IP Law Daily Streaming service operator VidAngel liable for copyright infringement and DMCA circumvention
Friday, March 8, 2019

Streaming service operator VidAngel liable for copyright infringement and DMCA circumvention

By Peter Reap, J.D., LL.M.

VidAngel violated the DMCA’s anti-circumvention provision by using software to decrypt the access controls on DVDs containing movies and television shows owned by several plaintiff production studios and infringed the plaintiffs’ copyright in those works by copying and publicly performing them.

VidAngel, the operator of an online video-on-demand streaming service that offered filtered versions of copyrighted movies and television shows to paying customers with audio and video content that the customers found objectionable removed from them, was liable for both circumventing the copyright owners’ technological protection measures under the Digital Millenium Copyright Act (DMCA) and for infringing the owners’ copyrights, the federal district court in Los Angeles has decided. All of the defenses raised by VidAngel, including fair use, the First Amendment, and the Family Movie Act, were without merit. Thus, the plaintiff copyright owners, Disney Enterprises, Lucasfilm Ltd., Twentieth Century Fox Film Corporation, and Warner Bros. Entertainment (together, the studios), were granted summary judgment on their DMCA and infringement claims. For the same reasons, the court in a separate order denied VidAngel’s motion to modify the court’s preliminary injunction (Disney Enterprises, Inc. v. VidAngel Inc., March 6, 2019, Birotte, A.).

VidAngel purchased physical discs containing copyrighted movies and television shows, decrypted the discs to "rip" a digital copy to a computer, and then streamed to its customers a filtered version of the work. The studios asserted that VidAngel engaged in copyright infringement and circumvention of technological measures controlling access to copyrighted works in violation of the DMCA. VidAngel denied the allegations, raising affirmative defenses of fair use and authorization by the Family Movie Act of 2005 (FMA). The studios moved for a preliminary injunction, which the district court granted. VidAngel appealed, and the Ninth Circuit affirmed the grant of preliminary injunction.

Summary judgment motion. Currently before the court was the studios’ motion for summary judgment. The studios moved for summary judgment on the issue of liability as to four works (FrozenStar Wars: The Force AwakensIce Age, and Harry Potter and the Sorcerer’s Stone) (the Works) that they say are representative of all works in issue. They argued that the preliminary injunction rulings already established at least a prima facie case of liability. VidAngel responded that new facts developed since the preliminary injunction litigation gave rise to triable issues and precluded summary judgment.

DMCA. Section 1201(a)(1)(A) of the DMCA provides that "[n]o person shall circumvent a technological measure that effectively controls access to a work protected under this title." To prevail on their circumvention claim, the studios must prove that (1) they employ "technological measure[s] that effectively control[] access to a work protected" by copyright; and (2) VidAngel "circumvent[s]" those measures. 17 U.S.C. § 1201(a)(1)(A).

VidAngel advanced several arguments to evade liability, but they were without merit, the court ruled. VidAngel’s argument that because it uses third-party decryption software, rather than writing its own, it is like any other person who legitimately views a work using an authorized disc player, and that the third-party is responsible for deciding to use unauthorized decryption was previously rejected. VidAngel did not claim that the third-party software that it uses to circumvent the studios’ technological protection measures (TPMs) is authorized by the studios, the court noted. The DMCA prohibits circumvention" of TPMs, conduct that VidAngel expressly admitted to engaging in. Thus, the studios established their prima facie case that VidAngel circumvented their TPMs in violation of the DMCA.

VidAngel asserted a fair use defense to liability for circumvention, but that defense does not apply to this DMCA violation, the court held. The fair use defense, 17 U.S.C. § 107, provides that certain uses of a work are not copyright infringement in violation of § 106 and § 106A. The DMCA’s prohibition of circumvention is in § 1201.

VidAngel also argued that its circumvention conduct was protected by the First Amendment because it circumvents in order to pursue its expressive interests and to build a community of like-minded subscribers. The court rejected VidAngel’s argument as poorly developed and dependent on a string of attenuated propositions. Section 1201(a) regulates conduct—the circumvention of TPMs—and not expression, the court observed.

Copyright infringement. VidAngel argued that the studios could not establish the second element of copyright infringement—infringement of at least one exclusive right—because (1) it did not infringed on the studios’ rights (a) to copy or (b) to publicly perform the Works; (2) its use of the Works is protected by the Family Movie Act; and (3) its use of the Works is fair use.

Both this court and the Ninth Circuit previously found that VidAngel copies works from the discs onto its computers and servers, the court noted. Now, the court concluded that it was undisputed that VidAngel copied the Works. Earlier in the litigation VidAngel repeatedly admitted that it "makes a copy of" or that it "copies" works. In response to the undisputed fact that it copies, VidAngel strained to avoid using that the word "copy" in describing its filtering process, but described conduct that amounted to copying, and ultimately ended up using the word "copy." Although VidAngel uses the words "render" and "rendition" instead of "copy," the conduct it described was in fact copying the Works, according to the court.

At the preliminary injunction stage, the court found that when VidAngel streams (i.e., transmits) the Works to its customers, it performs them to members of the public. The court now determined that it was undisputed that VidAngel publicly performs the Works. VidAngel’s convoluted arguments all turned on its claimed distinction between a copy and a rendition, but as noted, this premise was rejected and it was undisputed that VidAngel streams the Works from a master copy it stores on a server, the court explained.

Family Movie Act exemption. The court, affirmed by the Ninth Circuit, previously held that VidAngel’s conduct was not within the scope of the Family Movie Act (FMA). The FMA establishes two exemptions from copyright infringement: (1) for "the making imperceptible . . . of limited portions . . . of a motion picture . . . for private home viewing, from an authorized copy of the motion picture," and (2) for "the creation or provision of a computer program or technology that enables for such making imperceptible . . . if no fixed copy of the altered version of the motion picture if created by such computer program or technology." VidAngel argued that its "master file" is created directly from an authorized copy—a disc—so therefore its service is protected. But the Ninth Circuit rejected this argument, and VidAngel did not and could not deny that it streams from its "ripped" master files. Accordingly, the appellate court’s ruling foreclosed VidAngel’s defense under the FMA.

Fair use defense. VidAngel also argued that it was making "fair use" of the copyrighted works under 17 U.S.C. § 107. The court previously found that all of the factors weighed against fair use and that VidAngel was not likely to succeed on this defense; the Ninth Circuit affirmed. VidAngel sought to revisit that analysis, arguing that there are "historical facts in dispute" that rendered summary judgment inappropriate and require a jury trial, and that the fair use factors were also a jury question. The court again rejected the fair use defense, finding the "historical facts in dispute" to actually be undisputed, and the first three fair use factors—the purpose and character of the use; the nature of the copyrighted work; and the amount used—weighed heavily against fair use. The final factor, market harm, was at most neutral, but this did not create a triable issue as to the entire defense, the court held.

This case is No. 2:16-cv-04109-AB-PLA.

Attorneys: Glenn D. Pomerantz (Munger Tolles and Olson LLP) for Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corp. and Warner Bros Entertainment Inc. David W. Quinto for VidAngel Inc.

Companies: Disney Enterprises, Inc.; Lucasfilm Ltd LLC; Twentieth Century Fox Film Corp.; Warner Bros Entertainment Inc.; VidAngel Inc.

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