April 15, 2019
Omniverse One World Television claims that a long-term contract between private cable operator Hovsat Inc. and DirecTV has no restrictions on US market reach and delivery method, according to court documents.
Omniverse, accused of copyright infringement by several major US studios in the US District Court for the Central District of California, has a joint venture with New Jersey-based Hovsat under which it is distributing OTT-delivered pay-TV packages in tandem with partners such as TikiLive, VivaLive TV, SkyStream and Clikia. Of recent note, FlixonTV, believed to have a master reseller deal with Omniverse, now points users to a newly rebranded service called Omni Go.
Omniverse CEO Jason DeMeo has previously told Light Reading that its partner, Hovsat, has a 100-year deal with DirecTV going back to the Hughes days that does not preclude OTT distribution, and that Omniverse is doing everything by the book.
Omniverse has yet to produce that magical contract in court documents. But language in other documents filed by Omniverse earlier this month sheds light on some of the key elements.
"The contract between Hovsat and DirecTV has no limitations with regard to geographic markets, nor innovating with regard to delivery method," claimed Omniverse, which notes that it serves as a "marketer and technical provider" for Hovsat. DeMeo said earlier that Omniverse has colocation agreements to put equipment in Hovsat headend facilities located in Freehold and Tinton Falls, NJ, where Omniverse lists out the channels tied into the TV packages that it says it's authorized to access and distribute.
The court documents also mention that Hovsat (also referred to Grandview Cable) has served as a licensed cable company since 1971, while the Hovsat-Omniverse venture has been referred to as "OmniSat." Hovsat is linked to a home builder called Hovnanian Enterprises that, according to DeMeo, believed that such a long-term TV services agreement would be required to serve areas across the country for several decades.
The financial terms between Hovsat and DirecTV aren't known. But they are believed to include bulk-rate programming discounts that are typically used for apartments, college campuses and other types of multiple-dwelling units. According to people familiar with those bulk deals, wholesale pricing can be as much as 60% less than retail, which would help explain why Omniverse's partners can market and sell large pay-TV packages at relatively low price points.
For its part, DirecTV has maintained that Omniverse is "not our customer and our content can't be licensed in this manner." The company has not added to or revised that comment since being presented with information about the purported long-term contract between DirecTV and Hovsat.
Omniverse told the court that it markets content delivered by Hovsat through "secured or white listed ports," and that it has no record of known pirates having access to those ports. "Omniverse works with Hovsat, distribution partners and their technical teams to ensure that all distributed content complies with copyright law," the company added.
All of the specific details of the Hovsat/DirecTV deal may never come to light. The case is under a stipulated protective order to ensure that trade secrets, customer and pricing information and other proprietary information do not go public.
However, the plaintiffs in the case certainly want to take a good look at it. As part of the discovery process, they are requesting all agreements between Hovsat and DirecTV and its predecessors, including authorized sub-distributors, dealers and transporters for DirecTV. They are also seeking agreements related to or concerning the DirecTV account bearing the account number 13895653, as well as all documents referring to terms and payments to that same account number.
Accused of piracy or exceeding the Hovsat deal?
Omniverse has also asked the court for a "more definite statement" on the nature of the infringement of the copyright claims it's accused of. Omniverse argues that it does not know the following:
If it is accused of piracy, or;
If it is accused of exceeding the scope of the distribution agreement that Hovsat has with DirecTV, under which Omniverse engages in marketing, or;
Omniverse argued that the framing of a proper defense would be different under each of those scenarios. "The ambiguities in Plaintiffs’ Complaint must be clarified before Omniverse can properly respond," Omniverse told the court.
Omniverse argues further that it's being accused of piracy without the plaintiffs "stating facts alleging how Omniverse committed piracy" beyond the general copyright infringement claim.
In the original complaint filed in February, the plaintiffs characterized Omniverse as a "hub" that served "spokes" such as SkyStream and FlixonTV. They alleged that Omniverse's offering is "illegal" and that it "undermines the legitimate market for licensed services."
Omniverse has also moved to dismiss the plaintiffs as "misjoined" if they claim that Omniverse is engaging in piracy, but held they would not be misjoined from the case if the primary issue is whether the Hovsat deal has been exceeded.
The Alliance for Creativity and Entertainment (ACE), a legal consortium comprised of several major studios, programmers and OTT services, is running point on the suit against Omniverse. The specific plaintiffs identified in the case are: Disney Enterprises, Twentieth Century Fox Film Corp., Columbia Pictures, Warner Bros. Entertainment, Universal City Studios Productions, Universal Television and Universal Content Productions.
Omniverse is also urging the court to strike all comparisons between it and Dragon Box, a provider of "fully-loaded" Kodi boxes accused of committing piracy and providing unauthorized streams of copyrighted content. In January, Dragon Box settled with ACE for $14.5 million and was shut down.
Omniverse called comparisons between it and Dragon Box "scandalous and immaterial" that "cast a derogatory light on Omniverse and prejudice Omniverse in further proceedings."
"If the plaintiffs seriously contend that Omniverse is another Dragon Box engaging in outright piracy, then it should say so in the complaint," Omniverse argued. "If the plaintiffs are alleging that Omniverse is exceeding the authority of the Hovsat license, then the Dragon Box allegations must be dropped as inflammatory and irrelevant."
Catch up on the Omniverse saga:
— Jeff Baumgartner, Senior Editor, Light Reading
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