Disney v. VidAngel Part 2: The Revenge of the Ninth Circuit

Disney v. VidAngel Part 2: The Revenge of the Ninth Circuit by Mark KaufmanIn late August, the 9th Circuit in California delivered a blow to a legal argument that was questionable to begin with, and was doomed by the defendant’s eagerness to share it.

In Disney v. VidAngel, the culture war served as the background of a battle between content goliaths — Disney, LucasFilm, Twentieth Century Fox, and Warner Brothers — and “David,” a streaming service called VidAngel. VidAngel is no ordinary streaming service; its main selling point is that it removes “objectionable” material from Hollywood feature films in order to make them more suitable for younger viewers, as well as those adults who wish to spare their eyes and ears from certain aspects of the human experience. It should be noted that none of the edits to the movies were made with the permission of the movie studios.

As naïve as their approach may seem, VidAngel was no babe in the intellectual property woods. They sought to justify their actions by citing The Family Movie Act of 2005 (FMA), which allows the filtering of content from various movies so that people can screen them to their kids without exposing them to what they consider to be Western decadence. VidAngel also made a tepid fair use argument for making the edits, even though its use of the full-length movies seemed to eviscerate that defense from the start.

Indeed, the inner workings of VidAngel’s service purportedly tried to comply with the FMA by purchasing numerous physical copies of the movies it streamed, cataloging them, and locking the discs away in a vault. So confident was VidAngel that it sent unsolicited emails to each movie studio informing them of their business model, stating something to the effect of “If you object to what we’re doing, please let us know.”

None of the movie studios responded to VidAngel, but the letter had moved VidAngel squarely into the studios’ crosshairs as they watched from a distance. They discovered that in addition to filtering out curse words, VidAngel was streaming new releases before their official streaming release date. Additionally, VidAngel “bought back” each online rental and then “resold” it to more subscribers, essentially creating a never-ending loop of sales of new releases that completely bypassed the studios and undermined the content-owners’ multi-stage release strategy.

The movie studios eventually pounced and sued VidAngel in the District Court for the Central District of California (that is, L.A.).

The district court disagreed with VidAngel, holding that defendant’s FMA argument would create a giant loophole in the Copyright Act that would allow unlimited use of one authorized copy for distribution to a variety of viewers or users. It made no sense to interpret the FMA to say you only need one authorized copy to stream multiple, unauthorized versions.

The Ninth Circuit affirmed the district court’s granting a preliminary injunction against VidAngel. The appellate court held that the studios had demonstrated a likelihood of success on the merits of both their DMCA and copyright infringement claims. First, VidAngel violated DMCA § 1201 (a) (1) (A) by circumventing the encryption controls that protected the movies. VidAngel also infringed the studios’ exclusive right to reproduce the films under the Copyright Act, because defendant “ripped” copies of the DVDs onto VidAngel’s computers and third-party servers. Third, VidAngel violated the owners’ exclusive right to publicly perform their works. Finally, the court rejected VidAngel’s FMA defense, holding 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. The 9th Circuit also affirmed the district court’s finding that VidAngel was not likely to succeed on its fair use defense, because, among other things, the defendant’s service was an effective substitute for the studio’s unfiltered works.

What’s the moral of the story? Certainly, it would behoove anyone who is stealing something to restrain themselves from telling the owner that they are breaking and entering. For those of us who aren’t thieves, it might seem ironic that a company purportedly espousing family values, and providing a means of looking at content through a moral filter, could set up a business model that is based on taking intellectual property (all in the guise of changing it to make it “suitable” for family values). One has to wonder whether VidAngel would filter out its own misconduct if and when someone makes a movie about this case.

Mark Kaufman

Mark S. Kaufman
Kaufman & Kahn
kaufman@kaufmankahn.com

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