A California U.S. District court judge has told Vidangel to temporarily stop circumventing copyright protections on DVDs or streaming any of that content over the Internet.
That came in a decision from Judge Andre Birotte, Jr. granting a preliminary injunction to Disney, Lucasfilm, Twentieth Century Fox and Warner Bros. Oral argument in the injunction request by the studios was heard Nov. 14..
Utah-based Content-filtering company 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. The company says it will continue its fight all the way to the Supreme Court.
The California court (The U.S. District Court for the Central District of California, has yet to rule on the underlying arguments, but granting the studios the preliminary injunction is a signal the studios have made a good case for their interpretation. That is because, as the court points out, an injunction is an "extraordinary remedy" that is only granted on a clear showing that the plaintiff is entitled to the relief sought, including that there is likely immediate or imminent irreparable harm.
VidAngel argues that they can legally decrypt because the Family Home Movie Act of 2005 "provides an exemption for decrypting DVDs for the purpose of accessing a disk to filter audio and visual content," the court pointed out in its decision.
But the judge instead said: "Plaintiffs [the studios] have shown a strong likelihood of success on the merits of their claim that VidAngel has violated, and continues to violate, the Digital Millennium Copyright Act by circumventing technological measures that effectively control access to Plaintiffs’ copyrighted works on DVDs and Blu-ray discs."
Birotte concluded that the studios have a strong likelihood of winning on their arguments that VidAngel violates the studios' exclusive rights to reproduce their works and their exclusive right of public performance.
As to the Family Home Movie Act exemption, the judge said that the statute was clear that a performance of filtered content must be frmo an authorized copy, and VidAngel's is from a digital copy produced by circumventing copy protections--VidAngel pointed to the fact that an undecrypted copy of the DVD remained intact.
VidAngel also argued its use was transformative and thus fell under "fair use." Birotte said 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.
As to the potential harm to the studios, Birotte said: "[T]he Plaintiffs have provided uncontroverted evidence that VidAngel operates their service without a license, and offers Plaintiff’s works during exclusivity periods that Plaintiff negotiated with licensees. Furthermore, Plaintiffs have offered [a] sworn declaration stating that unlicensed services like VidAngel’s had been specifically referenced as a concern during negotiation meetings with licensees. The Court finds that this is a sufficient showing that VidAngel’s service undermines Plaintiffs negotiating position with licensees and also damages goodwill with licensees."
VidAngel had argued that an injunction would "severely undercut" the right to watch filtered content in private, but the court pointed to the Google Play filtering service, ClearPlay that access authorized streams and suggested VidAngel could offer a similar service.
Plaintiffs granted injunctions are required to post a bond to cover the potential harm and loss of business if a party has been wrongfully enjoined (VidAngel ultimately wins the underlying case). VidAngel had asked for $50 million. The court said the studios would need to post a $250,000 bond.
“Hollywood studios have followed a repeated pattern in their decades-long campaign to put movie filtering services out of business by seeking a shut-down decision in trial court," said VidAngel CEO Neal Harmon. "Previously, such a decision has signaled the end of the legal battle. As such, while we are extremely disappointed—for the countless people who rely on our service regularly to enjoy movies using filters—our customers have given us not just the mandate to fight this battle all the way to the Supreme Court, but the financial resources as well. We will aggressively pursue an appeal and take this case to a higher level where we have always believed we will ultimately prevail.”
VidAngel raised $10 million from investors for its legal fees. VidAngel filed a counterclaim against the studios, which will be heard by the same court Dec. 19.
VidAngel wants the studios' suit dropped, and argues it is the aggrieved party, alleging antitrust injury for, among other things, not negotiating a streaming license and Directors Guild of America contract prohibitions on alteration to content without a directors' permission that VidAngel alleges are an unreasonable restraint on trade in violation of antitrust laws.
"We are extremely gratified the court enjoined VidAngel’s unauthorized streaming service from infringing our copyrights and violating the Digital Millennium Copyright Act," the studios said in a joint statement. "This case was never about filtering. The court recognized that the Family Movie Act does not provide a defense to VidAngel’s infringing acts of ripping, copying and streaming copyrighted movies and TV shows. We look forward to defending the court’s decision against any appeal by VidAngel.”