev. 1415 (1989). This

Court has repeatedly held that the government must obey

the Constitution when it grants — and limits — benefits, just

as when it regulates conduct.2! Perry v. Sindermann, 408

U.S. 593 (1972), left no doubt in the matter:

For at least a quarter-century, this Court has

made clear that even though a person has no

“right” to a valuable governmental benefit and

even though the government may deny him the

benefit for any number of reasons, there are some

reasons on which the government may not rely. It

may not deny a benefit to a person on a basis

that infringes his constitutionally protected inter-

ests — especially, his interest in freedom of

speech.

Id. at 597. In the ensuing thirty years, the principle articu-

lated in Perry v. Sindermann has become well-established.22

The Eleventh Circuit’s contrary approach - effectively

exempting § 119(a)(2)(B) from First Amendment scrutiny

because it is codified as part of the copyright laws - is

*! This case does not implicate any form of government

subsidy, either for government speech as in Rust v. Sullivan, 500

U.S. 173 (1991), or for private speech as in Legal Services Corp. v.

Velazquez, 531 U.S. 533 (2001). No government funds are

provided to satellite carriers here. Instead, the § 119 license

represents the transfer of a portion of the copyright interest

Originally granted by the government from one group of

speakers to another, in exchange for a license fee.

*2 See, e.g., 44 Liquormart, 51Z U.S. at 513 (state power to

license liquor sellers does not justify banning liquor advertising

as a condition of license); Rosenberger v. Rector & Visitors of the

Univ. of Va.,515 U.S. 819, 837 (1995) (universities that decide to

fund student publications may not deny funds to religious

publications); League of Women Voters, 468 U.S. at 398-99 (federal

government may not condition public broadcast funding on

station’s abstaining from political editorials).

contrary to the decisions of this Court and sets a prece-

dent that will provide a blueprint for the evisceration of

the First Amendment in the name of copyright.

CONCLUSION

The_petition for writ of certiorari should be granted.

At minimum, it should be held in abeyance pending the

disposition of Eldred v. Ashcroft.

Respectfully submitted,

LAURENCE H. TRIBE*

Hauser Hall 420

1575 Massachusetts Avenue

Cambridge, Massachusetts

02138

(617) 495-4621

*Counsel of Record

Davip K. Moskowl!1tTz

EcHoStTarR COMMUNICATIONS

CORPORATION

5701 South Santa Fe Drive

Littleton, Colorado 80120

CynTHIA A. RICKETTS

DonaLp A. WALL

Desora L. VERDIER

SQUIRE, SANDERS &

Dempsey L.L.P.

Two Renaissance Square

40 North Central Avenue,

Suite 2700

Phoenix, Arizona 85004

(602) 528-4000

T. Wave WELCH

T. Wave WELCH & ASSOCIATES

2401 Fountainview, Suite 215

Houston, Texas 77057

(713) 952-4334

Counsel for Petitioners

March 27, 2002

Yuin abiéo vn.

APPENDIX A

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 00-15378

D. C. Docket Nos. 98-02651-CV-LCN

99-06382-CV-LCN

CBS BROADCASTING, INC.,

FOX BROADCASTING COMPANY,

ABC, INC., NATIONAL

BROADCASTING CO., FBC

TELEVISION AFFILIATES

ASSOCIATION, et al.,

Plaintiffs-Appellees,

versus

ECHOSTAR COMMUNICATION

CORPORATION, d.b.a. DISH

Network, ECHOSTAR SATELLITE

CORPORATION, SATELLITE

COMMUNICATIONS OPERATING

CORPORATION, DIRECT SAT CORP.,

Defendants-Appellants,

UNITED STATES OF AMERICA,

Intervenor.

ECHOSTAR COMMUNICATION

CORPORATION, a Nevada

Corporation,

Plaintiff-Counter-

Defendant-Appellant,

ECHOSTAR SATELLITE CORPORATION,

a Colorado corporation,

SATELLITE COMMUNICATIONS

OPERATING CORPORATION, a

Colorado corporation DIRECT SAT

CORPORATION, a Delaware corporation,

Plaintiffs-Appellants,

versus

CBS BROADCASTING INC.,

a New York corporation,

FOX BROADCASTING, CO., a

California corporation,

NATIONAL BROADCASTING CO.,

a New York corporation, ABC, INC.,

a New York corporation,

Defendants-Counter-

Claimants-Appellees,

UNITED STATES OF AMERICA,

Intervenor.

Appeal from the United States District Court

for the Southern District of Florida

(Filed September 17, 2001)

Before ANDERSON, Chief Judge, BIRCH and WOOD*,

Circuit Judges.

* Honorable Harlington Wood, Jr., U.S. Circuit Judge for

the Seventh Circuit, sitting by designation.

ANDERSON, Chief Judge:

This is an interlocutory appeal from the entry of a

preliminary injunction in a copyright infringement suit

that was initiated by four major television network sta-

tions and associations representing hundreds of local net-

work affiliates against EchoStar Satellite Company and its

subsidiaries. The propriety of the preliminary injunction

depends in large part upon the Satellite Home Viewer Act

(“SHVA”), 17 U.S.C. § 119, and its most recent amend-

ments in the Satellite Home Viewer Improvement Act of

1999 (“Improvement Act” or “the Act”), Pub. L. No.

106-133, § 1001, ef seq., 113 Stat. 1537, 515 (West Supp.

2001). SHVA, as amended by the Improvement Act, cre-

ates a compulsory, statutory license for satellite carriers

to transmit copyrighted network programming for pri-

vate home viewing to “persons resid[{ing] in unserved

households.” 17 U.S.C. § 119 (1996 & West Supp. 2001).

The district court found, inter alia, that there was a sub-

stantial likelihood that the Networks could establish that

EchoStar provides distant network signals to “served”

residences thereby falling outside of the Act and violating

the Networks’ copyrights. Because we conclude that this

finding was an abuse of discretion, we vacate the prelimi-

nary injunction and remand for further proceedings con-

sistent with this opinion.

BACKGROUND

A. Factual Background

CBS Broadcasting, Inc. (“CBS”), Fox Broadcasting

Company (“Fox”), ABC, Inc., National Broadcasting Co.,

CBS Television Network Affiliates Association, FBC Tele-

vision Affiliates Association, ABC Television Affiliates

Association, and NBC Television Affiliates are the respec-

tive owners of the CBS, Fox, ABC, and NBC television

networks, and are the trade associations representing

hundreds of CBS, Fox, ABC, and NBC affiliate stations.

The Networks own the copyright or exclusive rights in

numerous television programs broadcast by CBS, Fox,

ABC, and NBC network stations. EchoStar Communica-

tions Corporation and its subsidiaries, EchoStar Satellite

Corporation, Satellite Communications Operating Corpo-

ration, and Direct Sat Corporation (collectively “Echo-

Star”), provide satellite television programming to over

five million Americans under the name “DISH Network.”

During the 1990’s, EchoStar began providing satellite

television programming to subscribers with small (18

inch) satellite dishes. To provide such programming,

EchoStar contracted with PrimeTime 24 Joint Ventures

(“PrimeTime”) to obtain distant network signals.!

In December 1996, in the district court for the South-

ern District of Florida, CBS, Fox, and various CBS affili-

ates sued PrimeTime, asserting that PrimeTime was

infringing on the networks’ copyrights by transmitting

network material to individuals who did not qualify as

1 The phrase “distant network programming” or “distant

network signals” refers to network programming that is not

from a subscriber’s local market. For example, distant network

signals would be utilized, and distant network programming

would be provided, when a satellite provider transmits NBC

programming from a Chicago affiliate to subscribers in another

television market such as Macon, Georgia.

;

“unserved” (herein “PrimeTime litigation”). See CBS, Inc.,

v. PrimeTime 24 Joint Venture, 245 F.3d 1217 (11th Cir.

2001). By orders dated May 13, 1998, and July 19, 1998,

the district court preliminarily and permanently enjoined

PrimeTime from “deliver[ing] CBS or Fox television net-

work programming to any customer that does not live in

an ‘unserved household’ as defined in” SHVA. See CBS,

Inc. v. PrimeTime 24 Joint Ventures, 9 F. Supp. 2d 1333 (S.D.

Fla. 1998) (preliminary injunction) (CBS I); CBS Broadcast-

ing v. PrimeTime 24 Joint Venture, 48 F. Supp. 2d 1342 (S.D.

Fla. 1998) (permanent injunction) (CBS II).2

On July 20, 1998, the day after the permanent injunc-

tion in the PrimeTime litigation was entered, EchoStar

announced publicly that it would be providing its own

package of distant network programming. EchoStar cre-

ated two such packages to include signals from ABC,

CBS, Fox, and NBC affiliates in New York City and Los

Angeles.

At that time, EchoStar also implemented its own

screening process for new customers to ensure SHVA

compliance.* First, EchoStar hired an independent engi-

neering firm to provide a nationwide “red light/green

2 After the permanent injunction was entered, PrimeTime

moved the district court to modify the order ¢o account for the

C-band grandfathering provision promulgated with the passage

of the Improvement Act. See 17 U.S.C. § 119(a)(2)(B)(iii) (West

Supp. 2001). The district court granted PrimeTime’s motion by

interpreting the C-barid provision, and PrimeTime appealed. We

addressed the propriety of the court’s interpretation of

§ 119(a)(2)(B)(iii) in CBS, Inc., 245 F.3d 1217.

* Much of the PrimeTime litigation centered around

PrimeTime’s efforts to ensure SHVA compliance. PrimeTime’s

practice had been to rely on subscriber’s subjective

light” database that uses the Longley-Rice predictive

model to predict Grade A and Grade B signal intensity

within specific zip codes. In screening prospective sub-

scribers, EchoStar scanned their zip-code to determine

whether the subscriber resided in a red or green light

area, i.e., whether the residence was predicted to receive a

Grade A or B intensity. If predicted to reside in a Grade A

or B contour, the subscriber was allegedly refused distant

network services unless that subscriber obtained a waiver

from the local network affiliate or a professionally admin-

istered signal intensity test indicating that the residence

does not receive a Grade A or B signal from the network

affiliates in that market.

Beginning sometime after February 1999, EchoStar

hired Dataworld, a second independent engineering firm,

to construct a Grade A/Grade B database using the Indi-

vidual Location Longley-Rice propagation model (“ILLR

model”). This database was provided to EchoStar some-

time in 1999, and upon receipt of the software, EchoStar

alleges that it has run all prospective subscribers through

the ILLR model in the same manner that it utilized the

red light/green light database. Finally, in 1999, EchoStar

began negotiations with Decisionmark Corporation, a

representations regarding the qualify of their television picture.

Various courts found this subjective inquiry to be insufficient

under SHVA, which utilizes an objective standard for judging a

subscriber’s signal intensity. See 17 U.S.C. § 119(d)(10)(A)

(setting Grade B intensity as the standard); ABC, Inc. v.

PrimeTime 24, 184 F.3d 348 (4th Cir. 1999) (holding PrimeTime’s

subjective inquiry to be unlawful); CBS IJ, 48 F. Supp. 2d 1342

(same); CBS I, 9 F. Supp. 2d 1333 (same).

third independent engineering firm, to provide ILLR test-

ing for all of EchoStar’s pre-July 1998, PrimeTime-derived

subscribers to confirm their eligibility under SHVA.

B. Procedural Background

On October 19, 1998, EchoStar filed a declaratory

judgment action against the Networks in the United

States District Court for the Southern District of Colo-

rado, Case No. 98-CIV-02285, seeking a declaration that it

was complying with SHVA. The Networks did not

respond initially in the Colorado litigation.

Instead, on November 5, 1998, the Networks filed a

complaint in the United States District Court for the

Southern District of Florida alleging that EchoStar was

infringing on the Networks’ copyrights by providing dis-

tant network programming to “served” households. A

few days later, on November 9, 1998, the Networks filed a

motion in the Colorado district court to transfer Echo-

Star’s declaratory judgment action to the Southern Dis-

trict of Florida. The Colorado district court granted the

Networks’ motion to transfer on March 29, 1999, and on

April 28, 2000, the Colorado litigation was consolidated

with the Networks’ copyright infringement suit in the

Southern District of Florida.

Meanwhile, on December 2, 1998, the Networks filed

a motion for a preliminary injunction in the Southern

District of Florida seeking to enjoin EchoStar from

infringing on its copyrights. By written motion, EchoStar

requested an evidentiary hearing and requested the court

to compel the Networks to comply with its discovery

requests. The district court did not respond to these

motions, but set oral argument on the Networks’ prelimi-

nary injunction motion for September 21, 1999.

Oral argument was held on September 21, 1999, and

on September 29, 2000, the district court granted the

Networks’ motion for a preliminary injunction against

EchoStar. In the order granting the preliminary injunc-

tion, the court denied EchoStar’s requests for an evidenti-

ary hearing and motions to compel.

Finding all four prerequisites for a preliminary

injunction satisfied, the district court enjoined EchoStar

from transmitting distant network programming to

“served households” within the meaning of SHVA. Speci-

fically, the court first found that there was a substantial

likelihood that the Networks’ copyright infringement suit

would succeed because the evidence demonstrated that

EchoStar “likely provides distant network transmissions

te numerous households which are not ‘unserved’ ” and

EchoStar’s violations of SHVA are willful and repeated.

Second, the court found that “[b]ecause the network par-

ties have established that they are likely to prevail on the

merits, they are entitled to a presumption of irreparable

injury.” Third, the court weighed the equities, finding

that the potential injuries to the Networks should the

injunction not issue outweighed any injury to EchoStar

that could occur from issuance. Lastly, the court reasoned

that the preliminary injunction would not disserve the

public interest because the public interest lies with pro-

tecting the rights of copyright owners. Finding the four

prerequisites satisfied, the court granted the Networks’

motion, directing EchoStar to terminate distant network

programming to “served households.”

Lond eee 6 Dee

In addition to entering the preliminary injunction,

the court interpreted 17 U.S.C. § 119(e). The parties dis-

puted whether this provision enables a subscriber to

transfer to a different satellite provider with his or her

grandfathered rights under § 119(e). The court found that

§ 119(e) was ambiguous and resorted to legislative his-

tory to interpret it. Based on the Conference Committee

Report accompanying the Improvement Act, the district

court concluded that “grandfathered status is not trans-

ferable to a different [satellite] carrier... ”

EchoStar timely filed an interlocutory appeal from

the court’s order. On November 22, 2000, this Court,

upon motion of EchoStar, stayed the preliminary injunc-

tion pending appeal and, sua sponte, we expedited consid-

eration of this case. On appeal, we have granted three

motions to file amicus curiae briefs.4 Pursuant to 28

U.S.C. § 2403(a), we also granted the Department of Jus-

tice’s motion to intervene as a matter of right to defend

the constitutionality of the Act.

A. SHVA & The Improvement Act

The Satellite Home Viewers Act (“SHVA”) was

enacted in November 1988, see Pub. L. 101-667, Title II,

§ 202(2), 102 Stat. 3949, and was amended by Congress in

1993, 1994, 1995, and 1997. SHVA creates a compulsory,

* Specifically, we granted the National Association of

Broadé¢asters and the Satellite Broadcasting and Communication

Association leave to file amicus curiae briefs, as well as the joint

motion of the Consumer Federation of America and Media

Access to file a joint amicus curiae brief.

10a

statutory license for satellite carriers to retransmit copy-

righted network programming for private home viewing

to “persons resid[ing] in unserved households” without

the consent of the copyright owner. 17 U.S.C. § 119(a)(2)°

(1996). The satellite carrier’s license is limited to

“unserved households,” which SHVA describes as a resi-

dence that:

(A) cannot receive, through the use of a con-

ventional, stationary, outdoor rooftop receiving

antenna, an over-the-air signal of a primary net-

work station affiliated with that network of

Grade B intensity (as defined by the Federal

Communications Commission) of a primary net-

work station affiliated with that network, and

5 As to network stations, SHVA provides:

(A) In general. - Subject to the provisions of

subparagraphs (B) and (C) of this paragraph and

paragraphs (3), (4), (5), and (6) of this subsection,

secondary transmissions of programming contained

in a primary transmission made by a network station

and embodying a performance or display of a work

shall be subject to statutory licensing under this

section if the secondary transmission is made by a

satellite carrier to the public for private home

viewing, and the carrier makes a direct or indirect

charge for such retransmission service to each

subscriber receiving the secondary transmission.

(B) Secondary transmissions to unserved

households. - The statutory license provided for in

subparagraph (A) shall be limited to secondary

transmissions to persons who reside in unserved

households.

17 U.S.C. §§ 119(a)(2)(A) and (B). ~

lla

(B) has not, within 90 days, before the date on

which that household subscribes, . . . subscribed

to a cable system that provides the signal of a

primary network station affiliated with that net-

work. "

Id. at (d)(1) (1996). For SHVA’s statutory license to extend

to a satellite subscriber, the residence must satisfy the

objective requirements for “unserved household.” See

PrimeTime 24 Joint Ventures v. National Broadcasting, Co.,

Inc., 219 F.3d 92, 96 (2d Cir. 2000) (“the SHVA establishes

a relatively objective signal-strength rule rather than a

subjective rule of reception quality”); ABC, Inc. v.

PrimeTime 24, 184 F.3d 348, 353 (4th Cir. 1999) (“The very

terms of the SHVA define eligible households by means

of an objective, measurable standard.”); CBS II, 48

F. Supp. 2d at 1355.

SHVA’s statutory license was set to expire in 1999

and throughout the year Congress considered an exten-

sion of, and changes to, the statutory license. “After both

houses of Congress passed differing bills amending

SHVA, a conference committee negotiated what became

the [Satellite Home Viewers Improvement Act of 1999].”

PrimeTime 24, 245 F.3d at 1220. The Improvement Act was

ultimately passed by Congress and signed into law by

President Clinton on November 29, 1999. See Pub. L. No.

106-113, § 1001, et seq., 113 Stat. 1536, 515 (1999).

The Improvement Act renews SHVA’s existing statu-

tory copyright license and, among other things, the

Act further defines the scope of the license for

retransmission of network programming. See, e.g., 17

U.S.C. § 119(a)(2)(A)-(C) (West. Supp. 2001). Significantly,

12a

Congress altered the definition of an “unserved house-

hold” by amending § 119(d)(10) to read:

The term “unserved household,” with respect to

a particular television network, means a house-

hold that -

(A) cannot receive, through the use of a

conventional, stationary, outdoor rooftop receiv-

ing antenna, an over-the-air signal of a primary

network station affiliated with that network

of Grade B intensity as defined by the

F[CC] . . . under section 73.683(a) of title 47 of

the Code of Federal Regulations, as in effect on

January 1, 1999;

(B) is subject to a waiver granted under

regulations established under section 339(c)(2)

of the Communications Act of 1934 [47 U.S.C.A.

§ 339(c)(2)];

applies;

(D) is a subscriber to whom subsection

(a)(11) applies; or

(E) is a subscriber to whom the exemption

under subsection (a)(2)(B)(iii) applies.

Id. at § 119(d)(10). With the Improvement Act, eligibility

as an “unserved household” is now three-fold. A private

residence qualifies as “unserved” if it: 1) is predicted to

receive less than a Grade B signal intensity, 2) receives a

waiver from the local television network station to

PA AA SE MG he Ai Lie Tye Re bd ORES irl

13a

receive distant network programming, or 3) is grand-

fathered or otherwise exempted by the express terms of

the statute®. See id.

The Improvement Act not only redefines “unserved

households” but it further refines the methodology used

to determine the signal intensity at a specific location.

Specifically, Congress added § 119(a)(2)(B)(ii)(I), which

explains that:

In determining presumptively whether a person

resides in an unserved household under subsec-

tion (d)(10)(A), a court shall rely on the Individ-

ual Location Longley-Rice model set forth by

the Federal Communications Commission in

Docket No. 98-201, as that model may be

amended by the Commission over time under

section 339(c)(3) of the Communications Act of

1934 [47 U.S.C.A. § 339(c)(3)] to increase the

accuracy of that model.

17 U.S.C. § 119(a)(2)(B)(ii)(1) (West Supp. 2001). This pro-

vision allows a satellite provider to establish presump-

tively that a subscriber qualifies as “unserved” where the

ILLR model, as set forth by the Federal Communications

Commission’ (“FCC”), establishes that the residence can-

not receive an over-the-air signal of a primary network

recreational vehicles, while § 119 (a)(2)(B)(iii) grandfathers

certain C-band subscribers, and § 119(e) grandfathers certain

subscribers whose services were terminated or received during

a specific period.

’ When passing the Improvement Act in 1999, Congress

also promulgated 47 U.S.C. § 339(c)(3), which requires the FCC

to “take all actions necessary, including any reconsideration, to

develop and prescribe by rule a point-to-point predictive model

l4a

station of Grade B intensity. See id. Under the Improve-

ment Act, if the ILLR model predicts that a household

cannot receive a signal of Grade B intensity or better, the

home is “unserved” under § 119(a)(10)(A), and the Act’s

narrow statutory license extends to that residence.

DISCUSSION

EchoStar argues that the district court erred in enter-

ing a preliminary injunction that does not satisfy the four

prerequisites and is overly broad. Further, it contends

that the Improvement Act and SHVA violate the First

Amendment, and that the district court erred in interpret-

ing § 119(e). We address each argument in turn.

A. Standard of Review

We review the district court’s findings of fact under a

clearly erroneous standard, and its conclusions of law de

novo. See SunAmerica Corp. v. Sun Life Assurance Co. of

Canada, 77 F.3d 1325, 1333 (11th Cir. 1996). The district

court’s preliminary injunction will be reversed only upon

a showing of abuse of discretion. See Siegel v. LePore, 234

F.3d 1163, 1175 (11th Cir. 2000) (en banc) (citing cases).

This means that “we must affirm unless we at least deter-

mine that the district court has made a ‘clear error of

judgment,’ or has applied an incorrect legal standard.’ ”

SunAmerica, 77 F.3d at 1333.

for reliably and presumptively determining the ability of

individual locations to receive signals in accordance with the

signal intensity standard in effect under section 119(d)(10)(A).”

47 U.S.C. § 339(c)(3) (West Supp. 2001).

Sen ee ee ee

15a

A district court may grant a preliminary injunction

only upon the movant’s showing that: (1) it has a sub-

stantial likelihood of success on the merits; (2) the

movant will suffer irreparable injury unless the injunc-

tion is issued; (3) the threatened injury to the movant

outweighs the possible injury that the injunction may

cause the opposing party; and (4) if issued, the injunction

would not disserve the public interest. Siegel, 234 F.3d at

1176. It is well-established in this Circuit that “[a] prelim-

inary injunction is an extraordinary and drastic remedy

not to be granted unless the movant clearly established

the ‘burden of persuasion’ ” as to all four elements. Id.

(citing cases).

B. Substantial Likelihood of Success

To satisfy this prong, the Networks bore the burden

of demonstrating a substantial likelihood of success on its

Coast Community College Dist., 889 F.2d 1018, 1026 (11th

Cir. 1989) (a “preliminary injunction require[s] that [the

movant] demonstrate a substantial likelihood of success

on the merits of its infringement claim”).

Owners of copyrights in television programs enjoy

the exclusive right to “publicly perform” those programs

and to license others to do so. See 17 U.S.C. § 106(4)

(1996). There is no dispute that the Networks own the

exclusive copyrights in the numerous network television

programs that EchoStar retransmits to certain sub-

scribers. There is likewise no dispute that EchoStar is a

satellite television carrier under SHVA, see 17 U.S.C.

§ 119(d)(6), and is entitled to the compulsory, statutory

l6a

ming to viewers without the Network’s permission if the

satellite subscriber qualifies as an “unserved household,”

see id. at §§ 119(a)(2)(A), (a)(2)(B)(ii), & (d)(10). Here, the

controversy centers around whether EchoStar’s distant

network subscribers are actually “unserved.”

Accepting EchoStar’s proffer of evidence, the district

court found that the “record evidence demonstrate[d]

that EchoStar transmits distant network signals to a sig-

nificant number of households which are not unserved.”

Based on this finding, the court held that the Networks

established a substantial likelihood of success on their

petition for relief under the Copyright Act.

1. Burden of Proof & Statutory Presumption to

Determine “Unserved Household”

First, EchoStar argues that the Networks failed to

satisfy its burden of demonstrating that there is a sub-

stantial likelihood that it can establish EchoStar’s viola-

tions of SHVA and the Improvement Act. The Networks

counter that under 17 U.S.C. § 119(a)(5)(D) EchoStar has

the burden of demonstrating that its distant network

subscribers are “unserved.”

Resolving this, the district court reasoned that

“{ajlthough the network parties bear the burden of proof

on their motion for preliminary injunction, ‘the court

must consider that the ultimate burden of proof at trial is

upon the nonmovant.’” Thus, the court concluded that

the Networks could ” ‘establish likelihood of success on

the merits by demonstrating that [EchoStar] is unlikely to

BRS es SS Se Se eee

eye eT Rae Ure ee

Pty te abate ones LAs

17a

prove at trial that its subscribers are ‘unserved house-

holds.’ ”

In the 1994, Congress added § 119(a)(5)(D) to SHVA,

providing that:

In any action brought under this paragraph, the

satellite carrier shall have the burden of proving

that its secondary transmission of a primary

transmission by a network station is for private

home viewing to an unserved household.

17 U.S.C. § 119(a)(5)(D) (1996). This provision places the

ultimate burden of demonstrating SHVA eligibility on the

satellite carrier. While the satellite carrier is harnessed

with the ultimate burden at trial, it is well-settled that in

a preliminary injunction posture the movant must always

bear the burden of demonstrating the four prerequisites.

See e.g., Siegel, 234 F.3d at 1176. In resolving how to

allocate these burdens, the mechanics of the Improve-

ment Act are illustrative.

The Improvement Act allows parties to establish

“presumptively whether a person resides in an unserved

household . . . ,” through the ILLR predictive model,

as it may be amended by the FCC. 17 U.S.C.

§ 119(a)(2)(B)(ii)(I) (West Supp. 2001). In establishing the

presumption, the provision specifically directs that

“courts shall rely on the I[LLR] . . . model” as the FCC

may revise it. See id. As a corollary to this, the Improve-

ment Act amends SHVA’s reporting requirements by

requiring that:

satellite carrier[s] that make[ ] secondary trans-

missions of a primary transmission ... by a

network station pursuant to subparagraph (A)

shall, 90 days after commencing such secondary

18a

transmissions, submit to the network that owns

or is affiliated with the network station a list

identifying (by name and street address, includ-

ing county and zip code) all subscribers to

which the satellite carrier makes secondary

transmission of that primary transmission.

17 U.S.C. § 119(a)(2)(C) (West Supp. 2001).

Utilizing the Improvement Act’s paradigm in a pre-

liminary injunction posture, the district court should on

remand require the Networks to adduce sufficient evi-

dence to apply the § 119(a)(2)(B)(ii)(I) presumption based

on the records submitted to it by EchoStar under

§ 119(a)(2)(C)’s reporting requirements. While SHVA and

the Improvement Act place the ultimate burden of proof

at trial on the satellite carrier, see 17 U.S.C. § 119(a)(5)(D),

* Section 119(a)(2)(C) further explains the reporting

requirements as follows:

Thereafter, on the 15th of each month, the satellite

carrier shall submit to the network a list identifying

(by name and street address, including county and

zip code) any persons who have been added or

dropped as such subscribers since the last submission

under this subparagraph. Such subscriber

information submitted by a satellite carrier may be

used only for purposes of monitoring compliance by

the satellite carrier with this subsection. The

submission requirements of this subparagraph shall

apply to a satellite carrier only if the network to

whom the submissions are to be made places on file

with the Register of Copyrights a document

identifying the name and address of the person to

whom such submissions are to be made. The Register

shall maintain for public inspection a file of all such

documents.

19a

the fixed principle in the preliminary injunction context is

that the proponent of a [sic] such an injunction must always

make the prima facie showing of substantial likelihood of

success on the merits, see Siegel, 234 F.3d at 1176.

The principle guiding us is this: Where the ultimate

burden of proof at trial is on the non-movant, the party

seeking a preliminary injunction must nonetheless make

some prima facie showing before the burden of produc-

tion or proof shifts to the non-movant. See generally Deer-

field Med. Ctr. V. City of Deerfield Beach, 661 F.2d 328,

336-38 (5th Cir. 1981)% In litigation involving the

Improvement Act, the movant may do this by applying

the statutory presumption, and thereby demonstrating

that a substantial number of the satellite carrier’s sub-

scribers presumptively fall outside of the narrow copy-

right license created by SHVA and the Improvement Act.

See 17 U.S.C. § 119(a)(2)(B)(ii)(I). Pragmatically, this task

should not be onerous because the satellite carrier is

required under § 119(a)(2)(C) to submit its subscriber lists

to the networks. See id. at (a)(2)(C). Based on such data, a

network should be able to demonstrate which subscribers

are presumptively served and unserved. Once presump-

tive noncompliance is established, the non-movant or

satellite carrier may rebut the presumption with, for

example, evidence of signal strength tests or waivers

from local affiliates. Such a burden-shifting model

ensures that the party opposing a preliminary injunction

° In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.

1981) (en banc), this Court adopted as binding precedent all of

the decisions of the former Fifth Circuit handed down prior to

the close of business on September 30, 1981.

20a

is not saddled with the burden of production, initially,

and that the proponent of this “extraordinary and drastic

remedy” is required to “clearly establish the ‘burden of

persuasion’ as to the four requisites,” Siegel, 234 F.3d at

1176.

Here, the court examined the Network’s proffer of

Jules Cohen’s declaration. The court concluded that it

“w[ould] not rely on Mr. Cohen’s maps or his Declaration

testimony” because Cohen’s maps “overstate the number

of urrserved households to which EchoStar transmits dis-

tant network programming” by relying on an outdated

code provision. The Cohen evidence was the only evi-

dence proffered by the Networks’ to carry their initial

burden.!°

Having rejected the only evidence adduced by the

Networks, the court turned to EchoStar’s submission of

Michael R. Hawkins’s declaration and five supporting

ILLR maps of Chicago, San Francisco, Washington, D.C.,

Dallas-Fort Worth, and Memphis. For purposes of the

injunction, the court concluded it would “accept as accu-

rate Mr. Haw.:ins’s Declaration testimony and his anal-

ysis of the ILLR maps.” Based thereon, the court found

that “in five designated market areas, EchoStar likely

provides distant network programming to thousands of

households which are not ‘unserved.’ ”1! The court found

10 The Networks suggest that the district court did rely on

Cohen’s declaration. This contention is unpersuasive, however,

in light of the district court’s express statement that it “w[ould]

not rely on Mr. Cohen’s maps or his Declaration testimony.”

11 Specifically, the district court found Hawkins’s maps to

indicate that: 1) 39.33% of EchoStar’s Chicago area subscribers,

= eo ee

21a

that Hawkins’ declaration established that “at least 9,956

people in five markets — i.e., 25.27% of EchoStar’s 39,397

subscribers in those markets — receive a signal of Grade B

intensity or higher, and presumptively do not reside in

unserved households.” Based on Hawkins’s declaration,

the court found it presumptively established that at least

25.27% of EchoStar’s customers were “served,” and that

there was a substantial likelihood that the Networks

could demonstrate that EchoStar was presumptively vio-

lating the Act.

The district court’s approach was not much different

than the burden-shifting model suggested above. The

flaw we find, however, in the district court’s analysis is

its finding that the predicate burden is satisfied by evi-

dence pertaining only to five markets that were tested by

Hawkins. We conclude that the district court’s extrapola-

tion from these five markets to draw conclusions about

satellite subscribers in two-hundred and thirty nation-

wide markets is not supported by the record.!* There is

or rather, 2,171 households receive a signal of Grade B intensity

or stronger; 2) 44.48% of EchoStar’s San Francisco area

subscribers, or rather, 4,451 households receive a signal of

Grade B strength or stronger; 3) 3.07% of EchoStar’s

Washington, D.C. area subscribers, or rather, 321 households

receive a signal of Grade B strength or stronger; 4) 32.72% of

EchoStar’s Dallas-Fort Worth area subscribers, or rather, 2, 659

households receive a signal of Grade B strength or stronger; and

5) 7.01% of EchoStar’s Memphis area subscribers, or rather, 354

households receive a signal of Grade B strength or stronger.

12 We pause to note that the Networks possess the tools to

produce the evidence we require. As explained above, the

statutory presumption is available to the Networks, which

enables them to tag a presumptive label on EchoStar’s

22a

no evidence in the instant record that the five markets are

representative of Echostar’s nationwide service, nor do

the Networks point to other evidence that the district

court’s extrapolation is reasonable.'*

2. Willful or Repeated Infringement

Networks may sue satellite carriers under the

Improvement Act where the satellite carrier's violations

of the Act are “willful or repeated.” See 17 U.S.C.

§§ 119(a)(5)(A) & (B). Here, the district court found that

there was a substantial likelihood that the Networks

would be able to demonstrate willful and repeated viola-

tions because of: (1) EchoStar’s belated submission of

ILLR maps, (2) the twenty-percent rule, and (3) Echo-

Star’s failure to demonstrate corrective action. EchoStar

appeals all three conclusions, arguing that the Networks

tailed to demonstrate that its violations were willful or

repea ted.

subscribers, as either served or unserved. Because Echostar is

and has been required to submit its subscriber lists to the

Networks, see 17 U.S.C. § 119(a)(2)(C), the Networks should

have the information necessary to apply the statutory

presumption. We assume the Networks have such data, lest they

would have alleged an infringement based on noncompliance

with the reporting requirements. See 17 U.S.C. § 119(a)(3)

(making noncompliance with reporting and payment

requirements actionable as an act of infringement).

'* The Networks suggest that we should infer that the five

markets are representative merely because Echostar offered the

Hawkins evidence. However, the record does not support the

assertion that Hawkins or Echostar asserted or conceded that

the five markets were representative.

eA areal DF Bea th Bll he tb

ee eee ee ee

23a

a. Delay in Submitting ILLR Maps

The district court found that Hawkins’ declaration

established willful and repeated violations of the Act.

First, the court reasoned that, in May of 1998 in CBS I, the

district court for the Southern District of Florida estab-

lished the ILLR model as the proper litmus for determin-

ing presumptively whether a subscriber qualifies as

“unserved.” The court reasoned that the ILLR model was

thereafter adopted by the FCC by written Report and

Order in February 1999, and that Congress followed suit

in July 1999 by promulgating the § 119(a)(2)(B)(ii)(I) pre-

sumption based on the ILLR model. Because EchoStar did

not begin generating ILLR maps until approximately Sep-

tember of 1999, the court found that “[t]his delay demon-

strates a willful desire to avoid compliance with the

[Act].”

We find that the district court erred in inferring a

willful desire to avoid compliance from the evidence in

this record. On December 2, 1998, the Networks submit-

ted Cohen's declaration with supporting Longley-Rice

maps as support for its motion for a preliminary injunc-

tion. A little over a month later, on January 15, 1999, the

Networks submitted the supplemental declaration of

Cohen utilizing the Longley-Rice model. Weeks later, on

February 1, 1999, the FCC issued a Report and Order in

the matter of Satellite Delivery of Network Signals to

Unserved Households for Purposes of the Satellite Home

Viewer Act, CD Docket No. 98-201 (FCC February 1, 1999)

(“February Order”), embracing the ILLR model for

24a

determining signal intensity at individual locations.'4

Responding to the February 1999 Report, the Networks,

on July 12, 1999, submitted Cohen’s second amended

affidavit with supporting ILLR maps. A little over two

months later, on September 20, 1999, EchoStar submitted

the declaration of Hawkins, with supporting ILLR maps.

We reverse the district court’s finding of willful and

repeated violations on this ground as an abuse of discre-

tion because EchoStar’s delay was not significant, as com-

pared to the Networks’ own actions, and there is no

record evidence to support the court’s inference. First, it

took the Networks over five months to compile ILLR

maps and models, and it took EchoStar only two months

thereafter to submit its ILLR maps in rebuttal.!5 Second,

Hawkins’ affidavit attests to the fact that EchoStar

attempted to employ the ILLR model, and that despite

difficulties and delays in obtaining the computer software

needed to utilize this technology, EchoStar began generat-

ing ILLR maps as soon as EchoStar could adapt the

software to its subscriber base.1© The only way that the

14 Adoption of this new testing method is, and was, central

to this dispute because SHVA and the Improvement Act make

Grade B intensity the benchmark for determining whether a

household is “unserved.” See 17 U.S.C. § 119(a)(2)(B)(ii)(I) (West

Supp. 2001).

15 The Networks did not complete and submit to the court

its ILLR results until July 12, 1999, while the ILLR model was

adopted on February 1, 1999.

16 Specifically, in his affidavit submitted to the court on

September 20, 1999, Hawkins explains that:

EchoStar has experienced some delays in

incorporating the ILLR model endorsed by the FCC,

Pann area eS Lael

25a

court could have found a dilatory motive in the face of

such statements is by finding Hawkins’ statements to be

untrue, and inferring from the circumstances, i.e., the

amount of time it toe EchoStar took [sic] to submit ILLR

maps, that EchoStar had a willful desire to avoid compli-

ance with the Act. “[I]nference[s] based on speculation

and conjecture [are] not reasonable.” Chapman v. American

Cyanamid Co., 861 F.2d 1515, 1518 (11th Cir. 1988). Here,

the court inferred a willful desire to avoid compliance

with the Act from Hawkins’ comments and explanations

_for EchoStar’s delay in utilizing workable ILLR maps.

EchoStar’s difficulty in employing the ILLR technology

does not, on this record and without an evidentiary hear-

ing, establish willful or repeated violations of the Act,

and we reverse the district court’s conclusion to the con-

trary.

b. Twenty-Percent Rule

Second, the court used the twenty-percent rule to

find a substantial likelihood that the Networks could

demonstrate willful and repeated violations. The twenty-

in part, because of the length of the cue at DataWorld.

As a result, in part, of these delays, EchoStar only

recently obtained from DataWorld its ILLR data,

implementing the ILLR model endorsed by the

FCC. ... Once EchoStar received this ILLR data from

DataWorld, EchoStar still had to geocode its

subscribers (a substantial task) before using the data

to determine whether EchoStar’s subscribers are

eligible to receive distant network programming via

satellite.

Hawkins’ Affidavit { 8.

26a

percent rule, derived from the 1988 legislative history of

§ 119(a)(5) provides that:

In view of the possibilities for error which

would occur despite reasonably diligent efforts

to avoid them (because of variables such as con-

sumer self-reporting and engineering tests of

signal adequacy) it is the intent of this statute

that no pattern or practice be found if, excluding

subscribers grandfathered under section

119(a)(5)(C), less than 20% of the subscribers to

a particular network station (on either local,

regional, or national bases) are found ineligible.

H.R. Rep. No. 100-887(I), at 19 (1988), reprinted in, 1988

U.S.C.C.A.N. 1511, 5622. The district court reasoned that

a “substantial percentage (25.57%) of EchoStar’s sub-

scribers in the five markets who Mr. Hawkins’s ILLR

maps predict do not reside in unserved households, com-

bined with the lack of evidence regarding waivers or field

test results, supports a finding of a willful and repeated

pattern or practice of infringement.”

EchoStar argues that the Networks submitted no reli-

able evidence, let alone signal strength tests, to demon-

strate that at least 20% of the contested subscribers are

actually served. It argues that because the district court

aggregated the five test markets in Hawkins’ declaration,

instead of considering each individual network station,

the court misapplied the rule. The Networks counter that

there is nothing wrong with aggregating the test markets

from Hawkins’ declaration because the twenty-percent

rule refers to subscribers to a particular network station,

not the station whose market is being invaded.

bi Bi i a

27a

We need not resolve the above disputes regarding the

interpretation and application of the twenty-percent

rule.!” Instead, we reverse the district court’s finding of

substantial likelihood of success in demonstrating willful

or repeated violations because the court relied on extrap-

olations from only five test markets. As noted above, we

can find no evidence in the record that the five markets

tested by Hawkins are representative of EchoStar’s five-

million nationwide satellite subscribers in two-hundred

and thirty different markets across the country. We refuse

to engage in speculation and conjecture in reviewing this

nationwide preliminary injunction. See Chapman, 861 F.3d

at 1518. The court’s finding that the Networks’ had a

substantial likelihood of success ia demonstrating willful

and repeated violations is erroneous because it is based

on extrapolations from 5 out of 230 markets in the United

States, and there are no findings that these five test

markets are representative of EchoStar’s nationwide sub-

scriber base.

c. Corrective Action

The district court’s third ground for finding willful

and repeated violations for preliminary injunction pur-

poses was the fact that EchoStar failed to demonstrate

corrective action. Specifically, the court found that: (1)

there was no evidence that EchoStar intended to take

17 Further, because no party raises the issue, we need not

decide the propriety of applying such a standard from

Committee Reports which predate the current version of

§ 119(a)(5).

28a

corrective action in light of Hawkins’ findings of pre-

sumptively illegal subscribers, and (2) there was no evi-

dence that EchoStar turned off its pre-July 1998

subscribers signed-up in reliance on PrimeTime’s subjec-

tive qualification process, which was held insufficient to

comply with SHVA in ABC, Inc. v. PrimeTime 24, 184 F.3d

348 (4th Cir. 1999), CBS II, 48 F. Supp. 2d 1342, and CBS I,

9 F. Supp. 2d 1333.

As to the first finding, the court reasoned that

Hawkins’ declaration established that at least 9,956 of

EchoStar’s subscribers in the five test markets were pre-

sumptively illegal. The court reasoned that “Hawkins

does not suggest that a substantial portion of those 9,956

presumptively illegal subscribers received waivers or had

field testing performed at their households, but instead

states only that ‘certain subscribers’ received waivers or

were subjected to field testing.” Finding that Hawkins

did not “suggest that EchoStar plans to take corrective

action with regard to those subscribers,” the court

inferred that EchoStar was “aware that significant

numbers of its subscribers presumptively do not reside in

unserved households, [and] has not acknowledged that

fact and apparently has taken no corrective action,”

which “demonstrates a willful disregard of [SHVA].”

EchoStar argues that the foregoing conclusion is

clearly erroneous because the Networks submitted no

evidence that EchoStar did not intend to bring itself into

compliance and the record actually establishes the oppo-

site. We agree that the district court erred.

The district court’s inference that EchoStar will not

take corrective action is an abuse of discretion on this

29a

record. First, the court rejected Hawkins’ suggestion that

some of the 9,956 presumptively illegal subscribers were

eligible under the Act because the individuals received

favorable signal strength tests or waivers from the local

affiliates. Because EchoStar did not introduce evidence of

waivers or signal tests in the preliminary injunction pro-

ceedings, the court inferred that no such proof of compli-

ance existed and no such measures had been taken. Such

an inference is inconsistent with Hawkins’ declaration

that “certain subscribers are included in the sorting even

though they have obtained [waivers] or cannot, in fact,

receive a Grade B signal . . . as confirmed by actual field

testing.” (emphasis supplied). As is evident, the court

rejected Hawkins’ assertion that certain subscribers “have

obtained” signal tests or waivers, and concluded that

EchoStar did not possess such evidence, without any

record evidence indicating this statement was untrue or

otherwise not credible. Without the benefit of an eviden-

tiary hearing, the district court erred in rejecting

Hawkins’ assertions as not credible.1® We conclude that

18 A district court need not hold an evidentiary hearing

prior to the issuance of every preliminary injunction. See All

Care Nursing Service v. Bethesda Memorial, 887 F.2d 1535, 1538

(11th Cir. 1989). “Where the injunction turns on the resolution of

bitterly disputed facts, however, an evidentiary hearing is

normally required to decide credibility issues.” Id.

Because the district court rejected the Networks’ proffer of

SHVA and Improvement Act noncompliance, the only record

evidence on this bitterly contested issue was Hawkins’

declarations. The court, however, rejected portions of Hawkins’

affidavit and adopted an inference advanced by the Networks

which had no support in the record. Had the court held an

evidentiary hearing, it would have been free to discount

30a

the drastic remedy of a_nationwide injunction should be

based on stronger evidence than we find in this record.

Also, the district court erred in finding willful and

repeated violations from EchoStar’s failure to come for-

ward with evidence that its pre-July 1998, PrimeTime-

derived subscribers, qualify as “unserved.” The district

court reached this conclusion by erroneously relying on

what it perceived to be a concession by Charles Ergen,

EchoStar’s president and Chief Executive Officer, that

EchoStar did not attempt to determine the eligibility of its

pre-July 1998 subscribers until September of 1999.

Ergen’s affidavit discusses EchoStar’s testing of pre-

July 1998 subscribers under the new ILLR model, and

indicates the results will be available soon. Ergen’s affi-

davit also suggests that EchoStar did in fact test all of its

subscribers to ensure SHVA compliance. The Networks

argue that because Ergen’s affidavit states only that Echo-

Star tests “potential subscribers,” this demonstrates that

EchoStar only screens new customers, and not its pre-July

1998 subscribers.

The Networks’ interpretation of Ergen’s affidavit,

which the district court embraced, is plausible. We, how-

ever, did not read Ergen’s statements that way. In the face

of two plausible interpretations of evidence submitted to

demonstrate a contested issue, the district court is not at

liberty to accept one construction of the evidence and

Hawkins’ statements as uncredible. However, on the face of

Hawkins’ affidavits and the Networks’ arguments, the court

was not at liberty to make such a credibility determination or

inferential leap on this contested issue without the benefit of an

evidentiary hearing. 7

3la

reject the other without the benefit of an evidentiary

hearing.!9 See McDonald's Corp. v. Robertson, 147 F.3d 1301,

1312 (11th Cir. 1998). In the absence of an evidentiary

hearing, we cannot conclude that what we know from the

instant, sparse record about Echostar’s handling of its

pre-July 1998, subscribers adds much to the resolution of

the substantial likelihood of success issue.

3. Conclusion

In light of the district court’s rejection of the only

evidence adduced by the Networks, and in light of our

holding that the only other evidence —- Hawkins’ declara-

tion pertaining to [sic] only to five markets —- is insuffi-

cient by itself to support factual findings regarding

EchoStar’s nationwide market, we hold that the district

court’s application of the twenty-percent rule was flawed.

19 The court not only engaged in improper speculation here,

but ultimately avoided another critical question: Do the pre-July

1998 subscribers qualify as “unserved?” With the passage of the

Improvement Act, there is a likelihood that many of EchoStar’s

pre-July 1998 subscribers were grandfathered into the Act’s

statutory copyright license. See, e.g., 17 U.S.C. § 119(e)

subscribers who do not receive a Grade A signal and who “had

satellite service of such network signal terminated after July 11,

1998, and before October 31, 1999, as required by this section, or

received such service on October 31, 1999”). The district court

failed to examine or recognize that many of EchoStar’s pre-July

1998 subscribers might otherwise be eligible under the Act

whether or not the subscriber qualified as “unserved” under

§ 119(d)(10)(A). This contested issue may have considerable

relevance to the substantial likelihood of success issue and

should have been explored by the court before entering this

sweeping nationwide preliminary injunction.

32a

We also hold that the evidence in the instant record with

respect to Echostar’s delay in achieving compliance and

its actions with respect to correcting violations is less

than dispositive. We cannot sustain the drastic remedy of

a nationwide preliminary injunction on a record as sparse

as this. Accordingly, we conclude that the district court

abused its discretion in granting this nationwide prelimi-

nary injunction.2° On remand, the Networks will have an

opportunity to adduce evidence in an attempt to satisfy

their initial burden, and if the Networks offer sufficient

proof to warrant reasonable inferences on a nationwide

scope so as to trigger the statutory presumption that

Echostar is servicing “served households” across the

country, then Echostar will have an opportunity to rebut

the presumption in one or more of the ways provided for

in the statute and regulations.

D. First Amendment

Next, EchoStar attacks the constitutionality of SHVA

and the Improvement Act under the First Amendment.?!

It contends that distant network programming is speech,

and that SHVA and the Improvement Act restrict such

speech by prohibiting programming that subscribers are

20 Because of this conclusion, we need not address the

parties’ remaining arguments as to the other the [sic]

prerequisites for the issuance of a preliminary injunction, but

remand for the reconsideration of each of the other three

elements as well.

21 EchoStar also argues that the vagueness and overbreadth

of the preliminary injunction violates the First Amendment.

Because we vacate the preliminary injunction, we need not

address these arguments at this time.

33a

legally entitled to receive. EchoStar argues that SHVA

and the Improvement Act are premised on a content-

based governmental judgment that viewers should watch

local programming rather than distant network program-

ming and such content-based restrictions violate the First

Amendment. We find EchoStar’s First Amendment cnal-

lenge to be wholly without merit.

The copyright laws, which are explicitly sanctioned

by the Constitution, see U.S. Const. Art. I, § 8, provide

adequate First Amendment protection by protecting only

expression, not facts and ideas. See Harper & Row v.

Nation Enterprises, 471 U.S. 539, 556, 105 S. Ct. 2218, 2228

expression” that “establish{ ] a marketable right to the

use of one’s expression” and thereby “suppl[y] the eco-

nomic incentive to create and disseminate ideas.” Id. at

558, 105 S. Ct. at 229. In Harper & Row v. Nation Enter-

prises, the Supreme Court rejected the suggestion that the

First Amendment requires broader exceptions to the

gress. See id. at 560, 105 S. Ct. at 2230 (“In view of the

First Amendment protections already embodied in the

expression and uncopyrightable facts and ideas, .. . we

see no warrant for expanding the doctrine of fair

use...” on First Amendment grounds.). We follow such

reasoning in rejecting the instant challenge.

Nothing in SHVA or the Improvement Act restricts

the content of EchoStar’s programming. Instead, SHVA,

as amended by the Improvement Act, creates a narrow

exception io the generally applicable, and constitutional,

——

34a

the Act does not threaten its free speech rights but actu-

ally permits more speech than EchoStar would constitu-

tionally be entitled to under the Copyright Act. The First

Amendment does not require any broader exceptions to

the Copyright Act than Congress has conferred through

SHVA and the Improvement Act’s narrow copyright

licenses. See id. at 560, 105 S. Ct. at 2230.

EchoStar argues that SHVA’s “unserved household”

restriction is a special rule for satellite-carriers which is

premised on an impermissible content-based govern-

mental judgment that viewers should watch local pro-

gramming rather than distant. It contends SHVA is

conditioned in an unconstitutional manner by its prefer-

ence for localism.

Even if EchoStar’s provision of distant network pro-

gramming is “speech” under the First Amendment,??

22 We assume arguendo that the provision of distant network

services constitute speech under the First Amendment. In

Turner Broadcasting System, Inc. v. FCC, 515 U.S. 622, 636, 114

S. Ct. 2445, 2456 (1994), the Supreme Court explained that

“{t]hrough ‘original programming or by exercising editorial

discretion over which stations or programs to include in its

repertoire,’ cable programmers and operators ‘see[k] to

communicate messages on a wide variety of topics and in a wide

variety of formats.’ ” See also Hurley v. Irish-American Gay,

Lesbian & Bisexual Group, 515 U.S. 557, 568-69, 115 S. Ct. 2338,

2346 (1995) (explaining that “[c]able operators, for example, are

engaged in protected speech activities even when they only

select programming originally produced by others”). While

EchoStar does not select the programming aired on the

Networks’ channels, it does “exercis[e] editorial discretion over

which stations or programs to include in its repertoire,” insofar

as it chooses which Network channels to provide through

7 &

35a

which we need not and do not decide at this time, SHVA

and the Improvement Act’s restrictions on that speech are

content neutral and serve important governmental inter-

ests unrelated to the suppression of speech. In Turner

Broadcasting System, Inc. v. FCC, 512 U.S. 622, 643, 114

S. Ct. 2445, 2459 (1994), the Supreme Court explained that

“laws that confer benefits or impose burdens on speech

without reference to the ideas or views expressed are in

most instances content neutral.” (citing Members of City

Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789,

804, 104 S. Ct. 2118, 2128 (1984); Heffron v. International

Soc. for Krishna Consciousness, Inc., 452 U.S. 640, 649, 101

S. Ct. 2559, 2564 (1981)). Applying this standard in Turner,

the Court rejected cable operators First Amendment chal-

lenge to the Cable Television Consumer Protection and

Competition Act of 1992, which made it compulsory to

include local commercial and public broadcasting stations

in the cable operator’s line-up. Turner reasons that while

the must carry rules impose numerous burdens on cable

operators, none of the burdens are related to speech. Id.

at 644-46, 114 S. Ct. at 2460-62. Instead, the Court found

that “Congress designed the must carry provisions not to

promote speech of a particular content, but to... ensure

that allAmericans, especially those unable to subscribe to

cable, have access to free television programming — what-

ever its content.” Id. at 649, 114 S. Ct. at 2462.

distant network programming. Because we reject EchoStar’s

First Amendment challenge on other grounds, we need not

decide whether the provision of distant network programming

is speech, but assume arguendo that such is the case.

36a

The instant case is a fortiori from Turner. Localism in

SHVA and the Improvement Act is not preferred for

anything related to the content of the local broadcasts.

Instead, Congress limited the benefit of the compulsory

access to network programming for households that can-

not otherwise receive such programming, see 17 U.S.C.

§ 119(d)(10)(A), while creating the least possible interfer-

ence with Networks’ copyrights. Balancing the two,

SHVA, as amended by the Improvement Act, merely

gives households, who could not otherwise receive local

network programming through an over-the-air broadcast,

the option of receiving network programming from a

satellite carrier. Because the beneficiaries of this right

include only households that cannot otherwise receive

local network programming, the Networks’ copyrights

are not threatened. In this sense, the Act strikes a balance

between protecting the copyright interests of the Net-

works and the public interest in obtaining network pro-

gramming, whatever its content, for all Americans.

EchoStar’s argument - that the statute is content

based because the effect of its operation prefers local

network programming - is flawed for the same reason a

similar argument failed in Turner. Indeed, the Congres-

sional purpose in the instant case is even more unrelated

to content than in Turner. Here, Congress sought merely

to facilitate access to Network programming for those

households that cannot otherwise receive the same - 1.¢.,

for “unserved households.” “Unserved households” are,

inter alia, those unable to receive adequate signal

strength. See 17 U.S.C. § 119(d)(10)(A). The fact that the

source of the best candidate for a satisfactory signal

37a

strength is local is a function of geography and physics,

not a Congressional purpose to prefer local speech. In

other words, the mere fact that the signal strength is

measured from sources which are “local” with respect to

any particular household is a necessary, but entirely inci-

dental, function of measuring eligibility. Accordingly, the

narrow, compulsory license of SHVA, as it is amended by

the Improvement Act, is not content-based, but is merely

a Congressional preference that all Americans have

access to network programming, wherever they live.

A content-neutral restriction “that impose[s] inciden-

tal burdens on speech,” will be sustained if “it furthers an

important or substantial governmental interest; if the

governmental interest is unrelated to the suppression of

free expression; and if the incidental restriction on

alleged First Amendment freedoms is no greater than is

essential to the furtherance of that interest.” Turner, 512

U.S. at 662, 114 S. Ct. at 2469 (quoting United States v.

O’Brien, 391 U.S. 367, 377, 88 S. Ct. 1673, 1679 (1968)).

SHVA’s purpose of providing a limited license to

retransmit network programming to unserved private

residences, see H.R. Rep. No. 100-887 (II), at 19-20 (1988),

reprinted in 1988 U.S.C.C.A.N. 5648-49,23 is supported by

*3 The House Report supporting SHVA explains that the

statutory license is provided “for the sole purpose of facilitating

the transmission of each network’s programming to . . . areas

which are unserved by that network.” See H.R. Rep. No. 100-887

(II), at 19-20 (1988), reprinted in 1988 U.S.C.G-A.N. 5648-49. The-

“Committee believe[d] that this approach w[ould] satisfy the

public interest in making available network programming in

these (typically rural) areas, while also respecting the public

interest in protecting the network-affiliate distribution system.”

38a

the substantial government interest of ensuring that

Americans who cannot otherwise receive network pro-

gramming have access to it, whatever its content. Such an

interest is unrelated to the suppression of speech, and

indeed serves a governmental! purpose of the “highest

order” by promoting the dissemination of speech. See

Turner, 512 U.S. at 663, 114 S. Ct. at 2470 (“assuring that

the public has access to a multiplicity of information

sources is a governmental purpose of the highest order,

for it promotes values central to the First Amendment”).

Whatever limits Congress placed on SHVA’s license is

motivated by and consistent with the dual goals of the

expression, and provide incentives for copyright owners

to produce such original works. Both purposes are well

within constitutional bounds, as Congress has the author-

ity to define the contours of copyright law, see U.S. Const.

art. I, § 8 cl. 8, and the monopoly privilege created by the

author’s creation for the public, see Sony v. Universal City

Studios, 464 U.S. 417, 429, 104 S. Ct. 774, 782 (1984). Such

precise tailoring certainly survives scrutiny, intermediate

or otherwise.?4

Id. at 20. Thus, in extending SHVA’s statutory license, the

“Committee intend[ed] . . . to satisfy both aspects of the public

interest — bringing network programming to unserved areas

while preserving the exclusivity that is an integral part of

today’s network affiliate relationship.” Id.

24 We need not decide whether SHVA or the Improvement

Act impose even incidental burdens on speech. Instead, we

assume arguendo that it does because the challenged statutes

even survive the more heightened inquiry attending

intermediate scrutiny.

;

39a

To the extent that SHVA or the Improvement Act

provide a special rule for satellite carriers, this rule is

more permissive, and is indeed an exception to the gen-

eral restrictions in § 106 of the Copyright Act, see 17

U.S.C. § 106 (conferring exclusive rights to use in copy-

right owner). Merely because EchoStar would like this

license to be broader than Congress envisioned it does

not mean that it infringes on the First Amendment. There

is “no first amendment right to ... make commercial use

of the copyrighted works of others.” United Video, Inc. v.

FCC, 890 F.2d 1173, 1190-91 (D.C. Cir. 1989) (rejecting

cable operators challenge to the compulsory license

granted it by 17 U.S.C. § 111 based on the notion

that the statute’s failure to include authorization for

rebroadcasting syndicated programming violates the First

Amendment). Accordingly, we reject EchoStar’s First

Amendment challenge as meritless.

BE. Transferability of Grandfathered Rights under

§ 119(e)

Lastly, EchoStar asks us to revisit the district court’s

judicial interpretation of 17 U.S.C. § 119(e) (West Supp.

2001). Subsection (e) is one of the Improvement Act’s

grandfathering provisions, which provides:

(e) Moratorium on copyright liability. - Until

December 31, 2004, a subscriber who does not

receive a signal of Grade A intensity (as defined

in the regulations of the F[CC] . . . under section

73.683(a) of title 47 of the C[FR]..., as in effect

on January 1, 1999, or predicted by the

F[CC] . . . using the I[LLR] . . . methodology

described by the F[CC] .. . in Docket No.

40a

98-201) of a local network television broadcast

station shall remain eligible to receive signals of

network stations affiliated with the same net-

work, if that subscriber had satellite service of

such network signal terminated after July 11,

1998, and before October 31, 1999, as required

by this section, or received such service on Octo-

ber 31, 1999.

17 U.S.C. § 119(e) (West Supp. 2001). The dispute here is

whether subscribers may transfer to a different satellite

carrier and retain their rights to receive distant network

signals under § 119(e).

Addressing this question, the district court reasoned

that § 119(e) is “silent, and therefore ambiguous, as to

whether a subscriber ‘shall remain eligible to receive

signals of network stations’ only from his or her previous

satellite service provider, or from any satellite service

provider.” Finding the statute ambiguous, the court

turned to the legislative history, and specifically focused

on the Conference Committee Report accompanying the

Improvement Act, which states that “grandfathered sta-

tus is not transferable to a different carrier... ,” see Conf.

Rep., 146 Cong. Rec. H11794 (daily ed. Nov. 9, 1999).25

_ 2% The Conference Committee Report for the Improvement

Act explains that:

[t]he words “shall remain eligible” in section 119(e)

refer to eligibility to receive stations affiliated with

the same network from the same satellite carrier

through use of the same transmission technology at

the same location; in other words, grandfathered

status is not transferable to a different carrier...

Conf. Rep., 146 Cong. Rec. H11794 (daily ed. Nov. 9, 1999).

4la

Based on this Report, the court held that “grandfathered

status is not transferable to a different carrier.”

EchoStar argues that the district court erred in look-

ing to legislative history because the plain language of

the statute is clear. It contends that the district court

rewrote the statute when it read into it a transfer limita-

tion because no such restriction is found in § 119(e)’s

plain language.

- This Circuit’s “decisions . . . mandat[e] that ambi-

guity in statutory language be shown before a court delves

into legislative history.” PrimeTime 24, 245 F.3d at 1224

(citing United States v. Veal, 153 F.3d 1233, 1245 (11th Cir.

1998) (“Review of legislative history is unnecessary “

unless a statute is inescapably ambiguous.”) (citation and

quotation omitted)). Thus, in this Circuit, “ ‘[w]e begin

our construction of [a statute] where courts should

always begin the process of legislative interpretation, and

where they often should end it as well, which is with the

words of the statutory provision.’ ” Id. at 1222 (quoting

Harris v. Garner, 216 F.3d 970, 972 (11th Cir. 2000) (en

banc)).

Accordingly, our first task in construing § 119(e) is to

determine-its plain meaning and whether its terms are

ambiguous. See id. The meaning of § 119(e) is clear: It

grandfathers all subscribers who do not receive at least a

Grade A signal, as defined by the FCC, if that sub-

scriber’s satellite service of such network was terminated

between July 11, 1998, and October, 31, 1999, as required

by § 119, or if the subscriber received such~service on

October 31, 1999.

42a

For the reasons discussed below, we conclude that

§ 119(e) is unambiguous and does not include a condition

of nontransferability. First, its plain and clear language

confers eligibility upon subscribers:

a subscriber . . . shall remain eligible to receive

signals of network stations affiliated with the

same network, if that subscriber has satellite

service of such network signal terminated after

July 11, 1998, and before October 31, 1999, as

required by this section, or received such service

on October 31, 1999.

17 U.S.C. § 119(e). Eligibility belongs to the subscriber,

and nothing is said in the statute about carriers. In partic-

ular, the subscribers’ eligibility is not conditioned on

remaining with the same carrier.

Second, the statute expressly limits the rights con-

ferred to the “same network,” stating that the subscriber

“shall remain eligible to receive signals of network sta-

tions affiliated with the same network, if that subscriber

has satellite service of such network signal terminated

after July 11, 1998, and before October 31, 1999, as

required by this section, or received such service on

October 31, 1999.” Persuasively, then, the statute contains

a “same network” requirement but does not contain a

“same carrier” restriction.

Finally, the statutory provision is crafted with great

precision. It applies only to subscribers who do not

receive a signal of grade A intensity, and only to sub-

scribers falling within certain very specific date restric-

tions. With such precision, we cannot assume that

Congress stated one condition, i.e., the same network, but

inadvertently omitted to state another condition which

43a

would prohibit a subscriber’s change of carrier. The fact

that the statutory provision confers a benefit upon the

subscriber, and not the carrier, makes us doubt that that

Congress intended to benefit then extant carriers by lock-

ing subscribers in to their carrier as of October 31, 1999.26

In any event, we need not speculate into such

motives, as “[w]e are not at liberty to imply a condition

which is opposed to the explicit terms of the stat-

ute ... To [so] hold... is not to construe the Act but to

amend it.” Fodorenko v. United States, 449 U.S. 490, 513,

101 S. Ct. 737, 750 (1981) (quoting Detroit Trust Co. v. The

Thomas Barlum, 293 U.S. 21, 38, 55 S. Ct. 31, 36 (1934)). “It

is not the function of the courts to amend statutes under

the guise of ‘statutory construction.’ ” Id. at 514 n.35, 101

S. Ct. at 751 n.35; United States v. Cooper Corp., 312 U.S.

600, 605, 61 S. Ct. 742, 744 (1941) (“It is not our function

to engraft on a statute additions which we think the

legislature logically might or should have made.”).

Because § 119(e) is unambiguous and fails to contain a

transferability restriction, we refuse to read a “same car-

rier” limitation into the statute.

2¢ The Networks’ interpretation also seems inconsistent

with the fact that the provision grandfathers certain subscribers

whose service was terminated before October 31, 1999. The

Networks’ interpretation would seem to imply that such

terminated subscribers could “remain eligible” only by

resubscribing with the particular carrier which terminated

them. While that concept is not entirely unthinkable, it certainly

is not stated in the statute, and it points up the magnitude of the

additions to the statute which the Networks urge us to engraft

onto the provision.

44a

Furthermore, we will not consult the Conference

Committee Report, as resort to legislative history is

unnecessary, and indeed, improper, where the statute’s

terms are plain and unambiguous. See, e.g., Circuit City

Stores, Inc. v. Adams, __ U.S. __, 121 S. Ct. 1302, 1311

(2001) (refusing to examine legislative history where the

face of the statutory provision was unambiguous); Ratzlaf

v. United States, 510 U.S. 135, 147, 114 S. Ct. 655, 662

(1994) (Even where “[t]here are . . . contrary indications —

in the statute’s legislative history . . . we do not resort to |

legislative history to cloud a statutory text that is clear.”);

PrimeTime 24, 245 F.3d at 1224 n.2 ; Harris, 216 F.3d at 976

(“When the import of the words Congress has used is

clear, as it is here, we need not resort to legislative

history, and we certainly should not do so to undermine

the plain meaning of statutory language.”); Veal, 153 F.3d

at 1245 (“Review of legislative history is unnecessary

unless a statute is inescapably ambiguous”). We must

adhere to this principle because “it is ultimately the pro-

visions of our laws rather than the principal concern of

our legislators by which we are governed.” Lyes v. City of

Riviera Beach, Fla., 166 F.3d 1332, 1338 (11th Cir. 1999) (en

banc) (quoting Oncale v. Sundowner Offshore Servs., Inc.,

523 U.S. 75, 79, 118 S. Ct. 998, 1002 (1998)). Section

119(e)’s plain and unambiguous terms do not contain a

transferability limitation, and we reverse the district

court’s attempt to engraft such a restriction onto the

statute.

45a

Ill. CONCLUSION

For the foregoing reasons, we hold that the district

court abused its discretion in granting the nationwide

preliminary injunction. Accordingly, we vacate the pre-

liminary injunction, and remand for further proceedings

not inconsistent with this opinion. In arriving at our

decision, with respect to the transferability issue, we

reverse the district court’s interpretation of § 119(e), and

we affirm the district court’s rejection of Echostar’s First

Amendment challenge.

AFFIRMED IN PART, REVERSED IN PART, VACATED

IN PART AND REMANDED.

46a

APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CBS BROADCASTING, INC.,

et al.,

Plaintiffs, CASE NO.

VS. 98-2651-CIV-NESBITT

ECHOSTAR COMMUNICATIONS

CORPORATION, et al.,

ORDER GRANTING

Defendants. MOTION FOR

PRELIMINARY

ECHOSTAR COMMUNICATIONS INJUNCTION

CORPORATION, et al.,

Plaintiffs, (Filed Sep. 29, 2000)

Vs.

CBS BROADCASTING, INC.,

CASE NO.

et al.,

99-6382-CIV-NESBITT

Defendants.

This cause comes before the Court upon numerous

motions, including the network parties’ Motion for Pre-

liminary Injunction (D.E. #20 in case no. 98-2651-CIV-

NESBITT).

CBS Broadcasting Inc., Fox Broadcasting Co, ABC,

Inc., National Broadcasting Co., Inc., CBS Television Net-

work Affiliates Association, FBC Television Affiliates

Association, ABC Television Affiliates Association, and

47a

NBC Television Affiliates (collectively, “the network par-

ties”) are the owners of the ABC, CBS, Fox, and NBC

television networks, and are trade associations which

represent ABC, CBS, Fox, and NBC-affiliated network

stations.

EchoStar Communications Corporation d/b/a DISH

Network and its subsidiaries EchoStar Satellite Corpora-

tion, Satellite Communications Operating Corporation,

and DirectSat Corporation (collectively, “EchoStar”) pro-

vide television programming by satellite to owners of

small satellite dishes.

EchoStar markets to its subscribers two packages of

network signals which include signals from ABC, CBS,

Fox, and NBC affiliates in New York City and Los

Angeles. The network parties claim that EchoStar’s trans-

mission of these network signals infringes their federally-

protected copyrights in numerous television programs.

MOTION FOR PRELIMINARY INJUNCTION

The network parties have moved for a preliminary

injunction to prohibit EchoStar from continuing to

infringe their copyrights. “Preliminary injunctions are a

common judicial response to the imminent infringement

of an apparently valid copyright.” Dallas Cowboys Cheer-

leaders, Inc. v. Scoreboard Posters, Inc., 600 F.2d 1184, 1187

(Sth Cir. 1979); see also In re Capita Cities/ABC, Inc., 918

F.2d 140, 144 (11th Cir. 1990). However, the Court may

issue a preliminary injunction only if the network parties

establish: (1) a substantial likelihood of success on the

merits; (2) a threat of irreparable injury; (3) that their own

injury would outweigh the injury to EchoStar; and (4)

48a

that the injunction would not disserve the public interest.

See, e.g., Tefel v. Reno, 180 F.3d 1286, 1295 (11th Cir. 1999),

cert. denied, 120 S. Ct. 2657 (2000); Levi Strauss & Co. v.

Sunrise Int’l Trading Inc., 51 F.3d 982, 985 (11th Cir. 1995).

EchoStar asserts that the network parties have not

established any of the four factors. As discussed below,

the Court finds that the network parties have established

all four factors. The Court therefore will issue a prelimi-

nary injunction against EchoStar.

1. Substantial likelihood of success

“Likelihood of success is the touchstone of the pre-

liminary injunction inquiry.” Philip Morris, Inc. v. Harsh-

barger, 159 F.3d 670, 674 (1st Cir. 1998). Of course, this fact

does not obviate the requirement that the network parties

establish all four factors in order to obtain a preliminary

injunction. See, e.g., Illinois Tool Works, Inc. v. Grip-Pak,

Inc., 906 F.2d 679, 682 (Fed. Cir. 1980) (“Likelihood of

success is an important factor, but no court has held it

alone determinative and ignored all three of the other

factors.”).

The Copyright Act grants the owner of a copyright in ~

an audiovisual work such as a television program the

exclusive right to perform that copyrighted work publicly

or to authorize a public display or performance of the

work. See 17 U.S.C. § 106. There is no dispute that the

numerous network television programs at issue are origi-

nal audiovisual works fixed in a tangible medium of

expression, and therefore are copyrightable subject mat-

ter. See 17 U.S.C. § 102.

49a

To establish a substantial likelihood of success on the

merits, the network parties must demonstrate a prima

facie case of copyright infringement, i.e., that: (1) they

own exclusive rights under the Copyright Act in the

works at issue; and (2) EchoStar has infringed those

rights. See, e.g., Southern Bell Tel. & Tel. Co. v. Associated

Tel. Directory Publishers, 756 F.2d 801, 810 (11th Cir. 1985).

Additionally, EchoStar’s transmission of the network par-

ties’ signals must be “willful or repeated. ... ” 17 U.S.C.

§ 119(a)(5)(A).

Ownership

The network parties have submitted uncontroverted

affidavits and certificates of copyright registration which

demonstrate that they own copyrights in the network

programs which are at issue in this action. See Compl.,

Exh. A; Declarations and Exhibits in Support of Plaintiffs’

Motion for Preliminary Injunction, D.E. #22, Exhs. 3

(Goodspeed Decl.), 4 (Kryle Decl.), 5 (Lusins Decl.), 7

(Taylor Decl.).

Infringement

There is no dispute that EchoStar is a “satellite car-

rier,” 17 U.S.C. § 119(d)(6), that EchoStar has publicly

performed the programs at issue by transmitting them to

its many subscribers, and that the network parties did not

license EchoStar to transmit their programs, see Good-

speed Decl., 16; Kryle Decl., 6; Lusins Decl., | 6; Taylor

Decl, ¥ 6. The parties disagree, however, whether Echo-

Star’s satellite transmission of those programs infringed

the network parties’ copyrights. The parties’ dispute

50a

focuses on whether the Satellite Home Viewer Act autho-

rizes EchoStar to transmit the programs to its subscribers.

Specifically, the parties disagree as to the application

of a narrow exception to a network’s exclusive copyright

in its programming which is found in the Satellite Home

Viewer Act. The Act creates a compulsory license which

allows satellite carriers to deliver distant network pro-

gramming to certain satellite dish owners without the

ties’ permission, however, the compulsory license allows

EchoStar to transmit distant network programming only

to “unserved households.” 17 U.S.C. § 119(a)(2)(B)(I); see

CBS Inc. v. Primetime 24 Joint Venture, 9 F. Supp.2d 1333,

1335-37 (S.D. Fla. 1998). In relevant part, an “unserved

household” is

a household that -

(A) cannot receive, through the use of a

conventional, stationary, outdoor rooftop receiv-

ing antenna, an over-the-air signal of grade B

intensity as defined by the Federal Communica-

tions Commission under section 73.683(a) of

Title 47 of the Code of Federal Regulations, as in

effect on January 1, 19991....

17 U.S.C. § 119(d)(10).

At trial, EchoStar will have the burden to prove that

its transmission of distant network programming goes

1 In 47 C.F.R. § 73.683(a), the FCC defined Grade B intensity

in terms of signal strength: 47 dBu for television channels 2-6, 56

dBu for television channels 7-13, and 64 dBu for television

channels 14-69. In that same selection, the FCC defined Grade A

as a stronger signal, i.e. with higher dBu levels.

5la

only to “unserved households.” 17 U.S.C. § 119(a)(5)(D);

see CBS Inc., 9 F. Supp.2d at 1340-41. Although the net-

work parties bear the burden of proof on their motion for

preliminary injunction, “the court must consider that the

ultimate burden of proof at trial is upon the nonmovant.”

CBS Inc., 9 F. Supp.2d at 1340; see Deerfield Med. Ctr. v.

City of Deerfield Beach, 661 F.2d 328, 336-38 (5th Cir. 1981)

(in assessing likelihood of success on the merits, court

took into account nonmovants’ ultimate burden of proof);

Religious Tech. Ctr. v. NetCom On-Line Communication

Servs., Inc., 923 F. Supp. 1231, 1242 n.12 (N.D. Cal. 1995)

(“Even though fair use is an affirmative defense, . . . the

court notes that plaintiffs, as the parties moving for a

preliminary injunction, have the burden of proving a

likelihood of success on their infringement claim, includ-

ing the fair use defense. . . . However, in determining

whether plaintiffs have met their burden, the court recog-

nizes that fair use is an affirmative defense on which

defendants will have the burden of proof at trial.”).

The network parties therefore “can establish likeli-

hood of success on the merits by demonstrating that

[EchoStar] is unlikely to prove at trial that its subscribers

are ‘unserved households.’ ” CBS, 9 F. Supp.2d at 1341.

Congress has clarified that to “determin[e] presumptively

whether a person resides in an unserved household... ,a

court shall rely on the Individual Location Longley-Rice

model [“ILLR”] set forth by the Federal Communications

Commission in Docket No. 98-201, as that model may be

amended by the Commission over time... . ” 17 U.S.C.

§ 119(a)(2)(B)(ii)(1).

In support of their Motion for Preliminary Injunction,

the network parties have submitted Jules Cohen’s Second

52a

and Third Supplemental Declarations, in which he used

the ILLR method to analyze EchoStar’s subscribers in

thirty-five randomly-selected television markets. See D.E.

#73, 149. According to Mr. Cohen, in thirty-three of the

thirty-five markets which he analyzed, his ILLR maps

predicted that a majority of EchoStar’s subscribers as of

October, 1998, received signals of at least Grade B inten-

sity. See Cohen Second Suppl. Decl., at 5 {8 & Exhs. A, C.

In thirty of those thirty-five markets, Mr. Cohen’s ILLR

maps predicted that a majority of subscribers whom

EchoStar signed up for service in October, November, and

December, 1998, received signals of at least Grade B

intensity. See Cohen Second Suppl. Decl., at 5-6 79 &

Exhs. B, D. :

Overall, Mr. Cohen’s ILLR maps suggest that 113,973

subscribers as of October, 1998, i.e. 76.0% of EchoStar’s

subscribers in those thirty-five markets, were predicted to

receive signals of at least Grade B intensity. In fact, 91,546

of those subscribers, i.e. 61.0% of EchoStar’s subscribers

in those thirty-five markets, were predicted to receive

stronger signals of Grade A intensity.

Mr. Cohen’s maps also suggest that 27,078 sub-

scribers whom EchoStar signed up for service in October,

November, and December, 1998, i.e. 64.6% of the

analyzed subscribers whom EchoStar signed up for ser-

vice in those thirty-five markets, were predicted to

receive signals of at least Grade B intensity. Additionally,

19,907 of those subscribers, i.e. 47.5% of the analyzed

subscribers whom EchoStar signed up for service in those

thirty-five markets during those three months, were pre-

dicted to receive fe stronger Grade A intensity signals.

atta taeicel

53a

According to Mr. Cohen’s maps, 1,266 subscribers

whom EchoStar signed up for service in five markets

between November, 1999, and January, 2000, i.e. 47.9% of

the subscribers whom EchoStar signed up for service in

those markets during that period, were predicted to

receive signals of at least Grade B intensity. Additionally,

753 of those subscribers, i.e. 28.5%, were predicted to

receive Grade A intensity signals.

There is, however, one problem with Mr. Cohen’s

ILLR maps which suggests that those maps overstate the

number of unserved households to which EchoStar trans-

mits distant network programming. The Court therefore

will not rely on Mr. Cohen’s maps or his Declaration

testimony.

Prior to July 1, 1999, Congress defined “local market”

as “the area encompassed within a network station’s

predicted Grade B contour as that contour is defined by

the Federal Communications Commission.” 17 U.S.C.A.

§ 119(d)(11) (1996). The ILLR maps upon which Mr.

Cohen relied use the FCC-predicted Grade B contours,

consistent with the SHVA’s definition of “local market

area” prior to July 1, 1999. See D.E. #73 at 2 J (a), at 3

¥ (b); Second Suppl. Decl. of Jules Cohen, at 1 J1 (“the

majority of EchoStar’s subscribers within FCC-predicted

Grade B contours”) (emphasis added); Third Suppl. Decl.

of Jules Cohen, at { 3 (noting that Mr. Cohen used the

FCC-predicted Grade B contours); Tr. of Prelim. Inj. Hear-

ing, at 61-63 (Mr. Olson discusses use of Grade B con-

tour); see also Tr., at 43.

Effective July 1, 1999, however, Congress amended

the definition of “local market” to mean “the designated

54a

market area in which a station is located. ... ” 17

U.S.C.A. § 119(d)(10) & 122(j)(2)(A) (Supp. 2000). The

maps upon which Mr. Cohen relied failed to take into

account the designated market area, which the network

parties’ counsel, Mr. Olson, acknowledged would result

in lower percentages of unserved households. See Tr., at

61-63.

Because Mr. Cohen relied on ILLR maps which did

not take into account the appropriate “local market,” the

Court cannot accept those maps or Mr. Cohen’s testimony

as accurately representing the number of unserved

households to which EchoStar allegedly provides distant-

network signals.

However, the evidence which EchoStar submitted

demonstrates that EchoStar likely provides distant net-

work transmissions to numerous households which are

not “unserved.” EchoStar submitted the Declaration of

Michael R. Hawkins, an EchoStar employee whose

responsibilities include “assisting EchoStar in its continu-

ing efforts to comply with the Satellite Home Viewer

Act. ... ” Hawkins Decl., D.E. #97, 74.

Mr. Hawkins generated ILLR maps for five of the

thirty-five markets which Jules Cohen mapped. In part

because Mr. Hawkins’s maps define the local market as

the designated market area, Mr. Hawkins’s and Mr.

Cohen’s maps produced different numbers of unserved

households in each of the five mapped areas.

Although Mr. Olson pointed out at least one possible

problem with Mr. Hawkins’s maps, see Tr., at 66, for

purposes of the preliminary injunction the Court will

accept as accurate Mr. Hawkins’s Declaration testimony

55a

and his analysis of the ILLR maps. His testimony and

analysis demonstrate that in five designated market

areas, EchoStar likely provides distant network program-

ming to thousands of households which are not

“unserved.”

Mr. Hawkins’s ILLR maps predict that: in Chicago,

2,171 subscribers (39.33% of EchoStar’s subscribers in

that market) receive a signal of Grade B strength or

stronger; in San Francisco

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