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VidAngel goes to court for 2-day Disney trial, could face expensive damages

By Liesl Nielsen, KSL.com | Posted - Jun 11th, 2019 @ 3:20pm



PROVO — Three years after major Hollywood giants sued VidAngel for copyright infringement, the Provo startup could face expensive damages at the end of a two-day trial that began Tuesday.

In a nutshell: VidAngel previously allowed customers to stream movies for $1 each and filter out content they didn’t want to see. Disney, Lucasfilm (now part of Disney), Warner Bros. and 20th Century Fox sued VidAngel for copyright infringement.

Now, after years of legal back-and-forth, VidAngel is in court and could face millions of dollars in damages — though most expect the company won’t have to pay the maximum penalty.

The trial will follow a summary judgment issued in March that decided VidAngel violated copyright law and the studios’ public performance rights. The ruling also dismissed VidAngel’s arguments that the company’s actions were protected by the Family Movie Act and fair use law.

Here’s how this all happened:

VidAngel launches

VidAngel was founded in 2013 and launched its product a year later. The Provo startup previously allowed users to “buy” a movie for $20, then, if they returned it within 24 hours, VidAngel would give them back $19 — essentially letting viewers stream movies for $1 apiece.

The company’s software also allowed customers to choose what they wanted to filter out of the film, including bad language, nudity, violence, sex and more. The service quickly became popular, both for its ability to filter content and because it allowed customers to stream virtually any movie for a $1 without having to leave their home or purchase a streaming subscription.

VidAngel is sued

During mid-2016, Disney, Lucasfilm, Warner Bros. and 20th Century Fox filed a joint lawsuit, claiming that VidAngel was illegally streaming content.

The studios said VidAngel was unlawfully reproducing copyrighted works owned by the studios, then releasing the videos even before they became available on licensed streaming services. They said VidAngel bypassed encryption codes to copy and filter DVDs, which violated the Digital Millennium Copyright Act.

VidAngel said it was protected by the Family Movie Act, which allows consumers to filter “limited portions” of an authorized copy of a movie for home viewing or to create a computer program or technology that filters content but doesn’t make a copy of that content.

VidAngel claimed it was not creating copies of the films because the company had purchased physical copies of each movie streamed by customers.

Judge orders VidAngel to shut down streaming service

In late 2016, a federal judge granted a preliminary injunction against VidAngel, which essentially required the company to discontinue its “current model” of streaming during court proceedings.

Later that month, VidAngel pulled all the films from its streaming service but submitted an appeal to the 9th Circuit Court in an attempt to reverse the judge’s decision. In the meantime, the company continued streaming independent licensed films and a family-friendly stand-up comedy live show.

VidAngel launches new filtering service

In June of 2017, VidAngel launched a new service that allowed customers to filter content from streaming services like Netflix, HBO and Amazon for $7.99 a month. Because of the federal injunction, however, VidAngel could not filter content from any of the four studios involved in the lawsuit.

VidAngel’s appeals are rejected multiple times

The company’s request for an injunction review and appeal were rejected in August of 2017, despite the change in VidAngel’s business model. VidAngel lost another case a year later in the 9th Circuit Court of Appeals, denying the company’s claims that the studios involved in the lawsuit were acting in an anticompetitive manner. The ruling also blocked potential VidAngel deals with YouTube and GooglePlay.

VidAngel continued offering its new filtering service, which is still available today but does not filter content from the four studios involved in the lawsuit.

VidAngel files federal complaint in Utah

Just a month after VidAngel’s appeals were rejected, the Provo startup filed a federal complaint in Utah against 12 movie studios and entertainment companies, hoping a jury of Utah residents would settle questions about the company’s legality.

A representative from the four studios already involved in the lawsuit said the complaint was simply a “legal rehash.” The lawsuit was dismissed in 2018.

VidAngel files for bankruptcy

After years of legal battles, VidAngel filed for bankruptcy in late 2017 but said the company “is not going away.” VidAngel CEO Neal Harmon said the company was filing for bankruptcy to protect itself from the lawsuit and give it “breathing room to reorganize our business around the new streaming platform.”

VidAngel is found liable for copyright infringement

A judge issued a summary judgment in March 2019 that found VidAngel violated the Digital Millennium Copyright Act because the company circumvented “technological protection measures” when it used software to upload, decrypt and filter DVDs.

VidAngel said it was protected by the Family Movie Act, which allows consumers to filter “limited portions” of an authorized copy of a movie for home viewing or to create a computer program or technology that filters content but doesn’t make a copy of that content.

The ruling claimed VidAngel filtered unauthorized copies of movies because it circumvented the “technology protection measures” to create those copies.

“Where is the copy that’s authorized for making imperceptible changes?” Harmon said. “They have yet to show us where that exists for streaming.”

VidAngel goes to court

A court will decide what damages the once-popular Provo startup will face.

According to a March 8 blog post by Harmon, “a jury will decide whether VidAngel’s copyright infringement was innocent, ordinary, or willful, which could result in the following damages:

  • Innocent Infringement: Roughly $200 per title

  • Ordinary Infringement: Between $750 and $30K per title

  • Willful Infringement: Between $30K and $150K damages per title"

If the court finds VidAngel willfully committed copyright infringement on some 800 movie titles owned by the four studios, the company could face hundreds of millions of dollars in damages. Harmon said the company believed it was acting within the law and should only be fined for innocent infringement, a much lighter sentence for the embattled company.

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