Disney, Lucasfilm, 20th Century Fox, and Warner Bros are currently in the middle of a lawsuit against the movie filtering and streaming service VidAngel, for allegedly violating copyright law. VidAngel provides online streaming of filtered versions of movies for as little as $1. VidAngel does not have licensing agreements with the Hollywood studios that would allow them to stream their movies, instead, VidAngel purchases physical DVDs or Blu-rays of the media, which VidAngel then decrypts so that the content can be made available online.

The studios assert that VidAngel is in violation of the Digital Millennium Copyright Act (DMCA). VidAngel contends that the Family Movie Act of 2005 (FMA) exempts them from copyright infringement.

VidAngel is an online streaming service, like the Google Play Store or the iTunes Store, that offers over 2500 movies and television episodes for purchase on its website. The difference between VidAngel and other more widely known streaming services is that before watching the movie or episode, the customer can filter out objectionable content, such as swear words and nudity. Each movie costs $20, but can be sold back for a $19 credit after watching, effectively making it a movie rental of $1.

VidAngel does not have licensing agreements with the studios. According to VidAngel, the company has tried a number of times to establish agreements with the studios to allow VidAngel to stream filtered movies, but it has allegedly been denied at every turn. VidAngel first attempted to team with Google to filter Google Play’s licensed movies, then it attempted to license directly from the studios. When these attempts failed, VidAngel sought to purchase DVDs directly from the studios, and lastly tried to establish a product that could be used in conjunction with YouTube which would allow someone to filter movies that they had purchased. According to VidAngel, the studios blocked every attempt to establish any service that provides filtered movies, which led VidAngel to its current practice (discussed infra), which it claims is legal under the FMA.

VidAngel attempts to get around copyright law by purchasing numerous physical copies of each title, which are then decrypted by VidAngel and made available to its customers for filtering and online streaming. When customers purchase a movie, they are purchasing an actual physical copy of the movie. That physical copy is set aside by VidAngel and could be sent to the customer if requested, but it is usually kept at VidAngel’s facility. VidAngel then allows the customer to set filters for the movie to edit out any objectionable content and then streams the customer a filtered version of the purchased movie. The physical DVD of the movie is usually sold back to VidAngel by the customer for a $19 credit, and the filtered digital version is deleted.

The Plaintiffs assert that, by decrypting the movies and making them available for filtering and streaming, VidAngel is in violation of the DMCA, which states: “No person shall circumvent a technological measure that effectively controls access to a work.” 17 U.S.C. § 1201a. VidAngel claims that the Family Movie Act allows it to decrypt DVDs. The relevant portion of the Family Movie Act provides that it is not copyright infringement to edit out “limited portions of audio or video content of a motion picture,… for private home viewing,… from an authorized copy of the motion picture,… if no fixed copy of the altered version of the motion picture is created.” 17 U.S.C. § 110.

VidAngel claims that its actions fall within the exemptions created by the FMA for three reasons: (1) the movie is an authorized copy; (2) the movie is watched in the privacy of the home; and (3) no permanent filtered copy of the movie is created. The Plaintiffs argue that, even if the FMA allows filtering, it does not allow VidAngel to circumvent the security protections of their DVDs which VidAngel does when it decrypts the DVDs and makes movies available for online streaming and filtering.

On December 12, 2016, Judge Andre Birotte Jr. of the United States District Court for the Central District of California agreed with Plaintiffs and granted their motion for preliminary injunction. In its ruling, the Court held: “The purchase of a DVD only conveys the authority to view the DVD, not to decrypt it.” VidAngel counters that since the FMA allows filtering and since decrypting a DVD is the necessary first step in being able to filter the content on the DVD, decryption must be allowed under the FMA. The Court disagreed.

VidAngel further argued that, even if its actions do violate the DMCA, the Fair Use Doctrine, as provided in 17 U.S.C. § 107, allows VidAngel to use copyrighted work if its use is transformative. Again, the Court disagreed, holding that, according the Supreme Court, use is transformative only if it “adds something new” to the work, and since VidAngel does not add anything but instead simply removes portions of movies that viewers wish to filter out, the use is not transformative under the Fair Use Doctrine. The Court granted Plaintiffs’ motion for preliminary injunction, ordering VidAngel to stop decrypting and streaming the studios’ movies.

So what now?

VidAngel already requested a stay of the preliminary injunction which the 9th Circuit denied. On January 6th, the Court held VidAngel in contempt for failing to immediately comply with its order to stop streaming online content and awarded Plaintiffs’ counsel over $10,000 in legal fees. The case will continue on to trial, with VidAngel promising to appeal any adverse ruling to the Supreme Court if needed. VidAngel has raised over $10 million to fund their campaign to #SaveFiltering, and plans to work with members of Congress to pursue legislative options while the legal battle is ongoing.

Is VidAngel clearly in violation of copyright law? Or are Plaintiffs unfairly trying to stop filtering? We'll have to wait for trial to find out.

Robert Starling is a 3L at Georgetown University Law Center and a Law Clerk in Gerard Fox Law's DC Office