Ooh LaLa – Copyright and Racy Content in VidAngel Case

Look, I get it. I’ve been there. One awards season while I was a movie critic, a few families gathered to watch Joe Wright’s lush adaptation of Leo Tolstoy’s Anna Karenina. Our children ranged from middle school to mid teens but we agreed that Tolstoy’s masterpiece exploring and contrasting love in its many forms would benefit them despite its racy content. It’s great literature, after all! We agreed to simply skip the racier scenes, primarily because they were not appropriate for the children but also because ain’t nobody want to watch that kind of thing with your mama in the room.

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I held the remote and when the key moment came, hit the button to skip the scene. But remotes have a mind of their own. The DVD advanced just a tiny bit. Let’s just say the Trans-Siberian railroad was picking up steam. The next press of the button went way too far, jumping some later scenes, so I pushed rewind which brought us back to the offending action, halfway through perestroika, if you get my drift. By this point, I was panicking and pushing all the buttons, which ended in Kiera Knightly, frozen larger than life, wearing only a strategic fur and a look of ecstasy, as if she’d just tasted particularly good borscht.

It was memorable. The children learned more than we intended. By attempting to skip the scene, I had indelibly imprinted it on the minds of everyone in the room. I understand the market for movies with all of Anna’s kareninanas edited out, as it were. I would have paid good money for a remote that wasn’t conspiring against me. That’s what Congress had in mind when it passed the Family Movie Act, which reduced copyright liability for technology to filter out content, provided that the copy of that content was authorized. The idea is that technology could take the place of mom’s remote skills or, even worse, dad barking “Cover your eyes!” whenever a, um, Bolshoi Ballet starts.

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A recent court case, however, clarified that the right to protect copyrights and control one’s own work did not include a streaming service that competes with the studios’ own release of works on streaming platforms. The U.S. Court of Appeals for the Ninth Circuit upheld the District Court’s injunction of VidAngel’s service, saying the Family Movie Act did not shield them from copyright liability. You can read the opinion here.

What VidAngel Did:

VidAngel was a subscription service that allowed home users to stream movies and TV shows, selecting what types of content they would like edited out of the work. Users could watch without swearing, say, or violence or sexual content. I say “was” because, although the company still exists, the methodology seems to have changed since the time at question in the lawsuit.

When movies or TV shows would release on DVD, VidAngel would legitimately purchase multiple copies of that DVD. They would then break the encryption on the DVD and upload a master copy to a computer. That copy would then be segmented and digitally prepared for different types of content to be edited and those segments would be uploaded to cloud storage.

Subscribers to VidAngel would purchase a physical DVD that was stored at VidAngel’s facility, then VidAngel would stream the cloud-stored version to them, editing as directed by the customer. After the customer finished watching, VidAngel would buy back the DVD from the customer for a slightly reduced price. While the DVDs technically were owned by the subscriber, they almost never physically left VidAngel and VidAngel sold and bought the same physical DVD over and over again.

If you think this is too cute by half, the court agreed.

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The Legal Quandry:

The primary question before the court was if the copy of the work from which the stream originated constituted an “authorized copy” under the Family Movie Act. VidAngel argued that because the process begins with an authorized copy, a lawfully purchased DVD, any stream of that content is authorized. The court said disagreed: A “filtering technology that made digital copies from lawfully purchased discs and then filtered them, as VidAngel does, is not” consistent with the definition of “authorized copy” because “beginning from” or “indirectly from” an authorized copy is not the same thing as an “authorized copy.”

The court also rejected VidAngel’s argument that their use of the works were protected by fair use, saying merely removing content does not sufficiently transform a work. “Star Wars is still Star Wars, even without Princess Leia’s bikini scene,” the Court noted, thrilling law nerds across the country. Finally, the Court noted that VidAngel was likely to lose on the issue of violating the anti-circumnavigation rules, which prohibit breaking encryption technology in certain circumstances.

Why VidAngel Was a Bad Idea:

VidAngel’s model opened up an enormous copyright loophole. The Court noted:

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 was lawfully purchased at some point. But, virtually all piracy of movies originates in some way from a legitimate copy. 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, permitting, for example, unlicensed streams which filter out only a movie’s credits

Disney Enterprises, Inc. v. VidAngel, Inc., No. 16-56843, 2017 WL 3623286, at *7 (9th Cir. Aug. 24, 2017)

In other words, if filtering something is the only fig leaf necessary to stream unauthorized content, unscrupulous players would quickly filter something inconsequential and claim the protection of the Family Movie Act. The District Court’s findings upheld this instinct. Some 49% of content streamed over VidAngel had no filters activated at all.

The Service Interfered with Markets

TV and movie studios carefully window their products to profit from the product. A movie may be in theaters, then offered on DVD, and then offered for purchase and download before it is ever cleared for streaming. This is based on careful market calculations and is the product of extensive negotiations and contracting with platforms. VidAngel effectively eliminated the ability of the studios to cater to different markets by offering streaming as soon as the product was released on DVD. Evidence that the service was being used as an end-run around the studio releases is in the above statistic that 49% of content was not filtered. In those cases, the users did not prioritize editing ability. They merely wanted to cheaply stream the content sooner than they would be able on other platforms. As the district court put it VidAngel interfered with copyright owners’ “basic right to control how, when and through which channels consumers can view their copyrighted works.”

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The Service Interfered with Free Contracting

In addition to muddying the waters of contracting for streaming services and DVD sales, the service potentially interfered with contracting between the distributors and the people who make the movies. Take the case of directors. In my life as a movie critic, I interviewed a big directors and let me tell you a good director loves the final cut of her movie. The more artisan a director, the more she puts herself into a film. She sweats each cut, lives and breathes each sound edit, lovingly caresses the color balances into place. The more clout a director has, the more likely it is that she has negotiated for veto power over any derivative products made from the film. She may love each of the f-bombs in the movie like her own child and retain the power to stop an edited version from being released. She may think the sex scenes absolutely integral to the artistic vision of the movie. “Organic” is a word directors use a lot. They like characters or scenes or dialog to be “organic.” Cutting their beloved baby is never “organic.” One director may be fine with the film being edited for TV, for instance, and another may negotiate the right to deny that happening.

The studio, or whatever entity retains the copyright ownership, is able to comply with this contract element through its ability to grant or deny creation and performance of derivative works. The VidAngel model removed the right to deny, which then removed the ability to comply with existing contracts.

At the margins, free reign to edit and perform content without permission would result in some of that content not being made in the first place. Sure, James Gunn might still agree to do Guardians of the Galaxy, but perhaps Edgar Wright would not want to see his carefully crafted and stylized Baby Driver sliced into a million pieces. Artists are picky that way sometimes.

The Service Allowed VidAngel to Profit off Others’ Work

This is the bottom line. VidAngel was selling movies and TV shows it did not create and did not license. The fact that it did allow users to view works with a few swear words edited out does not change the reality that the entire business model revolved around selling a product created by others, without permission. The directors, actors, writers, camera operators, stunt people, set builders, light stringers, and key grips (whatever that is) deserve to be paid for their work. If there’s money to be made, it should go into their pockets. The ability to profit from an artistic work is not only fair, but enables the creators to make the next work. If Game of Thrones stopped making money for HBO, there would never be a season eight and we’d never know what Tyrion has up his sleeve.

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Allowing families to edit content may be a noble goal, but this was not the way to go about it.

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