Aug 25, 2017

Appeals Court Upholds Injunction Against VidAngel

Disney Enterprises, Inc. v. VidAngel, Inc., 16-56843 (9th Cir. Aug. 24, 2017)
By Ty Turley Trejo

In a ruling delivered on Thursday, August 24, the 9th Circuit Court of Appeals upheld the District Court’s preliminary injunction against family-friendly streaming service VidAngel. The Court’s opinion was authored by Judge Andrew Hurwitz, on behalf a unanimous three-judge panel.

Hollywood studio plaintiffs Disney, Lucasfilm, Fox, and Warner Brothers sued Provo, Utah-based VidAngel in 2016 for copyright infringement. The studios’ complaint accused VidAngel of circumventing technological protection measures (TPMs) in order to make illegal copies of their films that were then “publicly performed” via digital streams to paying customers. The case was initially heard by the U.S. District Court for the Central District of California, which found that the plaintiffs were likely to succeed on the merits of their case, and that allowing VidAngel’s service to continue would cause irreparable harm to the large entertainment conglomerates, by depriving them of the ability to fully exploit their copyrighted works. The 9th Circuit Court of Appeals reviewed this ruling, and held that the district court did not abuse its discretion in issuing the preliminary injunction.

The case presented the 9th Circuit with its first opportunity to analyze the Family Movie Act (FMA), which was raised as a defense by VidAngel. The FMA, passed in 2005, was designed to protect technology that “filtered limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy …” (17 U.S.C. § 110(11); emphasis added), so long as no fixed copy of the altered version is created. VidAngel argued that its lawful purchase of thousands of the plaintiffs’ DVDs satisfied the condition of filtering “from an authorized copy,” but the Court disagreed.

Instead, the judges held that the “most natural reading” of the FMA is that one must filter directly from an authorized copy, not from an intermediate copy that is prepared for filtering. The Court reasoned that, “VidAngel’s interpretation would create a giant loophole in copyright law, sanctioning infringement so long as it filters some content and a copy of the work was lawfully purchased at some point… If the mere purchase of an authorized copy alone precluded infringement liability under the FMA, the statute would severely erode the commercial value of the public performance right in the digital context, permitting, for example, unlicensed streams which filter out only a movie’s credits.”

The Court also rejected VidAngel’s fair use claims and agreed with the district court’s finding that “VidAngel’s service does not add anything to Plaintiff’s works. It simply omits portions that viewers find objectionable,” and transmits them for the “same intrinsic entertainment value” as the originals. The Court found that VidAngel’s use was “commercial and not transformative,” and thus acted as a market substitute for the studios’ original works.

As to the plaintiffs’ claims under § 1201(a)(1)(A) of the DMCA, the 9th Circuit again agreed with the district court that the plaintiffs were likely to succeed. The Court held that “when a defendant decrypts the TPMs [e.g., DVD encryption technologies] and then also reproduces that work, it is liable for both circumvention in violation of § 1201(a)(1)(A) and copyright infringement in violation of § 106(1).” The Court left open the possibility that “fair use can be a defense to a § 1201(a) violation,” but held that even assuming that possibility, the defense fails in this particular case.

Yesterday’s decision of the 9th Circuit is the latest in a string of recent legal setbacks for VidAngel, but the company has indicated it is prepared to “take its case all the way to the Supreme Court.” In a statement issued August 24, 2017, VidAngel asserts that the ruling has no impact on its new system, further indicating that, “On the legal front, we are just getting started. We will fight for a family’s right to filter on modern technology all the way.”