VidAngel Makes Deal to Reduce Piracy Award to Hollywood Studios

PROVO, Utah—VidAngel, the Utah-based "movie-sanitizing" (read: censorship) service that took movies owned by some of Hollywood's biggest studios, created programs that would delete "naughty" words and images from them and then rented them to mostly religious subscribers, has settled with those studios—Disney, Warner Bros., Twentieth Century Fox and others—for $9.9 million, a fraction of the $62.4 million the studios were awarded by a California federal jury. VidAngel attacked that verdict on several fronts. It appealed the verdict to the Ninth Circuit Court of Appeals, and in the same time frame, filed a Chapter 11 plan in Utah bankruptcy court, with the trustee who's now running the company claiming that the company would be able to stay in business while paying down the $62.4 million verdict over the next 14 years. The Ninth Circuit appeal, however, is an attempt to get rid of the judgment altogether by setting aside the jury verdict on damages (the company's legal liability had already been determined in a prior trial) and asking for a new trial. In its petition, VidAngel argued that, "The district court erroneously permitted plaintiffs to offer irrelevant, highly prejudicial evidence, prevented VidAngel from presenting important admissible evidence in support of its defenses, gave improper instructions to the jury, and improperly responded to a jury note" which, according to a report on Law360.com, consisted of District Court Judge André Birotte, Jr., after the jury requested the text of the Family Movie Act (which was the basis for VidAngel's case), instead provided the jury with "an opinion letter from a lawyer for the studios, and a court ruling that quoted part of the FMA and then stated that the act 'clearly,' 'directly,' and 'unambiguous[ly]' contradicted VidAngel's arguments," VidAngel claimed in its Ninth Circuit petition. The Family Movie Act (FMA), however, merely authorizes "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." To sum up why VidAngel's argument is baseless, VidAngel is not a "private household" under the FMA, its changes to the movies were hardly "imperceptible," and under its original method of operation, it bought DVDs of the movies it wanted to censor, created censored discs for purchase or in some cases uploaded the censored versions to its website for customers to download or view online. However, once called out by the studios in a "cease and desist" letter, VidAngel changed its operation so that it decrypted one purchased DVD and used it to create a 'master file' of video and audio content divided into tiny clips. A customer would then purchase a bar-coded copy of the movie they wanted to watch, watch it on VidAngel's site, and then sell the bar-coded copy back to VidAngel, supposedly to void any claim that VidAngel had tampered with the studios' copyrighted works. However, as a federal jury found, VidAngel's methods did indeed run afoul of the studios' copyrights. "After a long and extremely difficult legal battle in one of the biggest copyright cases in decades, we have finally come to an agreement in which VidAngel can emerge from bankruptcy and move forward as a rapidly-growing company," VidAngel CEO Neal Harmon said in a statement to the press. "As with any compromise, we had to make painfully difficult concessions to arrive at this agreement, as did Disney and Warner Brothers." That's going to be interesting, since as part of the settlement, VidAngel agreed "not to decrypt, copy, stream or distribute content of Disney, Warner Brothers, and their affiliates without permission from the Studios"—and such decryption, copying, streaming and distribution had been the very basis of VidAngel's business model. How the company plans to continue censoring mainstream movies for its customers without permission from the studios that sued it, which studios are unlikely to grant such permissions, was not explained, though Harmon did say, "Now, we can reward you for all of your support with incredible original content like The Chosen and Dry Bar Comedy and expand our mission to help you make entertainment good for your home." However, the studios are generously giving VidAngel 14 years to pay the $9.9 million it owes them.