A federal appeals court heard oral argument Thursday (June 8) 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 nude scenes, mute objectionable language —in their own homes if they choose. The studios argue VidAngel's service illegally circumvent copy protections, modifying and streaming their content, and preempting their windows for releasing their content online.
Walt Disney Co. and its Lucasfilm unit, Warner Bros. and 20th Century Fox in December 2016 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, 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 an L.A. District Judge. The court back in January refused to stay the injunction.
During the approximately 40-minute hearing, VidAngel’s appellate attorney, Peter K. 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, whether the Digital Millennium Copyright Act (DMCA) should be interpreted to "gut" the Family Movie Act and also "other well recognized exemptions to copyright infringement."
Stris said the Family Movie Act covers its reproduction of the content, which otherwise would be a copyright violation, and that it is not a public performance, so is not a violation of the DMCA on the transmission side, either.
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Judge Andrew Hurwitz asked why it was not a violation of the DMCA to use "what appears to be illegal software" to decrypt the films.
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 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 the Ninth Circuit to reverse the injunction.
He said the Family Movie Act (FMA) was intended to einsure 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 Verilli, 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 the DMCA says no person shall circumvent, "unequivocally," which 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.
Verilli 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," Verilli said. "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.
Verilli said VidAngel's whole FMA case hinges on whether it is transmitting from an unauthorized copy. Actually, Verilli 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."
Verilli 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 Senator 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's point about studios' contracts never allowing filtering, Verilli said such terms "don't exist." But VidAngel is saying, "If we fliter, we can stream without a license," he added.
“Stris, did a masterful job presenting our case to the 9th Circuit," said VidAngel CEO Neal Harmon of the oral arguement. "He clearly articulated why the preliminary injunction is unprecedented and improper, detailing why it should be overturned immediately... [W]e believe, when all is said and done, that the Family Movie Act of 2005 will prevail and VidAngel will be able to provide filtering to customers on modern streaming devices.”