Shenango Cable TV, Inc. v. Tandy Corp.

• Decision Date: 10 February 1986
• Docket Number: Civ. A. No. 83-2576.
• Citation: 631 F. Supp. 835
• Parties: SHENANGO CABLE TV, INC. and Variety Cable TV, Inc., Plaintiffs, v. TANDY CORPORATION, of which Radio Shack is a division, a corporation, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

631 F. Supp. 835

SHENANGO CABLE TV, INC. and Variety Cable TV, Inc., Plaintiffs, v. TANDY CORPORATION, of which Radio Shack is a division, a corporation, Defendant.

Civ. A. No. 83-2576.

United States District Court, W.D. Pennsylvania, Civil Division.

February 10, 1986.

Barry M. Simpson, John Daley, Brennan, Robins & Daley, Pittsburgh, Pa., for plaintiffs.

Herman C. Kimpel, George McGrann, Dickie, McCamey & Chilcote, Pittsburgh, Pa., for defendant.

MEMORANDUM AND ORDER

SIMMONS, District Judge.

Plaintiffs, Shenango Cable TV, Inc. and Variety Cable TV, Inc. (hereinafter "Shenango"), two affiliated cable television companies, allege that Defendant, Tandy Corporation, through its Radio Shack Division (hereinafter "Tandy"), is manufacturing, distributing and retailing a cable television converter known as the "Archer Converter" in violation of § 705 (formally § 605) of the Communications Act of 1934, 47 U.S.C. § 605 and § 633 of the Cable Communications Policy Act of 1984, 47 U.S.C. § 553. Shenango and Tandy now move for summary judgment under Fed.R. Civ.P. 56. Both parties have submitted extensive evidentiary materials, including depositions and affidavits of parties and witnesses, which present all facts that could be provable at trial.

I. FACTS

The undisputed operative facts of record may be summarized as follows: Shenango provides cable television service¹ to customers in Mercer County, Pennsylvania and Trumbull County, Ohio area. Under Shenango's system, customers can subscribe to basic cable service² in order to receive cable channels in the mid and super-band³ range. Both the mid-band cable channels and the super-band cable channels are transmitted by Shenango (in unscrambled form) through a cable wire running into the customer's home. When a customer (subscriber) elects to receive the mid and super-band services, Shenango leases as part of its monthly fee, a converter box which restricts access to only those channels subscribed to.⁴

The converter provided by cable companies, such as Shenango, converts each cable channel to VHF channel 3 or 4. Since the converter only delivers one channel at a time, the remote channel control feature of a standard TV set is eliminated because the TV must always be tuned to this channel (VHF Channel 3 or 4). In addition, standard televisions equipped with converters such as Shenango's cannot record one channel with VCR equipment while the user is watching another channel.

Tandy, through its Radio Shack division, markets and sells a product known as the "Archer Converter." The Archer Converter converts a "block" of VHF channels into UHF channels⁵ thereby restoring remote control capabilities and allowing the user to record one program on VCR equipment while watching another. The Archer Converter does, however, permit owners of standard television sets,⁶ who are basic service subscribers to Shenango's cable, to receive "unscrambled" and "non-trapped"⁷ mid and super-band signals without paying a subscription fee for those signals/channels.

II. DISCUSSION

Under Fed.R.Civ.P. 56(c), this Court will grant summary judgment where "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." While doubts as to the existence of genuine issues of fact must be resolved against the moving party, United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962), "Rule 56(e) does not allow a party resisting the motion to rely merely upon bare assertions, conclusory allegations or suspicions." Fireman's Insurance Company of Newark, N.J. v. DuFresne, 676 F.2d 965, 969 (3d Cir.1982). The party opposing a motion for summary judgment "must set forth the specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). See Viger v. Commercial Insurance Company of Newark, N.J., 707 F.2d 769, 771 (3d Cir.1983). ("Naked assertions in the pleadings are insufficient to withstand summary judgment.")

Defendant Tandy maintains that the Archer Converter is designed and marketed solely to 1) restore remote control capacity; and 2) permit the user who owns VCR equipment to record one program while watching another, and proffered substantial evidence in support of it's position. Plaintiff Shenango, however, contends that Tandy has manufactured and marketed the Archer Converter for the specific purpose of unauthorized interception of Shenango's mid and super-band signals in violation of Section 705 of the Communications Act of 1934, 47 U.S.C. § 605⁸ and Section 633 of the Cable Communications Policy Act of 1984, 47 U.S.C. § 553.

Section 705 of the Communications Act of 1934 provides in pertinent part:

(a) No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.

(d) (4) The importation, manufacture, sale, or distribution of equipment by any person with the intent of its use to assist in any activity prohibited by subsection (a) of this section shall be subject to penalties and remedies under this subsection to the extent and in the same manner as a person who has engaged in such prohibited activity.

47 U.S.C. § 605 (emphasis added). Section 705 protects radio and television communications transmitted by wire from the cable head end (initiation point) to the individual home cable subscriber. See, e.g., Allen B. DuMont Laboratories v. Carroll, 184 F.2d 153 (3d Cir.1950), cert. denied, 340 U.S. 929, 71 S.Ct. 490, 95 L.Ed. 670 (1951); Cox Cable Cleveland Area, Inc. v. King, 582 F.Supp. 376 (N.D.Ohio 1983). "Any manufacturer, distributor, importer, or retailer of equipment intentionally marketed for the unauthorized interception of signals may be held liable under Section 705." Ferris, Lloyd & Casey, Cable Television Law 91 26.021ci (1985) (emphasis added).

Section 633 of the Cable Communications Policy Act of 1984 provides in pertinent part:

(A)(1) No person shall intercept or receive or assist in intercepting or receiving any communication service offered over a cable system unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.

(2) For the purpose of this section, the term "assist in intercepting or receiving" shall include the manufacture or distribution of equipment intended by the manufacturer or distributor (as the case may be) for unauthorized reception of any communications service offered over a cable system in violation of subparagraph (1).

47 U.S.C. § 553 (emphasis added).

The Cable Communications Act of 1984 is the first statute enacted specifically to address cable television issues. Section 633 of the Cable Act is explicitly designed as a cable systems operator's cause of action against cable pirates who "tap" into the cable system and against those who assist them. See Cable Television Law, at ¶ 26.022. It prohibits interception of signals "actually being distributed over or within the cable system." H.R. No. 98-934, 98th Cong., 2d Sess. 83 (1984), U.S. Code Cong. & Admin.News 1984, pp. 4655, 4720. The legislative history specifically states that Section 633 was to be in addition to, and not a replacement for, other remedies for theft of cable services, including Section 705. Id. at 84. Manufacturers and distributors may be liable under Section 633 "where the equipment is intentionally created or marketed for the unauthorized interception of signals." Cable Television Law, at ¶ 26.022 (emphasis added). The mere sale of a decoder is not enough to establish liability under Section 633. H.R. No. 98-934, at 84.

The language, legislative history and case law of the Communications Act of 1934 and the Cable Communications Act of 1984 unequivocally establish that the manufacturer, retailer or distributor of the equipment in question is liable only if he intends that the equipment he produces and sells be used for the interception or pirating of cable signals and the equipment is designed solely and specifically for that purpose.

The legislative history of Section 633, as well as the unambiguous language contained therein, makes it clear that Section 633 of the Cable Act is an anti-pirating statute and a violation will be found only where the "intent" is to pirate cable signals. The legislative history provides:

Paragraph (a)(2) defines the term "assist in intercepting or receiving" as including the manufacture or distribution of equipment which is intended for authorized reception. Thus, if a manufacturer intends that equipment he produces, or a distributor intends that equipment he distributes, or a retailer intends that equipment he sells, be used for interception or reception of services provided over a cable system, such person would be liable for assisting such activities. The Committee does not intend that manufacturers, distributors or retailers be subject to liability under this section if they are engaged in the production or sale of a device or equipment which is used for legal purposes merely because the same device or equipment is capable of being used for an unauthorized reception of cable service, if they do not provide the equipment with the intent or specific knowledge that it will be used for the unauthorized reception of cable service. Thus, the Committee does not intend a person's clearly legal conduct to become illegal because of the actions of others about which such person had no knowledge or no intention to assist.

H.R.Rep. No. 98-934, 98th Cong., 2d Sess. 83-84 (1984), U.S.Code Cong. & Admin. News 1984, pp. 4720-4721.

The case law⁹ is equally clear in requiring that the intention and sole purpose of the equipment be interception and pirating of cable signals. In Home Box Office v....