# Petition for Writ of Certiorari — Echostar Communications Corp. v. CBS Broadcasting Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_1653%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2002 - **Citation:** 535 U.S. 1079 ## Text ee 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)? il 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 gS CONSTITUTIONAL AND STATUTORY PROVI- Oe 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.. 1] iV 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 V 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 vi 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 c 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 x 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 gh > oe Bee ae Geen GE Bass dedoketeedeenes 17 U.S.C. 17 U.S.C. DMD o, ¢t a yo eee Da) .4, 17 . passim vill TABLE OF AUTHORITIES - Continued Page gil 'sl G:. | +: SPPrerrrereereTTTrTTTEeCrTErire ” re ik Vem 9 5) fons 7S re aes Pa EF USA. SB TUGBA cans ccnkcscsecensscinsses passim SP Be OP I Ais pasccdandcaechutses¥icaancaxaess 3 gk St Se | ere rr rrr? ee gtk Sat > + SE err rer srr rer passim RE Pade > > ree rr en eee yee eee 1 ee ER EE bo cb bcos cab renawaevecds dunug a gk ee Sy re Pr errr ee Mee kT Se ee a rer See Te Pare 2 ge RS PP errr erry Try TS Teer eT er Ter 6 ge Se Pe eee reer ree 6 Intellectual Property and Communications Omnibus Reform Act of 1999, Pub. L. No. rn rr er On ol ae akae du ah Nae eoae ae bake es 5 FEDERAL RULES i ne... > hake eae ee eee see een ere dee we aoe s 1 UniteD STATES CONSTITUTION Sie Cs SNE: Te ccsccscccerenrsapscnasseenss passim ee See, A i ey Ee ie ccc dave ebusareusseeedeus 2 3 ; 1X 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 8 | ee ery ere reer rer eee tree Sere 4, 5; a Paes Ss PN MIND Ges oc 55s 0d races dk hekes cane caaees 5 8 ee eg PPIPOLT TERE OP PET CT TTT CEN TT 14, 15 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 1 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 2 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). 3 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 copyright issues. At minimum, if plenary review is not 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 4 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 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. 6 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. 9 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 10 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’ 11 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, 12 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. : ; . 13 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, 14 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 copyright license for both local and distant satellite 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 15 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 Copyright Within the First Amendment Skein, 54 Stan. L. Rev. 1, 73 (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 16 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. j ‘ 3 3 i ; 17 435 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 18 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 19 “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. 20 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”). 21 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 | | 22 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. 23 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 \ 24 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 : | : : | 25 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). 26 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 Copyright Clause of the Constitution.!9 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 copyright was broad enough to protect the First Amendment 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 Ps ee Muon fol ant Panna pa A ck AUS ae PAS tas 27 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 28 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). 29 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. la 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, EE 2a 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. 3a 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., 4a 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 6a 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). 7a 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 8a 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 9a 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)]; (C) is a subscriber to whom subsection (e) 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 © For example, § 119(a)(11) extends the license to certain 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 copyright infringement claims. See, e.g., Tally-Ho, Inc. v. 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 copyright license to retransmit distant network program- 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) (extending the statutory copyright license until 2004 for subscribers who do not receive a Grade A signal and who “had satellite service of such netwo [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386010_1653%3A1. Public record. Not legal advice.