National Subscription Television v. Formula International, Inc.

California Court of Appeal Mar 20, 1984 No. Civ. No. 69160Published

Before: Thompson

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Holding. The court held that a preliminary injunction prohibiting the sale of kits and instructions for decoders used to intercept subscription television signals does not violate the First Amendment or federal patent law, and that the trial court did not abuse its discretion in finding irreparable harm.

Issues

Whether an injunction against the sale of decoder kits violates the First Amendment right to free speech.
Whether an injunction against the sale of decoder kits conflicts with federal patent laws.
Whether the trial court abused its discretion in granting a preliminary injunction based on a showing of irreparable harm.

Disposition. affirmed

Quotations verified verbatim against the opinion

“the activity enjoined essentially proscribes conduct and only incidentally affects speech.”

“Interpretation of state unfair competition law to prohibit the sale of assembled decoders or unassembled decoders is consistent with federal law.”

“the preliminary injunction should remain in effect until final disposition of the case.”

[311]Opinion

THOMPSON, J. Defendant Formula International, Inc. (Formula) appeals from a denial of a motion to set aside the preliminary injunction obtained by the plaintiff, National Subscription Television (National).

Procedural and Factual Summary

National operates a subscription television business marketed under the name “ON-TV” (ON). National broadcasts its programming in Southern California during evening hours over KBSC, channel 52.

KBSC uses a scrambled signal to broadcast ON programming, so that ordinary television sets tuned to channel 52 receive unintelligible video. Subscribers to the ON programming are furnished decoders which unscramble the signals to provide intelligible reception.

National charges subscribers an installation fee plus a monthly fee of $22 to cover programming and rental of the decoder device.

Formula is a retail distributor of electronic parts in Southern California. Formula began selling its customers kits which include a parts list, a circuit board and all the instructions and components necessary to assemble a decoder which can unscramble the ON signals.

National brought suit against Formula, seeking to enjoin Formula from selling any device, kit or plan capable of intercepting its signals. National alleged that Formula’s activities constitute unfair and unlawful business practice.

Formula failed to appear for the hearing on the preliminary injunction on July 14, 1982, and the court below issued the preliminary injunction National sought. Subsequently, Formula filed a motion to set aside the preliminary injunction on grounds that its failure to be present at the prior hearing was inadvertent and due to excusable neglect.

The court below heard Formula’s motion, but denied its request to vacate the preliminary injunction. Formula appeals the rejection of its motion to vacate the preliminary injunction. Formula argues that the injunction impinges on its First Amendment right of free speech by restraining dissemination of scientific information. Formula further argues that the injunction, by precluding unsanctioned decoders, effectively grants National an exclusive patent to decoder devices. Such an exclusive right, Formula argues,

National Subscription Television v. Formula International, Inc.

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