Dish Network L.L.C. v. World Cable Inc.

893 F.Supp.2d 452

DISH NETWORK L.L.C., EchoStar Technologies L.L.C. and Nagrastar LLC, Plaintiffs,

v.WORLD CABLE INC., d/b/a www. worldcable. tv, Premium Hosting.Net Inc., Statewide Management Holding, Inc., Sajid Sohail, Yasmine Malik, Shahid Rasul a/k/a “Bob Rasul” and John and Jane Does 1–5, Defendants.

No. 11–CV–5129 (ADS)(WDW).

United States District Court, E.D. New York.

Sept. 28, 2012.

Kenney Shelton Liptak Nowak by James S. Nowak, Esq., of Counsel, Buffalo,NY, Green, Miles, Lipton & Fitz–Gibbon, LLP by John M. McLaughlin, Esq., Of Counsel, Northhampton, MA, for plaintiffs.

Law Offices of Patrick J. Sullivan, PLLC by Patrick J. Sullivan, Esq., of Counsel, Mineola, NY, for defendants.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

On July 17, 2009, Plaintiffs DISH Network, L.L.C. (“DISH Network”), EchoStar Technologies L.L.C. (“EchoStar”), and NagraStar L.L.C. (“NagraStar” and together with DISH Network and EchoStar, “the Plaintiffs”) commenced this action against Defendants World Cable Inc., d/b/a www. worldcable. tv (“World Cable”), PremiumHosting.Net Inc. (“Premium Hosting”), Statewide Management Holding, Inc. (“Statewide”), Sajid Sohail (“Sohail”), Yasmine Malik (“Malik”), and Shahid Rasul a/k/a “Bob Rasul” (“Rasul” and collectively “the Defendants”), alleging violations of the Digital Millennium Copyright Act, 17 U.S.C. § 1201 (“DMCA”), the Communications Act of 1934, 47 U.S.C. § 605 (“the Communications Act”), and New York state law. Presently before the Court is a motion by the Defendants pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ.P.”) 12(b)(6) to dismiss the DMCA and Communications Act causes of action for failure to state a claim, and a motion by the Plaintiffs pursuant to Fed.R.Civ.P. 15(a) to amend the complaint. For the reasons set forth below, the Court grants the Defendants motion to dismiss the complaint. In addition, the Court grants in part, denies in part, and reserves decision in part with respect to the Plaintiffs' motion to amend.

I. BACKGROUND

A. Factual Background

The following facts are drawn from the Plaintiffs' proposed second amended complaint. For purposes of this motion to dismiss and motion to amend, the Court accepts all well-pleaded, nonconclusory factual allegations as true and treats them in the best light for the Plaintiffs. See Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949–50, 173 L.Ed.2d 868 (2009); Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 88 (2d Cir.2009).

Plaintiffs DISH Network, EchoStar, and NagraStar operate various elements of the DISH Network satellite television distribution system. DISH Network is a satellite television company that delivers hundreds of channels with movies, sports, and general entertainment services to subscribers who pay a fee to receive such services. EchoStar designs and delivers to DISH Network subscribers the equipment necessary to receive DISH Network satellite programming services, including a small satellite DISH antenna and an integrated receiver/decoder (the “EchoStar receiver”). NagraStar provides smart cards and other technology that are included in a DISH Network customer's EchoStar receiver. Through the use of the EchoStar receiver and the NagraStar smart card, DISH Network is able to control what programming subscribers can receive based on their subscriptions.

DISH Network contracts for and purchases the distribution rights for the copyrighted programming it broadcasts from a number of different outlets, including content providers from outside the United States. Relevant to the instant case, DISH Network has entered into agreements whereby it obtained the rights to distribute the content from the following twelve South Asian channels through its satellite signals to its subscribers in the United States: “ARY DIGITAL”, “ARY ONE (NEWS)”, “ATN BANGLA”, “CHANNEL I”, “DAWN NEWS”, “EKHUSEY”, “EXPRESS NEWS”, “GEO TV”, “GEO NEWS”, “HUM”, “PTV”, and “TV ONE” (the “subject channels”). With respect to four of those channels, “ARY DIGITAL”, “ARY ONE (NEWS)”, “ATN BANGLA”, and “GEO NEWS”, DISH Network has agreements giving it the exclusive rights to broadcast the programming (“the exclusive rights channels”).

DISH Network utilizes the following “conditional access system” to provide security for the DISH Network satellite signal (“the DISH signal”) and therefore protect the content on the subject channels from unauthorized viewing. First, DISH Network digitally compresses and digitizes its satellite television programming and then encrypts (electronically scrambles) it before transmitting it to its customers. This encrypted DISH signal is then transmitted to satellites above the Earth; transmitted back down to customer's satellite dish antenna; and then relayed by a cable wire to the customer's EchoStar receiver. Finally, the NagraStar smart card works with the EchoStar receiver to decrypt or descramble the encrypted DISH signal. Through the use of the conditional access system, DISH Network can restrict access to its signals to its paying subscribers.

Defendant World Cable is a New York corporation that operates a telecommunications distribution company through the website www. worldcable. tv. World Cable operates a television signal distribution business in the New York City/Long Island area, which distributes television signals through an Internet Protocol Television (“IPTV”) system. Through these signals, World Cable transmits to its subscribers approximately 130 channels, many of which originate in South Asia. To obtain access to the World Cable IPTV system, subscribers pay a monthly subscription fee and purchase a set top box (“the World Cable box”). As described by the Plaintiffs:

The World Cable box is designed to make a direct-to-server internet connection with the World Cable server. Once connected to the World Cable server, the World Cable box streams the video channels from the server directly onto subscriber's television set. The subscriber can then utilize a remote control tied to the World Cable box to switch channels and watch programming in real-time, almost as if the subscriber were watching the commensurate satellite television feed for the real-time programming.

(PSAC, ¶ 35.)

According to the Plaintiffs, defendant Premium Hosting, also a New York corporation, is one of the web-hosting companies that effectuates the direct-to-server connection between the World Cable boxes and the World Cable server. Defendant Shahid Rasul is the chairman or chief executive officer and the principal executive officer of World Cable and the president of Premium Hosting.

At an unspecified time, DISH Network entered into the following subscription agreements that establish DISH Network accounts with the following individual defendants, who the Plaintiffs allege were undisclosed agents or employees of World Cable (“the individual accounts”):

• a commercial subscriber agreement with defendant Statewide Management Holding Inc., which authorized the receipt of DISH Network programming at a commercial location specified on the account, 1983 Marcus Avenue, North New Hyde Park, Nassau County, N.Y. 11042 (“the Statewide account”). This address is also the business address for World Cable. In addition, defendant Sajid Sohail is the chairman or chief executive officer of Statewide. In association with this account, Statewide had five separate EchoStar receivers that were listed as active on the account, bearing serial numbers: R0080381823; R0081455994; R0078855235; R0078988218; and R0073393471.

• two residential subscriber agreements with Sajid Sohail. Sohail's first agreement with DISH Network authorized the receipt of DISH Network programming at the residential location specified on the account, 270 I U Willets, Road, Albertson, Nassau County, N.Y. 11507 (“Sohail's first account”) and the second agreement limited the receipt of DISH Network programming to the allegedly non-existent residential address located on the account, 270 I U, # U, Willets Road, Albertson, N.Y. 11507 (“Sohail's second account”). Three separate EchoStar receivers were associated with Sohail's first account, bearing serial numbers R0053416600; R0038531642; and R0035527026, and two separate EchoStar receivers were associated with Sohail's second account, bearing serial numbers R0064424827 and R0066742196.

• a residential subscriber agreement with Yasmine Malik, which authorized receipt of DISH Network programming at the residential location specified on the account, 226 Floral Avenue, Plainview, N.Y. 11803 (“the Malik account”). According to the Plaintiffs, although her account remained active as of December 1, 2011, Malik no longer resided at the residential address listed in the agreement. Three separate EchoStar receivers were associated with the Malik account bearing serial numbers: ROI09658475; ROI09608463; and ROI09722637.

• a residential subscriber agreement with Shahid Rasul, which authorized the receipt of DISH programming at the allegedly non-existent address 272 I U Willets Road, Albertson, New York 11507 (“the Rasul account”). Three separate EchoStar receivers were associated with the Rasul account, bearing serial numbers: R0080504930; R0080052849; and R0083273667.

According to the Plaintiffs, in entering into these subscription agreements, Statewide, Sohail, Malik and Rasul agreed to view the programming only at the address associated with their particular account, and agreed not to re-broadcast or transmit the DISH Network signals. However, at an unspecified time, the Plaintiffs conducted an undercover investigation and allegedly determined that: (1) at least as of December 1, 2011, and for some time prior to that date, the EchoStar receivers associated with the individual accounts were not located at the addresses associated with the accounts and (2) the subject channels were being routed from the individual accounts and re-broadcast through the World Cable IPTV distribution system (“the re-broadcasting...