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IP/Entertainment Case Law Updates

Disney Enterprises Inc., v. VidAngel, Inc.

In copyright infringement action brought by major movie studios against streaming service that allows viewers to filter “objectionable” content out of motion pictures and television programs, district court grants summary judgment in favor of studios, finding streaming service liable for copyright infringement and for violating Digital Millennium Copyright Act.

Movie studios Disney Enterprises Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corp. and Warner Bros. Entertainment Inc. sued VidAngel Inc., an unlicensed video-on-demand streaming service that allows customers to filter out “objectionable” content from movies and television shows. The studios claimed VidAngel infringed their copyrights and violated the anti-circumvention prohibitions of § 1201(a) of the Digital Millennium Copyright Act. The district court previously granted plaintiffs’ preliminary injunction motion (read our summary of that decision here), which was upheld by the Ninth Circuit on appeal (read our summary of that decision here), and their motion to dismiss VidAngel’s counterclaims for antitrust violations, intentional interference with prospective economic advantage and unfair competition under California law (read our summary of that decision here), which the Ninth Circuit also affirmed (read our summary of that decision here).

Subsequently, the studios moved for summary judgment on the remaining claims, which the district court granted. 

With respect to the studios’ claim that VidAngel violated the DMCA by circumventing technological protection measures on discs containing the studios’ works, the district court found that VidAngel’s liability was undisputed because VidAngel had admitted that it circumvented the studios’ protection measures. The court was unpersuaded by VidAngel’s arguments to the contrary, namely that because VidAngel used third-party decryption software, rather than writing its own, it was “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.” The court rejected this argument, finding as dispositive that VidAngel was not authorized to use such third-party software in the first place. “VidAngel’s decision to use other software to decrypt the TPMs . . . is exactly like ‘breaking into a locked room in order to obtain a copy of a [movie].’” As to VidAngel’s argument that it only temporarily removes the encryption on the discs and that the contents of the discs, including the TPMs, remain unchanged, the court concluded this was a “distinction without difference” because VidAngel nonetheless admitted that it had engaged in the conduct prohibited under the DMCA — the “circumvention” of TPMs. 

Turning to VidAngel’s defenses to liability under the DMCA, the court found that VidAngel had not raised a triable issue. First, the court concluded that the fair use defense simply does not apply to the DMCA’s prohibition of circumvention and that “neither the text of § [17 U.S.C.] 107 [the fair use defense] nor the nature of the conduct targeted by the DMCA (circumvention) supports applying the fair use defense to a DMCA violation.” Next, the court rejected VidAngel’s argument that “it circumvents in order to pursue its expressive interests and to build a community of like-minded subscribers,” thus protecting VidAngel’s conduct under the First Amendment. The court explained that the DMCA’s prohibition of circumvention regulates conduct (the circumvention of TPMs) and not expression (the use to which a person puts TPM-protected works), and as such “does not appear to tread on expressive or associative rights.”

The court also determined that the studios were entitled to summary adjudication of their copyright infringement claims. First, the court found that VidAngel had indisputably copied the studios’ works, and that VidAngel had admitted to doing so, despite its attempts to describe what it had done without using the word “copying.” Indeed, the court determined that VidAngel’s own description of its filtering process perfectly matched the Copyright Act’s definition of copying: “fixing” the work in “material objects” “from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” Further, the court found that VidAngel had violated the studios’ public performance rights. The court rejected VidAngel’s argument that its streaming service was merely a private performance because its customers owned the discs at issue and those customers therefore had the right to have the content of those discs streamed to them. Instead, the court explained that the dispositive issue was that “VidAngel streams [the studios’ works] from a master copy it stores on a server.”  

As with VidAngel’s defenses to DMCA liability, the court also found no merit to VidAngel’s defenses to copyright infringement. The court held that VidAngel’s infringement was not protected by the Family Movie Act because that statute protects performance of transmission of filtered content only to the extent it comes from an authorized copy of a motion picture. In this case, it was clear that VidAngel was streaming from “ripped” master files.  

The district court also found that VidAngel’s fair use defense failed because at least three of the fair use factors weighed heavily against fair use. Under the “purpose and character” factor — which considers whether the work’s purpose was for profit or not for profit and “to what extent the new work is transformative” — the court found that VidAngel’s use was commercial in nature and “not transformative”: VidAngel was omitting portions of the works that viewers find objectionable but otherwise transmitting the works for the “same intrinsic entertainment value” as the originals. VidAngel had already conceded that the second factor — the nature of the copyrighted work — weighed against its fair use. As for the third factor — the quantity of the work taken and the quality and importance of the portion taken — the court found that “VidAngel does not genuinely dispute that it copies the works in their entirety, that its filtered streams omit only portions of the works, and the heart of those [w]orks remains unchanged.” Finally, the court explained that under the fourth factor — which considers the extent of market harm caused by the infringing activity — a likelihood of market harm is “presumed” when use of copyrighted works is commercial and nontransformative. Finally, the court rejected VidAngel’s argument that “its streaming service is a form of social criticism protected by fair use” because VidAngel had failed to meaningfully substantiate this position.

Summary prepared by Linna Chen and Sara Slavin

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