VidAngel

VidAngel is an American video streaming service launched in 2014. The service offers members an option to edit commercially-released DVDs by filtering content perceived as offensive, such as profanity, nudity and sexual content, or graphic violence.

The company was sued by several major movie studios in 2016, under allegations that their practices of bypassing DVD copyright protection features and streaming edited videos without permission constitute copyright infringement. Court rulings as of mid-2017 have all been against VidAngel, finding that the company violated copyright law and further ordering their service stopped. VidAngel has vowed to appeal, and was once fined for contempt of court for violating a court order.

VidAngel were ordered to shut down their website in late 2016 pending trial. On June 13, 2017, VidAngel announced the launch of a new $7.99 monthly subscription service^[1] for filtering content from video streaming services like Netflix, Amazon Prime, and subsequently added filtering for Amazon Fire TV, Roku, Chromecast, Android TV, and Apple TV.^[2] In a June 2017 statement, Netflix noted: "We have not endorsed or approved the VidAngel technology".^[3]

History

VidAngel was founded in 2013 in Provo, Utah as a startup company with only six employees and launched in 2014.^[4] In March 2014, VidAngel released a statement that it had moved its headquarters to Silicon Valley, California.^[5]

In December 2016, VidAngel initiated a Regulation A+ (mini initial public offering) securities offering, seeking to raise $5 million in investments;^[6] it reached that goal in 28 hours, and ultimately raised over $10 million over the course of five days.^[7][8] The majority of the $10 million raised will be used for Advertising and Promotion (42%) and Legal Fees and Expenses (26%)^[9] The advertising and marketing efforts will be provided by Harmon Brothers, an advertising agency owned by VidAngel founders and officers, Neal Harmon and Jeffery Harmon.^[10]

In December 2016, VidAngel was ordered to shut down their website until the case could be brought to trial. In response, CEO Neal Harmon announced that VidAngel would launch its own studio in early 2017, creating what he described as original "family friendly" content.^[11]

Operations

VidAngel allows users to select filters that remove instances of objectionable content, such as nudity, profanity, and graphic violence, from videos. The customer purchases the film from VidAngel for $20, which VidAngel argued gave customers the right to filter objectionable content. Once the customer is finished with the film, they can sell it back to VidAngel for $19 for standard definition or $18 for high definition, effectively paying $1 or $2 for renting the film for a 24-hour period. The sell-back credit decreases by $1-$2 per day that the film is not sold back.^[12] According to VidAngel, 96% of customers filter at least two instances from a film, and on average filter 17 instances per film.^[12]

Legal basis

VidAngel cites the Family Movie Act of 2005 (FMA) as legally protecting customers' right to use their service to filter films.^[13] They say that under the FMA, they are allowed to stream filtered movies to customers as long as the movie is an authorized copy watched in the privacy of the home, and no permanent filtered copy is created.^[14] VidAngel buys a physical disc of each movie they offer. They contend that the FMA provides an exemption from the Digital Millennium Copyright Act (DMCA) for the purpose of filtering, allowing VidAngel to legally decrypt discs.^[15] As noted below, all these arguments have been rejected by the courts.

According to VidAngel, they tried three different arrangements to legally filter movies in partnership with studios: teaming with Google to add filters to licensed films available on Google Play; buy a licensed movie on YouTube then apply filters to it; and buying discs directly from the studios. The studios rejected all three proposals, so VidAngel bought licensed discs from retail stores, and as of mid-2016 spent about a third of its revenue on DVDs.^[16]

Studio lawsuit

On June 12, 2016, production companies such as Lucasfilm, 20th Century Fox, Disney, and Warner Bros. filed a federal lawsuit against VidAngel for circumventing copyright protection on DVDs and for unlicensed video streaming, accusing them of violating the DMCA.^[17] The case, Disney Enterprises, Inc. et al v. VidAngel, Inc., was filed in the United States District Court for the Central District of California. VidAngel's defense is that members actually own a digital copy of the film when they stream it for $20 and VidAngel will buy it back for $19 and have a right to filter content under the Family Home Movie Act of 2005. VidAngel has filed a counterclaim against the companies alleging violation of the Sherman Antitrust Act and the preliminary hearing was held on November 14, 2016.^{[18][19] [12]}

In the lawsuit VidAngel is being represented by a group of lawyers led by Peter Stris of Stris & Maher, a small but influential firm known for handling complex cases and arguments at the Supreme Court.^[20] Disney is being represented by a group of lawyers led by former Solicitor General Donald Verrilli.^[21]

Judge Andre Birotte Jr., in a ruling on December 12, 2016,^[22] granted Disney’s motion for a preliminary injunction, declaring that VidAngel had violated copyright laws by circumventing copyright protection technology on DVDs and by hosting the streamed content on VidAngel's computer servers without appropriate licensing and permission from copyright holders.^[23] The court also rejected VidAngel's Fair Use defense, noting as paraphrased in media about the case, "VidAngel does not add anything and the result has essentially the same entertainment value as the original, thus the fair use defense is unlikely to win out."^[24]

Judge Birotte's order blocked VidAngel from circumventing copyright protection features on DVDs and also ordered them to stop streaming movies, stating that the Family Movie Act requires that the filtered content comes from an "authorized copy" of the film, and the digital content VidAngel streamed was not an authorized copy.^[25] Shortly thereafter, VidAngel requested a stay of the preliminary injunction, claiming the company would suffer irreparable legal harm from not being able to operate while the case makes its way through the courts. VidAngel has vowed to fight the case all the way to the United States Supreme Court.^[26][27] VidAngel announced intentions to obey the court's order to stop streaming effective December 30, 2016.^[28] However, in January of 2017, VidAngel was found in contempt of court for continuing to add titles in violation of the court's order. For this infraction, they were fined $10,231.20 in legal costs incurred by Disney et al.^[29]

VidAngel appealed the case to the Ninth Circuit Court of Appeals. A hearing occurred June 8, 2017, where VidAngel requested an emergency stay of the injunction. VidAngel's request was denied and the injunction was upheld.^[30]

VidAngel requested an appeal or clarification of the injunction, specifically whether their new streaming-filter service was a violation of the injunction. Disney et al. responded with a request for an ex parte ruling, arguing that VidAngel violated procedural rules by not notifying Disney of their intentions of filing such an appeal or clarification.^[31] On August 2, 2017, Judge Birotte rejected VidAngel's request for appeal or clarification of the injunction.^[32][33]

Commentary

In a commentary on the legal battle, journalist and activist Johnathan Bailey of Plagiarism Today argues that VidAngel's public statements have consistently misrepresented the core legal issues of the case. Bailey notes that VidAngel has repeatedly claimed or implied they are being sued due to the filtering of offensive content. Bailey writes: "However, the studios have repeatedly made it clear that the filtering is not the issue, its the unauthorized streaming and copy protection circumvention, nothing more."^[34]

References

See also

• Fair use
• Family Movie Act of 2005
• Sherman Antitrust Act
• DMCA
• Copyright Law
• CleanFlicks, an earlier Utah based company with a similar business model