Appeals Court Deals Blow To Streaming Service That Lets You Filter Out Nudity & Swearing

"Star Wars is still Star Wars, even without Princess Leia’s bikini scene," says court.

VidAngel is a streaming service that allows subscribers to filter out nudity, violence, swearing, or anything else they might find offensive in a movie or TV show. Today, a federal appeals court dealt the latest blow to VidAngel, saying that the service likely violates federal copyright law, and keeping in place an injunction that prevents the service from reproducing and streaming videos without permission.

In addition to its library of content that doesn’t require any filtering, VidAngel has a way for subscribers to view custom, cleaned-up versions of other titles.

But because merely editing down and rebroadcasting a movie to all your customers without the studio’s permission would be a clear violation of copyright, VidAngel attempted to take a novel approach to making an end-run around this concern.

The company has a vault full of DVD and Blu-ray discs for a variety of titles. It also uses software to decrypt and create a digital master file that is then stored on the cloud along with digital markers that would allow users to filter out up to 80 different types of offensive or sensitive content.

When a subscriber wants one of these movies, they “purchase” one of the physical discs from VidAngel’s vault but they don’t actually receive it. Instead, they are given access to the streaming video that they can then filter per their own desires. What’s more, the subscriber can then “sell” the disc back to VidAngel for $18 or $19, effectively meaning they paid $1 or $2 for streaming that title. After selling the title back, the customer no longer has access to the streaming file.

The notion is that — at least for the time during which the customer “owns” the disc — they should be able to watch the movie in any form they wish.

But there are multiple legal hiccups with VidAngel’s process. Federal copyright law states that copyright holders have the exclusive rights to reproduce or broadcast their content. Additionally, the Digital Millennium Copyright Act (DMCA) puts heavy restrictions on decrypting copyrighted digital content, which VidAngel must do in order to make its file for streaming from the cloud.

VidAngel also kicked up a hornet’s nest when it decided to make high-profile titles, like Star Wars: The Force Awakens, available for streaming before they could be found on Netflix or other platforms that had reached licensing deals with the studios to show their movies and shows.

In 2016, Disney, Lucasfilm, Twentieth Century Fox, and Warner Bros. jointly sued VidAngel, and in Dec. 2016 a District Court judge granted a preliminary injunction [PDF] against the streaming startup, finding that the studios were likely to succeed on their DMCA and copyright allegations. The judge said that purchasing a DVD does not automatically give the purchaser any right to circumvent the encryption on the disc. Nor does the Family Movie Act of 2005 (FMA) — which added some new protections for people hoping to create clean versions of movies they own — allow for DVD owners to bypass copyright protection tech.

The District Court judge also said that VidAngel was violating the studios’ copyrights by reproducing and broadcasting content without permission.

VidAngel had tried to argue that its reproduction and streaming constitutes a protected fair use of the copyrighted materials, but the court found that this argument appeared to fail every one of the four factors that go into determining whether something is considered fair use: It’s commercial and non-transformative; the materials being reproduced and streamed are worthy of copyright protection; the VidAngel versions of the videos are ultimately too similar to the original works; and the existence of these new versions has an effect on the potential market for the original content.

Today, the a three-judge panel for the Ninth Circuit Court of Appeals upheld the District Court’s injunction [PDF], finding that VidAngel’s interpretation of the FMA would create a “giant loophole in copyright law, sanctioning infringement so long as it filters some content and a copy of the work was lawfully purchased at some point.”

The panel points out that “virtually all piracy of movies originates in some way from a legitimate copy,” so if that one authorized original copy was enough to justify all subsequent copies, “the statute would severely erode the commercial value of the public performance right in the digital context, permitting, for example, unlicensed streams which filter out only a movie’s credits.”

The best line of the Ninth Circuit’s ruling comes from its analysis of the fair use argument, where the panel shoots down VidAngel’s argument that its filtering is substantially transformative.

Star Wars is still Star Wars, even without Princess Leia’s bikini scene,” explains the appeals panel.

And so the preliminary injunction remains in place.

In a statement posted on the VidAngel site, CEO Neal Harmon says the Ninth Circuit decision has “absolutely no impact on VidAngel’s current service, we remain open for business. While all of the legal back-and-forth plays out, we know our customers are grateful to still have a way to protect their kids and filter harmful content. On the legal front, we are just getting started. We will fight for a family’s right to filter on modern technology all the way.”