VidAngel, Studios Battle in Ninth Circuit

A federal appeals court heard oral argument Thursday in Hollywood studios' fight against filtered-video streamer VidAngel and the current legal prohibition on its streaming service. 

VidAngel argues that it is only giving users the ability to more effectively filter content—skip the nude scenes, mute the language if they choose—in their own homes. The studios argue it is illegally circumventing copy protections, modifying and streaming their content, and preempting their windows for releasing their content online. 

Disney, Warner Bros., 20th Century Fox and Lucasfilm secured an injunction against the company, which provides online versions of films and TV shows filtered for family consumption.

VidAngel argues that the Family Movie Act gives it the right to pay for copies of films, edit them and then distribute them to users. 

The hearing, before a panel of the U.S. Court of Appeals for the Ninth Circuit, was on the VidAngel appeal of the injunction, granted by a L.A. district judge. The court back in January refused to stay the injunction. 

During the approximately 40-minute hearing, VidAngel attorney Peter Stris argued that the case hinged on two key "merits" questions: Whether the Family Movie Act allowed VidAngel to copy and stream the studio content and, if so, should the Digital Millennium Copyright Act (DMCA) be interpreted to "gut" the Family Movie Act and also "other well recognized exemptions to copyright infringement." 

Stris said that the Family Movie Act covers its reproduction of the content, which otherwise would be a copyright violation, but that it is not a public performance, either, so is not a violation of the DMCA on the transmit side. 

Judge Andrew Hurwitz asked why it was not a violation of the DMCA to use "what appears to be illegal software" to decrypt them.

Stris said it was because once the copyright owner gives them the ability to decrypt to watch the authorized copy (disk) they have bought, they are no longer circumventing "access control." Stris said the fundamental reason for access controls was to stop people who didn't pay for content from accessing it.

Hurwitz asked where VidAngel got the permission to bypass that control. Stris said that the only way to watch a disk is to bypass encryption, which you do when putting it in a player. Stris said he thought fair use applied, but it did not have to in order for it to win on the merits.

Stris also said there was an obvious abuse of discretion by the district court in finding a likelihood of irreparable harm—one of the thresholds for granting injunctions—calling that the clearest path for the Ninth Circuit to reverse the injunction. 

He said the Family Movie Act (FMA) was intended to insure that families could skip over offensive content after they bought a movie. He said it applies to both disks and content streamed to homes. But, he said, studios have never granted filtering rights in any streaming, which is a studio veto VidAngel says it was created to counter, just as the FMA intends. 

For his part, Don Verrilli, arguing for Disney, Fox and Warner Bros., countered that the district court imposed the injunction because it rightly saw VidAngel "for what it is, an unlicensed, on demand streaming service that lacks any legal justification and is totally unfair to us and to licensed streaming services."

He said that the DMCA says no person shall circumvent, "unequivocally." He says that means decrypting a work without authority of a copyright owner. He said that authority is for the folks who make DVD players and drives in computers, not those who view the content with the authority of the copyright owner.

Verrilli also said that VidAngel was arguing that when it bought a DVD, it also bought the keys to decrypting it. "That's just not right. The people with the keys are the technology companies that have license to create the DVD players and drives that allow it to be viewed in an authorized manner."

He said if the court modified the injunction, it would allow VidAngel to "reap the fruits of their illegal content," pointing out they have hundreds of copies of the studio's content on their servers.

Verrilli said that their whole FMA case hinges on whether they are transmitting from an unauthorized copy. Actually, he said, it is a doubly unauthorized copy because it is a "ripped" copy in violation of the DMCA, and then they make another unauthorized master copy, from which they transmit. Verrilli said the FMA does not authorize copying that is not otherwise authorized, and it certainly doesn't authorize streaming that is otherwise unauthorized.

He cited a statement from Sen. Orrin Hatch (R-Utah), the sponsor of the FMA, about his bill, saying "you cannot invoke the Family Movie Act to excuse conduct that would be a violation of the DMCA on the grounds that you are violating the DMCA so that you can do what the Family Movie Act would otherwise allow you to do," which he said is why "authorized copy" language is in the act. He said that would be one straightforward way to resolve the issue—and maintain the injunction.

Asked bout Stris' point about studios' contracts never allowing filtering, Verrilli said such terms "don't exist." But VidAngel is saying, "if we filter, we can stream without a license," said Verrilli.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.