Petition for Writ of Certiorari — EchoStar Communications Corp. v. Fox Broadcasting Co. (No. 06-545)

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In The :

Supreme Court of the United States

ECHOSTAR COMMUNICATIONS CORPORATION, et al.,

Petitioners,

Vv.

FOX BROADCASTING COMPANY, et al.,

Respondents.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI &

‘

*THOMAS C. GOLDSTEIN MARK A. NADEAU

AKIN GUMP STRAUSS CYNTHIA A. RICKETTS

HAUER & FELD L.L.P. SQUIRE, SANDERS &

1333 New Hampshire DEMPSEY L.L.P.

Avenue N.W. 40 North Central Avene,

Washington, D.C. 20036 Suite 2700

Telephone: 202-887-4000 Phoenix, Arizona 85004

Facsimile: 202-887-4288 Telephone: 602-528-4000

*Counsel of Record Facsimile: 602-253-8129 _

MICHAEL C. SMALL

AKIN GUMP STRAUSS :

HAUER & FELD L.L.P.

2029 Century Park East,

Suite 2400

Los Angeles, California 90067

Telephone: 310-229-1000

Fascimile: 310-229-1001

Attorneys for Petitioners

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

OR CALL COLLECT (402) 342-2833

=—

QUESTION PRESENTED

The Satellite Home Viewer Act and the Satellite Home

Viewer Improvement Act (collectively “the Act”) grant a ~

compulsory license to satellite carriers to retransmit

copyrighted network television programming to eligible

households. The Act’s remedial provision states, in rele-

vant part, that if a satellite carrier “engages in a willful or

repeated pattern or practice” of transmitting copyrighted

network television programming to ineligible households

on a substantially nationwide basis, the district court

“shall order a permanent injunction barring the secondary

transmission by the satellite carrier, for private home

viewing, of the primary transmissions of any primary

network station affiliated with the same network... .” 17

_ US.C. §119(a)(7)(B)G). The question presented is whether

that provision eliminates entirely the traditional discre-

tion of district courts to fashion injunctive relief tailored to

the particular factual circumstances of a case, and dictates

instead that the distriet court enter a permanent nation-

wide injunction forbidding the satellite carrier from

retransmitting the programming authorized by the Act,

even to households that are statutorily eligible to receive

it.

—_ one

PARTIES TO THE PROCEEDING

Petitioners are EchoStar Communications Corpora-

tion; EchoStar Satellite L.L.C., formerly known as

EchoStar Satellite Corporation; Satellite Communications

Operating Corporation; and DirectSat Corporation. Peti-

tioners are referred to herein collectively as “EchoStar.”

Respondents are Fox Broadcasting Company; FBC

Television Affiliates; ABC Television Affiliates; NBC Televi-

sion Affiliates; and CBS Television Affiliates. CBS Broad-

casting, Inc., ABC, Inc., and National Broadcasting Company

originally were parties to the litigation, but have settled

with Petitioners and so no longer are parties to the proceed-

ings before this Court.

RULE 29.6 STATEMENT

EchoStar Communications Corporation is a publicly-

held company. Satellite Communications Operating Corpo-

ration is a direct wholly-owned subsidiary of EchoStar

Communications Corporation. EchoStar Satellite L.L.C.,

doing business as DISH Network, is a direct wholly-owned

subsidiary of EchoStar DBS Corporation, which is an

indirect wholly-owned subsidiary of EchoStar Communica-

tions Corporation. DirectSat Corporation was an indirect

wholly owned subsidiary of EchoStar DBS Corporation,

but. merged into EchoStar Satellite L.L.C. effective March

12, 1999.

ili

TABLE OF CONTENTS

Page

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Pe aicscnihcsubiSeesetaliccucieulpioidoctangkovebbasaceesanes 1

STATUTORY PROVISION INVOLViW)..........cceeeeseees 1

STATEMENT OF THE CASE ......... piiccummabensineuctneniads ice ae

A. Statutory Backpwround ..........cccccccccssssssesessosveeceses 2

Bae I BE pices piacere esicarciientgteniiaeiesonn 5

1. Initial District Court and Eleventh Circuit

Proceedings: The Preliminary Injunction

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2. The District Court’s Permanent Injunction

a DOI Secs canissnatenvonem sas pielauacioniiidandtioaniesnanbare i

3. The Eleventh Circuit’s Permanent Injunction

TEE sor ctiensisitssinvenibipesieindaneeerimmometatiinminiss 7

REASONS FOR GRANTING THE PETITION............. 9

I. THE ELEVENTH CIRCUITS DECISION

INTERPRETING AN IMPORTANT FEDERAL

STATUTE WILL HAVE PROFOUNDLY NEGA- -

TIVE NATIONAL CONSEQUENCES ............... 11

Il. THE ELEVENTH CIRCUITS DECISION IS

IN TENSION WITH THIS COURT’S STEAD-

FAST POSITION THAT FEDERAL STATUTES

SHOULD NOT BE LIGHTLY CONSTRUED

TO REMOVE THE TRADITIONAL DISCh*-

TION OF DISTRICT COURTS TO FASHION

INJUNCTIONS TAILORED TO THE FACTS

OF A PARTICULAR CASE ........ cesses 14

Eas Gib icciankorsceandeasuisddiensedckeniabebeaiirboneneines 21

TABLE OF AUTHORITIES

. Page

CASES

ABC, Inc. v. PrimeTime 24, 184 F.3d 348 (4th Cir.

BUN Eidaihisickits pivcveneuinbcainsdcgusentoimnieusicessiasnacaebiteicbabcaiias 14

Amoco Production Co. v. Village of Gambell, 480

Br ee CRE issn hadciciersebdeckcdsabecberiepleoeetcalceotaiel 19, 20

Califano v. Yamasaki, 442 U.S. 682 (1979).............0. 14, 16

CBS Broad., Inc. v. EchoStar Communications Corp.,

SNe ee Fete CA eee Cy RD iss nrcvvebsasentecéccecetvevnibectecs 6

CBS Inc. v_PrimeTime 24 Joint Veniure, 245 F.3d

RET Ce Ca eS hin citicidssacsacckcccssseesiaatieiieecsivess 12

eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837

CR hensive: dda bciiisuii cau dibdakd ai baedtoiidcwusietapaddssgradiidiiaes am

Hecht Co. v. Bowles, 321 U.S. 321 (1944)... 14, 16

Miller v. French, 580 U.S. 327 (2000).........c.csccoseserscceseoses 14

Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979)......... 13

Porter v. Warner Holding Co., 328 U.S. 395 (1946) ... 14, 15

Satellite Broad. & Commn’s Ass’n v. FCC, 275 F.3d

Re CRE Gls. GD dissins Scscdcdcoeschetnsirctenechesvincnuwarecivanisiuns 12-

United States ex rel. Totten v. Bombardier Corp.,

BF ae Be I Es I es sinteerd shstiscdenesvacsnsvavessivass 19

United States v. Donovan, 429 U.S. 413 (1977)................ 13

United States v. Texas, 507 U.S. 529 (1993)........... cc eeeseee 15

United States v. Wilson, 503 U.S. 329 (1992).............:.000 19

Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982)........

TABLE OF AUTHORITIES - Continued

ie Page

LEGISLATIVE MATERIALS AND RULES

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Se ers Ee PEE sihdnbccecnseniowicirenchiciatbanietoapbenpnaisinigites Huet 1

4.5m SHOP. INO, TOG-GSTCD) (IGGB)...n.cceccesvscovecsseseeeesssesee 17,18

H.R. Rep. No. 100-887(II) (1988) .............cccesssssssrecesessseees 11

BE.es BROT. BVO. LOG-FOCT) (TODO). niosicsccscasssvenscevescvocesscosovevsees 12

Pub. L. No. 100-667, tit. II, 102 Stat. 3935 ..................cceees 2

PUD, La INO. 10G-LIS, 115 Gal. LOGE ....csceissssvecesccccossessssovens 2

145 Cong. Rec. S5775-02 (daily ed. May 20, 1999)........... 12

SN Sk. Ba PE Vi vieseiiass ph ainddcicerearcientonccneaiaatashsekaitieckannents 14

OTHER AUTHORITIES

11A Wright, Miller, & Kane, Federal Practice and

Procedure §2946 (2d ed. 1995) ..............cccecccosssssvsssssssees 20

DirecTV Reaches Agreement With Major Networks,

Pes Ea. RO: PUA LE, BO skicticsinicticentivicdiackoncesncicctens 13

Robert L. Stern et al., Supreme Court Practice (8th

WOE SURE Jcididickcitumsonnsavccstseatedidcainaidinbooesaiialapaiantcainaccuaaiens 13

OPINIONS BELOW

The opinion of the Eleventh Circuit Court of Appeals

(Pet. App. la) is reported at 450 F.3d 505 (2006). The

opinion of the district court (Pet. App. 42a) is reported at

276 F. Supp. 2d 1237 (S.D. Fla. 2003).

JURISDICTION

The opinion of the Eleventh Circuit was issued on

May 23, 2006. A timely petition for rehearing en banc was

denied on July 19, 2006. (Pet. App. 85-86a). The jurisdic-

tion of this Court is invoked pursuant to 28 U.S.C.

§1254(1).

STATUTORY PROVISION INVOLVED

The Satellite Home Viewer Act provides, in pertinent

part:

“(B) Pattern of violations. — If a satellite

carrier engages in a willful or repeated pattern

or practice of delivering a primary transmission

made by a network station and embodying a per-

formance or display of a work to subscribers who

are not eligible to receive the transmission under

this section, then... .

(i) if the pattern or practice has been car-

ried out on a substantially nationwide basis, the

court shall order a permanent injunction barring

the secondary transmission by the satellite car-

rier, for private home viewing, of the primary

transmissions of any primary network station af-

filiated with the same network, and the court

may order statutory damages of not to exceed

$250,000 for each 6-month period during which

the pattern or practice was carried out... .”

17 U.S.C. §119(a)(7)(B)(i).

STATEMENT OF THE CASE

This case concerns the interpretation of the injunctive

relief provisions of the Satellite Home Viewer Act

(““SHVA”), as amended by the Satellite Home Viewer

Improvement Act (“SHVIA”) (collectively “the Act”).' The

Eleventh Circuit held that, in the event of a pattern and

practice of violations of the Act by a satellite carrier,

district courts lose all of their traditional discretion to

fashion injunctive relief tailored to particular factual

circumstances. According to the Eleventh Circuit, in such

cases, the Act instead dictates that the district court enter

a permanent nationwide injunction forbidding the satellite

carrier from retransmitting the programming authorized

by the Act, even to households that are statutorily eligible

to receive it. The Eleventh Circuit’s decision raises impor-

tant issues that warrant review by this Court.

A. Statutory Background

Large numbers of Americans, particularly in rural

communities, reside so far away from cities where network

television stations are located that they cannot receive

network television signals through the use of conventional

antennas installed on the roofs of their homes. Pet. App.

' See Pub. L. No. 100-667, tit. II, 102 Stat. 3935 (“SHVA”); Pub. L.

No. 106-113, 113 Stat. 1501 (“SHVIA”).

2a & n.2. In SHVA and SHVIA, Congress sought to aa-

dress this problem. The Act grants satellite carriers a

compulsory license to retransmit copyrighted network

television programming to satellite subscribers who,

because of their geographic location, are unserved by

network television stations in the subscribers’ local mar-

ket. SHVA and SHVIA thus enable those households to

receive via satellite what is known as “distant network

programming.” Pet. App. 2a.

The Act’s authorization of the retransmission of distant

network programming has proven to be of great utility to

hundreds of thousands of Americans. As an illustration, take

a household in rural Texas. The nearest city where network

television stations are located is E] Paso. But the household

is so distant from El Paso that it cannot receive broadcast

signals from El Paso network television stations. In that

situation, the Act permits satellite carriers to retransmit

copyrighted network television programming to the house-

hold, which, in turn, may choose to receive network televi-

sion programming not just from El Paso stations, but also

from network television stations in other cities around the

country. Pet. App. 2a & n.1.

The Act establishes a detailed mechanism for deter-

mining whether a household is eligible to receive distant

network signals via satellite (i.e., whether the household

actually is incapable of receiving network television pro-

gramming through normal rooftop antennas at a specified

level of intensity). Pet. App. 6-7a.’ That mechanism is not

* The Act also provides that households are eligible to receive

distant network programming if they obtain a waiver from network

affiliate stations or are “grandfathered” under an exemption in the Act.

17 U.S.C. §119(d)(10).

important for purposes of this Petition. What is important

are the Act’s remedial provisions, which apply when a

satellite carrier exceeds the scope of the Act’s compulsory

license by retransmitting copyrighted network television

programming to ineligible households (i.e., households

that are capable of receiving network television program-

ming through normal rooftop antennas at the specified

level of intensity). The Act proscribes the retransmission of

distant network programming to those households. It

contemplates two types of violations for such action by

- satellite carriers.

The first type of violation is “individual violations,”

which arise from “willful or repeated secondary transmis-

sion ... to a subscriber who is not eligible to receive the

transmission ..: .” 17 U.S.C. §119(a)(7)(A). To redress such

violations, the district court may award any of the reme-

dies set forth in Sections 502 through 506 and 509 of the

including a permanent injunction “on such terms as it may

deem reasonable to prevent or restrain infringement of a

The second type of violation is “patterns of violations,”

which arise “[i]f a satellite carrier engages in a willful or

repeated pattern or practice of delivering a primary

transmission made by a network station and embodying a

performance or display of a work to subscribers who are

not eligible to receive the transmission under this sec-

tion....” 17 U.S.C. §119(a)(7)(B). In relevant part, the

remedial provision governing such violations states that “if

the pattern or practice has been carried out on a substan-

tially nationwide basis, the court shall order a permanent

injunction barring the secondary transmission by the

satellite carrier, for private home viewing, of the primary

transmissions of any primary network station affiliated

with the same network, and the court may order statutory

damages of not to exceed $250,000 for each 6-month period

during which the pattern or practice was carried out... .”

Id. §119(a)(7)(B)G).

B. Procedural History

EchoStar is a satellite carrier that does business

under the name DISH Network. Pet. App. 3a. At year end

2005, EchoStar had over 12 million subscribers to its

satellite services. EchoStar Communications Corporation,

Form 10-K Annual Report, Year Ended 2005, at 46 [here-

inafter “EchoStar 2005 10-K”]. There are approximately 1

million subscribers to EchoStar’s distant network services.

Pet. App. 3a n.4.

Respondent Fox Broadcasting Network (“Fox”) is a

television network. Pet. App. 3a. Respondents F. Televi-

sion Affiliates, ABC Television Affiliates, NBC Television

Affiliates, and CBS Television Affiliates (collectively “the

Affiliates”) “are voluntary membership trade associations

comprised of network stations that are affiliates” with

television networks. Pet. App. 3a n.3.°

* CBS Broadcasting, Inc., ABC, Inc., and the National Broadcast-

ing Company originally were parties to the litigation, opposed to

EchoStar. EchoStar has settled with each of those companies, and so

they no longer are parties. EchoStar 2005 10-K, at 37.

1. Initial District Court and Eleventh Cir-

cuit Proceedings: The Preliminary In-

junction Rulings

EchoStar initiated this litigation in October 1998 by

filing suit in federal court in Colorado, where it sought a

declaration that its procedures for ensuring the eligibility

of subscribers to its distant network programming com-

plied with the Act. CBS Broad., Inc. v. EchoStar Commu-

nications Corp., 265 F.3d 1193, 1197 (11th Cir. 2001). In

turn, Respondents filed their own suit in federal court in

Florida, alleging that EchoStar was exceeding the copy-

right license granted to it under the Act by retransmitting

distant network programs to households that are statuto-

rily ineligible to receive them. Jd. Petitioners’ Colorado

action was subsequently transferred and consolidated with

Respondents’ Florida action, where Respondents sought a

preliminary injunction precluding EchoStar from re-

transmitting distant network programming. Id.

The district court granted Respondents’ motion for a

preliminary injunction. 265 F.3d at 1197-98. The Eleventh

Circuit reversed and remanded, holding that the evidence

adduced up to that point in the litigation did not support

the entry of a preliminary injunction. Jd. at 1208.

* The Eleventh Circuit rejected Petitioners’ First Amendment

challenge to,SHVA. 265 F.3d at 1211. Petitioners sought review in this

Court on the First Amendment question. 2002 WL 32135979. That

petition fer certiorari was denied. 535 U.S. 1079 (2002).

2. The District Court’s Permanent Injunc-

tion Ruling

On remand, the district court conducted a bench trial

to determine whether a permanent injunction should be

entered, and if so, what its contours would be. After the

trial, the district court found ‘hat (with two minor excep-

tions) EchoStar’s procedures for qualifying viewers eligible

to receive distant network programming complied with the

Act, Pet. App. 59-60a, and that EchoStar therefore was not

currently engaged in a “pattern or practice” of violations

within the meaning of the Act. Pet. App. 76a. In light of

that finding, the district court declined to enter a nation-

wide injunction precluding EchoStar from transmitting

any distant network programming pursuant to the statu-

tory copyright license. Pet. App. 76a. Concluding that-

“such an extreme sanction” was unwarranted on the

evidence before it, Pet. App. 76a, the district court entered

instead a more modest permanent injunction to redress

“individual” violations of the Act that, in its view, had

occurred. Pet. App. 77-78a. In particular, the district

court’s injunction would have required EchoStar to re-

qualify its distant network subscribers and to disconnect

distant network programming to those subscribers who

were not eligible to receive it. Pet. App. 80a. It also would

have required EchoStar to disconnect such programming

to subscribers even if they were “grandfathered” under the

Act. Pet. App. 82a. |

3. The Eleventh Circuit’s Permanent In-

junction Ruling

On August 13, 2003, the Eleventh Circuit stayed the

district court’s permanent injunction pending the disposi-

tion of appeals from both sides. In its appeal, EchoStar

contended that the entry of a permanent injunction of any

stripe was unwarranted because it had not violated the

Act. In their cross-appeal, Respondents contended that the

district court should have entered a nationwide permanent

injunction barring EchoStar from transmitting any distant

network programming. Pet. App. 4a.

In a decision issued on May 23, 2006, the Eleventh

Circuit vacated the district court’s injunction and ordered

the entry of a vastly more sweeping permanent nationwide

injunction. Pet. App. 4la. While it did not override the

district court’s finding that EchoStar was not currently

engaged in a pattern or practice of statutory violations, the

Eleventh Circuit “read the statute as imposing liability ‘[ilf

a satellite carrier [ever] engages in a willful or repeated

pattern or practice’ of statutory violations.” Pet. App. 34a

(alteration and emphasis in Eleventh Circuit opinion). The

Eleventh Circuit thus openly read the word “ever” into the

statute in such a way that the pattern and practice provi-

sion of the Act encompasses both past and present viola-

tions. Applying that reading, the Eleventh Circuit held

that EchoStar previously had engaged in a “pattern or

practice” of vidlations, and therefore the remedial provi-

sion for pattern and practice violations was implicated.

Pet. App. 36-38a. Next, the Eleventh Circuit interpreted

that provision as mandating the entry of a permanent

nationwide injunction | barring E EchoStar from offering any

distant network programming, e even to eligible households.

In reaching that conclusion, the Eleventh Circuit con-

strued the phrase “shall order a permanent injunction” in

Section 119(a)(7)(B)(i) as eliminating altogether a district

court’s traditional power to exercise discretion in crafting

injunctive relief. Pet. App. 40a.°

REASONS FOR GRANTING THE PETITION

The question presented — whether the Act’s remedial

provision for pattern and practice violations strips district

courts of their traditional discretion to fashion equitable

relief tailored to the particular circumstances of a case — is

substantial and warrants this Court’s review in two

respects. First, the sheer importance of the Act and the

national impact of the Eleventh Circuit’s construction of

* Petitioners filed a timely petition for rehearing en banc in the

Eleventh Circuit on June 13, 2006. On July 19, 2006, the Eleventh

Circuit denied that petition. Pet. App. 86a. On July 25, 2006, Petition-

ers filed a motion to stay the issuance of the Eleventh Circuit's mandate

pending certiorari proceedings. On August 7, 2006, the Eleventh Circuit

denied Petitioners’ motion to stay the mandate. On August 17, 2006,

Petitioners filed an application with this Court to recall and stay the

Eleventh Circuit's mandate pending the filing and disposition of a

petition for certiorari. The application was denied (per Justice Thomas)

on August 22, 2006.

On August 28, 2006, EchoStar reached a settlement agreement with

the Affiliates, but not with Fox, which opposed the settlement. EchoStar’s

settlement agreement with the Affiliates has been submitted to the

district court, which has not yet approved it. See Notice of Settlement,

CBS Broad., Inc. v. EchoStar Communications Corp., No. 98-2651-CIV

(S.D. Fla. Aug. 28, 2006). In urging that the district court approve the

settlement, EchoStar, joined by the Affiliates, has argued that no

injunction on EchoStar’s distant network programming should be entered

in light of the settlement agreement, and that if any injunction is

entered, it should be limited to the retransmission of distant network

programming on stations owned and operated by Fox Television Associa-

tions, Inc., a sister company of Fox. See Joint Stipulation To Enter

Consent Judgment And Approve Settlement Agreement, CBS Broad., Inc.

v. EchoStar Communications Corp., No. 98-2651-CIV (S.D. Fla. Sept. 12,

2006).

its remedial provision for pattern and practice violations

furnish grounds for the exercise of this Court’s certiorari

jurisdiction. If it stands, the decision of the regional circuit

in this case could have enormous implications throughout

the country by mandating the entry of a nationwide

permanent injunction blocking the ability of hundreds of

thousands of Americans, who indisputably are eligible to

receive distant network signals under the Act, to watch

network television programming in their homes.” Second,

the Eleventh Circuit’s construction of the Act is in tension

with this Court’s precedents. Time and again, this Court

has admonished that injunctive relief provisions in federal

statutes should not be lightly interpreted so as to remove

completely a district court’s power to exercise discretion in

delineating the parameters of an injunction. The Eleventh

Circuit’s rationale for departing from that bedrock princi-

ple itself raises questions worthy of this Court’s review.

* EchoStar and the Affiliates have argued to the district court that

the Eleventh Circuit’s mandate (which, as indicated above, has issued

and was not stayed) should not be interpreted to require the entry of a

blanket nationwide injunction barring EchoStar from retransmitting all

distant network programming. To support that argument, EchoStar

and the Affiliates have pointed to limiting language of Section

119(a)(7)(B\(i), which authorizes the entry of a “permanent injunction

barring the secondary transmission by the satellite carrier, for private

home viewing, of the primary transmissions of any primary network

station affiliated with the same network.” 17 U.S.C. §119(a)(7)(B)G)

(emphasis added). EchoStar and the Affiliates contend that, if any

injunction is entered (and, as indicated above, note 5, they argue that

no injunction should be entered), the “same network” language of

Section 119(a7B)i) indicates that the injunction should be limited to

stations owned and operated by Fox Television Associations, Inc. Fox

disagrees with this position and maintains that the Act and the

Eleventh Circuit’s mandate require the entry of a permanent nation-

wide injunction blocking EchoStar from retransmitting all distant

network programming.

I. THE ELEVENTH CIRCUIT’S DECISION IN-

TERPRETING AN IMPORTANT FEDERAL

STATUTE WILL HAVE PROFOUNDLY NEGA-

TIVE NATIONAL CONSEQUENCES.

Lying at the intersection of telecommunications and

intellectual property laws, SHVA and SHVIA address a

glaring national problem. A huge number of Americans

across the country, especially in rural areas, are unable to

receive signals from network television stations through

basic rooftop antefinas because their homes are located too

far away from cities where television stations are located.

SHVA and SHVIA seek to fill that void. The statutes grant

a compulsory license to satellite carriers to retransmit

copyrighted network television programming to house-

holds that otherwise are unable to receive that program-

ming. In short, because of the Act, hundreds of thousands

of Americans are able to receive distant network signals

via satellite and thus watch network television program-

ming in their homes.

That will no longer be true if this Court declines to

review the Eleventh Circuit’s decision in this single case.

At bottom, the nationwide permanent injunction that Fox

contends is mandated by the Act and the Eleventh Cir-

cuit’s decision will result in the disruption of distant

network television programming to vast numbers of

households across the country. Such an injunction would

draw no distinction between eligible and ineligible house-

holds: all of EchoStar’s distant network subscribers will be

deprived of distant network programming. That result is

at odds with the primary purpose of SHVA: to provide

network television programming via satellite to consumers

who cannot otherwise get it through basic television

antennas. See H.R. Rep. No. 100-887(II), at 19-20 (1988);

12_

see also CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d

1217, 1229 (11th Cir. 2001).

The Eleventh Circuit’s decision is also at odds with a

secondary, albeit important purpose of SHVA: to spur

competition between cable and satellite companies in an

effort to reduce prices to consumers for subscription

television services. See Satellite Broad. & Commn’s Ass’n

v. FCC, 275 F.3d 337, 343 (4th Cir. 2001).’ The Eleventh

Circuit’s decision threatens to upset that competitive

balance because the termination of EchoStar’s distant

network satellite service will prompt many of its subscrib-

ers to switch to cable in order to continue to watch net-

work television programming.”

” SHVIA has the same consumer-oriented bent. It was passed, in

part, to address “administrative difficulties in deciding which house-

holds were genuinely unserved” under SHVA, which “led to increasingly

bitter disputes between satellite \carriers and broadcasters,- leaving

bewildered, angry consumers stuck in the middle.” Satellite Broad., 275

F.3d at 348. Broad injunctions entered in a dispute between broadcast-

ers and a then-existing satellite provider, PrimeTime 24, spawned a

public outcry, prompting Congress to adopt SHVIA. Referring to

PrimeTime 24’s dispute with broadcasters, the House Report for SHVIA

recognized that “[w]hile the courts’ ability and authority to interpret

the law is unquestionable, their remedies are sometimes too blunt, -

particularly in cases, such as this one, where the remedy affects a broad

class...” H.R. Rep. No. 106-79(I), at 14 (1999); see also 145 Cong. Rec.

S5775-02 (daily ed. May 20, 1999) (“We have been racing against the

clock because court orders have required the cutoffs of distant CBS and

Fox television signals to over a million households in the U.S.”)

(statement of Sen. Leahy).

* EchoStar’s distant network subscribers could, of course, switch to

DirecTV, the nation’s only other company offering television programs

via satellite. (And in many rural areas of the country not served by

cable, DirecTV will be the only option for EchoStar subscribers who

wish to continue receiving distant network television programming).

The prospect of EchoStar subscribers transferring distant network

(Continued on following page)

: | 13

This Court frequently has exercised its certiorari

jurisdiction in cases such as this one where a regional

circuit’s interpretation of a significant federal statute has

broad national ramifications. See, e.g., United States v.

Donovan, 429 U.S. 413, 422 (1977) (“We granted certiorari

to resolve these issues, which concern the construction of a

major federal statute... .”). Furthermore, this case pre-

sents the classic circumstance in which this Court should

intervene to decide an issue of national importance arising

under a significant federal statute, despite the absence of

a circuit conflict on that issue. See Robert L. Stern et al.,

Supreme Court Practice 247 (8th ed. 2002) (“Many of the

cases coming to the Supreme Court on certiorari involve

the construction and application of acts of Congress.... In

some of them it can be shown that there is a conflict of

decisions among lower courts.... In others, however, the

importance of the issue is the major basis for securing

review.”) (emphasis added). No circuit conflict is likely ever

to arise with respect to the question presented because

EchoStar currently is the only satellite carrier affected by

judicial construction of the Act,’ and because EchoStar will

be precluded from relitigating in any other circuit in a

subsequent case the statutory construction issue decided

by the Eleventh Circuit in this case. See Parklane Hosiery

service to DirecTV has its own anti-competitive effects. News Corpora-

tion, the parent company of Respondent Fox, owns approximately 34%

of DirecTV, as well. See www.newscorp.com/news/ news_271.html.

* There are only two satellite carriers that presently transmit

distant network programming, EchoStar and DirecTV. In 1999,

however, DirecTV settled a dispute with Respondents with respect to

the transmission of distant network programming. See DirecTV

Reaches Agreement With Major Networks, N.Y. Times, March 13, 1999,

at C3. DirecTV's distant network activities are thus governed by its

settlement agreement with Respondents, not the Act.

Co. v. Shore, 439 U.S. 322, 331 (1979). All told, this

Petition probably furnishes the Court with its only oppor-

tunity to decide the important national question presented

here.

i. THE ELEVENTH CIRCUIT’S DECISION IS IN

TENSION WITH THIS COURT'S STEADFAST

POSITION THAT FEDERAL STATUTES SHOULD

NOT BE LIGHTLY CONSTRUED TO REMOVE

THE TRADITIONAL DISCRETION OF DISTRICT

COURTS TO FASHION INJUNCTIONS TAI-

LORED TO THE FACTS OF A PARTICULAR

CASE.

The Eleventh Circuit held that the remedial provision

governing pattern and practice violations of the Act

completely removes the traditional discretion of district

courts to craft injunctions. That holding is in tension with

this Court’s precedents interpreting federal statutes that

are purported to eliminate all discretion in district courts

to fashion injunctive relief, commensurate with the facts of

a particular case. See, e.g., Miller v. French, 530 U.S. 327,

340-41 (2000); Weinberger v. Romero-Barcelo, 456 U.S.

305, 313 (1982); Califano v. Yamasaki, 442 U.S. 682, 694

(1979); Porter v. Warner Holding Co., 328 U.S. 395, 398

(1946); Hecht Co. v. Bowles, 321 U.S. 321, 327-28 (1944).

Such conflicts are a well-established ground for the exer-

cise of this Court’s certiorari jurisdiction. Sup. Ct. R. 10(c)

(that “a United States court of appeals ... has decided an

important federal question in a way that conflicts with

” The Fourth Circuit construed the Act in the same way in

litigation involving a former satellite carrier. See ABC, Inc. v. Prime-

Time 24, 184 F.3d 348, 354 (4th Cir. 1999).

relevant decisions of this Court” is a consideration in

granting a petition for a writ of certiorari).

This Court repeatedly has stated that federal statutes

- should not be loosely construed to eviscerate all discretion

in district courts to tailor fact-specific injunctive relief.

The Court’s steady refrain has been that a district court’s

“equitable jurisdiction is not to be denied or limited in the

absence of a clear and valid legislative command. Unless a

statute in so many words, or by a necessary and inescap-

able inference, restricts the court’s jurisdiction in equity,

the full scope of that jurisdiction is to be recognized and

applied.” Porter v. Warner Holding Co., 328 U.S. at 398."

The Court echoed that theme just last Term in eBay Inc. v.

MercExchange, L.L.C., 126 S. Ct. 1837 (2006), which, like

this case, involved an intellectual property dispute. In eBay,

the Court stressed that it “has consistently rejected invita-

tions to replace traditional equitable considerations with a

rule that an injunction automatically follows a determina-

tion that a copyright has been infringed.” Jd. at 1840.

The Eleventh Circuit deviated from these principles.

Its reasons for doing so raise serious questions that

warrant this Court’s review.

The Eleventh Circuit’s characterization of Section

119(a)(7)(B)G) of the Act as containing “no ambiguous

statutory language,” Pet. App. 40a, is out of step with this

" In passing a statute, legislatures are presumed to act with

knowledge of legal principles in court decisions. The statute will not

alter those principles, unless the legislature expresses a contrary

intent. United States v. Texas, 507 U.S. 529, 534 (1993). Thus, in SHVA

and SHVIA, Congress is presumed to have acted with knowledge of the

principle that district courts have inherent discretion in crafting

injunctions.

Court’s precedents. To be sure, Section 119(a)(7)(B)(i)

provides that district courts “shall order a permanent

injunction” upon finding a pattern or practice of violations.

17 U.S.C. §119(a)(7)(B)(i) (emphasis added). This Court

has, however, held that the use of the mandatory-sounding

word “shall” does not automatically foreclose a district

court’s discretion to impose narrower remedies. See, e.g.,

Califano v. Yamasaki, 442 U.S. at 693 n.9 (“[T]he use of

the word ‘shall,’ particularly with reference to an equitable

decision, does not eliminate all discretion. . . . ”); Hecht Co.

v. Bowles, 321 U.S. at 327-28 (holding that “shall be

granted” language in a statute was not mandatory and did

not eliminate a district court’s traditional discretion.). The

language of SHVA and SHVIA, as well as the legislative

history of those statutes, does not inexorably lead to the

Eleventh Circuit’s supposition that the use of the word

“shall” in Section 119(a)(7)(B)(i) was intended to denude

district courts of their traditional equitable discretion to

fashion injunctive relief in a given case.

To support its construction of the statute, the Elev-

enth Circuit asserted that while Section 119(a)(7)(B)(i)

states district courts “may order statutory damages” for

pattern or practice violations (which the Eleventh Circuit

deemed a “discretionary” remedy), it also states that

courts- “shall order a permanent injunction” for such

violations (which the Eleventh Circuit deemed a “manda-

tory” remedy). Pet. App. 40a. According to the Eleventh

Circuit, Congress’ use of “may” and “shall” in the same

provision manifests an “unequivocal|] ... purpose to

restrict the courts’ traditional equitable authority upon a

finding of a ‘pattern or practice.’” Pet. App. 40a. The

Eleventh Circuit read too much into the provision’s juxta-

position of “shall” and “may.”

For one, the Eleventh Circuit ignored Congress’

recognition that satellite carriers could make good faith

mistakes in signing up subscribers for distant signal

programming and that they therefore should not be

harshly penalized as a result of such errors. H.R. Rep. No.

100-887(1T), at 19 (1988). The legislative history of SHVA

indicates that, in light of this concern, Congress sought to

give satellite carriers a wide degree of latitude before

liability would be imposed. In particular, even if as many

as 19% of its subscribers are ineligible to receive distant

network signals, a satellite carrier will not be considered

in violation of the statute. Jd. Under the Eleventh Circuit’s

construction of the statute, however, the entry of a manda-

tory, permanent nationwide injunction could turn on the

slightest of numerical discrepancies: such an injunction

must be entered upon a finding of a pattern and practice of

violations in which -20% of a carrier’s subscribers are

ineligible, but such an injunction should not be entered if

19% of a carrier’s subscribers are ineligible. There is no

clear sign that Congress intended to command district

courts to enter a permanent nationwide injunction barring

the retransmission of all distant network programming

based on such razor-thin distinctions.

Furthermore, the Eleventh Circuit made a threshold

misstep in determining that the pattern and practice

provision of the Act even applied in this case. By its terms,

that provision is triggered only when a satellite carrier

“engages in a willful or repeated pattern or practice” of

statutory violations. 17 U.S.C. §119(a)(7)(B) (emphasis

added). Applying that language, the district court found

that Petitioners’ existing qualification procedures comply

with the Act, and that therefore EchoStar was not pres-

ently engaging in a pattern or practice of violations. Pet.

App. 76a (“The current qualification system employed

by EchoStar[|] and applied to every potential distant

network subscriber is a reasonable system to prevent

ineligible households from receiving distant network pro-

gramming....”).” The Eleventh Circuit did not disturb

that finding on appeal. Nevertheless, the Eleventh Circuit

read the Act’s pattern and practice provision to extend to

cases in which a “satellite carrier fever] engages in a

willful or repeated pattern or practice” of statutory viola-

tions. Pet. App. 34a (alteration and emphasis in Eleventh

Circuit opinion). In short, according to the Eleventh

Circuit, the present-tense word “engages” is interchange-

able with the past-tense phrase “ever had engaged.”

Applying that interpretation, the Eleventh Circuit con-

cluded that EchoStar previously had engaged in a pattern

or practice of violations, thereby implicating the remedial

provision for such violations.

The notion that the pattern and practice provision

reaches both past and present violations is inconsistent

with the Act’s legislative history, which states that Con-

gress did not intend “to subject a satellite carrier to

‘pattern or practice’ liability ... provided that the carrier

is reasonably diligent in avoiding and correcting violations

through an internal compliance program....” H.R. Rep.

No. 100-887(I), at 19. As found by the district court,

EchoStar’s internal compliance program reflects reason-

able measures to correct prior violations and prevent

future violations. Pet. App. 76a. Given that finding, the

“ Even a representative of Respondent CBS Television Affiliates

testified at the trial that “EchoStar today is making legitimate efforts to

qualify subscribers.” Pet. App. 60a.

legislative history of SHVA signals that EchoStar should

not have been subjected to pattern and practice liability.

Moreover, the Eleventh Circuit’s interpretation

conflating “engages” with “ever had engaged” contravenes

the venerable principle that Congress’ choice of a particu-

lar verb tense should be accorded great weight in constru-

ing statutes. United States v. Wilson, 503 U.S. 329, 333

(1992); see also United States ex rel. Totten v. Bombardier

Corp., 380 F.3d 488, 493 (D.C. Cir. 2004) (Roberts, J.)

(rejecting interpretation of a statute that “equate[d] the

present-tense ‘provides’ in the statute with the past-tense

‘has provided’” because that reading “r{an] afoul of the

Supreme Court’s admonition that Congress’ use of a verb

tense is significant in construing statutes”) (internal

quotations omitted), cert. denied, 544 U.S. 1032 (2005). It

was the failure to adhere to that principle in the first place

that led the Eleventh Circuit to reach the question

whether the pattern and practice provision of the Act

eliminates the traditional equitable discretion of district

courts — and then to order an injunctive remedy for past

violations that the district court found had been largely

redressed through EchoStar’s revamped qualification

procedures. In sum, the Eleventh Circuit concluded that

Congress intended to mandate a sweeping nationwide

injunction, detrimental to the interests of hundreds of

thousands of individuals throughout the country, on the

basis of conduct that had ceased. The conclusion is dubi-

ous.

Finally, this Court has said that the policies underlying

a statute must inform the interpretation of the breadth of

the statute’s injunctive relief provisions. Amoco Production

Co. v. Village of Gambell, 480 U.S. 531, 544-45 (1987), is

illustrative. In that case, the Court held that the Ninth

Circuit erred in directing the entry of an injunction pursuant

to the Alaska National ‘Interest Lands Conservation Act

(ANILCA). Id. at 545-46. Concluding that ANILCA did not

deprive district courts of their traditional equitable discretion

in shaping injunctive relief, the Court rebuked the Ninth

Circuit for “erroneously focusing] on the statutory procedure

rather than on the underlying substantive policy the process

was designed to effect. . . .” Jd. at 544 (emphasis added).

Like the Ninth Circuit in Gambell, which disregarded

the purposes of the ANILCA, the Eleventh Circuit in this

case gave insufficient attention to the purposes of SHVA and

SHVIA. The permanent nationwide injunction ordered by

the Eleventh Circuit would frustrate the Act’s primary goal

of making network television programming available to all

Americans. Likewise, it would frustrate the secondary goal of

fostering a competitive balance between cable and satellite

providers. Indeed, injunctive remedies for a cable company’s

violations of a network’s copyrighted programming are

discretionary. 17 U.S.C. §§111(c)(2), 502. By insisting that

injunctive remedies for certain violations by satellite carriers

of that same copyrighted programming are mandatory, the

Eleventh Circuit gave a leg-up to cable companies. There is

no firm indication that Congress intended the application of

Section 119(aX(7)(B\i) to have that result.”

‘* The Eleventh Circuit’s interpretation could lead to other peculiar

results. It would, for example, require the entry of a permanent

nationwide injunction even if a copyright owner has unclean hands or

unduly delayed seeking relief — considerations that courts, in the

exercise of their discretion, routinely take into account in tailoring an

injunction. See 11A Wright, Miller, & Kane, Federal Practice and

Procedure §2946, at 108, 116 (2d ed. 1995).

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

*THOMAS C. GOLDSTEIN

AKIN GUMP STRAUSS HAUER

& FELD L.L.P.

1333 New Hampshire Avenue N.W.

Washington, D.C. 20036

*Counsel of Record

MICHAEL C. SMALL

AKIN GUMP STRAUSS HAUER

& FELD L.L.P.

2029 Century Park East,

Suite 2400

Los Angeles, California 90067

MARK A. NADEAU

CYNTHIA A. RICKETTS

SQUIRE, SANDERS & DEMPSEY L.L.P.

40 North Central Avenue,

Suite 2700

Phoenix, Arizona 85004

450 F.3d 505

United States Court of Appeals, Eleventh Circuit.

CBS BROADCASTING, INCORPORATED,

Fox Broadcasting Company,

Plaintiffs-Counter-Defendants-Appellees,

FBC Television Affiliates Association, ABC Television

Affiliates Association, NBC Television Affiliates, CBS

Television Affiliates Association,

Plaintiffs-Counter-Defendants-

Appellees-Cross-Appellants,

ABC, Inc., Plaintiff,

National Broadcasting Company,

Plaintiff-Counter-Defendant,

ECHOSTAR COMMUNICATIONS CORPORATION, dba

DISH Network, EchoStar Satellite Corporation,

Satellite Communications Operating Corporation,

Direct SAT Corp., Defendants-Counter-

Claimants-Appellants-Cross-Appellees.

No. 03-13671.

May 23, 2006.

Cynthia A. Ricketts, Mark A. Nadeau, Squire, Sanders

& Dempsey, L.L.P., Debora Lynn Verdier, Sanders &

Parks, P.C., Phoenix, AZ; for Defendants-Counter-

Claimants-Appellants-Cross-Appellees.

Katherine A. Fleet, Wilmer, Cutler, Pickering, Hale &

Dorr, LLP, New York City, David M. Rogero, David M.

Rogero, P.A., Miami, FL, Thomas P. Olson, A. Stephen

Hut, Jr., E. Colin Rushing, Wilmer, Cutler, Pickering, Hale

& Dorr, LLP, Washington, DC, Reid L. Phillips, David

Kushner, Wade H. Hargrove, Brooks, Pierce, McLendon,

Humphrey & Leonard, LLP, Raleigh, NC, for Plaintiffs.

Charles C. Murphy, Jr., Vaughan & Murphy, Lawrence

K. Nodine, Needle & Rosenberg, P.C., Atlanta, GA, for

Amici Curiae, Keenan and Comer.

Appeals from the United States District Court for the

Southern District of Florida.

Before TJOFLAT and HILL, Circuit Judges, and

MILLS*, District Judge.

TJOFLAT, Circuit Judge:

The Satellite Home Viewer Act of 1988 (“SHVA”), Pub.

L. No. 100-667, tit. II, 102 Stat. 3935 (codified as amended

at 17 U.S.C. § 119), as amended by the Satellite Home

Viewer Improvement Act of 1999 (“SHVIA”) (collectively,

the “Act”), Pub. L.-No. 106-113, § 1001 et seg., 113 Stat.

1501, 1501A-523, gives satellite carriers a compulsory,

statutory license to transmit copyrighted distant network

programing’ to “unserved households,” that is, households

unable to receive network -programing at a specified level

of intensity through the use of conventional rooftop anten-

nas.’ This case involves claims by network stations CBS

* Honorable Richard Mills, United States District Judge for the

Central District of Illinois, sitting by designation.

* “Distant network signals are network stations from outside a

subscriber’s market area. For example, a person who lives in Fort

Lauderdale but receives an ABC, CBS, Fox or NBC network station

from New York City is receiving ‘distant network programming’ or

‘distant network stations.’” CBS Broad., Inc. v. EchoStar Commce’ns

Corp., 276 F.Supp.2d 1237, 1241 (S.D.Fla.2003).

* In its report, the House Committee on Energy and Commerce

stated that it “believes that this approach will satisfy the public

interest in making available network programming in these (typically

rural) areas, while also respecting the public interest in protecting the

network-affiliate distribution system.” H.R.Rep. No. 100-887(II), at 19-

20 (1988), reprinted in 1988 U.S.C.C.A.N. 5577, 5648. See also ABC,

(Continued on following page)

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

(“Fox”), and network affiliate associations ABC Television

Affiliates Association, CBS Television Network Affiliates

Association, FEC Television Association, and NBC Televi-

sion Affiliates Association (collectively, “networks”),’ that

defendant EchoStar, a satellite carrier doing business as

DISH Network,’ is retransmitting their programs to

“served” households and thereby infringing their exclusive

right, under the Copyright Act, to control the retransmis-

sion of their programs.

In CBS Broadcasting, Inc. v. EchoStar Communica-

tions Corp., 265 F.3d 1193 (11th Cir.2001) (EchoStar TD, we

vacated the district court’s preliminary injunction uphold-

ing the networks’ claims and ordering EchoStar to cease

transmitting the programs to “served households,” id. at

1193, and remanded the case to the district court for a

trial on the networks’ application for injunctive relief

pursuant to the Act. On remand, the district court found at

the conclusion of the bench trial that EchoStar had not

satisfied its statutory burden of proving 'that the house-

holds at issue were unserved. CBS Broad., Inc. v.

Inc. v. PrimeTime 24 Joint Venture, 184 F.3d 348, 350-51 (4th Cir.1999),

CBS Broad., Inc. v. PrimeTime 24 Joint Venture, 48 F.Supp.2d 1342,

1355 (S.D.Fla.1998). -

° The Affiliate Associations are voluntary membership trade

associations comprised of network stations that are affiliates with the

respective networks. Plaintiffs ABC, Inc. (“ABC”) and National Broad-

casting Company, Inc. (“NBC”) were dismissed and are no longer

parties to the case.

* As of April 2002, EchoStar provided satellite television services to

over nine million Americans, including both local network subscribers

under the compulsory license in 17 U.S.C. § 122, and distant network

subscribers under the Act. EchoStar provided distant network pro-

gramming to about 1.2 million subscribers.

EchoStar Commce’ns Corp., 276 F.Supp.2d 1237, 1248

(S.D.Fla.2003). In fact, in the district court’s judgment, the

evidence indicated that EchoStar had been retransmitting

the networks’ programs to thousands of served households.

Id. at 1253-54. Given these findings, the networks asked

the court permanently to enjoin EchoStar from any use of

the Act’s statutory license for distant network programing.

The court denied their request, and instead issued an

injunction ordering EchoStar to use a different method for

determining whether its subscribers are unserved house-

holds. Jd. at 1254-55." EchoStar now appeals the court’s

injunctive order and its grant of summary judgment to the

networks on EchoStar’s counterclaims. The networks

cross-appeal, contending that the district court was

required as a matter of law permanently to enjoin the

carrier from using the statutory license.

We organize this opinion as follows. In Part I, we

explain the statutory licensing scheme the Act created and

the burden of proof a satellite carrier must satisfy to

permit the court to find that the subscribers at issue are

eligible to receive distant network programming. In Part

II, we review how the trial proceeded, the district court’s

findings of fact, and its legal conclusions. In Part III, we

address both EchoStar’s and the networks’ claims of error.

Despite reversing the district court’s determination that

EchoStar’s use of two vendors was unlawful, we affirm on

the remainder of EchoStar’s claims and the court’s conclu-

sion that EchoStar engaged in a “willful or repeated”

° In addition to prescribing a method for determining subscriber

eligibility, the court held that none of EchoStar’s current subscribers

were eligible for grandfather status pursuant to 17 U.S.C. § 11%e). CBS

Broad., Inc., 276 F.Supp.2d at 1257.

violation of the Act. We also hold that the court erred in

not finding a “willful or repeated pattern or practice” of

statutory violations, and in not barring EchoStar from

further use of the license. In Part IV we briefly conclude.

The scheme the Act created is set out in considerable

detail in EchoStar I. We reiterate what was said there only

to set the stage for the discussion that follows.

As noted, SHVA created a compulsory, statutory license

for satellite carriers to retransmit copyrighted network

programming (“secondary transmission”) for private home

viewing to “persons who reside in unserved households.” 17

U.S.C. 119%a)(2B)i).° SHVIA defines “unserved households”

* Subject to provisions not relevant here, SHVA as amended, states

that -

(A) In general. - ... [Slecondary transmissions [i.e., re-

transmissions] of a performance or display of a work embod-

ied in a primary transmission made by a network station

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, with regard to secon-

dary transmissions the satellite carrier is in compliance

with the rules, regulations, or authorizations of the Federal

Communications Commission governing the carriage of

television broadcast station signals, 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. -

(i) In general. —- The statutory license provided for in sub-

paragraph (A) shall be limited to secondary transmissions of

the signals of no more than two network stations in a single

day for each television network to persons who reside in un-

served households.

(Continued on following page)

by dividing them into five categories, the first three of

which are pertinent here:

1. Households that “cannot receive,

through use of conventional, stationary, outdoor

rooftop receiving antenna, an over-the-air signal

of a primary network station affiliated with that

network of Grade B intensity as defined by the

Federal Communications Commission under sec-

tion 73.683(a) of title 47 of the Code of Federal

Regulations, as in effect on January 1, 1999.” Id.

§ 119(d)(10)A).

2. Households that receive a waiver from

each network station affiliated with a particular

i network that is predicted to deliver a Grade B or

better signal to the subscriber’s residence. Id.

§ 119(d)(10)(B), (a)(14), (a)(2)(B).

3. Households that (a) receive a signal of

less than Grade A intensity for a particular net-

work and (b) received satellite service of that net-

work’s signals on October 31, 1999 or had such

service terminated for SHVA ineligibility between

July 11, 1998 and October 31, 1999 (“grand-

fathered subscribers”). Id. §§ 119(d)(10)(c), (e).’

17 U.S.C. §§ 119(aX2XA), (B)G). SHVA’s definition of “unserved

households” was altered by the SHVIA amendment. The amended

definition is controlling in this case.

” The fourth and fifth categories are:

4. Subscribers who receive distant signals through a satel-

lite dish located on a commercial truck or recreational vehi-

cle, and who satisfy the strict statutory documentation

requirements. Id. § 119(d 10D), (aX12).

5. Subscribers who receive “secondary transmissions by C-

band services of network stations that [the subscriber] received

(Continued on following page)

)

Anticipating that litigation would ensue over whether

households are served or unserved, Congress, as part of

the SHVIA amendment, instructed that the courts may

use two methods to resolve the issue: the “Accurate meas-

urements” method and the “Accurate predictive model.”

The “Accurate measurements” method requires actual

physical measurements to determine the strength of the

television station’s signal at the subscriber’s residence. Jd.

§ 119(a)(2)(B)Gi)(II). These measurements must follow the

procedures elaborated in 47 U.S.C. § 339 and 47 C.FR.

§ 73.686, including measuring the signal intensity at a

“minimum of five locations as close as possible to the

specific site where the site’s receiving antenna is located.”

47 C.FR. § 73.686(d)(1)Gi). The “Accurate predictive

mode)” for determining signal intensity is “the Individual

Location Longley-Rice [ILLR] model set forth by the

Federal Communications Commission.” 17 U.S.C.

§ 119(a)(2)(B)(ii)(1).” If used, the ILLR model permits the

satellite carrier to avoid having to make time-consuming

physical measurements of the signal intensity at a sub-

scriber’s residence by allowing the carrier to establish

presumptively that a household cannot receive at least a

Grade B signal and is therefore unserved. See 17 U.S.C.

§ 119(a)(2)(B)Gi)\(1); EchoStar I, 265 F.3d at 1200. But

before any termination of such secondary transmissions be-

fore October 31, 1999.”

Id. § 119% d)(10)(E), (a)(2)(B iii).

* Prior to the SHVIA amendment, SHVA limited the statutory

license to “secondary transmissions to persons who reside in unserved

households,” 17 U.S.C.A § 119(a)(2)(B) (West, Westlaw through Novem-

ber 28, 1999 amendments), but did not set out specific ways in which a

satellite carrier could demonstrate whether a household was unserved.

The FCC adopted ILLR as a method for determining signal strength in

February 1999. See EchoStar I, 265 F.3d at 1204.

ILLR determinations are nothing more than presumptive-

eligibility is ultimately based on the signal strength a

household actually receives, as measured by on-site

testing. See 17 U.S.C. § 119(a)(2)(B)(ii(1) (indicating that

the ILLR model is to be used “[i]Jn determining presump-

tively whether a person resides in an unserved house-

hold”); H.R. Rep. 106-464, at 97 (1999) (Conf.Rep.) (Joint

Explanatory Statement of the Committee of Conference)

(“(Clourts should rely on the FCC’s ILLR model to pre-

sumptively determine whether a household is capable of

receiving a signal of Grade B intensity. ... [T]he ultimate

determination of eligibility to receive network signals shall

be a signal intensity test pursuant to 47 C.F.R. § 73.686(d),

as reflected in new section 339(c)(5) of the Communica-

tions Act of 1934.”).

The Act makes abundantly clear that it is the satellite

carrier who bears the burden of proving that its subscrib-

ers are, in fact, unserved. 17 U.S.C. § 119(a)(7)(D).’ Plain-

tiff network stations have no obligation to put on any

evidence demonstrating a violation of the terms of the

statutory license. To the extent networks put on affirma-

tive evidence of ineligibility, a satellite carrier cannot

simply rebut or impeach that evidence. The satellite

_ carrier must provide additional evidence that its chal-

lenged subscribers are unserved. Thus, a satellite carrier

* This provision states:

Burden of proof. - In any action brought under this para-

graph, the satellite carrier shal] have the burden of proving

that its secondary transmission of a primary transmission

by a network station is to a subscriber who is eligible to re-

ceive the secondary transmission under this section.

17 U.S.C. §.119%(aX7)(D).

may be found to have violated the Act even if a court does

not find that its subscribers are “served.” A violation

occurs so long as a carrier does not satisfy its burden of

proving that its subscribers are “unserved.”

The Act contemplates two categories of violations as it

relates to the secondary transmission of distant network

service to served households: “Individual violations” and

“Pattern(s] of violations.” An “Individual violation” occurs

where there is a “willful or repeated secondary transmis-

sion ... to a subscriber who is not eligible to receive the

transmission under this section.” Jd. § 119(a)(7)(A). A

district court has broad discretion to remedy such viola-

tion(s). See id.; id. §§ 502-506, 509. A “Pattern of viola-

tions” arises where “a satellite carrier engages in a willful

or repeated pattern or practice of delivering [distant

network service} to subscribers who are not eligible to

receive the transmission under this section.” Id.

§ 119(a)(7)(B). The Act grants a court no discretion in its

choice of remedy for a “pattern or practice” of violations.”

Upon finding such a “pattern or practice,” the Act instructs

that “the court shall order a permanent injunction barring

the secondary transmission by the satellite carrier, for

private home viewing, of the primary transmissions of any

primary network station affiliated with the same network,

and the court may order statutory damages of not to

exceed $250,000 for each 6-month period during which the

pattern or practice was carried out.” Jd. § 119(a)(7)(Bi)."'

° EchoStar contends that courts retain their traditional equitable

discretion regardless of the Act’s explicit limitations. As we discuss

infra, we disagree.

" The scope of the permanent injunction depends on the scope of

the “pattern or practice” of violations. Where the “pattern or practice”

(Continued on following page)

10a

Despite not having the burden of proof at trial, plain-

tiffs presented affirmative evidence, in the form of expert

testimony from Jules Cohen as well as ILLR analyses of

EchoStar’s subscribers at various points in time, tending

to demonstrate that EchoStar has provided, and continues

to provide, distant network service to ineligible house-

holds. EchoStar responded with the testimony of company

executives, as well as that of Dr. Charles Jackson, an

expert whose testimony was intended to criticize plaintiffs’

expert testimony and whom the court determined lacked

credibility. CBS Broad. Inc., 276 F.Supp.2d at 1244, 1252

n. 10. The court specifically and correctly noted that

merely impeaching the plaintiffs’ affirmative evidence

would be insufficient given defendant’s statutory burden.

Id. at 1244. After evaluating the evidence presented by the

parties, the court made the following findings of fact and

conclusions of law.”

A. Findings of Fact

1. EchoStar’s History of Compliance Procedures

From March 1996 to July 1998, EchoStar offered

distant network programming through an agreement with

another satellite provider, PrimeTime 24 Joint Venture.

PrimeTime 24 utilized a subjective method of determining

has been carried out on a “substantially nationwide basis,” the Act

mandates a nationwide injunction. See 17 U.S.C. § 119(a)(7)(B)i). A

local or regional “pattern or practice” results in a permanent injunction

limited to “that locality or region.” See id. § 119(a)(7 BXii).

“ We summarize only those findings that are relevant to this

appeal.

lla

subscriber eligibility based simply on a potential sub-

scriber’s qualitative evaluation of her television signal. In

1998, the United States District Court for the Southern

District of Florida issued first a preliminary, then a

permanent injunction requiring PrimeTime 24 to termi-

nate the delivery of distant network signals to subscribers

who had been signed up using this subjective method.

Days after the entry of the injunction, EchoStar termi-

nated its agreement with PrimeTime 24 and canceled its

subscribers’ PrimeTime 24 distant network programming

packages. EchoStar then switched virtually all subscribers

to new, EchoStar-designed distant network programming

packages.

After EchoStar terminated its relationship with

PrimeTime 24, it began evaluating new-subscriber eligibil-

ity through a system referred to as the “red-light/green-

light method.” Under this system, each zip code was

designated as either a red-light or a green-light zip code-

based on predicted signal strength. A household in a red-

light area was presumptively ineligible for service.

EchoStar claims that it refused to sign up subscribers who

lived in red-light zip codes unless the subscribers obtained

a valid waiver from the network station. The district court

found, however, that EchoStar presented no real evidence.

that its determination of whether zip codes were red-light

or green-light areas was reasonably calculated to prevent

signups of ineligible subscribers. Additionally, the court

found that EchoStar’s customer service representatives

were able to override the red-light/green-light designations

— that is, even if a subscriber was in a red-light zip code, a

customer service representative still had discretion to sign

up that subscriber for distant network programming.

12a

EchoStar began using the ILLR model to determine

subscriber eligibility in 1999. Echostar’s ILLR methodol-

ogy involved the following three relevant factors: First,

until October 2000, EchoStar utilized a “DMA Rule” by

which it only used the ILLR model to consider the signal

strength of network stations in a given household’s Niel-

sen-defined designated market area (“DMA”). In other

words, even if a household received a Grade B or higher

signal from network stations outside a household’s DMA,

EchoStar would consider it potentially unserved. Addi-

tionally, EchoStar included interference in its ILLR

analyses until January 2002.” Finally, EchoStar utilized

(and continues to use) two vendors — Decisionmark and

Dataworld — for its ILLR analysis. So long as one vendor

indicates that a household cannot receive a Grade B

signal, EchoStar considers the household to be unserved.”

The district court found that recently, EchoStar has

taken significant measures to ensure compliance with the

Act. Customer service representatives are trained and are

no longer able to override system determinations of

subscriber ineligibility. Additionally, EchoStar uses a

backup compliance system and, on a monthly basis,

reanalyzes all new subscribers to ensure eligibility.

EchoStar terminates distant network programming to any

subscribers found to be ineligible.

" Incorporating interference in the ILLR analysis can-potentially

result in weaker predicted signal strength, as the model would then

factor in the predicted presence of interfering signals from other

stations.

‘* The two vendors might differ in their ILLR output as a result of

database inaccuracies. CBS Broad. Inc., 276 F.Supp.2d at 1250.

13a

2. Analysis of EchoStar’s Subscriber Base

Plaintiffs presented analyses of EchoStar subscriber

lists at different points in time. The analyses were super-

vised and explained by plaintiffs’ expert witness, Jules

Cohen.

a. PrimeTime 24 Subscribers

In an effort to dissuade the district court from issuing

the original injunction in this case, EchoStar’s CEO,

Charles Ergen, made a formal pledge under penalty of

perjury in September 1999. In that pledge, he promised

that for each of the subscribers that had originally been

signed up for EchoStar’s distant network programming

using the subjective PrimeTime 24 method, EchoStar

would (1) determine if they were served or unserved using

the ILLR method and (2) terminate all ineligible subscrib-

ers. To comply with this promise, EchoStar submitted a

list of its 331,586 PrimeTime 24 subscribers to Decision-

mark, an ILLR vendor, for an ILLR analysis. EchoStar

received the analysis the following month.

The analysis revealed that of the 331,586 total sub-

scribers signed up for distant network programming with

EchoStar pursuant to the agreement with PrimeTime 24,

the percentages of Grade A subscribers were 61% (ABC),

60% (CBS), 58% (Fox), and 60% (NBC). These totals

amount to more than 258,000 former PrimeTime 24

* We believe it is worth re-emphasizing: An unserved household is

one that cannot-receive a Grade B signal, let alone the stronger Grade A

variety. 17 U.S.C. §119(d)(10XA). Subscribers receiving a Grade A

signal are not even eligible for grandfather status pursuant to section

119(e).

l4a

subscribers (approximately 78% of the total) who were

predicted to receive a Grade A signal from at least one of

the four networks. Contrary to Ergen’s promise, the

district court found no evidence that EchoStar terminated

service to any of these subscribers for compliance-related

purposes. CBS Broad., Inc., 276 F.Supp.2d at 1245-46.

b. Red-Light/Green-Light Subscribers

The district court found that during the period in

which EchoStar utilized the red-light/green-light method-

ology, it signed up a substantial number of subscribers in

the ineligible red-light zip codes. For example, between

November 1988 and March 1999 EchoStar signed up

62,374 red-light subscribers for CBS distant network

programming and 63,979 red-light subscribers for Fox

distant network programming. An ILLR analysis of this

group of subscribers shows that 167,000 are predicted to

receive a Grade B or better signal.” Of the CBS distant

programming subseribers signed up during this period,

69% were predicted to receive at least a Grade B signal

and 41% were predicted to receive a Grade A signal. Id. at

1242.

c. September 1999 Subscriber List

Along with its submission of PrimeTime 24 subscrib-

ers, EchoStar submitted a list of all of its distant network

receiving subscribers as of September 1999. The results

* EchoStar objects to an ILLR analysis of subscribers signed up

before the ILLR methodology was incorporated into the Act via the

SHVIA amendment as an impermissible retroactive application of the

amendment. As discussed, infra, we disagree.

15a

were no more encouraging. Of its 879,808 distant network

subscribers, 53% were predicted to receive a Grade A

signal for ABC, 51% for CBS, 48% for Fox and 52% for

NBC. An additional 18% for ABC, 21% for CBS, 12% for

Fox, and 27% for NBC were predicted to receive a Grade B

signal. As of September 1999, 72% of EchoStar’s distant

network subscribers (630,000 subscribers), regardless of

the compliance method used to enroll them, were predicted

to receive a Grade A signal from at least one of the four

networks. The district court found no evidence that

EchoStar, despite receiving the analysis in October 1999,

terminated any of the 630,000 Grade A subscribers for

compliance reasons. Jd. at 1245.

d. April 2002 Subscriber List

During the course of pre-trial discovery, EchoStar

provided the plaintiffs with a list of its subscribers as of

April 25, 2002. Plaintiffs submitted the list for ILLR

analysis under Cohen’s supervision. This analysis showed

that hundreds of thousands of EchoStar’s distant network

programming subscribers are predicted to receive signals

of Grade A or B. Of the 898,847 ABC subscribers, 50.9%

(457,584) were predicted to receive a Grade B or better

signal from an ABC station; 28.5% (255,980) of those were

Grade A. Of the 864,494 CBS subscribers, 55.7% (481,659)

were predicted to receive a Grade B or better signal] from a

CBS station; 28.2% (244,022) of those were Grade A. Of

the 993,490 Fox subscribers, 38.7% (383,987) were pre-

dicted to receive a Grade B or better signal from a Fox

station; 25.8% (256,741) of those were Grade A. Of the

867,240 NBC subscribers, 56.4% (489,315) were predicted

16a

to receive a Grade B or better signal from an NBC station;

29.6% (256,503) of those were Grade A. Id. at 1243.”

B. Conclusions of Law”

The district court concluded that “EchoStar has failed

to meet its burden of proving that its subscribers are

‘unserved households,’” within the meaning of the Act. Jd.

at 1248.” The court noted that, after a trial in which

" The court also considered the impact that grandfather status and

waivers might have on the analysis assuming that all of EchoStar’s

claims to such subscriber eligibility were valid. This analysis revealed

more of the same: Of the 898,847 ABC subscribers, 26.5% (238,048)

were predicted to receive a Grade B or better-signal from an ABC

station; 18.3% (164,409) of those were Grade A. Of the 864,494 CBS

subscribers, 26.9% (232,699) were predicted to receive a Grade B or

better signal from a CBS station; 17.6% (152,140) of those were Grade

A. Of the 993,490 Fox subscribers, 20.2% (200,422) were predicted to

receive a Grade B or better signal from a Fox station; 15.8% (156,906) of

those were Grade A. Of the 867,240 NBC subscribers, 28.1% (243,342)

were predicted to receive a Grade B or better signal from an NBC

station; 18.8% (163,011) of those were Grade A. CBS Broad., Inc., 276

F.Supp.2d at 1244.

* Prior to trial, in an order dated March 24, 2003, the district court

granted summary judgment to the networks on EchoStar’s counter-

claims. EchoStar had sued alleging tortious interference, unfair

competition, and conspiracy to commit tortious interference and unfair

competition based on statements made by plaintiffs, plaintiffs’ counsel,

local network affiliates and the National Association of Broadcasters.

The court concluded that, based on Florida law — which both parties

agreed should apply — “EchoStar has failed to present evidence that

raises a general [sic] issue of materia! fact that would establish that

Plaintiffs possessed the requisite intent and that EchoStar was harmed

by the statements at issue.” Order at 8.

* The court fluctuated in its conclusions as to whether it found

that EchoStar had in fact provided service to ineligible households or

that EchoStar had failed to satisfy its burden of demonstrating that its

subscribers were unserved. Compare id. at 1253 (“EchoStar has failed

to present credible evidence, either in the form of an ILLR analysis or

(Continued on fellowing page)

17a

EchoStar presented no ILLR analysis or on-site signal

intensity measurements, EchoStar had failed to prove that

any of its subscribers cannot receive a network signal of at

least Grade B strength. Jd. Moreover, the court found fault

with EchoStar’s ILLR methodology. Jd. at 1249-50. First it

found the “DMA Rule” to be an improper method to ensure

compliance with the Act. Additionally, it found that

EchoStar’s use of interference in its ILLR mode! from May

2000 to January 2002 was improper.” Finally, the court

found that EchoStar’s past and present use of two ILLR

vendors, whereby EchoStar always chooses the vendor

that designates a subscriber as unserved whenever there

is a discrepancy, was, and continues to be, unlawful.

The court also found that “EchoStar has not met its

burden in showing that any of its distant signal subscrib-

ers meet the grandfathering requirements,” of section

119(e). Jd. at 1250. As previously indicated, to be eligible

for grandfather status, a subscriber must (1) have been a

subscriber on October 31, 1999 or have had distant net-

work service terminated pursuant to the Act between July

signal intensity measurements, that any of its subscribers are unserved

as defined under SHVA.”) with id. at 1248-49 (“Mr. Cohen’s testimony

and reports ... support the conclusion that hundreds of thousands of

EchoStar’s distant network programming subscribers are not unserved

households.”); id. at 1252 (“EchoStar has provided service to a large

number of subscribers who have been incorrectly issued grandfather

status.”). As we discuss, infra, the distinction is immaterial in this

context. The two conclusions are equivalent violations of the statute.

* In May 2000, the-FCC issued a First Report and Order and

published a “cookbook” describing how the ILLR model is to be em-

ployed. The May 2000 publications eliminated interference as a factor

to be included in the model. CBS Broad., Inc., 276 F.Supp.2d at 1249.

The Act permits reliance on the ILLR model “set forth by the [FCC]...

as that model may be amended by the Commission over time ... to

increase the accuracy of that model.” 17 U.S.C. § 119% aX2)ByXii)(1).

18a

11, 1998 and October 31, 1999 and (2) receive a signal of

less than Grade A intensity. 17 U.S.C. § 119%e). EchoStar

presented no evidence that its putative grandfathered

subscribers receive a signal of less than Grade A intensity,

no list of subscribers as of October 31, 1999 and no list of

subscribers terminated, for Act compliance reasons,

between July 11, 1998-and October 31, 1999. More impor-

tantly, EchoStar did present testimony that it does not

have a list of its subscribers as of October 31, 1999. CBS

Broad., Inc., 276 FSupp.2d at 1251. Thus, because

EchoStar had not demonstrated that any of its subscribers

were eligible for grandfather status, and conceded that it

did not have the data necessary ever so to prove, the court

refused to acknowledge any alleged grandfather subscrib-

ers as eligible, id. at 1251-52, and held that “EchoStar

subscribers are no longer entitled to grandfather status,”

id. at 1257.”

Finally, the district court concluded that EchoStar

“failed to prove that any of its subscribers are eligible

because they have obtained waivers from the relevant

network stations,” pursuant to 17 U.S.C. § 119(a)(14). Id.

at 1252. EchoStar again made use of its “DMA Rule” in

this context and only sought waivers from stations in a

subscriber’s DMA. Because EchoStar did not consider

” As part of its discussion, the court concluded that eligibility for

grandfather status depends upon the strength of signal a subscriber

currently receives, not the strength of signal received on October 31,

1999. CBS Broad., Inc., 276 F.Supp.2d at 1251. In other words,

eligibility for grandfather status can change over time as the signal

strength a household receives changes. We believe that this is the

correct interpretation of the statutory language and is consistent with

our conclusion, discussed infra, that the Act imposes a requirement of

continual subscriber eligibility based on the strength of network signal

that a given household receives.

19a

subscribers who received Grade B or stronger signals from

stations outside the subscribers’ DMA to be served, they

did not seek waivers from those stations. The court,

however, concluded that “(flor a particular household to

have a valid waiver with respect to a particular network, it

is necessary to obtain a waiver from every station affili-

ated with that network that the ILLR model predicts to

deliver a Grade B signal to the household.” Jd. Thus,

because EchoStar did not present evidence that it had

obtained waivers from all relevant stations, the court held

that EchoStar did not carry its burden of proving that any

of its subscribers were unserved on account of valid

waivers. Id.

As a result of these findings, the district court con-

cluded that EchoStar’s conduct and failure to satisfy its

statutory burden amounted to a “willful or repeated”

17 U.S.C. § 119(a)(7)(A). Jd. at 1253.” The court declined,

however, to find that EchoStar engaged in a “pattern or

practice” of violations. According to the Act, upon such a

“ The district court found that EchoStar’s action constituted

“willful or repeated” violations under two interpretations of “willful or

repeated.” The court first noted that “{iJn order to prove willfulness, ‘it

is necessary only to show that a person knew it was doing the acts in

question, not that the person knew those acts were wrong.’” CBS

Broad. Inc., 276 F.Supp.2d at 1253 (quoting CBS Broad., Inc., 48

F.Supp.2d at 1356). The court also found that EchoStar had acted

willfully under a gross negligence standard for willfulness. Jd. EchoStar

did not challenge either interpretation and we therefore need not

resolve the issue here. We pause only to note that the strict-liability-

like former definition may be inconsistent with our prior opinion in

which we referred to a “willful desire to avoid compliance,” EchoStar /,

265 F.3d at 1204. Regardless, we are confident that the record demon-

strates that EchoStar knew what it was doing and knew it was not in

compliance with the Act.

20a

finding, “the court shall order a permanent injunction”

barring the satellite carrier from providing distant net-

work service of any network station affiliated with the

infringed-upon network. 17 U.S.C. § 119(a)(7)(B)i). The

court did not find it necessary to determine conclusively

whether EchoStar had ever engaged in a “pattern or

practice” of violations, because “no such pattern or practice

currently exists which would warrant such an extreme

sanction.” Jd. at 1254. Accordingly, the court crafted an

injunction designed to remedy the willful or repeated

individual violations of the Act. Jd. at 1255-58.

ITI.

Both EchoStar and plaintiffs appealed. We address

EchoStar’s appeal before moving on to the plaintiffs’ claim

that EchoStar engaged in a “pattern or practice” of viola-

tions and, as a result, the district court was obligated by

the statute to issue a permanent, nationwide injunction.

We review the district court’s findings of fact for clear

error. and its interpretation of the SHVA de novo. See

United States v. Pistone, 177 F.3d 957, 958 (11th Cir.1999)

(“The interpretation of a statute is a question of law

subject to de novo review.”); Fed.R.Civ.P. 52(a) (“In all

actions tried upon the facts without a jury or with an

advisory jury ... [flindings of fact, whether based on oral

or documentary evidence, shall not be set aside unless

clearly erroneous, and due regard shall be given to the

opportunity of the trial court to judge of the credibility of

the witnesses.”).”

* The district court relied upon the testimony of the networks’

expert witness, Jules Cohen, throughout its Findings of Fact and

(Continued on following page)

2la

In this appeal, EchoStar has alleged a staggering

seventeen claims of error.“ Despite EchoStar’s apparent

characterization of the trial as one of gross mismanage-

ment, utter incompetence, and widespread chaos, we find

the district court’s orders and opinions to be generally

thoughtful, careful, and well-reasoned. We applaud the

court’s efforts in dealing with a complicated, technical

matter — oftentimes in spite of, rather than with the aid of,

defendant’s cooperation. We find the vast majority of

EchoStar’s claims to be completely without merit and

address those briefly in the margin.”

Conclusions of law, and specifically questioned the credibility of

EchoStar’s expert witness, see CBS Broad., Inc., 276 F. Supp.2d at 1244,

1252 n. 10. Because “[a]ppellate courts reviewing a cold record give

particular deference to credibility determinations of a fact-finder who

had the opportunity to see live testimony,” Owens v. Wainwright, 698

F.2d 1111, 1113 (11th Cir.1983), we do not second guess the court's

judgments. ”

* In EchoStar’s opening brief, these claims are sometimes clearly

correlated to section headings, and other times they are overlapping

and/or only tangentially mentioned in the course of discussing another

alleged error and left for this court to discover and evaluate.

* EchoStar contends that the district court erred by “entering an

overly broad permanent injunction,” because the court ruled that none

of EchoStar’s subscribers had valid waivers and none were properly

considered “grandfathered” or could ever be considered “grandfathered.”

See CBS Broad., Inc., 276 F.Supp.2d at 1257. The scope of an injunction

is reviewed for abuse of discretion. Simmons v. Conger, 86 F.3d 1080,

1085 (11th Cir.1996). As we discuss, infra, we agree with the district

court’s conclusion that the “DMA Rule’ is inconsistent with the Act, and

therefore EchoStar has not carried its burden of proving that any of its

subscribers have valid waivers from all the necessary network stations.

EchoStar also claims that the injunctive requirement of a “written

waiver” is infeasible given electronic record-keeping and the possibility

of waiver-by-failure-to-respond.

(Continued on following page)

22a

Neither we, nor plaintiffs, read into the court’s injunction an

inflexibility that would make it inconsistent with those realities.

With respect to grandfathered subscribers, because EchoStar failed

to provide any evidence that any of its subscribers met any of the

criteria for grandfathered status, and represented that it did not have

the data to do so, the district court committed no error in concluding

that none of the subscribers were or could ever be demonstrated to be

grandfathered. EchoStar attempts to counter by suggesting that “it is

literally impossible that not one of EchoStar[’s) subscribers is ‘grand-

fathered.’” Appellant’s Reply Brief at 12. The argument is too clever by

half. EchoStar seems to overlook the fact that it simply does not matter

whether this is true; EchoStar, not the networks, and certainly not the

court, has the burden of demonstrating that any given subscriber is

grandfathered. Accordingly, we cannot say that the district court

abused its discretion in crafting the injunction.

EchoStar makes a related argument that, by denying subscribers

their duly-earned grandfathered status, the court deprived them of

their property without due process of law. EchoStar relies primarily on

language in EchoStar I, that “eligibility [for grandfathered status]

belongs to the subscriber, and nothing is said in the statute about

carriers.” 265 F.3d at 1212. Even assuming that this language vests in

subscribers a property interest for which they are entitled to due

process, it is certainly not a right to receive service from EchoStar.

EchoStar’s current subscribers are free to seek grandfathered eligibility

from another satellite carrier so long as it can be proven that they

qualify. We therefore reject EchoStar’s constitutional argument.

EchoStar further maintains that the district court erred by

admitting Jules Cohen’s testimony in violation of Fed.R.Evid. 702

because his testimony was based on ILLR analyses performed by

Decisionmark. A trial court’s decision to admit expert testimony is

reviewed for abuse of discretion. A.A. Profiles, Inc. v. City of Fort

Lauderdale, 253 F.3d 576, 581 (11th Cir.2001). EchoStar does not

contest that Cohen was qualified as an expert. Fed.R.Evid. 703 provides

that if “facts or data in the particular case upon which an expert bases

an opinion or inference” are “of a type reasonably relied upon by experts

in the particular field,” then “the facts or data need not be admissible in

evidence in order for the opinion or inference to be admitted.” We

cannot say that the district court abused its discretion in determining

that it was reasonable for Cohen to rely on Decisionmark’s model

output as the basis for his testimony.

(Continued on following page)

23a

EchoStar also claims that the court erred by not requiring the

networks to prove irreparable harm before entering a permanent

injunction. Under the Copyright Act, however, a plaintiff need not show

irreparable harm in order to obtain a permanent injunction, so long as

there is past infringement and a likelihood of future infringement. See

Pac. & S. Co. v. Duncan, 744 F.2d 1490, 1499 (11th Cir.1984). More-

over, the district court did find that the networks demonstrated harm

due to EchoStar’s delivery of illegal distant network programming to

served households, because the number of viewers attributed to a

particular television station determines the price it can charge adver-

tisers. If a Nielsen household receives a network from a different city,

then that household will not be counted as a viewer of the Jécal network

affiliate, causing harm to that affiliate.

EchoStar further argues that the district court prejudiced EchoStar

by denying critical discovery and refusing to continue the trial, despite

numerous discovery motions remaining pending until the eve of trial.

Discovery rulings will not be disturbed absent an abuse of discretion

and substantia] harm to the party seeking relief. See Arabian Am. Oil

Co. v. Scarfone, 939 F.2d 1472, 1477 (11th Cir.1991). We do not find

that the court’s discovery rulings and scheduling decisions were abuses

of discretion that substantially harmed EchoStar.

EchoStar also claims that the district court erred by finding that

the networks had proven their ownership of the copyrights in question,

and by entering a nationwide permanent injunction based on television

programs which aired before EchoStar provided distant network

programming. This argument is meritless. In its opinion vacating the

preliminary injunction, this court stated that “[t]he Networks own the

cast by CBS, Fox, ABC, and NBC network stations.” EchoStar I, 265

F.3d at 1196. The district court did not err by reaching the same

conclusion on remand. We also agree with the district court’s March 31,

2003 Order addressing this argument.

EchoStar next argues that the Affiliate Associations do not have

standing to bring this action. Individual affiliate stations have standing

pursuant to 17 U.S.C. § 501(e). We agree with the district court that the

Affiliate Associations meet the requirements for representational

standing under Hunt v. Washington State Apple Advertising Commis-

sion, 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977).

EchoStar also asserts that the court erred by granting summary

judgment to the networks on EchoStar’s counterclaims, see supra note

18. In reviewing a district court’s grant of summary judgment, we view

(Continued on following page)

24a

1. EchoStar’s ILLR Methodology

EchoStar claims that the district court erred in its

interpretation of the Act and its application to three

components of EchoStar’s ILLR methodology. Although we

reject Echostar’s first two arguments, we agree that the

Act does not proscribe the use of multiple vendors. Be-

cause this determination has no bearing on EchoStar’s

failure to carry its statutory burden of proof, it does not

impact the ultimate disposition of this case.

the evidence in the light most favorable to the non-moving party. See

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

“Where the circumstantial evidence and reasonable inferences drawn

therefrom create a genuine issue of material fact for trial, summary

judgment is improper.” /d. at 1518-19. “However, an inference based on

speculation and conjecture is not reasonable.” Jd. at 1518. We agree

with the district court that the evidence presented by EchoStar

purportedly establishing intent and harm was “nothing more than

speculation” and “mere belief.” As such, no trier-of-fact, based on the

evidence presented and the reasonable inferences that could be drawn

therefrom, could find that EchoStar made out a claim for tortious

interference, unfair competition, or a conspiracy to commit either. Nor

does EchoStar point to any outstanding discovery requests that would

have produced any evidence capable of altering this conclusion.

Lastly, EchoStar claims that the district court erred in striking

EchoStar’s jury trial demand days before trial. There is no right to a

jury trial, however, when the plaintiffs seek purely equitable relief such

as an injunction. See Ford v. Citizens & S. Nat'l Bank, 928 F.2d 1118,

1121-22 (11th Cir.1991). A request for attorney's fees does not change

that result. See Whiting v. Jackson State Univ., 616 F.2d 116, 122 n. 3

(5th Cir.1980). It therefore was not reversible error for the district court

to strike EchoStar’s demand.

25a

a. “DMA Rule”

EchoStar claims that, contrary to the district court’s

determination, the Act endorses the “DMA Rule.”” Thus,

EchoStar contends that so long as the network station in a

household’s Nielsen-defined DMA does not provide a

Grade B or better signal, the household is properly consid-

ered unserved. The district court concluded, however, that

if a household receives any signal of Grade B or better,

regardless of its source, the household is served with

respect to that network. We agree with the district court’s

interpretation of the Act.

The Act defines “unserved household” with respect

to a given network as one that “cannot receive ... an

over-the-air signal of a primary network station affiliated

with that network of Grade B intensity.” 17 U.S.C.

§ 119(d)(10)A) (emphasis added). The definition is not

limited to “the primary network station in the household’s

DMA.” It refers to the signal of any network station. The

plain meaning of the statute is not altered by EchoStar’s

oblique reference to 17 U.S.C. § 122(j)(2)’s definition of

“local market,” which is somehow supposed to shed light

on the meaning of “local service area” as used in 17 U.S.C.

§ 501(e). Not only is this end-around unconvincing, it is

unnecessary given the clear language of the statute. Thus,

* Relatedly, EchoStar claims that if the Act prohibits the “DMA

Rule,” it “improperly expands the affiliates’ contractual rights.”

Appellants Brief at 33. This argument is bewildering. Even if it is

factually correct, we have difficulty understanding why Congress is not

free to define the scope of EchoStar’s statutory right. Evidently,

according to EchoStar, it is perfectly legitimate for Congress to constrict

any contractual right the affiliate may have had by granting satellite

carriers a statutory license, but an expansion of anyone else’s right is

wholly inappropriate. We disagree.

26a

we agree with the district court that EchoStar’s use of the

“DMA Rule” was in violation of the Act.

b. Use of Interference

EchoStar also objects to the district court’s conclusion

that the use of interference in the [LLR model was im-

proper after May 2000. We agree with the district court’s

~ resolution of this issue. As the court noted, in May 2000,

the FCC issued a First Report and Order that made

modifications to the ILLR model and provided a step-by-

step “cookbook” describing how the model was supposed to

be run. A prior “cookbook” had included interference, but

the May 2000 and July 2002 “cookbooks” specifically and

clearly omitted it. After the SHVIA amendment, the Act

permits use of the ILLR model “set forth by the [FCC] ... ,

as that model may be amended by the Commission ... to

increase the accuracy of that model.” 17 U.S.C.

§ 119(a)(2)(B\ii(1).” Accordingly, the use of any ILLR

method that does not comply with the specific procedures

* In its reply brief, EchoStar contends that removing interference

from the ILLR model is beyond the scope of the FCC’s authority. The

argument runs as follows: because the Act only permits the FCC to

improve the accuracy of the model, and removing interference un-

equivocally worsens the accuracy of the model, the FCC action was

ultra vires, and should be invalidated pursuant to Chevron U.S.A., Inc.

v. Natural Res. Defendant. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778,

81 L.Ed.2d 694 (1984). This distinct administrative law issue was not

raised in EchoStar’s initial brief and is therefore waived. Moreover,

even if the argument had not been waived, EchoStar points us to

nowhere in the record where this issue was specifically raised and

litigated. Absent an exhaustive bench trial and considering the

deference due to administrative agencies in the conduct of their

technological expertise, we would be extremely reluctant to determine

that it was plain error to conclude that the FCC acted within the scope

of its authority.

27a

the FCC establishes for the model cannot be said to

conform to the Act’s requirements. Therefore, because

EchoStar’s model included interference and thereby did

not conform to the FCC’s specifications, it did not comply

with the Act and the district court could have determined

that the non-compliant model provided no presumptive

evidence of eligibility.

- ¢. Use of Two Vendors

EchoStar claims that it was error to hold that the Act

prohibits the use of multiple ILLR vendors in assessing

subscriber eligibility. The district court concluded that

“EchoStar could have chosen either of these two competent

vendors to check the ILLR status of its subscribers,” CBS

Broad., Inc., 276 F.'Supp.2d at 1250, but because EchoStar ~

used both vendors to exploit inconsistencies between the

two, it acted unlawfully. We find nothing in the Act to

support this conclusion. The statute provides that “[iJn

determining presumptively whether a person resides in an

unserved household ... , a court shall rely on the [ILLR]

model set forth by the [FCC].” 17 U.S.C. § 119(a)(2)(B)(@i)(D.

So long as a satellite carrier uses vendors whose models

comply with the FCC’s ILLR guidelines, the carrier may

utilize as many different vendors as it would like. We note,

however, that the ILLR model is only a presumptive

determination of eligibility, and the satellite carrier bears

the ultimate burden of proving that a household is un-

served. Unless there is evidence that one model is more

accurate than another — which, in this case, EchoStar’s

witnesses did not suggest — when the models produce

conflicting results, it would be difficult to conclude that a

satellite carrier has satisfied its burden of proof. In such

circumstances it would likely be necessary to obtain an

28a

accurate measurement pursuant to section 119(a)(2)(B)(iiX ID)

to demonstrate subscriber eligibility.” Thus, while Echo-

Star’s use of two ILLR vendors may negatively affect its

ability to satisfy its burden, it is not necessarily unlawful

to do so.

2. Retroactive Application and Present Eligibility

Finally, EchoStar argues that SHVIA’s ILLR provi-

sions either do hot apply retroactively to customers signed

up before SHVIA was passed, or if they do apply retroac-

tively, they do so in violation of the Fifth and Fourteenth

Amendments of the United States Constitution. Relatedly,

EchoStar argues that the district court erred by interpret-

ing the Act “to imply an obligation upon satellite carriers

to constantly re-test and re-qualify subscribers each time”

the model changes or the model input, such as station

power or antenna direction, changes. We address these

arguments separately.

EchoStar contends that any requirement that it

qualify its subscribers by an ILLR model cannot be applied

to subscribers who signed up prior to the incorporation of

the ILLR provisions into the Act. So applying the SHVIA

amendment, according to EchoStar, would be unconstitu-

tionally retroactive. We do not see how this could possibly

* In this regard, we find it hard to believe that EchoStar could

benefit by using two vendors aside from being alerted to households for

which EchoStar mj .to conduct an on-site measurement.

Utilizing a second vendor will not likely provide the necessary proof

that a household, deemed served by the first vendor, is presumptively

unserved. Moreover, inconsistencies between the vendors could possibly

force the court to question whether a household, which would have been

presumptively unserved based on the first vendor alone, should be

considered presumptively unserved.

29a

be so. Neither the Act nor the district court’s opinion

imposes any requirement that EchoStar ever use an ILLR

model in any way. All the Act requires — and has ever

required — is that EchoStar subscribers be unserved. The

definition of an “unserved household” was originally, and

continues to be, a household that “cannot receive, through

the use of a conventional outdoor rooftop receiving an-

tenna, an over-the-air signal of grade B intensity (as

defined by the Federal Communications Commission) of a

primary network station affiliated with that network.”

Pub. L. No. 100-667, tit. II, § 202, 102 Stat. 3935, 3957; 17

U.S.C. § 119(d)(10)(A). Prior to the SHVIA amendments,

courts may or may not have regarded ILLR results as

presumptive indications of signal strength. The amend-

ment simply made that presumption clear. But the touch-

stone of eligibility has always been whether a given

household actually receives a Grade B or stronger network

signal. By incorporating the ILLR into the Act, Congress

gave satellite carriers a relatively cheap and convenient

method of presumptively establishing eligibility. It allowed

the satellite carriers to satisfy its burden of proof — which

could then be rebutted if the network station performed an

actual measurement — without on-site testing at every

household. To the extent the ILLR model exposed house-

holds that were previously considered unserved as served,

those households were never actually entitled to service.

As such, SHVIA did not apply a retroactive obligation on

satellite carriers. Rather it provided an evidentiary tool to

enable the carriers to prove what it was always required to

prove.

EchoStar raises a related but distinct concern: it does

not believe that the Act imposes an obligation to re-test

and re-qualify subscribers once they have already been

30a

qualified.” According to Echostar, so long as a subscriber is

eligible (apparently, presumptively or actually) upon sign-

up, the subscriber is always and forever eligible. We do not

interpret the Act to impose such a one-time-only require-

ment. To begin, we note that the Act is drafted in the

present tense, without qualification; it limits the license to

transmissions “to persons who reside in unserved house-

holds.” 17 U.S.C. § 119(a)(2B)G) (emphasis added); see also

id. § 119(a)(2)B)GiT) (prescribing use of ILLR model to

“determin{e] presumptively whether a person resides in an

unserved household” (emphasis added)); id. § 11% a)(2B)iiXTD)

(providing for use of on-site measurements “to determine

whether a person resides in an unserved household”

(emphasis added)). The clear indication is that a person

must always reside in an unserved househoid, not just

initially.

We recognize the possibility, however, that a person

can be said to be “residing” in an unserved household,

regardless of current conditions, if a household were

deemed forever “unserved” so long as it met the eligibility

requirements at sign-up. We therefore look to the definition

*° EchoStar believes this is the consequence of interpreting the

SHVIA ILLR amendments to apply “retroactively.” As we discussed, we

do not believe SHVIA imposed any new requirement on the satellite

carrier and therefore cannot be said to have required carriers to re-test

and re-qualify existing subscribers. Because the argument is phrased in

terms of re-testing upon changes in station power and antenna direc-

tion, however, we interpret the argument as an objection to the on-

going qualification requirement with respect to changes in inputs such

as signal strength that can affect whether the ILLR model presump-

tively establishes eligibility and whether a given household is, in fact,

served. EchoStar argues that it is only obligated to demonstrate

eligibility at sign-up regardless of any changes in conditions that might

affect that determination.

Sla “au

of “unserved household.” All three relevant definitions

refer to present criteria: either a household that (1) “can-

not receive” a Grade B signal; (2) “is subject to a waiver;” or

(3) “does not receive-a signal of Grade A intensity” and

otherwise qualifies for grandfathered status. Jd. § 119(d)(10)

(emphasis added). None of these definitions refer to sign-up,

despite the ease with which Congress could have included

such a qualification if that had been its intention.

We note, moreover, that there is no requirement that

network stations challenge a subscriber at the time of

sign-up or any specified period of time thereafter.

EchoStar’s interpretation, however, would either trans-

form the ILLR model into de facto conclusive evidence of

eligibility (because it would be difficult to rebut the pre-

sumption with an actual measurement done at a later

time if ehgibility referred only to eligibility at sign-up) or

force networks to perform on-site measurements for every

subscriber at the time of sign-up — the latter being a

requirement that appears nowhere in the Act. Accordingly,

we conclude that the Act imposes a requirement that a

household be presently unserved, not unserved solely at

sign-up, as EchoStar suggests.

3. Summary —

Of EchoStar’s seventeen claims of error, we find only

the district court’s determination that the Act proscribes

the use of multiple ILLR vendors to be incorrect. Because

we do not believe this decision had any effect on

EchoStar’s inability to demonstrate that it has not will-

fully or repeatedly infringed upon plaintiffs’ copyright —

nor, as we discuss, infra, on our determination that

EchoStar engaged in a “pattern or practice” of violations —

32a

we do not need to remand for any reconsideration in light

of this conclusion.

Before we move on to plaintiffs’ cross-appeal, we pause

briefly to comment on defendant’s approach. While it is not

normally the place for courts to second guess the strategic

decisions of counsel, we do note that, here, EchoStar may

have been better served by focusing on and developing its

serious objections, as opposed to its scattershot approach

that ultimately wasted limited space on patently unmeri-

torious claims of error.

Plaintiffs also appealed, challenging the district

court’s conclusion that, because EchoStar is not currently

engaging in a “pattern or practice” of violations, it was not

obligated to issue a nationwide permanent injunction

prescribed by the statute.” EchoStar contends that the

district court’s ruling was permissible because the court

retained a measure of discretion not to issue the perma-

nent injunction despite the mandatory language in the

statute. EchoStar also suggests that the remedy does not

apply so long as it is not currently engaging in a “pattern

or practice” of violations. We disagree with both conten

tions. Because we come to the inescapable conclusion,

based on the district court’s findings, that EchoStar did

engage in a “pattern or practice” of violations, we find that

® The district court’s findings of fact and conclusions of law dealt

with all of EchoStar’s subscribers throughout the United States. Thus,

any violations are on a “substantially nationwide” scale rather than

“local or regional” indicating that, to the extent 17 U.S.C. § 119(a)(7)(B)

comes into play, it is through subsection (i) rather than (ii).

33a

the district court erred in not entering a permanent

injunction.

1. Requirements for “Pattern or Practice” Liability

According to the Act:

If a satellite carrier engages in a willful or re-

peated pattern or practice of delivering a primary

transmission made by a network station ... to

subscribers who are not eligible to receive the

transmission... , then... if the pattern or prac-

tice has been carried out on a substantially na-

tionwide basis, the court shall order a permanent

injunction barring the secondary transmission by

the satellite carrier, for private home viewing, of

the primary transmissions of any primary net-

work station affiliated with the same net-

work. ...

17 U.S.C. § 119(a“7)(B)i). The Act itself provides no

further explanation as to what constitutes a “pattern or

practice,” except to indicate that it can occur on a nation-

wide, regional, or local scale. See id. at §§ 119{a)(7)(B)(i),

(ii). We find some guidance, however, in the legislative

history of the Act: It is not the intent of this statute to

subject a satellite carrier to “pattern or practice” liability

as a result of good faith mistakes, provided that the

carrier is reasonably diligent in avoiding and correcting

violations through an internal compliance program that

includes methods of confirmation of household eligibil-

ae -

In view of the possibilities for error which would occur

despite reasonably diligent efforts to avoid them ... , it is

the intent of this statute that no pattern or practice be

found if. . . less ‘han 20% of the subscribers to a particular

34a

network station (on either local, regional, or national

bases) are found ineligible.

H.R.Rep. No. 100-887(1), at 19 (1988), reprinted in

1988 U.S.C.C.A.N. 5577, 5622; see also CBS Broad. v.

PrimeTime 24 Joint Venture, 48 F.Supp.2d 1342, 1357

(S.D.Fla.1998). Thus, while the statute itself does not

automatically impose “pattern or practice” liability where

the 20% threshold is met, nor does it preclude a finding of

“pattern or practice” where the threshold is not reached,

we believe the 20% ineligibility proportion to be a relevant

marker for “pattern or practice” analysis.

EchoStar would have us forgo even this preliminary

inquiry of whether a “pattern or practice” ever existed

because the district court found that “no ... pattern or

practice currently exists,” CBS Broad. Inc., 276 F.Supp.2d

at 1254, and EchoStar reads the Act to impose a require-

ment of an ongoing “pattern or practice” before section

11% a\7Byi) is triggered. It reads the statutory lan-

guage, “[iJf a satellite carrier engages in a willful or

repeated pattern or practice,” 17 U.S.C. § 119(a)(7)(B)

(emphasis added), as foreclosing application of the section

so long as a satellite carrier ceases (most of) its illegal

activity, presumably anytime before the close of trial. We _

do not believe this is the best reading of the statute.

Rather than imposing an obligation on the networks to

identify violations, bring suit, conduct discovery, and

complete a full trial, all before the satellite carrier decides

to become SHVA compliant -— we read the statute as

imposing liability “[i]f a satellite carrier [ever] engages in a

willful or repeated pattern or practice” of statutory viola-

tions. Id. The moment a satellite carrier engages in what

can be said to be a “pattern or practice” of violations, it

makes itself eligible for the specified remedy, regardless of

35a

when it is found to have been doing so. Cf, e.g., 18 U.S.C.

§ 1621 (indicating that the crime for perjury occurs where

a duly sworn individual “states or subscribes any material

matter which he does not believe to be true” but not

requiring a defendant to be “stat[ing]” or “subscrib[ing]” at

the time of his perjury trial).

We also note that there is no requirement that a court

find that the satellite carrier engage in a “pattern or

practice” of actually providing distant network service to

served households. This is again a function of the statu-

tory burden of proof. While we do not find it particularly

intuitive to think of a satellite carrier as engaging in

“pattern or practice” of failing to prove that its subscribers

are unserved, we have but little choice. The statute spe-

cifically mandates that “[i]n any action brought under this

paragraph,” the satellite carrier has the burden of proof.

Id. § 119(a)(7)(D) (emphasis added). A requirement that a

satellite carrier actually engaged in a “pattern or practice”

of serving served households is inconsistent with that

burden allocation. Accordingly, we presume, for the pur-

pose of evaluating “pattern or practice” liability, that a

finding that a satellite carrier failed to carry its burden of

establishing eligibility is tantamount to a finding of

ineligibility. Section 119(a)(7)(B) liability is triggered

whenever a satellite carrier fails to carry its burden of

proving eligibility on a sufficient scale, and to a sufficient

degree, such that we can presume that the satellite carrier

is engaging in a “pattern or practice” of serving ineligible

subscribers.

36a

2. EchoStar Engage in a “Pattern or Practice”

Based on these guidelines, we now must determine if

EchoStar ever engaged in a “pattern or practice” of statu-

tory violations. Because the district court found EchoStar’s

current practices to be substantially compliant, it did not

believe it necessary to determine if EchoStar’s prior

conduct constituted a “pattern or practice” of violations.

See CBS Broad., Inc., 276 F.Supp.2d at 1254. Ordinarily

we would remand to the district court to make this deter-

mination in the first instance. We believe, however, that

there is no other possible conclusion that can be drawn

from the district court’s findings of fact.

We first note the length of time over which the district

court found EchoStar to be using inadequate procedures

for assessing subscriber eligibility. When EchoStar first

began offering its own distant network packages in July

1998, it utilized the red-light/green-light method - a

method for which the district court found “no evidence

[that would indicate that it] was reasonably calculated to

prevent signups of ineligible subscribers.” Jd. at 1241.

Even after EchoStar switched to the ILLR model, it

utilized the illegitimate “DMA Rule” through October

£200, and unlawfully considered “interference” from at

jeast August 2000 through January 2002. In other words,

at no point from when EchoStar began offering distant

network programming through January 2002 did it use a

compliance method capable of reliably assessing sub-

scriber eligibility.”

* This says nothing of the unlawful PrimeTime 24 qualitative

assessment that generated distant network subscribers for EchoStar

from March 1996 to July 1998.

37a

This three-and-half year period of unlawful eligibility

screening predictably led to a sizeable number of subscrib-

ers for whom EchoStar was unable to establish eligibility.

We start with the ILLR analysis of EchoStar’s April 2002

subscriber list. The best case scenario, which takes as

valid EchoStar’s claims of waivers and grandfathered

status (the sane ones regarding which the district court

found EchoStar failed to carry its burden of establishing),

indicates that, on a nationwide basis, EchoStar is pre-

sumptively providing illegal service to 26.5% of its sub-

scribers receiving ABC distant network programming,

26.9% for CBS, 20.2% for Fox, and 28.1% for NBC. Thus,

even for the network with the lowest percentage of viola-

tions, factoring in claims of eligibility that the district

court found not to have been established, EchoStar ex-

ceeds the 20% threshold on a nationwide basis. While we

believe this may very well be sufficiently objectionable, we

glean some additional inculpatory conclusions from the

district court’s opinion: “The Court finds that EchoStar

has failed to meet its burden of proving that its subscrib-

ers are ‘unserved households.’” Jd. at 1248; “EchoStar has

failed to present any evidence . .. that any of its subscrib-

ers are unserved as defined under SHVA.” Id. at 1253;

“(T]he Court’s [findings] support the conclusion that

hundreds of thousands of EchoStar’s distant network

programming subscribers are not unserved households.”

Id. at 1249; “Plaintiff’s evidence indicates that a signifi-

cant percentage of EchoStar’s distant network program-

ming subscribers receive a signal of Grade B intensity or

better.” Jd. at 1253; “Echostar has not met its burden in

showing that any of its distant signal subscribers meet the

grandfathering requirements.” Jd. at 1250; “EchoStar has

also failed to prove that any of its subscribers are eligible

because they have obtained waivers from the relevant

38a

network stations.” Jd. at 1252. If these findings do not

describe a “pattern or practice” of violations, we do not

know what does. Cf. ABC, Inc. v. PrimeTime 24 Joint

Venture, 184 F.3d 348, 354 (4th Cir.1999) (“Since Prime-

Time could prove that virtually none of its thousands of

subscribers in the Raleigh-Durham market was eligible for

satellite service, the district court held — and we agree —

that the carrier had engaged in a ‘pattern or practice’ of

infringement.”). 5

As if the magnitude of its ineligible subscriber base

were insufficiently disconcerting, we have found no indica-

tion that EchoStar was ever interested in complying with

the Act. Indeed, based on the district court’s findings, we

seem to have discerned a “pattern” and “practice” of

violating the Act in every way imaginable. Whether it be

overriding compliance determinations of ineligibility (more

than 12,500 “red zone” subscribers per month), CBS

Broad., Inc., 276 F.Supp.2d at 1242; making pledges under

oath to terminate ineligible subscribers and then failing to

present any evidence fhat this corrective action was taken,

id. at 1244-45; blatantly disregarding FCC alterations to

the ILLR model after it was specifically put on notice of

such changes, id. at 1250; or failing to disconnect sub-

scribers it initially recognized to be ineligible for grandfa-

ther status based on an atextual “reinterpretation” of the

statutory provision, id. at 1251; EchoStar has disregarded

the limitations of its statutory license and sought to avoid

its obligations under the Act at every turn. Accordingly, we

have no trouble concluding that EchoStar has engaged in a

nationwide “pattern or practice of delivering a primary

transmission made by a network station . . . to subscribers

who are not eligible to receive the transmission under this

section.” 17 U.S.C. § 119(a)(7)(B).

39a

3. Mandatory Nature of the Remedy

The Act instructs that, upon a finding of a “pattern or

practice” of violations, a “court shall order a permanent

injunction barring the secondary transmission by the

satellite carrier, for private home viewing, of the primary

transmissions of any primary network station affiliated

with the same network.” 17 U.S.C. § 119(a)(7)(B)(i) (em-

phasis added). Despite the facially mandatory nature of

the provision, EchoStar argues that the district court had

discretion to issue the injunction, and properly exercised

that discretion in not issuing the injunction in this case. In

making this argument, EchoStar relies primarily on Hecht

Co. v. Bowles, 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754

(1944), for the proposition that, if Congress is going to

remove courts’ traditional equitable discretion, “an un-

equivocal statement of its purpose would have been made.”

321 U.S. at 329, 64 S.Ct. at 591; see also id. at 330, 64

S.Ct. at 592 (“We do not believe that such a major depar-

ture from that long tradition as is here proposed should be

lightly implied.”). We believe there are important differ-

ences between the statute in Hecht and the one before us

that lead us to conclude that Congress removed courts’

discretion upon a finding of a “pattern or practice” of

violations.

The Hecht Court interpreted section 205(a) of the

Emergency Price Control Act of 1942, 50 U.S.C. § 901 et

seq., (repealed 1956), which provided that, upon finding of

certain conditions, “a permanent or temporary injunction,

restraining order, or other order shall be granted without

bond.” The Court found statutory language (“or other

order”) and legislative history suggesting that Congress

had not intended to remove courts’ traditional equitable

discretion. 321 U.S. at 328-29, 64 S.Ct. at 591. Unlike

40a

Hecht here there is no ambiguous statutory language in

the SHVA and we are unaware of any legislative history

that would indicate that the remedial measure chosen by

Congress is anything but mandatory. Cf H.R.Rep. No.

106-464, at 94 (1999) (Conf.Rep.) (“The section 122 license

contains remedial provisions parallel to those of Section

119, including a ‘pattern or practice’ provision that re-

quires termination of the Section 122 statutory license as

to a particular satellite carrier if it engages in certain

abuses of the license.” (emphasis added)). Moreover,

section 119(a)(7)(B)(i) itself contemplates both mandatory

and discretionary remedies: Upon the same finding of a

“pattern or practice,” “the court shall order a permanent

injunction” whereas “the court may order statutory dam-

ages.” 17 U.S.C. § 119(a)(7B)(G) (emphasis added). Absent

evidence to the contrary, we presume that Congress

understood what it was doing when it instructed courts to

provide a specific remedy and permitted courts to provide

another. Accordingly, we find that Congress unequivocally

stated a purpose to restrict the courts’ traditional equitable

authority upon a finding ofa “pattern or practice.” Accord

ABC, Inc. 184 ¥:3d at 354-55.” Because, as discussed, we

“ This discussion is not altered by the Supreme Court's recent

decision in eBay, Inc. v. MercExchange, L.L.C., _. U.S. __, 126 S.Ct.

1837, 164 L.Ed.2d 641 (2006). There the Court, in invalidating the

Federal Circuit's “general rule that courts will issue permanent

injunctions against patent infringement absent exceptional circum-

stances,” id, 126 S.Ct. at __, 2006 WL 1310670, at *1 (quoting

MercExchange, L.L.C v. eBay, Inc., 401 F.3d 1323, 1339 (Fed.Cir.2005))

(internal quotation marks omitted), specifically found that “[nJothing in

the Patent Act indicates that Congress intended” a departure from

traditional equitable principles, id., 126 S.Ct. at __, 2006 WL 1310670,

at *2. As discussed, we do find such congressional intent in the SHVA.

Because the Court in eBay said nothing of Congress’s ability to remove

(Continued on following page)

4la

come to the unavoidable conclusion that EchoStar engaged

in a “pattern or practice” of SHVA violations, we hold that

the district court is required to issue a nationwide perma-

nent injunction barring the provision of distant network

programming pursuant to the Act’s statutory license.

IV.

For the foregoing reasons the judgment of the district

court is AFFIRMED in part and REVERSED in part, and

we REMAND the case to the district court for the entry of

a nationwide permanent injunction .as mandated by the

Act.

SO ORDERED.

unambiguously courts’ traditional equitable discretion, the opinion has

no bearing on this case.

42a

276 F.Supp.2d 1237

United States District Court, S.D. Florida.

CBS BROADCASTING, INC. et al., Plaintiffs,

ECHOSTAR COMMUNICATIONS

CORPORATION et al., Defendants.

No. 98-2651-CIV.

June 10, 2003.

David Michael Rogero, Coral Gables, FL, Thomas P.

Olson, Natacha D. Steiner, Maya Alexandri, A. Stephen

Hut, Jr., C. Colin Rushing, Mark L. Bieter, Katherine A.

Fleet, Kyle M. DeYoung, Howard M. Shapiro, Wilmer,

Cutler & Pickering, Nory Miller, Jenner & Block, Wash-

ington, DC, Reid L. Phillips, David Kushner, Wade H.

Hargrove, Brooks, Pierce, McLendon, Humphrey & Leo-

nard, Raleigh, NC, for plaintiffs. :

Kenneth M. Myers, Squire, Sanders & Dempsey,

Miami, FL, John A. Burlingame, Kara K. Mather, Mark A.

Miller, Squire, Sanders & Dempsey, Washington, DC,

Richard S. Gurbst, Damond R. Mace, Squire, Sanders &

Dempsey, Cleveland, OH, David W. Alexander, Squire,

Sanders & Dempsey, Columbus, OH, Cynthia A. Ricketts,

Mark A. Nadeau, Debora L. Verdier, Scott Day Freeman,

Mitchell W. Fleischmann, Squire, Sanders & Dempsey,

Phoenix, AZ, T. Wade Welch, T. Wade Wech [sic} & Associ-

ates, Houston, TX, for defendants.

Alan Graham Greer, Richman, Greer, Weil, Brum-

baugh, Mirabito & Christensen, Miami, FL, for claimant.

Kenneth M. Myers, Squire, Sanders & Dempsey,

Miami, FL, Cynthia A. Ricketts, Mark A. Nadeau, Debora

L. Verdier, Scott Day Freeman, Squire, Sanders &

43a

Dempsey, Phoenix, AZ, T. Wade Welch, T. Wade Wech [sic]

& Associates, Houston, TX, for defendants/counter-

claimant.

- David Michael Rogero, Coral Gables, FL, Thomas P.

Olson, Natacha D. Steiner, Wilmer, Cutler & Pickering,

Washington, DC, Nory Miller, Jenner & Block, Washing-

ton, DC, for plaintiff/counter-defendant.

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

DIMITROULEAS, District Judge.

THIS CASE came on for non-jury trial on April 11, 14,

15, 16, 17, 21, 22, 23, 24, and 25, 2003. The Court has

carefully considered the arguments of counsel, the evi-

dence presented, and the testimony of the witnesses. The

Court has also determined the credibility of witnesses and

is otherwise fully advised in the premises.

Pursuant to Rule 52(a) of the Federal Rules of Civil

Procedure, the Court makes the following Findings of Fact

and Conclusions of Law. To the extent, if any, that the

Findings of Fact as stated may be deemed Conclusions of

Law, they shall be considered Conclusions of Law. Simi-

larly, to the extent the matters expressed as Conclusions of

Law may be deemed Findings of Fact, they shall be con-

sidered Findings of Fact.

I. INTRODUCTION

1. This is a copyright infringement action in which

the Plaintiffs seek injunctive relief pursuant to 17 U.S.C.

§ 502 and § 119(a)(5)(B). Plaintiffs also seek costs and

reasonable attorneys’ fees pursuant to 17 U.S.C. § 505.

44a

2. Plaintiff CBS Broadcasting, Inc. (“CBS”) is a New

York corporation with its principal place of business in

New York, New York. Plaintiff Fox Broadcasting Company

(“Fox”) is a Delaware corporation with its principal place

of business in Los Angeles, California. CBS and Fox

operate the CBS and Fox television networks, respectively,

which provide CBS and -Fox network programming to

television stations nationwide that are affiliated with CBS

and Fox networks.

3. Plaintiffs ABC Television Affiliates Association,

CBS Television Network Affiliates Association, FBC

Television Affiliates Association and NBC Television

Affiliates Association are voluntary membership trade

associations representing network stations that are

affiliates with their respective networks.

4. Defendant EchoStar Communications Corporation

is a Nevada corporation. Defendants EchoStar Satellite

Corporation and Satellite Communications Operating

Corporation are Colorado corporations and subsidiaries of

EchoStar Communications Corporation. The fourth defen-

dant, DirectSat Corporation, a Delaware corporation, has

merged with EchoStar Satellite Corporation. All defen-

dants have their principal place of business in Littleton,

Colorado. (The Court will refer to all the defendants

collectively as “EchoStar.”) EchoStar has 8.5 million

customers. It has eight satellites orbiting the earth at

22,000 miles over the equator.

5. Plaintiffs claim that EchoStar’s retransmission

via satellite of copyrighted programming owned by Plain-

tiffs violates Plaintiffs’ copyright in its network television

45a

broadcasts.’ The principal issue is whether EchoStar’s

actions are permitted by the Satellite Home Viewer Act

(“SHVA”), as amended by the Satellite Home Viewer

Improvement Act (“SHVIA”),’ which grants a limited

statutory license to satellite carriers transmitting distant

network signals to private homes if the subscribers are

“unserved households.” 17 U.S.C. § 119(a)(2)(A), (B).

II. PROCEDURAL HISTORY

6. On October 19, 1998, EchoStar filed suit in Colo-

rado against CBS, Fox, NBC and ABC seeking a declara-

tory judgment that EchoStar’s method of qualifying

subscribers for distant network programming complied

with the law. On November 5, 1998, the Plaintiffs filed

their complaint in this Court alleging that EchoStar was

infringing Plaintiffs’ copyrights by providing distant

network programming to “served” households in violation

of SHVA. The Colorado district court granted Plaintiffs’

motion to transfer the suit filed by EchoStar to Florida

and the Colorado litigation was consolidated with this

action.

7. On September 29, 2000, the Court entered a

preliminary injunction against EchoStar. On November

22, 2000, the Eleventh Circuit stayed the enforcement of

the preliminary injunction. On September 17, 2001, the

" The Court has previously determined, in its Order dated March

31, 2003, that each of the plaintiffs has standing under the Copyright

Act to pursue this copyright infringement lawsuit against EchoStar.

* The Court will refer to both the Satellite Home Viewer Act and

the Satellite Home Viewer Improvement Act collectively as SHVA

unless otherwise indicated.

46a

Eleventh Circuit vacated the preliminary injunction

holding. The case was then remanded to this Court.

8. EchoStar filed a Motion for Summary Judgment

on February 3, 2003. Plaintiffs filed a Motion for Summary

Judgment on All Counts of Their Complaint and Count I of

EchoStar’s Counterclaim on February 4, 2003. Plaintiff’s

also filed a Motion for Summary Judgment on Counts II-V

» of EchoStar’s Counterclaim on February 4, 2003. The

Court granted Plaintiffs’ Motion for Summary Judgment

on Counts II-V of EchoStar’s Counterclaim on March 24,

2003. The Court denied both EchoStar’s Motion for Sum-

mary Judgment and Plaintiffs’ Motion for Summary

Judgment on All Counts of Their Complaint and Count I of

EchoStar’s Counterclaim on March 31, 2003. In that Order

on Motions for Summary Judgment, the Court stated that

all Plaintiffs had standing to proceed in this case. The

Court further indicated that the issues to be decided at

trial would be whether EchoStar is in violation of SHVA,

whether a threat of future violation exists and whether

EchoStar has engaged in a “willful or repeated pattern or

practice.”

9. Plaintiff ABC was dismissed from this case on

April 15, 2002. Plaintiff NBC was dismissed on November

25, 2002.

II]. FINDINGS OF FACT

A. EchoStar and Distant Network Programming

10. EchoStar is a satellite carrier within the mean-

ing of the Satellite Home Viewer Act (““SHVA”), 17 U.S.C.

§ 119, as amended by the Satellite Home Viewer Im-

provement Act (“SHVIA”).

47a

11. EchoStar operates a Direct Broadcast Satellite

(“DBS”) service called “DISH Network,” which offers

satellite television, programming to subscribers who

receive programming using small satellite dishes.

iZ. EchoStar retransmits the signals of network

stations in two different ways: on a “local-to-local” basis

and as distant signals. Local-to-local retransmission refers

to the satellite delivery of network stations to a subscriber

within the subscriber’s own local market. EchoStar cur-

rently offers local-to-local programming in approximately

62 out of the 210 U.S. television markets.

13. Distant network signals are network stations

from outside a subscriber’s market area. For example, a

person who lives in Fort Lauderdale but receives an ABC,

CBS, Fox or NBC network station from New York City is

receiving “distant network programming” or “distant

network stations.”

14. EchoStar sells distant ABC, CBS, Fox and NBC

network programming to customers throughout the

United States. As of April 2002. EchoStar had approxi-

mately 1,180,000 distant network subscribers.

B. EchoStar’s Past Compliance Efforts

1. Subscribers signed up during Prime

Time 24 Period

15. From approximately March 1996 until approxi-

mately July 19, 1998, EchoStar offered distant network

programming pursuant to an agreement with Prime Time

24 Joini Venture (“Prime Time 24”). During this period,

subscribers were signed up using a subjective method

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which depended on the viewer’s opinion concerning the

quality of his or her picture.

16. In December 1996, CBS, Fox and other plaintiffs

brought suit against PrimeTime 24. In 1998, this Court

issued a preliminary injunction, and then a permanent

injunction, requiring PrimeTime 24 to terminate the

delivery of distant network signals to subscribers who had

been signed up illegally. On July 19, 1998, days after the

entry of the preliminary injunction, EchoStar terminated

the delivery of the PrimeTime 24 distant network pro-

gramming package to its subscribers and switched virtu-

ally all of the customers receiving the PrimeTime 24

network programming to its own, new distant network

station packages, called DISH Nets East and DISH Nets

West. On August 25, 1998, Michael Schwimmer,

EchoStar’s Vice President of Programming wrote affiliate

station managers asking them to waive any interest in

litigating EchoStar implementation of a red light/green

light method instead of an ILLR method. The letter placed

a burden on the station managers to object to this proposal

within one (1) week.

2. Red Light/Green Light Method

17. EchoStar claims that after its break with Prime-

Time 24, it implemented a “red light/green light” zip code

system to determine which subscribers were eligible for

distant network programming. A red light/green light

system means that the satellite provider would refuse to

signals, unless they obtained a waiver from the station.

18. However, EchoStar presented no evidence that

its red light/green light system was reasonably calculated

49a

to prevent signups of ineligible subscribers. In fact, Rich-

ard Biby, an outside vendor, testified that he was directed

to use a 95% confidence factor in running Longley-Rice.

This setting will shrink the predicted coverage areas of TV

stations.

19. Further, Michael Hawkins, EchoStar’s former

employee on whom it relied to prepare four declarations

submitted to this Court during 1999-2000 about SHVA

compliance matters, testified that comparing EchoStar’s

red light zip codes to the area shown by the Individual

Location Longley-Rice (“ILLR”) model was like comparing

a “golf ball to a softball.” That is, the red light area defined

by EchoStar was much smaller that [sic] the ILLR-

predicted Grade B area.

20. Additionally, even if a Customer Service Repre-

sentative (“CSR”) was advised that a subscriber was in a

red light zip code, the CSR was able to sign up the sub-

scriber for distant network signals anyway.

21. Further, Plaintiffs’ expert witness, Jules Cohen,

P.E., asked Decisionmark to analyze EchoStar’s signups ~

during the period that EchoStar claims it used the red

light/green light method, using the monthly signup lists

and the red light zip code list provided by EchoStar.’ Mr.

Cohen’s testimony and expert reports support the conclu-

sion that EchoStar signed up large numbers of subscribers

in the forbidden red light zip codes. In January 1999, for

example, EchoStar signed up 17,380 new subscribers for

Fox distant stations in red light zip codes. See Cohen

* The Court finds that the zip code list provided to Plaintiffs by

EchoStar does constitute a list of red light zip codes used by EchoStar

during the red light/green light period.

Supp. Expert Report, Table 4. That same month, EchoStar

signed up 14,622 new subscribers for distant CBS stations

in red light zip codes for that network. See Cohen Supp.

Expert Report, Table 3. Overall, during the five months

from November 1998 through March 1999, EchoStar

signed up 62,374 subscribers in red light zip codes for CBS

distant stations and 63,979 subscribers in red light zip

codes for Fox distant stations.

22. Additionally, an ILLR analysis of this same

group of subscribers shows that EchoStar signed up

167,000 subscribers during these five months predicted to

receive a signal of Grade B or better. For example, the

ILLR analysis showed that 69% of EchoStar’s customers

signed up for CBS distant stations during this period are

predicted by ILLR to receive a signal of at least Grade B

intensity, and that 41% are predicted to receive a signal of

Grade A intensity.

3. ILLR Methodology

23. The methodology was named individual Location

Longley-Rice (“ILLR”) by the Federal Communications

Commission (“FCC”) in February 1999. EchoStar asserts

that it has been using the ILLR methodology since 1999 to

determine which new subscribers are eligible for distant

signals. From the time EchoStar began using ILLR until

October 2000, EchoStar ignored many stations that are

predicted by the ILLR model to deliver Grade B or better

signals to EchoStar subscribers by excluding all network

stations that are not in the same Nielsen-defined DMA as

the subscriber. Also, EchoStar continued to include inter-

ference in its ILLR analysis until January 2002. Finally,

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EchoStar uses two vendors, Dataworld and Decisionmark,

to verify the ILLR status of its subscribers.

24. In May 2002, EchoStar provided Plaintiffs with a

complete list of its subscribers as of April 25, 2002.*

25. Mr. Cohen, Plaintiffs’ expert witness, supervised

an Individual Location Longley-Rice (“ILLR”) analysis by

Decisionmark of the April 2002 subscriber list. Mr. Cohen

is a qualified expert, and he was a credible witness. In

May, 2000, the FCC relied on Mr. Cohen’s work and

published part of his study in an order on land use and

land cover. Additionally, Mr. Cohen’s reliance on Decision-

mark, a competent ILLR vendor also used by EchoStar, to

make the necessary ILLR predictions was reasonable.

26. The ILLR model takes into account terrain and,

for UHF stations, land use and land cover, to determine

the likely signal strength from any given television trans-

mitter to a particular household.

27. In running the ILLR model, the first step is

“geocoding,” which employs a very large database of street

names and addresses throughout the country to generate a

latitude and longitude for each address. Geocoding pro-

duces accurate latitude and longitude for the vast majority

of households, although it is not as precise for “Rural

“On October 2, 2001, Plaintiffs served discovery requests on

EchoStar seeking a complete list of EchoStar’s subscribers as of October

2001. Plaintiffs filed a motion to compel the October 2001 subscriber

list, which was granted. However, when asked for the requested copy of

the October 2001 list, EchoStar stated that it had not retained a copy of

the October 2001 list. The April 2002 list is the only complete sub-

scriber list supplied by EchoStar to Plaintiffs (other than EchoStar’s

initial list of subs ibers in October 1998).

52a

Route” or “General Delivery” addresses. Mr. Cohen testi-

fied that there were only approximately 43,000 of these

rural route addresses in the database and that any devia-

tions would have had a de minimus effect on his calcula-

tions and opinions. In theory one could visit the location

and use a Global Positioning System (“GPS”) meter to get

a more precise latitude and longitude for each location;

however, that solution is not practical for large volumes of

addresses.

28. Once the geocoding process had generated a

latitude and longitude for a household, the Longley-Rice

predictive model is used to predict the signal strength of

the household. This is called the “Individual Location”

Longley-Rice model because the prediction is made on a

“point-to-point” basis from the television transmitter to

the household. Levels of intensity of over-the-air signals,

such as “Grade A” or “Grade B,” are objective measures of

signal strength, expressed in a unit of measure called dBu.

29. Any errors in the geocoding process discussed by

EchoStar’s witnesses would have a de minimus effect on

the outcome of the ILLR analysis supervised by Mr.

Cohen.

30. The ILLR analysis supervised by Mr. Cohen

shows that EchoStar has hundreds of thousands of illegal

distant network programming subscribers for each of the

four networks. On a network-by-network basis, the Deci-

sionmark ILLR analysis supervised by Mr. Cohen showed

the following:

(i) 457,584 (or 50.9%) of the 898,847 subscribers

were predicted to receive at least a Grade B sig-

nal from an ABC station (excluding stations

owned and operated by ABC, Inc.);

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(ii) 481,659 (or 55.7%) of the 864,494 CBS sub-

scribers were predicted to receive at least a

Grade B signal from a CBS station;

(iii) 383,987 (or 38.7%) of the 993,490 Fox sub-

scribers were predicted to receive at. least a

Grade B signal from a Fox station; and

(iv) 489,315 (or 56.4%) of the 867,240 NBC sub-

scribers were predicted to receive a Grade B sig-

nal from an NBC station (excluding stations

owned and operated by NBC).

31. For each network, hundreds of thousands of

subscribers are predicted to receive the more powerful

signal of Grade A intensity; 255,980 for ABC; 244,022 for

CBS;256,741 for Fox; and 256,503 for NBC.°

32. Even when EchoStar’s claims of waivers and

grandfather status are treated as valid, the ILLR analysis

shows high numbers of illegal subscribers to distant

network programming for each of the four networks.

Taking into account the waiver and grandfather claims,

the ILLR analysis showed that:

(i) 238,048 (or 26.5%) of the 898,847 subscribers

were predicted to receive at least a Grade B sig-

nal from an ABC station (excluding stations

owned and operated by ABC, Inc.);

* The numbers in Paragraphs 30-33 reflect the corrected ILLR

which includes the following changes: (1) for “Genera) Delivery” and

similar non-street addresses, this analysis uses street addresses from

filed “Address 2” where a usable address is present; (2) no rounding

wpe of dBu.

54a

(ii) 232,699 (or 26.9%) of the 864,494 CBS sub-

scribers were predicted to receive at least a

Grade B signal from a CBS station;

(iii) 200,422 (or 20.2%) of the 993,490 Fox sub-

scribers were predicted to receive at least a

Grade B signal from a Fox station; and

(iv) 243,342 (or 28.1%) of the 867,240 NBC sub-

scribers were predicted to receive a Grade B sig-

nal from an NBC station (excluding stations

owned and operated by NBC).

33. For each network, a large number of subscribers

are predicted to receive the more powerful signal of Grade

A intensity, even when treating as valid EchoStar’s waiver

and grandfather claims, 164,409 for ABC; 152,140 for

CBS; 156,906 for Fox; and 163,011 for NBC.

34. EchoStar attempted to rebut the ILLR analysis

conducted by Decisionmark and supervised by Mr. Cohen.

Noting that EchoStar has the burden of proving that each

of its subscribers resides in an “unserved household” and

that merely criticizing Plaintiffs’ ILLR analysis would be

insufficient to meet this burden, the Court finds that

EchoStar’s criticisms of the ILLR analysis presented by

Plaintiffs are without substance.

35. First, the Court finds that Dr. Charles Jackson,

EchoStar’s primary witness presented to criticize the

Cohen/Decisionmark ILLR analysis, while qualified in this

field, lacked credibility based on the manner in which he

answered questions asked by Plaintiffs’ counsel.

36. Further, EchoStar argues that it was inappropri-

ate to use the ILLR model (ind current specifications

for the locations and power of TV transmitters) for sub-

scribers who were initially signed up at previous times.

55a

However, the Court finds that the effect on the ILLR

analysis due to changes in the characteristics of TV

transmitters is de minimus. Similarly, the effects of

stations changing from one network to another network

(for example, a CBS affiliate station changing to an NBC

affiliate station) on the ILLR analysis would also be de

minimus.

37. Also, the Court agrees with Mr. Cohen’s testi-

mony that the difference in the depression angle testified

to by EchoStar witness, William Hammet, alse had a de

minimus effect on the ILLR analysis.

4. The Ergen promise and the 1999 Deci-

sionmark ILLR analysis

38. In an effort to dissuade this Court from issuing a

preliminary injunction, EchoStar CEO Charles Ergen

made a formal pledge, under penalty of perjury, in Sep-

tember 1999 that each of the subscribers that EchoStar

originally signed up using the unlawful “do you like your

picture?” method would be checked by Decisionmark using

the ILLR model and that all ineligible subscribers would

be terminated.

39. EchoStar did send a list of its former PrimeTime

24 subscribers in September 1999 to Decisionmark for

ILLR analysis. That list contained approximately 331,000

subscribers. In addition to sending Decisionmark a list of

former PrimeTime 24 subscribers as of late September

1999, EchoStar also sent Decisionmark other lists created

as of that time: (1) a list of all of EchoStar’s roughly three

million subscribers, whether or not they received distant

network signals; and (2) a list of all of EchoStar’s roughly

893,000 subscribers receiving distant network stations.

56a

40. EchoStar received Decisionmark’s ILLR analysis

sometime in October 1999. Although it had promised the

Court that it would turn off the former PrimeTime 24

subscribers shown to be Grade A or Grade B by the Deci-

sionmark analysis (other than those that had waivers or

signal tests), EchoStar made no report in any later court

filing about the results of the Decisionmark ILLR analysis.

41. When Plaintiffs sought to obtain the Decision-

mark analysis, EchoStar filed a motion to quash. Plaintiffs

then filed a motion seeking production of the Decision-

mark ILLR data, which was granted by the Magistrate

Judge on April 9, 2003, two days before trial began. As a

result of that Order, Decisionmark made the documents

from its ILLR analysis available on a File Transfer Proto-

col (“FTP”) Internet site.

ae ae

42. Mr. Cohen, worked with two different database

experts (one from Decisionmark and one from Plaintiffs’

law firm) to ensure that the Decisionmark ILLR analyses

were interpreted properly.

43. Among the total of 331,586 PrimeTime 24 sub-

scribers, the ILLR analysis showed that the percentages of

Grade A subscribers were 61% (ABC), 60% (CBS), 58%

(Fox) and 60% (NBC). Further, the Decisionmark ILLR

analysis showed that EchoStar was delivering distant

network stations to more than 258,000 former PrimeTime

24 subscribers who were predicted to receive a-Grade A

signal from at least one of the four networks. In other

words, if EchoStar had kept Mr. Ergen’s promise to the

Court in the September 1999 declaration, it would have

terminated one or more distant network stations to more

than 258,000 subscribers. And this figure does not include

57a

those predicted to be Grade B but not Grade A, who may

later have been grandfathered after the enactment of

SHVIA on November 29, 1999, if they had still been

subscribers on October 31, 1999.

44, As a percentage of the total of 879,808 distant

signal subscribers, those predicted to receive a Grade A

signal were 53% for ABC, 51% for CBS, 48% for Fox and

52% for NBC. The percentage predicted to receive at least

a Grade B signal, but not a Grade A signal, were 18% for

ABC, 21% for CBS, 12% for Fox and 27% for NBC. Fur-

ther, the Decisionmark ILLR analysis showed that

EchoStar was delivering distant network stations to more

than 630,000 subscribers who were predicted to receive a

Grade A signal from at»least one of the four networks.

Thus, if EchoStar had turned off all of its Grade A sub-

scribers, it would have terminated one or more distant

network stations to more than 630,000 subscribers,

amounting to 72% of its total distant subscribers and 21%

of its total customer base of three million. Again, this does

not include subscribers predicted to be Grade B but below

Grade A.

45. No credible evidence was presented to the Court

to support the contention that EchoStar turned off distant

signals for compliance reasons to any of the more than

258,000 former PrimeTime 24 Grade A subscribers that

Decisionmark told EchoStar about in October 1999. Nor is

there any credible evidence that EchoStar turned off

distant signals for compliance reasons to any of the more

than 630,000 Grade A subscribers that Decisionmark told

EchoStar about at that time.

46. It appears that EchoStar executives, including

Mr. Ergen and David Moskowitz, when confronted with

58a

the prospect of cutting off network programming to hun-

dreds of thousands of subscribers, elected instead to break

Mr. Ergen’s promise to the Court. During his testimony,

Mr. Ergen stated that EchoStar intended to run its distant

network programming subscribers through a Decision-

mark ILLR analysis, but, as Mr. Ergen was aware of the

possibility that the law regarding the subscribers could

change (as he was lobbying for such a change), EchoStar

decided to wait for the new law (anticipating the passing

of SHVIA, which would grandfather certain subscribers).

However, when Mr. Ergen made his promise to the Court,

he did not qualify that promise by stating that he would

not follow through if the new legislation was passed.

47. Further, the Court notes that when Mr. Mosko-

witz, an EchoStar executive who worked closely on SHVA

compliance, was questioned during his deposition about

the 1999 Decisionmark ILLR analysis, he paused for an

unusually long period of time and then answered the

questions concerning the ILLR analysis in a vague man-

ner, unable or unwilling to give any details on the results

of the analysis or EchoStar’s actions following the analy-

sis.

5. EchoStar’s claims of mass turnoffs of

ineligible distant network subscribers

48. Mr. Ergen and other EchoStar witnesses testified

concerning alleged mass turnoffs of illegal distant network

programming subscribers between the time that EchoStar

ended its relationship with PrimeTime 24 and early 2002.

However, EchoStar witnesses also admitted that EchoStar

does not have a single list of subscribers whose distant

network programming was terminated by EchoStar for

59a

compliance reasons nor other documentation of such mass

turnoffs for compliance reasons. Instead, EchoStar points

to its monthly lists of disconnected subscribers, submitted

to the networks pursuant to SHVA reporting require-

ments, as proof that EchoStar conducted large-scale

compliance terminations.

49. The Court rejects the monthly lists as proof of

compliance-related terminations. As Mr. Ergen and Mr.

Povenmire admitted, subscribers stop receiving distant

network stations for a wide variety of reasons, including

involuntary disconnections for failure to pay one’s bills as

well as voluntary disconnections because the subscriber

has chosen to switch to cable, to switch to DirecTV, to

switch to local-to-local service, to switch to C-band dish, to

switch to over-the-air reception or to cancel EchoStar (or

just their distant network subscription) because the

household concludes in [sic] can no longer afford it. Both

Mr. Ergen and Mr. Povenmire acknowledge that it is

impossible to determine from EchoStar’s monthly sub-

scriber lists which subscribers had their service discon-

nected for any particular reason. Therefore, an increase in

the numbers of subscribers on a monthly disconnect report

is insufficient evidence that large numbers of subscribers

were terminated for compliance reasons.

C. EchoStar’s Compliance Efforts Today

50. The Court finds that, with the exception of its

use of two vendors, EchoStar is currently taking reason-

able steps to ensure that only those potential subscribers

that are eligible under the law are signed up for distant

network programming. Robert Lee of the CBS Affiliates

60a

Association, a witness for Plaintiffs, testified that EchoStar

today is making legitimate efforts to qualify subscribers.

51. Mr. Povenmire described in detail and demon-

strated for the Court EchoStar’s current qualification

process. EchoStar currently involves many people and

departments in its efforts to ensure its compliance, includ-

ing more than 7,000 Customer Service Representatives

(“CSR”), each of whom is responsible for utilizing the ILLR

databases to qualify new customers who wish to receive

distant network channels. EchoStar provides each CSR

with training and graphic screens designed to prevent

misuse. Also, CSRs can no longer tinker with the system

in order to approve ineligible households for distant

network programming.

52... Additionally, in an effort to eliminate any inad-

vertent activation errors, EchoStar has instituted a back-

up compliance system (the “WAC” or “Exemption Report-

ing” process). At the end of each month, EchoStar reviews

all the people that were signed up in that previous month

and reanalyzes them in order to disconnect any ineligible

subscribers. EchoStar also “requalifies” subscribers

anytime a subscriber attempts to modify network pro-

gramming or moves to a new household.

53. At then [sic] end of each month, EchoStar goes

through al] the people who were signed up for networks in

that previous month, and reanalyzes them. If any ineligi-

ble subscriber is identified, EchoStar promptly terminates

distant network programming to such subscribers.

6la

IV. CONCLUSIONS OF LAW

A. The Satellite Home Viewers Act

54. In 1988, Congress amended the Copyright Act to

include the Satellite Home Viewers Act (“SHVA”). SHVA

creates a narrow exception to a network’s exclusive copy-

right over its programming in the form of a compulsory

license allowing satellite carriers to retransmit copy-

righted network programming for private home viewing to

persons residing in “unserved households.” 17 U.S.C.

§ 119(a)(2)(B). Congress sought to achieve two goals in

enacting this provision: (1) to provide network program-

ming to the small number of households that otherwise

lacked access to it; and (2) to preserve the existing net-

work/ affiliate television distribution system by preventing

satellite delivery of network programming to other house-

holds. H.R.Rep. No. 100-187, pt. 2 at 20 (1988); see ABC,

Inc. v. PrimeTime 24 Joint Venture, 184 F.3d 348, 350-351

(4th Cir.1999); CBS Broadcasting, Inc. v. PrimeTime 24

Joint Venture, 48 F.Supp.2d 1342, 1355 (S.D.Fla.1998).

55. As stated above, the satellite carrier’s license is

limited to “unserved households.” Under SHVA, an un-

served household was described as a residence that:

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

tional, stationary, outdoor rooftop receiving an-

tenna, an over the air signal of a primary

network 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

(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

62a

primary network station affiliated with that net-

work.

17 U.S.C. § 119(aX(2) (1996). The Satellite Home Viewers

Improvement Act (““SHVIA”), enacted in November 1999,

renewed SHVA’s existing statutory copyright license and

altered the definition of unserved household. CBS Broad-

casting, Inc. v. EchoStar Communications Corp., 265 F.3d

1193, 1198 (llth Cir.2001). Now, under the SHVIA

amendments, “unserved household” is defined in five

different ways.

56. First, an unserved household means a household

that “cannot receive, through use of conventional, station-

ary, outdoor rooftop receiving antenna, an over-the-air

signal of a primary network station affiliated with that

network of Grade B intensity as defined by the Federal

Communications Commission under section 73.683(a) of

title 47 of the Code of Federal Regulations, as in effect on ~

January 1, 1999.” 17 U.S.C. § 119(d)(10)(A). Second, a

household is unserved if it receives a waiver from each

network station affiliated with a particular network that

is predicted to deliver a Grade B or better signal to the

subscriber’s residence. 17 U.S.C. § 119(d)(10)(B). Third,

the term unserved household includes subscribers who

receive a signal of less than Grade A intensity for a par-

ticular network and who received satellite service of that

network’s signals on October 31, 1999 or had such service

terminated for SHVA ineligibility between July 11, 1998

and October 31, 1999 (“grandfathered subscribers”). 17

U.S.C. §119(d)(10)(C). Fourth, an unserved household

* The Grade B standard found in the first definition of unserved

household has been a part of SHVA since its enactment in 1988.

63a

includes subscribers who receive distant signals through a

satellite dish located on a commercial truck or recreational

vehicle, and who satisfy the strict documentation require-

ments. 17 U.S.C. § 119d)(10)(D). Finally, a [sic] exemption

exists for secondary transmissions by C-band services of

network stations that a subscriber to a C-band service

received before any termination of such secondary transmis-

sions before October 31, 1999.’ 17 U.S.C. § 119(d)(10)(E).

57. A satellite carrier, such as EchoStar, has the

burden at trial of proving that its transmission of distant

network programming goes only to unserved households.

17 U.S.C. § 119(a)(5\(D); CBS Broadcasting, Inc. v. EchoStar

Communications, 265 F.3d at 1201; CBS Broadcasting Inc. v.

PrimeTime 24, 48 F.Supp.2d at 1356; ABC, Inc., 184 F.3d at

352.

58. Congress has provided two methods to be used

by a Court in determining the signal intensity at a par-

ticular location: (1) predictions made using a computer

model approved by the FCC called the Individual Location

Longley-Rice (“ILLR”) model (17 U.S.C. § 119(a)(2B)(ii(D);

and (2) signal intensity measurements, following FCC-

prescribed procedures, in the vicinity of the subscriber’s

home (17 U.S.C. § 119(a)(2)(B)(ii)ID)). The first method

allows a satellite provider to establish presumptively that

a subscriber qualifies as unserved where the ILLR model

establishes that the residence cannot receive a Grade B

over-the-air signal of a primary network station. 17 U.S.C.

’ C-band service is defined as “a service that is licensed by the

Federal Communications Commission and operates in the Fixed

Satellite Service under part 25 of title 47 of the Code of Federal

Regulations.” 17 U.S.C. § 119(aX2)(B)iiiI1). This provision is not

relevant to EchoStar’s small-dish service.

64a

§ 119(a)(2)(BXiiXT); CBS Broadcasting, Inc. v. EchoStar

Communications Corp., 265 F.3d at 1200.

B. EchoStar’s Compliance with SHVA

59. The Court finds that EchoStar has failed to meet

its burden of proving that its subscribers are “unserved

households.” First, EchoStar has failed to show that its

distant signal subscribers cannot receive an over-the-air

signal of Grade B intensity. EchoStar did not present at

trial any ILLR analysis of its distant network signal

subscribers nor did EchoStar present any results of signal

intensity measurements at the homes of representative

subscribers.’ Additionally, Mr. Cohen’s testimony and

_ reports, as discussed in the Court’s Findings of Facts,

support the conclusion that hundreds of thousands of

EchoStar’s distant network programming subscribers are

not unserved households. The Court notes that Mr.

Cohen’s direction to Decisionsmark to round dBu levels to

47 when the result was above 46.5, but below 47, was

improper. However, Mr. Cohen corrected this error, and

his conclusion tiat a large number of EchoStar’s distant

network subscribers are ineligible was not disturbed by

* An engineering firm hired by EchoStar, Hammett & Edison, did

perform a small-seale ILLR analysis of 956 EchoStar subscriber

locations. However, as William Hammett testified, the purpose of that

analysis was not to present an audit of the eligibility of EchoStar

distant network programming subscribers. Rather, the purpose of the

study was to illustrate the fact that different vendors sometimes

produce different results when performing an ILLR analysis.

* A dBu level of 47 is the cutoff for determining Grade B eligibility.

Approximately 12,000 customers had a du initially rounded up to 47

by Mr. Cohen. Similar de minimus amounts of customers had a dBu

rounded up to 56 and 64 for higher numbered television channels.

65a

the error. Finally, the Court finds that the use of NAD83 is

appropriate (as opposed to NAD27) to calculate data

points; however, the effect of any possible use of NAD27 by

Decisionmark in the ILLR analysis of the April 2002

subscriber list would be de minimus and would not affect

Mr. Cohen’s conclusions regarding the large number of

ineligible subscribers; the difference between NAD83 and

NAD27 results in a difference of one hundred (100) feet or

less in an actual location.

60. Additionally, no basis exists in SHVA nor in the

FCC’s directives concerning the ILLR model to support the

use of the “DMA rule.” From the time EchoStar began

using ILLR until October 2000, EchoStar, in running

potential subscribers through the ILLR model, failed to

consider stations that were predicted by the ILLR model to

deliver a Grade B or better signal to its subscribers be-

cause these stations were not in the same Nielsen defined

DMA as the subscribers. The Court finds that use of the

“DMA Rule” is improper and that EchoStar’s ILLR meth-

odology was flawed during the time tha

This text is long and has been trimmed here. Open the source document for the complete record.

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