VidAngel

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VidAngel
VidAngel logo.png
Type of site
Public
Founded2013; 6 years ago (2013)
Headquarters,
United States
Area servedUnited States
Founder(s)Neal Harmon, Jeffrey Harmon, Daniel Harmon, and Jordan Harmon
IndustryEntertainment, Content filtering
Websitewww.vidangel.com
Current statusActive

VidAngel is an American streaming video company that allows the user to skip distasteful content based on user preferences regarding profanity, nudity, sexual situations, and graphic violence.

The company's original business model was to sell films to users who could then choose to filter any element of the film considered objectionable, and sell the film back to VidAngel after watching it. It cited the Family Movie Act as legal justification to alter copyrighted content. Several big movie studios sued the company in 2016, claiming it broke copyright law by evading DVD copyright protection features and streaming altered videos without permission. In late 2016, the company was told to shut down its website until the trial; the company vowed to appeal. In June 2017 it relaunched as a streaming service for filtering movies and television shows (not owned by the movie studios in the lawsuit) from Netflix, Amazon Prime, and HBO.[1][2]

The company filed for Chapter 11 bankruptcy in October 2017 as a legal strategy to protect the company against the ongoing lawsuit and allow it to reorganize its business around its new streaming service.[3] It continues to operate its Netflix and Amazon-based streaming service during the bankruptcy process.

History[edit]

VidAngel was founded in 2013 and launched in 2014 in Provo, Utah as a startup company with six employees.[4] In March 2014, the company said it had moved its headquarters to Silicon Valley, California.[5]

On August 11, 2016, during a legal deposition, Neal Harmon, VidAngel's CEO, said that VidAngel illegally ripped DVDs using the software program AnyDVD HD.[6][7][8]

In December 2016, VidAngel began a Regulation A+ securities offering (mini initial public offering) to get $5 million in investments.[9] It met its goal after 28 hours and had over $10 million after five days.[10][11] They assigned 42% of the $10 million to advertising and 26% to legal costs.[12] Harmon Brothers, owned by VidAngel founders and officers Neal Harmon and Jeffery Harmon, will make the advertisements.[13]

In December 2016, VidAngel was ordered to shut down its website until the trial. Neal Harmon replied that VidAngel would open a studio in 2017 to make "family friendly" content.[14]

In June 2017, shortly after the Ninth Circuit Court of Appeals denied their request to lift the injunction, VidAngel announced a new streaming service for $7.99 per month (currently to filter content on Netflix, Amazon Prime Video, and HBO. Only titles from studios not included in the lawsuit are available.[15] In a June 2017 statement, Netflix noted: "We have not endorsed or approved the VidAngel technology".[16]

Also in June 2017, VidAngel general counsel David Quinto made an unexpected admission that his client does indeed make master copies of Amazon content as VidAngel is incapable of posting any content on their site without an illegal master copy, as outlined in an article from Eriq Gardner (The Hollywood Reporter) who quoted the studios "[I]t appears from Mr. Quinto’s declaration that VidAngel itself is streaming from its own 'master' copies of works that VidAngel has created on its own servers rather than layering its filters over an authorized stream from the licensed streaming services," writes Glenn Pomerantz, attorney for the studios. "In other words, VidAngel indisputably itself is publicly performing works to its users."[17]

Operations[edit]

VidAngel allows users to personally select filters for moments that the user deems objectionable. Content, such as nudity, profanity, and graphic violence in commercial content, are skippable on the current VidAngel platform. The customer already have access to the content from Netflix, Amazon, or HBO accounts, which can be connected to VidAngel. When the user purchases the content they obtain the right to apply filters to objectionable content in their home.

Legal basis[edit]

VidAngel cites the Family Movie Act of 2005 (FMA) as legally protecting customers' right to use their service to filter films.[18] They say that under the FMA, they are allowed to stream filtered movies to customers as long as the movie is an authorized copy watched in the privacy of the home. As noted below, all these arguments have been rejected by the courts due to VidAngel's own legal counsel admitting that where they do not have agreements with Netflix and Amazon to use their movies and TV shows. In fact, VidAngel is not using authorized copies of any Netflix and Amazon content, but have to resort to making illegal master copies of all content from Netflix and Amazon in order to offer their current streaming service.

According to VidAngel, after they took their (DVD and Blu-ray based) movie-selling live for illegal public consumption—without legal approval from any Hollywood movie studio—they tried three different arrangements to legally sell movies in partnership with studios: teaming with Google to add filters to licensed films available on Google Play; buy a licensed movie on YouTube then apply filters to it; and buying discs directly from the studios. The studios rejected all three proposals, so VidAngel bought licensed discs from retail stores, made illegal master copies where they broke the anti-copying software on every DVD and Blu-ray disc they purchased and put their master copy of each movie on their website without studio-permission to use those movies.[19]

Studio lawsuits[edit]

On June 12, 2016, production companies such as Lucasfilm, 20th Century Fox, Disney Enterprises, Inc., and Warner Bros. filed a federal lawsuit against VidAngel for circumventing copyright protection on DVDs and for unlicensed video streaming, accusing them of violating the DMCA.[20] The case, Disney Enterprises, Inc. et al v. VidAngel, Inc., was filed in the United States District Court for the Central District of California. VidAngel's defense is that members actually own a digital copy of the film when they stream it for $20 and have a right to filter content under the Family Home Movie Act of 2005. VidAngel would buy it back for $19. VidAngel has filed a counterclaim against the companies alleging violation of the Sherman Antitrust Act and the preliminary hearing was held on November 14, 2016.[21][22][23]

In the lawsuit VidAngel is being represented by a group of lawyers led by Peter Stris of Stris & Maher, a small but influential firm known for handling complex cases and arguments at the Supreme Court.[24] Disney is being represented by a group of lawyers led by former Solicitor General Donald Verrilli.[25]

Judge Andre Birotte Jr., in a ruling on December 12, 2016,[26] granted Disney's motion for a preliminary injunction, declaring that VidAngel had violated copyright laws by circumventing copyright protection technology on DVDs and by hosting the streamed content on VidAngel's computer servers without appropriate licensing and permission from copyright holders.[27] The court also rejected VidAngel's Fair Use defense, noting as paraphrased in media about the case, "VidAngel does not add anything and the result has essentially the same entertainment value as the original, thus the fair use defense is unlikely to win out."[28]

Judge Birotte's order blocked VidAngel from circumventing copyright protection features on DVDs and also ordered them to stop streaming movies, stating that the Family Movie Act requires that the filtered content comes from an "authorized copy" of the film, and the digital content VidAngel streamed was not an authorized copy.[29] Shortly thereafter, VidAngel requested a stay of the preliminary injunction, claiming the company would suffer irreparable legal harm from not being able to operate while the case makes its way through the courts. VidAngel has vowed to fight the case all the way to the United States Supreme Court.[14][30] VidAngel announced intentions to obey the court's order to stop streaming effective December 30, 2016.[31] However, in January 2017, VidAngel was found in contempt of court for continuing to add titles in violation of the court's order. For this infraction, they were fined $10,231.20 in legal costs incurred by Disney et al.[32] After this ruling, Johnathan Bailey of Plagiarism Today wrote that VidAngel's public statements have consistently misrepresented the core legal issues in the case by characterizing the major film studios as opposed primarily to filtering adult content: "[T]he studios have repeatedly made it clear that the filtering is not the issue, its the unauthorized streaming and copy protection circumvention, nothing more."[33]

VidAngel appealed the case to the Ninth Circuit Court of Appeals. A hearing occurred June 8, 2017, where VidAngel requested an emergency stay of the injunction. VidAngel's request was denied and the injunction was upheld.[34]

VidAngel requested an appeal or clarification of the injunction, specifically whether their new streaming-filter service was a violation of the injunction. Disney et al. responded with a request for an ex parte ruling, arguing that VidAngel violated procedural rules by not notifying Disney of their intentions of filing such an appeal or clarification.[35] On August 2, 2017, Judge Birotte rejected VidAngel's request for appeal or clarification of the injunction.[36][37]

On August 24, 2017 the Ninth Circuit Court of Appeals upheld the injunction against VidAngel, quoting a statement from U.S. Senator Orrin Hatch that the Family Movie Act is not a defense for violation of copy protection measures or for violation of copyright law, and to suggest otherwise is "counter to legislative intent" of the Family Movie Act.[38][39]

In September 2017, VidAngel filed its own lawsuit in a Utah federal court against affiliates of the studios, including Marvel Comics, Fox Broadcasting Company, Castle Rock Entertainment, MGM Studios, and others, seeking a declaratory judgment that its new streaming model is legal.[40] After VidAngel reportedly decided to drop the case, U.S. District Court Judge David Nuffer dismissed this lawsuit on August 7, 2018.[41]

In October 2017, VidAngel filed for Chapter 11 bankruptcy protection as a legal strategy to protect the company against the ongoing lawsuit and allow it to reorganize its business around its new streaming service in an effort to ensure that they could avoid the courts from declaring how much VidAngel owed the studios in copyright infringement fines for as long as possible.[42] VidAngel estimated between $1 million and $10 million in liabilities, and approximately equal amounts of assets.[3] The filing forces a pause on the lawsuit, but allows business to continue as usual. A statement on the company's blog announced: "VidAngel is not going away", that the company has "millions of dollars in the bank, and now generating millions in revenue," and stated its goal was "to reorganize the business around our new streaming model" to stay in business and pay damages when they finally lose the pending trial.[43] The plaintiffs in the lawsuit characterized the bankruptcy as a delay tactic, noting that prior rulings indicate VidAngel would indefinitely lose in court.[3] An article in Utah's Deseret News (https://www.deseretnews.com/article/900002739/vidangel-files-for-bankruptcy-protection-from-its-own-customers.html) further notes that the bankruptcy has provoked ire among some customers whose buy-back credits for DVD purchases are included in the bankruptcy among VidAngel's assets, preventing customers from cashing out these refunds while the bankruptcy is pending.[3] However, Vidangel is allowing those buy-back credits to be used in its new streaming service. [44]

Original content[edit]

Dry Bar Comedy[edit]

VidAngel began creating its own original content in 2017 with Dry Bar Comedy, which began as a series of 52 original stand-up comedy sets filmed in Utah that are generally clean and performed by lesser-known comedians.[45] Dry Bar Comedy has attracted a large social media following and a live tour is scheduled for cities across the United States in 2019.

The Chosen[edit]

VidAngel is also the distributor of The Chosen, a planned streaming multi-season television series about the life of Jesus.[46] The series is supported by equity crowdfunding and has raised over $10 million, the largest amount ever crowdfunded for a TV show.[46]

References[edit]

  1. ^ Maddaus, Gene. "VidAngel Changes Course With New Netflix and Amazon Filtering Service". Variety. Retrieved June 17, 2017.
  2. ^ Scribner, Herb (June 19, 2017). "VidAngel's CEO explains how the company made its decision to develop its new service". Deseret News. Retrieved February 25, 2018.
  3. ^ a b c d Raymond, Art (October 23, 2017). "VidAngel files for bankruptcy protection — from its own customers". Deseret News. Retrieved February 25, 2018.
  4. ^ McCord, Keith. "Provo company creates program that filters online content". Deseret News Utah. Deseret Digital Media. Retrieved October 20, 2016.
  5. ^ VidAngel. "Online Child Protection Startup VidAngel Moves Headquarters to Silicon Valley". Market Wired. Retrieved December 5, 2016.
  6. ^ "Appeal from the United States District Court for the Central District of California André Birotte, Jr., District Judge, Presiding" (PDF). August 24, 2017.
  7. ^ Cullins, Ashley (July 3, 2017). "Hollywood Studios Rip VidAngel's New Service in Filtering Fight". Hollywood Reporter. Retrieved February 25, 2018.
  8. ^ Hart, Terry (August 28, 2017). "VidAngel, VidAngel, Appeal Denied". Copyhype. Retrieved February 25, 2018.
  9. ^ Alois, JD (December 4, 2016). "VidAngel Crowdfunded $5 Million in Just 28 Hours Under Reg A+". Crowdfund Insider. Retrieved February 25, 2018.
  10. ^ Turner, Rod (November 21, 2016). "VidAngel Boasts the Fastest Reg A+ Raise So Far". Equities.com. Retrieved February 25, 2018.
  11. ^ "Legally Embattled VidAngel Movie-Streaming Site Raises $10 Million From Fans". variety.com. Variety. December 12, 2016. Retrieved December 12, 2016.
  12. ^ VidAngel Offering Circular (Oct 19, 2016), pp. 23
  13. ^ VidAngel Offering Circular (Oct 19, 2016), pp. 19
  14. ^ a b Maddaus, Gene (December 14, 2016). "Facing a Shutdown Order, VidAngel Will Start Making Movies". Variety. Retrieved February 25, 2018.
  15. ^ Cullins, Ashley (June 13, 2017). "VidAngel Launches New Platform Amid Studio Legal Battle (Exclusive)". The Hollywood Reporter. Retrieved February 25, 2018.
  16. ^ Scribner, Herb. "Netflix says it has not 'endorsed or approved' VidAngel's new technology". Deseret News. Retrieved June 17, 2017.
  17. ^ Hollywood Studios Are Suspicious of VidAngel's New Filtering App
  18. ^ Scribner, Herb (December 1, 2016). "Amid controversial court case, VidAngel makes the case for family friendly movies in new video". Deseret News. Retrieved February 25, 2018.
  19. ^ Gardner, Eriq (June 21, 2017). "Hollywood Studios Are Suspicious of VidAngel's New Filtering App - Hollywood Reporter". Hollywood Reporter. Hollywood Reporter. Retrieved June 21, 2017.
  20. ^ "U.S. DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION CASE NO. CV16-04109" (PDF). Retrieved October 20, 2016.
  21. ^ Openshaw, Geoff. "VidAngel Files Countersuit against Studios, Cites FMA Act". this week in mormons. This Week in Mormons. Retrieved October 20, 2016.
  22. ^ Porterfield, Julia. "Company sued for sanitizing films responds". The Washington Times. Retrieved October 20, 2016.
  23. ^ Cieply, Michael (November 14, 2016). "VidAngel Lawsuit: Judge Makes No Immediate Decision On Injunction". Deadline. Retrieved November 26, 2016.
  24. ^ Leblanc, Jeanne (May 25, 2016). "Professor Brendan Maher Prevails in U.S. Supreme Court Case". UCONN School of Law. Retrieved February 25, 2018.
  25. ^ "VidAngel Tells 9th Circuit Studios Do Not Have Exclusive Streaming Rights - Lexis Legal News". Lexis Legal News. February 24, 2017. Retrieved February 25, 2018.
  26. ^ "Vidangel ruling". Scribd. scribd.com. December 12, 2016. Retrieved December 12, 2016.
  27. ^ Lauren A. McGee (2016) Judge clips VidAngel’s naughty wings, The Biederman Blog, Southwestern Law School, Feb 3, 2017, accessed Aug 3, 2017[dead link]
  28. ^ Eggerton, John (December 13, 2016). "Court Blocks VidAngel Video Filtering Service | Broadcasting & Cable". www.broadcastingcable.com. Retrieved February 25, 2018.
  29. ^ "Federal judge blocks Utah-based VidAngel from filtering movies". Fox 13 Now. Fox13 TV News. December 12, 2016. Retrieved December 12, 2016.
  30. ^ "VidAngel CEO Statement on Preliminary Injunction Decision in Disney v. VidAngel Case". prnewswire.com. December 12, 2016. Retrieved December 12, 2016.
  31. ^ Scribner, Herb (December 30, 2016). "VidAngel has temporarily stopped streaming filtered movies. Here's why". Deseret News. Retrieved December 31, 2016.
  32. ^ Winslow, Ben (January 6, 2017). "VidAngel fined $10,000 for contempt of court in movie filtering lawsuit". Fox 13. Retrieved February 25, 2018.
  33. ^ Bailey, Jonathan (January 12, 2017). "VidAngel: It's Not About Filtering - Plagiarism Today". Plagiarism Today. Retrieved February 25, 2018.
  34. ^ TV News Desk (January 5, 2017). "VidAngel Responds to 9th Circuit Decision". BroadwayWorld. Retrieved February 25, 2018.
  35. ^ "PLAINTIFFS' EX PARTE APPLICATION FOR AN ORDER [1] STRIKING VIDANGEL'S MOTION TO CLARIFY [DKT. NO. 182] FOR FAILURE TO COMPLY WITH LOCAL RULE 7-3 AND [2] SETTING SCHEDULE FOR RE- NOTICED MOTION THAT INCLUDES DISCOVERY ON VIDANGEL'S "NEW" STREAMING SERVICE" (PDF). June 20, 2017. Retrieved February 25, 2018.
  36. ^ "Disney Enterprises, Inc. et al v. VidAngel Inc. (2:16-cv-04109), California Central District Court". Pacermonitor.com. Retrieved February 25, 2018.
  37. ^ Raymond, Art (August 3, 2017). "VidAngel request for injunction review rejected". KSL.com. Retrieved February 25, 2018.
  38. ^ Stempel, Jonathan (2017). "Hollywood studios win ruling over VidAngel family-friendly filters". Reuters. Retrieved February 25, 2018.
  39. ^ Raymond, Art (August 25, 2017). "9th Circuit Court of Appeals rejects VidAngel's injunction appeal". Deseret News. Retrieved February 25, 2018.
  40. ^ Gardner, Eriq. "VidAngel Seeks Salvation for Filtering Service in Utah Federal Court". The Hollywood Reporter (01 September 2017). Retrieved February 25, 2018.
  41. ^ Winslow, Ben (August 7, 2018). "VidAngel drops lawsuit against Hollywood studios". Fox 13 Salt Lake City. Retrieved August 8, 2018.
  42. ^ Legal Entertainment (October 18, 2017). "VidAngel Uses Bankruptcy Strategy To Fend Off Studios". Forbes. Retrieved February 25, 2018.
  43. ^ Harmon, Neal (October 18, 2017). "VidAngel Uses Chapter 11 Protection to Pause Los Angeles Lawsuit to Reorganize Its Business Around The New Streaming Model - VidAngel Blog". VidAngel. Retrieved February 25, 2018.
  44. ^ Cite error: The named reference Vidangel.com was invoked but never defined (see the help page).
  45. ^ VidAngel switches its focus to ‘Dry Bar Comedy’ in wake of lawsuit
  46. ^ a b Largest-Ever Crowdfunding Campaign for a TV Show Issues Equity to Investors (The Hollywood Reporter)

See also[edit]