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ACE, Omniverse Slug It Out as Court Date Looms

Jeff Baumgartner
5/20/2019
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The Alliance for Creativity and Entertainment (ACE) and Omniverse One World Television traded a few more punches in the courts in recent weeks, with part of the bout centered on ACE's attempts and apparent struggles to get its hands on a long-term contract that a New Jersey-based private cable operator (and a key Omniverse partner) purportedly has with DirecTV.

As a quick recap, ACE, a legal consortium made up of major US studios, programmers and OTT providers, is spearheading a complaint in a California district court alleging that Omniverse and its CEO, Jason DeMeo, are distributing TV programming to various reselling partners without obtaining the proper carriage rights. Billing itself as a marketing and technology company, Omniverse claims that it's streaming offering is on completely legal footing, citing a joint venture with Hovsat, a private cable operator that, Omniverse claims, possesses a 100-year contract with DirecTV affixed with "no limitations" with respect to US distribution and delivery method.

In recently filed court documents, ACE argues that Omniverse is making it difficult for the legal group to procure access to the critical contract in question. Omniverse, meanwhile, continues to request that ACE refine the scope of its complaint and that comparisons between Omniverse and the former Dragon Box service be stricken from the proceedings.

In a court doc dated May 3, the ACE-led plaintiffs claim that Omniverse's motions are "based on zero supporting materials," holding that Omniverse has failed to provide the requested licensing agreement that Hovsat purportedly has with DirecTV that authorizes the streaming distribution of TV programming.

ACE claims that it's made an effort to get its mitts on that information, but with limited success.

ACE said it was successful in serving a subpoena on DirecTV about the purported Hovsat agreement. "There was no document produced that constituted or even referred to any agreement between DirecTV and Hovsat that would allow Hovsat, much less Omniverse, to sublicense or redistribute DirecTV programming over the internet to downstream services and end users," it stated to the court.

ACE claims it's had less luck with the subpoena to Hovsat. "Omniverse's counsel told us that he had been in contact with Hovsat's counsel. We therefore asked Omniverse's counsel to provide us with that contact information. Omniverse's counsel has not done so."

Instead, ACE said, Omniverse's counsel provided it with contact information for Shant Hovnanian, the purported owner of Hovsat, who, it was told, is currently in Armenia. The filing also cites court records showing that Shant Hovnanian is a defendant in a US civil tax enforcement proceeding involving $16 million in penalties, and that the US government has been unable to serve him with the complaint in that case.

Per court documents obtained by Light Reading, the US District Court for the District of New Jersey filed the complaint involving Shant Hovnanian in October 2018. The complaint focuses on the tax years of 2002, 2003, 2004 and 2007 for a total of $16.2 million -- the balance as of September 30, 2018. Among various citations, the complaint alleges that Shant Hovnanian has "attempted to hide his ownership of the Village Mall property" to evade federal tax liens. That property, the complaint adds, is also known as 1 Dag Hammarskjold Blvd., Freehold, NJ., which also happens to be a listed business address for Hovsat.

From a broader standpoint, ACE contends that that Omniverse "has no desire for the actual facts about the purported DirecTV-Hovsat contract to come to light... The Court need not, and indeed cannot, consider Omniverse's bare assertions about its supposed relationship with Hovsat and Hovsat's supposed relationship with DirecTV."

Omniverse appears to be waiting for more direction from the court before taking certain actions.

The plaintiffs, Omniverse said in a reply to the court on May 10, "must make clear whether the Hovsat-DirecTV agreement is at issue," including any sub-licensing rights and service limitations tied into that agreement. "Plaintiffs must make it clear whether they are alleging that Omniverse alleged conduct is a breach of the Hovsat-DirecTV agreement."

Omniverse went on to reiterate its position that ACE "must make a more definite statement" about whether it is being accused of piracy, has exceeded the scope of the Hovsat-DirecTV deal, or both.

"The framing of a proper defense is very different under each of these scenarios," Omniverse told the court in the May 10 filing. "Omniverse cannot properly prepare its defenses not knowing if Plaintiffs are disputing the scope of the Hovsat-DirectTV agreement or alleging copyright infringement."

Omniverse still wants to slay comparisons to Dragon Box
Omniverse's bigger beef involves comparisons being made by ACE between Omniverse and Dragon Box, a former provider of "fully-loaded" Kodi boxes that was accused of pirating and providing unauthorized streams of copyrighted content. Dragon Box and ACE settled the matter in January, resulting in a $14.5 million judgement and the shutting down of Dragon Box's business.

Omniverse wants those comparisons stricken, arguing that they are "scandalous and immaterial" and "cast a derogatory light on Omniverse and prejudice Omniverse in further proceedings."

Omniverse acknowledged that it previously did business with Dragon Box, but stressed that such business was being done before Omniverse was aware that Dragon Box was engaged in piracy.

ACE countered that Omniverse's motion to have Dragon Box stricken from the current case should be denied. It argues that its Dragon Box references are both material and relevant to the suit brought against Omniverse, noting that Omniverse does not dispute that it had previously done business with Dragon Box and that it is Omniverse, and not the plaintiffs, that have characterized Dragon Box as a known "pirate."

"The complaint does not use the terms 'pirate' or 'piracy' at all, and instead uses legally relevant terms to describe Omniverse's and Dragon Box's copyright infringement," ACE's May 3 filing explained.

Omniverse has previously stated to Light Reading that ACE "has taken this history out of sequence and out of context to twist it into an imaginary conspiracy."

Per court documents, a hearing date for the case is set for the morning of May 24.

Recent changes
Since the lawsuit first came to light, some changes have occurred between Omniverse and some of its partners that had been marketing and selling OTT-TV services to consumers. It appears that Omniverse is taking more direct control of the streaming services being sold to consumers via the Hovsat arrangement.

The most notable recent change involves Flixon, a company that previously had a master reseller agreement with Omniverse going back to 2017.

Earlier this month, Flixon announced its Flixon TV service was no longer available and that those subscribers had been transferred to OmniGo.tv, an offering that was quietly launched in April and is directly operated by Omniverse.

Additionally, Clikia and SiliconDust, companies that had white-labeled respective direct-to-consumer OTT-TV services through another Omniverse master reseller, TikiLive, have shut down their respective live TV streaming services.

Update: TikiLive's site currently is not promoting the pay-TV packages it had been selling through its arrangement with Omniverse, though an existing TikiLive subscriber told Light Reading that the service was still active as of last week. TikiLive is currently marketing an Indie Pack for $5.99 per month for a lineup of 16 channels, including Ride TV, MavTV, Westerns4U, the Sony Channel and Biz TV. A source said TikiLive has negotiated distribution deals on its own for those channels, which fall outside the scope of its Omniverse partnership.

As CordCutterNews reported, TikiLive has said little about the change via Twitter, other than to note that it's "working on expanding our lineup soon."

And, as of May 20, TikiLive appears to still be at work on these changes to its OTT video offerings:

Through its master reseller deal with Omniverse, TikiLive has supported white-label services through partners such as SiliconDust, Clickia, Milo and VivaLiveTV. Of that group, Milo and VivaLiveTV are still marketing OTT-TV packages that cite the Omniverse relationship.

Catch up on the Omniverse saga:

— Jeff Baumgartner, Senior Editor, Light Reading

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