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VidAngel offers what is functionally a video-on-demand (VOD) service plus “filtering” for viewers who want to see mainstream fare with certain naughty bits—sex, foul language, violence, etc.—removed. To provide this service, though, VidAngel allegedly violates the copyright owners’ exclusive right of reproduction and public performance, as well as Section 1201 of the DMCA prohibiting circumvention of technical protection measures (TPM) used to encrypt DVDs.
Movie studios Disney, 20th Century Fox, Lucasfilms, and Warner Bros. sued VidAngel, and in December 2016, the District Court for the Central District of California issued an injunction, halting the defendant’s operations. The judge’s opinions in the order state that all arguments favor the plaintiffs’ likelihood of success on the merits. VidAngel has appealed the injunction to the 9th Circuit where briefs were filed last week.
The Family Home Movie Act (2005)
As a frame of reference, if a consumer owns a feature film on DVD, a statute called the Family Home Movie Act (FMA), allows the use of technological means (e.g. a product called ClearPlay) to make limited portions of his disk “imperceptible” while playing it in a private viewing situation. Designed for audiences who want to “filter” out scenes containing the aforementioned naughty bits, the FMA affords the viewer a limited right to use technology to achieve this “filtering” without infringing copyright. (As a no-tech option, there is of course no limit to the amount a viewer may close his eyes, plug his ears, and sing La-La-La during those portions of a movie he finds offensive.)
We can debate whether or not “filtering” motion pictures is truly a right, but there is apparently enough of a market that wants to “filter” that the subject has at least been an issue. For instance, the Directors Guild of America (DGA) was opposed to filtering technology like ClearPlay, claiming that editing the films violates the right of the author to disseminate a work as he sees fit, which is certainly true. So, the FMA was enacted as a legal compromise, written very narrowly to provide the home viewer with the ability to “make imperceptible” limited portions of legally-acquired DVDs.
The CEO of VidAngel, Neal Harmon, reportedly grew up in a household where, for religious reasons, he was not allowed to watch a number of mainstream movies. Remembering what it felt like to be culturally out of the loop, Harmon founded VidAngel in Utah in 2013—it is now headquartered in Silicon Valley—as a way to provide families in similar circumstances with a solution. According to testimony, VidAngel approached the studios with their model; and the studios were not interested. There are any number of reasons why a film producer will be opposed to enterprise-scale “filtering” by a third party, and the studios were certainly under no obligation to engage in that endeavor.
Deciding to forge ahead, VidAngel developed a convoluted workflow and business model based on a bold legal assumption that the FMA allows the company to provide an unlicensed video-on-demand and “filtering” service while avoiding liability for infringement. The overly-complex model looks a lot like what it is: an attorney’s Rube Goldberg attempt to circumvent copyright law. And although VidAngel wants to make this a story about the right of consumers to “filter,” launching the hashtag campaign #savefiltering, that debate has little bearing on the infringing nature of the VidAngel enterprise.
VidAngel buys feature film DVDs, which they decrypt, digitize, organize, and store as “segments” that are tagged to facilitate “filtering” by pre-selected criteria (e.g. blasphemy). A customer uses the VidAngel app—available on Roku, AppleTV, Chromecast, etc.—to select among the criteria and create his “filtering” preferences. Next, the customer “buys” a DVD from VidAngel’s inventory for $20—let’s say 1988’s Working Girl. But having filtered for nudity, he does not want to see Melanie Griffith vacuuming topless. (There’s a cleanliness next to godliness joke in there, but I’ll let it go.)
Most of the time, the customer doesn’t choose to receive the DVD he “bought”—it does still have the unwanted scenes, after all—but instead, he streams Working Girl, sans topless vacuuming scene, and then “sells” the DVD back to VidAngel for a refund minus $1/day for a standard-def stream ($2/day for high def). Note, the DVD never changed hands; VidAngel “held the DVD” for customer during the “buy-sellback” interval.
According to VidAngel’s testimony, 80% of the disks are “sold back,” so if this sounds like an absurdly complicated way to operate what is primarily a VOD service, that’s because it is overly complicated—and quite on purpose. Because what VidAngel is counting on is that during the brief period when the customer “owns” the DVD, that customer may then legally “direct” VidAngel to perform the same function he would otherwise be allowed to perform at home under the FMA. That’s their theory anyway.
The fact that VidAngel markets its service as providing streaming for “as low as $1” belies its claim as a “reseller” of disks; and the fact that 80% of its customers “sell back” the DVDs seems more than sufficient evidence to reasonably describe the core business as video-on-demand. But even if a court might agree that a VidAngel customer is temporarily the “owner” of the DVD, this should have no bearing in assessing VidAngel’s infringing activities; and their own workflow makes this clear.
VidAngel Infringes Before a Customer Exists
In order to prepare files for “filtered” viewing, the company has to decrypt a DVD and then make and store copies of entire films on its servers (i.e. in fixed form). For practical reasons, the company must perform these two infringing activities prior to any customer “buying” any disks. There is simply no other way to organize the workflow and provide the service they offer. Because the infringement against the owners’ right of reproduction, and violation of the DMCA, occurs before a customer becomes part of the workflow, VidAngel’s claim that it is shielded by the FMA on the grounds that they “filter” at the direction of a DVD owner is simply impossible. The only owner of the DVD at the time when decryption and copying are performed is VidAngel. Moreover, VidAngel has predetermined a set of criteria for “filtering,” and no matter how many possible permutations of a given film this may produce, the company has still acted to create a finite set of “filters” it makes available to a prospective DVD owner rather than its claim to “filter” at the direction of an actual DVD owner.
Next, when VidAngel streams a movie, this constitutes a public performance in violation of another exclusive right protected by copyright. Again, VidAngel puts its faith in the FMA, arguing that because they only stream a “filtered” version of a movie to the customer during the period when the customer “owns” the DVD, they are not publicly performing any more than if the customer himself were to engage in the same function at home using a legal “filtering” technology as permitted by the FMA.
Here, VidAngel appeals to the “spirit” of the FMA and not the statute, implying that Congress believed generally in the principle of “filtering” when it wrote the law. Whether this is true of Congress or not, VidAngel is asking the court for an extremely broad (dare I say, leap of faith?) interpretation of narrowly written legislation that does not allow a party doing the “filtering” to publicly perform a film beyond the confines of ordinary private viewing. The FMA simply does not anticipate a model anything like VidAngel, which is exactly why the company is straining to create its own loophole in the law with its over-complicated pretense of “selling and buying back” DVDs.
VidAngel Claims Fair Use
Finally, VidAngel appeals to fair use doctrine, claiming that the “filtered” versions are “transformative” under the first prong, that the service is not a substitute under the third prong, and that the service does not create potential market harm under the fourth prong. I suspect the appellate court will agree with the district court, which found that the fair use test favored the plaintiffs across the board; but it was the judge’s response to VidAngel’s fair use claim under the fourth prong that I find particularly revealing about the rationales being applied in VidAngel’s defense. The court states:
VidAngel attempts to support their arguments by offering customer survey results that indicate that over 51% of VidAngel customers would not watch their offerings without filtering. The survey results are ultimately detrimental to VidAngel’s arguments. The fact that 49% of VidAngel’s customers would view movies without filters shows that VidAngel’s service does serve as an effective substitute for Plaintiff’s unfiltered works, for approximately half of VidAngels users.
Not that attorneys for VidAngel aren’t on the ball, but they actually presented evidence to indicate that nearly half of VidAngel’s customers may be poached from the potential customer base of the rightful owners of the works. That certainly seems like a good way to fail on the fourth prong of the fair use test, but the self-defeating oddness of this argument is consistent with the major theme running through this entire case: that the overly-complex design of the VidAngel model reveals a strenuous, ham-handed, effort to thread the enterprise through the legal boundaries of copyright. It is little surprise that the lower court found all of VidAngel’s arguments untenable, and it is hard to imagine that the appeals court will not sustain the injunction.
A Moral Enterprise?
Advertised in their promo video as “Movie Heaven,” VidAngel presumably targets a market with sincerely held religious beliefs, even though the first laws they seem to have overlooked are Commandments #8 & 10: Thou shalt not steal, and Thou shalt not covet, respectively. For all the assumed piety in VidAngel’s “filtering” crusade, the company clearly feels no sense of moral conflict about its for-profit, unlicensed exploitation of the thousands of people whose labor makes the movies. In fact, it is notable that among the content a VidAngel subscriber may have “filtered” from viewing is the end credits listing the names of all those workers. I’ll leave the moral rationalization of that to the operators of VidAngel themselves, but as far as the copyright implications go, it seems like they don’t know what the H-E-double-hockey-sticks they’re doing.
© 2017, David Newhoff. All rights reserved.