In Dish Network Corp. v. Arrowood Indemnity Co., et al., D.C. No. 1:09-CV-00447-JLK-MEH (10th Cir. Nov. 25, 2014), the Tenth Circuit affirmed a district court’s grant of summary judgment in favor of the insurers, Arrowood Indemnity Company, Travelers Indemnity Company of Illinois, XL Insurance America, Inc., and National Union Fire Insurance Company of Pittsburgh, finding that the insurers were not obligated to defend and indemnify Dish Network Corporation or Dish Network, LLC (collectively Dish Network) due to exclusions present in their respective insurance policies.
The underlying lawsuit arose out of a patent infringement dispute between Dish Network and Ronald A. Katz Technology Licensing, L.P. (RAKTL). RAKTL’s complaint alleged that its patents relating to “the field of interactive call processing” and “the integration of telephonic systems with computer databases and live operator call centers to provide interactive call processing” were infringed by Dish Network’s customer service telephone system that allowed customers to perform pay-per-view ordering and customer service functions over the telephone. Upon receiving the RAKTL’s complaint, Dish Network requested a defense from its various insurers. All of the insurers denied coverage and, in response, Dish Network filed a declaratory judgment action seeking a ruling that the insurers had a duty to defend and indemnify Dish Network in the RAKTL action.
The appeal resulted from a district court’s ruling in favor of the insurers in a summary judgment motion regarding whether the insurers had a duty to defend Dish Network. The Tenth Circuit addressed four issues. The most interesting and pivotal issue dealt with the business exclusions for “broadcasting” and “telecasting” precluding coverage for “advertising injuries.” Dish Network disagreed with the district court’s construction of the terms “broadcasting” and “telecasting.” The district court construed both terms as being synonymous with “transmission” and did not see a distinction between subscription and non-subscription television. In contrast, Dish Network argued that the private contractual nature of Dish Network’s services was crucial. In addition, Dish Network pointed to the Communications Act of 1934 which defined “broadcasting” as the “dissemination of radio communications intended to be received by the public … .” Dish Network asserts subscriptions service providers (like itself) that provide service via a private contract are classified as non-broadcast services. Furthermore, Dish asserted that the distinction between a subscription service provider and those involved in “broadcasting” is well known in government and industry, which can be seen in the Standard Industrial Classification (SIC) System. Dish Network points to the fact that federal agencies like the Securities Exchange Commission rely on the SIC to classify Dish Network as a “Cable and Other Pay Television Service” as opposed to a “Radio Broadcasting Station” or a “Television Broadcasting Station.”
The Tenth Circuit was not persuaded by Dish Network’s construction of the terms. First, the Tenth Circuit did not find the statutory definition of “broadcasting” relevant because the D.C. Circuit, in reviewing the Federal Communications Commission’s (FCC) decision to modify the definition of “broadcasting”, noted that the fact that pay television services did not qualify as “broadcasting” was “technical” and much narrower than the common understanding of the term. Therefore, due to the unusual definition of “broadcasting” according to the FCC, it carried little weight in the current case.
With respect to Dish Network’s argument that “broadcasting” and “telecasting” required public distribution for free, the circuit court reviewed the dictionary definition of “broadcast.” The dictionary definition of “broadcast” focused mainly on the act of spreading or scattering in all directions, which does not support Dish Network’s contention. Even if there was a “public” requirement, the circuit court argued that the exclusions would still apply because, like newspapers and movies, television is aimed at the general public, so long as the public can pay. In conclusion, the court declared that the commonly-understood definition of the terms undoubtedly encompassed Dish Network’s transmissions.