Watch What You *bleeping* Want: Interpretation of Statutes Dealing With Advancing Technology in Light of the Ninth Circuit Case of "disney Enterprises, Inc. v. Vidangel, Inc."

• Publication year: 2018

Watch What You *Bleeping* Want: Interpretation of Statutes Dealing With Advancing Technology in Light of the Ninth Circuit Case of "Disney Enterprises, Inc. v. VidAngel, Inc."

Thomas B. Norton
University of Georgia School of Law

WATCH WHAT YOU *BLEEPING* WANT: INTERPRETATION OF STATUTES DEALING WITH ADVANCING TECHNOLOGY IN LIGHT OF THE NINTH CIRCUIT CASE OF DISNEY ENTERPRISES, INC. V. VIDANGEL, INC.

Thomas B. Norton^*

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I. INTRODUCTION....................................................................................................289

II. BACKGROUND.....................................................................................................292

A. FACING THE GIANTS: A BRIEF LOOK AT SONY CORP. OF AMERICA AND ITS IMPLICATIONS ON TECHNOLOGICAL ADVANCES IN THE MEDIA INDUSTRY........................................................292
B. RULES OF ENGAGEMENT: THE FAMILY MOVIE ACT OF 2005 AND HOW IT SET THE STAGE FOR DISNEY ENTERPRISES................293

1. Legislative History of the Act.......................................................293
2. Judicial History............................................................................294

C. CATCH ME IF YOU CAN: THE VIDANGEL SAGA.........................................295

1. The District Court Case.............................................................. 295
2. The Circuit Court Case...............................................................296

D. A BEAUTIFUL MIND: A BRIEF OVERVIEW OF THE DIFFERENT TOOLS OF INTERPRETATION..........................................................................298

1. Textualism..................................................................................298
2. Intentionalism..............................................................................299
3. Purposivism................................................................................. 300
4. Pragmatism.................................................................................. 300
5. Dynamic Interpretation................................................................ 301

III. ANALYSIS.............................................................................................................301

A. ANACONDA: THE NINTH CIRCUIT'S INTERPRETATION OF THE FMA IS TOO CONSTRICTING..................................................................302

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B. BACK TO THE FUTURE: HOW COURTS SHOULD APPROACH THESE STATUTES MOVING FORWARD.......................................................307
C. DEEP IMPACT: HOW VIDANGEL'S NEW SYSTEM SHOULD FIT UNDER THIS APPROACH...................................................................................310

IV. CONCLUSION......................................................................................................312

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I. INTRODUCTION

As has been the recurring trend of the innovative-heavy media consumption age, there has been a shift in the market for media viewership to internet-based streaming. There have been substantial shifts in media-viewing technology leading up to today's streaming movement since the inception of at-home media viewership. From the invention of the VHS, to the advancement of 4K Ultra High Definition televisions, to the ease of streaming popular movies and shows from the internet, the innovation of at-home media viewership has been one of the most rapid and intriguing technological transformations of the current era.

However, the rapid advancement of technology has raised issues on how new types of technology comport with existing statutory regulations. Specifically, this Note considers the preliminary injunction granted against a company, VidAngel, using new technology to offer filtered streams of popular movies and television shows.¹ While VidAngel brought a multitude of defenses against Disney's copyright claim,² the Family Movie Act defense and the interpretation of the Act by the court brings an intriguing insight as to how these types of statutes should be considered and interpreted in view of the developing technology they directly implicate.

To illustrate how rapidly the technology revolving around at-home media viewership has changed, consider what is arguably the most iconic service of the streaming media movement: Netflix. Starting up in 1997, Netflix originally began as a service for DVD rental and sale in 1997, eventually becoming a subscription-based service in 1999.³ When Netflix first started its streaming service in 2007, its service was far from that which it has become today.⁴ In fact, when Netflix tried to use price increases to push its customers from mailed DVDs to streaming media, the company suffered harsh economic loss and came close to reaching bankruptcy.⁵ Fortunately for the sake of Netflix and technological advancement, Netflix was able to refocus on its customers' needs and now has 117 million subscribers worldwide.⁶

There has since been a clear shift to streaming in today's culture. Multiple companies have entered the market, and there is an increasing prevalence of

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"stream exclusive" shows created by streaming service providers.⁷ Even televisions themselves have integrated internet services to allow for more accessible streaming.⁸ More radically, some consumers (a large percentage of them millennials) have begun to completely eliminate cable subscriptions and instead rely solely on internet streaming services for all manners of media entertainment.⁹

In the midst of today's cultural obsession with streaming, VidAngel saw its chance to make an impact and have a hand in the stream-heavy culture. VidAngel was founded on the premise that those who have objectional views to explicit content in movies and television should have the ability to watch and stream popular media and not feel as if they were excluded from the rest of the American population and culture.¹⁰ Prior to its current model, VidAngel attempted to enable filtered streaming through Google-based services but was halted in its tracks by complications with Google and major film entertainment studios.¹¹ Faced with this dilemma, VidAngel then developed its own unique model to allow for filtered streaming.¹² This model involved VidAngel purchasing multiple DVD and Blu-ray disc copies of different titles, after which VidAngel took the discs and processed the movie file (commonly referred to as "ripping" the file) to break it up into small segments in order to tag each segment for some type of filterable content.¹³ Each individual disc purchased by VidAngel was given a unique barcode to keep track of how many customers purchased the film to stream.¹⁴ Since VidAngel only kept a set amount of physical discs of each movie, only an equal set amount of customers could

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purchase the film for streaming at one time.¹⁵ After a customer watched their streamed movie or show, they were encouraged (but not required) to "sell" back the title so that they are refunded all but $1 for each night they kept their purchase.¹⁶

At the outset of launching this business model, VidAngel notified Disney and other major studios of its intentions and its method for streaming.¹⁷ VidAngel also encouraged any studios which felt that their method of filtered streaming was contrary to copyright laws to contact VidAngel concerning potential issues.¹⁸ Consequently, the major studios filed a suit eleven months after this notice for violations of the Copyright Act in the Central District Court of California, where the court granted a preliminary injunction against VidAngel.¹⁹ This decision was upheld by the Ninth Circuit on August 24, 2017.²⁰

After the preliminary injunction was granted, VidAngel launched a new business model for its streaming service. VidAngel, at the time of this Note, currently offers a subscription-based service where subscribers can connect their VidAngel account to any of their other streaming accounts, such as Netflix or Amazon Prime.²¹ VidAngel no longer uses decryption of discs as a method to filter but instead uses a "crowd sourced tagging tool" and "some machine learning algorithms for filtering," which allow subscribers to watch filtered media from whatever primary streaming service they subscribe to.²² This Note will analyze the Ninth Circuit interpretation of the Family Movie Act of 2005 (FMA) and how statutes should be interpreted in the face of advancing technology, using VidAngel's current business model's compatibility with the FMA as an illustration.²³

Part II of this Note begins with a brief review of a Supreme Court ruling that set the stage for this Note's analysis. It then shifts into the background of the FMA, including relevant legislative history and the single piece of judicial history that concerns the relevant subsection of the FMA. Part II continues with a discussion of the Ninth Circuit ruling in Disney Enterprises, specifically concerning its interpretation of the FMA. Then, Part II finishes with the different tools of

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interpretation relevant to this Note's analysis. Finally, Part III consists of an analysis of the approach the Ninth Circuit takes and a suggestion that statutes similar to the FMA, which directly impact rapidly changing technology, should be interpreted to accommodate such technological growth.

II. BACKGROUND

A. FACING THE GIANTS: A BRIEF LOOK AT SONY CORP. OF AMERICA AND ITS IMPLICATIONS ON TECHNOLOGICAL ADVANCES IN THE MEDIA INDUSTRY

Rapid media-based innovation that has occurred over the past few decades has brought its own difficulties that have caused legal troubles through the years, especially in the world of copyright. These issues can be traced back to an important 1976 case where Universal Studios sought to hold Sony responsible for the illegitimate use, which resulted in copyright infringement, of its Betamax videocassette recorder.²⁴

In 1984, a Supreme Court majority set the foundation for the home video business, incidentally aiding Universal in the long run.²⁵ In Sony Corp. of America...