https://archive.org/details/LegalGeekEp93
VidAngel is based in Provo, Utah, right near Frogpants headquarters. This company streams all kinds of recent movies for consumers, spanning from PG fare like Zootopia to Rated-R content like Deadpool. However, VidAngel removes objectionable content like cursing, excessive violence, and sexual content for these consumers, making sanitized versions of films for streaming.
VidAngel also offers these at lower rates than other streaming services by trying to circumvent the usual channels requiring permission to stream movies. In short, VidAngel purchased a lot of DVD's and they sell these movies for $20 to consumers, then offer to buy them back within 24 hours after the film is streamed for $19. That results in $1 transactions for the streaming service.
Major film studios argue this is a sham transaction meant to cover piracy of copyrighted materials, while VidAngel argues that it falls under the protections of a 2005 law called the Family Movie Act. That 2005 law addressed a lawsuit over a previous Utah company called ClearView which made technology that could be deployed on a home DVD player to censor movies for content in similar ways during playback, making such technology a valid exception to copyright infringement issues related to those modified performances of the films. That law reads:
"the making imperceptible, by or at the direction of a member of a private household, of limited portions of audio or video content of a motion picture, during a performance in or transmitted to that household for private home viewing, from an authorized copy of the motion picture, or the creation or provision of a computer program or other technology that enables such making imperceptible and that is designed and marketed to be used, at the direction of a member of a private household, for such making imperceptible, if no fixed copy of the altered version of the motion picture is created by such computer program or other technology"
By selling copies of the movies temporarily, VidAngel is clearly trying to argue that the streaming is an authorized copy of the motion picture being altered at the direction of the movie's owner. It's a good try, but there appear to be 2 problems with this theory.
First is that the consumers don't really own an authorized copy of the motion picture, as the primary selling point is the selling back and streaming for only $1 per movie. That also leads to the second problem with the theory, which is that VidAngel continues to own the copies of the movies and the selling of streams or performances is therefore not for private home viewing by the owner. Those facts distinguish this case from the facts of a decade ago, when software was used in the home by the homeowner to scrub movies of objectionable content.
The Ninth Circuit Court of Appeals upheld a district court judge's preliminary injunction order to stop VidAngel from operating during the pendency of this lawsuit. That is a major blow to the company, as it relies on crowdfunding and other sources of support to continue fighting this lawsuit. While I personally believe VidAngel is wrong on the application of the current law, there may be a chance to win the day by updating the law via legislation, like ClearView fought for in 2005. Stay tuned, as the battle will likely continue as long as there's a significant audience for such cleaned-up content, and apparently there is.
The Bottom Line is, this is another case where a law was updated to fit technology of the time a decade ago, but it was not written broadly enough to cover this type of streaming, now defining the channels of distribution for most movies. When there's a profit to be made, however, it's fun to see the lengths legal nerds will go to in legislative and judicial arenas to try and fit or change the rules.
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