In July 2016, Disney, Lucasfilm, 20th Century Fox, and Warner Bros filed a lawsuit against local startup VidAngel for infringing the studios' exclusive rights under the Copyright Act and for violating the Digital Millennium Copyright Act. In response to the filing of the lawsuit, VidAngel CEO Neal Harmon released the following statement:
"Disney, Lucasfilm, 20th Century Fox, and Warner Bros have filed a complaint against VidAngel in federal court. We wish they would have let us know they had issue with VidAngel back in July 2015 when we wrote them a letter to inform them about VidAngel's lawful service. However, we've hired great Hollywood attorneys. We're as confident now as we were when we launched that filtering a DVD or Blu-ray you own on your favorite devices is your right. We're ready. More to come."
VidAngel--which allows users to buy a movie for $20, watch it, then sell it back for $19--has tried to set its service apart from the CleanFlix and CleanFilms of yore, which created edited copies of DVDs then burned derivatives to sell to customers. Those businesses were ultimately shut down. Harmon explained, "Unlike CleanFlix and Cleanfilms, VidAngel doesn't change any of the original content. VidAngel is more like a very powerful remote control. Anything you can do manually on your own computer, you can also use VidAngel to accomplish."
He added, "VidAngel is completely legal." It seems Disney, Lucasfilm, 20th Century Fox and Warner Bros disagree.
The lengthy complaint filed by the plaintiffs cited a number of reasons why the studios consider VidAngel's services illegal. The studios claim that VidAngel does not possess the rights (rights that they require other video-on-demand services to purchase) to stream movies and television shows and is circumventing technological protection measures to create unauthorized copies of those movies and television shows to stream to customers. This practice, the plaintiffs allege, violates the Copyright Act.
The studios are also less than thrilled that VidAngel has been able to offer streamed content before other video-on-demand services and at a lower cost. The complaint states, "If left unabated, VidAngel will undermine the Plaintiffs' relationships with their authorized licensees and interfere with Plaintiffs' ability to negotiate with those legitimate VOD services."
In other words, if VidAngel continues to grow, other streaming services will be less willing to pay studios for exclusive rights to content already available on VidAngel. Streaming services less willing to pay studios for exclusive rights means less money for those studios. VidAngel has disrupted the marketplace in a real way, and big players in Hollywood don't like that one bit. Customers, on the other hand, love cheaper, quicker access to new movies.
A short while after news of the lawsuit broke, VidAngel released another statement introducing their lawyers. VidAngel hired Baker Marquart LLP to represent them in the lawsuit.
Baker Marquart is known for helping FilmOn win a copyright case against major networks and studios. The VidAngel statement read, "With their representation, FilmOn obtained a landmark ruling in the Central District that FilmOn could legally apply for the same compulsory licenses available to large cable companies."
VidAngel also hired David Quinto to write their legal opinion. Quito represented the Oscars for 27 years and has plenty of Hollywood insider knowledge that VidAngel hoped would help them win the lawsuit.
"We're very proud of our legal team. We're confident about our case. And we're excited to tell our story to the judge," the statement read.
About a month later, the legal drama reached Law & Order levels when VidAngel filed a countersuit. Baker Marquart filed the suit in U.S. District Court, stating that the movie studios' "carefully selected and misleading allegations distort relevant facts and law" by "suggest[ing] that VidAngel needs their permission to offer a filtering service, despite Congressional law which expressly authorizes VidAngel's service without need for any such consent."
That "Congressional law" is the Family Entertainment and Copyright Act of 2005 which states that so long as content is screened from an authorized copy of a motion picture (VidAngel matches a DVD to each user), consumers can filter out unwanted content. VidAngel provides consumers the technology necessary for that filtering.
Marquat wrote that by asking to shut down VidAngel, the studios are "asking that the Court repeal a federal statute enacted to protect American families." Marquat also alleged that the original suit is the studios' attempt to expand their copyright monopoly and "deprive consumers of their right to buy and sell copyrighted works."
"We hope that the filing will help these studios to realize that they are asking the court to shut down a service that will allow millions to filter content for themselves and their children," said VidAngel CEO Neal Harmon. "This case is completely, 100% about filtering, and as that becomes clear in the legal process, we are confident that the courts will uphold the law of the land."
Later, VidAngel announced that attorney David W. Quinto resigned his position at a prestigious Hollywood law firm to lead...