Federal judge Andre Birotte made no immediate ruling Monday on a request by several film studios to grant an injunction blocking VidAngel from continuing to stream films with objectionable content filtered out by consumer request. After listening to opposing arguments for about three hours in the U.S. District Court for the Central District of California in Los Angeles, Birotte said: “I’m going to take a little time to review some of my notes” and evidence in the case. He gave no clear indication of leaning for or against the injunction, which was requested by Disney, Warner Bros, 20th Century Fox and Lucasfilm.
The studio complaint against start-up VidAngel, which was filed last June, appears to be shaping up as a showdown between the federal Family Movies Act, which permits individuals to filter what they consider to be unacceptably violent, profane or other content from home entertainment versions of films, and protection afforded copyright owners under the Digital Millennium Copyright Act. On Monday, opposing legal teams delved for hours into the intent and legislative history of the laws, each side taking a radically different view of their latitude, and of VidAngel’s unusual business model.
VidAngel, which recently raised a little over $10 million in a public offering, says it sells a copy of a film to customers for $20, allows the purchaser to select which snippets will be eliminated, then offers to buy the copy back for as much as $19, a price that diminishes by a dollar for each day the buyer keeps it. The studios say that amounts to little more than a low-price rental, as some buyers choose minimal filtering of hits like the most recent Star Wars film.
In arguments on Monday, David Quinto, a lawyer representing VidAngel, said 96% of the company’s customers filter at least two elements from films, and on average, he said, they request filtering of 17 elements. The most frequently chosen filters, he said, eliminate female nudity, and two common obscenities.
Kelly Klaus, arguing for the studios, countered by citing user endorsements in which VidAngel customers raved about the service’s ability to provide cheap, timely streams of popular films with minimal clean-up.
“You are changing the minds of consumers about what is legal,” Klaus said of what is clearly a principal concern of studios — that VidAngel will seem to legitimize the decryption and copying of DVDs and Blu-ray discs.
In an intricate discussion of the actual mechanics behind VidAngel, both Klaus and Quinto described a process under which the company actually purchases a DVD for each film streamed — whether directly from the studio, or by re-purchase from an earlier consumer. But it actually makes only one master copy of each film, which is broken into bits, tagged by those who watch and assess its content, then scattered into a cloud storage mechanism. Thus, consumers who briefly “own” a DVD, actually watch an assemblage gathered from a single master. Klaus argued that those are being illegally “ripped” from a DVD in what amounts to little more than piracy.
Quinto repeatedly insisted that both the Family Movies Act and the Digital Millennium Copyright Act authorize the master, without which there would be little or no way to deliver the family-friendly movies envisioned by Congress when it created the family film legislation.
Quinto said about 12,000 discs are now retained by VidAngel, because consumers never sold them back, and never claimed a physical copy to which they would be entitled once they had kept it long enough to be charged the full $20.
“There is no file-sharing occurring,” Quinto insisted, as he underscored the distinctions between VidAngel and film pirates.
Birotte did not say when he might rule, but pointed out that a next hearing in the case is scheduled for December 16.