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EXHIBIT 1
MOTIONS HEARING - MAY 30, 2013 Page 1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case No. 13-CV-00832-PAB-KLM
Proceedings before KRISTEN L. MIX, United States Magistrate Judge, United States District Court for the District of Colorado, commencing at 10:01 a.m., Friday, May 31, 2013, in the United States Courthouse, Denver, Colorado. WHEREUPON, THE ELECTRONICALLY RECORDED PROCEEDINGS ARE HEREIN TYPOGRAPHICALLY TRANSCRIBED... APPEARANCES MS. ELYSE D. ECHTMAN, ESQ. Appearing on behalf of the Non-party Movant. MR. SEAN R. GALLAGHER, ESQ., MS. JULIE A. SHEPARD, ESQ. Appearing on behalf of the Respondents.
MOTIONS HEARING
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MOTIONS HEARING - MAY 30, 2013 Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S (Whereupon, within the electronically recorded proceedings are herein transcribed, pursuant to order of counsel.) THE COURT: Good morning. Good morning.
-- 13-CV-00832, Dish Network, LLC versus WNET, et al. Let's have counsel enter appearances, please. MS. ECHTMAN: Good morning, Your Honor. My
name is Elyse Echtman of Orrick, Herrington & Sutcliffe. I represent non-movement -- sorry, non-party movant Dish Network, LLC. THE COURT: Good morning. Good morning, Your Honor.
MR. GALLAGHER:
Sean Gallagher from Pulsinelli, PC on behalf of the respondents. Also with me at counsel table is Julie
Shepard from Jenner and Block. THE COURT: MS. SHEPARD: THE COURT: Good morning. Good morning. We're here on the non-party Dish Counsel, for
purposes of efficiency I want to assure you that I have reviewed the motion to quash and its exhibits, respondent's opposition to the motion to quash and it's
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MOTIONS HEARING - MAY 30, 2013 Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 exhibits, and the reply in support of the motion to quash and its exhibits. I have also reviewed the
opinion of Judge Nathan in -- excuse me, in American Broadcasting Company's, Inc. versus Aerio, Inc. reported at 874 F.Supp. 2d, 373 and the Second Circuit decision in WNET, et al versus Aerio, Inc. reported at 712 F.3rd 676. With that background I'll hear from the non-party Ms. Echtman. Thank you, Your Honor. I'll
movant first.
MS. ECHTMAN:
just jump right in to the reasons why this discovery is unnecessary and burdensome. First, the respondents asked Dish to produce documents that are available from the party to its litigation, Aerio. They asked for any draft or final
agreements or memorandum of understanding between Dish and Aerio on different subject matter. discovery can be had from Aerio. All of that
have taken discovery from Aerio, but the discovery was scant. They provided no basis to suspect that Aerio
didn't produce everything it had and, indeed, there are multiple decisions from this district court holding that when discovery may be had from a party to the litigation those efforts must be fully exhausted and you cannot obtain duplicative discovery from a non-party. It's
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MOTIONS HEARING - MAY 30, 2013 Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reason those portions of the subpoena should be quashed. Second, the remainder of the materials that the respondents seek from Dish are highly confidential internal analyses and documents. When -- when
confidential materials are requested, the -- the subpoenaing party has a duty to show that they are both relevant and necessary to the litigation. Not only
that, when the documents are sought from a competitor, and Fox asserts that Aerio and Dish are indeed competitors, and the documents have the potential to put the non party at a competitive disadvantage, a substantial need must be shown. The existence of a There's a
presumption of harm, and it must be something that is substantial and necessary -- substantially necessary to the litigation. That showing has not been made here.
And the types of documents sought, to the extent they might exist, are sensitive for several reasons. Fox wants any internal valuations and analyses Now, in this action
those -- those documents would be required to be produced to Aerio which is a litigant here. Fox also To the
extent that might be so it would be harmful to Dish to produce its internal -- its internal versions and
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MOTIONS HEARING - MAY 30, 2013 Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case. valuations relevant to any such negotiations to the party to which it might be sitting across the table. At the same time, Fox says, well, it wants Dish's internal analyses and valuations about how the very existence of Aerio might assist Dish in its retransmission consent negotiations with the network such as Fox and the other respondents in the case. Again, that would harm Dish because Dish at some point will be sitting across the table from Fox in connection with retransmission consent negotiations. Dish and Fox are currently parties to a retransmission consent agreement and Fox wants a sneak peek into what Dish's plans might be and its future negotiations with it and other networks. Again, that's something that
Dish should not be compelled to produce to Fox. In addition, none of this is necessary to the This all goes to the issue of irreparable harm as The district court in New York has They
Fox concedes.
already found that Fox made a sufficient showing. say Aerio is still contesting it.
more evidence on how Aerio might harm it in connection with retransmission consent negotiations it's in the best position to have that. The declaration of Sherry Brennen shows that. Ms. Brennan, a Fox executive, says that Dish regularly
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MOTIONS HEARING - MAY 30, 2013 Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 engages -- I mean, Fox regularly engages in retransmission consent negotiations with paid TV providers such as Dish. To the extent that it's already
sat across the table and a party has raised Aerio as an issue and said I'm going to pay you less because Aerio is out there, and Aerio is not paying retransmission consent fees. Well, that's the best evidence.
What Dish's plans might be with respect to negotiations that may happen in the future and whether those negotiation positions may be successful or not is all very speculative. It's a fishing expedition.
They've got no reason to believe that those plans have been made. And if they have, they shouldn't be able to
get them in connection with the litigation. THE COURT: MS. ECHTMAN: Let me ask you -Because Fox knows what people
have said when they've sat across the table from Fox, and that's Fox's best evidence. And the district judge
already agreed with Fox and said, you have what you need on this topic. THE COURT: two questions. Well, let me ask you, Ms. Echtman,
documents that they're requesting and the subpoena that relates to drafts or final agreements or memorandums of understanding between Aerio and Dish or EchoStar. Is it
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MOTIONS HEARING - MAY 30, 2013 Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 your contention that those documents are also confidential if they exist? MS. ECHTMAN: If they exist in Dish's files
and they haven't been shared with Aerio, yes, they're confidential, and it would put Dish at a competitive disadvantage to share them. Anything that's in Aerio's
possession they already have and they can get directly from Aerio which is a party to their litigation. To the
extent there might be something that was not shared with Aerio in Dish's possession that would be harm a to Dish. THE COURT: Let me ask you this. Is there any
argument made by Fox, as you understand it, that the documents requested go not to the issue of irreparable harm, but to the issue of damages that they've requested in their complaint in the Southern District of New York? MS. ECHTMAN: Well, if they're on the issue of And Dish
damages they would have to be present damages. and Fox have a -- have a retransmission consent agreement that's been in effect for years.
So, what
might happen in the future wouldn't be relevant to actual damages. And in terms of how their negotiating
position might be affected by the existence of Aerio, they're engaged in these types of negotiations all the time. And if Aerio's been raised, it's been raised, and
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MOTIONS HEARING - MAY 30, 2013 Page 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ended up receiving less in retransmission consent fees because of the existence of Aerio as opposed to what might possibly happen in future negotiations. THE COURT: What if there is in the records of
Dish an agreement between Dish and Aerio, but that doesn't take effect until January 1st, 2014? Couldn't
that arguably go to the issue of damages in the case in New York? MS. ECHTMAN: But if there's a final agreement
between Dish and Aerio that might go into effect in the future they could get that agreement from Aerio. And,
indeed, they could ask Aerio in any deposition about any future plans with Dish. They don't need to ask those
questions of Dish, and they don't need to get any internal documents from Dish. THE COURT: MS. ECHTMAN: THE COURT: Thank you. Thank you. Mr. Gallagher. Good morning, Your Honor.
MR. GALLAGHER:
I think those of us who have followed this litigation often think of EchoStar versus Fox or Dish versus Fox because there has been litigation between those two
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MOTIONS HEARING - MAY 30, 2013 Page 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 parties. But it's also important to note that the
respondents in this case are not just -- it's not just Fox. PBS is also one of their respondents that's So while counsel has
attempted to focus a discussion on a dispute between Fox and Dish, there are other parties that are seeking the same information by subpoena. about Fox. We're not just talking
We're talking about all of the respondents. Let me begin with two threshold observations.
The first is that Dish is asking this court to take an extreme position that no discovery whatsoever should be permitted. And as we know, Rule 45 certainly permits
that scenario but it only permits that kind of wholesale foreclosure of discovery upon extraordinary circumstances. The other thing, especially, that's evident in the briefing is that Dish's motion somewhat conflates the concept of undue burden with protection of proprietary information. things. They're really two different
argument, and especially in the pleadings, there really has been no showing of traditional undue burden. There's no suggestion that it's going to be expensive to collect these documents or any documents that would be responsive. There's no suggestion that there's any
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MOTIONS HEARING - MAY 30, 2013 Page 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 electronically stored information that's going to be -that's going to be required to be accessed. There's no
suggestion that there should be any cost sharing. So, I think the focus, really, of the court's attention should not be on the burden issue, but it should be on the protection of intellectual property or trade secrets. Dish essentially argues that documents that are available from other sources are by definition unduly burdensome and should be denied. They're
essentially arguing that documents -- since documents can be available from Aerio third-party discovery is inappropriate. And that's certainly not the rule in
this circuit or any others. We start with the basic -- basically standard for discovery that a request for discovery should be considered relevant if it's possible that the information could be relevant to a claim or defense. And the burden of asserting a -- asserting a restriction on the discovery falls upon Dish. They bear the burden
of objecting and -- and convincing this court that the objection is appropriate. THE COURT: Do you dispute though,
Mr. Gallagher, that the preferred method of discovery of information that might be in the possession of an
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MOTIONS HEARING - MAY 30, 2013 Page 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 issues. opposing party, and might be in the possession of a third parties as well is from the opposing party? MR. GALLAGHER: Oh, absolutely. And that's
exactly what happened in this case, Your Honor. Discovery has been ongoing for sometime against Aerio. But -- but the suggestion that simply some of these documents might be available from Aerio, so none of this discovery is appropriate from Dish is -- is simply not the law. THE COURT: Who has the burden of showing
whether these documents are available from Aerio or not, and if so whether they have been obtained from Aerio? MR. GALLAGHER: Well, those are two different
discovery has the initial burden of establishing through some sort of appropriate proffer to the court that -that this information is objectionable. And in simply
saying that -- that since some of the discovery requests or some of the subpoenaed requests could be read as requiring us to produce communications with Aerio no -no discovery should occur, they simply haven't carried that burden. Now, with regard to duplication there certainly is a possibility that there could be some duplication in production, and -- but that's -- that is
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MOTIONS HEARING - MAY 30, 2013 Page 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the situation in every third party -- or in many third-party subpoena situations. The possibility, the
mere possibility of duplication isn't enough in order to justify the wholesale foreclosure of discovery. And in
fact, you know, both parties have briefed the relevance of -- of information that while it might be similar, there might be discrete and unique electronically stored information, e-mails, or other documents that Dish has, even if -- even if we're talking about an e-mail thread with Aerio. be relevant. There might be BCCs on e-mails that would There might be comments. There might be
The point is we -- we don't know what's there. But we do know from other discovery that's occurred in this case that there have been documents obtained from other third parties that -- that are unique to those third parties and the characterizations by those third parties of what it is that Aerio does would be relevant and discoverable, and perhaps admissible in the underlying case. I think the important thing here to point out, between this -- the relationship of these parties, and let's talk about Fox because that's the focus at least of Dish's argument this morning. Dish is not just some
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MOTIONS HEARING - MAY 30, 2013 Page 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 uninterested third party. Dish is essentially the
customer of -- well, certainly the customer of Fox. Dish carries Fox programming. uninterested party. THE COURT: So Dish is not an
customers too, as do some of the other plaintiff's in the underlying litigation. And have they served
third-party subpoenas on other customers besides Dish? MR. GALLAGHER: I don't know. But -That troubles me. Well -And what Your Honor, I -- I don't know.
THE COURT:
troubles me also is the existence of this underlying litigation between Fox and Dish in the Northern District of California. And, you know, I'm not suggesting that I
thoroughly adopt Dish's point of view that this is necessarily a fishing expedition in conjunction with that other litigation, but to the extent that other third-party subpoenas have not been served in connection with the New York litigation on other customers quote/unquote of Fox it does tend to show that there's some targeting going on here, and why that would be occurring is troubling to the court. MR. GALLAGHER: Well, let me explain why this
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MOTIONS HEARING - MAY 30, 2013 Page 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 customer is unique among customers of -- of Fox. customer is both a customer of Fox and a potential acquirer of Aerio. And the reason that Dish may have an This
interest in acquiring Aerio is because it could effect Dish's negotiating ability with regard to their retransmission fees. THE COURT: What about Direct TV? Wouldn't
they have an interest in acquiring Aerio as well? Aren't there other similar companies to Dish that might have an interest. MR. GALLAGHER: Well, I believe Direct TV is
owned by News Corp., so I mean that's -- you know, and that's probably the only other -- you know, the only other potential competitor in this space. Dish is uniquely positioned here. But -- but
they a customer of Fox, but if Dish acquires Aerio then Dish can essentially obtain the signals of these broadcast television networks from Aerio and use that in lieu of signals that they currently acquire. Now, the reason that's important, it's not because of the fact that they could do that. It is
because that very -- the very thing that makes Aerio an interesting target for Dish is that Aerio permits or arguably permits a -- a -- an acquiring company to avoid paying retransmission fees. So the reason that this
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MOTIONS HEARING - MAY 30, 2013 Page 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 discovery is appropriate as to this particular third party is because the very fact that Dish is interested demonstrates that there's market harm. THE COURT: Well, tell me more about the
market harm because, frankly, I find the argument that Dish has made that Judge Nathan has already held that your client has demonstrated that it suffered irreparable harm to be quite compelling. Why would you
need all of this information from Dish to further bolster a finding that's already been made by the district court? MR. GALLAGHER: Well, there hasn't been --
there hasn't been a finding at trial made. THE COURT: Well, the finding -- the standard
for preliminary injunction and permanent injunction with respect to irreparable harm is identical in the Second Circuit, and she's already found, and the Second Circuit has essentially acknowledged that she has already found that there has been irreparable harm to your clients. So that standard is not going to change on a permanent injunction. That leaves, in my view, the only
possibility being that you need this information for proof of your damages claim not your injunction claim. MR. GALLAGHER: claim is absolutely right. Well, I think the damages But let me -- I don't want
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MOTIONS HEARING - MAY 30, 2013 Page 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to surrender the hill here on irreparable harm. I'm not
trial counsel in the New York case, but I would be very surprised if this case goes to trial that Aerio would not try to reargue that -- that -- that harm issue. THE COURT: Mr. Gallagher. MR. GALLAGHER: Well, but that doesn't It's a (unintelligible) the case,
preclude it from being reargued -- I mean, it's -it's -- when you get to trial irreparable harm and damages are interwoven, and it's -- it's clearly relevant to damages. there are damages. of damages. THE COURT: Well, tell me how it is relevant. Well, because if Aerio has a It's clearly relevant to whether It's clearly relevant to the extent
MR. GALLAGHER:
particular market value, one of the components of that market value is that Aerio permits either Aerio or the company that owns it to avoid paying retransmission fees. THE COURT: And it's your contention that the
market value of Aerio is somehow relevant to the damages suffered by your clients? MR. GALLAGHER: Yes, because the market value
of Aerio is in many ways tied to the market value of what it does, and the market value of what it does is
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MOTIONS HEARING - MAY 30, 2013 Page 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ; that Aerio has taken extensive discovery on this issue of irreparable harm, and that Judge Pittman has ordered all the retransmission negotiations to be produced. So Aerio avoids its owner to repay -- from repaying transmission fees. THE COURT: Well, how is -- how does a breach
of copyright in a copyright infringement claim result in actual damages that relate to market value of an infringer? Show me a case -MR. GALLAGHER: THE COURT: Well --
reality is, Dish is -- the very reason that Dish is interested in Aerio is because it has a value. And that
value is absolutely relevant to whether there's a fact of injury for copyright purposes and if so what the damages would be.
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MOTIONS HEARING - MAY 30, 2013 Page 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 client -MR. GALLAGHER: THE COURT: Well -I know why. itself to argue that there is no irreparable harm at trial. So, the -- so the ultimate point, Your Honor, is whether you couch this as irreparable harm or damages or fair use for purposes of the -- of the defense under the Copyright Act, the documents that we are seeking are narrow -- first of all, the request is narrowly tailored. This is not a fishing expedition. These are
determining whether Dish had negotiations with Aerio and, if so, what the conclusions that Dish raised -- or reached concerning the value of Aerio and the utility of Aerio. THE COURT: It's fair to say that the point of
the document request is to find out whether Dish is going to buy Aerio and, if so, for how much, right. MR. GALLAGHER: is also important. THE COURT: Okay. Why is extremely important. I mean, your Right. And -- and why. Why
MR. GALLAGHER:
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MOTIONS HEARING - MAY 30, 2013 Page 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we don't have to prove why at trial. THE COURT: Do you have to prove why at trial? Well, I think we probably do.
all -- it's all included in the concept of what it is that Aerio does and why it causes damage. Finally, Your Honor, the -- the question becomes if the court is inclined to permit discovery under what circumstances should the court permit discovery? There is a protective order in place. The
protective order has been signed by all of the parties to the litigation. There is a counsel's-eyes-only It would certainly
be appropriate, we believe, for the court to condition production of documents on compliance with that protective order. It would be appropriate to condition
disclosure of the documents to counsel pursuant to the counsel's-eyes-only provision. Now, Dish has suggested that it would be inappropriate for Mr. Stone, in particular Rick Stone at Jenner and Block, to have access to the information because he's counsel both in this case and in litigation against Dish, but -- but that happens all the time. And
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MOTIONS HEARING - MAY 30, 2013 Page 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 if there is some sort of inadvertent use by Mr. Stone of information collected in this case in the other case there would be remedies available to address that in the other case. THE COURT: Well, let me ask something that's
slightly different but that also pertains to the protective order. What provision, if any, does the
protective order make for counsel's use of attorney's-eyes-only information in pleadings that might be reviewed by the client. MR. GALLAGHER: THE COURT: Your Honor, I --
MR. GALLAGHER:
ask Ms. Shepard to address that. MS. SHEPARD: Your Honor, in the protective
order in the Aerio case there is currently a provision that allows some -- I think it's called high level summaries, to be disclosed to in-house counsel. As I
have set forth in my declaration we have agreed to in other circumstances to not allow that. I certainly
think -- that was never raised as a concern by Dish's counsel when they contacted me. We would be more than We
amenable to leave it at outside counsel eyes only. have no issue, concern. If there's other notice
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MOTIONS HEARING - MAY 30, 2013 Page 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 problem, Your Honor. the documents. MR. GALLAGHER: Your Honor, it would seem to It's just important that we get
us also that one of the issues that Dish might have is if counsel-eyes-only discovery is permitted what do you do if -- if we mark one of these documents -THE COURT: Right. -- as a trial exhibit.
MR. GALLAGHER:
certainly be willing to enter into some sort of agreement or stipulated order with the court that requires notice in that situation and then -- and then Dish could take appropriate action, I would presume, in the Southern District of New York. But we certainly recognize that if -- if we were going to use or one of the parties was going to use one of these documents at trial or in a pleading that was not otherwise sealed that it would be appropriate to give notice and allow them an opportunity to protect that interest. THE COURT: What is the status of the It's
litigation in the Northern District of California? still on appeal over at the Ninth Circuit; is that right? The denial of the preliminary injunction?
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MOTIONS HEARING - MAY 30, 2013 Page 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. SHEPARD: The denial of the preliminary
injunction is being heard -- there's two preliminary injunction motions that have been filed, Your Honor. The denial of the preliminary injunction motion is being heard next week for the first preliminary injunction ruling. The other ruling, I believe, is still under
submission in that -- in that case. THE COURT: MS. SHEPARD: In the district court. In the district court, yes.
It's been heard and is under submission with the trial court there. THE COURT: All right. Thank you. I'll give
you an opportunity to respond Ms. Echtman. MS. ECHTMAN: MR. GALLAGHER: Thank you. Well, Your Honor, that's If there are no
basically the substance of my argument. further questions I thank the court. THE COURT:
invite you, Mr. Gallagher -- and of course counsel for Dish may do the same -- to attempt to clarify for me the connection between the information that you sought -you seek, and damages. Because, frankly, I'm not buying I think
that the judge has already made a finding of irreparable harm with respect to the preliminary injunction. I find
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MOTIONS HEARING - MAY 30, 2013 Page 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 no meaningful difference in the case law whatsoever between the quality or standard for irreparable harm and a preliminary injunction and on a permanent injunction. I think that is the law of the case. The parties may want to argue it out the ying-yang, but if I were Judge Nathan I would limit argument because the law of the case is that irreparable harm has already occurred; therefore, from my perspective the information that you seek from Dish is not necessary and probably not relevant to a showing of irreparable harm at this stage. But I am interested in the connection between the information you seek and your claim for damages under the Copyright Act. And that is not clear to me.
I understand in general your argument about market value, but, you know, most copyright cases result in a finding of statutory damages. There isn't a lot of law
on actual damages on the copyright cases, and I haven't found any yet that relates to actual damages in market value. So, to the extent that you can clarify that connection at length between the information that you seek and proof of actual damages in the copyright claim, I'll invite to you brief that. I'd like you to do that And I'd like you to
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MOTIONS HEARING - MAY 30, 2013 Page 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do that within one week of today's date unless there's a reason why you need more time. MS. SHEPARD: THE COURT: MS. SHEPARD: issue, Your Honor. THE COURT: MS. SHEPARD: additional briefing. You may. We'll be happy to submit With respect to the issue of the May I? You may. If I can just address that one
framing of that argument, Your Honor, we -- I would ask that that be with respect to the irreparable harm and market harm. And I want to clarify we are not seeking
actual damages. THE COURT: MS. SHEPARD: (Unintelligible). So that I don't want Dish to be
in a position that it has to argue something -- and I have looked at the cases that you are talking about, Your Honor, with respect to that issue, so -THE COURT: MS. SHEPARD: All right. -- the other thing, with respect
to the timing, I would typically say a week would be great, Your Honor, but we have an opposition to a summary judgment motion due in the Aerio case as well as numerous depositions and a hearing this next week on Tuesday. So, if we could have at least to maybe the
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MOTIONS HEARING - MAY 30, 2013 Page 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 following Tuesday to submit those papers I would appreciate it. THE COURT: That's fine. Let me ask you --
(Phone ringing.) THE COURT: doesn't mean anything. go off. Sometimes that happens. Don't worry about it. It It will
from (unintelligible) Credit Union call services security department. THE COURT: For your protection -I have no idea what this is. -- we have placed
RECORDED MESSAGE:
restrictions on your ATM card. THE COURT: It's a robo call from some -To remove restrictions and
RECORDED MESSAGE:
reactivate your card we must run a brief verification process to show that you are in possession of your card. This is just a security measure. your information security, skip -THE COURT: Thank you. If we already have
Isn't it amazing that the companies who -- who do credit card checks or own credit cards robo dial federal court numbers while court is in session. to admit, that's a first. I have
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MOTIONS HEARING - MAY 30, 2013 Page 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Anyway, let me ask you about your comment about the fact that the plaintiffs in the underlying case are not seeking actual damages. Has the complaint
been amended, because the original complaint does make a request and a prayer for relief for damages proven, or statutory damages. MS. SHEPARD: It hasn't formally been amended,
Your Honor, but through the correspondence with the court and all of the arguments that appeared before Magistrate Judge Pittman he has -- in his rulings that he's issued, it's clear that we have affirmatively taken that position and are bound by that determination. THE COURT: All right. So in other words,
your position is that to the extent that additional briefing is requested it should relate to the issue of irreparable harm and also statutory damages? MS. SHEPARD: THE COURT: MS. SHEPARD: because the -THE COURT: MS. SHEPARD: Okay. -- rulings that Judge Pittman Really market harm, Your Honor. Market harm. Market harm and irreparable harm
has made in the discovery that's been taken have really been focusing on those issues and we can relate those matters to you that way.
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MOTIONS HEARING - MAY 30, 2013 Page 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: All right. Fair enough. I'll
give you an additional brief of five pages due on or before -- I think you were requesting -- let's see, that would be Tuesday, June 10th? MS. SHEPARD: THE COURT: MS. SHEPARD: THE COURT: Yes, Your Honor. Will that work? Yes. Wait a minute. Let me make sure
June 11th, yes, Your Honor. All right. That's fine with me.
And of course Dish is welcome to submit simultaneous briefing at the same time. Ms. Echtman, from Dish? MS. ECHTMAN: MR. GALLAGHER: THE COURT: MS. SHEPARD: MS. ECHTMAN: Yes, there is, Your Honor. Thank you, Your Honor. And is there any reply,
simultaneous briefing may I request an opportunity to respond, because I don't know what arguments are going to be made. THE COURT: That's fine. And this really is
just to -- this is in the nature of what I would request from my law clerks with respect to a memorandum of
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MOTIONS HEARING - MAY 30, 2013 Page 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 existing law on the connection between damages, proof of market harm, so to speak, and irreparable harm, in the context of a copyright infringement action either at the preliminary injunction or permanent injunction stage. don't care much about the difference there. But to the I
extent that you feel that you need some time to respond I'll allow that. Is a week sufficient time to respond? One week is sufficient. All right. So the order in the
minutes should reflect that the -- the respondent shall file a brief with respect to the actual harm, slash -or excuse me, damages, slash, irreparable harm issue on or before June 10th of 2000 -- June 11th. MS. SHEPARD: MR. GALLAGHER: THE COURT: June 11th. June 11th.
and the movant shall respond on or before June 18th of 2013. No reply will be permitted. Ms. Echtman, do you have any further reply? MS. ECHTMAN: I do. One point that was made And
I -- I did mention Fox in my argument because Fox is the entity that Dish is in litigation with in the Central District of California. And as Ms. Shepard mentioned
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MOTIONS HEARING - MAY 30, 2013 Page 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 denied, and the appeal is being argued on Tuesday in Pasadena, and there's another preliminary injunction motion by Fox that's under submission before Judge Gee. THE COURT: MS. ECHTMAN: All right. But also that's because, like
you, Dish is troubled by the fact that it was singled out here. There are other very large pay television You mentioned Direct AT&T,
Direct TV and Time Warner are other entities that were mentioned in the Wall Street Journal as potentially having discussions with Aerio. To our knowledge those
entities, which also provide Fox's network and other networks to large numbers of individuals around the country on a pay TV basis and pay rate transmission consent fees to Fox and others, were not subpoenaed to our knowledge. And their internal confidential
negotiations strategy was not requested. In addition, there was a suggestion that we had conflated the burden issue with disclosure of confidential information. Well, the disclosure of
confidential information is burdensome. THE COURT: MS. ECHTMAN: I understand. And that's not to mean that
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MOTIONS HEARING - MAY 30, 2013 Page 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for a 30(b)(6) deposition, which requires that you produce someone most knowledgeable and all of the relevant documents that might be out there. Of course,
we would have to do an ESI search which is expensive and invasive and time consuming. In fact, the respondents' Well,
counsel said they're looking for e-mail trails. that's not going to be in hard copy. an e-mail.
That's going to be
and a hardship on a non party and it shouldn't be required when it's duplicative. In addition, respondents' counsel said duplication is not a basis to deny it. It doesn't
matter that you may have requested something first from a party to the litigation. In fact, there are multiple To the
extent that discovery is available from the party, you don't get anything from the non party. EchoStar case. That's in the
Your Honor's decision in the Rembrandt case where repeatedly with respect to particular requests where the discovery was available from the party, it was denied from the non party. THE COURT: What about this, Ms. Echtman.
What if I required as a condition of respondents' subpoena that the plaintiffs in the underlying
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MOTIONS HEARING - MAY 30, 2013 Page 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 litigation create a list of documents relating to these topics that they have already received from Aerio, and disclose those back to you so that no duplication of those documents would occur? MS. ECHTMAN: Yeah. And Dish would then have The subpoena was
that was sent to a related entity, EchoStar Technologies, which is Dish's technology vendor, and also the subpoena asked for all documents from any related entities. It's a very broad subpoena. It's
Dish Network, LLC and it attempts to get documents from every related entity that might have anything about Aerio or any types of valuations of Aerio. So, it still would entail a burden of non-party discovery when they don't have any basis to think or suspect that Aerio's production was not complete. They can ask Aerio at deposition if it had
any -- if they had any documents that they destroyed, but without a reason to believe that the production is incomplete, there's no reason to burden Dish with testing a party's production of its documents. just not Dish's responsibility. THE COURT: In Dish's view is there any It's
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MOTIONS HEARING - MAY 30, 2013 Page 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 network. producing the documents and the burden associated with giving a deposition? MS. ECHTMAN: There's no distinction when
you're talking about a 30(b)(6) deposition, because a 30(b)(6) deposition requires you to assemble documents and prepare a witness. It's not just saying, well, this
is a person who was mentioned who was on an e-mail chain with someone, and I want to ask them questions about that discrete e-mail chain where the person would have it readily available. deposition. What we've got is a 30(b)(6)
about a 30(b)(6) deposition you can't divorce it from a document request. There's the same level of burden. All right. Anything else?
go to irreparable harm and the market harm issue, which there's going to be supplemental briefing on. mention briefly if -- Fox knows what it gets in retransmission consent fees -THE COURT: MS. ECHTMAN: Right. -- related to its broadcast I'll just
if some entity is going to stop paying at those fees, it knows what they are. It knows --
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MOTIONS HEARING - MAY 30, 2013 Page 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here? future. THE COURT: MS. ECHTMAN: Right. -- how to project them into the
can help them do that analysis. THE COURT: I don't understand why that would
not be the measure of damages, the loss of the retransmission fees that would occur as a result of the purchase of Aerio by Dish or somebody else. MS. ECHTMAN: They don't -THE COURT: MS. ECHTMAN: Well known? And all the others. They don't Which are well known to Fox.
have to come to Dish and say what are you paying us, and what -- and if you happen to adopt the Aerio system what would you stop paying us. THE COURT: MS. ECHTMAN: Right. So -- so why -- so why do we go
requested is that there just doesn't seem to be a need and given -- at all, and there needs to be a substantial need to get Dish's internal documents. And in light of
the fact that there is ongoing litigation between Dish and Fox, and the 30(b)(6) notice references products that are issue in that litigation, it makes it all suspect that Dish has been singled out here for
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MOTIONS HEARING - MAY 30, 2013 Page 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MS. SHEPARD: if I may Okay. MS. SHEPARD: THE COURT: Honor. THE COURT: Thank you. Your Honor, could we just make discovery that no other similarly situated paid TV provider has been asked for. THE COURT: MS. ECHTMAN: All right. Thank you, very much, Your
MR. GALLAGHER:
one quick, I guess, sur-rebuttal point? THE COURT: You may. And would it be permissible
MR. GALLAGHER:
for Ms. Shepard to make that? THE COURT: Yes, that's fine. All right. Thank you, Your Honor.
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MOTIONS HEARING - MAY 30, 2013 Page 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tell you, with respect to retransmission consent if you're a commercial provider you can get -- you can get our broadcast signals at your home via antenna without paying. If you're a commercial service provider and you
capture the signals and you retransmit them you have to pay. That's what Dish does. THE COURT: MS. SHEPARD: Right. And they pay us those
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MOTIONS HEARING - MAY 30, 2013 Page 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There's been test -- there's public testimony and statements by Charlie Ergen that the existence of Aerio is having downward pressure on the retransmission consent fees. Quantifying that is really not possible,
and that's the definition of irreparable harm for us. So that's why I want to focus the briefs on irreparable harm.
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MOTIONS HEARING - MAY 30, 2013 Page 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And we will engage in whatever protective order measures that need to be put in place to address Dish's concerns on the confidentiality and notice. always been willing to do that. I've It's -- we need the discovery from Dish. not duplicative. It's -- it is important. It's
We will do
the briefing on irreparable harm and market harm to explain these issues and why it's not. While I would
love it if it was the law of the case and we didn't have to prove irreparable harm, the way the record exists right now it's not the case. Dish. And we are not targeting
meet-and-confer with respect to that as opposed to just an absolute we-won't-give-you-anything, those issues could have been addressed in a dialogue with Dish's counsel as the burden issues could have been. But it's
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MOTIONS HEARING - MAY 30, 2013 Page 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there. been absolute no production, no discussion as opposed to talking. THE COURT: Let me, Ms. Shepard, and
Ms. Echtman, for your benefit too, let me ask you or focus you on one issue that continues to trouble me with respect to this market harm issue in general. And that
is that I -- I don't understand how production of documents relating to any potential negotiations between Aerio and Dish would necessarily demonstrate the amount of downward pressure that could be placed on retransmission fees from a potential agreement between these two entities. I understand that showing that
they're in communications and that showing that Dish wants to buy Aerio and wants to avoid paying your clients for retransmission fees would show -MS. SHEPARD: THE COURT: Uh-huh. -- that there could be some harm
me it's a leap of faith to assume that that specific information about whatever minutiae of their negotiations there might be would actually result in a quantifiable amount of downward pressure. What you're
really talking about is getting information relating to negotiating strategies and negotiating positions, and how that will translate to a quantifiable amount of
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MOTIONS HEARING - MAY 30, 2013 Page 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 downward pressure I don't understand. MS. SHEPARD: THE COURT: Well -It seems to me you'd do better to
take Charlie Ergen's deposition -- and I understand that's another part of -- that's a part of the subpoena at issue here, a separate subpoena -- and say to him what kind of downward pressure do you think it's going to have -- you know, effect in the industry as a result of the possibility for these kinds of connections, because he's an experienced person who enters into negotiations all the time on behalf of his company. But
in terms of document production and the details of these negotiations, I see that as a leap of faith. MS. SHEPARD: With respect to the agreements,
the first -- I think it's the first five requests, Your Honor, that deal with the -- whatever agreement is contemplated. There's probably only one or two of those
as opposed to all four or five of them, but just to make sure we didn't miss one. I believe that the way they We are not
seeking all of the e-mail communications back and forth, and was particularly targeted that way to eliminate and streamline the process so we could take the deposition in April when we were trying to take it and get the documents.
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MOTIONS HEARING - MAY 30, 2013 Page 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on. question. There are other document requests dealing with the communications on the impact on retransmission fees, but those -THE COURT: MS. SHEPARD: (Unintelligible) documents. -- those would truly bear on
that issue, and it's not the minutiae of the negotiations as you were pointing out, that it would really be that plan. And so I do think that those
documents would -- those requested documents would reveal that -- that issue. THE COURT: MS. SHEPARD: THE COURT: So -That --
All right.
that further if you wish. MS. SHEPARD: THE COURT: Ms. Echtman? MS. ECHTMAN: A few things I'd like to respond Right. Do you want to respond to that,
First of all, there has been no subpoena issued There is a 30(b)(6) -Yes. -- deposition, that would be an
directly to Mr. Ergen. THE COURT: MS. ECHTMAN: Apex deposition which -THE COURT:
I understand.
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MOTIONS HEARING - MAY 30, 2013 Page 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. ECHTMAN: THE COURT: MS. ECHTMAN: we would object to. THE COURT: I was just simply throwing that Which has -I understand. -- not been requested, and that
out for the purpose of arguing with these brilliant lawyers I have in my courtroom this morning. MS. ECHTMAN: And I'd also like to point out
that the 30(b)(6) notice is much broader than the document requests. Although we think the document
requests are too broad, the 30(b)(6) topics include communications with Aerio broadly, negotiations with Aerio. And so they -- it goes really well beyond It's very broad and it would
require Dish to prepare someone on all communications with Aerio of any nature and all negotiations with Aerio of any nature. I don't have a transcript of the I
would think an Aerio representative would know full well what conversations they had with Dish and what they relate to.
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MOTIONS HEARING - MAY 30, 2013 Page 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 recess. (Whereupon, the within hearing was then in conclusion at 10:47 a.m. on this date.) I certify that the foregoing is a correct transcript, to the best of my knowledge and belief (pursuant to the quality of the recording) from the record of proceedings in the above-entitled matter. counsel. So I just wanted to -- to clarify those -those few points. THE COURT: All right. Thank you very much,
going to take this under advisement, welcome your briefing, and I will try to issue a written order in due course upon receipt of the additional briefing. we'll be in recess. Thank you. Thank you, Your Honor. Thank you. (Unintelligible). All rise. Court is in And
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