VidAngel injunction affirmed

The 9th U.S. Circuit Court of Appeals affirmed Thursday an injunction to halt VidAngel Inc.’s streaming service, the latest in a string of courtroom defeats for the embattled movie rental company.

A primary aspect of the company’s appeal was to re-litigate the applicability of the Family Movie Act of 2005, an argument the district court had rejected. VidAngel rents filtered versions of films with parental control options for as low as $1 to consumers, a service they claim is exempted from copyright infringement under the act.

Peter K. Stris, an attorney with Stris & Maher LLP and counsel for VidAngel, argued during a June hearing that the district court had applied the act consistently, and reasoned that it presented “the clearest path to a reversal.” But Circuit Judge Andrew Hurwitz said that VidAngel couldn’t avoid the plain language of the act, which requires filtering services to be paired with an authorized version of the film.

Other filtered streaming services, like ClearPlay, provide parental controls through a separate program that only works in conjunction with an authorized copy of the film. VidAngel, conversely, offers consumers both the film and the filters as a single package. Disney Enterprises Inc. v. VidAngel Inc., 16-cv-04109 (9th Cir., filed June 9, 2016).

VidAngel said that for every film it rents out, it has a physical copy of that film on hand in its vault. The company argued that owning a physical copy of the film grants the purchaser the authority to decrypt and transmit it as they see fit. Hurwitz roundly disagreed, noting that virtually all cases of movie piracy originate from an authorized copy of the film. VidAngel’s interpretation would set a questionable precedent, he wrote.

“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 has been lawfully purchased at some point,” Hurwitz wrote. “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.”

To further support the invalidity of the FMA, Hurwitz pointed to statements made by the act’s sponsor, Senator Orrin Hatch. Hatch said that the act “should be narrowly construed” to avoid “impacting established doctrines of copyright.”

VidAngel has been on the losing end for much of the lawsuit, filed by major studios including Disney Enterprises Inc., Warner Bros., and 20th Century Fox. But David Quinto, general counsel for VidAngel, said Thursday that the impact of the injunction is limited, as it only affects VidAngel’s prior technology and business model.

“The new system we introduced in June, which avoids decryption entirely and eliminates every one of the plaintiffs’ claimed economic harms, is unaffected. We are relying on it to continue growing our business,” Quinto said.

Quinto added that the company is “weighing our legal options now with appellate counsel.”

Kelly M. Klaus, counsel for Disney, deferred comment to a Disney spokesperson. The Disney spokesperson did not respond to a request for comment Thursday. Stris did not respond to a request for comment.