Movie Studios Aim for Tens of Millions of Dollars at VidAngel Copyright Trial

Casablanca (1942) Still 1- Photofest -H 2018
Warner Bros. Pictures/Photofest

On June 11, in a California federal court, three major film studios will be hoping to collect as much damages as copyright law allows when they face off at trial against VidAngel.

The Utah-based VidAngel made a splash back in 2016 with a streaming service that touted the ability to buy access to movies for $20; set filters so those films could be watched without profanity, sex or violence; and then sell them back back to VidAngel for $19. VidAngel may have viewed its service as permissible under the Family Home Movie Act of 2005, but the film studios wouldn't let stand a company advertising movies that weren't even yet available on Netflix and other licensed streaming outlets.

Disney, Fox and Warner Bros. (along with subsidiaries) filed suit, and after a long legal war that included an appeal and bankruptcy, the plaintiffs emerged victorious, scoring both an injunction and a determination that VidAngel was indeed liable for copyright infringement.

Now, the question for trial is what VidAngel owes in damages — a more complicated issue than one might expect.

At issue is about 824 copyrighted works, although the number isn't fully settled because VidAngel is putting up a fight over the ownership of famous movies like Casablanca, Batman, Full Metal Jacket, Goodfellas, The Wizard of Oz and about 100 others. These films have been associated with Warner Bros. or sister company Turner Entertainment, but the AT&T subsidiaries must go the extra distance in proving chain of title upon VidAngel's challenge to copyright registrations and transfers. This aspect may be first to be resolved at a bench trial before U.S. District Court Judge Andre Birotte Jr.

Even if the number of infringed copyrighted works is 824, that doesn't end the Gordian knot of assessing the copyright damages in play.

In particular, the plaintiffs demand statutory damages for each of the works in two respects: first, the way that VidAngel violated the Digital Millennium Copyright Act by "ripping" the encryption on DVDs and Blu-rays; and second, the way copies of these motion pictures were then made to stream to VidAngel customers.

VidAngel objects to so-called double damages, but the movies studios say that legal precedent allows for double recovery under separate statutory schemes.

Now, more math.

If VidAngel's copyright infringement is determined at trial to be willful, then damages may range between $750 to $150,000 per work. And again, according to the movie studios, it should be doubled. So that puts the high range of damages somewhere between $1.2 million and $247.2 million overall. In past copyright cases, the more typical penalty for willful copyright infringement is about $10,000 to $50,000 per work. That would mean that the studios should more realistically hope for about $16 million to $82 million in damages at this trial.

Although VidAngel can no longer fight its liability in the matter, the defendant has hopes of escaping with a far less punishment.

VidAngel wants a jury to determine that it is merely an "innocent" infringer. The company plans to present testimony and exhibits related to its understanding upon launch of the Family Home Movie Act (permitting technology sanitizing offensive home entertainment, but only for authorized copies), the Supreme Court's Aereo decision and the movie industry's alleged antipathy to filtering services. VidAngel asserts that after discussions with Google and upon advice of counsel, it had a good faith belief in the legitimacy of its streaming service.

If VidAngel is successful, the company fancies a damages award trimmed to just $200 per work. That puts the low end of this trial around $165,000.

The trial is scheduled to begin less than a week from now, though the parties are still litigating which aspects of the damages trial go to a judge for decision and which go to a jury. It's likely that whatever a jury decides will be brought to Birotte anyhow.