Time Warner Cable, Inc. v. Directv, Inc.

• Decision Date: 05 February 2007
• Docket Number: No. 06CIV14245LTSMHD.,06CIV14245LTSMHD.
• Citation: 475 F.Supp.2d 299
• Parties: TIME WARNER CABLE, INC., Plaintiff, v. DIRECTV, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

475 F.Supp.2d 299

TIME WARNER CABLE, INC., Plaintiff, v. DIRECTV, INC., Defendant.

No. 06CIV14245LTSMHD.

United States District Court, S.D. New York.

February 5, 2007.

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Patterson, Belknap, Webb & Tyler, By Saul B. Shapiro, Sarah E. Zgliniec, Scott W. Parker, Richard Jackson, Karen Lim, New York City, for Plaintiff.

Quinn Emanuel, By Michael E. Williams, Los Angeles, CA, Marc L. Greenwald, Jessica Rose, New York, for Defendant.

OPINION

SWAIN, District Judge.

Plaintiff Time Warner Cable, Inc. ("Plaintiff' or "TWC") brings this action, asserting false advertising, deceptive business practices and breach of contract claims against Defendant DIRE CTV, Inc. ("Defendant" or "DIRECTV"), pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), §§ 349 and 350-a of the New York General Business Law, and the common law. In its Amended Complaint, Plaintiff alleges that Defendant has engaged in a multi-pronged false advertising campaign claiming that its satellite service is superior to Plaintiff's cable services. The Court has jurisdiction of the federal statutory claims raised in this matter pursuant to 28 U.S.C. §§ 1331 and 1343 and has supplemental jurisdiction of the related state law claims pursuant to 28 U.S.C. § 1367.

Plaintiff moves for a preliminary injunction enjoining DIRECTV from broadcasting certain television and internet advertisements and from making negative statements regarding the picture or audio quality of Plaintiff's service or of cable service in general. The Court has considered thoroughly the parties' written evidentiary and argumentative submissions, as well as the oral arguments of counsel. This opinion, which addresses the pending motion for a preliminary injunction, constitutes the Court's findings of fact and conclusions of law in accordance with Federal Rules of Civil Procedure 52 and 65. For the reasons that follow, Plaintiff's motion for a preliminary injunction is granted to the extent set forth below and in the Order granting Preliminary Injunction Motion filed contemporaneously herewith.

Background

The general background of this matter, and the Court's findings as to the factual issues material to its determination of the pending motion, are as follows. TWC is the second-largest cable provider in the United States. In the areas of New York City in which TWC is the franchisee, an overwhelming majority of cable subscribers subscribe to TWC. (Declaration of Sam Howe in Support of Plaintiff's Motion for a Preliminary Injunction ("Howe Decl.") ¶¶ 8, 9.) TWC offers both analog and digital cable television services to its subscribers, whereas DIRECTV offers 100% of its programming digitally. (Howe Decl. ¶ 3, Declaration of Giles S. Lundberg in Opposition to Plaintiff's Motion for a Preliminary Injunction ("Lundberg Decl.") ¶ 3.) TWC and DIRECTV broadcast only a limited number of their respective channels in high-definition ("HD") format. (Lundberg Decl. ¶ 3.) To receive HD programming, customers of either service must have high definition television equipment. (Howe Decl. ¶ 6.)

According to Advanced Television Systems Committee ("ATSC"), a non-profit organization that develops voluntary standards for digital television, including HDTV, the screen resolution must be either 720p, 1080i, or 1080p to qualify as HD.¹ (Declaration of Ronald E. Boyer in Support of Plaintiff's Motion for Preliminary Injunction ("Boyer Decl.") ¶¶ 4-5.) The higher the "i" or "p" number, the better the resolution. (Id.) Providers such as TWC and DIRECTV do not set the screen resolution for HDTV programming, but instead make available sufficient bandwidth to permit the relevant level of resolution to pass to customers. (Id. ¶ 6.) Therefore, both TWC and DIRE CTV have the same picture quality when it comes to HD programming. With respect to non-HD service, the record establishes that analog cable service is inferior in certain respects to digital cable service, in part because a digital cable signal is less prone to corruption than an analog cable signal. (Id. ¶ 13.)

On November 26, 2006, counsel for TWC contacted counsel for DIRECTV regarding various DIRECTV advertisements, including, a commercial featuring the singer and actress Jessica Simpson ("the Original Simpson Commercial"), and a commercial featuring the actor William Shatner ("the Original Shatner Commercial"). (Declaration of Michael Williams in Opposition to Plaintiff's Motion for Preliminary Injunction ("Williams Decl.") ¶ 2; Declaration of Saul B. Shapiro in Support of Plaintiff's Motion for a Preliminary Injunction ("Shapiro Decl.") ¶ 2.)

In the Original Simpson Commercial, which began running on October 25, 2006, Ms. Simpson, playing the character of Daisy Duke that she portrayed in the movie The Dukes of Hazzard, stated in relevant part: "Hey, 253 straight days at the gym to get this body and you're not going to watch me on DIRECTV HD? You're just not going to get the best picture out of some fancy big screen TV without DIRECTV. It's broadcast in 1080i. I totally don't know what that means but I want it." A narrator's voice then concluded, "for picture quality that beats cable, you've got to get DIRE CTV." (Declaration of Jon T. Geiselman in Opposition to Plaintiff's Motion for a Preliminary Injunction ("Geiselman Decl.") ¶¶ 16-17.)

In the Original Shatner Commercial, which began running on October 7, 2006, Mr. Shatner, playing the character of Captain James T. Kirk that he portrayed in the Star Trek television series and movies, stated in relevant part: "I wish he'd just relax and enjoy the amazing picture clarity of the DIRECTV HD we just hooked up. With what Starfleet just ponied up for this big screen TV, settling for cable would be illogical." A narrator's voice concluded, "for picture quality that beats cable, you've got to get DIRECTV." (Id. ¶¶ 29-30.)

Counsel for both TWC and DIRE CTV spoke numerous times over the Thanksgiving weekend to attempt to resolve TWC's issues with the contested advertisements. The parties focused their discussions on the Original Simpson Commercial, the Original Shatner Commercial, and other advertisements that are not relevant to this motion practice. (Williams Decl. ¶¶ 3-7; Shapiro Decl. ¶¶ 3-5.) On November 28, 2006, counsel for DIRECTV informed counsel for TWC that it would no longer run the Original Shatner Commercial. (Shapiro Decl. ¶ 5.) On November 29, 2006, counsel for DIRE CTV informed counsel for TWC that it would immediately take steps to stop running the Original Simpson Commercial. (Id.; Williams Decl. ¶ 7.) The Original Simpson Commercial ran through approximately December 3, 2006. (Shapiro Decl. ¶ 8; Gieselman Decl. ¶ 27.)

Both the Simpson and the Shatner commercials were revised. A revised Simpson commercial ("the Revised Simpson Commercial"), which began airing on some networks sometime in early December 2006, is identical to the Original Simpson Commercial, with the exception that the narrator's closing line has been changed to "for an HD picture that can't be beat, get DIRECTV." (Howe Decl. ¶ 19.) A revised Shatner commercial (the "Revised Shatner Commercial"), which began running on January 1, 2007, is identical to the original Shatner commercial, with the exception that the narrator's closing line has been changed to "for an HD picture that can't be beat, get DIRECTV." (Gieselman Decl. ¶ 31.)

On December 7, 2006, TWC filed the Complaint in this action. (Shapiro Decl. ¶ 10.) In a Stipulation and Order filed with the Court on December 11, 2006, and so-ordered by the undersigned on December 12, 2006, Defendant agreed, among other things, not to claim that its HDTV service was superior to that offered by TWC or any other cable provider. The parties further stipulated that any breach of the Stipulation would constitute irreparable harm to TWC. (Stip. ¶ 3.) An Amended Complaint was filed on January 17, 2007.

In addition to seeking an injunction barring the broadcast of the above-mentioned television commercials, TWC seeks a prohibition barring the display of certain advertisements on the internet, namely a website demonstrative featuring NFL player Kevin Dyson and two so-called "banner ads," one of which depicts women snorkeling underwater and the other of which depicts NFL player Eli Manning. (Gieselman Decl. ¶¶ 34, 36; Howe Decl. ¶¶ 24-26). In both the website demonstrative and both versions of the banner ads (collectively, "the Internet Advertisements"), the image is divided into two screens by a white line. One half is a clear picture labeled "DIRECTV" and the other half is an extremely blurry, highly pixellated and indistinct image labeled "OTHER TV." (Gieselman Decl. ¶ 34; Howe Decl. ¶¶ 24-26.) In the website demonstrative, text eventually appears that reads, in part, "[i]f you're hooking up your high-definition TV to basic cable, you're not getting the best picture on every channel. For unparalleled clarity, you need DIRECT TV HD." (Gieselman Decl. ¶ 36; Howe Decl. ¶¶ 24.) In the banner ads, text eventually appears that reads, in part, "[f]ind out why DIRECTV's picture beats cable." (Howe Decl. ¶ 25.) The record in connection with this motion practice also includes an audio advertisement depicting cable's audio signal as distorted and interrupted or inconsistent. (Howe Decl. Exh. F.)

Analysis

TWC seeks an injunction barring, among other thing, dissemination of the Revised Simpson Commercial, the Revised Shatner Commercial, and the Internet Advertisements. TWC contends that the commercials falsely represent that DIRECTV's HD service is superior to cable's, and that the Internet Advertisements falsely depict cable TV images as unwatchably blurry or pixellated. Section 43(a) of the Lanham Act, 15 U.S.C.A. § 1125(a) (West 2006),² which establishes a federal cause of action for false advertising, provides, in relevant part, that:

(1) [a]ny person who, on or in connection with any goods or services, or any container for...