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Ad-skipping device at heart of legal battle between Fox, Dish

By Meg James and Joe Flint, Los Angeles Times –

LOS ANGELES — Fox Broadcasting Co. has sued Dish Network, becoming the first television network to fire a legal salvo over the satellite company’s controversial new ad-skipping device called AutoHop.

Dish, meanwhile, filed its own lawsuit, which asks a federal judge to declare that AutoHop violates no copyright laws. Dish sued not only Fox, but also CBS, Walt Disney-owned ABC, and Comcast Corp. controlled-NBC.

The television industry is grappling with new technologies that threaten to undercut the billions of dollars a year that the networks collect from advertisers to run 30- to 60-second television commercials. That advertising revenue underwrites the high cost of producing television shows.

Fox filed its copyright violation and breach-of-contract suit against Dish on Thursday in U.S. District Court in Los Angeles. Dish filed its suit in U.S. District Court in New York.

“The suit asks for a declaratory judgment that the AutoHop feature does not infringe any copyrights that could be claimed by the major networks, and that Dish, while providing the AutoHop feature, remains in compliance with its agreements with the networks,” the Englewood, Colo., company said in a statement.

While consumers with digital video recorders can fast-forward through commercials of recorded shows, Dish’s AutoHop takes it a step further. The screen goes black when a commercial break appears. A few seconds later, the program returns. The service can’t be used on live programming, such as a sporting event, even after it has been recorded.

With more than 14 million subscribers, Dish Network Corp.’s new technology may threaten the networks’ ability to continue to charge premiums for their commercial time.

Dish Network’s new feature, launched earlier this month, comes at a particularly awkward time for broadcasters as they are beginning negotiations with advertisers over the sale of their commercial time for the 2012-2013 television season.

“We were given no choice but to file suit against one of our largest distributors, Dish Network, because of their surprising move to market a product with the clear goal of violating copyrights and destroying the fundamental underpinnings of the broadcast television ecosystem,” Fox said in a statement. “Their wrongheaded decision requires us to take swift action in order to aggressively defend the future of free, over-the-air television.”

Dish, for its part, said the new technology was simply making it easier for consumers to avoid commercials.

“Viewers have been skipping commercials since the advent of the remote control; we are giving them a feature they want and that gives them more control,” David Shull, Dish senior vice president of programming, said in a statement. “We don’t believe AutoHop will substantially change established consumer behavior, but we do believe it makes the viewing experience better.”

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