Disney Enterprises, Inc.; Lucasfilm Ltd. LLC; Twentieth Century Fox Film Corporation; Warner Brothers Entertainment, Inc., Plaintiffs-Counter-Defendants-Appellees,
VidAngel, Inc., Defendant-Counter-Claimant-Appellant.
and Submitted June 8, 2017 Pasadena, California
from the United States District Court for the Central
District of California D.C. No. 2:16-cv-04109-AB-PLA
André Birotte, Jr., District Judge, Presiding.
K. Stris (argued), Elizabeth Rogers Brannen, Dana Berkowitz,
and Victor O'Connell, Stris & Maher LLP, Los Angeles,
California; Brendan S. Maher, Daniel L. Geyser, and Douglas
D. Geyser, Stris & Maher LLP, Dallas, Texas; Ryan
Geoffrey Baker, Jaime Wayne Marquart, and Scott M. Malzahn,
Baker Marquart LLP, Los Angeles, California; David W. Quinto,
VidAngel Inc., Beverly Hills, California; Shaun P. Martin,
University of San Diego School of Law, San Diego, California;
B. Verrilli Jr. (argued), Munger Tolles & Olson LLP,
Washington, D.C.; Glenn D. Pomerantz, Kelly M. Klaus, Rosa
Leda Ehler, and Allyson R. Bennettt, Munger Tolles &
Olson LLP, Los Angeles, California; for
William A. Delgado, Willenken Wilson Loh & Delgado LLP,
Los Angeles, California; Susanna Frederick Fischer, Columbus
School of Law, The Catholic University of America,
Washington, D.C.; for Amici Curiae U.S. Representatives John
Hostettler and Spencer Bachus.
Mitchell L. Stoltz and Kit Walsh, San Francisco, California,
as and for Amicus Curiae Electronic Frontier Foundation.
M. Burger, Thompson Coburn LLP, Washington, D.C.; Mark
Sableman, Thompson Coburn LLP, St. Louis, Missouri; for
Amicus Curiae ClearPlay, Inc.
E. Short, Short Legal Group, Newport Coast, California; Bruce
H. Turnbull, Turnbull Law Firm PLLC, Washington, D.C.; for
Amici Curiae DVD Copy Control Association Inc., and Advanced
Access Content System License Administrator LLC.
Eleanor M. Lackman and Lindsay W. Bowen, Cowan DeBaets
Abrahams & Sheppard LLP, New York, New York; Keith
Kupferschmid and Terry Hart, The Copyright Alliance,
Washington, D.C.; for Amicus Curiae The Copyright Alliance.
Before: Carlos T. Bea and Andrew D. Hurwitz, Circuit Judges,
and Leslie E. Kobayashi, [*] District Judge.
Injunction / Copyright
panel affirmed the district court's preliminary
injunction against the defendant in an action under the
Copyright Act and the Digital Millennium Copyright Act.
VidAngel, Inc., operated an online streaming service that
removed objectionable content from movies and television
shows. VidAngel purchased physical discs containing
copyrighted movies and television shows, decrypted the discs
to "rip" a digital copy to a computer, and then
streamed to its customers a filtered version of the work.
panel held that the district court did not abuse its
discretion in concluding that VidAngel's copying
infringed the plaintiffs' exclusive reproduction right.
Because VidAngel did not filter authorized copies of movies,
it was unlikely to succeed on the merits of its defense that
the Family Movie Act of 2005 exempted it from liability for
copyright infringement. VidAngel also was unlikely to succeed
on its fair use defense.
panel held that the district court also did not abuse its
discretion in concluding that the plaintiffs were likely to
succeed on their DCMA claim. The panel held that the
anti-circumvention provision of the DMCA, 17 U.S.C. §
1201(a), covered the plaintiffs' technological protection
measures, which controlled both access to and use of the
panel affirmed the district court's findings regarding
the likelihood of irreparable harm, the balancing of the
equities, and the public interest.
HURWITZ, Circuit Judge.
Inc. operates an online streaming service that removes
objectionable content from movies and television shows.
VidAngel purchases physical discs containing copyrighted
movies and television shows, decrypts the discs to
"rip" a digital copy to a computer, and then
streams to its customers a filtered version of the work.
district court found that VidAngel had likely violated both
the Digital Millennium Copyright Act and the Copyright Act,
and preliminarily enjoined VidAngel from circumventing the
technological measures controlling access to copyrighted
works on DVDs and Blu-ray discs owned by the plaintiff
entertainment studios, copying those works, and streaming,
transmitting, or otherwise publicly performing or displaying
them electronically. VidAngel's appeal presents two
issues of first impression. The first is whether the Family
Movie Act of 2005 exempts VidAngel from liability for
copyright infringement. 17 U.S.C. § 110(11). The second
is whether the anti-circumvention provision of the Digital
Millennium Copyright Act covers the plaintiffs'
technological protection measures, which control both access
to and use of copyrighted works. 17 U.S.C. § 1201(a)(1).
The district court resolved these issues against VidAngel. We
agree and affirm the preliminary injunction.
The copyrighted works.
Enterprises, LucasFilm Limited, Twentieth Century Fox Film
Corporation, and Warner Brothers Entertainment ("the
Studios") produce and distribute copyrighted motion
pictures and television shows. The Studios distribute and
license these works for public dissemination through several
"distribution channels": (1) movie theaters; (2)
sale or rental of physical discs in DVD or Blu-ray format;
(3) sale of digital downloads through online services, such
as iTunes or Amazon Video; (4) on-demand rental for
short-term viewing through cable and satellite television or
internet video-on-demand platforms, such as iTunes or Google
Play; and (5) subscription on-demand streaming online
outlets, such as Netflix, Hulu, HBO GO, and cable television.
maximize revenue, the Studios employ "windowing, "
releasing their works through distribution channels at
different times and prices, based on consumer demand.
Typically, new releases are first distributed through digital
downloads and physical discs, and are only later available
for on-demand streaming. The Studios often negotiate higher
licensing fees in exchange for the exclusive rights to
perform their works during certain time periods. Digital
distribution thus provides a large source of revenue for the
Studios employ technological protection measures
("TPMs") to protect against unauthorized access to
and copying of their works. They use Content Scramble System
("CSS") and Advanced Access Content System
("AACS"), with optional "BD, " to
control access to their copyrighted content on DVDs and
Blu-ray discs, respectively. These encryption-based TPMs
allow consumers to use players from licensed manufacturers
only to lawfully decrypt a disc's content, and then only
for playback, not for copying.
VidAngel's streaming service.
offers more than 2500 movies and television episodes to its
consumers. It purchases multiple authorized DVDs or Blu-ray
discs for each title it offers. VidAngel then assigns each
disc a unique inventory barcode and stores it in a locked
vault. VidAngel uses AnyDVD HD, a software program, to
decrypt one disc for each title, removing the CSS, AACS, and
BD TPMs on the disc, and then uploads the digital copy to a
computer. Or, to use VidAngel's
terminology, the "[m]ovie is ripped from Blu-Ray to the
gold master file." After decryption, VidAngel creates
"intermediate" files, converting them to HTTP Live
Streaming format and breaking them into segments that can be
tagged for over 80 categories of inappropriate content. Once
tagged, the segments are encrypted and stored in cloud
"purchase" a specific physical disc from
VidAngel's inventory for $20. The selected disc is
removed from VidAngel's inventory and
"ownership" is transferred to the customer's
unique user ID. However, VidAngel retains possession of the
physical disc "on behalf of the purchasers, " with
the exception of the isolated cases in which the consumer
asks for the disc. To date, VidAngel has shipped only four
discs to purchasers.
purchasing a disc, a customer selects at least one type of
objectionable content to be filtered out of the
work.VidAngel then streams the filtered
work to that customer on "any VidAngel-supported device,
including Roku, Apple TV, Smart TV, Amazon Fire TV, Android,
Chromecast, iPad/iPhone and desktop or laptop
computers." The work is streamed from the filtered
segments stored in cloud servers, not from the original
discs. Filtered visual segments are "skipped and never
streamed to the user." If the customer desires that only
audio content be filtered, VidAngel creates and streams an
altered segment that mutes the audio content while leaving
the visual content unchanged. VidAngel discards the filtered
segments after the customer views them.
viewing the work, a customer can sell the disc "back to
VidAngel for a partial credit of the $20 purchase price,
" less $1 per night for standard definition purchases or
$2 per night for high-definition purchases. VidAngel
accordingly markets itself as a $1 streaming service. After a
disc is sold back to VidAngel, the customer's access to
that title is terminated. Virtually all (99.6%) of VidAngel's
customers sell back their titles, on average within five
hours, and VidAngel's discs are "re-sold and
streamed to a new customer an average of 16 times each in the
first four weeks" of a title's release.
2015, VidAngel sent letters to the Studios describing its
service. The letters explained that VidAngel was in "a
limited beta test of its technology" and had only 4848
users, and concluded: "If you have any questions
concerning VidAngel's technology or business model,
please feel free to ask. If you disagree with VidAngel's
belief that its technology fully complies with the Copyright
Act . . . please let us know." The Studios did not
respond, but began monitoring VidAngel's activities.
opened its service to the general public in August 2015. Its
marketing emphasized that it could stream popular new
releases that licensed video-on-demand services like Netflix
could not, for only $1. For example, when VidAngel began
streaming Disney's Star Wars: The Force Awakens,
it was available elsewhere only for purchase on DVD or as a
digital download, not as a short-term rental. Similarly,
VidAngel began streaming Fox's The Martian and
Brooklyn while those works were exclusively licensed
to HBO for on-demand streaming. Customers responded
favorably. And, a survey indicated that
51% of VidAngel's users would not otherwise watch their
selections without filtering.
eventually reached over 100, 000 monthly active users. When
the Studios filed this suit in June 2016, VidAngel offered
over 80 of the Studios' copyrighted works on its website.
VidAngel was not licensed or otherwise authorized to copy,
perform, or access any of these works.
Studios' complaint alleged copyright infringement in
violation of 17 U.S.C. § 106(1), (4), and circumvention
of technological measures controlling access to copyrighted
works in violation of the Digital Millennium Copyright Act of
1998 ("DMCA"), 17 U.S.C. § 1201(a)(1)(A).
VidAngel denied the statutory violations, raising the
affirmative defenses of fair use and legal authorization by
the Family Movie Act of 2005 ("FMA"), 17 U.S.C.
§ 110(11). The ...