By Lauren Gelman on November 17, 2008 at 3:09 pm
Author: Stuart Loh
The plaintiffs, Echostar Satellite LLC and its related companies ("Echostar"), provide pay-TV programming to their customers via encrypted satellite broadcast. Echostar provides its customers with a satellite dish and receiver that enable them to decrypt paid programming. The defendant, Freetech, Inc. ("Freetech"), sells Free-to-Air ("FTA") receivers. Although Freestar’s FTA receivers as sold are not capable of intercepting Echostar’s encrypted satellite signals, the receivers could be modified by third parties to do so. Consequently, Echostar filed a suit claiming that the receivers are primarily designed for unlawful purposes and that Freestar provided assistance to intercept or receive the encrypted signals in violation of the DMCA, 17 U.S.C. §§ 1201(a)(2) and 1201(b)(1), and the Communications Act, 47 U.S.C. §§ 605(a) and 605(e)(4). In the instant proceedings, Freetech moved for a protective order against 17 subpoenas that Echostar served on Freetech’s distributors seeking the identity and contact information of every purchaser of Freetech’s FTA receivers pursuant to its lawsuit.
In granting Freetech’s protective order under Rules 26 and 45 of the Federal Rules of Civil Procedure, the court held that the customer information sought had insufficient value in helping Echostar prove that Freetech had breached the DMCA and Communications Act. It was also of insufficient value in helping Echostar to calculate damages.
In reaching this holding, the court assessed whether the need for the requested information outweighed the negative impact on persons affected by the subpoenas. In relation to the DMCA claims, such need could not be identified. The DMCA claims concerned the prohibition on the manufacturing and provision of certain devices which can be used to circumvent an access control system (e.g., devices which are "primarily designed" for that purpose). However, the court could not see how customers could offer information about whether this had occurred – customers would not be able to say whether Freetech primarily designed the FTA receivers for circumvention purposes. It also identified alternative, superior sources of evidence, including marketing materials from Freetech’s distributors, and expert witnesses who could provide information on the FTA receiver industry. Further, the effect of the subpoena on third parties would be "markedly intrusive." Although the subpoena would potentially have allowed Echostar to identify by whom satellite piracy was being conducted, it would also encompass legitimate users of the FTA receivers. The overly broad nature of the subpoena could be perceived as harassment of such users and could chill the future purchase and lawful use of the FTA receivers.
A similar line of reasoning was followed in relation to the claims involving the Communications Act. The knowledge held by the customers was not likely to be of help in showing whether Freetech knew or had reason to know that its FTA receivers were "primarily of assistance" in the decryption of access control systems.
The court found that customer information was more pertinent in relation to calculating damages but, without giving much additional reasoning, held that the negative impact on the subpoenaed parties outweighed the usefulness of that information. It also noted that there were alternative, less intrusive methods to obtain the evidence required, but did not specify those methods.
In its submissions, Echostar referred to two cases in which customer information had been successfully subpoenaed. VISA Int’l Serv. Ass’n v. Bankcard Holders of Am., 784 F.2d 1472 (9th Cir. 1986) concerned infringement of Visa’s trademark and Turmenne v. White Consol. Indus., Inc., 266 F. Supp. 35 (D. Mass. 1967) was an antitrust case in which the defendant was alleged to have engaged in improper conduct in marketing products to customers. The court distinguished these two cases on the bases that, in those cases, customer knowledge was relevant towards proving the plaintiff’s claims (e.g. in VISA Int’l Serv., public perception was important as to whether public confusion over Visa’s trademark had occurred) and no alternative, less intrusive means of obtaining similar evidence existed.
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