Argued: December 7, 2017
from the United States District Court for the District of
Maryland, at Greenbelt. Deborah K. Chasanow, Senior District
E. Calkins, HOLLAND & KNIGHT, LLP, Washington, D.C., for
Lawrence Yohai, WEIL, GOTSHAL & MANGES LLP, New York, New
York, for Appellees.
Jessica L. Farmer, HOLLAND & KNIGHT, LLP, Washington,
D.C., for Appellant.
Theodore E. Tsekerides, Gregory S. Silbert, David E. Yolkut,
New York, New York, Peter D. Isakoff, WEIL, GOTSHAL &
MANGES LLP, Washington, D.C., for Appellees.
WILKINSON and DIAZ, Circuit Judges, and SHEDD, Senior Circuit
case involves a contract dispute between a media company and
a television distributor. In October 2007, Sky Angel U.S.,
LLC obtained nonexclusive distribution rights to Discovery
Communications, LLC's television programming. The written
contract contained a satisfaction clause allowing Discovery
to terminate the agreement if at any time it became
dissatisfied with Sky Angel's method of distribution.
Discovery exercised this right after learning Sky Angel's
distribution path relied on the "public
internet." Sky Angel sued, contending that Discovery
acted in bad faith because the contract expressly allowed it
to use the public internet.
trial, the district court held the agreement was susceptible
to competing reasonable interpretations as to the scope of
Sky Angel's distribution rights. Relying on extrinsic
evidence adduced at trial to resolve this ambiguity, the
district court found no support for Sky Angel's claim
that the contract permitted distribution over the public
internet, meaning Discovery acted in good faith when it
terminated the contract.
appeal, Sky Angel claims that the district court erred by
holding the agreement was ambiguous and compounded the error
by misinterpreting extrinsic evidence. Sky Angel also argues
that Discovery selectively waived the attorney-client
privilege with respect to certain documents. Finding no error
in the district court's judgment, we affirm.
Angel's problems began with a fall from heaven. The
satellite the company used to distribute television services
was failing and launching a replacement was cost prohibitive.
In need of a new distribution model, Sky Angel landed on
Internet Protocol Television or
"IPTV." Rather than broadcasting in real time over
satellite or cable, IPTV stores programming on servers and
then delivers content digitally over a highspeed network that
can be configured in any number of ways. Examples of IPTV
include online streaming services like Netflix as well as
Verizon Fios and AT&T U-verse, which use private
fiber-optic cables to deliver live television feeds to
develop its IPTV network, Sky Angel partnered with a third
company, NeuLion, Inc. Under the model they developed, Sky
Angel would receive third-party content at its satellite
substation and then transcode and transmit it to
NeuLion's servers via a private line. From there, NeuLion
would send the encoded signals over the public internet to
subscribers' set-top boxes. In other words, Sky Angel
relied on preexisting internet connections provided by
third-party internet service providers, rather than its own
private lines, to distribute programming. So long as
customers had an authorized set-top box and access to the
internet, they could receive Sky Angel's programming
anywhere in the world.
2007, Sky Angel approached Discovery about obtaining
programming for its IPTV system. The bulk of the negotiations
focused on understanding Sky Angel's new IPTV model.
Discovery repeatedly asked whether Sky Angel planned to
transmit its content over the public internet, but was told
that Sky Angel would not. Discovery also tasked one of its
technical engineers with investigating Sky Angel's
distribution system, but Sky Angel refused to share all of
the requested information. Without knowing more, the engineer
advised that while it was possible for Sky Angel to use an
entirely closed fiber-optic network, he had "concerns
that it may be going over the Internet" which could
present "rights issues" for Discovery. J.A. 959-60
September 2007, Discovery sent Sky Angel a draft distribution
agreement, under which Sky Angel would receive a nonexclusive
license to distribute five Discovery channels in exchange for
monthly payments determined on a per-subscriber basis. The
agreement described Sky Angel's distribution system as a
"cable television system." J.A. 41. Sky Angel
responded by inserting language authorizing it to use IPTV
technology, which it defined as:
a closed and encrypted transmission path over a national
fiber-optic network and a high-speed data connection that may
be a digital subscriber line . . ., cable or other broadband
connection in a subscriber's ...