VidAngel Wall LogoLooking ahead to 2017, there are a lot of great and important copyright cases to watch. From the Blurred Lines appeal to the Axanar case, copyright is going to see some courtroom drama.

But there’s one case that’s been largely flying under the radar outside of copyright circles: VidAngel.

The VidAngel case has the potential to be one of the most important copyright cases in recent years. It draws natural comparisons to Aereo due to the type of company but actually looks at new areas of law.

However, VidAngel and much of the media coverage has turned what coverage the case has received away from the issues at hand.

VidAngel, through their #savefiltering campaign, pitches the battle over their desire to allow parents to filter films. Unfortunately for VidAngel, looking at the complaints and the rulings, filtering is far from the biggest issue the courts are pondering.

Instead, it’s a case about ownership and DRM. While both issues are important, the latter sets it up to be a potentially important case as possible copyright reforms are mulled in the years to come.

The Basics of the VidAngel Case

Angel ImageVidAngel is, or at least was, a movie streaming service. Somewhat similar to renting films on Amazon or iTunes, the service offered the ability to stream movies from their servers but with the added bonus that you could filter out unwanted content such as swearing or violence.

However, rather than licensing movies for streaming, VidAngel took a different approach. The company bought up a slew of DVDs and, according to them, customers “buy” the DVD for $20 when they choose to stream it. When they are done, they sell it back to VidAngel for $19.

They believe that a combination of right of first sale, the right that allows you to resell legally-purchsed DVDs and books, and the Family Home Movie Act of 2005, which allows for the creation of movie filtering software, makes their service legal.

The movie studios, however, have disagreed. Four studios, including Disney, Warner Bros., 20th Century Fox and Lucasfilm all filed a lawsuit against VidAngel. They claim that the service infringes their copyrights both by the unlicensed streaming and through breaking the copy protection on the DVDs to stream the DVDs.

So far, the courts have agreed resoundingly with the film studios. The court issued an injunction against VidAngel on December 12 and denied a stay of the injunction later that month. Then the 9th Circuit Court of Appeals denied an emergency stay on that injunction and the lower court actually held VidAngel in contempt for failure to comply with the initial injunction fast enough.

What that means is that, for now and the foreseeable future, VidAngel is shut down. However, the company has vowed to fight this issue to the Supreme Court if needed and claims to have the funds to do so. They’ve also heavily promoted a petition that asks signatories to #savefiltering and to also call lawmakers on the issue.

So far, over 130,000 people have signed the petition.

But despite the support from VidAngel’s allies and a PR campaign by VidAngel itself, the case has not drawn a great deal of attention, with most of the attention from trade publications or news organizations from VidAngel’s native Utah.

However, much of the coverage that the case has received has focused more on the filtering aspect of the case rather than the real issue, the streaming and distribution.

The truth is, remove the filtering from VidAngel and you would almost certainly have the same lawsuit with the exact same legal issues.

Filtering: Not the Issue

Filtering ImageVidAngel has been quick to position this issue as one of Hollywood studios lashing out at a filtering service. However, the studios have repeatedly made it clear that the filtering is not the issue, its the unauthorized streaming and copy protection circumvention, nothing more.

Remove the filtering from the case and it’s hard to imagine that film studios would allow a streaming service to “buy” and “buy back” DVDs in this manner unchallenged. A service without filtering would likely be hit with the same lawsuit.

Instead, the studios argue that it is VidAngel misinterpreting the Family Movie Act of 2005. Since the act only allows for on-the-fly removal of offensive content from authorized copies, the studios claim that it doesn’t protect VidAngel’s unauthorized streaming or its copy protection circumvention, which is itself a copyright infringement.

And the courts have agreed with that, granting the injunction on the grounds of the digital rights management (DRM) circumvention.

However, VidAngel has not mentioned that fact in their legal page, failing to mention DRM or copy protection in my searches. Instead, they focus on the Family Movie Act of 2005 ignoring the issues that brought about the injunction.

As such, it’s worth taking a moment to analyze the act and see why it doesn’t directly apply.

The Family Movie Act

Child TV ImageThe Family Movie Act is actually one half of the Family Entertainment and Copyright Act of 2005. The other half, the Artist’s Rights and Theft Prevention Act, dealt with filming movies in theaters and releasing copyrighted works before they were publicly available.

The Family Movie Act was brought about by litigation against Clearplay. The company aimed to create filtering software similar to VidAngel but was sued by the film studios. The act was specifically targeted at allowing them to continue their efforts.

However, Clearplay was and is a very different company than VidAngel. Clearplay distributes software that the user runs either on their computer or on a Blu-Ray player purchased from the company. The consumer still has to obtain the film from a third party (Google Play for streaming titles) and Clearplay earns its revenue by charging for its filters.

In short, Clearplay is a streaming/filtering service similar to what VidAngel wants to be, but it is legal because it is software run on the fly over legally-acquired content. Which is exactly what the Family Movie Act aimed to do.

The act, which was codified into the law under 17 U.S.C. 110(11) allows members of a private household to make imperceptible limited portions of audio or video content in a motion picture.

It also allows for the creation of computer programs or other technology to enable this process. However, the law requires that an authorized copy be used as the beginning point, that no permanent copies of the altered version be created and that the product is marketed to end users.

The film studios argue that, since the Family Movie Act does not mention DRM cirvumvention or streaming over the internet, which was found in the Aereo case to be a public performance (due to its similarity to a community antenna television provider), that VidAngel is infringing.

The courts, so far, have agreed. Furthermore, the Clean Flicks case of 2006, a case involving a company reselling “clean” versions of DVDs, also dealt with these issues, leading to the defeat of Clean Flicks.

It’s worth noting that Clearplay, since the passage of the Family Movie Act, has not been sued. It’s different approach to streaming has not been targeted.

In short, there is already a movie streaming service that offers filtering, it’s just called Clearplay. It does so legally by allowing you to manipulate legitimately-rented Google Play movies. The difference with Vidangel is that the latter wanted control over the distribution.

But all of this raises the question: If the issue isn’t filtering, what is it and why SHOULD we pay attention to it?

Why the Case is Important

The VidAngel case is still a very important one, just not for the reasons VidAngel and others would have you believe.

To be clear, even though the facts seem straightforward and recent court decisions make the outcome seem inevitable, anything can still happen.

However, what may be more important in the long run than why VidAngel claims its legal is why the movie studios claim it is infringing.

Though the injunction (PDF) cites two reasons for ordering VidAngel to cease streaming:

  1. Copyright Infringement: The courts believe that the buying and selling of titles on VidAngel doesn’t really transfer ownership for the purpose of first sale. In short, the court believes that the “sale” isn’t real, making the streams an infringement.
  2. DMCA Violations: Second, in order to rip the films and stream them, VidAngel must break the DRM on the DVDs they own. Under the DMCA, such circumvention is an infringement and the Family Movies Act makes no exemption for that.

It’s that latter issue that has an interesting place in the big picture.

Over the past few years, DRM has been under attack and, in many cases, quite justifiably. Whether it was DRM being used to prevent car repair or force you to buy certain printer ink, people are rightly upset about DRM and were making calls to reform.

But, as we discussed in our year-end post, that reform may soon be a possibility. The House Judiciary Committee recently finished its multi-year review of copyright law and Congress appears to be prepared to exit its previous gridlock.

Reform on DRM law may be nigh and opposition to such reform may be fractured at best.

That’s because the record labels have long abandoned DRM on their products and use of it on video games is becoming more limited, in large part due to cracking. Movie studios, however, have stood by it and still include it on DVDs, even though it’s trivial to break it.

Shortly, the studios could be asked a simple question: What good does blocking DRM circumvention do?

VidAngel might give them their answer.

For all of the craziness that has come out of the DRM rules, it could be central to closing an unlicensed movie streaming service.

That, in the end, is potentially much more game-changing than the alleged battle over filtering, which is clearly not what the VidAngel fight is about.

Bottom Line

No matter what you think about VidAngel and whether you feel it should or should not be legal, the simple fact is that it’s future doesn’t hinge on filtering.

Filtering might be why the studios denied them licenses or why they feel their service is important, but it’s the streaming and DRM issues that will actually determine its future.

And those issues, in particular the DRM issues, come at an interesting time for copyright law. There’s been little movement on copyright reform since the SOPA/PIPA protests of 2012 and now that the gears are turning, five years later, DRM is likely in the crosshairs.

VidAngel could easily become an unwitting part of that debate. Proof that DRM legislation is a powerful tool for stopping unlicensed streaming of physical media.

In the end, that’s much more interesting and possibly much more impactful than the battle over filtering VidAngel wishes to bill this as. But the truth is, filtering is not the issue, as the continued survival of ClearPlay shows, and instead is very much about VidAngel’s business and content-delivery model.

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