VidAngel hit with $62.4M in damages in Disney lawsuit

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SALT LAKE CITY — Video filtering startup VidAngel must pay Disney, Fox and Warner Bros. a combined $62.4 million in damages for streaming movies without authorization, according to plaintiffs in the case.

The damages

This decision may be a death knell for the company, which has spent several years in legal back-and-forth with the Hollywood giants after launching its filtering service in 2013.

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 three years later.

Now, VidAngel must pay tens of millions of dollars in damages — though most believed the company wouldn't be fined so heavily.

The Hollywood studios originally sought about $120 million in damages and argued that VidAngel had committed willful copyright infringement, which comes with a maximum penalty of $150,000 per movie title. VidAngel streamed about 800 titles owned by the studios.

VidAngel, however, argued that the company had previously sought legal advice before launching and believed they were operating within the law. The company's attorneys argued that VidAngel committed innocent infringement and should therefore be required to pay much less.

Instead, the court found the Provo startup guilty of willful infringement but required that it pay only $75,000 per movie title, along with another fine over $1 million for violating the Digital Millennium Copyright Act.

The decision

The trial followed a summary judgment issued in March that decided VidAngel violated the Digital Millennium Copyright Act because the company circumvented “technological protection measures” when it used software to upload, decrypt and filter DVDs, then stream those copies before they were even available on licensed streaming services.

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 was found guilty of copyright infringement, however, because the judge ruled that the Provo startup created unauthorized copies of movies by bypassing the “technology protection measures” to create the filtered copies they would then stream.

“Where is the copy that’s authorized for making imperceptible changes?” VidAngel CEO Neal Harmon told in March. “They have yet to show us where that exists for streaming.”

The reaction

“We disagree with today’s ruling and have not lessened our resolve to save filtering for families one iota. VidAngel plans to appeal the District Court ruling, and explore options in the bankruptcy court. Our court system has checks and balances, and we are pursuing options on that front as well," Harmon said in an emailed statement.

VidAngel filed for bankruptcy in late 2017 and is still in the middle of those proceedings.

A spokesman for the plaintiffs Disney, Fox and Warner Bros. said the judge's ruling was a warning to others about the unlawful use of content.

"The jury today found that VidAngel acted willfully, and imposed a damages award that sends a clear message to others who would attempt to profit from unlawful infringing conduct at the expense of the creative community."

Read's timeline that details how the Provo startup even got to this point.

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