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Ninth Circuit Upholds Preliminary Injunction Against VidAngel's DVD "Filtering" Service

By Barry Werbin

In a decision issued in Disney Enterprises, Inc., et al. v. VidAngel, Inc. on August 24, 2017 [Disney v. VidAngel.pdf], the Ninth Circuit affirmed the grant of a preliminary injunction to stop VidAngel's ripping of DVDs, decrypting and copying them to its servers, and then filtering out objectionable content at the request of end users who could then stream the filtered content from VidAngel's cloud servers for $20. After viewing a stream, however, the end user would "return" it to VidAngel for a $19 credit. VidAngel then discards the filtered segments after the customer views them. The discs contained film and TV content owned by Disney and the other studio plaintiffs.

The Court held that the Family Movie Act of 2005 ("FMA"), 17 U.S.C. ยง 110(11), only exempted from copyright infringement filtered versions of content that is created from authorized versions, and the copies ripped to VidAngel's servers at that point became unauthorized and infringing, even though VidAngel originally purchased legitimate DVDs. VidAngel was also found in likely violation of the DMCA for circumventing the plaintiff's anti-circumvention technology. Finally, a fair use defense was rejected.

This was the first Ninth Circuit case to interpret the FMA. The Court emphasized that FMA authorized "'making imperceptible'--filtering--by or at the direction of a member of a private household of limited portions of audio or video content of a motion picture, during performances or transmissions to private households, 'from an authorized copy of the motion picture.'"

If VidAngel could meet this "authorized copy" requirement by simply starting with a lawfully purchased disc, it would open up a "giant loophole" in the statute and eviscerate its purpose. Indeed, observed the Court, Congress intended that FMA not impact "established doctrines of copyright law."

With respect to fair use, the Court found that: "Although removing objectionable content may permit a viewer to enjoy a film, this does not necessarily 'add[] something new' or change the 'expression, meaning, or message' of the film" so as to make it transformative. The District Court's ruling that market harm was presumed was also affirmed in light of VidAngel's commercial, non-transformative use.

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