Appeals Court Upholds Injunction Against VidAngel's Streaming Service

"Star Wars is still Star Wars, even without Princess Leia’s bikini scene," states the opinion.

VidAngel, the self-touted family-friendly technology service that burst onto the Hollywood scene with a plan to clean up filthy language, nudity and violence from films and television shows, has suffered yet another blow. On Thursday, the 9th Circuit Court of Appeals affirmed an injunction in a copyright lawsuit brought by Disney, Fox and Warner Bros.

The company had a quirky business model — selling new movies to customers for $20, buying them back for $19 — and let customers use filters when streaming the content purchased. But after the studios filed claims, a federal judge arrived at the conclusion that VidAngel was likely violating the Digital Millennium Copyright Act by circumventing encryption and that the Family Home Movie Act of 2005 didn't save the service because it only applied to lawfully acquired works.

Thursday's opinion authored by 9th Circuit judge Andrew Hurwitz is the first by this appellate circuit to interpret the Family Home Movie Act, which was passed by Congress with an eye towards permitting technology sanitizing offensive home entertainment.

"Indeed, VidAngel concedes that under the FMA, the filtering must come ‘from an authorized copy’ of the movie," writes Hurwitz. "But, VidAngel argues that because it 'begins its filtering process with an authorized copy' — a lawfully purchased disc — 'any subsequent filtered stream' is also 'from' that authorized copy."

Hurwitz disagrees and concludes the most natural reading of the FMA is that the filtered transmission must be "from" an authorized copy of a motion picture. Something that indirectly comes from that copy isn't sufficient, the judge adds, emphasizing aspects of the statute that provided for the protection of intellectual property rights.

Ultimately, the 9th Circuit agrees with the studios that VidAngel's technology really amounts to an unlicensed VOD service.

"VidAngel’s interpretation would create a giant loophole in copyright law, sanctioning infringement so long as it filters some content and a copy of the work was lawfully purchased at some point," states the opinion. "But, virtually all piracy of movies originates in some way from a legitimate copy. If the mere purchase of an authorized copy alone precluded infringement liability under the FMA, the statute would severely erode the commercial value of the public performance right in the digital context, permitting, for example, unlicensed streams which filter out only a movie’s credits."

The three judges also reject VidAngel's fair use arguments, finding for instance that the service hardly adds transformative new meaning to a work when its raison d'etre is subtraction.

Writes Hurwitz, "Star Wars is still Star Wars, even without Princess Leia’s bikini scene."

Here's the full opinion that goes into more DMCA analysis and looks at the irreparable harm faced by studios and the public interest before ultimately concluding the district court didn't abuse discretion in finding a preliminary injunction as warranted.

VidAngel's losing streak continues. Down at the lower court, it recently failed in a bid to have a second version of its service ruled outside the scope of the injunction. If VidAngel intends to fully pursue its options, the next step would be seeking a review before a fuller panel of 9th Circuit judges before petitioning the Supreme Court.

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