A Manhattan federal judge on Wednesday denied a request by Walt Disney Co's ABC unit to stop Dish Network Corp from selling devices that let viewers skip commercials when watching primetime broadcast shows.
ABC had claimed that allowing Dish's Hopper system to remain on the market while a lawsuit between the two goes forward would cause ABC irreparable harm by threatening its ability to generate advertising revenue and disrupting its exclusive rights to control its programming.
U.S. District Judge Laura Swain said she would make public her reasoning for denying ABC's request after the parties have a chance to address whether certain portions of the decision should remain sealed.
In July, the 9th U.S. Circuit Court of Appeals also refused to shut down sales of the Hopper in a similar case brought against Dish by Twenty-First Century Fox Inc.
Introduced last year, Dish's DVR-like device contains the feature "AutoHop," which allows subscribers to skip commercials entirely when they watch recorded shows, drawing the ire of the major broadcast television owners.
In the New York lawsuit, ABC is alleging that Dish's system violates both copyrights to its programming and an agreement between the companies that allows the satellite provider to distribute ABC programming.
Swain's order Wednesday also denied a motion by Dish to dismiss certain claims brought against it in the same lawsuit by CBS Corporation.
CBS is claiming that Dish should have provided details about the Hopper's features during contract negotiations between the two companies in December 2011. Dish had argued that it had no duty to give CBS a "sneak preview" of its new system.
An ABC spokeswoman called the decision merely "the first step in the judicial process," and said Dish's AutoHop and PrimeTime Anytime services breach its contractual agreements, unfairly compete with ABC, and infringe ABC's copyrights.
A spokeswoman for CBS said the company is pleased with the decision, saying it "allows us to show in trial what Dish knew and what Dish said it knew are two absolutely different things and give reason to unwind a deceptive contract."
R. Stanton Dodge, Dish's general counsel, in a statement called the decision "yet another victory for American consumers."
Analysts have said Dish was using its Hopper DVR as a way to fight back against retransmission fees, which are payments cable and satellite companies pay to broadcast stations to carry their networks.
The case is Dish Network v. American Broadcast Companies Inc, et al, U.S. District Court for the Southern District of New York, No. 12-4155.
(Reporting By Erin Geiger Smith; additional reporting by Liana B. Baker; Editing by Bernard Orr)