Family friendly streaming service VidAngel found to be in violation of law, ordered to shut down

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You can’t alter copyright materials, then stream those altered copies via the web to paying customers, while still claiming you’re within your legal rights. At least that’s what VidAngel has just been told. Warner Bros., Disney and Fox have won a preliminary injunction against VidAngel, a Utah-based company offering a family friendly streaming service that filters out adult language, nudity and violence from its films.

VidAngel’s business model involved selling DVDs for $20, then buying them back for $19 after being viewed, effectively offering $1 rentals to its customers.

But the studios argued that VidAngel was operating as an unlicensed video-on-demand streaming service. Plus, because some of the films on VidAngel, like Star Wars: The Force Awakens, hadn’t yet reached legal streaming services like Netflix, VidAngel was also undercutting studios’ windowing system, explains The Hollywood Reporter in its report detailing the judgement.

There were actually several issues with VidAngel’s business model. For starters, the Digital Millennium Copyright Act (DMCA) says you can’t remove or circumvent the access-control protections on DVDs and Blu-rays. VidAngel tried to claim that the Family Home Movie Act of 2005, which allows the use of technology to censor DVDs, protected it.

The judge disagreed, saying that it didn’t have the right to hack the DVDs. He said that the Family Movie Act requires that the filtered content comes from an “authorized copy” of the film, and the digital content VidAngel streamed was not an authorized copy.

Also called into question were public performance rights — something that’s reminiscent of the Aereo case that made its way to the Supreme Court, where that earlier startup eventually lost. VidAngel said it was not infringing on public performance rights like Aereo did, because its service represented a private performance.

This argument went back to the idea that the owners of the DVD — the customers — have a right to a private performance of that film. U.S. District Judge Andre Birotte Jr. said this argument was unsupported because VidAngel was creating copies of copyrighted material, then publicly performing it via its streaming service.

In addition, the judge said that even if VidAngel’s buy/sellback service created a valid ownership interest in the DVD, it would only apply to the physical disk, not the content streamed from VidAngel’s servers to customers. In fact, VidAngel was actually streaming from a master copy of the movie on the server, not the DVD the customer temporarily owned.

Ownership of the DVD itself allows you only the right to view it, not decrypt it for viewing on another platform, the judge determined.

That means the customers who “bought” the DVD weren’t really the lawful owners of the digital content they were watching via the streaming service.

Long story short, selling the customer a DVD in order to stream them a hacked, altered copy of that DVD via the internet isn’t legal. That should seem obvious, but many companies have tried to find loopholes in copyright law in order to offer new twists on streaming services.

The judge ordered VidAngel to post a $250,000 bond and said it must temporarily stop circumventing copyright protections, copying the copyrighted materials from DVDs and Blu-rays and stop streaming or transmitting those works over the web or through apps and media streaming devices like Roku and Apple TV.

VidAngel says it plans to continue fighting.

The company raised funds from customers by touting the need for a family values-focused service like this, despite the looming lawsuit.

“We are grateful that you, our customers, have given the resources to fight this battle all the way to the Supreme Court and that is what we will do,” it said.