Disney Tells Company That Encourages Users To “Watch Movies However The BLEEP You Want” To BLEEP Off

Disney, LucasFilm, and Twentieth Century Fox filed suit against VidAngel for violating the Digital Millennium Copyright Act, alleging that VidAngel operates an unauthorized video on demand service
October 24, 2016

Disney, LucasFilm, and Twentieth Century Fox are taking on VidAngel, a video service that encourages users to “watch movies however the BLEEP you want” for essentially a dollar. In June, the parties filed a lawsuit against VidAngel, Inc. asserting that VidAngel is violating the Digital Millennium Copyright Act, which states that “[n]o person shall circumvent a technological measure that effectively controls access to a work protected under [the Copyright Act].”[1] In its complaint, Disney argues that the service is nothing more than an unauthorized video on demand service that operates under the guise of selling family-friendly content to users.[2] The complaint alleges that VidAngel takes advantage of a loophole that allows companies to produce technology that skips over portions of content—typically content that contains profanity or nudity—as long as the companies do not create a permanent censored version of the film.

VidAngel is a streaming service that allows users to buy movies for twenty dollars, filter the film based on categories like profanity, nudity, or violence, and then—if they choose—sell the movie back to VidAngel for nineteen dollars.[3] In a post on its blog titled “Is VidAngel Legal?,” VidAngel’s founder Neil Harmon writes that the service is legal under the Family Entertainment and Copyright Act of 2005, which allows members of private households to prevent exposure to “limited portions of audio or video content of a motion picture…transmitted to that household for private home viewing.”[4]

In its answer and countercomplaint, VidAngel reasons that its service complies with “first sale doctrine,” which allows purchasers of authorized copyrighted material to sell or dispose of their copy without permission of the copyright holder.[5] The service emphasizes repeatedly in its answer and counterclaims, as well its opposition to Disney’s motion for preliminary injunction and the supporting declaration by VidAngel founder Neal Harmon, that it operates a filtering service that is sells “specific, identifiable discs” to its users—even if the physical disc almost always remains in the custody of VidAngel and are rarely sent to the user—who then select the filtered content and stream a censored version of the film.[6]

However, as Disney contends, VidAngel’s service certainly takes advantage—and a liberal interpretation—of the DMCA and FECA. VidAngel previously allowed users to select only that the end or beginning credits are filtered out, so users could essentially watch complete, unedited films on the site.[7] A feature that seems to undermine the very intent of filtering—as well as VidAngel’s own company purpose. And although the first sale doctrine does not require a purchaser to receive permission from the copyright holder to resell or dispose of the content, it is uncertain whether a court will extend this doctrine to encompass streaming.[8]

[1] 17 U.S.C. § 1201(a)(1)(A).
[2] See Disney Enter., Inc. v. VidAngel, Inc., No. 16-cv-04109, Dkt. 1 at 4 (C.D. Cal. June 9, 2016).
[3] How Does VidAngel Sellback Work?, VIDANGEL, http://help.vidangel.com/knowledge_base/topics/how-does-vidangel-sell-back-work (last visited Sept. 29, 2016).
[4] Neal Harmon, Is VidAngel Legal?, VIDANGEL (May 18, 2016), http://blog.vidangel.com/2016/05/18/is-vidangel-legal/.
[5] See Disney Enter., Inc. v. VidAngel, Inc., No. 16-cv-04109, Dkt. 11 at 37 (C.D. Cal. July 12, 2016).
[6] Id. at 3-4.
[7] Eriq Gardner, Hollywood Piracy Lawsuit Now Features Disney Porn, WikiLeaks and Jar Jar Binks, CBS, THE HOLLYWOOD REPORTER: THR, ESQ. (Sept. 13, 2016, 5:28pm), http://www.hollywoodreporter.com/thr-esq/hollywood-piracy-lawsuit-features-disney-928626.
[8] Todd Spangler, Movie-Streaming Sites Claim Legal Cover With DVD-Ownership Models, VARIETY (Mar. 9, 2016, 2:10pm), http://variety.com/2016/digital/news/movie-streaming-legal-vidangel-movieswap-dvd-1201726450/.