The TV network says the satellite TV provider "deliberately failed to disclose" the AutoHop features during contract negotiations in 2011.
analysis Dish Network's deal with Disney sacrifices AutoHop, but it does more than just keep ESPN and gain access to more mobile-video apps: It slings Dish into the lead for full-on Web TV.
The Consumer Electronics Association says "AutoHop" technology is "clearly protected" under a Supreme Court ruling over Betamax recordings.
Fox Broadcasting sought to block the AutoHop feature, which allows programs to be viewed without commercial interruption.
The latest ruling means Dish can keep operating the Hopper, which lets viewers skip over ads, in New York.
The pay-TV operator hopes that third-party developers will dream up new ideas for its technology.
The DVR set-top box revealed at the Consumer Electronics Show in January is now available to Dish customers, ahead of the anticipated arrival of Wireless Joey.
The Dish Network DVR that automatically skips commercials won another round in a US court of appeals, which again rejected 21st Century Fox's petition to halt the feature.
Fox Broadcasting contends that Dish doesn't have the right to make "bootleg, commercial-free, on-demand programming available over the Internet and on mobile devices via Sling."
Ergen says he wants to change the way ads are delivered to consumers, giving viewers a choice of ads so they can be better targeted.