Disney Enterprises, Inc., et al v. VidAngel, Inc.

Filing 20

Filed (ECF) Appellees Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation and Warner Brothers Entertainment, Inc. response opposing motion ([16] Motion (Seal) (ECF Filing)). Date of service: 01/02/2017. [10251409] [16-56843] (Klaus, Kelly) [Entered: 01/02/2017 09:40 PM]

Case No. 16-56843
IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

DISNEY ENTERPRISES, INC., ET AL.,
Plaintiffs-Appellees,
v.
VIDANGEL, INC.
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
Case No. 16-cv-04109-AB (PLAx)
The Honorable André Birotte Jr., Presiding
APPELLEES’ OPPOSITION TO VIDANGEL, INC.’S EMERGENCY
MOTION UNDER CIRCUIT RULE 27-3 FOR A STAY PENDING APPEAL

MUNGER, TOLLES & OLSON LLP
Glenn D. Pomerantz
Kelly M. Klaus
Rose Leda Ehler
Allyson R. Bennett
355 South Grand Avenue
Thirty-Fifth Floor
Los Angeles, California 90071-1560
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiffs-Appellees

CORPORATE DISCLOSURE STATEMENT
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure:
Appellees Disney Enterprises, Inc. and Lucasfilm Ltd. LLC certify they are
wholly owned subsidiaries of The Walt Disney Company, a publicly held
company.
Appellee Twentieth Century Fox Film Corporation certifies it is an indirect,
wholly-owned subsidiary of Twenty-First Century Fox, Inc., a publicly held
company.
Appellee Warner Bros. Entertainment Inc. certifies it is an indirect, whollyowned subsidiary of Time Warner Inc., a publicly held company.

TABLE OF CONTENTS
Page
INTRODUCTION .....................................................................................................1
FACTUAL BACKGROUND ....................................................................................3
A.

VidAngel’s Illegal Service .................................................................... 3

B.

VidAngel’s Aggressive Marketing And Growth .................................. 5

PROCEDURAL BACKGROUND ............................................................................ 6
ARGUMENT .............................................................................................................7
I.

PLAINTIFFS, NOT VIDANGEL, HAVE A STRONG
LIKELIHOOD OF SUCCESS ON THE MERITS ......................................... 7
A.

VidAngel’s Legal Violations Are Clear, And It Is Unlikely To
Succeed On Its FMA Defense ............................................................... 7

B.

VidAngel Is Unlikely To Prevail On Its Fair Use Defense................. 13

II.

THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN
CONCLUDING THAT VIDANGEL CAUSES PLAINTIFFS
IRREPARABLE HARM ...............................................................................15

III.

VIDANGEL WILL NOT SUFFER IRREPARABLE HARM
WITHOUT A STAY .....................................................................................18

IV.

A STAY WOULD HARM THE PUBLIC INTEREST ................................19

CONCLUSION ........................................................................................................20

i

TABLE OF AUTHORITIES
Page(s)
FEDERAL CASES
Am. Broad. Cos., Inc. v. Aereo, Inc.,
134 S. Ct. 2498 (2014) ..................................................................................11, 12
Apple Comput., Inc., v. Franklin Comput. Corp.,
714 F.2d 1240 (3d Cir. 1983) .............................................................................20
Arc of Cal. v. Douglas,
757 F.3d 975 (9th Cir. 2014) ........................................................................17, 18
Campbell v. Acuff-Rose Music, Inc.,
510 U.S. 569 (1994) ......................................................................................13, 15
Capitol Records, LLC v. ReDigi Inc.,
934 F. Supp. 2d 640 (S.D.N.Y. 2013) ................................................................12
Clean Flicks of Colo. v. LLC v. Soderbergh,
433 F. Supp. 2d 1236 (D. Colo. 2006)................................................................14
Dish Network, L.L.C. v. Vicxon Corp.,
No. 12-CV-9-L WVG, 2013 WL 3894905 (S.D. Cal. July 26,
2013) .....................................................................................................................9
Elvis Presley Enters., Inc. v. Passport Video,
349 F.3d 622 (9th Cir. 2003) ..............................................................................14
Fox Television Stations, Inc. v. BarryDriller Content Sys., PLC,
915 F. Supp. 2d 1138 (C.D. Cal. 2012) ..............................................................16
Fox Television Stations, Inc. v. FilmOn X, LLC,
968 F. Supp. 2d 134 (D.D.C. 2013) ....................................................................19
Leadsinger, Inc. v. BMG Music Publ’g,
512 F.3d 522 (9th Cir. 2008) ..............................................................................14
Leiva-Perez v. Holder,
640 F.3d 962 (9th Cir. 2011) ................................................................................ 7
ii

TABLE OF AUTHORITIES
(continued)
Page(s)
MDY Indus. LLC v. Blizzard Entm’t, Inc.,
629 F.3d 928 (9th Cir. 2010) ................................................................................ 9
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.,
518 F. Supp. 2d 1197 (C.D. Cal. 2007) ........................................................17, 20
Perfect 10, Inc. v. Amazon.com, Inc.,
508 F.3d 1146 (9th Cir. 2007) ............................................................................13
Realnetworks, Inc. v. DVD Copy Control Ass’n,
641 F. Supp. 2d 913 (N.D. Cal. 2009) .................................................................. 8
Rent-A-Ctr., Inc. v. Canyon Television & Appliance Rental, Inc.,
944 F.2d 597 (9th Cir. 1991) ..............................................................................16
Sega Enters. v. Accolade, Inc.,
977 F.2d 1510 (9th Cir. 1992) ............................................................................10
Tekkno Labs., Inc. v. Perales,
933 F.2d 1093 (2d Cir. 1991) ............................................................................... 7
Triad Sys. Corp. v. Se. Express Co.,
64 F.3d 1330 (9th Cir. 1995) ..............................................................................18
United States v.Crippen,
No. CR 09-703 PSG, 2010 WL 7198205 (C.D. Cal. Nov. 23, 2010) .................. 9
Universal City Studios, Inc. v. Reimerdes,
111 F. Supp. 2d 294 (S.D.N.Y. 2000) .................................................................. 9
Warner Bros. Ent. Inc. v. WTV Sys., Inc.,
824 F. Supp. 2d 1003 (C.D. Cal. 2011) ..............................................................11
FEDERAL STATUTES
17 U.S.C. § 101 ..................................................................................................11, 12
17 U.S.C. § 106 .................................................................................................passim
17 U.S.C. § 107 ....................................................................................................9, 13
iii

TABLE OF AUTHORITIES
(continued)
Page(s)
17 U.S.C. § 110(11) ......................................................................................... passim
17 U.S.C. § 504(c) ...................................................................................................17
17 U.S.C. § 1201(a)(1)(A) ................................................................................passim
17 U.S.C. § 1201(a)(3)(A) .........................................................................................8
LEGISLATIVE MATERIALS
151 Cong. Rec. S450, S502 (daily ed. Jan. 25, 2005) (Sen. Hatch) ......................2, 9

iv

INTRODUCTION
The district court considered a voluminous record (more than 2,000 pages),
conducted a half-day hearing, and properly enjoined VidAngel’s rampant
circumvention violations and infringements of more than a thousand of Plaintiffs’
copyrighted works. VidAngel does not deserve a stay, which it would only use to
resume and expand its illegal exploitation of Plaintiffs’ works.
First, the district court did not abuse its discretion in finding that Plaintiffs
have “a strong likelihood of success” on all three of their substantive claims.
A.197, 200. VidAngel circumvents the technological protection measures on
DVDs and Blu-ray discs (“Discs”)—i.e., VidAngel “rips” Discs—thereby violating
the anti-circumvention prohibition in the Digital Millennium Copyright Act
(“DMCA”), 17 U.S.C. § 1201(a)(1)(A). VidAngel then makes additional copies of
the content it has ripped, infringing Plaintiffs’ exclusive reproduction right, id.
§ 106(1). VidAngel streams performances from these unauthorized copies to
thousands of users, thereby infringing Plaintiffs’ exclusive public performance
right, id. § 106(4). VidAngel’s counter-arguments ignore statutory text, legislative
history, and precedent—and defy common sense. Its liability is clear.
Second, the district court correctly held that the Family Movie Act, id.
§ 110(11) (“FMA”), does not shield VidAngel’s systematically unlawful course of
conduct. A.196-97, 201. The FMA narrowly provides that the act of “making
1

[content] imperceptible” at a home user’s direction is not copyright infringement.
17 U.S.C. § 110(11). The statutory text makes quite clear that it does not authorize
violations of the DMCA’s anti-circumvention provisions under any circumstances.
On-point legislative history confirms that “[i]t would not be a defense to a claim of
violation of section 1201 that the circumvention is for the purpose of engaging in
the conduct covered by this new exemption in section 110(11).” See 151 Cong.
Rec. S450 at S502 (daily ed. Jan. 25, 2005) (Sen. Hatch).
The FMA likewise provides no defense for VidAngel’s infringing copying
and streaming. VidAngel cannot claim the protection of the FMA because it does
not stream “from an authorized copy of the motion picture,” as the statute requires.
17 U.S.C. § 110(11). Even more to the point, the FMA simply does not authorize
the unlicensed use of copyrighted works, and does not legitimize business models
based on wholesale infringement because filtering happens to be applied to
unlicensed performances streamed from unlicensed copies. If VidAngel’s extreme
and unsupported reading of the FMA were accepted, practically any streaming
service could avoid all liability for the unauthorized use of copyrighted works by
adopting VidAngel’s sham “buy/sellback” model and allowing customers to filter
out any snippet of content (including just a film’s credits). When Congress
enacted the FMA to create a limited exception to copyright infringement for
making content imperceptible, it could not possibly have intended to create the
2

massive loophole in DMCA and copyright protection that VidAngel purports to
find there.
Third, the district court did not abuse its discretion in concluding that
VidAngel’s illegal conduct caused Plaintiffs “ongoing” irreparable harms that “will
likely only increase absent an injunction,” A.208, and that all the other equitable
factors weighed in favor of an injunction and against a stay. A.4, 209-10.
VidAngel started its business by violating Plaintiffs’ rights; scaled its business to
more than 100,000 users by aggressively marketing itself as a $1-a-day alternative
to licensed streaming services, such as iTunes, Amazon, and Netflix; and only
sought forgiveness (not permission) once it had been sued. VidAngel ignores the
district court’s finding that its unlicensed offering directly interferes with
Plaintiffs’ “windowing,” whereby Plaintiffs negotiate exclusive licenses to permit
authorized services to stream that content exclusively for a period of time. A.720.
On the other side of the balance, VidAngel cannot claim hardship from having to
cease its illegal activity.
FACTUAL BACKGROUND
A.

VidAngel’s Illegal Service

VidAngel operated and asks to continue to operate as follows:
By ripping Plaintiffs’ works from access-protected Discs. VidAngel admits
that it starts its process by “removing restrictions on DVD [and Blu-ray]

3

encryption” from the physical Disc containing Plaintiffs’ content. A.195. That is
circumvention, prohibited by 17 U.S.C. § 1201(a)(1)(A). See Argument § I.A.
By copying Plaintiffs’ works. VidAngel takes the ripped copies of movies
and creates new copies on computers and servers, both to mark them for filters and
to create digital copies to stream to customers. A.192, 199. VidAngel tries to
obscure its infringement by saying it stores the movies in “tiny segments.” Mot. at
4. Even if true, the tiny segments add up to complete copies. S.A. 967 ¶ 28.
By publicly performing Plaintiffs’ works. Finally, VidAngel uses the
unauthorized copies to stream Plaintiffs’ movies on demand. A.192. VidAngel
again seeks to obscure what it does by insisting that it is merely streaming content
its users temporarily “own” because those users “buy” and then “sellback” discs
for an effective price of $1 per day (for SD format; $2 for HD). As the district
court found, the entire buy/sellback scheme provides no legal shelter because users
“view a stream from a master copy stored on a server, not [the] DVD” they
purportedly “owned.” A.200. The Disc the user purportedly “owns” sits in
VidAngel’s “vault,” and is recycled multiple times. A.71.
The “buy/sellback” is a gimmick. VidAngel acknowledges as much, calling
it a “creative way” to compete in the on-demand streaming market “while staying
buttoned up legally.” Supplemental Appendix (“S.A.”) 992. And VidAngel’s
customers treat the service just like an on-demand video rental: 99.65% of its
4

transactions involve users “selling [] back” the Disc within an average of five
hours of supposedly “purchas[ing]” it. A.282. VidAngel (not the user) maintains
possession of the “sold” Disc unless the user asks for it—which has happened a
trivial number of times out of the millions of purported “sales.” S.A.1040; A.166.
B.

VidAngel’s Aggressive Marketing And Growth

Without any supporting evidence, VidAngel says it developed the foregoing
model only after “attempt[ing] to work with the Studios to make filtered streaming
a reality.” Mot. at 4. That is false. VidAngel launched its service, and then
informed Plaintiffs about it in July 2015, with letters from its then-outside litigator
(now General Counsel) to the general counsels of Plaintiffs and other parent
companies. A.645. The letters described a nascent service of less than 5,000 users
in “limited beta” testing and said nothing about VidAngel circumventing the
Technological Protection Measures (“TPMs”) on Plaintiffs’ Discs. A.725-26.
Plaintiffs started a legal investigation of VidAngel and monitored the service’s
growth. S.A.951 ¶ 35.
VidAngel, meanwhile, launched an aggressive advertising offensive in order
to get “a lot bigger” as rapidly as possible, before trying to “get licensing from
Hollywood.” S.A.992. By mid-2016, VidAngel had grown to over 100,000
monthly active users and 500,000 monthly streams. A.248. It did so by touting the
advantages that flowed from its unlicensed exploitation of Plaintiffs’ works.
5

Attempting to use the FMA as a shield, VidAngel undercut the prices of licensed
streaming services—which pay for exercising copyright owners’ rights to copy and
stream content. And VidAngel offered movies not currently available on other
streaming services—which have rights only for specified windows based on
agreements with copyright owners. A.191; S.A.860-62, 870-85 (promoting videos
“Not on Netflix”); S.A.945 ¶ 16 (VidAngel streamed Star Wars before legitimate
licensees could offer it for on-demand streaming); S.A.916-21 (same).
PROCEDURAL BACKGROUND
Plaintiffs filed this action on June 9, 2016, A.526, and a motion for a
preliminary injunction (following expedited discovery and pursuant to a stipulated
schedule) on August 22, A.707. On December 12, the district court granted the
motion, finding that each relevant factor favored Plaintiffs. A.190. That Order
immediately enjoined VidAngel from circumventing Discs containing Plaintiffs’
works, and from copying and publicly performing those works. A.211.
VidAngel requested a stay on December 14, A.42, while disregarding the
court’s Order. It continued to stream Plaintiffs’ works—and even added more of
Plaintiffs’ works to its service as Plaintiffs released new titles on Discs. S.A.772-

6

88.1 On December 29, the district court denied VidAngel’s stay motion. A.4.
Within hours, VidAngel said it had finally removed Plaintiffs’ works from its
service, belying its prior claim that it could not comply with the injunction until
late January, at the earliest. A.28 ¶ 13.
ARGUMENT
I.

PLAINTIFFS, NOT VIDANGEL, HAVE A STRONG LIKELIHOOD
OF SUCCESS ON THE MERITS
To justify a stay, VidAngel must show, “at a minimum, that [it] has a

substantial case [] on the merits” of its defenses to all of Plaintiffs’ claims. LeivaPerez v. Holder, 640 F.3d 962, 968 (9th Cir. 2011). VidAngel cannot come close
to meeting that burden because the district court’s determination that Plaintiffs
demonstrated a strong likelihood of success on their DMCA claim and both
infringement claims was plainly correct.
A.

VidAngel’s Legal Violations Are Clear, And It Is Unlikely To
Succeed On Its FMA Defense

Circumvention. The district court correctly held that VidAngel’s business is
predicated on a systematic violation of the DMCA’s anti-circumvention provision.
1

VidAngel’s filing of the stay motion did not excuse its immediate obligation to
comply; VidAngel simply granted itself a stay and flouted the injunction—conduct
that itself is manifestly inequitable. See Tekkno Labs., Inc. v. Perales, 933 F.2d
1093, 1099 (2d Cir. 1991). Plaintiffs have moved for an order holding VidAngel
in contempt. The district court has set a hearing on that motion for this Friday,
January 6, and has given VidAngel the opportunity to be heard (including,
presumably, actual evidence from VidAngel of how it has complied). S.A.750.

7

The DMCA provides that “[n]o person shall circumvent a technological measure
that effectively controls access to a work protected under [the Copyright Act].” 17
U.S.C. § 1201(a)(1)(A). Plaintiffs protect their works on Discs using TPMs—
CSS, AACS and BD+—that effectively control access to the digital copies of
Plaintiffs works. S.A.818-19 ¶¶ 3-5; S.A.930, 932 ¶¶ 20, 27; see Realnetworks,
Inc. v. DVD Copy Control Ass’n, 641 F. Supp. 2d 913, 932 (N.D. Cal. 2009) (“CSS
. . . effectively controls access to . . . copyrighted DVD content”). VidAngel
admits that it decrypts these TPMs without authorization. A.630. So “decrypt[ing]
an encrypted work” is a paradigmatic violation of § 1201. 17 U.S.C.
§ 1201(a)(3)(A). VidAngel’s DMCA violation could not be more clear.
VidAngel invokes the FMA to justify its conduct but, as the district court
correctly held, the FMA provides no shelter for DMCA violations. A.195-98. The
FMA applies only to the “making imperceptible” of limited portions of motion
picture content and the “creation or provision of . . . technology that enables such
making imperceptible,” not circumvention. 17 U.S.C. § 110(11). Further, the
FMA’s text makes clear that the actions covered by that provision are exempt only
from “the provisions of section 106” (i.e., they are not “infringements of
copyright”) and conspicuously omits any mention of the DMCA’s anticircumvention prohibition, which is codified at § 1201(a) not in § 106. 17 U.S.C.
§ 110 (first sentence) (emphasis added). This Court has recognized that § 1201(a)
8

provides a cause of action “distinct from infringement.” See MDY Indus. LLC v.
Blizzard Entm’t, Inc., 629 F.3d 928, 950 (9th Cir. 2010) (emphasis added). The
FMA’s legislative history confirms what the text makes plain: “[T]he [FMA] does
not provide any exemption from the anti-circumvention provisions of section 1201
[the DMCA].” See 151 Cong. Rec. S450 at S502 (daily ed. Jan. 25, 2005) (Sen.
Hatch). 2
VidAngel argues that the fair use defense, 17 U.S.C. § 107, may excuse its
DMCA violation. Numerous courts have held that fair use is not a defense to
circumventing.3 VidAngel relies on the fact that MDY Industries said it was not
deciding the question. Mot. at 14. That does not show likely success or even the
existence of a substantial case on the merits. VidAngel’s invocation of fair use is
beside the point because, as the district court held, VidAngel failed to establish the
defense. A.205.

2

Even if VidAngel were right (which it is not) that the FMA authorizes
“necessary” circumvention, the district court found as fact that circumvention is
not necessary. “[A]nother filtering service, ClearPlay, offers filtering to Google
Play users who access authorized streams from GooglePlay’s licensed service.”
A.209. The court found the injunction “would not prevent VidAngel or any other
company from providing a filtering service similar to ClearPlay’s.” Id.
3

See, e.g., Dish Network, L.L.C. v. Vicxon Corp., No. 12-CV-9-L WVG, 2013 WL
3894905, at *6 (S.D. Cal. July 26, 2013); United States v.Crippen, No. CR 09-703
PSG, 2010 WL 7198205, at *2 (C.D. Cal. Nov. 23, 2010); Universal City Studios,
Inc. v. Reimerdes, 111 F. Supp. 2d 294, 322 (S.D.N.Y. 2000).

9

VidAngel’s obvious DMCA violation, in and of itself, fully justifies the
preliminary injunction and warrants denial of VidAngel’s stay motion.
Unauthorized Reproduction. VidAngel’s model also depends on the
systematic infringement of Plaintiffs’ works. In each and every instance,
VidAngel’s streaming of Plaintiffs’ works is preceded by making unauthorized
copies. A.198. This infringes Plaintiffs’ exclusive reproduction right. VidAngel
claims that it makes only “intermediate” copies that do not trigger liability under
§ 106. But the copies are permanent. S.A.825-27 ¶¶ 25-29. And § 106(1)
“unambiguously encompasses and proscribes ‘intermediate copying.’” Sega
Enters. v. Accolade, Inc., 977 F.2d 1510, 1518 (9th Cir. 1992).
VidAngel again seeks to hide behind the FMA. But, as the district court
correctly held, the FMA (when its terms are met) “exempts only (1) ‘the making
imperceptible’ of limited portions of a motion picture; and (2) ‘the creation or
provision of a computer program or other technology that enables such making
imperceptible.’” A.201 (quoting 17 U.S.C. § 110(11)). It does not exempt
unauthorized copying.
Finally, VidAngel argues, for the first time, that the illegal copies it creates
should be deemed “other technology” within the meaning of the FMA. Mot. at 8.
Because that argument was not presented to the district court, it should not be
considered (indeed, VidAngel’s including it justifies denying the motion, Cir. R.
10

27-3(a)(4)). Regardless, the assertion is meritless. Making a digital copy is neither
the act of “making imperceptible” nor the “creation or provision of . . .
technology.” It is not protected by the FMA.
Unauthorized Public Performance. VidAngel also systematically infringes
Plaintiffs’ public performance right. As the district court found, VidAngel engages
in precisely the unauthorized conduct that the text of § 106 forbids4: it “transmits”
performances of Plaintiffs’ works—i.e., it streams them—to members of the public
who have a “commercial ‘public’ relationship” with VidAngel, “regardless of
where the viewing takes place.” A.199 (quotation omitted). That ruling is fully
consistent with a long line of precedent interpreting the public performance right,
including most recently American Broadcasting Companies, Inc. v. Aereo, Inc.,
134 S. Ct. 2498 (2014). See also Warner Bros. Ent. Inc. v. WTV Sys., Inc., 824 F.
Supp. 2d 1003, 1010 (C.D. Cal. 2011) (holding that streaming from DVDs and
DVD players assigned to specific users violates the public performance right).
VidAngel’s contrary position rests on false premises. The core of
VidAngel’s argument is the claim that its streaming is a private, not a public,
4

“To perform … a work ‘publicly’ means,” inter alia, “to transmit … a
performance … of the work … to the public, by means of any device or process,
whether the members of the public capable of receiving the performance …
receive it in the same place or in separate places and at the same time or at
different times.” 17 U.S.C. § 101.

11

performance because VidAngel streams “only to customers who own a legitimate
DVD copy.” Mot. at 9. Wholly apart from the sham nature of the “ownership”
interest VidAngel claims to create, this argument cannot help VidAngel because
the FMA requires the transmission to be “from an authorized copy.” 17 U.S.C.
§ 110(11). But VidAngel streams from a master digital copy that it unlawfully
makes, not from the Disc copy that the user purportedly “own[s].” A.200-01.5
At bottom, VidAngel’s “ownership” claim is a sham, just like the lawyerdesigned gimmickry of assigning separate antennae for each subscriber that the
Supreme Court rejected in Aereo. Just as Aereo’s scheme did not “render Aereo’s
commercial objective any different from that of cable companies” with which
Aereo competed or “alter the viewing experience of Aereo’s subscribers,” 134 S.
Ct. at 2508, the details of VidAngel’s “buy/sellback” scheme do not change its
advertised purpose to compete with the licensed streaming services that it
5

VidAngel also misquotes Aereo, claiming the Court said that “the public” in
§ 101 “‘does not extend to those who act as owners or possessors of the relevant
content.’” Mot. at 9-10 (purporting to quote Aereo, 134 S. Ct. at 2510-11). The
Court’s actual words were “owners or possessors of the relevant product.” 134 S.
Ct. at 2510-11 (emphasis added). When someone buys a Disc, the product they
own is the Disc. The content on the Disc continues to be a copyrighted work, the
exclusive rights to which under § 106 belong to the copyright owner, save for the
right to control further distribution of the physical Disc under the “first sale”
defense, which is inapplicable here. See Capitol Records, LLC v. ReDigi Inc., 934
F. Supp. 2d 640, 655 (S.D.N.Y. 2013) (first sale defense inapplicable to
infringement of reproduction right).

12

undercuts or alter the experience of those who use VidAngel to stream videos.
VidAngel simply used an ersatz “ownership” label solely for the purpose of
evading the copyright rights that all other streaming services must respect. Its
users obtain that “interest” in order to receive a streamed movie and then relinquish
it once they have watched the movie. A.282 (more than 99% of VidAngel’s
claimed “sales” are sold back within an average of five hours). A sham of this
kind cannot justify VidAngel’s unlicensed streaming of Plaintiffs’ works.
B.

VidAngel Is Unlikely To Prevail On Its Fair Use Defense

VidAngel has the burden of showing that its fair use defense will prevail.
See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1158 (9th Cir. 2007).
The district court did not abuse its discretion in holding that VidAngel failed to
meet its burden with respect to any of the four statutory fair use factors, 17 U.S.C.
§ 107(1). A.202-205.
(1) Commercial and transformative use. VidAngel concedes that its use is
commercial. It is also not “transformative,” which involves “add[ing] something
new, with a further purpose or different character, altering the first with new
expression, meaning or message.” Campbell v. Acuff-Rose Music, Inc., 510 U.S.
569, 579 (1994). As the district court found, VidAngel’s use does not add
anything; it merely subtracts a small amount of content from Plaintiffs’ works.
A.203. And VidAngel’s use “serves the ‘same intrinsic entertainment value that is
13

protected by Plaintiffs’ copyrights.’” Id. (quoting Elvis Presley Enters., Inc. v.
Passport Video, 349 F.3d 622, 629 (9th Cir. 2003)). A commercial, nontransformative use “is ‘presumptively an unfair exploitation of the monopoly
privilege that belongs to the owner of the copyright.’” Leadsinger, Inc. v. BMG
Music Publ’g, 512 F.3d 522, 530 (9th Cir. 2008). Thus, the district court’s finding
that the first factor weighs for Plaintiffs was not an abuse of discretion. See Clean
Flicks of Colo. v. LLC v. Soderbergh, 433 F. Supp. 2d 1236, 1241 (D. Colo. 2006)
(rejecting a similar fair use defense by defendants who mechanically edited movies
to remove content because defendants (1) added nothing to the movies, (2) only
removed small amounts of content, and (3) did so for commercial gain).
(2) Nature of the copyrighted works and (3) amount and substantiality of
use. VidAngel does not and cannot dispute the court’s findings on these factors
that (i) movies are at the “core” of copyright protection, and (ii) VidAngel copies
100% of, and streams “the heart of,” Plaintiffs’ movies. A.203-04.
(4) Effect on actual or potential market for the works. VidAngel cannot
show that the district court abused its discretion in finding that VidAngel inflicts
market harms. A.204-05. VidAngel’s own evidence showed that “49% of [its]
customers would view movies without filters.” A.204. The question on this factor
is not confined to VidAngel’s particular unauthorized use, but “‘whether
unrestricted and widespread conduct of the sort engaged in by the defendant . . .
14

would result in a substantially adverse impact on the potential market’ for the
original.” Campbell, 510 U.S. at 590 (quotation omitted). It plainly would.
II.

THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN
CONCLUDING THAT VIDANGEL CAUSES PLAINTIFFS
IRREPARABLE HARM
The district court was well within its discretion in concluding that

VidAngel’s illegal activity caused Plaintiffs “ongoing” irreparable harm, which
“will likely only increase absent an injunction.” A.208; see also A.7. VidAngel’s
contrary arguments are baseless.
First, VidAngel is wrong that the district court presumed irreparable harm.
Mot. at 14. VidAngel ignores the district court’s order and the ample evidence
supporting it. The court relied on the uncontroverted declaration of one of
Plaintiffs’ digital distribution executives (which VidAngel ignored and neglected
to include it its Appendix). That declaration established that Plaintiffs’ copyrights
“are critical to providing Plaintiffs the opportunity to earn a return on their
substantial investments”; that Plaintiffs exercise their rights (and earn a return)
through contractual commitments to guarantee licensees “exclusive time
window[s] for performing a title”; that VidAngel in fact streamed Plaintiffs’ works
during periods of contractual exclusivity commitments undermining the value of
exclusivity; and that VidAngel thus “interferes with Plaintiffs’ exercise of their
exclusive rights and frustrates Plaintiffs’ ability to negotiate for similar rights in
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the future.” A.206. These findings alone justify the district court’s conclusion of
irreparable harm.
The court found additional irreparable harm to Plaintiffs’ licensee
relationships and goodwill from the fact that in contract negotiations licensees
complain about being undercut by unlicensed services. A.206. VidAngel says the
court presumed harm because no licensee named VidAngel specifically. Mot. at
16. Not so. VidAngel’s own words and deeds prove it inflicts this harm.
VidAngel expanded its user base dramatically by marketing its ability to provide
on-demand streaming at prices that undercut licensed services and during windows
when licensed services cannot yet offer the same titles. A.247; S.A.860-62, 870-85
(promoting titles “Not on Netflix”); S.A.888-914 (promoting $1-a-day movies).
Second, VidAngel is wrong that money damages can fully compensate
Plaintiffs. Mot. at 17. The district court correctly held that money damages were
not adequate to compensate “harm to one’s negotiating position and/or goodwill
with licensees.” A.207 (citing, inter alia, Rent-A-Ctr., Inc. v. Canyon Television &
Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991) (“intangible injuries . . .
qualify as irreparable harm”)). Moreover, as VidAngel’s infringement and
circumvention continues, its liability grows, making VidAngel even less likely to
have the resources to satisfy a damages award. Fox Television Stations, Inc. v.
BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138, 1147 (C.D. Cal. 2012)
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(finding irreparable harm when “start-up” “would [not] be likely to be able to
satisfy the damages award”); Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.,
518 F. Supp. 2d 1197, 1217 (C.D. Cal. 2007) (same). VidAngel’s copying and
streaming of more than a thousand of Plaintiffs’ works (including during the two
weeks when VidAngel violated the injunction) means that its monetary liability
almost certainly will exceed the $10 million it claims it raised to defend this
litigation. See 17 U.S.C. § 504(c) (range for statutory damages).
Third, there is no merit to VidAngel’s insistence that Plaintiffs forfeited the
right to seek an injunction by waiting too long to sue and file their motion. Mot. at
18. VidAngel ignores controlling Ninth Circuit authority—which the district court
followed—that “courts are ‘loath to withhold relief solely on [] ground[s]’” of
delay, and that alleged “tardiness is not particularly probative in the context of
ongoing, worsening injuries,” which is plainly the case here. Arc of Cal. v.
Douglas, 757 F.3d 975, 990 (9th Cir. 2014).
The district court specifically found Plaintiffs’ course of conduct to be
“reasonable under the circumstances.” A.208. When Plaintiffs first learned of
VidAngel in July 2015, VidAngel “was in ‘limited beta’ and had fewer than 5,000
users.” Id. It was reasonable for Plaintiffs to “monitor[] VidAngel and
investigate[] their claims,” and file suit “once VidAngel started marketing itself
more aggressively, expanded its content offering, and posed a more significant
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threat of harm.” Id. These findings were not clearly erroneous, and the district
court was within its discretion in rejecting VidAngel’s “delay” argument.
III.

VIDANGEL WILL NOT SUFFER IRREPARABLE HARM
WITHOUT A STAY
VidAngel’s unsupported claims of irreparable harm are meritless.
First, VidAngel “cannot complain of the harm that will befall it when

properly forced to desist from its infringing activities.” Triad Sys. Corp. v. Se.
Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995). To be clear, VidAngel is not
asking to preserve the status quo—Plaintiffs’ works finally have been taken
down—but to resume its infringement of the more than 1,000 of Plaintiffs’ titles
that VidAngel already has ripped, copied and streamed, and even to add new titles
as Plaintiffs release them on Disc. A.26 ¶ 9; A.393 ¶ 59.
Second, the record does not support VidAngel’s claim that the injunction
effectively requires VidAngel to stop streaming all movies. Mot. at 19. The
injunction applies only to Plaintiffs’ works, not the other 44% of titles VidAngel
streams. A.26 ¶ 9. VidAngel tried to excuse its non-compliance by claiming that,
if it removed Plaintiffs’ titles from two “app” services—Apple and Roku—users
might be “confus[ed]” until VidAngel could update its apps on those services.
A.26 ¶ 8, A.28 ¶ 13. The record evidence—including a declaration from Roku’s
General Counsel—refuted VidAngel’s claims. S.A.751-52 (Roku); S.A.771

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(Apple). VidAngel submitted no evidence showing that it could not comply with
the injunction for transactions through its own website or other app services, or
otherwise to continue offering content not owned by Plaintiffs. 6
Third, VidAngel’s public statements belie its claim to this Court that the
absence of a stay will destroy VidAngel’s business. VidAngel is telling its users
that it will weather the injunction until the appeal is resolved. S.A.807 ¶ 9, 810-11.
The day after the injunction issued, VidAngel announced “[t]he launch of
VidAngel Studios,” which it will fund with $5 million of the $10 million that it has
raised, to produce and offer VidAngel’s own content. S.A.811; S.A.808 ¶ 12, 815.
VidAngel already has licensed content from other copyright owners. A.25 ¶ 5.
See Fox Television Stations, Inc. v. FilmOn X, LLC, 968 F. Supp. 2d 134, 138
(D.D.C. 2013) (denying stay application and noting that public still is able “to
access material that is properly licensed from copyright holders”). In short,
VidAngel’s predictions of doom are contrived.
IV.

A STAY WOULD HARM THE PUBLIC INTEREST
“[I]t is virtually axiomatic that the public interest can only be served by

upholding copyright protections and, correspondingly, preventing the
6

VidAngel’s real concern seems to be potential liability to other content owners,
who have not provided VidAngel with a covenant not to sue. S.A. 756-57 ¶ 4. The
fact that VidAngel has even sought such a covenant underscores its own lack of
confidence in its likelihood of success.

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misappropriation of the skills, creative energies, and resources which are invested
in the protected work.” Apple Comput., Inc., v. Franklin Comput. Corp., 714 F.2d
1240, 1255 (3d Cir. 1983) (quotation omitted); accord Metro-Goldwyn-Mayer
Studios, Inc., 518 F. Supp. 2d at 1222 (citing cases).
VidAngel argues that members of the public who use filtering will suffer
absent a stay. That is not true, as shown by ClearPlay, which works on licensed
streams from Google Play. A.209. “The presence of market alternatives to
VidAngel’s filtering service belies its claim that an injunction would effectively
end the public’s ability to watch filtered movies.” A.7 (quotations omitted).
CONCLUSION
Plaintiffs respectfully request that VidAngel’s motion be denied.

DATED: January 2, 2017

MUNGER, TOLLES & OLSON LLP
Kelly M. Klaus
By: s/ Kelly M. Klaus
Attorney for Plaintiffs-Appellees

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CERTIFICATION OF SERVICE
I hereby certify that I electronically filed the foregoing Appellees’
Opposition to VidAngel Inc.’s Emergency Motion Under Circuit Rule 27-3 for
a Stay Pending Appeal with the Clerk of the Court for the United States Court of
Appeals for the Ninth Circuit by using the appellate CM/ECF system on January 2,
2017.

I certify that all the participants in the case are registered CM/ECF users and
that service will be accomplished by the appellate CM/ECF system.

DATED:

January 2, 2017

s/ Kelly M. Klaus
KELLY M. KLAUS

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