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

Filing 24

Submitted (ECF) excerpts of record. Submitted by Appellant VidAngel, Inc.. Date of service: 01/11/2017. [10263145] [16-56843] (Stris, Peter) [Entered: 01/11/2017 09:33 PM]

No. 16-56843
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
VIDANGEL, INC.,
Defendant-Appellant,
v.
DISNEY ENTERPRISES, INC.; LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM CORPORATION; AND
WARNER BROS. ENTERTAINMENT, INC.,
Plaintiffs-Appellees.
On Appeal from the United States District Court
for the Central District of California
Hon. André Birotte Jr.
No. 2:16-cv-04109-AB-PLA
EXCERPTS OF RECORD
VOLUME III OF V
(Pages 290-567)
Brendan S. Maher
Daniel L. Geyser
Douglas D. Geyser
STRIS & MAHER LLP
6688 N. Central Expy., Ste. 1650
Dallas, TX 75206
Telephone: [phone]
Facsimile: [phone]
January 11, 2016

Peter K. Stris
Elizabeth Rogers Brannen
Dana Berkowitz
Victor O’Connell
STRIS & MAHER LLP
725 S. Figueroa St., Ste. 1830
Los Angeles, CA 90017
Telephone: [phone]
Facsimile: [phone]
[e-mail]

Counsel for Defendant-Appellant VidAngel, Inc.

TABLE OF CONTENTS
VOLUME I OF V
Pages 1 to 22

ECF Description
144

Page

Order Granting Plaintiffs’ Motion for Preliminary Injunction

ER001

VOLUME II OF V
Pages 23 to 289

ECF Description

Page

175

[In Chambers] Order Granting Plaintiffs’ Ex Parte Application
for an Order to Show Cause Why VidAngel Should Not Be Held
in Contempt

ER023

172

Ninth Circuit Order Denying VidAngel, Inc.’s Emergency Motion
for a Stay Pending Appeal

ER024

167

Declaration of David Quinto

ER026

166

[In Chambers] Order Denying Defendant’s Ex Parte Application
to Stay Preliminary Injunction Pending Appeal or Alternatively,
Pending Decision by the Ninth Circuit on Stay Pending Appeal

ER029

164

VidAngel, Inc.’s Opposition to Plaintiffs’ Ex Parte Application
for an Order to Show Cause

ER034

164-1

Declaration of Neal Harmon in Support of VidAngel,
Inc.’s Opposition to Plaintiffs’ Ex Parte Application for
an Order to Show Cause

ER050

164-2

Declaration of David Quinto in Support of VidAngel,
Inc.’s Opposition to Plaintiffs’ Ex Parte Application for
an Order to Show Cause

ER060

164-3

Declaration of Jarom McDonald in Support of
VidAngel, Inc.’s Opposition to Plaintiffs’ Ex Parte
Application for an Order to Show Cause

ER070

ECF Description

Page

163

Plaintiffs’ Preliminary Injunction Bond

ER075

158

Declaration of Neal Harmon in Support of VidAngel, Inc.’s Ex
Parte Application to Stay Preliminary Injunction Pending Appeal
or, Alternatively Pending Decision by the Ninth Circuit on Stay
Pending Appeal

ER080

149

VidAngel, Inc.’s Notice of Appeal from Order Granting Motion
for Preliminary Injunction; Representation Statement

ER088

145

Court Reporter’s Transcript of Proceedings on Monday,
November 14, 2016

ER094

123

Order Regarding Hearing Date on Plaintiffs’ Motion for
Preliminary Injunction

ER218

110

Supplemental Declaration of Neal Harmon in Opposition to
Motion for Entry of Preliminary Injunction (with Exhibits)

ER220

109

Declaration of William J. Aho in Support of VidAngel, Inc.’s
Opposition to Motion for Entry of Preliminary Injunction

ER283

78

Order Continuing Hearing of Plaintiffs’ Motions for Preliminary
Injunction and to Dismiss VidAngel’s Countercomplaint

ER288

VOLUME III OF V
Pages 290 to 567

ECF Description

Page

77

Amended Answer and First Amended Counterclaims

ER290

69

Declaration of Tim Wildmon in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER350

68

Declaration of Tim Barton in Support of VidAngel’s Opposition
to Motion for Preliminary Injunction

ER354

ECF Description

Page

67

Declaration of Theodore Baehr in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER358

66

Declaration of Rick Green in Support of VidAngel’s Opposition
to Motion for Preliminary Injunction

ER362

65

Declaration of Rebecca Hagelin in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER366

64

Declaration of Patrick Trueman in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER371

63

Declaration of Matt Kibbe in Support of VidAngel’s Opposition
to Motion for Preliminary Injunction

ER375

62

Declaration of L. Brent Bozell III in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER378

61

Declaration of George E. Roller in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER383

60

Declaration of Gary Marx in Support of VidAngel’s Opposition
to Motion for Preliminary Injunction

ER387

59

Declaration of Gary Bauer in Support of VidAngel’s Opposition
to Motion for Preliminary Injunction

ER391

58

Declaration of David Bozell in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER395

57

Declaration of David Barton in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER399

56

Declaration of Connor Boyack in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER403

55

Declaration of Harry R. Jackson Jr. in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER407

54

Declaration of Timothy F. Winter in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER411

ECF Description

Page

53

Declaration of Donna Rice Hughes in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER419

52

Declaration of Bryan and Diane Schwartz in Support of
VidAngel’s Opposition to Motion for Preliminary Injunction

ER428

51

Declaration of Bob Waliszewski in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER433

50

Declaration of Andrea Lafferty in Support of VidAngel’s
Opposition to Motion for Preliminary Injunction

ER436

46

Declaration of David W. Quinto in Support of VidAngel’s
Memorandum of Points and Authorities in Opposition to
Preliminary Injunction Motion

ER441

45

Declaration of Jaime W. Marquart in Support of VidAngel’s
Memorandum of Points and Authorities in Opposition to
Preliminary Injunction Motion

ER451

45-2

[Redacted] Exhibit B to Declaration of Jaime W.
Marquart in Support of VidAngel’s Memorandum of
Points and Authorities in Opposition to Preliminary
Injunction Motion

ER455

45-4

[Redacted] Exhibit D to Declaration of Jaime W.
Marquart in Support of VidAngel’s Memorandum of
Points and Authorities in Opposition to Preliminary
Injunction Motion

ER469

44

[Redacted] Declaration of Sigurd Meldal in Support of
VidAngel’s Memorandum of Points and Authorities in
Opposition to Preliminary Injunction Motion

ER470

44-4

ER514

Exhibit D to Declaration of Sigurd Meldal in Support
of VidAngel’s Memorandum of Points and Authorities
In Opposition to Preliminary Injunction Motion

ECF Description

Page

43

[Redacted] Declaration of Neal Harmon in Support of
VidAngel’s Memorandum of Points and Authorities In
Opposition to Preliminary Injunction Motion

ER520

43-1

Exhibit A to Declaration of Neal Harmon in Support of
VidAngel’s Memorandum of Points and Authorities In
Opposition to Preliminary Injunction Motion

ER545

43-2

Exhibit B to Declaration of Neal Harmon in Support of
VidAngel’s Memorandum of Points and Authorities In
Opposition to Preliminary Injunction Motion

ER547

43-3

Exhibit C to Declaration of Neal Harmon in Support of
VidAngel’s Memorandum of Points and Authorities In
Opposition to Preliminary Injunction Motion

ER551

28

Declaration of Tedd Cittadine in Support of Plaintiffs’ Motion
for Preliminary Injunction

ER554

VOLUME IV OF V
Pages 568 to 660

ECF Description

Page

27

[Redacted] Plaintiffs’ Notice of Motion and Motion for
Preliminary Injunction; Memorandum of Points and Authorities
in Support Thereof

ER568

1

Complaint for Copyright Infringement and Violation of Digital
Millennium Copyright Act

ER613

[1/11/2017] Docket Sheet

ER633

VOLUME V OF V
(FILED UNDER SEAL)
Pages 661 to 848

ECF Description

Page

80-1 Declaration of Neal Harmon in Support of VidAngel’s
Memorandum of Points and Authorities In Opposition to
Preliminary Injunction Motion

ER661

80-2 Declaration of Sigurd Meldal in Support of VidAngel’s
Memorandum of Points and Authorities in Opposition to
Preliminary Injunction Motion

ER686

80-3 Exhibit B to Declaration of Jaime W. Marquart in Support of
VidAngel’s Memorandum of Points and Authorities in Opposition
to Preliminary Injunction Motion

ER709

80-4 Exhibit D to Declaration of Jaime W. Marquart in Support of
VidAngel’s Memorandum of Points and Authorities in Opposition
to Preliminary Injunction Motion

ER723

33

Plaintiffs’ Notice of Motion and Motion for Preliminary
Injunction; Memorandum of Points and Authorities in Support
Thereof

ER804

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 1 of 60 Page ID #:2624

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Fl.
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]

Peter Stris (Bar No. 216226)
[e-mail]
Brendan Maher (Bar No. 217043)
[e-mail]
Elizabeth Brannen (Bar No. 226234)
[e-mail]
Daniel Geyser (Bar No. 230405)
[e-mail]
STRIS & MAHER LLP
725 S. Figueroa St, Suite 1830
Los Angeles, CA 90017
Telephone: [phone]
Facsimile: [phone]

8
9
10
11
12
13
14

Maxwell M. Blecher (Bar No. 26202)
[e-mail]
Donald R. Pepperman (Bar No. 109809)
[e-mail]
Taylor C. Wagniere (Bar No. 293379)
[e-mail]
BLECHER COLLINS & PEPPERMAN, P.C.
515 S. Figueroa St., Suite 1750
Los Angeles, California 90071
Telephone: [phone]
Facsimile: [phone]

David Quinto (Bar No. 106232)
[e-mail]
VIDANGEL, Inc.
3007 Franklin Canyon Drive
Beverly Hills, CA 90210-1633
Telephone: [phone]

Attorneys for Defendant and
15 Counterclaimant VidAngel, Inc.
16
UNITED STATES DISTRICT COURT

17

CENTRAL DISTRICT OF CALIFORNIA

18

WESTERN DIVISION

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20
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22

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,
Plaintiffs,

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24
25
26

CASE NO. 2:16-cv-04109-AB-PLA
VIDANGEL, INC.’S AMENDED
ANSWER AND AFFIRMATIVE
DEFENSES TO COMPLAINT; AND
FIRST AMENDED
COUNTERCLAIMS
[DEMAND FOR JURY TRIAL]

vs.
VIDANGEL, INC.,
Defendant.

Judge: Hon. André Birotte Jr.
Courtroom 4

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AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS
ER290

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 2 of 60 Page ID #:2625

1

VIDANGEL, INC.,

2

Counterclaimant,

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4
5
6
7

vs.
DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; WARNER BROS.
ENTERTAINMENT, INC., AND
DOES 1-100,
Counterclaim-Defendants.

8
9

AMENDED ANSWER

10

Defendant VidAngel, Inc. (“VidAngel”) hereby answers plaintiffs Disney

11

Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation and

12

Warner Bros. Entertainment, Inc.’s (collectively, “Plaintiffs’”) Complaint.

13

INTRODUCTORY STATEMENT

14
15

Plaintiffs’ carefully selected and misleading allegations distort relevant facts
and law.

16

Plaintiffs repeatedly suggest that VidAngel needs their permission to offer a

17

filtering service, despite Congressional law which expressly authorizes VidAngel’s

18

service without need for any such consent. In enacting the Family Movie Act

19

(“FMA”), Congress protected the right of families to filter and view content

20

according to their personal preferences. This right is codified in Copyright Act

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Section 110 (“Limitations on exclusive rights: Exemption of certain performances

22

and displays”). That section provides that “making imperceptible (i.e., filtering) . . .

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at the direction of a member of a private household, of limited portions of audio or

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video content of a motion picture [defined to include television programs, as well],

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during a performance in or transmitted [e.g., streamed] to that household for private

26

home viewing, from an authorized copy of the motion picture” does not violate the

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Copyright Act. Because the Digital Millennium Copyright Act is part of the

28

Copyright Act, it is subject to the same exemption. Hence, VidAngel is well within
-1-

ER291

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 3 of 60 Page ID #:2626

1

its rights to legally decrypt DVDs and Blu-rays for the purpose of allowing families

2

to view filtered movies.

3

In asking this Court to impose a consent requirement on VidAngel’s filtering

4

service, Plaintiffs are effectively asking that the Court repeal a federal statute enacted

5

to protect American families.

6

Plaintiffs further suggest they do not derive financial benefit from VidAngel’s

7

business. In fact, the opposite is true. VidAngel spends one-third of all capital raised

8

to lawfully purchase thousands of DVD and Blu-ray discs, which are then re-sold to

9

VidAngel users. Shown below is the manager of VidAngel’s storage vault pictured

10

with lawfully purchased copies of The Revenant.

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25
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VidAngel’s inventory of The Revenant, one of over 2,000 titles available

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ER292

-2AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 4 of 60 Page ID #:2627

1

The majority of VidAngel’s purchases represent sales that would not occur but for its

2

filtering service, because most of VidAngel’s customers would not acquire and watch

3

a particular film without filtering.

4

Plaintiffs’ repeated characterization of VidAngel’s service as a “rental” service

5

is yet another deliberate mischaracterization. As shown in the picture below, each

6

disc lawfully purchased by VidAngel is assigned an individual bar code.

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8
9
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25

VidAngel’s discs are marked with individual bar codes

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ER293

-3AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 5 of 60 Page ID #:2628

1

These specific, identifiable discs are re-sold by VidAngel to its customers. Once a

2

VidAngel customer purchases a disc, that disc is no longer available for sale. The

3

purchasing customer may request that the physical disc be mailed to him or her or

4

may allow VidAngel to maintain custody of it. The discs are maintained in a physical

5

vault, which is kept locked and protected by round-the-clock electronic monitoring.

6

When a customer purchases one episode of a television show available on a disc

7

containing multiple episodes, VidAngel cannot sell any other episode for an obvious

8

reason – the entire disc is in its vault and the entire disc belongs to that one customer.

9

After VidAngel lawfully acquires DVDs for a particular title, it prepares the

10

DVD’s content for filtering by tagging a digital copy of each film to identify over 80

11

categories of content – such as profanity, nudity and violence. To use VidAngel’s

12

service, users must first purchase movies and may view them only after selecting

13

their desired content filters. Works are filtered as requested by each customer and

14

transmitted to each household privately, at the direction of a member of the

15

household. VidAngel never makes a fixed copy of any filtered work. Once a

16

VidAngel user has viewed a filtered film he or she purchased, the user may, at his or

17

her option, keep the title or sell it back to VidAngel.

18

VidAngel’s business model is predicated on providing a filtering service in a

19

completely lawful manner. VidAngel wrote to Plaintiffs and other content owners

20

over a year ago to describe its service and request feedback regarding any concerns

21

with respect to copyright or other issues. In those letters, VidAngel promised that if

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any of the studios raised an issue with VidAngel’s service, VidAngel would attempt

23

to modify it to address the purported infirmity. Although neither the Plaintiffs nor

24

any other copyright owner raised any issue in response to the letters, at least one of

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the Plaintiffs signed up for VidAngel’s service shortly after receiving VidAngel’s

26

letter. Using an alias name, Albert Podrasky, Plaintiff Disney Enterprises, Inc.’s

27

worldwide anti-piracy head, opened a VidAngel account on August 6, 2015. He then

28

purchased and sold back numerous DVDs. Plaintiffs Twentieth Century Fox and
-4-

ER294

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 6 of 60 Page ID #:2629

1

Time Warner also responded to VidAngel’s offer to meet, but they did not raise any

2

concerns regarding VidAngel’s model.

3

Plaintiffs disingenuously imply that, following a year of inaction, they have

4

sued now only because VidAngel changed its business model. (Complaint ¶ 47.)

5

The truth is that during a 2014 beta test, VidAngel used an earlier business model (a

6

Google Play “plug-in” and HD Chromecast support), which required Google’s active

7

assistance. After initially supporting VidAngel, Google notified VidAngel that the

8

method being tested violated YouTube’s Terms and Conditions and withdrew

9

Chromecast support. When VidAngel wrote to the Plaintiffs and other studios (in

10

July 2015), it was already using its current business model, which Mr. Podrasky

11

began examining early last August. Given their delay, Plaintiffs cannot credibly

12

argue that VidAngel’s service has irreparably harmed them.1

13

Plaintiffs’ complaint is not surprising in light of Plaintiffs’ longstanding

14

hostility toward any form of filtering under the FMA, as the framers of the FMA

15

acknowledges in its legislative history. It appears that Plaintiffs also complain

16

because VidAngel’s service is damaging their relationships with “streaming service

17

licensees” to whom Plaintiffs have sold lucrative streaming licenses that do not

18

permit filtered streaming.2 But Plaintiffs cannot demand a separate license for

19

filtering their content when doing so is specifically authorized by the FMA, which

20

Congress enacted to protect the right of families to enjoy the cinematic arts in their

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25
26
27

1

Moreover, courts may not enjoin a technology, such as VidAngel’s, that has
“substantial non-infringing uses.” Sony Corp. of America v. Universal City Studios,
Inc., 464 U.S. 417 (1984). Plaintiffs nowhere dispute that VidAngel’s technology has
such uses.
2
In fact, Plaintiffs have interfered with VidAngel’s attempts to partner with
streaming content providers to filter movies. Plaintiffs have also sought to
improperly expand their copyright monopoly, seeking to deprive consumers of their
right to buy and sell copyrighted works. As alleged in VidAngel’s Amended
Counterclaims, Plaintiffs should be held accountable for their improper actions.

28

ER295

-5AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 7 of 60 Page ID #:2630

1

homes while omitting offensive or otherwise objectionable content. VidAngel exists

2

to provide families a means to implement the spirit and purpose of the FMA. This

3

Court should protect the FMA and reject Plaintiffs’ renewed effort to render that

4

important legislation meaningless.

5

RESPONSES TO SPECIFIC ALLEGATIONS

6
7

1.

Paragraph 1 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

8

2.

VidAngel admits the image in paragraph 2 appears to be a screenshot

9

from VidAngel’s website. Additionally, VidAngel admits its users can search for

10

content by popularity, genre and other categories. Among other things, users can

11

search for content by a motion picture’s “inspiring score,” which is the average score

12

given by users on a rating scale of 1 to 100 as to whether a motion picture is

13

inspiring. VidAngel denies the remaining allegations in this paragraph.

14
15

3.

Paragraph 3 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

16

4.

VidAngel admits the image in paragraph 4 appears to be an

17

advertisement that previously appeared on VidAngel’s website. Paragraph 4 contains

18

legal arguments, opinions and conclusions that require no response. VidAngel

19

otherwise denies the allegations of this paragraph.

20

5.

VidAngel admits the images in paragraph 5 appear to be screenshots

21

from VidAngel’s website. The remainder of this paragraph contains legal arguments,

22

opinions and conclusions that require no response. VidAngel otherwise denies the

23

allegations of this paragraph.

24
25

6.

require no response. VidAngel otherwise denies the allegations of this paragraph.

26
27

Paragraph 6 contains legal arguments, opinions and conclusions that

7.

Paragraph 7 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

28

ER296

-6AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 8 of 60 Page ID #:2631

1
2

8.

VidAngel is without sufficient information or knowledge to form a

belief as to the truth of the allegations of paragraph 8.

3

9.

VidAngel is without sufficient information or knowledge to form a

4

belief as to the truth of the averment that Disney has obtained Certificates of

5

Copyright Registration for the Copyrighted Works. The remainder of Paragraph 9

6

contains legal arguments, opinions and conclusions that require no response.

7

VidAngel otherwise denies the allegations of this paragraph.

8
9

10.

VidAngel is without sufficient information or knowledge to form a

belief as to the truth of the allegations of paragraph 10.

10

11.

VidAngel is without sufficient information or knowledge to form a

11

belief as to the truth of the averment that Lucasfilm has obtained Certificates of

12

Copyright Registration for the Copyrighted Works. The remainder of Paragraph 11

13

contains legal arguments, opinions and conclusions that require no response.

14

VidAngel otherwise denies the allegations of this paragraph.

15
16

12.

VidAngel is without sufficient information or knowledge to form a

belief as to the truth of the allegations of paragraph 12.

17

13.

VidAngel is without sufficient information or knowledge to form a

18

belief as to the truth of the averment that Fox has obtained Certificates of Copyright

19

Registration for the Copyrighted Works. The remainder of Paragraph 13 contains

20

legal arguments, opinions and conclusions that require no response. VidAngel

21

otherwise denies the allegations of this paragraph.

22
23

14.

VidAngel is without sufficient information or knowledge to form a

belief as to the truth of the allegations of paragraph 14.

24

15.

VidAngel is without sufficient information or knowledge to form a

25

belief as to the truth of the averment that Warner Bros. has obtained Certificates of

26

Copyright Registration for the Copyrighted Works. The remainder of Paragraph 15

27

contains legal arguments, opinions and conclusions that require no response.

28

VidAngel otherwise denies the allegations of this paragraph.
-7-

ER297

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 9 of 60 Page ID #:2632

1

16.

VidAngel admits that it is a Delaware corporation with its principal

2

place of business at 249 N. University Avenue, Provo, Utah 84601. VidAngel

3

otherwise denies the allegations of this paragraph.

4
5

17.

VidAngel admits that this Court has subject matter jurisdiction over the

Complaint.

6

18.

VidAngel admits that venue is proper in this district.

7

19.

VidAngel lacks sufficient information or knowledge to form a belief as

8

to the truth of the allegations of paragraph 19.

9
10

20.

to the truth of the allegations of paragraph 20.

11
12

21.

22.

23.

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 23.

17
18

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 22.

15
16

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 21.

13
14

VidAngel lacks sufficient information or knowledge to form a belief as

24.

VidAngel is without sufficient information or knowledge to form a

belief as to the truth of the averments in the preamble of paragraph 24.

19

(a) VidAngel is without sufficient information or knowledge to form

20

a belief as to the truth of the allegations of paragraph 24(a).

21

(b) VidAngel is without sufficient information or knowledge to form

22

a belief as to the truth of the allegations of paragraph 24(b).

23

(c) VidAngel is without sufficient information or knowledge to form

24

a belief as to the truth of the allegations of paragraph 24(c).

25

(d) VidAngel is without sufficient information or knowledge to form

26

a belief as to the truth of the allegations of paragraph 24(d).

27

VidAngel admits that it has previously offered each of the motion picture titles listed

28

in paragraph 24 for sale and online filtering.
-8-

ER298

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 10 of 60 Page ID #:2633

1
2

25.

to the truth of the allegations of paragraph 25.

3
4

26.

27.

28.

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 28.

9
10

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 27.

7
8

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 26.

5
6

VidAngel lacks sufficient information or knowledge to form a belief as

29.

Paragraph 29 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

11

30.

VidAngel admits that it operates an online video service located at

12

http://vidangel.com, which is also available through a mobile application users may

13

access on their internet-connected smartphones, tablets and televisions (apps for

14

televisions can only be used through a set-top box like Roku, Apple TV and Amazon

15

Fire TV). Additionally, VidAngel admits that it currently offers users the ability to

16

skip or mute content within certain filter categories, including language,

17

sex/nudity/immodesty, violence/blood/gore and alcohol or drug use. Users must

18

apply at least one filter in order to view a video. VidAngel otherwise denies the

19

allegations of this paragraph.

20
21

31.

Paragraph 31 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

22

32.

VidAngel admits that DVDs and Blu-ray discs are optical discs that

23

contain recorded material in digital form. VidAngel lacks sufficient information or

24

knowledge to form a belief as to the truth of the remainder of this paragraph.

25

VidAngel otherwise denies the allegations of this paragraph.

26
27

33.

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 33.

28

ER299

-9AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 11 of 60 Page ID #:2634

1
2

34.

require no response. VidAngel otherwise denies the allegations of this paragraph.

3
4

Paragraph 34 contains legal arguments, opinions and conclusions that

35.

Paragraph 35 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

5

36.

VidAngel admits that the image in Paragraph 36 is an advertisement that

6

previously appeared on the Internet. VidAngel otherwise denies the remaining

7

allegations of Paragraph 36.

8
9

37.

require no response. VidAngel otherwise denies the allegations of this paragraph.

10
11

Paragraph 37 contains legal arguments, opinions and conclusions that

38.

Paragraph 38 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

12

39.

VidAngel admits VidAngel’s “How Does VidAngel’s Sellback Work?”

13

page contains the question and response quoted in footnote 1. The remainder of

14

paragraph 39 contains arguments, opinions and legal conclusions that require no

15

response. VidAngel otherwise denies the allegations of this paragraph.

16

40.

VidAngel admits the screenshot and language from a “how-to” use

17

VidAngel video posted on the service’s homepage contains the picture and quoted

18

language contained in paragraph 40. The remainder of this paragraph contains

19

arguments, opinions and legal conclusions that require no response. VidAngel

20

otherwise denies the allegations of this paragraph.

21

41.

VidAngel admits VidAngel sells copyrighted content and permits users

22

to sell that content back to VidAngel. VidAngel further admits the image in

23

paragraph 41 appears to be a screenshot from VidAngel’s website. VidAngel admits

24

that it previously allowed users to select between auto or manual sell-back when a

25

user purchased video content. VidAngel admits that, when watching from a desktop

26

or laptop web browser, the system is designed to show the user a sell-back button

27

over the closing credits of the film. The remainder of this paragraph contains

28

ER300

-10AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 12 of 60 Page ID #:2635

1

arguments, opinions and legal conclusions that require no response. VidAngel

2

otherwise denies the allegations of this paragraph.

3
4

42.

require no response. VidAngel otherwise denies the allegations of this paragraph.

5
6

43.

44.

Paragraph 44 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

9
10

Paragraph 43 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

7
8

Paragraph 42 contains legal arguments, opinions and conclusions that

45.

Paragraph 45 contains legal arguments, opinions and conclusions that

require no response. VidAngel otherwise denies the allegations of this paragraph.

11

46.

VidAngel admits that users previously were able to filter out opening

12

and closing credits. Additionally, VidAngel lacks sufficient information or

13

knowledge to form a belief as to the truth of the averment that “some people already

14

have started to make social media postings touting the fact they can use VidAngel to

15

watch movies and television shows essentially unfiltered.” Paragraph 46 also

16

contains legal arguments, opinions and conclusions that require no response.

17

VidAngel otherwise denies the allegations of this paragraph.

18

47.

VidAngel admits that, as part of beta testing, it previously distributed an

19

internet web browser “plug-in” that muted and skipped content streamed from other

20

services. VidAngel denies the remaining allegations in paragraph 47.

21

48.

VidAngel admits that it currently offers more than 2,000 titles, which

22

includes television episodes and movies. VidAngel otherwise denies the allegations

23

of paragraph 48.

24

49.

Deny.

25

50.

VidAngel is without sufficient information and knowledge to form a

26

belief as to the truth of the allegations of paragraph 50.

27
28

51.

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 51.
-11-

ER301

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 13 of 60 Page ID #:2636

1
2

52.

VidAngel is without sufficient information and knowledge to form a

belief as to the truth of the allegations of paragraph 52.

3

53.

Deny.

4

54.

Deny.

5

FIRST CLAIM FOR RELIEF

6
7

55.

VidAngel incorporates its answers to paragraphs 1-54 as if set forth fully

herein.

8

56.

Deny.

9

57.

Deny.

10

58.

Deny.

11

59.

Deny.

12

60.

Deny.

13

61.

Deny.

14

62.

Deny.

15

63.

Deny.

16

SECOND CLAIM FOR RELIEF

17
18

64.
herein.

19
20

65.

VidAngel admits that the quoted language in paragraph 65 appears in

Section 1201(a)(1)(A) of the Digital Millennium Copyright Act. Otherwise denied.

21
22

VidAngel incorporates its answers to paragraphs 1-63 as if set forth fully

66.

VidAngel lacks sufficient information or knowledge to form a belief as

to the truth of the allegations of paragraph 66.

23

67.

Deny.

24

68.

Deny.

25

69.

Deny.

26

70.

Deny.

27

71.

Deny.

28

72.

Deny.

ER302

-12AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 14 of 60 Page ID #:2637

1

AFFIRMATIVE DEFENSES

2

Pursuant to Rule 8(c) of the Federal Rules of Civil Procedure, VidAngel

3

further pleads the following separate and additional defenses. By pleading these

4

defenses, VidAngel does not in any way agree or concede that it has the burden of

5

proof or persuasion on any of these issues. VidAngel reserves the right to assert such

6

additional affirmative defenses as discovery indicates are proper.

7

FIRST AFFIRMATIVE DEFENSE

8

(Failure to State a Claim)

9

The complaint fails to state a claim upon which relief can be granted.

10

SECOND AFFIRMATIVE DEFENSE

11

(Legal Authorization)

12
13

VidAngel’s business is authorized by the Family Movie Act of 2005, codified
as 17 U.S.C. §110(11).

14

THIRD AFFIRMATIVE DEFENSE

15

(Fair Use)

16

The complaint is barred, in whole or in part, by the doctrine of fair use.

17

FOURTH AFFIRMATIVE DEFENSE

18

(Comparative Fault)

19
20

The complaint is barred, in whole or in part, based on the doctrine of
comparative fault.

21

FIFTH AFFIRMATIVE DEFENSE

22

(Failure to Mitigate Damages)

23

The complaint is barred, in whole or in part, based on Plaintiffs’ failure to

24

mitigate damages.

25

SIXTH AFFIRMATIVE DEFENSE

26

(Estoppel)

27
28

The complaint is barred, in whole or in part, based on the principles of
estoppel.

ER303

-13AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 15 of 60 Page ID #:2638

1

SEVENTH AFFIRMATIVE DEFENSE

2

(Laches)

3

The complaint is barred, in whole or in part, by the doctrine of laches.

4

EIGHTH AFFIRMATIVE DEFENSE

5

(Unclean Hands)

6

The complaint is barred, in whole or in part, by the doctrine of unclean hands.

7

NINTH AFFIRMATIVE DEFENSE

8

(Waiver)

9

The complaint is barred, in whole or in part, by the doctrine of waiver.

10

TENTH AFFIRMATIVE DEFENSE

11

(First Amendment)

12

The complaint is barred, in whole or in part, because application of the

13

Copyright Act to impose liability in this case would violate the First Amendment to

14

the United States Constitution.

15

ELEVENTH AFFIRMATIVE DEFENSE

16

(Copyright Abandonment)

17

The complaint is barred, in whole or in part, to the extent any Plaintiffs have

18

forfeited or abandoned copyright or failed to comply with all necessary formalities.

19

TWELFTH AFFIRMATIVE DEFENSE

20

(Innocent Infringers)

21
22

The complaint is barred, in whole or in part, to the extent any persons, based on
whose behavior seek to hold VidAngel liable, are innocent infringers.

23

THIRTEENTH AFFIRMATIVE DEFENSE

24

(Supervening Events)

25

The complaint is barred, in whole or in part, because any alleged injury or loss

26

sustained by Plaintiffs was caused by intervening or supervening events over which

27

VidAngel had and has no control.

28

ER304

FOURTEENTH AFFIRMATIVE DEFENSE
-14AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 16 of 60 Page ID #:2639

1

(Responsibility of Third Parties)

2

The complaint is barred, in whole or in part, because any alleged injury or loss

3

sustained by Plaintiffs was the fault and responsibility of third parties over whom

4

VidAngel had and has no control, and for whose actions VidAngel had and has no

5

responsibility.

6

FIFTEENTH AFFIRMATIVE DEFENSE

7

(Express or Implied License)

8
9

The complaint is barred, in whole or in part, because Plaintiffs have granted an
express or implied license in their copyrighted works to VidAngel.

10

SIXTEENTH AFFIRMATIVE DEFENSE

11

(First Sale Doctrine)

12

The complaint is barred, in whole or in part, by the first sale doctrine.

13

SEVENTEENTH AFFIRMATIVE DEFENSE

14

(Copyright Misuse)

15

The complaint is barred, in whole or in part, by the copyright misuse doctrine.

16
17

ADDITIONAL AFFIRMATIVE DEFENSE

18

(Subsequently Discovered Defense)

19

VidAngel has insufficient knowledge or information upon which to form a

20

belief as to whether it may have additional affirmative defenses, and reserves the

21

right to assert additional defenses if and as it learns of facts that may support such

22

defenses.

23

WHEREFORE, VidAngel prays for relief as follows:

24

1.

That the complaint be dismissed, with prejudice and in its entirety;

25

2.

That Plaintiffs take nothing by this action and that judgment be entered

26

against Plaintiffs and in favor of VidAngel;

27

3.

That VidAngel be awarded its costs incurred in defending this action;

28

ER305

-15AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 17 of 60 Page ID #:2640

1
2

4.

That VidAngel be granted such other and further relief as the Court may

deem just and proper.

3

PRAYER

4

WHEREFORE, VidAngel prays for a judgment as follows:

5

1.

That Plaintiffs take nothing by the complaint;

6

2.

That no preliminary or permanent injunctions be entered against

7

VidAngel.

8

3.

That the complaint be dismissed with prejudice;

9

4.

That VidAngel recover its costs of suit incurred herein, including

10

reasonable attorneys’ fees; and

11
12

5.

That VidAngel be awarded any other and further relief as the Court may

deem just and proper.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER306

-16AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 18 of 60 Page ID #:2641

1

VIDANGEL’S FIRST AMENDED COUNTERCLAIMS

2

For its Amended Counterclaims against Plaintiffs Disney Enterprises, Inc.,

3

Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, and Warner Bros.

4

Entertainment, Inc.’s (collectively “Counterclaim-Defendants”), VidAngel avers as

5

follows:

6

THE PARTIES

7

1.

Counterclaimant VidAngel, Inc. is a corporation duly incorporated under

8

the laws of the State of Delaware with its principal place of business in Provo, Utah.

9

VidAngel is the leading entertainment platform empowering users to filter movies

10

and television shows as expressly authorized by Congress. Using VidAngel’s

11

proprietary technology, consumers view content they own in a customized experience

12

that offers the greatest degree of personal choice in the entertainment marketplace –

13

all as expressly authorized by Congress in the Family Home Movie Act of 2005, as

14

explained more fully below.

15
16

2.

Counterclaim-Defendant Disney Enterprises, Inc. (“Disney”) is a

Delaware corporation with its principal place of business in Burbank, California.

17

3.

Counterclaim-Defendant Lucasfilm Ltd., LLC (“Lucasfilm”) is a limited

18

liability company organized under the laws of the State of California with its

19

principal place of business in San Francisco, California. Lucasfilm is a wholly-

20

owned subsidiary of Disney.

21

4.

Counterclaim-Defendant Twentieth Century Fox Film Corporation

22

(“Fox”) is a Delaware corporation with its principal place of business in Los Angeles,

23

California.

24

5.

Counterclaim-Defendant Warner Bros. Entertainment Inc. (“Warner

25

Bros.”) is a Delaware corporation with its principal place of business in Burbank,

26

California.

27
28

6.

VidAngel does not presently know the true names and capacities of the

Counterclaim-Defendants sued herein as DOES 1 through 100 and therefore is suing
-17-

ER307

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 19 of 60 Page ID #:2642

1

those Counterclaim-Defendants by fictitious names pursuant to Federal Rule of Civil

2

Procedure 19. VidAngel will amend its Counterclaims to allege the true identities of

3

DOES 1 through 100 once they are ascertained. VidAngel is informed and believes

4

each of the Counterclaim-Defendants sued as DOES 1 through 100 is in some manner

5

responsible for the occurrences, injuries and other damages alleged in these

6

Counterclaims.

7

JURISDICTION AND VENUE

8
9
10

7.

This Court has original and exclusive jurisdiction over these Amended

Counterclaims pursuant to 28 U.S.C. §§ 1331, 1337(a), 1338, 2201 and 15 U.S.C. §§
1, 15, 26.

11

8.

Venue is proper in this District pursuant to 15 U.S.C. §§ 22 and 28

12

U.S.C. §§ 1391(b) and 1400(a). Many of the unlawful acts alleged herein were

13

performed and occurred in material part within this District.

14

SUMMARY OF COUNTERCLAIMS

15

9.

There exists a demand for a service which allows parents to filter motion

16

pictures and television content to eliminate objectionable material, such as violence,

17

sex and profanity. In response to that demand, Congress enacted the Family Home

18

Movie Act (“FMA”) to allow filtering without violating legitimate copyright

19

protection. Counterclaimant VidAngel founded its business on providing such

20

filtering services consistent with the FMA. Contrary to the spirit and purpose of the

21

FMA, Counterclaim-Defendants have each executed an agreement with the Directors

22

Guild of America (“DGA”) which the industry understands as prohibiting the

23

filtering of motion picture and television content except in very limited

24

circumstances. Counterclaim-Defendants, and their unnamed studio co-conspirators,

25

have relied on this agreement to justify their anticompetitive conduct designed to

26

prevent VidAngel from fulfilling its mission to filter such content. When entering

27

into this agreement with the DGA, each Counterclaim-Defendant knew that every

28

other studio (i.e., each of its competitors) would be asked to and required to sign a
-18-

ER308

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 20 of 60 Page ID #:2643

1

similar agreement; in fact, Counterclaim-Defendants insisted that they do so to insure

2

that no entity would secure a competitive advantage. In furtherance of the

3

combination to eliminate filtering—and contrary to their own economic self-

4

interest—Counterclaim-Defendants then refused to enter into licensing agreements to

5

allow VidAngel to stream and filter content, rejected VidAngel’s offers to buy

6

enormous quantities of DVDs from Counterclaim-Defendants, and interfered with

7

YouTube and Google Play’s efforts to expand VidAngel’s platform, viability and

8

customer base. In fact, Counterclaim-Defendants and their unnamed co-conspirators

9

have deliberately and repeatedly thwarted the efforts of VidAngel, and other filtering

10

services, at every turn. In so doing, Counterclaim-Defendants have frustrated the will

11

of Congress, effectively eviscerated the ability of parents to shield their children from

12

objectionable material, and seriously diminished VidAngel’s ability to function in the

13

market. Moreover, having forced VidAngel to an awkward and cumbersome method

14

of operation, as described more fully herein, Counterclaim-Defendants have now

15

conjured up a copyright infringement claim against VidAngel. These Amended

16

Counterclaims, based on the Sherman and Clayton Antitrust Acts, seek damages for,

17

and injunctive relief against, the unlawful collusive acts described herein.

18

FACTUAL ALLEGATIONS

19

The Family Movie Act of 2005

20

10.

Many parents struggle to find ways to shield their children and others

21

within their homes from viewing or listening to violence, sex, profanity and other

22

content they find objectionable in television programs and motion pictures. There is

23

great demand for services that allow them to filter out these objectionable elements.

24

A recent survey conducted for VidAngel found that approximately 47% of parents

25

want online filtering services. Unsurprisingly, many are not sufficiently technology-

26

savvy to filter content on their own; instead, they must and do rely on third-party

27

services, including but not limited to VidAngel.

28

ER309

11.

In response to the demand from parents and other consumers to control
-19AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 21 of 60 Page ID #:2644

1

the content they view in the privacy of their homes, Congress enacted the Family

2

Home Movie Act of 2005. The FMA, codified at 17 U.S.C. § 110(11), specifically

3

provides that it is not a violation of copyright to create or provide a “computer

4

program or other technology that enables” filtering “by or at the direction of a

5

member of a private household, of limited portions of audio or video content of a

6

motion picture, during a performance in or transmitted to that household for private

7

home viewing, from an authorized copy of the motion picture.” As used in the FMA,

8

“motion picture” is defined to include television programs. The FMA immunized

9

from copyright infringement and expressly authorizes: (1) a third party to create a

10

computer program or other technology; (2) that enables a member of a private

11

household to make imperceptible limited portions of an authorized copy of a motion

12

picture’s audio or video content; (3) to transmit that technology or computer program

13

to a household at the direction of a member of a private household; and (4) if no fixed

14

copy of the altered version is created.

15
16

12.
follows:

17

The Committee strongly believes that, subject to certain conditions,
copyright and trademark law should not be used to limit a parent’s right
to control what their children watch in the privacy of their own home. A
dispute involving this issue is currently being heard in the U.S. District
Court for the District of Colorado [Huntsman v. Soderbergh, No. Civ.
A02CV01662RPMMJW (D. Colo.)]. Testimony provided by the
Register [of Copyright] on June 17, 2004, makes clear that some parties
to the suit should not face liability for their current actions, while others
appear to be in violation of existing copyright law. The “Family Movie
Act” clarifies the liability, if any, for the companies that are a party to
this case and to other companies not a party to this case that may be
interested in providing such services in the future.

18
19
20
21
22
23
24

The legislative history of the FMA describes the origin of the FMA as

H.R. Rep. 109-33 at 5.

25

13.

The FMA does not dictate what type of content families may make

26

imperceptible. The FMA was “drafted in a content-neutral manner so that its

27

operation and impact do not depend upon whether the content . . . made imperceptible

28

contains items that are often viewed as offensive, such as profanity, violence, or
-20-

ER310

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 22 of 60 Page ID #:2645

1

sexual acts. . . .The goal of the legislation [is] to give the viewer the ability to make

2

imperceptible limited portions of [a] work that he or she chooses not to see for

3

themselves or their family, whether or not the skipped content is viewed as

4

objectionable by most, many, few, or even one viewer.” Id. at 224.

5

14.

The Director’s Guild of America is an entertainment guild of some

6

16,000 motion picture and television directors and members of directorial teams in

7

the United States. The Motion Picture Association of America (“MPAA”) is a trade

8

organization that represents the major studios and “serves as the voice and advocate

9

of the American motion picture, home video and television industries.” Each

10

Counterclaim-Defendant, or its parent, is a member of the MPAA. Both the DGA

11

and MPAA vigorously opposed the FMA. Id. at 69.

12

15.

In drafting the FMA, Congress specifically considered whether the

13

public would benefit from having for-profit companies offer such filtering services.

14

Following subcommittee hearings, the House Copyright Committee (the

15

“Committee”) concluded that:

16

18

The for-profit nature of the entities providing services to the public that
the legislation addresses has no bearing on the operation of the immunity
from liability. The Committee is unable to discern a credible basis for
creating a distinction between the for-profit or non-profit nature of
companies that offer services covered by the Act.

19

Id. at 225. Thus, Congress understood that the content filtering permitted by the

20

FMA would likely be provided by for-profit companies.

17

21

16.

Likewise, federal courts have recognized that the FMA protects filtering

22

services from the studios’ infringement claims: “the effect of the Family Movie Act is

23

that Congress made a policy decision that those who provide the technology to enable

24

viewers to edit films for their private viewing should not be liable to the copyright

25

owners for infringing their copyright. . . .” Huntsman v. Soderbergh, No. Civ.

26

A02CV01662RPMMJW, 2005 WL 1993421 (D. Colo. 2005).

27

17.

VidAngel’s Counterclaims are brought to give the FMA efficacy and

28

ER311

-21AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 23 of 60 Page ID #:2646

1

defeat the collaborative efforts of the studios, and particularly the anticompetitive

2

actions taken by Counterclaim-Defendants and the DGA to prevent filtering and

3

thereby circumvent Congress’ intent and neuter the FMA.

4

The Studios’ Hostility Toward Filtering

5

18.

Unfortunately, due to the hostility of the major motion picture studios,

6

the commercial market for online filtering services has been slow to develop.

7

VidAngel is one of few companies that enable consumers to filter out violence,

8

profanity, nudity, sexual acts and other content in motion pictures and television

9

programs. In fact, VidAngel allows consumers to choose to filter any combination of

10

over 80 categories of content. All of the market participants, including VidAngel,

11

have had their growth stunted by the studios, including the Counterclaim-Defendants.

12

As a result, many – if not most – consumers have been unable to realize the promise

13

and benefits of the FMA.

14

19.

But for the conduct described herein, there would be a vibrant “filtering”

15

industry with numerous for-profit entities competing with VidAngel and others.

16

Counterclaim-Defendants, the DGA and/or the other major studios have sued nearly

17

every filtering company over the years. Nearly all of the targeted companies, which

18

operated with business models different than VidAngel’s, have since ceased

19

operations.

20

20.

The major motion picture studios, and the directors they employ,

21

historically have been hostile to any alterations made to a director’s final cut. They

22

have long argued that a director’s “moral right” should prohibit any alterations to the

23

director’s work. As members of Congress have noted in rejecting that contention,

24

such concern for artistic integrity does not extend to opportunities to sell product

25

placements in films, the use of test audiences to modify their works to make them

26

“more commercial,” and other “assaults” on artistic integrity.

27
28

21.

The studios and others opposing the FMA also argue that parents should

not allow children to watch a movie unless the parent approves the content of the
-22-

ER312

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 24 of 60 Page ID #:2647

1

entire movie. Congress also rejected that contention.

2

22.

In 2014, all major motion picture and television studios, including those

3

named as Counterclaim-Defendants herein as well as those not named, entered into a

4

written agreement with the DGA (the “DGA Agreement”). That agreement is

5

understood and implemented by the parties to prohibit the studios from entering into

6

distribution agreements that allow secondary editing or filtering of movies or

7

television programs, save for a few narrow exceptions.

8

23.

In particular, Section 7-509 of the DGA Agreement, entitled “Editing

9

Theatrical Motion Pictures,” prohibits any alteration to a motion picture, including

10

such nuances as the “placement of or changes in commercial breaks,” without the

11

involvement, consultation or final approval of the director. These provisions of the

12

DGA Agreement, standing alone, are an unreasonable restraint on trade in violation

13

of Section 1 of the Sherman Act.

14

24.

Section 7-509 of the DGA Agreement has been understood and enforced

15

by the studios as prohibiting all filtering. For example, when VidAngel approached

16

the studios to obtain licensing to stream filtered movies, non-party Lionsgate

17

Entertainment, Inc., (“Lionsgate”) advised VidAngel that it could not enter into such

18

an agreement with VidAngel unless VidAngel got permission from the DGA first. In

19

2014, VidAngel approached non-party Google Inc. (“Google”) to discuss the

20

possibility of streaming filtered content through Google Play. As detailed below, the

21

negotiations ended when Mark Fleming, a Google representative, informed VidAngel

22

on December 14, 2015 that Google was concerned a “blocker” to the deal was that

23

the “directors won’t let this happen” and that even if the studios were interested,

24

“their existing deals with the production companies/directors/etc. may not allow for it

25

. . . and therefore those [contracts] will need to get renegotiated first. . .” Conversely,

26

a local distributor in Utah, who started negotiations in May 2016, agreed to a

27

licensing deal with VidAngel because it is not a signatory to the DGA Agreement and

28

can permit filtering of content.

ER313

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1

25.

Each Counterclaim-Defendant and each non-defendant studio

2

voluntarily signed the DGA Agreement knowing full well that every other studio

3

would be asked to and would sign the same agreement so that all studios agreed there

4

would be no filtering of motion pictures save for in a few narrow and well-defined

5

exceptions (i.e. in-flight entertainment). Indeed, to avoid any studio(s) getting a

6

competitive advantage, each studio sought and received DGA assurance that all

7

studios would be required to and would sign the same agreement. Accordingly, the

8

studios have each agreed with the DGA and further have agreed with every other

9

studio that each would abide by the industry agreement not to filter.

10

26.

On July 1, 2014, over 150 studios, production companies and other

11

entities, including Counterclaim-Defendants and/or their parents and subsidiaries,

12

signed the DGA Agreement.

13

27.

The studios entered the DGA Agreement as part of a concerted effort to

14

prohibit the lawful provision of online filtering services pursuant to the FMA. The

15

studios were, or should have been, aware that the DGA Agreement could and would

16

be used in an anticompetitive manner, as alleged above, to restrict or extinguish the

17

market for online filtering services within the United States and this is exactly what

18

they contemplated and have accomplished.

19

28.

Moreover, and perhaps more importantly, the studios license film

20

content only on the express written condition that the licensee not filter. In

21

furtherance of the studios’ concerted effort to prohibit lawful provision of online

22

filtering services, the studios, including Counterclaim-Defendants, have entered into

23

anticompetitive agreements with the major digital content distributors which include

24

standard terms and conditions that restrict content editing and filtering of any kind

25

without their prior written consent. At least one of those agreements, involving non-

26

parties Google and Sony Pictures Entertainment (“Sony”), included the following

27

language:

28

ER314

-24AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 26 of 60 Page ID #:2649

CUTTING, EDITING AND INTERRUPTION. Licensee [Google]
shall not make, or authorize any others to make, any modifications,
deletions, cuts, alterations or additions in or to any Included Program
without the prior written consent of Licensor [Sony]. For the avoidance
of doubt, no panning and scanning, time compression or similar
modifications shall be permitted, provided, however, Licensee may
make reasonable adjustments to size, color, brightness, contrast, etc. of
any of the Included Programs as necessary to preserve the integrity of
the original picture of the Copy as delivered by Licensor to Licensee.
Without limiting the foregoing, Licensee shall not delete the copyright
notice or credits from the main or end title of any Included Program or
from any other materials supplied by Licensor hereunder.
No
exhibitions of any Included Program hereunder shall be interrupted for
intermission, commercials or any other similar commercial
announcements of any kind. Notwithstanding the foregoing, Licensee
shall be entitled to insert a promotional card displaying Licensee’s logo
or brand name prior to the Included Program provided that such
promotional card runs for no longer than 3 seconds.

1
2
3
4
5
6
7
8
9
10
11
12
13
14

29.

Likewise, when the studios, including Counterclaim-Defendants, sign a

deal for the rights to a specific movie title, the studios are required to include the
following language in all of their agreements. For example, in Sony’s agreement for
the movies Fury and American Hustle, the following language binds Sony:

16

[Sony] shall have the right...to make any and all changes and
modifications in the Picture; provided, [Sony] shall comply with any
contractual right of first opportunity to make such changes granted to
Director.

17

30.

15

This language (or requirements just like it) ultimately trickles down

18

through all agreements and purports to hand the authority to make any changes back

19

to the director. Indeed, all of Counterclaim-Defendants’ agreements with major

20

digital content distributors contain similar standard terms and conditions which

21

restrict content filtering of any kind without the studios’ prior consent.

22

Counterclaim-Defendants are, or should have been, aware that such agreements are

23

anticompetitive.

24

31.

To avoid any studio having a competitive advantage, it is reasonable and

25

plausible to infer that each of the studios has entered agreements with the major

26

content distributors that contain terms and conditions similar to those mentioned

27

above, extending the restrictions on editing and filtering found in the DGA

28

Agreement to the major content distributors. This network of vertical DGA-studio
-25-

ER315

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 27 of 60 Page ID #:2650

1

agreements operates to substantially restrict, if not eliminate, competition and

2

therefore violates the antitrust laws.

3

32.

During congressional deliberations over the FMA, the House Copyright

4

Committee acknowledged that it was “aware of concerns regarding the legislation’s

5

impact upon moral rights, particularly those of movie directors.” While preserving

6

the directors’ right to control the editing of content in the public sphere, the

7

Committee granted individual viewers the right to filter content for viewing within

8

the privacy of their homes, with the assistance of remote technology offered by for-

9

profit companies. It wrote:

10

The Committee had hoped to receive testimony from a representative of
the director’s community on this issue [of moral rights] at one of the
Committee hearings on the issue, but no director was willing to testify.
The Committee is aware of numerous motion pictures being edited for
screen size, content, and time purposes with or without the director’s
consent so that a motion picture can be displayed on the 48-3 aspect
ratios of standard definition televisions, on an airplane with
objectionable language removed, and on television channels in the
traditional 90 or 120 minute time slots. The Committee sees no
difference between the impact upon the moral rights of directors of such
modifications and someone wanting to prevent certain content from
being displayed on their television.

11
12
13
14
15
16
17

H.R. Rep. 109-33 at 225. Thus, Congress fairly protected the directors and studios

18

from the threat of public censorship, while simultaneously granting individuals the

19

right to customize content in a private setting.

20

33.

The Committee weighed the studios’ objection to filtering content and

21

determined that neither copyright nor trademark law should be used to limit a

22

parent’s right to control what his or her family watches in private. Accordingly, for-

23

profit companies and private individuals have the right to filter motion pictures in

24

accordance with the FMA, notwithstanding the hostility of the motion picture

25

industry to this type of alteration of their content.

26

The United States Market for Online Filtering of

27

Film and Television Content

28

ER316

34.

When the FMA was enacted in 2005, physical media was king in the
-26AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 28 of 60 Page ID #:2651

1

home entertainment world. DVDs were by far the most popular video format for

2

Americans. According to the Digital Entertainment Group (the “DEG”), in 2006

3

Americans spent $22.8 billion on DVD sales and rentals, representing 99% of home

4

entertainment spending. DEG Year-End 2006 Home Entertainment Sales Update,

5

The Digital Entm’t Grp. (Jan. 8, 2007), http://degonline.org/wp-

6

content/uploads/2014/02/f_4Q06.pdf. At that time, most households had DVD

7

players and almost every desktop or laptop computer had a DVD drive.

8

35.

Today, the home entertainment landscape is dramatically different.

9

Sales of DVDs and Blu-ray discs have steadily declined in recent years. In 2014, the

10

DEG reported that for the first time, Americans spent more on digital video providers

11

than physical discs.

12

36.

Americans are also using new methods to view video content, as

13

consumers shift from physical discs to digital content that may be viewed on a

14

number of different devices. In 2015, the Pew Research Center reported that 68% of

15

American adults owned smartphones and 45% owned tablet computers.

16

Unsurprisingly, it has become increasingly difficult to purchase laptops with DVD

17

drives, as consumers demand lightweight portable devices and as digital delivery of

18

content becomes more feasible and prevalent.

19

37.

As a result, there is a nationwide demand for online filtering services

20

that transmit filtered content over the internet, at the direction of heads of household,

21

to personal computers and other devices, including mobile applications, smart phones

22

and remote streaming devices. The market for filtered movies is, according to

23

National Research Group, 56 million people. Improvements in internet access and

24

speed have enabled viewers to unplug and rely heavily on streaming as a main source

25

of video consumption. From 2010 to 2015, the increasing prevalence of

26

smartphones, tablets and other internet-connected devices has mirrored and largely

27

been driven by the increased effectiveness and reliability of streaming video. Many

28

Americans rely upon these devices to watch their media content. Thus, the demand
-27-

ER317

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 29 of 60 Page ID #:2652

1

for movies and television programs available for online remote filtering is larger

2

today than ever.

3

38.

Counterclaim-Defendant Disney recognizes the need and demand for

4

online filtering services to control the content of what is available to children in

5

particular. Disney owns and markets a device called “Circle” which, according to its

6

website (https://meetcircle.com/circle/filter/) allows parents to set and customize

7

filters to ensure their children are not exposed to unwanted content on the internet,

8

social media or streaming television services.

9

VidAngel’s Three Early Business Models and

10

Counterclaim-Defendants’ Anticompetitive Conduct

11

39.

To address the substantial demand for online filtering, VidAngel was

12

formed in October 2013 to provide customers the ability to control the content they

13

view at home. Using innovative and proprietary software, VidAngel created a

14

catalog of videos that could be filtered by users. Once a video is selected, a user can

15

choose from over 80 categories of filters, including sex, violence and profanity, to

16

mute or skip portions of the audio or video to permit a family-friendly viewing

17

experience.

18

40.

Method 1: Traditional Streaming License. VidAngel solicited each of

19

the studios for a traditional streaming license, inducing the Counterclaim-Defendant

20

studios, but each and every studio declined. This unanimity could not exist in a

21

competitive environment and the unanimous and consistent declination to license

22

streaming content evidences and supports the inference that the studios have agreed

23

to “kill off” filtering.

24

41.

Method 2: Buying discs straight from the studios. VidAngel requested

25

to buy DVDs and Blu-rays from the studios directly, thus funneling revenue straight

26

to the studios without any profits siphoned off by an intermediate retailer, such as

27

Walmart. Further evidencing collusion and acting contrary to their best business

28

interests, each studio declined or ignored these requests.
-28-

ER318

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 30 of 60 Page ID #:2653

1

42.

Method 3: Streaming through YouTube and Chromecast. Because the

2

studios refused to grant it a traditional streaming license and would not otherwise sell

3

physical DVDs to it, VidAngel developed a website to allow customers to filter

4

movies and videos available on YouTube and the Google Play Hollywood library.3

5

In 2012, Google launched Google Play to provide movies, TV shows, music and

6

books to Google and Android users. Importantly, the movies on Google Play were

7

delivered using YouTube’s infrastructure, meaning that every movie and show

8

available on Google Play was also available for purchase and/or rent on YouTube.

9

This was important because YouTube ran in a user’s web browser using a type of

10

software (called a Javascript API) that made it possible for VidAngel to manipulate

11

the playback of ordinary (but not high-definition) video and audio on a user’s desktop

12

computer. One limitation of this method was that without the official collaboration of

13

Google, the Javascript API would not work on Google Play apps, mobile devices,

14

Roku and other mobile platforms. At that time, though, Google supported the

15

technical capabilities for VidAngel to deliver a filtered HD movie to a family’s TV.

16

43.

For some time, customers also could use VidAngel’s Chrome extension

17

(an additional piece of software that can be loaded into a user’s Google Chrome web

18

browser) and VidAngel.com to stream filtered movies that appeared on YouTube to

19

their computers. They could also use a Chromecast (a small piece of hardware that

20

plugs into newer HDTVs) to stream HD filtered movies to their HDTVs.

21

44.

From approximately November 2013 to February 3, 2014, while

22

Chromecast was undergoing its own private beta test, VidAngel was able to access

23

technical features within the Chromecast private beta that allowed VidAngel to filter

24

high-definition titles available on Google Play to a user’s HDTV. During this time,

25
26
27

3

At all relevant times, Google Play’s Hollywood library was made available on
YouTube (although Hollywood movies were only available on YouTube in standard
definition format). Google was and is the owner of YouTube.

28

ER319

-29AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1

VidAngel reached out to Google to ask whether VidAngel could purchase

2

Chromecast devices at wholesale and then sell them to families who wanted to use

3

VidAngel’s filtering services. Google responded that it would consider a bulk

4

purchase agreement only after VidAngel successfully launched a public beta of its

5

Software Development Kit on February 3, 2014.

6

45.

Once Chromecast launched on February 3, 2014, however, VidAngel

7

discovered that Google had removed the technology that made the filtering service

8

possible on native Chromecast. Google did not notify VidAngel or publicly

9

announce the removal of its technology. As a result of these abrupt changes,

10

VidAngel no longer had any support for its high-definition product on Chromecast

11

and lost the time, resources and energy that had gone into developing VidAngel’s

12

technology for use of this platform.

13

46.

Counterclaim-Defendants, and the studios acting collectively, induced

14

and persuaded Google to terminate all technical support offered to VidAngel for its

15

Chromecast application for filtering HD content by contending that such support

16

violated the studios’ contracts with Google. Google stood to profit from VidAngel’s

17

purchase, promotion and distribution of the Chromecast device and offered no

18

justification, business or otherwise, for suddenly eliminating the technical features

19

that allowed VidAngel’s services to function with Chromecast.

20

47.

The studios also induced and persuaded other major digital content

21

distributors (e.g., Google Play, Netflix, Amazon, and Hulu) to refuse to support

22

VidAngel’s online filtering service. On or about December 5, 2013, VidAngel

23

received a notice from YouTube’s legal department averring that VidAngel was

24

breaking its terms of use because the VidAngel application was designed to “modify

25

the audio or visual components of . . . content.” YouTube took the position that

26

VidAngel’s content filtering, even as authorized by the FMA, violated YouTube’s

27

terms of use.

28

ER320

48.

Shortly after VidAngel filed its original Counterclaims, Google changed
-30AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1

its terms of use and/or protocol on YouTube to introduce more restrictive terms

2

which make YouTube less practicable and useable for filtering.

3

49.

Counterclaim-Defendants combined with one another (and others) to

4

unlawfully pressure Google to withhold its Chromecast and YouTube support

5

services from VidAngel. Counterclaim-Defendants did so, at least in part, in

6

furtherance of a conspiracy to prevent filtered streaming of their works.

7

Google Play Sought to Partner with VidAngel Then Abruptly Terminates

8

Negotiations After Interference from the Studios

9

50.

The studios again pressured Google to withdraw support of VidAngel in

10

late 2014 and early 2015. In November 2014, a Google Play representative Mark

11

Fleming (who was a customer of VidAngel and a fan of the product) reached out to

12

VidAngel and expressed interest in a partnership between Google and VidAngel to

13

allow consumers to use VidAngel’s filtering technology directly on Google Play’s4

14

various platforms. On or about December 12, 2014, VidAngel’s CEO met with Mr.

15

Fleming and other Google representatives to discuss the viability of VidAngel’s

16

filters on Google Play’s various streaming platforms. Google Play’s representatives

17

informed VidAngel that Google was interested in this partnership, but Google Play

18

was concerned that their licensing agreements with the studios prohibited secondary

19

editing of any kind, which could interfere with an otherwise positive business

20

relationship.

21

51.

Mr. Fleming and VidAngel’s CEO exchanged several emails after the

22

meeting and continued negotiations until March 2015. On December 14, 2014, Mr.

23

Fleming expressed concern in an email to VidAngel’s CEO that the studios’

24
25
26
27

4

Google Play is Google’s official store for digital content distribution. It can be
accessed through web browsers, smartphones and various other modern devices.
Google Play sells and rents movie and television content pursuant to license
agreements with the movie and television studios.

28

ER321

-31AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1

agreements with the directors prohibited filtering, and in order to comply with the

2

terms of these agreements, Google would need to get approval from the director of

3

each and every movie VidAngel wanted to filter, or alternatively, wait until a “painful

4

cascade” of renegotiations occurred between each studio and the DGA and/or each

5

studio and each director.

6

52.

In March 2015, Mr. Fleming met with executives from non-party Sony

7

to discuss the opportunity to use VidAngel’s online filtering service on Google Play’s

8

platforms. Mr. Fleming insisted that none of the negotiations with VidAngel and

9

Sony be in writing. After meeting with Sony, Mr. Fleming informed VidAngel’s

10

CEO that Sony and the rest of the MPAA member studios refused to allow Google to

11

partner with VidAngel. After March 2015, Google Play ceased all negotiations of a

12

partnership with VidAngel.

13

53.

Google has an extensive library of movies and television shows

14

available for purchase or rent on Google Play. Google Play’s “Movies & TV”

15

website has a section dedicated to motion pictures produced by major studios. In this

16

section, it promotes, sells and rents motion pictures from Counterclaim-Defendants

17

Warner Bros., Disney and Fox, among others. Google depends on the studios to

18

supply content for this library.

19

54.

In the absence of the DGA Agreement and in a competitive market, at

20

least one or more the studios, including Counterclaim-Defendants, would agree to a

21

streaming license with VidAngel to provide filtering services because such an

22

agreement would be profitable for the studios. Nonetheless, as a result of the studios’

23

collective agreement, the market for online remote filtering has been “killed off” and

24

is virtually non-existent – despite being protected by the FMA. VidAngel is the only

25

significant company in the United States that presently provides online filtering

26

services for high-definition motion pictures and television shows over the internet,

27

whether the consumer is using a laptop, smart phone, tablet or other device capable of

28

streaming video. Counterclaim-Defendants have frustrated the will of Congress and
-32-

ER322

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 34 of 60 Page ID #:2657

1

the American people as expressed by the adoption of the FMA.

2

VidAngel Launches Its Current Business Model

3

55.

Contrary to Plaintiffs’ allegations (Complaint ¶ 47), prior to VidAngel

4

developing its current model, there was no effective way to deliver filtered content

5

pursuant to the FMA to the overwhelming majority of viewers without the

6

cooperation of Google and other content distributors. By 2014, the traditional ways

7

of filtering movies were no longer available to the overwhelming majority of

8

consumers.

9

56.

Alternatives to VidAngel’s current model are cumbersome, expensive

10

and often ineffective. ClearPlay, for example, offers a DVD filtering experience

11

which requires the purchase and installation of a $249.99 DVD-player in addition to

12

an $8/month subscription fee. Consumers must acquire a DVD on their own,

13

purchase and install the additional equipment, subscribe to the service, place the

14

physical DVD in the player, and download filters just to view a filtered title. At

15

times, differences between the content a consumer purchased (e.g., a director’s cut

16

with bonus footage additions or a separate edition of the film) and the content upon

17

which the ClearPlay filters are based cause ClearPlay’s filters to fail.

18

57.

Even VidAngel’s pioneering filtering software, which functioned on top

19

of Google Play streaming content, was fraught with problems. That software worked

20

only with standard definition content, not the popular high-definition format. More

21

importantly, as noted above, Google Play began to prevent VidAngel’s software from

22

functioning properly on the Chromecast. Because VidAngel’s software was not

23

officially supported by Google, changes to YouTube caused the filters to fail. When

24

that happened, users would see content that they did not want to see until VidAngel

25

updated its software. Those experiences damaged VidAngel’s credibility. Finally,

26

slower computers could not process both the video and the filter at the same time,

27

resulting in missed profanity or nudity filters. The end result was that – without

28

Google’s technical support and cooperation – no method enabled a consistent
-33-

ER323

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 35 of 60 Page ID #:2658

1

filtering experience for the majority of VidAngel users and no method would provide

2

a high-definition filtering experience for any VidAngel users.

3

58.

Unable to use Google Play and YouTube’s platform due to

4

Counterclaim-Defendants’ opposition to VidAngel’s online filtering service,

5

VidAngel built its current proprietary platform, and developed software and other

6

technology to enable private persons to engage lawfully in personal movie filtering as

7

contemplated and expressly authorized by the FMA. Its technology allows the

8

owners of digital video discs or Blu-ray discs (collectively referred to as “DVDs”) to

9

filter objectionable content.

10

59.

At present, VidAngel has more than 2,500 movies and television

11

episodes currently available for purchase in its library. VidAngel has lawfully

12

purchased and owns physical copies of each of these titles in DVD format before

13

selling the DVDs to VidAngel customers. VidAngel spends one-third of all capital

14

raised just to purchase those DVDs lawfully. VidAngel acquires numerous DVDs for

15

each of its titles from various public and private sellers. Plaintiffs falsely allege that

16

they receive no payment from VidAngel as a result of its service (Complaint ¶¶ 49-

17

50), Plaintiffs in truth receive the same payment for each of these first sales to

18

VidAngel as they would receive from any lawful first purchaser.

19

60.

Following its purchase from VidAngel’s suppliers, VidAngel enters each

20

DVD it has purchased into an inventory management application database and

21

assigns a unique barcode to each physical disc case. When a consumer purchases a

22

DVD, that particular DVD is held in VidAngel’s vault for the customer and VidAngel

23

records the purchase by assigning the unique barcode for the DVD to its owner. Only

24

a customer who owns a DVD in the vault may access the title for filtering. The vault

25

is locked and under 24-hour surveillance using multiple video cameras.

26
27

61.

VidAngel’s trained personnel and contractors carefully review all titles

available for resale for potentially objectionable content. VidAngel has developed

28

ER324

-34AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 36 of 60 Page ID #:2659

1

more than 80 codes or tags for different kinds of content that a viewer might prefer

2

not to hear or see.

3

62.

Using VidAngel’s proprietary tagging application, customers are able to

4

select their own filtering options and stream content they own to their personal

5

devices. Users are shown a listing of the various types of potentially objectionable

6

content identified in the purchased work, as well as the number of occurrences of

7

each such type of content within the work. The user then selects the types of content

8

he or she wishes to have silenced or deleted. The user has access to set any

9

combination of filters in the following categories: profanity, sex/nudity/immodesty,

10

violence, drug/alcohol use, and objectionable/disturbing. The user’s unique selection

11

of filters creates a custom filter. Filters may be modified before and during the

12

viewing process and are saved to the user’s unique customer ID.

13

63.

Before watching a particular movie or television episode, a customer

14

must purchase a physical DVD containing the complete, unaltered version of the title

15

from VidAngel. Every DVD available for purchase by a customer was first lawfully

16

acquired by VidAngel as described above. VidAngel typically maintains the physical

17

DVD on behalf of the purchasers, but purchasers may request that the DVD be sent to

18

them or retrieve the DVD from VidAngel’s offices. VidAngel will not provide its

19

filtering service, however, if the DVD is not in its or the customer’s possession. That

20

requirement ensures that the one-to-one correspondence between the disc and the user

21

is maintained.

22

64.

Users are able to access the contents of their DVDs only by owning

23

them. The purchase price for each DVD is $20. To purchase a disc, users must log-

24

on to the VidAngel website. First-time users are required to provide an email address

25

to establish a unique user ID and create a password. Upon providing this

26

information, users have the ability to access the current inventory of disks available to

27

purchase.

28

ER325

-35AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 37 of 60 Page ID #:2660

1

65.

Once a purchase transaction has occurred, the disc is removed from

2

available inventory and the title is transferred to that customer’s unique user ID.

3

After a customer purchases a physical DVD and selects his or her desired filters, the

4

user is permitted to play a filtered version of the work on one device screen at a time.

5

VidAngel filters the specific content identified by its customer to be screened as the

6

content is streamed to the customer but makes no permanent fixed copy of the work

7

as streamed. Neither VidAngel nor its users make any alteration to the underlying

8

work.

9

66.

A subscriber is able to view the stream instantaneously on any

10

VidAngel-supported device, including Roku, Apple TV, Smart TV, Amazon Fire TV,

11

Android, Chromecast, iPad/iPhone and desktop or laptop computers.

12

67.

VidAngel’s service relies on HTTP Live Streaming (“HLS”) encryption

13

to let customers enjoy video over HTTP for playback on devices running iOS,

14

including the iPhone, iPad, iPod Touch, Roku, Chromecast, and desktop and laptop

15

computers. VidAngel’s service utilizes the Advanced Encryption Standard (“AES”),

16

as well as other technologies, to seamlessly protect content from non-authorized

17

streaming, piracy, and redistribution by others, with no detectable difference to video

18

playback. VidAngel employs a one-screen policy for playback based on the user’s

19

account, IP address and other information.

20

68.

Once a user has viewed it, the user may re-sell a movie or television

21

program back to VidAngel for a partial credit of the $20 purchase price. The sell-

22

back price decreases $1 per night for standard definition (SD) purchases and $2 per

23

night for high-definition (HD) purchases. Once a user sells the movie back to

24

VidAngel, the user’s access is immediately terminated. If the user decides to sell the

25

disk back, the remaining balance is credited back to the user’s VidAngel account.

26

The credit can be used towards future purchases. For example: A $20 SD disk is

27

owned for 2 nights at $1 per night and sold back for $18 in sell-back credit. If a

28

VidAngel customer keeps a DVD for more than 20 days, he or she can now view it
-36-

ER326

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 38 of 60 Page ID #:2661

1

through the VidAngel platform in perpetuity or sell it back for $1 or $2 in credit. Or,

2

VidAngel will send the DVD to the customer upon request at any time.

3

69.

VidAngel has designed and engineered its filtering service to promote

4

compliance with copyright law and the FMA. For example, just as a physical DVD

5

could not be played simultaneously on multiple devices, VidAngel restricts a user’s

6

playback to one device at a time. VidAngel also streams a filtered work to just one of

7

a user’s registered devices at a time.

8

VidAngel Reached Out to Counterclaim-Defendants to Explain Its Service

9

70.

Before VidAngel made its new service available to the public at large,

10

VidAngel wrote to the general counsels of each of the Counterclaim-Defendants, as

11

well as other content owners, on July 23, 2015, with follow-up letters on August 21,

12

2015, introducing its business model and offering to meet with them to discuss the

13

distribution of their content for filtering under the FMA. Attached as Exhibits A and

14

B are true and correct copies of letters sent to Counterclaim-Defendants (or their

15

parents), in July and August of 2015. VidAngel had over 750 titles available when it

16

sent its letters to Counterclaim-Defendants asking for their input or offering to

17

discuss VidAngel’s business model.

18

71.

Unbeknownst to VidAngel at the time, Counterclaim-Defendant Disney

19

almost immediately accessed VidAngel’s service after receiving VidAngel’s first

20

letter. On August 6, 2015, a Disney employee signed up for a VidAngel account

21

using a non-descript Gmail account and providing payment information for the

22

Director of Antipiracy Operations at Disney. Between August 2015 and April 2016,

23

this Disney employee purchased and sold back 17 titles using VidAngel’s services.

24

Despite this apparent interest in VidAngel, Disney did not respond to VidAngel’s

25

offer to meet or discuss VidAngel’s business.

26

72.

Also in response to VidAngel’s letters and growing user base,

27

Counterclaim-Defendants, including Fox, sought guidance from the MPAA and each

28

other concerning VidAngel’s filtering services in or around July and August 2015. In
-37-

ER327

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 39 of 60 Page ID #:2662

1

fact, 59 employees of Counterclaim-Defendants, the MPAA, or other MPAA studios

2

exchanged 124 messages concerning VidAngel in August 2015 alone. During early

3

2016, Fox again discussed VidAngel’s services with the MPAA, and consulted with

4

co-Counterclaim-Defendants Disney and Warner Bros. on the issue. Although it was

5

seemingly interested and possibly concerned about VidAngel, Fox never met with

6

VidAngel to discuss VidAngel’s service or operations. In fact, although Fox and

7

Time Warner, Inc. (Warner Bros.’ parent) were the only Counterclaim-Defendants to

8

respond to VidAngel’s offer to meet, Fox failed to appear for two scheduled

9

appointments. Likewise, Time Warner cancelled a conference call at the last minute

10

and then failed to reschedule.

11

73.

Overall, Counterclaim-Defendants’ in-house counsel and outside counsel

12

discussed VidAngel over 1,300 times by email alone before finally filing suit. At no

13

point did any Counterclaim-Defendant send VidAngel a cease-and-desist letter, seek

14

an injunction or any other type of relief.

15

The Studios’ Choice to Enforce Their Anticompetitive Agreements

16

74.

Because unfiltered content falls outside the FMA, a service streaming

17

unfiltered content (i.e. Netflix) is required to negotiate and pay for a streaming

18

license with each studio. The studios generally charge $3.50 per title to allow third

19

party services to stream unfiltered content for 24 to 48 hours. After the third parties

20

add their own mark-up, consumers usually pay around $5.00 to watch new releases

21

through these streaming services.

22

75.

VidAngel has sought a streaming license from the studios, including

23

Counterclaim-Defendants. Because of the restrictive and exclusionary terms of the

24

DGA Agreement, the studios, including Counterclaim-Defendants, have refused to

25

grant VidAngel a streaming license that would permit filtering. As a result, under

26

VidAngel’s current business model, the studios profit from VidAngel’s initial

27

purchase of each DVD title, but not each time that title is re-sold and streamed to a

28

new customer. This allows VidAngel to offer consumers lower prices than unfiltered
-38-

ER328

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 40 of 60 Page ID #:2663

1

streaming services, typically $1.00-2.00 net cost per title.

2

76.

Not only are VidAngel’s prices lower, but its apps also are rated higher

3

by users than the leading distribution platforms endorsed by the studios. For

4

example, the VidAngel rating on Google Play is 4.8 stars whereas Netflix is 4.4 stars,

5

Hulu is 4.1 stars, and Disney Movies Anywhere is 3.9 stars. For all ratings on the

6

Apple App Store, VidAngel has 5 stars, Netflix has 3.5 stars, Hulu has 2 stars, and

7

Disney Movies Anywhere has 3.5 stars. On Roku, VidAngel has 4.5 stars, Netflix

8

has 3 stars, Hulu has 3.5 stars and Disney Movies Anywhere has 3.5 stars.

9

77.

About 96% of VidAngel’s purchases have come from users who chose

10

more than one filter. This filtered-only viewership adds to the studios’ bottom lines

11

because these purchases would not have occurred but for VidAngel and its filtering

12

services. Nonetheless, the studios have economic and other control motives to

13

subvert VidAngel’s business because VidAngel’s DVDs are re-sold and streamed to a

14

new customer an average of 16 times each in the first four weeks of the new release.

15

Because Counterclaim-Defendants have denied VidAngel a streaming license, they

16

do not receive a profit from each instance a title is re-sold and streamed like they

17

would from a service, such as Netflix, that has a streaming license. Although this

18

could be easily remedied by granting VidAngel a streaming license with a per use

19

charge, Counterclaim-Defendants have instead chosen to enforce their

20

anticompetitive agreements which prohibit filtering by denying VidAngel such a

21

license rather than confronting the DGA or changing the terms of their contracts with

22

the directors who produce their motion picture and television content.

23

78.

In addition to the studios’ economic and control motivations,

24

VidAngel’s success has also detracted from Counterclaim-Defendant Disney’s

25

reputation and brand as the longstanding guardian of children and family interests in

26

the industry.

27
28

79.

There are significant drawbacks to VidAngel’s current business model

because it does not have a streaming license. For example, VidAngel spends one-39-

ER329

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 41 of 60 Page ID #:2664

1

third of all capital raised on the purchase of DVDs and has high overhead costs

2

stemming from the maintenance of its secure vault. It also sustains losses when it

3

overstocks its inventory with a particular title that its customers ultimately do not

4

purchase, or is forced to send “out of stock” notices when its inventory on a

5

particularly popular title is too low. VidAngel sent over 250,000 out of stock notices

6

in August 2016 alone – meaning VidAngel turned away 250,000 potential purchases

7

it could have consummated if it had a standard streaming distribution agreement that

8

allowed for filtering. Despite its attempts to cooperate, collaborate and consult with

9

each studio, VidAngel has been forced into this inefficient business model by virtue

10

of their collective anticompetitive conduct.

11

FIRST COUNTERCLAIM FOR RELIEF

12

By VidAngel against All Counterclaim-Defendants

13

(Violation of Section 1 of the Sherman Act (15 U.S.C. § 1))

14
15

80.

VidAngel incorporates herein by reference each and every averment

contained in all preceding paragraphs.

16

Relevant Product/Service Market

17

81.

The relevant product/service market for antitrust purposes in this case is

18

the implementation of online remote filtering services for high-grossing motion

19

picture productions and high-rated television productions, including without

20

limitation, the implementation of filtering services for digital content applications

21

available on modern mobile devices, including smartphone and remote streaming

22

devices.

23

82.

There is extremely low cross-elasticity of demand and/or no reasonably

24

interchangeable substitutes for online remote filtering services. Over VidAngel’s

25

entire history, nearly 96% of VidAngel’s purchasers selected multiple filters,

26

demonstrating the fact that the version of the motion picture or television show

27

VidAngel streams is of a different character than the version available through other

28

ER330

-40AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 42 of 60 Page ID #:2665

1

non-filtering streaming services like Google Play, Amazon Video, VUDU and

2

iTunes.

3

Relevant Geographic Market

4

83.

The relevant geographic market for antitrust purposes in this case is the

5

entire United States which is the area of effective competition in which the parties

6

operate and to which customers can practically turn for online remote filtering

7

services.

8

Antitrust Standing

9

84.

VidAngel has the requisite standing to assert antitrust claims against

10

these Counterclaim-Defendants because VidAngel is a participant and competitor in

11

the relevant market and has suffered injury by reason of the unreasonable restraints

12

and concerted exclusionary conduct of the Counterclaim-Defendants.

13

Contracts and Combination to Unreasonably Restrain Competition

14

85.

Even without consideration or aggregation of their unnamed co-

15

conspirators, Counterclaim-Defendants represent nearly 57% percent of motion

16

picture revenue, and over a period of many decades, have established collective and

17

total control over motion picture, film and television productions in the U.S. – the

18

raw material needed to effectively compete in the relevant online remote filtering

19

services market. To date in 2016, each Counterclaim-Defendant enjoys the following

20

market shares based on overall gross revenue in the motion picture industry: Fox,

21

14.1%; Warner Bros., 16.5%; and Disney (through its subsidiary Buena Vista),

22

26.2%. The production and distribution of all motion pictures accounts for

23

approximately $11.5 billion dollars annually. Accordingly, Counterclaim-Defendants

24

collectively have market power because of their ability to exclude competition and/or

25

control prices or output in the filtering services market.

26

86.

Counterclaim-Defendants also have significant television-related

27

ventures. Warner Bros.’s television outlets produced more than 70 series in the 2015-

28

2016 season and comprise the largest television production company measured by
-41-

ER331

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 43 of 60 Page ID #:2666

1

revenue and library. Disney’s television portfolio includes the Disney Channel, ABC

2

Television Network, 50% ownership of A&E Network, and an 80% stake in ESPN.

3

Disney and Fox, among others, are co-owners of the streaming television service

4

Hulu. In addition to Hulu, Fox’s television ventures also include FOX News, Fox

5

Sports Networks, FOX Sports, FX, and National Geographic.

6

87.

As evidenced above, the motion picture and television production and

7

distribution markets are controlled by an oligopoly of entrenched and vertically-

8

integrated enterprises. As a result, there are high barriers to entry, including capital

9

and access to talent, which limit access to potential new entrants. Further,

10

Counterclaim-Defendants’ restrictions, threats and arrangements have created a

11

barrier that precludes effective entry by other competitors. As a result, the quality

12

and variety of offerings in the online remote filtering market have been reduced and

13

constrained.

14

88.

As set forth above, Counterclaim-Defendants and their unnamed co-

15

conspirators entered into one or more agreements that unreasonably restrained

16

interstate trade in violation of Section 1 of the Sherman Act and Section 4 of the

17

Clayton Act, 15 U.S.C. §§ 1, 15.

18

89.

Counterclaim-Defendants voluntarily entered into a written contract with

19

the DGA on July 1, 2014, as described above, in which they agreed to prohibit

20

secondary editing or filtering of motion pictures or television programs and which

21

prohibits Counterclaim-Defendants from entering into distribution agreements that

22

permit such filtering. These agreements impose vertical non-price restraints on

23

distributors, exhibitors, and other companies in the market for online remotefiltering

24

services of motion pictures and television shows and amount to a group boycott or

25

other concerted refusal to deal with VidAngel in violation of the antitrust laws.

26

90.

Counterclaim-Defendants have entered into licensing agreements with

27

Google Play and other digital content distributors. In furtherance of their

28

combination to restrain the market for online filtering services, Counterclaim-42-

ER332

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 44 of 60 Page ID #:2667

1

Defendants have inserted provisions into those license agreements which prohibit

2

these distributors from implementing filtering services for digital content applications

3

available on modern mobile devices, including smartphones and remote streaming

4

devices.

5

91.

In furtherance of their combination to restrain the market for online

6

filtering services, Counterclaim-Defendants placed pressure on Google Play to not

7

enter into a partnership with VidAngel and to deny VidAngel access to Google Play’s

8

services. Counterclaim-Defendants orchestrated this boycott of VidAngel to further

9

their own commercial profit, artificially raise prices, reduce output and force

10

VidAngel out of business.

11

92.

The actions complained of herein will continue to restrain and adversely

12

affect interstate commerce in that provision of filtering services crosses state lines.

13

Each Counterclaim-Defendant and VidAngel purchase a substantial volume of goods,

14

services, and supplies in interstate commerce which are, or are threatened to be,

15

adversely affected by the unlawful conduct alleged herein.

16

Antitrust Injury and Damage to VidAngel

17

93.

The anticompetitive scheme and plan of the Counterclaim-Defendants to

18

unreasonably restrain trade in the above-described trade and commerce has been done

19

with the intent to specifically eliminate online filtering of motion picture and

20

television productions as a viable industry.

21

94.

A copyright holder enjoys a “distribution right” and may initially sell, or

22

not sell, copies of a copyrighted work to others on such terms as he or she sees fit.

23

However, the copyright holder’s distribution right is limited to the first sale of the

24

copyrighted item. Under the “first sale” doctrine, codified at 17 U.S.C. § 109(a), “the

25

distribution right may be exercised solely with respect to the initial disposition of

26

copies of a work, not to prevent or restrict the resale or other further transfer of

27

possession of such copies.”

28

ER333

95.

Counterclaim-Defendants’ right to control distribution of a copy of a
-43AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 45 of 60 Page ID #:2668

1

copyrighted movie release ends once the copy has been sold. The distribution right

2

may not lawfully be exercised after the initial sale, “to prevent or restrict the resale or

3

further transfer of possession of such copies.”

4

96.

Counterclaim-Defendants’ attempts to prevent and restrict VidAngel

5

from offering its buy-sell-back service to customers constitute an attempt to

6

unlawfully restrict the resale of goods. Any such attempt is an illegal restraint of

7

trade.

8
9

97.

Counterclaim-Defendants’ collusive conduct and unlawful contracts

have produced antitrust injury, and unless enjoined by this Court, will continue to

10

produce at least the following actual and demonstrative anticompetitive, exclusionary

11

and injurious effects upon competition and consumers in interstate commerce:

12
13

(a)

substantially and reasonably restricted, lessened, foreclosed and eliminated;

14
15

competition and output in the relevant filtering market has been

(b)

barriers to entry into the relevant filtering market have been raised

which has prevented or delayed the entry of new filtering competitors;

16

(c)

consumer choice has been, and will continue to be, significantly

17

reduced, limited and constrained as to selection, price and quality of filtering services

18

in the United States;

19

(d)

consumer access to VidAngel’s competitive filtering services has

20

been artificially restricted and reduced and its filtering service offerings will continue

21

to be excluded from the market; and

22
23

(e)

the will of the people and of Congress in enacting the FMA has

been frustrated, subverted and thwarted.

24

98.

As a result of Counterclaim-Defendants’ concerted activity, VidAngel

25

was denied access to Google Play’s digital distribution service and therefore has

26

suffered antitrust injury. Counterclaim-Defendants’ conduct has had an

27

anticompetitive effect on the development of the market for online filtering services

28

for high-quality video content within the United States; in fact, their misconduct has
-44-

ER334

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 46 of 60 Page ID #:2669

1

substantially deprived and actually threatens to effectively extinguish that market.

2

99.

There are no business, technological or other efficiencies that require or

3

justify Counterclaim-Defendants’ imposition of such exclusionary and

4

anticompetitive conditions and restrictions.

5

100. By reason of, and as a direct and proximate result of the violations

6

alleged herein, Counterclaimant VidAngel has suffered and may continue to suffer

7

substantial financial injury in its business and property by Counterclaim-Defendants’

8

and unnamed co-conspirators continuing violations of the antitrust laws.

9

Counterclaim-Defendants’ unlawful conduct was calculated to eliminate

10

Counterclaimant as a viable competitor in the filtering market. Due to Counterclaim-

11

Defendants’ contract and combination, VidAngel lost substantial profits and profit

12

opportunities. Counterclaim-Defendants’ coordinated and focused anticompetitive

13

conduct has cumulatively, incrementally, and unreasonably restricted competition and

14

devastated VidAngel’s business. As a result, VidAngel has been deprived of

15

revenues and profits they would have otherwise made, suffered diminished market

16

growth and sustained a loss of goodwill and going concern value. Counterclaim-

17

Defendants’ conduct has decreased VidAngel’s business volume and substantially

18

diminished its business value.

19
20

101. VidAngel does not yet know the precise extent of its past damages and
when ascertained will ask leave of this Court to insert said sum herein.

21

SECOND COUNTERCLAIM FOR RELIEF

22

By VidAngel against All Counterclaim-Defendants

23

(Intentional Interference with

24

Prospective Economic Advantage)

25

102. VidAngel incorporates herein by reference each and every averment

26

contained in all preceding paragraphs.

27
28

103. This Court has jurisdiction over this Second Counterclaim for Relief
based on the doctrine of supplemental jurisdiction (28 U.S.C. § 1367) because this
-45-

ER335

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 47 of 60 Page ID #:2670

1

Counterclaim for Relief arises from the same transactions and from a common

2

nucleus of operative facts as alleged in the federal causes of action.

3

104. VidAngel has developed advantageous prospective business and

4

economic relationships with business partners to expand VidAngel’s business,

5

visibility and availability to consumers, and which promise a continuing probability

6

of future economic benefit to VidAngel. Counterclaim-Defendants knew, or

7

reasonably should have known, of the existence of those prospective economic

8

advantages.

9

105. Counterclaim-Defendants, with the intent of disrupting and destroying

10

VidAngel’s business relationships, have deliberately undertaken the illegal practices

11

described herein thereby inducing VidAngel’s actual and prospective partners, such

12

as YouTube and Google Play, not to enter into such prospective contractual

13

relationships with VidAngel. As such Counterclaim-Defendants’ conduct was

14

wrongful.

15

106. By means of the alleged actions, including but not limited to the unfair,

16

anticompetitive and/or predatory acts set herein, Counterclaim-Defendants intended

17

to pressure and induce these customers to end or disrupt their prospective economic

18

relationships with VidAngel. As a direct and proximate result of Counterclaim-

19

Defendants’ actions as alleged herein, many of the economic benefits from

20

Counterclaimant’s prospective customers have been lost. Counterclaim-Defendants

21

knew these disruptions or interferences were substantially certain to occur as a result

22

of their conduct.

23

107. Counterclaim-Defendants’ conduct was a substantial factor in causing

24

financial injury to VidAngel and has rendered it more difficult for VidAngel to

25

remain and survive as a viable competitor. VidAngel has sustained and will continue

26

to sustain damages, the exact amount of which is extremely difficult to calculate, and

27

presently unknown, but which will be proven at trial.

28

ER336

108. Counterclaim-Defendants’ wrongful conduct in interfering with such
-46AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 48 of 60 Page ID #:2671

1

prospective business contractual relations is intentional, malicious and without

2

justification and such conduct and overall scheme was undertaken solely to hinder, if

3

not eliminate, competition. Their anticompetitive conduct was not privileged or

4

excused and was without any legitimate business justification. Counterclaim-

5

Defendants have knowingly engaged in such wrongful conduct for the purpose of

6

excluding competition, damaging VidAngel’s goodwill, and to deprive consumers of

7

the benefits of free and open competition. Counterclaim-Defendants committed each

8

of the foregoing acts willfully, fraudulently, oppressively, maliciously and with the

9

wrongful intention of injuring VidAngel’s prospective business relationships.

10

Accordingly, VidAngel is entitled to punitive and exemplary damages sufficient to

11

serve as an example and to punish Counterclaim-Defendants.

12

109. As a result of the foregoing acts, VidAngel has suffered, and will

13

continue to suffer, irreparable injury for which there is no adequate remedy at law

14

unless Counterclaim-Defendants are enjoined by this Court.

15

THIRD COUNTERCLAIM FOR RELIEF

16

By VidAngel against All Counterclaim-Defendants

17

(Unfair Competition in Violation of

18

Cal. Bus. & Prof. Code §§ 17200 et seq.)

19

110. VidAngel incorporates herein by reference each and every averment

20

contained in all preceding paragraphs.

21

111. This Court has jurisdiction over this Third Counterclaim for Relief based

22

on the doctrine of supplemental jurisdiction (28 U.S.C. § 1367) because this

23

Counterclaim for Relief arises from the same transactions and from a common

24

nucleus of operative facts as alleged in the federal causes of action.

25

112. Section 17200 et seq. of the California Business & Professions Code is

26

written in the disjunctive and broadly covers three varieties of unfair competition –

27

acts that are unlawful, or unfair, or fraudulent. The statute’s intent and purpose is to

28

protect both consumers and competitors by promoting fair competition in commercial
-47-

ER337

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 49 of 60 Page ID #:2672

1

markets for goods and services.

2
3

113. Counterclaimant VidAngel is a “person” within the meaning of
California Business & Professions Code § 17201.

4

114. As alleged herein, Counterclaim-Defendants’ conduct constitutes

5

“unfair” business practices. A practice may be deemed unfair even if not specifically

6

proscribed by some other law although here the conduct violates both the FMA and

7

the Sherman Act. Conduct that significantly threatens or harms competition, or

8

threatens an incipient violation of an antitrust law, may be deemed to be “unfair.”

9

115. As alleged herein, Counterclaim-Defendants’ anticompetitive conduct is

10

also “unlawful.” Within the meaning of § 17200, virtually any violation of any civil

11

or criminal federal, state or municipal, statutory, regulatory, court-made, or local law

12

can serve as a predicate for an “unlawful” claim.

13

116. By reason of, and as a direct and proximate result of Counterclaim-

14

Defendants’ unfair and unlawful practices and conduct, Counterclaimant VidAngel

15

has suffered and will continue to suffer, economic injury to its business and property.

16

117. Counterclaim-Defendants’ unfair and unlawful conduct has caused

17

economic harm to Counterclaimant VidAngel, competition and consumers.

18

118. Pursuant to Section 17203, the entry of permanent and mandatory

19

injunctive relief against Counterclaim-Defendants is necessary to enjoin the ongoing

20

wrongful business conduct. An injunction is needed to enable and restore

21

competition in the online filtering market.

22

FOURTH COUNTERCLAIM FOR RELIEF

23

By VidAngel against All Counterclaim-Defendants

24

(Declaratory Relief Regarding VidAngel’s Current System)

25

119. VidAngel incorporates herein by reference each and every averment

26

contained in all preceding paragraphs.

27
28

120. An actual controversy has arisen and now exists between VidAngel and
Counterclaim-Defendants concerning whether VidAngel’s current system violates
-48-

ER338

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 50 of 60 Page ID #:2673

1

copyright law. VidAngel’s system is designed and operates as follows:

2

(a)

3
4

VidAngel lawfully purchases Blu-rays and DVDs (both referred to as
“DVD” in this prayer);

(b)

VidAngel uses a commercially available software program to

5

automatically allow read-access for the purpose of mounting the DVD

6

files for uploading onto a computer, in the process removing restrictions

7

on DVD encryption;

8

(c)

9
10

VidAngel extracts the subtitle/caption data files and then creates
Matroska files of the feature films;

(d)

VidAngel uploads the subtitle/caption data files and Matroska files

11

(collectively known as the “pre-filter files” or “PF” files) onto a secure

12

folder on a third-party Internet service provider’s cloud storage service

13

(“CSS”) and uploads the subtitle/caption into a separate CSS folder;

14

(e)

VidAngel destroys the Matroska files;

15

(f)

VidAngel boots an encoding and segmenting server (“ESS”) to run two

16
17

scripts, including an encoding script and a segmenting script.
(g)

The encoding script temporarily copies the PF files from the CSS to the

18

ESS, uses ffmpeg to prepare the PF files for tagging and filtering, creates

19

a single mp4 file (640 kilobytes per second bitrate) for tagging (when

20

that is not performed beforehand on YouTube or when corrections need

21

to be made to the tags), copies the mp4 file from the ESS to a secure

22

CSS location, creates four Transport Stream files (“TS files”) at 640,

23

1200, 2040 and 4080 bitrates for filtering, copies the TS files to a secure

24

location on the CSS, and deletes all copies and files on the ESS, and is

25

run once for each title’s Matroska file;

26

(h)

The segmenting script temporarily copies the TS files from the CSS to

27

the ESS, segments the TS files for adaptive bitrate streaming (the HLS

28

specification) based on both 9-10 second intervals and the locations of
-49-

ER339

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1

each tag for the title (which could be as short as 2 tenths of a second),

2

creates thumbnail files for player scrubbing preview for each non-

3

filterable segment, saves a comma-separated values (CSV) file

4

containing the results of the segmenting process for each segment,

5

uploads the CSV file for use by the filtering system, encrypts each

6

segment of each bitrate with a new and unique encryption key, copies

7

the unencrypted segments from the ESS to a secure location on the CSS,

8

copies the encrypted segments from the ESS onto a publicly accessible

9

location on the CSS, copies the encryption keys from the ESS to a secure

10

location on the CSS, deletes older revision files on the CSS, and deletes

11

all copies and files on the ESS;

12

(i)

VidAngel lawfully purchases additional DVDs;

13

(j)

VidAngel enters the information concerning the additional DVDs into an

14

inventory system;

15

(k)

VidAngel applies bar codes to the DVD packages;

16

(l)

VidAngel sells specific, individual DVDs to specific customers;

17

(m)

VidAngel requires each customer to select one or more filters; and

18

(n)

VidAngel streams content from the DVD to each purchaser while

19

applying the filters chosen by that customer.

20

121. Counterclaim-Defendants contend that VidAngel’s operating system as

21

described in the preceding paragraph infringes their exclusive rights to copy and

22

make public performances of their copyrighted works in violation of 17 U.S.C. § 101

23

et seq., whereas VidAngel contends that this system is fully consistent with the FMA

24

and otherwise complies with copyright law.

25

122. VidAngel desires a judicial determination of the legality of its current

26

operating system, and the respective rights and duties of the parties. A judicial

27

declaration is necessary and appropriate so that VidAngel and Counterclaim-

28

Defendants may ascertain their rights and duties under copyright law.
-50-

ER340

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 52 of 60 Page ID #:2675

1

123. VidAngel desires a judicial determination of the legality of its buy-sell-

2

back provision, and the respective rights and duties of the parties. A judicial

3

declaration is necessary and appropriate so that VidAngel and Counterclaim-

4

Defendants may ascertain their rights and duties under copyright, antitrust and unfair

5

competition law.

6

FIFTH COUNTERCLAIM FOR RELIEF

7

By VidAngel against All Counterclaim-Defendants

8

(Declaratory Relief Regarding Decryption of DVD Format

9

for the Purpose of Filtering Under the FMA)

10

124. VidAngel incorporates herein by reference each and every averment

11

contained in all preceding paragraphs.

12

125. An actual controversy has arisen and now exists between VidAngel and

13

Counterclaim-Defendants concerning whether the creation of a decrypted version of

14

lawfully purchased DVDs for the purpose of filtering pursuant to the FMA violates

15

copyright law. Counterclaim-Defendants contend that the mere act of creating a

16

decrypted version of a lawfully purchased DVD of their title violates Section

17

1201(a)(1)(A) of the Digital Millennium Copyright Act and infringes their

18

reproduction rights in violation of 17 U.S.C. §§ 1201, et seq. VidAngel contends that

19

the making of a decrypted copy as the necessary first step in making a lawfully

20

purchased DVD capable of being filtered is fully consistent with the FMA and

21

otherwise complies with all copyright laws.

22

126. VidAngel desires a judicial determination of the legality of decrypting

23

DVDs for the sole purpose of converting them into a format capable of being filtered

24

to streaming devices pursuant to the FMA, and the respective rights and duties of the

25

parties with respect to this practice. A judicial declaration is necessary and

26

appropriate so that VidAngel and Counterclaim-Defendants may ascertain their rights

27

and duties under copyright law.

28

ER341

-51AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 53 of 60 Page ID #:2676

1

SIXTH COUNTERCLAIM FOR RELIEF

2

By VidAngel against All Counterclaim-Defendants

3

(Declaratory Relief Regarding Remote Streaming of

4

Filtering Technology Under the FMA)

5

127. VidAngel incorporates herein by reference each and every averment

6

contained in all preceding paragraphs.

7

128. An actual controversy has arisen and now exists between VidAngel and

8

Counterclaim-Defendants concerning whether the practice of remotely streaming a

9

filtering technology to users is permissible under the FMA. Counterclaim-

10

Defendants contend that such a practice infringes their exclusive right to publicly

11

perform their copyrighted works in violation of 17 U.S.C. § 101 et seq. VidAngel

12

contends that such a practice is fully consistent with the FMA and otherwise complies

13

with copyright law.

14

129. VidAngel contends that the plain language of the FMA endorses the use

15

of remote streaming of filtering technology. The FMA provides that it is not a

16

violation of copyright for a third party, operating at the direction of a member of a

17

private household, to make limited portions of audio or video content imperceptible

18

“during a performance . . . transmitted to that household for private home viewing . .

19

. .” 17 U.S.C. § 110(11) (emphasis added). Such a transmission is clearly broad

20

enough to include remote streaming; indeed, the Copyright Act states that “[t]o

21

transmit a performance or display is to communicate it by any device or process

22

whereby images or sounds are received beyond the place from which they are sent.”

23

17 U.S.C. § 101 (emphasis added). The legislative history also makes clear that

24

remote streaming of filtering technology is authorized by the FMA:

25
26
27
28

ER342

The bill as proposed in the Senate makes clear that, under certain
conditions, “making imperceptible” of limited portions of audio or
video content of a motion picture-that is, skipping and muting limited
portions of movies without adding any content-as well as the creation
or provision of a computer program or other technology that enables
-52AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 54 of 60 Page ID #:2677

3

such making imperceptible, does not violate existing copyright or
trademark laws. That is true whether the movie is on prerecorded
media, like a DVD, or is transmitted to the home, as through pay-perview and “video-on-demand” services.

4

150 Cong. Rec. S11852-01. Additionally, VidAngel privately transmits its filtering

5

technology to an individual user in his own household consistent with established

6

copyright law. See Fox Broad. Co. v. Dish Network LLC, 2015 WL 1137593, at *13

7

(C.D. Cal. Jan. 20, 2015) (holding that transmissions to owners or valid possessors of

8

copyrighted programming are not public performances).

1
2

9

130. VidAngel desires a judicial determination of the legality of remotely

10

streaming a filtering technology to users and the respective rights and duties of the

11

parties with respect to this practice. A judicial declaration is necessary and

12

appropriate so that VidAngel and Counterclaim-Defendants may ascertain their rights

13

and duties under copyright law.

14

SEVENTH COUNTERCLAIM FOR RELIEF

15

By VidAngel against All Counterclaim-Defendants

16

(Declaratory Relief Regarding Prior Authorization Under the FMA)

17

131. VidAngel incorporates herein by reference each and every averment

18

contained in all preceding paragraphs.

19

132. An actual controversy has arisen and now exists between VidAngel and

20

Counterclaim-Defendants concerning whether the FMA requires VidAngel to obtain

21

prior authorization from Counterclaim-Defendants before streaming Counterclaim-

22

Defendants’ copyrighted works to individual users pursuant to the FMA.

23

Counterclaim-Defendants contend that without their prior authorization, the

24

streaming of filtered versions of their works infringes their exclusive rights to copy

25

and publicly perform their works in violation of 17 U.S.C. § 101 et seq., whereas

26

VidAngel contends that the FMA requires no such prior authorization.

27

133. VidAngel contends that the FMA expressly allows the filtering and

28

ER343

-53AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 55 of 60 Page ID #:2678

1

streaming of third-party works at the direction of private persons without obtaining

2

authorization from the copyright holder to make limited alterations to the copyrighted

3

content. The plain language of the FMA permits a third party operating “by or at the

4

direction of a member of a private household” to filter audio or video content “from

5

an authorized copy of the motion picture . . . .” 17 U.S.C. § 110(11). Nothing in the

6

FMA requires a third party to obtain authorization from copyright holders before

7

making “limited portions of audio or video content” imperceptible for performance in

8

“private home viewing[.]” Id.; see also 150 Cong. Rec. S11852-01 (stating that

9

“skipping and muting from an unauthorized or ‘bootleg’ copy of a motion picture

10

would not be exempt.”) Consistent with the plain language of the FMA and

11

copyright law, VidAngel contends that it lawfully operates at the direction of

12

members of private households and properly purchased and owned “authorized

13

cop[ies]” of the titles at issue in DVD format before selling the DVDs to its

14

customers.

15

134. VidAngel desires a judicial determination as to whether it is required by

16

the FMA to obtain Counterclaim-Defendants’ prior authorization before providing its

17

filtering service to individuals under the FMA, and the respective rights and duties of

18

the parties with respect to this practice. A judicial declaration is necessary and

19

appropriate so that VidAngel and Counterclaim-Defendants may ascertain their rights

20

and duties under copyright law.

21

PRAYER FOR RELIEF

22

WHEREFORE, VidAngel respectfully requests that this Court award the

23

following relief:

24
25

1.

That the conduct alleged in the First Counterclaim for Relief herein be

adjudged to be in violation of Section 1 of the Sherman Act (15 U.S.C. § 1).

26

2.

That, pursuant to Section 4 of the Clayton Act (15 U.S.C. § 15),

27

VidAngel recover treble the amount of its actual damages sustained by reason of

28

those federal antitrust violations.

ER344

-54AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 56 of 60 Page ID #:2679

1
2

3.

That, pursuant to Section 4 of the Clayton Act (15 U.S.C. § 15),

VidAngel be awarded a reasonable attorneys’ fee and costs of litigation.

3

4.

That, pursuant to Section 16 of the Clayton Act (15 U.S.C. § 26), the

4

Court enjoin Counterclaim-Defendants from their continuing anticompetitive and

5

wrongful conduct.

6
7

5.

adjudged to constitute intentional interference with prospective advantage.

8
9

That the conduct alleged in the Second Counterclaim for Relief herein be

6.

That VidAngel be awarded punitive or exemplary damages on its tort

7.

That the conduct alleged in the Third Counterclaim for Relief herein be

claim.

10
11

adjudged to be unfair and/or unlawful business practice in violation of § 17200 of the

12

California Business & Professions Code.

13

8.

That pursuant to § 17203 of the California Business & Professions Code,

14

the unfair and/or unlawful business practices of Counterclaim-Defendants be

15

permanently enjoined.

16
17

9.

Procedure, VidAngel be awarded reasonable attorneys’ fees.

18
19

That pursuant to Section 1021.5 of the California Code of Civil

10.

Pursuant to 28 U.S.C. § 2201, a declaration that VidAngel’s current

system does not violate copyright law, to the extent it operates as follows:

20

(a)

21
22

VidAngel lawfully purchases Blu-rays and DVDs (both referred to as
“DVD” in this prayer);

(b)

VidAngel uses a commercially available software program to

23

automatically allow read-access for the purpose of mounting the DVD

24

files for uploading onto a computer, in the process removing restrictions

25

on DVD encryption;

26

(c)

27
28

ER345

VidAngel extracts the subtitle/caption data files and then creates
Matroska files of the feature films;

(d)

VidAngel uploads the subtitle/caption data files and Matroska files
-55AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 57 of 60 Page ID #:2680

1

(collectively known as the “pre-filter files” or “PF” files) onto a secure

2

folder on a third-party Internet service provider’s cloud storage service

3

(“CSS”) and uploads the subtitle/caption into a separate CSS folder;

4

(e)

VidAngel destroys the Matroska files;

5

(f)

VidAngel boots an encoding and segmenting server (“ESS”) to run two

6
7

scripts, including an encoding script and a segmenting script.
(g)

The encoding script temporarily copies the PF files from the CSS to the

8

ESS, uses ffmpeg to prepare the PF files for tagging and filtering, creates

9

a single mp4 file (640 kilobytes per second bitrate) for tagging (when

10

that is not performed beforehand on YouTube or when corrections need

11

to be made to the tags), copies the mp4 file from the ESS to a secure

12

CSS location, creates four Transport Stream files (“TS files”) at 640,

13

1200, 2040 and 4080 bitrates for filtering, copies the TS files to a secure

14

location on the CSS, and deletes all copies and files on the ESS, and is

15

run once for each title’s Matroska file;

16

(h)

The segmenting script temporarily copies the TS files from the CSS to

17

the ESS, segments the TS files for adaptive bitrate streaming (the HLS

18

specification) based on both 9-10 second intervals and the locations of

19

each tag for the title (which could be as short as 2 tenths of a second),

20

creates thumbnail files for player scrubbing preview for each non-

21

filterable segment, saves a comma-separated values (CSV) file

22

containing the results of the segmenting process for each segment,

23

uploads the CSV file for use by the filtering system, encrypts each

24

segment of each bitrate with a new and unique encryption key, copies

25

the unencrypted segments from the ESS to a secure location on the CSS,

26

copies the encrypted segments from the ESS onto a publicly accessible

27

location on the CSS, copies the encryption keys from the ESS to a secure

28

location on the CSS, deletes older revision files on the CSS, and deletes
-56-

ER346

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 58 of 60 Page ID #:2681

1

all copies and files on the ESS;

2

(i)

VidAngel lawfully purchases additional DVDs;

3

(j)

VidAngel enters the information concerning the additional DVDs into an

4

inventory system;

5

(k)

VidAngel applies bar codes to the DVD packages;

6

(l)

VidAngel sells specific, individual DVDs to specific customers;

7

(m)

VidAngel requires each customer to select one or more filters; and

8

(n)

VidAngel streams content from the DVD to each purchaser while

9

applying the filters chosen by that customer.

10

11.

A declaration that the buy-sell-back provision in VidAngel’s current

11

business model complies with the FMA and does not otherwise violate copyright law,

12

and that Counterclaim-Defendants’ attempts to prevent VidAngel from offering its

13

buy-sell-back service to customers constitute an attempt to unlawfully restrict the

14

resale of goods;

15

12.

A declaration that VidAngel’s current practice of decrypting DVDs for

16

the sole purpose of converting them into a format capable of being filtered to

17

streaming devices pursuant to the FMA does not violate the Digital Millennium

18

Copyright Act and does not infringe the reproduction rights of copyright holders;

19

13.

A declaration that VidAngel’s current practice of remotely streaming its

20

filtering technology to users is permissible under the FMA and does not infringe the

21

public performance rights of copyright holders;

22

14.

A declaration that VidAngel is not required to obtain prior authorization

23

from Counterclaim-Defendants before streaming Counterclaim-Defendants’

24

copyrighted works to individual users pursuant to the FMA;

25

15.

Such further relief as this Court deems just and appropriate.

26
27
28

ER347

-57AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 59 of 60 Page ID #:2682

1

DATED: September 16, 2016

2

Respectfully submitted,
BLECHER COLLINS & PEPPERMAN, P.C.

3
4

By:

/s/ Maxwell M. Blecher
Maxwell M. Blecher

5
6
7

BAKER MARQUART LLP

8
9

By:

/s/ Ryan G. Baker
Ryan G. Baker

10
11
12

Attorneys for Defendant and Counterclaimant
VidAngel, Inc.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER348

-58AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 77 Filed 09/16/16 Page 60 of 60 Page ID #:2683

1

DEMAND FOR JURY TRIAL

2
3

VidAngel hereby demands trial by jury pursuant to Rule 38(b) of the Federal
Rules of Civil Procedure and Civil Local Rule 38-1.

4
5

DATED: September 16, 2016

6

Respectfully submitted,
BLECHER COLLINS & PEPPERMAN, P.C.

7
8

By:

/s/ Maxwell M. Blecher
Maxwell M. Blecher

9
10

BAKER MARQUART LLP

11
12

By:

13

/s/ Ryan G. Baker
Ryan G. Baker

14
Attorneys for Defendant and Counterclaimant
VidAngel, Inc.

15
16
17

85973.3

18
19
20
21
22
23
24
25
26
27
28

ER349

-59AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

Case 2:16-cv-04109-AB-PLA Document 69 Filed 09/12/16 Page 1 of 4 Page ID #:2456

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF TIM
WILDMON IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER350

DECLARATION OF TIM WILDMON

Case 2:16-cv-04109-AB-PLA Document 69 Filed 09/12/16 Page 2 of 4 Page ID #:2457

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER351

DECLARATION OF TIM WILDMON

Case 2:16-cv-04109-AB-PLA Document 69 Filed 09/12/16 Page 3 of 4 Page ID #:2458

I, Tim Wildmon, declare as follows:
1.

I am the President of American Family Association. I make this declaration of my personal and first-hand
knowledge and, if called and sworn as a witness, I could and would testify competently hereto.

2.

AFA has hundreds of thousands of financial supporters and millions of online subscribers.

3.

A matter of great concern to our members and their families is their ability to watch movies and television
programs in private without being subjected to types of content they regard as inappropriate or indecent.
Our members who are parents want to be able to watch movies and television programs with their young
children without exposing their children to such content. Every family and every child is unique and no
one is in a better position to decide what is in a child’s best interest than the child’s parents. Many
parents reasonably fear that watching violence at a young age may lead to an increased incidence of
violent behavior later in life.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. Works that are filtered and streamed by a third party can be viewed on a wide range of
devices, including desk top, lap top, and tablet computers and smart telephones—as well as on television
sets. Further, such works can be streamed to a family virtually anywhere, whether in a hotel, an airport,
or a parent’s place of business. In contrast, home filtering requires that consumers buy a special DVD
player and pay a monthly rental fee for it. More importantly, the DVD player must be connected to a
television set, thus making it impractical to use when a family wants to watch content on a television
other than the one to which the box is connected, and impossible to use when watching content on any
type of computer or a smart telephone. Given that many of our members want to watch movies or
television programs when they are not in front of a home television, the third-party filtering and
streaming method is of much greater benefit to them than relying on a special DVD player connected to a
television set.

7.

If the studios persuade the Court to enjoin VidAngel from filtering and streaming content to American
families--even though those families have each lawfully purchased a copy of that content--the studios will
succeed in depriving a great many American families of a very valuable right granted to them by Congress.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.

ER352

Case 2:16-cv-04109-AB-PLA Document 69 Filed 09/12/16 Page 4 of 4 Page ID #:2459

Executed this __6__day of September, 2016, at __10:50__, __AM__.

By____Tim Wildmon_____

ER353

Case 2:16-cv-04109-AB-PLA Document 68 Filed 09/12/16 Page 1 of 4 Page ID #:2452

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF TIM BARTON
IN SUPPORT OF VIDANGEL’S
OPPOSITION TO MOTION FOR
PRELIMINARY INJUNCTION

28

ER354

DECLARATION OF TIM BARTON

Case 2:16-cv-04109-AB-PLA Document 68 Filed 09/12/16 Page 2 of 4 Page ID #:2453

vs.

1
2

VIDANGEL, INC.,
Defendant.

3

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

4
5

VIDANGEL, INC.,

6

Counterclaimant,

7
8

vs.

10

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

11

Counterclaim Defendants.

9

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER355

DECLARATION OF TIM BARTON

Case 2:16-cv-04109-AB-PLA Document 68 Filed 09/12/16 Page 3 of 4 Page ID #:2454

I, Tim Barton, declare as follows:
1.

I am the Chief Operating Officer of WallBuilders. I make this declaration of my personal and first-hand
knowledge and, if called and sworn as a witness, I could and would testify competently hereto.

2.

I have been employed by WallBuilders and have served in my present capacity since 2009. WallBuilders
has thousands of followers.

3.

A matter of great concern to our followers is their ability to watch movies and television programs in
private without being subjected to types of content they regard as inappropriate or indecent. A
significant percentage of our adult followers want to watch popular movies and television programs, but
only if they are not exposed to types of content they personally find repugnant—such as violence, sex,
nudity, vulgarity, blasphemy, and the like. Much more commonly, our followers who are parents want to
be able to watch movies and television programs with their young children without exposing their
children to such content. Their concerns should be respected not only because every family and every
child is unique and no one is in a better position to decide what is in a child’s best interest than the child’s
parents, but because they reasonably fear that watching violence at a young engage may lead to an
increased incidence of violent behavior later in life and that watching inappropriate content in general
may degrade society’s moral standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones—as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our followers want to watch movies or television programs when they are not in front of a home
television, the third-party filtering and streaming method is of much greater benefit to them than relying
on a special DVD player connected to a television set.

ER356

Case 2:16-cv-04109-AB-PLA Document 68 Filed 09/12/16 Page 4 of 4 Page ID #:2455

7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act
because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner’s
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Executed this __8th____day of September, 2016, at _Aledo____, _Texas____.

By____

ER357

[Tim Barton]

____________________

Case 2:16-cv-04109-AB-PLA Document 67 Filed 09/12/16 Page 1 of 4 Page ID #:2448

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF THEODORE
BAEHR IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER358

DECLARATION OF THEODORE BAEHR

Case 2:16-cv-04109-AB-PLA Document 67 Filed 09/12/16 Page 2 of 4 Page ID #:2449

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER359

DECLARATION OF THEODORE BAEHR

DocuSign Envelope ID: B5AF9596-07A5-4EE8-A7BE-B60F6D52E06E

Case 2:16-cv-04109-AB-PLA Document 67 Filed 09/12/16 Page 3 of 4 Page ID #:2450

I, Theodore Baehr, declare as follows:
1.

I am the Publisher of MOVIEGUIDE(r) and Chairman of Christian Film & Television Commission®. I make
this declaration of my personal and first-hand knowledge and, if called and sworn as a witness, I could and
would testify competently hereto.

2.

I have been employed by Good News Communications, Inc. dba MOVIEGUIDE(r) and dba Christian Film &
Television Commission® since 1978 and have served in my present capacity since
1978. Www.movieguide.org has more than 34 million CONTSTITUENTS/USERS.

3.

Extensive research, including over 500,000 studies, shows that the best protection for children from the
well documented harms of the mass media of entertainment to which they are susceptible is teaching
them media and cultural wisdom so that they understand and hold fast to the values and faith of their
parents. The most comprehensive system for this is THE CULTURE-WISE FAMILY® and THE MEDIA-WISE
FAMILY. Along with 60 professors at City University of New York, I helped to develop and test the initial
media literacy systems when I was the Director of the TV Center at CUNY.

4.

A secondary level of protection is the ability to watch movies and television programs in private without
being subjected to types of content they regard as inappropriate or indecent. A significant percentage of
our MOVIEGUIDE(r) users want to watch popular movies and television programs, if they are not exposed
to types of content they personally find repugnant—such as violence, sex, nudity, vulgarity, blasphemy,
and even more important worldviews that are contrary to their faith and values even if the movie is
devoid of objectionable semantics and Syntactics. Much more commonly, our constituents, who are
parents want to be able to watch movies and television programs with their young children without
exposing their children to such content or aberrant philosophies and worldviews. Their concerns should
be respected not only because every family and every child is unique and no one is in a better position to
decide what is in a child’s best interest than the child’s parents, but because they reasonably fear that
watching violence at a young engage may lead to an increased incidence of violent behavior later in life
and that watching inappropriate content in general may degrade society’s moral standards.

5.

That said, removing offensive semantic and syntactic content must be joined with understanding
worldviews, ontology and epistemology so that the child is not influenced by culturally corrosive material
presented in a pristine way, such as the movie HAPPY FEET.

6.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

7.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

ER360

DocuSign Envelope ID: B5AF9596-07A5-4EE8-A7BE-B60F6D52E06E

Case 2:16-cv-04109-AB-PLA Document 67 Filed 09/12/16 Page 4 of 4 Page ID #:2451

8.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones—as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our users want to watch movies or television programs when they are not in front of a home
television, the third-party filtering and streaming method is of much greater benefit to them than relying
on a special DVD player connected to a television set.

9.

One company that filtered content for consumers was not fully compliant with the Family Movie Act
because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner’s
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Executed this 7 day of September, 2016, at Camarillo, CA

By________________________, Theodore Baehr, Publisher and Chairman
[NAME]

ER361

Case 2:16-cv-04109-AB-PLA Document 66 Filed 09/12/16 Page 1 of 4 Page ID #:2444

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF RICK GREEN
IN SUPPORT OF VIDANGEL’S
OPPOSITION TO MOTION FOR
PRELIMINARY INJUNCTION

28

ER362

DECLARATION OF RICK GREEN

Case 2:16-cv-04109-AB-PLA Document 66 Filed 09/12/16 Page 2 of 4 Page ID #:2445

vs.

1
2

VIDANGEL, INC.,
Defendant.

3

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

4
5

VIDANGEL, INC.,

6

Counterclaimant,

7
8

vs.

10

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

11

Counterclaim Defendants.

9

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER363

DECLARATION OF RICK GREEN

Case 2:16-cv-04109-AB-PLA Document 66 Filed 09/12/16 Page 3 of 4 Page ID #:2446

I,#Rick#Green,#declare#as#follows:#
##
1. I#am#the#Host#of#WallBuilders#Live#Radio#Program.##I#make#this#declaration#of#my#personal#and#firstChand#
knowledge#and,#if#called#and#sworn#as#a#witness,#I#could#and#would#testify#competently#hereto.#
#
2. I#have#been#employed#by#WallBuilders#Live#since#and#have#served#in#my#present#capacity#since#
2006.#WallBuilders#Live#has#thousands#of#listeners.#
#
3. A#matter#of#great#concern#to#our#listeners#is#their#ability#to#watch#movies#and#television#programs#in#
private#without#being#subjected#to#types#of#content#they#regard#as#inappropriate#or#indecent.##A#
significant#percentage#of#our#adult#listeners#want#to#watch#popular#movies#and#television#programs,#but#
only#if#they#are#not#exposed#to#types#of#content#they#personally#find#repugnant—such#as#violence,#sex,#
nudity,#vulgarity,#blasphemy,#and#the#like.##Much#more#commonly,#our#listeners#who#are#parents#want#to#
be#able#to#watch#movies#and#television#programs#with#their#young#children#without#exposing#their#
children#to#such#content.##Their#concerns#should#be#respected#not#only#because#every#family#and#every#
child#is#unique#and#no#one#is#in#a#better#position#to#decide#what#is#in#a#child’s#best#interest#than#the#child’s#
parents,#but#because#they#reasonably#fear#that#watching#violence#at#a#young#engage#may#lead#to#an#
increased#incidence#of#violent#behavior#later#in#life#and#that#watching#inappropriate#content#in#general#
may#degrade#society’s#moral#standards.#
#
4. In#various#ways,#the#government#has#sought#to#guarantee#the#right#of#all#Americans#to#enjoy#popular#
culture#in#private#without#having#their#sensibilities#assaulted.##The#Supreme#Court,#for#example,#long#ago#
approved#the#right#of#the#Federal#Communications#Commission#to#prohibit#radio#stations#from#playing#the#
George#Carlin#“Seven#Dirty#Words”#or#“Filthy#Words”#monologue#during#hours#when#children#might#be#
listening.##In#that#vein,#Congress#enacted#the#Family#Movie#Act#in#2005.##In#doing#so,#Congress#wanted#to#
make#the#filtering#of#movies#and#television#programs#as#widely,#readily,#and#inexpensively#available#to#
American#families#as#possible.##In#deference#to#the#major#Hollywood#studios#(which#opposed#the#
enactment#of#the#Family#Movie#Act),#Congress#required#that#to#fall#within#the#Act’s#protections,#filtering#
could#be#performed#only#within#a#family’s#home#or#by#a#third#party#and#streamed#to#the#family#provided#
that:#(i)#the#family#lawfully#purchased#a#copy#of#the#work#(i.e.,#a#DVD#or,#today,#a#BluCray#disc);#(ii)#the#
filtering#was#performed#to#specifications#chosen#by#that#family;#and#(iii)#no#fixed#copy#of#a#filtered#work#
was#ever#made.#
#
5. Those#requirements#attempted#to#balance#the#strong#public#interest#in#making#filtered#content#as#widely,#
readily,#and#inexpensively#available#to#American#families#as#possible#with#the#interests#of#the#copyright#
owners,#who#understandably#did#not#want#the#market#flooded#with#bootleg#or#derivative#copies#of#their#
works#and#who#wanted#to#protect#their#exclusive#rights#to#distribute#copies#of#their#works#and#to#show#
them#publicly,#whether#on#television,#in#movie#theaters,#by#streaming,#or#by#using#other#methods.#
#
6. Of#the#two#methods#of#filtering#authorized#by#the#Family#Movie#Act,#the#thirdCparty#filtering#and#streaming#
method#best#satisfies#the#intent#of#Congress#that#filtering#be#widely,#readily,#and#inexpensively#available#to#
American#families.##The#reasons#why#that#is#so#are#obvious.##Works#that#are#filtered#and#streamed#by#a#
third#party#can#be#viewed#on#a#wide#range#of#devices,#including#desk#top,#lap#top,#and#tablet#computers#
and#smart#telephones—as#well#as#on#television#sets.##Further,#such#works#can#be#streamed#to#a#family#
virtually#anywhere,#whether#in#a#hotel,#an#airport,#or#a#parent’s#place#of#business.##In#contrast,#home#
filtering#requires#that#consumers#buy#a#special#DVD#player#and#pay#a#monthly#rental#fee#for#it.##More#
importantly,#the#DVD#player#must#be#connected#to#a#television#set,#thus#making#it#impractical#to#use#when#
a#family#wants#to#watch#content#on#a#television#other#than#the#one#to#which#the#box#is#connected,#and#
impossible#to#use#when#watching#content#on#any#type#of#computer#or#a#smart#telephone.##Given#that#
many#of#our#listeners#want#to#watch#movies#or#television#programs#when#they#are#not#in#front#of#a#home#
television,#the#thirdCparty#filtering#and#streaming#method#is#of#much#greater#benefit#to#them#than#relying#
on#a#special#DVD#player#connected#to#a#television#set.#
#

ER364

Case 2:16-cv-04109-AB-PLA Document 66 Filed 09/12/16 Page 4 of 4 Page ID #:2447

7.

One#company#that#filtered#content#for#consumers#was#not#fully#compliant#with#the#Family#Movie#Act#
because#it#performed#oneCsizeCfitsCall#filtering,#as#opposed#to#filtering#pursuant#to#the#homeowner’s#
specifications.##The#studios#reacted#by#suing#it#and#forcing#it#out#of#business.##Although#another#company#
still#provides#home#filtering#through#the#use#of#a#DVD#player,#VidAngel#is#the#only#service#that#filters#and#
streams#content#to#consumers#wherever#they#are#and#to#virtually#whatever#device#they#want.##If#the#
studios#persuade#the#Court#to#enjoin#VidAngel#from#filtering#and#streaming#content#to#American#familiesCC
even#though#those#families#have#each#lawfully#purchased#a#copy#of#that#contentCCthe#studios#will#succeed#
in#depriving#a#great#many#American#families#of#a#very#valuable#right#granted#to#them#by#Congress.#

##
I#declare#under#penalty#of#perjury#of#the#laws#of#the#United#States#that#the#foregoing#is#true#and#correct.#
##
th
Executed#this#17 #day#of#August,#2016,#at#Austin,#Texas.#
##
##
By________________________#
Rick#Green#

#

ER365

Case 2:16-cv-04109-AB-PLA Document 65 Filed 09/12/16 Page 1 of 5 Page ID #:2439

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF REBECCA
HAGELIN IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER366

DECLARATION OF REBECCA HAGELIN

Case 2:16-cv-04109-AB-PLA Document 65 Filed 09/12/16 Page 2 of 5 Page ID #:2440

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER367

DECLARATION OF REBECCA HAGELIN

Case 2:16-cv-04109-AB-PLA Document 65 Filed 09/12/16 Page 3 of 5 Page ID #:2441

1

I, Rebecca Hagelin, declare as follows:

2

1. I am a public speaker and an author of books and columns on faith, family and the

3

culture. I make this declaration of my personal and first-hand knowledge and, if called and

4

sworn as a witness, I could and would testify competently hereto.

5

2. I have written three books, thousands of newspaper and online columns, and

6

given scores of speeches about the challenges parents face in raising children of strong

7

moral character in our current crass culture. I work hard to provide real solutions and

8

practical help to parents and families in their quest to locate materials and entertainment

9

matter that reinforces - rather than destroys - the principles they are trying to teach their

10
11

children.
3. A matter of great concern to my readers is their ability to watch movies and

12

television programs in private without being subjected to types of content they regard as

13

inappropriate or indecent. A significant percentage of my readers want to watch popular

14

movies and television programs, but only if they are not exposed to types of content they

15

personally find repugnant—such as violence, sex, nudity, vulgarity, blasphemy, and the

16

like. Much more commonly, my readers who are parents want to be able to watch movies

17

and television programs with their young children without exposing their children to such

18

content. Their concerns should be respected not only because every family and every child

19

is unique and no one is in a better position to decide what is in a child’s best interest than

20

the child’s parents, but because they reasonably fear that watching violence at a young age

21

may lead to an increased incidence of violent behavior later in life and that watching

22

inappropriate content in general may degrade society’s moral standards.

23

4. In various ways, the government has sought to guarantee the right of all

24

Americans to enjoy popular culture in private without having their sensibilities assaulted.

25

The Supreme Court, for example, long ago approved the right of the Federal

26

Communications Commission to prohibit radio stations from playing the George Carlin

27

“Seven Dirty Words” or “Filthy Words” monologue during hours when children might be

28

listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so,
1

ER368

DECLARATION OF REBECCA HAGELIN

Case 2:16-cv-04109-AB-PLA Document 65 Filed 09/12/16 Page 4 of 5 Page ID #:2442

1

Congress wanted to make the filtering of movies and television programs as widely,

2

readily, and inexpensively available to American families as possible. In deference to the

3

major Hollywood studios (which opposed the enactment of the Family Movie Act),

4

Congress required that to fall within the Act’s protections, filtering could be performed

5

only within a family’s home or by a third party and streamed to the family provided that: (i)

6

the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc);

7

(ii) the filtering was performed to specifications chosen by that family; and (iii) no fixed

8

copy of a filtered work was ever made.

9

5. Those requirements attempted to balance the strong public interest in making

10

filtered content as widely, readily, and inexpensively available to American families as

11

possible with the interests of the copyright owners, who understandably did not want the

12

market flooded with bootleg or derivative copies of their works and who wanted to protect

13

their exclusive rights to distribute copies of their works and to show them publicly, whether

14

on television, in movie theaters, or by using other methods.

15

6. Of the two methods of filtering authorized by the Family Movie Act, the third-

16

party filtering and streaming method best satisfies the intent of Congress that filtering be

17

widely, readily, and inexpensively available to American families. The reasons why that is

18

so are obvious. Works that are filtered and streamed by a third party can be viewed on a

19

wide range of devices, including desk top, lap top, and tablet computers and smart

20

telephones—as well as on television sets. Further, such works can be streamed to a family

21

virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In

22

contrast, home filtering requires that consumers buy a special DVD player and pay a

23

monthly rental fee for it. More importantly, the DVD player must be connected to a

24

television set, thus making it impractical to use when a family wants to watch content on a

25

television other than the one to which the box is connected, and impossible to use when

26

watching content on any type of computer or a smart telephone. Given that many parents

27

want to watch movies or television programs when they are not in front of a home

28
2

ER369

DECLARATION OF REBECCA HAGELIN

Case 2:16-cv-04109-AB-PLA Document 65 Filed 09/12/16 Page 5 of 5 Page ID #:2443

1

television, the third-party filtering and streaming method is of much greater benefit to them

2

than relying on a special DVD player connected to a television set.

3

7. One company that filtered content for consumers was not fully compliant with the

4

Family Movie Act because it performed one-size-fits-all filtering, as opposed to filtering

5

pursuant to the homeowner’s specifications. The studios reacted by suing it and forcing it

6

out of business. Although another company still provides home filtering through the use of

7

a DVD player, VidAngel is the only service that filters and streams content to consumers

8

wherever they are and to virtually whatever device they want. If the studios persuade the

9

Court to enjoin VidAngel from filtering and streaming content to American families--even

10

though those families have each lawfully purchased a copy of that content--the studios will

11

succeed in depriving a great many American families of a very valuable right granted to

12

them by Congress.

13
14
15

I declare under penalty of perjury of the laws of the United States that the foregoing
is true and correct.

16
17

Executed this 23rd day of August, 2016.

18
19
20

Rebecca Hagelin

21
22
23
24
25
26
27
28
3

ER370

DECLARATION OF REBECCA HAGELIN

Case 2:16-cv-04109-AB-PLA Document 64 Filed 09/12/16 Page 1 of 4 Page ID #:2435

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF PATRICK
TRUEMAN IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER371

DECLARATION OF PATRICK TRUEMAN

Case 2:16-cv-04109-AB-PLA Document 64 Filed 09/12/16 Page 2 of 4 Page ID #:2436

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER372

DECLARATION OF PATRICK TRUEMAN

Case 2:16-cv-04109-AB-PLA Document 64 Filed 09/12/16 Page 3 of 4 Page ID #:2437

September 8, 2016

I, Patrick A. Trueman, declare as follows:

1. I am the President & CEO of the National Center on Sexual Exploitation.
I make this declaration of my personal and first-hand knowledge and, if
called and sworn as a witness, I could and would testify competently
hereto.

2. I have been employed by National Center on Sexual Exploitation since
2009 and have served in my present capacity since January, 2011.
National Center on Sexual Exploitation has more than 700,000 active
supporters.

3. A matter of great concern to our supporters is their ability to watch
movies and television programs in private without being subjected to
types of content they regard as inappropriate or indecent. A significant
percentage of our adult supporters want to watch popular movies and
television programs, but only if they are not exposed to types of
content they personally find repugnant—such as violence, sex, nudity,
vulgarity, blasphemy, and the like. Much more commonly, our
supporters who are parents want to be able to watch movies and
television programs with their young children without exposing their
children to such content. Their concerns should be respected not only
because every family and every child is unique and no one is in a better
position to decide what is in a child’s best interest than the child’s
parents, but because they reasonably fear that watching violence at a
young engage may lead to an increased incidence of violent behavior
later in life and that watching inappropriate content in general may
degrade society’s moral standards.

4. In various ways, the government has sought to guarantee the right of
all Americans to enjoy popular culture in private without having their
sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to
prohibit radio stations from playing the George Carlin “Seven Dirty
Words” or “Filthy Words” monologue during hours when children
might be listening. In that vein, Congress enacted the Family Movie Act
in 2005. In doing so, Congress wanted to make the filtering of movies
and television programs as widely, readily, and inexpensively available
to American families as possible. In deference to the major Hollywood
studios (which opposed the enactment of the Family Movie Act),
Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and
streamed to the family provided that: (i) the family lawfully purchased

ER373

Case 2:16-cv-04109-AB-PLA Document 64 Filed 09/12/16 Page 4 of 4 Page ID #:2438
a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the filtering was performed to
specifications chosen by that family; and (iii) no fixed copy of a filtered work was ever made.

5. Those requirements attempted to balance the strong public interest in making filtered content
as widely, readily, and inexpensively available to American families as possible with the
interests of the copyright owners, who understandably did not want the market flooded with
bootleg or derivative copies of their works and who wanted to protect their exclusive rights to
distribute copies of their works and to show them publicly, whether on television, in movie
theaters, by streaming, or by using other methods.

6. Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering
and streaming method best satisfies the intent of Congress that filtering be widely, readily,
and inexpensively available to American families. The reasons why that is so are
obvious. Works that are filtered and streamed by a third party can be viewed on a wide range
of devices, including desk top, lap top, and tablet computers and smart telephones—as well as
on television sets. Further, such works can be streamed to a family virtually anywhere,
whether in a hotel, an airport, or a parent’s place of business. In contrast, home filtering
requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical
to use when a family wants to watch content on a television other than the one to which the
box is connected, and impossible to use when watching content on any type of computer or a
smart telephone. Given that many of our supporters want to watch movies or television
programs when they are not in front of a home television, the third-party filtering and
streaming method is of much greater benefit to them than relying on a special DVD player
connected to a television set.

7. One company that filtered content for consumers was not fully compliant with the Family
Movie Act because it performed one-size-fits-all filtering, as opposed to filtering pursuant to
the homeowner’s specifications. The studios reacted by suing it and forcing it out of
business. Although another company still provides home filtering through the use of a DVD
player, VidAngel is the only service that filters and streams content to consumers wherever
they are and to virtually whatever device they want. If the studios persuade the Court to
enjoin VidAngel from filtering and streaming content to American families--even though those
families have each lawfully purchased a copy of that content--the studios will succeed in
depriving a great many American families of a very valuable right granted to them by
Congress.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and
correct.

Executed this eighth day of September 2016, at 6:00pm.

By
Patrick A Trueman

President & CEO

ER374

Case 2:16-cv-04109-AB-PLA Document 63 Filed 09/12/16 Page 1 of 3 Page ID #:2432

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF MATT KIBBE
IN SUPPORT OF VIDANGEL’S
OPPOSITION TO MOTION FOR
PRELIMINARY INJUNCTION

28

ER375

DECLARATION OF MATT KIBBE

Case 2:16-cv-04109-AB-PLA Document 63 Filed 09/12/16 Page 2 of 3 Page ID #:2433

vs.

1
2

VIDANGEL, INC.,
Defendant.

3

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

4
5

VIDANGEL, INC.,

6

Counterclaimant,

7
8

vs.

10

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

11

Counterclaim Defendants.

9

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER376

DECLARATION OF MATT KIBBE

Case 2:16-cv-04109-AB-PLA Document 63 Filed 09/12/16 Page 3 of 3 Page ID #:2434

I, Matt Kibbe, declare as follows :
1.

2.
3.

4.

5.

6.

7.

8.

I am the President and Chief Community Organizer at Free the People. I make this declaration of my personal and
first-hand knowledge and, if called and sworn as a witness, I could and would testify competently hereto.
I have been employed by Free the People since I founded it in 2015. Prior to that, I founded Freedom Works in
2004, and served as President until 2015.
As a libertarian, I oppose government censorship. Freedom of speech and artistic expression are essential in a
free society, even when I find such expressions personally offensive. I also don't think the political process is very
good at defining, or defending, community values. Communities best define community values, and communities
are defined by the choices of parents, grandparents, brothers, sisters, and even next-door neighbors. Protected
and defended from the bottom up, values and standards thrive, and hold us together, despite all of our different
preferences.
How do you deal with content that some people find offensive? There are typically two answers to this question.
The first is central planning. Some government regulator, a censor, decides what the public should be allowed to
see. In the West, most societies have realized that censorship and the stifling of free expression is detrimental,
not only to freedom as an end in itself, but to a well-functioning society where creators are allowed to voice their
views in any way they see fit, and the public is free to consume it, or not.
This has long been regarded as the "free market" position for media. Customers pay for the content they want to
see, and if something offends them, they simply don't buy it. While this is far preferable to any form of
censorship, it does not give parents access to all of the technological tools available to them.
Congress enacted the Family Movie Act in 2005, with the intent of allowing parents more personal control.
Congress wanted to make the filtering of movies and television programs as widely, readily, and inexpensively
available to American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act's protections, filtering could be
performed only within a family's home or by a third party and streamed to the family provided that : (i) the family
lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the filtering was performed to
specifications chosen by that family; and (iii) no fixed copy of a filtered work was ever made.
Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why are so obvious. Works that are filtered and streamed by a third party can be
viewed on a wide range of devices, including desk top, lap top, and tablet computers and smart telephones-as
well as on television sets. Further, such works can be streamed to a family virtually anywhere, whether in a
hotel, an airport, or a parent's place of business. In contrast, home filtering requires that consumers buy a
special DVD player and pay a monthly rental fee for it. More importantly, the DVD player must be connected to a
television set, thus making it impractical to use when a family wants to watch content on a television other than
the one to which the box is connected, and impossible to use when watching content on any type of computer or
a smart telephone.
The company VidAngel has managed to carve out a niche in the content market by removing objectionable
material from popular films and television shows, and marketing it to viewers who find such material offensive.
This is a simple and elegant solution that gives parents more control without undermining artistic expression.
VidAngel is the only service that filters and streams content to consumers wherever they are and to virtually
whatever device they want. If the studios persuade the Court to enjoin VidAngel from filtering and streaming
content to consumers--even though those consumers have each lawfully purchased a copy of that content--the
studios will succeed in depriving a great many American families of a very valuable choice, one that protects
every interest without leaving anyone worse off.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Execm ed t ;, 9~ of September, 201:

at S:37 pm, EST. By

~

v\ \ \ V Q...-;7
Matt Ki be
Washington, DC

ER377

'\--\~

.

Case 2:16-cv-04109-AB-PLA Document 62 Filed 09/12/16 Page 1 of 5 Page ID #:2427

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF L. BRENT
BOZELL III IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER378

DECLARATION OF L. BRENT BOZELL III

Case 2:16-cv-04109-AB-PLA Document 62 Filed 09/12/16 Page 2 of 5 Page ID #:2428

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER379

DECLARATION OF L. BRENT BOZELL III

Case 2:16-cv-04109-AB-PLA Document 62 Filed 09/12/16 Page 3 of 5 Page ID #:2429

1

I, L. Brent Bozell III, declare as follows:

2

1.

I am the founder and President of the Media Research Center. I make

3 this declaration of my personal and first-hand knowledge and, if called and sworn as
4 a witness, I could and would testify competently hereto.
5

2.

I have been employed by the Media Research Center since 1987 and

6 have served in my present capacity ever since. Media Research Center has almost
7 1,000,000 members nationwide, over 10 million followers on Face book, and
8 delivers nearly 203 million impressions weekly through its websites, video channels,
9 news wire services, and Brent my nationally syndicated columns.
10

3.

Our members, most of whom come from America's vast Christian

11 community, are deeply concerned about the media and their effect on their lives and
12 those of their families. Our members see the Media Research Center as a leading
13 resource in holding media accountable. We have long been deeply concerned by the
14 impact of movies and TV shows on kids, which is why-in 1995-I founded and
15 served as the first President of the Parent's Television Council. In partnership with
16 legendary Hollywood comedian Steve Allen, former host of The Tonight Show, we
17 worked to raise awareness about the harmful effects of adult programming on
18 children. We encouraged Hollywood-as well as its advertisers-to create and
19 promote family-friendly programming. Today, the PTC, now run by President Tim
20 Winter, is the largest group in America dedicated to restoring responsibility in
21 Hollywood.
22

4.

In that capacity, like most Americans, I was supportive of services

23 launched in the early 2000s to provide parents with tools to filter content for their
24 kids in their homes. And I was deeply frustrated by the Hollywood studios'
25 collective hostility to such services, culminating in a lawsuit that resulted in the
26 closure of Clean Flix, a popular video filtering service. I recall distinctly that
27 Members of Congress in both the House and the Senate- with whom I have had
28

ER380

-1DECLARATION OF L. BRENT BOZELL III

Case 2:16-cv-04109-AB-PLA Document 62 Filed 09/12/16 Page 4 of 5 Page ID #:2430

1 regular contact for decades-were upset about Hollywood's disregard for the
2 national plea from parents for a return to decency. This sentiment was bi-partisan.
3 Members of both parties were enraged.
4

5.

During 2004 and 2005, as the Family Movie Act moved through

5 Congress under a variety of names and committees in both chambers and with
6 strong support from both parties, I was supportive of the measure and felt that it was
7 necessary to protect families from mature content. This sentiment was echoed in
8 letters of support by the American Medical Association and the American
9 Psychological Association. When the Family Movie Act passed with overwhelming
10 support in the House and Senate, I was convinced that we had solved the problem
11 and that parents would finally be protected and empowered with the right to filter
12 content such as violence, sex, nudity, vulgarity, blasphemy, in the home.
13

6.

When the Media Research Center discovered 11 years later that Disney

14 and three other studios had sued VidAngel, by far the most popular filtering service,
15 I was dumbfounded. How could they attempt to shut down a company that is clearly
16 in compliance with the Family Movie Act? We at the Media Research Center have
17 resolved to voice our support for the rights of families to filter content, to declare
18 unequivocally that VidAngel is a service our members and families desire, and to
19 remind the Court that Members of Congress clearly and expressly passed the Family
20 Movie Act-years after the passage of the Digital Millennium Copyright Act and
21 with full knowledge of that legislation in hindsight-to afford families this absolute
22 right to purchase content from a third party and "hire" said party to transmit said
23 content to them in the home.
24

7.

The Media Research Center and its 975,000 members strongly contend

25 that, should VidAngel be enjoined from operating, the effect would be an immediate
26 and undue harm to families who currently enjoy a legally protected status in their
27 homes. To shut down VidAngel-even temporarily-would be harmful to and

28

ER381

-2DECLARATION OF L. BRENT BOZELL III

Case 2:16-cv-04109-AB-PLA Document 62 Filed 09/12/16 Page 5 of 5 Page ID #:2431

1 contrary to the public interest. Therefore, we ask the Court today to reaffirm the will

2 of Congress and the legality ofthe Family Movie Act.

3
4 I declare under penalty of perjury of the laws of the United States that the foregoing
5 is true and correct.
6
7 Executed this

1 (_p day of August, 2016, at Re~+c n ,

VA

8
9

10
L. Brent Bozell III

11

12
13
14
15

16
17
18
19

20
21
22
23
24

25

26
27
28

ER382

-3DECLARATION OF L. BRENT BOZELL III

Case 2:16-cv-04109-AB-PLA Document 61 Filed 09/12/16 Page 1 of 4 Page ID #:2423

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF GEORGE E.
ROLLER IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER383

DECLARATION OF GEORGE E. ROLLER

Case 2:16-cv-04109-AB-PLA Document 61 Filed 09/12/16 Page 2 of 4 Page ID #:2424

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER384

DECLARATION OF GEORGE E. ROLLER

DocuSign Envelope ID: 755620BE-E4D0-4C5D-98F5-D3EFB4713217

Case 2:16-cv-04109-AB-PLA Document 61 Filed 09/12/16 Page 3 of 4 Page ID #:2425

I, George E. Roller, declare as follows:
1.

I am the Ambassador for the Center for Christian Statesmanship. I make this declaration of my personal
and first-hand knowledge and, if called and sworn as a witness, I could and would testify competently
hereto.

2.

I have been employed by the Center for Christian Statesmanship since 2003 and have served in my
present capacity since November of 2016. The Center for Christian Statesmanship has more than 250
people on our donor and prayer warrior list.

3.

A matter of great concern to our donors is their ability to watch movies and television programs in private
without being subjected to types of content they regard as inappropriate or indecent. A significant
percentage of our adult donors want to watch popular movies and television programs, but only if they
are not exposed to types of content they personally find repugnant—such as violence, sex, nudity,
vulgarity, blasphemy, and the like. Much more commonly, our donors who are parents and grandparents
want to be able to watch movies and television programs with their young children without exposing their
children to such content. Their concerns should be respected not only because every family and every
child is unique and no one is in a better position to decide what is in a child’s best interest than the child’s
parents, but because they reasonably fear that watching violence at a young age may lead to an increased
incidence of violent behavior later in life and that watching inappropriate content in general may degrade
society’s moral standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones—as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our donors want to watch movies or television programs when they are not in front of a home
television, the third-party filtering and streaming method is of much greater benefit to them than relying

ER385

DocuSign Envelope ID: 755620BE-E4D0-4C5D-98F5-D3EFB4713217

Case 2:16-cv-04109-AB-PLA Document 61 Filed 09/12/16 Page 4 of 4 Page ID #:2426

on a special DVD player connected to a television set.
7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act
because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner’s
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Executed this __6____day of September, 2016, at _Manassas_______, __Virginia_______.

By_George E. Roller_______________________
[NAME]

ER386

Case 2:16-cv-04109-AB-PLA Document 60 Filed 09/12/16 Page 1 of 4 Page ID #:2419

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF GARY MARX
IN SUPPORT OF VIDANGEL’S
OPPOSITION TO MOTION FOR
PRELIMINARY INJUNCTION

28

ER387

DECLARATION OF GARY MARX

Case 2:16-cv-04109-AB-PLA Document 60 Filed 09/12/16 Page 2 of 4 Page ID #:2420

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4
5

Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4
Filed concurrently herewith:

VIDANGEL, INC.,

6

Counterclaimant,

7
8

Judge: Hon. André Birotte Jr.

vs.

10

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

11

Counterclaim Defendants.

9

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER388

DECLARATION OF GARY MARX

DocuSign Envelope ID: 9A319DA7-D67A-49BC-B4E3-7FB6ED024412

Case 2:16-cv-04109-AB-PLA Document 60 Filed 09/12/16 Page 3 of 4 Page ID #:2421

I, Gary Marx, declare as follows:
1.

I am the President of Madison Strategies. I make this declaration of my personal and first-hand
knowledge and, if called and sworn as a witness, I could and would testify competently hereto.

2.

I have been employed by Madison Strategies since 2013 serve as President of a team the believes in
VidAngel and uses it with my own family.

3.

A matter of great concern to my team and family is our ability to watch movies and television programs in
private without being subjected to types of content they regard as inappropriate or indecent. We want to
watch popular movies and television programs, but only if they are not exposed to types of content they
personally find repugnant—such as violence, sex, nudity, vulgarity, blasphemy, and the like. Much more
commonly, my wife and I are parents want to be able to watch movies and television programs with our
young children without exposing their children to such content. Our concerns should be respected not
only because every family and every child is unique and no one is in a better position to decide what is in
a child’s best interest than the child’s parents, but because we reasonably fear that watching violence at a
young engage may lead to an increased incidence of violent behavior later in life and that watching
inappropriate content in general may degrade society’s moral standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones—as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of us want to watch movies or television programs when they are not in front of a home television,
the third-party filtering and streaming method is of much greater benefit to them than relying on a special
DVD player connected to a television set.

7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act

ER389

DocuSign Envelope ID: 9A319DA7-D67A-49BC-B4E3-7FB6ED024412

Case 2:16-cv-04109-AB-PLA Document 60 Filed 09/12/16 Page 4 of 4 Page ID #:2422

because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner’s
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.
I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Executed this ___30th___day of August, 2016, at _Flowery Branch___, ____GA_____.

By_______Gary A. Marx_________________

ER390

Case 2:16-cv-04109-AB-PLA Document 59 Filed 09/12/16 Page 1 of 4 Page ID #:2415

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF GARY BAUER
IN SUPPORT OF VIDANGEL’S
OPPOSITION TO MOTION FOR
PRELIMINARY INJUNCTION

28

ER391

DECLARATION OF GARY BAUER

Case 2:16-cv-04109-AB-PLA Document 59 Filed 09/12/16 Page 2 of 4 Page ID #:2416

vs.

1
2

VIDANGEL, INC.,
Defendant.

3

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

4
5

VIDANGEL, INC.,

6

Counterclaimant,

7
8

vs.

10

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

11

Counterclaim Defendants.

9

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER392

DECLARATION OF GARY BAUER

Case 2:16-cv-04109-AB-PLA Document 59 Filed 09/12/16 Page 3 of 4 Page ID #:2417

I, Gary L. Bauer declare as follows:
1.

I am the President of American Values. I make this declaration of my personal and first-hand knowledge
and, if called and sworn as a witness, I could and would testify competently hereto.

2.

I have been employed by American Values since 2000 and have served in my present capacity since
2000. American Values has thousands of supporters.

3.

A matter of great concern to our supporters is their ability to watch movies and television programs in
private without being subjected to types of content they regard as inappropriate or indecent. A
significant percentage of our adult supporters want to watch popular movies and television programs, but
only if they are not exposed to types of content they personally find repugnant—such as violence, sex,
nudity, vulgarity, blasphemy, and the like. Much more commonly, our supporters who are parents want
to be able to watch movies and television programs with their young children without exposing their
children to such content. Their concerns should be respected not only because every family and every
child is unique and no one is in a better position to decide what is in a child’s best interest than the child’s
parents, but because they reasonably fear that watching violence at a young engage may lead to an
increased incidence of violent behavior later in life and that watching inappropriate content in general
may degrade society’s moral standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones—as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our supporters want to watch movies or television programs when they are not in front of a
home television, the third-party filtering and streaming method is of much greater benefit to them than
relying on a special DVD player connected to a television set.

ER393

Case 2:16-cv-04109-AB-PLA Document 59 Filed 09/12/16 Page 4 of 4 Page ID #:2418

7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act
because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner’s
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.

I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
th

Executed this 9 day of August, 2016, at Arlington, Virginia.
By________________________
Gary Bauer

ER394

Case 2:16-cv-04109-AB-PLA Document 58 Filed 09/12/16 Page 1 of 4 Page ID #:2411

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF DAVID
BOZELL IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER395

DECLARATION OF DAVID BOZELL

Case 2:16-cv-04109-AB-PLA Document 58 Filed 09/12/16 Page 2 of 4 Page ID #:2412

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER396

DECLARATION OF DAVID BOZELL

Case 2:16-cv-04109-AB-PLA Document 58 Filed 09/12/16 Page 3 of 4 Page ID #:2413

I, David Bozell, declare as follows:
1.

I am the President of America, Inc.. I make this declaration of my personal and first-hand knowledge and,
if called and sworn as a witness, I could and would testify competently hereto.

2.

I have been employed by America Inc. since 2010 and have served in my present capacity since 2015.
America, Inc. has more than nine million social media fans, followers and subscribers.

3.

A matter of great concern to our organization is the public's ability to watch movies and television
programs in private without being subjected to types of content it regards as inappropriate or
indecent. Our subscribers, a significant percentage who are parents, want to be able to watch movies and
television programs with their young children without exposing their children to such content. Their
concerns should be respected not only because every family and every child is unique and no one is in a
better position to decide what is in a child's best interest than the child's parents, but because they
reasonably fear that watching violence at a young engage may lead to an increased incidence of violent
behavior later in life and that watching inappropriate content in general may degrade society's moral
standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin "Seven Dirty Words" or "Filthy Words" monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act's protections, filtering
could be performed only within a family's home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones-as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent's place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our subscribers want to watch movies or television programs when they are not in front of a
home television, the third-party filtering and streaming method is of much greater benefit to them than
relying on a special DVD player connected to a television set.

7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act
because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner's

ER397

Case 2:16-cv-04109-AB-PLA Document 58 Filed 09/12/16 Page 4 of 4 Page ID #:2414

specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.
I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Executed this 19th day of August, 2016, at Clifton, VA.

David Bozell
President, ForAmerica

ER398

Case 2:16-cv-04109-AB-PLA Document 57 Filed 09/12/16 Page 1 of 4 Page ID #:2407

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF DAVID
BARTON IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER399

DECLARATION OF DAVID BARTON

Case 2:16-cv-04109-AB-PLA Document 57 Filed 09/12/16 Page 2 of 4 Page ID #:2408

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER400

DECLARATION OF DAVID BARTON

Case 2:16-cv-04109-AB-PLA Document 57 Filed 09/12/16 Page 3 of 4 Page ID #:2409

I, David Barton, declare as follows:
1.

I am the Founder and President of WallBuilders. I make this declaration of my personal and first-hand
knowledge and, if called and sworn as a witness, I could and would testify competently hereto.

2.

WallBuilders began in 1988 and we now have thousands of followers.

3.

A matter of great concern to our followers is their ability to watch movies and television programs in
private without being subjected to types of content they regard as inappropriate or indecent. A
significant percentage of our adult followers want to watch popular movies and television programs, but
only if they are not exposed to types of content they personally find repugnant—such as violence, sex,
nudity, vulgarity, blasphemy, and the like. Much more commonly, our followers who are parents want to
be able to watch movies and television programs with their young children without exposing their
children to such content. Their concerns should be respected not only because every family and every
child is unique and no one is in a better position to decide what is in a child’s best interest than the child’s
parents, but because they reasonably fear that watching violence at a young engage may lead to an
increased incidence of violent behavior later in life and that watching inappropriate content in general
may degrade society’s moral standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possible. In deference to the major Hollywood studios (which opposed the
enactment of the Family Movie Act), Congress required that to fall within the Act’s protections, filtering
could be performed only within a family’s home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones—as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent’s place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our followers want to watch movies or television programs when they are not in front of a home
television, the third-party filtering and streaming method is of much greater benefit to them than relying
on a special DVD player connected to a television set.

7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act

ER401

Case 2:16-cv-04109-AB-PLA Document 57 Filed 09/12/16 Page 4 of 4 Page ID #:2410

because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner’s
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.
I declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.
Executed this __8th____day of September, 2016, at _Aledo____, __Texas__.

By____

ER402

____________________
[David Barton]

Case 2:16-cv-04109-AB-PLA Document 56 Filed 09/12/16 Page 1 of 4 Page ID #:2403

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF CONNOR
BOYACK IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER403

DECLARATION OF CONNOR BOYACK

Case 2:16-cv-04109-AB-PLA Document 56 Filed 09/12/16 Page 2 of 4 Page ID #:2404

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER404

DECLARATION OF CONNOR BOYACK

Case 2:16-cv-04109-AB-PLA Document 56 Filed 09/12/16 Page 3 of 4 Page ID #:2405

1

DECLARATION OF CONNOR BOYACK

2 I, Connor Boyack, declare as follows:
3

1.

I am the president of Libertas Institute, a public policy watchdog and

4 educational organization in Utah. I submit this declaration in support of defendant
5 and counter-claimant VidAngel Inc.’s preliminary injunction opposition. I have
6 personal knowledge of the facts set forth herein and, if called upon a witness, I
7 could and would testify competently thereto.
8

2.

I founded Libertas Institute in 2011 and have served its president ever

9 since. Over 50,000 identified Utahns are supporters of Libertas Institute’s work,
10 though our public interest efforts benefit many more throughout the state.
11

3.

Many of our supporters are families with young children. We publish a

12 book series of educational literature and spend considerable time and resources
13 trying to identify the values and principles the parents of these families have.
14 Without question I can say that a large majority of them are concerned with the
15 media content surrounding their young children and their inability to protect them
16 from content they deem inappropriate. These parents desire the freedom and
17 flexibility to customize the content they acquire for the particular benefit of their
18 children, whether it is by reducing or eliminating violence, sex, profanity, or other
19 indecent content. They are able to do this with physical media and desire to do it
20 with digital media as well.
21

4.

Content creators do not have the right to dictate how the viewer must

22 experience content. As an author of ten books, I know that some readers object to
23 various chapters in my books and skip them altogether. Some resell them, deeming
24 them undesirable for ownership. Others may disagree with limited parts, but find the
25 overall experience worth continuing to read. I cannot compel my readers to read the
26 entire book as I wrote it and intended it to be read. Similarly, film creators cannot
27 compel a viewing experience that is out of their control; ownership relinquishes the
28

ER405

-1DECLARATION OF CONNOR BOYACK

Case 2:16-cv-04109-AB-PLA Document 56 Filed 09/12/16 Page 4 of 4 Page ID #:2406

1 ability to dictate the experience, and families should have the right to employ tools
2 or techniques that can alter the viewing experience as necessary to protect the
3 sensibilities and vulnerable emotions of their young children.
4

5.

As I understand the law, the Family Movie Act provides VidAngel the

5 legal right to provide this customized experience for families that purchase copies of
6 videos through VidAngel’s website. This service has been a tremendous resource for
7 many of our supporters who are eager to consume content from which they
8 otherwise would have completely abstained. This opens a new market to film
9 producers while allowing these families the right to control their in-home, personal
10 viewing experience.
11

6.

Victory on the part of the plaintiff studios would cause great harm to

12 our supporters and their families, who would once again find themselves without the
13 ability to filter the films they are watching. VidAngel’s compliance with the law—
14 notwithstanding the objection of the plaintiff studios—fulfills Congress’s intent in
15 passing the Family Movie Act and provides a service beneficial to millions of
16 Americans—legal consumers who want to exercise the fundamental right of
17 regulating how the property they have properly acquired is personally used.
18
19

I declare under penalty of perjury under the laws of the United States of

20 America that the foregoing is true and correct to the best of my knowledge and
21 belief.
22
23

Executed this 7th day of September 2016, at Lehi, Utah.

24
25
26
27

By:

________
Connor Boyack
President, Libertas Institute

28

ER406

-2DECLARATION OF CONNOR BOYACK

Case 2:16-cv-04109-AB-PLA Document 55 Filed 09/12/16 Page 1 of 4 Page ID #:2399

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF HARRY R.
JACKSON JR. IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER407

DECLARATION OF HARRY R. JACKSON JR.

Case 2:16-cv-04109-AB-PLA Document 55 Filed 09/12/16 Page 2 of 4 Page ID #:2400

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER408

DECLARATION OF HARRY R. JACKSON JR.

Case 2:16-cv-04109-AB-PLA Document 55 Filed 09/12/16 Page 3 of 4 Page ID #:2401

I, Harry Jackson, declare as follows :

1.

I am Harry Jackson, Senior Pastor of Hope Christian Church and Bishop of the International Communion of
Evangelical Churches that has 7000 churches in the network. I make this declaration of my personal and
first-hand knowledge.

2.

1 have

3.

A matter of great concern to our members is their ability to watch movies and television programs in
private without being subjected to types of content they regard as inappropriate or indecent. A
significant percentage of our adult members want to watch popular movies and television programs, but
only if they are not exposed to types of content they personally find repugnant-such as violence, sex,
nudity, vulgarity, blasphemy, and the like. Much more commonly, our members who are parents want to
be able to watch movies and te levision programs with their young children without exposing their
children to such content. Their concerns should be respected not only because every family and every
child is unique and no one is in a better position to decide what is in a child's best interest than the child's
parents, but because they reasonably fear that watching violence at a young engage may lead to an
increased incidence of violent behavior later in life and that watching inappropriate content in general
may degrade society's moral standards.

4.

In various ways, the government has sought to guarantee the right of all Americans to enjoy popular
culture in private without having their sensibilities assaulted. The Supreme Court, for example, long ago
approved the right of the Federal Communications Commission to prohibit radio stations from playing the
George Carlin "Seven Dirty Words" or " Filthy Words" monologue during hours when children might be
listening. In that vein, Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted to
make the filtering of movies and television programs as widely, readily, and inexpensively available to
American families as possi ble. In deference to the major Hollywood studios (which opposed th e
enactment of the Family Movie Act), Congress required that to fall within the Act's protections, filtering
could be performed only within a family's home or by a third party and streamed to the family provided
that: (i) the family lawfully purchased a copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the
filtering was performed to specifications chosen by that family; and (iii) no fixed copy of a filtered work
was ever made.

5.

Those requirements attempted to balance the strong public interest in making filtered content as widely,
readily, and inexpensively available to American families as possible with the interests of the copyright
owners, who understandably did not want the market flooded with bootleg or derivative copies of their
works and who wanted to protect their exclusive rights to distribute copies of their works and to show
them publicly, whether on television, in movie theaters, by streaming, or by using other methods.

6.

Of the two methods of filtering authorized by the Family Movie Act, the third-party filtering and streaming
method best satisfies the intent of Congress that filtering be widely, readily, and inexpensively available to
American families. The reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top, and tablet computers
and smart telephones-as well as on television sets. Further, such works can be streamed to a family
virtually anywhere, whether in a hotel, an airport, or a parent's place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly rental fee for it. More
importantly, the DVD player must be connected to a television set, thus making it impractical to use when
a family wants to watch content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart telephone. Given that
many of our members want to watch movies or television programs when they are not in f ront of a home
television, the third-party filtering and streaming method is of much greater benefit to them than relying
on a special DVD player connected to a tel evision set.

ER409

been employed by Hope Christian Church since the 1980s and have served in my present capacity.

Case 2:16-cv-04109-AB-PLA Document 55 Filed 09/12/16 Page 4 of 4 Page ID #:2402

7.

One company that filtered content for consumers was not fully compliant with the Family Movie Act
because it performed one-size-fits-all filtering, as opposed to filtering pursuant to the homeowner's
specifications. The studios reacted by suing it and forcing it out of business. Although another company
still provides home filtering through the use of a DVD player, VidAngel is the only service that filters and
streams content to consumers wherever they are and to virtually whatever device they want. If the
studios persuade the Court to enjoin VidAngel from filtering and streaming content to American families-even though those families have each lawfully purchased a copy of that content--the studios will succeed
in depriving a great many American families of a very valuable right granted to them by Congress.

I declare the foregoing is true and correct.

Harry R. Jackson Jr.
Senior Pastor, Hope Christ ian Church
Bishop, International Communion of Evangelical Churches

ER410

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 1 of 8 Page ID #:2391

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite 1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF TIMOTHY F.
WINTER IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER411

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 2 of 8 Page ID #:2392

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER412

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 3 of 8 Page ID #:2393

1 I, Timothy F. Winter, declare:
2

1.

I submit this declaration in support of defendant and counterclaimant

3 VidAngel, Inc.’s (“VidAngel’s”) Opposition to Plaintiffs’ Motion for Preliminary
4 Injunction. I have personal knowledge of the facts set forth herein and, if called as a
5 witness, I could and would testify competently thereto.
6

2.

I am the President of the Parents Television Council (PTC). I make

7 this declaration of my personal and first-hand knowledge and, if called and sworn as
8 a witness, I could and would testify competently thereto.
9

3.

I have been employed by the PTC since April 1, 2003, and have served

10 in my present capacity as President since January 1, 2007. Since the PTC’s
11 founding in 1995, approximately 1.4 million Americans have joined the
12 organization in its mission to protect children from graphic sex, violence and
13 profanity in entertainment.
14

4.

The PTC is a non-profit, nonpartisan, secular, grassroots organization.

15 The PTC’s membership, its staff, and its governing board of directors are comprised
16 of people who reflect the depth and breadth of national concern about the issue of
17 children and toxic media content. The organization communicates daily with its
18 members, and with members of the public, who are frustrated by the lack of high19 quality programming that is free of harmful or offensive content, such as nudity,
20 violence, profanity, sexually-explicit dialogue, etc. They feel that Hollywood has
21 turned its back on most Americans by producing and distributing ubiquitously
22 graphic entertainment. They are hungry for entertainment content that is both
23 family-friendly and high-quality in terms of production value. And they realize that
24 most entertainment products would be appropriate for their consumption but for
25 specific instances that could otherwise be filtered out, without ruining the overall
26 entertainment value.
27
28

ER413

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 4 of 8 Page ID #:2394

1

5.

According to a national poll conducted by Rasmussen, 64% of all

2 Americans support federal regulation of indecent broadcasts by the Federal
3 Communications Commission; and 67% said that states should be able to prohibit
4 the sale of violent videogames to children. A national poll conducted by Zogby
5 found 74.6% of all Americans agreed or strongly agreed that there was too much
6 sex, violence and profanity on television. And a recent research report conducted by
7 the PTC found that literally 99% of primetime broadcast television programming
8 that features families as a central part of the storyline included some amount of sex,
9 violence or profanity in the show. The Annenberg Public Policy Center recently
10 reported that the level of gun violence in top-selling PG-13 movies has been rising,
11 and it now exceeds that in the most popular R-rated films.
12

6.

More than a thousand scientific research studies confirm what most

13 parents instinctively and intuitively believe to be true: the media content that
14 children consume can have a harmful impact on their mental, physical and
15 emotional wellbeing. Decades worth of scientific research have been conducted by
16 the premier organizations in the nation and, indeed, around the world, such as the
17 American Psychological Association, the American Academy of Pediatrics, the
18 National Institutes of Health, the RAND Corporation; and universities such as
19 Harvard, Stanford, Ohio State, Michigan, Iowa State, Arizona, Indiana, and
20 numerous others, just to name a few. The overwhelming weight of scientific
21 evidence supports a connection between media consumption and behavior,
22 especially for children. Much of the research opposing these findings stems from
23 those who produce and/or profit from explicit media content.
24

7.

The compelling government interest in this issue is abundantly clear

25 and cannot be diminished by those who would prefer that such an interest did not
26 exist.
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ER414

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 5 of 8 Page ID #:2395

1

8.

The Federal Government, in responding to the scientific evidence and

2 the will of the American people, have demonstrated a keen, decades-long interest in
3 protecting children from explicit entertainment content. Here are but a few of the
4 efforts undertaken at the Federal level:
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6
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a. Congress instructed the Federal Communications Commission
(FCC) to enforce indecency guidelines for broadcasts via radio
and television during times when children are likely to be in the
audience;

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b. In 1978 the Supreme Court of the United States (SCOTUS)
upheld the constitutionality of the FCC’s enforcement of
broadcast indecency in its famous F.C.C. v. Pacifica Found., 438
U.S. 726 (1978) decision;
c. In 1998 the FCC adopted a Report and Order authorizing a VChip and an age-based content rating system for broadcast and
cable television, thereby allowing viewers at home to block
explicit programming based on their personal preferences;
d. In 2005 the Congress passed the Family Entertainment and
Copyright Act (a/k/a the Family Movie Act), the express purpose
of which was to allow consumers the ability to lawfully filter
explicit content based on their personal preferences;

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e. In 2006 the Congress passed (unanimously in the Senate, and
379-35 in the House) the Broadcast Indecency Enforcement Act,
increasing by tenfold the fines able to be levied by the FCC
against broadcasters for violating the broadcast indecency law;
f. In 2008 the Congress passed (unanimously in both houses) the
Child Safe Viewing Act, instructing the FCC to identify
advanced content blocking measures to protect children from
explicit content;
g. In 2009, and again in 2012, SCOTUS refused to overturn its
Pacifica decision, despite multiple lawsuits brought by broadcast
television networks challenging the FCC’s continued
enforcement of broadcast indecency laws.

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ER415

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 6 of 8 Page ID #:2396

1

The compelling government interest in this issue is abundantly clear and

2 cannot be diminished by those who would prefer that such an interest did not exist.
3

9.

Each and every regulatory effort mentioned above was met with

4 animus and/or fierce opposition from forces in Hollywood. When Hollywood’s
5 numerous and intense lobbying efforts to kill the aforementioned legislative efforts
6 failed, they quickly followed with legal challenges. Back in the 1990s, when the V7 Chip was being considered, forces in Hollywood condemned the technology as
8 government-sponsored censorship. And even today, Hollywood is fighting the
9 efforts of the PTC and other pro-family groups to provide greater accuracy,
10 consistency, transparency and public accountability of the television content ratings
11 system, which triggers the V-Chip to block certain explicit content deemed harmful
12 by parents. The TV networks rate their own programs, and they control the
13 Oversight Monitoring Board that was put in place ostensibly to ensure the rating
14 system’s integrity. Hollywood’s effort to impede in VidAngel’s lawful business is
15 consistent with their efforts to similarly impede in every other business or regulatory
16 effort that would allow a viewer’s ability to filter out harmful or explicit content.
17

10.

When Congress passed the Family Movie Act, the legislative intent was

18 crystal clear. Guidelines were put in place. And those guidelines properly balanced
19 the legal and reasonable business needs of Hollywood with the strong public interest
20 goals of making content filtering available to American families. VidAngel has
21 carefully crafted its business operations – at great financial peril to itself – so as to
22 meet the guidelines set forth in the legislation. They are clearly in compliance with
23 both the spirit and the letter of the Family Movie Act. And, just as the legislation
24 intended, millions of families who otherwise would not be able to view a film or a
25 program are now able to do so. Ironically, the VidAngel service actually broadens
26 the market of potential customers for Hollywood’s products.
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ER416

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 7 of 8 Page ID #:2397

1

11.

The studios that are suing VidAngel must believe that if a standard is

2 good, then a double-standard is twice as good. When Hollywood believes content
3 should be altered or filtered, they eagerly step in and do it themselves. About a
4 decade ago, NBC secured the broadcast rights to the beloved children’s animated
5 series Veggie Tales; but when the network aired the program, they removed
6 references to God – despite the program being created by Christian producers who
7 hoped to share Christian values. And when the television program Duck Dynasty
8 was among the most-watched programs every week, “bleeps” were edited into the
9 programming to suggest harsh profanity was being used, even when no actual
10 profanity was in fact being used. The network wanted to create the false impression
11 in order to bring more “edginess” to the show, despite the fact that the show was so
12 popular precisely because it was squeaky-clean. And on every program on every
13 network, promotional materials are placed above or below the program during its
14 broadcast. The “altering” of the producer’s “work” occurs all hours of every day on
15 every network. The notion that Hollywood must vigorously prevent content
16 filtering or editing for the sake of the creative community doesn’t pass the laugh17 test.
18

12.

VidAngel is the only service that allows consumers to filter out

19 offensive content while streaming the remaining content to their personal viewing
20 devices, wherever they happen to be. VidAngel is clearly operating within both the
21 spirit and the letter of the Family Movie Act. VidAngel allows each parent and each
22 family to consume entertainment content precisely in accord with their unique
23 standards. If the Hollywood studios convince the Court to impede or interfere with
24 VidAngel’s legitimate and lawful business, American families will be deprived of
25 the very right granted to them by Congress in the Family Movie Act.
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ER417

DECLARATION OF TIMOTHY F. WINTER

Case 2:16-cv-04109-AB-PLA Document 54 Filed 09/12/16 Page 8 of 8 Page ID #:2398

1

I declare under penalty of perjury under the laws of the United States of

2 America that the foregoing is true and correct.
3
4

Executed on September 8, 2016, at

Lo.S A"-9-e 1~ .r

CA

5
6
7

Timothy F. Winter

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ER418

DECLARATION OF TIMOTHY F. WINTER

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 1 of 9 Page ID #:2382

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
Jaime Marquart (Bar No. 200344)
[e-mail]
Scott M. Malzahn (Bar No. 229204)
[e-mail]
Brian T. Grace (Bar No. 307826)
[e-mail]
BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
Los Angeles, California 90067
Telephone: [phone]
Facsimile: [phone]
Peter K. Stris (Bar No. 216226)
[e-mail]
Brendan Maher (Bar No. 217043)
[e-mail]
Elizabeth Brannen (Bar No. 226234)
[e-mail]
Daniel Geyser (Bar No. 230405)
[e-mail]
STRIS & MAHER LLP
725 South Figueroa Street, Suite 1830
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
David W. Quinto (Bar No. 106232)
[e-mail]
3007 Franklin Canyon Drive
Beverly Hills, California 90210
Telephone: [phone]
Facsimile: [phone]
Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,
Plaintiffs,

ER419

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF DONNA RICE
HUGHES IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

DECLARATION OF DONNA RICHE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 2 of 9 Page ID #:2383

vs.

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VIDANGEL, INC.,
Defendant.

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VIDANGEL, INC.,
Counterclaimant,

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vs.

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Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4
Filed concurrently herewith:

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Judge: Hon. André Birotte Jr.

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

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Counterclaim Defendants.

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ER420

DECLARATION OF DONNA RICE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 3 of 9 Page ID #:2384

1 I, Donna Rice Hughes, declare:
1.

I am the President of Enough Is Enough, a non-partisan, 501(c)(3) non-

profit organization, which emerged in 1994 as the national leader on the front lines
to make the Internet safer for children and families. Since then, EIE has pioneered
and led the effort to confront online pornography, child pornography, child stalking
and sexual predation with innovative initiatives and effective communications. We
are dedicated to continue raising public awareness about the dangers of Internet
pornography, sexual predators, other dangers and advance solutions that promote
equality, fairness and respect for human dignity with shared responsibility between
the public, technology, and the law. We stand for freedom of speech as defined by
the Constitution of the United States; for a culture where all people are respected
and valued; for a childhood with a protected period of innocence; for healthy
sexuality; and for a society free from sexual exploitation.
2.

I make this declaration based on my personal and first-hand knowledge

of the issues discussed herein and am prepared to take follow-up action on this
matter as needed. I was employed by Enough Is Enough in 1994 as the
Communications Director and have served as the CEO and President since 2002.
3.

Our constituents and supporters strongly agree that every child deserves

a protected age of innocence and the opportunity to thrive during childhood free
from Internet-enabled sexual exploitation. Their hearts and minds are innocent,
tender, and trusting and need to be safeguarded from the negative influences of
increasingly violent and sexualized media.
4.

Our organization has been a national leading advocate for effective

public policy, parental education and empowerment and corporate responsibility to
protect children from dangers in the digital age.

ER421

-1DECLARATION OF DONNA RICHE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 4 of 9 Page ID #:2385

1

5.

The lead plaintiff in this case—Disney—claims that VidAngel is

2 harming their business, that shutting down this family-friendly service is in the
3 public interest, and that VidAngel is violating copyright law. Yet, in protecting its
4 own copyright and protecting families from harmful content, Disney has been
5 strangely silent on a matter that has been on EIE’s radar screen for almost 15 years.
6 I first brought an offensive porn site called DisneyPornLand.com to Disney’s
7 attention in the late 1990’s when I discovered it in my early work as an Internet
8 safety advocate. I later brought it to the attention of Disney policy leaders in DC
9 office and the public at large in 2008 when—as the executive producer host of the
10 award winning Internet Safety 101 DVD teaching series and curriculum—I used
11 Disneypornland.com as an example of the misuse of cartoon characters by
12 pornographers . Lastly, a couple of years later while briefing top Disney executives
13 Burbank, CA. on the Internet Safety 101 Program, I showed these same executives
14 the disneypornland.com website and specifically asked them to pursue the many
15 misuses of their beloved Disney characters and the abuse of dozens of possible
16 copyright and trademark infringements. I had hoped at this point, that Disney would
17 take action aggressive action to enforce their copyrights. But today, this website has
18 not been taken down and has only grown to incorporate the latest popular Disney
19 characters.
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ER422

-2DECLARATION OF DONNA RICE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 5 of 9 Page ID #:2386

1

6.

As a leader in the fight to protect children from dangers online, I find

2 Disney’s actions in suing VidAngel to be confusing, oddly hypocritical, and
3 squarely against the public interest. Families have the right to view filtered content
4 under the Family Movie Act of 2005. Furthermore, the notion that families should
5 be empowered with technology to protect their children from all manner of
6 objectionable or harmful media and Internet content is reinforced by several
7 Supreme Court decisions on legislation of which I have been involved. Specifically,
8 the Communications Decency Act and the Child Online Protection Act, passed by bi
9 partisan support in Congress, were not upheld by the Supreme Court. A key reason
10 given in each case was that the least restrictive means of protecting children from
11 indecent, harmful, and pornographic content online is through the use of filtering
12 technologies that are available to parents. Filtering technologies allow persons who
13 should not or do not want to be exposed to such content to filter it while permitting
14 adults who wish to see it do so. Reno v. ACLU, 521 U.S. 844, (1997); ACLU v.
15 Gonzalez, 478 F. Supp. 2d 775 (E.D. Pa. 2007), aff’d sub nom ACLU v. Mukasey,
16 534 F.3d 181 (3d Cir. 2008), cert. denied, 555 U.S. 1137 (2009). In Reno v. ACLU,
17 the Court noted that it has “repeatedly recognized the governmental interest in
18 protecting children from harmful materials.” Id. at 875 (citing cases). Significantly,
19 it noted that a less restrictive alternative to banning all indecent speech on the
20 Internet would be to “require[e] that indecent material be ‘tagged’ in a way that
21 facilitates parental control of material coming into their homes.” Id. at 879. Later,
22 in Ashcroft v. ACLU, 542 U.S. 656 (2004), the Supreme Court held that filters were
23 a less restrictive than the Child Online Protection Act (“COPA”). It noted that
24 “[t]he primary alternative considered by the District Court was blocking and
25 filtering software. Blocking and filtering software is an alternative that is less
26 restrictive than COPA, and, in addition, likely more effective as a means of
27 restricting children's access to materials harmful to them. The District Court, in
28

ER423

-3DECLARATION OF DONNA RICE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 6 of 9 Page ID #:2387

1 granting the preliminary injunction, did so primarily because the plaintiffs had
2 proposed that filters are a less restrictive alternative to COPA and the Government
3 had not shown it would be likely to disprove the plaintiffs' contention at trial.” Id. at
4 666-67. The Supreme Court agreed with the District Court’s determination because
5 “[f]ilters are less restrictive than COPA. They impose selective restrictions on
6 speech at the receiving end, not universal restrictions at the source.” Id. at 668.
7

7.

In light of these Supreme Court decisions, the burden of protecting

8 children from both soft core pornography (indecency) and obscene pornography has
9 fallen onto the shoulders of parents. The Internet Safety 101 Program a program of
10 EIE’s for which I served as Executive Producer, is a proven-evidenced based
11 curriculum created in partnership with the Department of Justice and is
12 Congressionally funded. It was designed to prevent Internet-initiated dangers
13 threatening children by educating, equipping and empowering parents to protect
14 children from online pornography, sexual predators and cyberbullies, as well as
15 social media, online gaming and mobile dangers. A key action item for parents
16 emphasized in the 30 minute safety section of the dvd/film program is to implement
17 parental controls tools, specifically filtering.
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ER424

-4DECLARATION OF DONNA RICE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 7 of 9 Page ID #:2388

1

8.

In various ways, the government has sought to guarantee the right of all

2 Americans to enjoy popular culture in private without having their sensibilities
3 assaulted. The Supreme Court, for example, long ago approved the right of the
4 Federal Communications Commission to prohibit radio stations from playing the
5 George Carlin “Seven Dirty Words” or “Filthy Words” monologue during hours
6 when children might be listening. In that vein, Congress enacted the Family Movie
7 Act in 2005. In doing so, Congress wanted to make the filtering of movies and
8 television programs as widely, readily, and inexpensively available to American
9 families. In deference to the major Hollywood studios (which opposed the
10 enactment of the Family Movie Act), Congress required that to fall within the Act’s
11 protections, filtering could be performed only within a family’s home or by a third
12 party and streamed to the family provided that: (i) the family lawfully purchased a
13 copy of the work (i.e., a DVD or, today, a Blu-ray disc); (ii) the filtering was
14 performed to specifications chosen by that family; and (iii) no fixed copy of a
15 filtered work was ever made.
16

9.

Those requirements attempted to balance the strong public interest in

17 making filtered content available to American families as possible with the interests
18 of the copyright owners, who understandably did not want the market flooded with
19 bootleg or derivative copies of their works and who wanted to protect their
20 exclusive rights to distribute copies of their works and to show them publicly,
21 whether on television, in movie theaters, by streaming, or by using other methods.
22
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ER425

-5DECLARATION OF DONNA RICE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 8 of 9 Page ID #:2389

1

10.

Of the two methods of filtering authorized by the Family Movie Act, it

2 is my understanding that the third-party filtering and streaming method satisfies the
3 intent of Congress that filtering be widely, readily, and inexpensively available to
4 American families. Works that are filtered and streamed by a third party can be
5 viewed on a wide range of devices, including desk top, lap top, and tablet computers
6 and smart telephones—as well as on television sets. Further, such works can be
7 streamed to a family virtually anywhere, whether in a hotel, an airport, or a parent’s
8 place of business. In contrast, home filtering requires that consumers buy a special
9 DVD player and pay a monthly rental fee for it. More importantly, the DVD player
10 must be connected to a television set, thus making it impractical to use when a
11 family wants to watch content on a television other than the one to which the box is
12 connected, and impossible to use when watching content on any type of computer or
13 a smart telephone. Bottom line, Enough Is Enough’s position for protecting youth
14 from pornography and other objectionable online content should be shared by the
15 government, corporate America and the parents. It seems to me that VidAngel is
16 making it much easier for parents to be empowered to easily and economically
17 manage the type of film content their children view online.
18 //
19 //
20 //
21 //
22 //
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24 //
25 //
26 //
27 //
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ER426

-6DECLARATION OF DONNA RICE HUGHES

DocuSign Envelope ID: EBFD8D68-71C8-4ED2-8C79-9A07E4A5233F

Case 2:16-cv-04109-AB-PLA Document 53 Filed 09/12/16 Page 9 of 9 Page ID #:2390

1

11.

VidAngel is the only service that I am aware of that filters and streams

2 content to consumers wherever they are and to virtually whatever device they
3 choose. If the studios persuade the Court to enjoin VidAngel from filtering and
4 streaming content to American families--even though those families have each
5 lawfully purchased a copy of that content--the studios will succeed in depriving a
6 great many American families of a very valuable right granted to them by Congress.
7
8

I declare under penalty of perjury of the laws of the United States that the foregoing
is true and correct.

9 Executed this 12th day of September, 2016, at ________, _________.
10
11
12

__________________________________
Donna Rice Hughes

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ER427

-7DECLARATION OF DONNA RICE HUGHES

Case 2:16-cv-04109-AB-PLA Document 52 Filed 09/12/16 Page 1 of 5 Page ID #:2377

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Case 2:16-cv-04109-AB-PLA Document 52 Filed 09/12/16 Page 5 of 5 Page ID #:2381

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ER432

39I$+28

Case 2:16-cv-04109-AB-PLA Document 51 Filed 09/12/16 Page 1 of 3 Page ID #:2374

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF BOB
WALISZEWSKI IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER433

DECLARATION OF BOB WALISZEWSKI

Case 2:16-cv-04109-AB-PLA Document 51 Filed 09/12/16 Page 2 of 3 Page ID #:2375

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4
Filed concurrently herewith:

5
6

Judge: Hon. André Birotte Jr.

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER434

DECLARATION OF BOB WALISZEWSKI

Case 2:16-cv-04109-AB-PLA Document 51 Filed 09/12/16 Page 3 of 3 Page ID #:2376

I, Bob Waliszewski, the director of Focus on the Family’s Plugged In department, can say without
question after 25 years here that our constituency is greatly concerned about problematic content (most
often sexual dialogue, sexual situations, nudity, vulgarity, extreme violence, harsh profanities, misuses of
Jesus’ Name, pro-drug sentiment, etc.), and desire to watch movies and television only if this type of
content is edited out.
Often this concern regards parents wanting to safeguard the hearts and minds of their children. But often
(as it is with my wife and me personally), it’s adults who choose not be bombarded with said content.
Our website currently has 1,200,000 users each month and 8,000,000 people listen to our Plugged In
Movie Review radio features (on 1,100 radio outlets across the U.S.). These constituents come to us
because they are equally concerned by entertainment that assaults their personal values.
That is why I, as the director of Focus on the Family’s entertainment review department (and
PluggedIn.com), strongly support the Family Movie Act of 2005, and agree wholeheartedly with
Congress that the filtering of movies and television programs needs to be widely, readily, and
inexpensively available to American families. Millions of families have come to depend on our contentcentral reviews because they are indeed concerned about troublesome content. Traditionally, avoidance of
these movies was a discerning family’s only solution. The Family Movie Act changed that.
Although the Family Movie Act of 2005 expressly authorizes several means to offer filtered content to
families, the first method it offers is the most important because it best allows all families to enjoy filtered
content at all times. The first method provides that if a family member lawfully purchases a copy (such as
a DVD or Blu-ray disc) of a movie or television show, purchaser may ask a third party to filter it to his or
her specifications and transmit (stream) it to the family for private viewing. Unlike methods that require
that filtering be performed by a device costing hundreds of dollars that is attached to a television set, the
first method allows families to enjoy filtered not only on television sets but on desktop, laptop, and tablet
computers, as well as on smart telephones, and allows families to enjoy filtered content in private
wherever they are, such as in a hotel room while on vacation.
I believe the congressional intent of the Family Movie Act of 2005 was to allow families, in the privacy
of their own home, and with their children’s hearts and minds at the forefront, to have the right to watch a
movie with problematic content excised from their viewing experience. Again, representing millions of
constituents using Focus on the Family’s Plugged In, I want to reiterate that I fully support private film
editing as allowed by law.
Robert S. Waliszewski
August 5, 2016

ER435

Case 2:16-cv-04109-AB-PLA Document 50 Filed 09/12/16 Page 1 of 5 Page ID #:2369

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24
25
26

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

27

Plaintiffs,

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF ANDREA
LAFFERTY IN SUPPORT OF
VIDANGEL’S OPPOSITION TO
MOTION FOR PRELIMINARY
INJUNCTION

28

ER436

DECLARATION OF ANDREA LAFFERTY

Case 2:16-cv-04109-AB-PLA Document 50 Filed 09/12/16 Page 2 of 5 Page ID #:2370

vs.

1
2

VIDANGEL, INC.,
Defendant.

3
4

Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

5
6

VIDANGEL, INC.,
Counterclaimant,

7
vs.

8
9
10
11

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

12

Counterclaim Defendants.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ER437

DECLARATION OF ANDREA LAFFERTY

Case 2:16-cv-04109-AB-PLA Document 50 Filed 09/12/16 Page 3 of 5 Page ID #:2371

I, Andrea Lafferty, declare as follows:

1. I am a mother and care about the impact movies and television have on my son
and his generation.
2. I am the President of the Traditional Values Coalition. I make this declaration of
my personal and first-hand knowledge and, if called and sworn as a witness, I
could and would testify competently hereto.
3. I have been employed by the Traditional Values Coalition since 1990 and have
served in my present capacity since 2011. Traditional Values Coalition has
millions of supporters including 43,000 churches, ministries and individuals and a
long record of advocating a Biblical worldview in the public square in
Washington, DC and across America.
4. Our churches, ministries and individuals are greatly concerned about their
inability to watch movies and television programs in private without being
subjected to types of content they regard as inappropriate or indecent. A
significant percentage of our adult church leaders and members want to watch
popular movies and television programs, but only if they are not exposed to types
of content they personally find abhorrent-such as violence, sex, nudity,
vulgarity, blasphemy, and the like. Much more commonly, our churches,
ministries and individuals are made up of parents who want to be able to
watch movies and television programs with their young children without
exposing them to such content. Their concerns should be respected not only
because every family and every child is unique and no one is in a better position
to decide what is in a child's best interest than the child's parents, but because
they reasonably fear that watching violence at a young age may desensitize
children to violent behavior and could lead to increased incidence of
violent behavior later in life and that watching inappropriate content, in
general, will degrade our society's moral standards and place current and
future generations of Americans in spiritual jeopardy. As Chief Justice
Warren Burger wrote in the landmark parental rights case Wisconsin v. Yoder:

"The history and culture of Western civilization reflect a strong tradition of
parental concern for the nurture and upbringing of their children. This primary
role of the parents in the upbringing of their children is now established beyond
debate as an enduring American tradition." We hope that courts will give an
appropriate weight to this most important parental right, supporting parental
direction in their children's upbringing.

Traditional Values Coalition is an inter-denominational public policy organization speaking on behalf of 43,000 churches.
For more information, call [phone]. TVC 139 C Street, 5£., Washington, DC 20003. Web site address: www.traditionalvalues.org

ER438

Case 2:16-cv-04109-AB-PLA Document 50 Filed 09/12/16 Page 4 of 5 Page ID #:2372

5. In various ways, the government has sought to guarantee the right of all
Americans to enjoy popular culture in private without having their values and
sincerely-held religious beliefs assaulted. The Supreme Court, for example, long
ago approved the right of the Federal Communications Commission to prohibit
radio stations from playing the George Carlin "Seven Dirty Words" or "Filthy
Words" monologue during hours when children might be listening. In that vein,
Congress enacted the Family Movie Act in 2005. In doing so, Congress wanted
to make the filtering of movies and television programs as widely, readily, and
inexpensively available to American families as possible. In deference to the
major Hollywood studios (which opposed the enactment of the Family Movie
Act), Congress required that to fall within the Act's protections, filtering could be
performed only within a family's home or by a third party and streamed to the
family provided that: (i) the family lawfully purchased a copy of the work (i.e., a
DVD or, today, a Blu-ray disc); (ii) the filtering was performed to specifications
chosen by that family; and (iii) no fixed copy of a filtered work was ever made.
6. Those requirements attempted to balance the strong public interest in making
filtered content as widely, readily, and inexpensively available to American
families as possible with the interests of the copyright owners, who
understandably did not want the market flooded with bootleg or derivative copies
of their works and who wanted to protect their exclusive rights to distribute copies
of their works and to show them publicly, whether on television, in movie
theaters, by streaming, or by using other methods.
7. Of the two methods of filtering authorized by the Family Movie Act, the third-party
filtering and streaming method best satisfies the intent of Congress that filtering
be widely, readily, and inexpensively available to American families. The
reasons why that is so are obvious. Works that are filtered and streamed by a
third party can be viewed on a wide range of devices, including desk top, lap top,
and tablet computers and smart telephones-as well as on television
sets. Further, such works can be streamed to a family virtually anywhere,
whether in a hotel, an airport, or a parent's place of business. In contrast, home
filtering requires that consumers buy a special DVD player and pay a monthly
rental fee for it. More importantly, the DVD player must be connected to a
television set, thus making it impractical to use when a family wants to watch
content on a television other than the one to which the box is connected, and
impossible to use when watching content on any type of computer or a smart
telephone. Given that many of our members of our affiliated-churches want to
watch movies or television programs when they are not in front of a home
television, the third-party filtering and streaming method is of much greater
benefit to them than relying on a special DVD player connected to a television
set.
8. One company that filtered content for consumers was not fully compliant with the
Family Movie Act because it performed one-size-fits-all filtering, as opposed to
filtering pursuant to the homeowner's specifications. The studios reacted by
suing it and forcing it out of business. Although another company still provides
home filtering through the use of a DVD player, VidAngel is the only service that
filters and streams content to consumers wherever they are and to virtually
whatever device they want. If the studios persuade the Court to enjoin VidAngel

ER439

Case 2:16-cv-04109-AB-PLA Document 50 Filed 09/12/16 Page 5 of 5 Page ID #:2373
from filtering and streaming content to American families--even though those
families have each lawfully purchased a copy of that content--the studios will
succeed in depriving a great many American families of a very valuable right
granted to them by Congress. We believe the parents are best-suited to
protect the interests of their children. Courts, the studios and all levels of
government would do well to remember that the common good of our
society is best served by fully supporting such conscientious parents.

I declare under penalty of perjury of the laws of the United States that the foregoing is
true and correct.
Executed this

ER440

31

day of August, 2016, at

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 1 of 10 Page ID #:1992

1 R;:an G. Baker (Bar No. 214036)
rbak~bakermarquart.com

2 Ja.ime

arquart (Bar No. 200344)

JmaMuart~bakermar'Nmrt.com

3 Scott . Ma zahn (Bar o. 229204)
[e-mail]
4 BrianT. Grace (Bar No. 307826)
bY(Ece~bakermar:a_uart.com

5 BA R ARQUA T LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: ~424j 652-7800
7 Facsimile: 424 652-7850
8 Peter K. Stris (Bar No. 216226)
peter .stris~strismaher .com
9 Brendan Ma er ~ar No. 217043)
brendan.maher strismaher. com
10 Elizabeth Brannen ~ar No. 226234)
elizabeth.brannen strismaher.com
11 Daniel Geyser~ar o. 230405)
danielje:lfer strismaher.com
12 STRIS
A RLLP
725 South Figueroa Street, Suite 1830
13 Los Angeles, California 90017
Telephone: ~213j 995-6800
14 Facsimile: 213 261-0299
15 David W.

~into

(Bar No. 106232)
idAngel.com
16 30 7 Fran lin Canyon Drive
Beverly
California 90210
17 Telephone: 213j 604-1777
Facsimile: 732 377-0388
18
19 Attorneys for Defendant and
Counterclaimant VidAngel, Inc.
20
dduinto~

Hillf

21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24 DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
25 TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
26 BROS. ENTERTAINMENT, INC.,
Plaintiffs,

27
28

ER441

CASE NO. CV16-04109-AB (PLAx)
DECLARATION OF DAVID W.
QUINTO IN SUPPORT OF
VIDANGEL'S MEMORANDUM OF
POINTS AND AUTHORITIES IN
OPPOSITION TO PRELIMINARY
INJUNCTION MOTION

vs.
DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 2 of 10 Page ID #:1993

1 VIDANGEL, INC.,

2

Defendant.

3

Judge: Hon. Andre Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

4

5
6
7

VIDANGEL, INC.,

8
9

Counterclaimant,
vs.

10 DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
11 TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
12 BROS. ENTERTAINMENT, INC.,
13
14

Counterclaim Defendants.

15
16
17

18
19
20
21

22
23
24
25
26
27
28

ER442

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 3 of 10 Page ID #:1994

1

2
3
4

5
6
7
8

I, David W. Quinto, declare as follows:
1.

I am a member of the Bar of the State of California and of this

Court. Since August 1, 2016, I have served as the general counsel of defendant
VidAngel, Inc. ("VidAngel"). I submit this declaration in support of defendant and
counterclaimant VidAngel' s Memorandum of Points and Authorities in Opposition to
Plaintiffs' Motion for Preliminary Injunction. I make this declaration of my personal
and firsthand knowledge and, if called and sworn as a witness, I could and would
testify competently hereto.

9

Disney's Refusal to Permit VidAngel to Address Disney's
"lrrenarable InJuries" Pending Resolution of This Action
Confirms That ts Injuries Are Merely Sham and Pretext

10
11

2.

12

Because three of the six major motion picture studios refused to sue

13 VidAngel, I will refer to the four plaintiffs herein by the name of the lead plaintiff,
14 Disney. That Disney's claimed "irreparable injuries" are neither irreparable nor
15

injuries but are purely pretextual is reflected in an e-mail exchange I had with

16 plaintiffs' counsel, Kelly Klaus, on August 29, 2016. In the first message, I proposed
17 solutions to several of the alleged "irreparable injuries" Disney's declarant, Tedd
18 Cittadine, identified. I wrote:
19
20
21

22
23

I was struck by two things while reading Tedd Cittadine's declaration
explaining how VidAngel' s business potentially could harm
plaintiffs. One, explained m paragraph 30, is that "VidA!lgel limits the
number of devices to which a consumer can stream." VidAngel has
always sought to work with content owners. It did not realize that
limitmg the number of devices it allows its customers to use to view
streamed content caused a problem for the studios. Unless y:ou
immediately advise otherwise, VidAngel will consider removing that
limitation in deference to the studios' concerns.

24
25
26
27

28

ER443

ORCLA R ATTON OF OA Vm W OlJTNTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 4 of 10 Page ID #:1995

Second, paragraph 29 of Mr. Cittadine's declaration avers that the "outof-stock' notices VidAngel sends to its customers after its stock of
DVDs and Blu-ray discs of a given movie have sold out are
"inconsistent with the idea of video on 'demand' and risks causing
consumer frustration and confusion, thereby hurting the broader ondemand streaming market." He explains that the out-of-stock notices
are of "particular significance since the 'always available, never out of
stock' character of on-demand streaming IS one of the essential
differentiating characteristics of the on-demand ex...12erience from that of
traditional, pbysical DVD rental." Ironically, VidAngel also hates
sending sucfi. notices. It does not wish to dis~ppoint its customers but
wants to make its service available reliably. Given the parties' mutual
interest in avoiding out-of-stock notices, I welcome ).'OUr thoughts
concerning how this problem can best be mitigated while we awmt a
final merits determination of the parties' rights. llerhaps we could agree
on a reasonable license fee to stream filtered content m lieu of sending
out-of-stock notices?

1
2
3
4
5
6
7
8
9
10

3.

Mr. Klaus's response ignored entirely my suggested means to eliminate

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14

If VidAngel takes its legal obligations seriousJy, VidAngel will
immediately stop ripping my clients' works from DVDs and Blu-ray
discs and will remove those works from its infringing service. We fino
your email below to be as disingenuous as your origmal letters to each
of my clients. In addition it IS simply astonishing that VidAngelwhile pursuing legally and factually baseless antitrust claims-proposes
to engage my clients in joint licensing discussions. To reiterate what I
have tola Baker Marquart multiple times: my clients absolutely will not
engage in any joint licensing discussions.

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Unless and until your client stops illegally circumventing the access
control on my clients' DVDs and Blu-ray discs and stops infringing
their co_pyriglited works, we have little to discuss. Otherwise, we look
forwardto liaving the Court resolve these issues in October.

20
21
22

4.

I then attempted again to find a solution to the purported "irreparable

23

injuries" by proposing that the parties negotiate a license to permit VidAngel to stream

24

filtered content, paying Disney a streaming fee while abandoning entirely any

25

purchase of discs. Mr. Klaus never responded to that message, which stated:

26
27
28

ER444

2

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 5 of 10 Page ID #:1996

1

VidAngel is willing to abandon its Family Movie Act exemption (and
with it the requirement that consumers must purchase copies of discs)
and instead pay a streaming license fee to stream filtered content for a
number of reasons. Those reasons include, without limitation, that (i)
when the studios someday stop selling discs, VidAngel' s business
model will cease to be viable; (ii) subject to a single exception
evidently made for litigation purposes, movies are made available for
streaming before they are released on disc, meaning that VidAngel must
disappoint its customers by not making popular movies avairable for
filtered streaming when other companies make them available for
unfiltered streammgf· (iii) VidAngel's customers don't like the buy-sell
back business mode and wonder why they can't pay a simple rental or
streaming fee; (iv) VidAngel disappoints its customers every time it
sends an "out-of-stock" notice; (v) VidAngel faces an ever increasing
administrative burden in managing a constantly increasing number oi
discs in its vault; (vi) VidAngel would like to avoid the burden of
having to purchase discs from multiple sources; and (vii) discs of
television shows frequently have diffenng numbers of episodes, thereby
making int monumental1y difficult to allow someone who has
purchased a disc with just three episodes to watch those three episodes
while allowing someone who has purchased a disc with five episodes to
watch all five.

2
3
4
5
6
7
8
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I take it that if VidAngel agreed to a license to exclusively filter and
stream your clients' content while abandoning its disc-purchase business
model, that would resolve both the DMCA and the infringement
claims. Are your clients open to discussing a license witli those
parameters?

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16

A true and correct copy of my August 29, 2016 e-mail message exchange with Mr.

17

Klaus is attached as Exhibit A.
If Disne~Pornow-aphDDoes Not Cause Injury, Disnex Cannot
Credibly rgue 1 hat aighly-Regarded Fi termg Service Would

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19

5.

Disney's contentions that ifVidAngel customers receive "out-of-stock"

20

notices or are dissatisfied with the quality of VidAngel' s service, Disney might

21

possibly be "irreparably damaged" if those acts sully the reputation of all streaming

22

services should be viewed skeptically given the very high bar Disney sets before

23

viewing anything as damaging. Attached as Exhibit B is a true and correct copy of the

24

home page ofDisneyPomLand.com, which uses Disney characters to engage in

25

various sex acts, the Disney mark, and the Disney script. The "whois lookup" records

26

reflect that the DisneyPornLand.com registrant has owned that domain name since

27

1999. As a Uniform Domain Name Resolution Policy ("UDRP") panelist accredited

28

by the World Intellectual Property Organization ("WIPO") and as a lawyer who, while

ER445

3

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 6 of 10 Page ID #:1997

1 in law firm practice, brought several successful in rem actions in the Eastern District
2

of Virginia to obtain domain names used in bad faith by unknown or foreign

3

registrants to cause harm to U.S. trademark owners, I know that it would be a simple

4

and inexpensive matter for Disney to take ownership of that domain name. That it has

5

not done so leads me to conclude that Disney does not believe that the association of

6

its mark and characters with pornography injures it, thus rendering its contention that

7

something both wholesome and approved by Congress trivial and commonplace might

8

less than credible.

9

Disney Would Benefit if It Enjoyed the Reputation VidAngel Is Earning

10

6.

Disney has not offered a shred of evidence showing that consumers

11

cannot distinguish among various streaming services and therefore view all as

12

providing identical quality. If Disney were correct, though, Disney would benefit

13

from that consumer naivete because VidAngel's service has attracted glowing praise

14

from the news media, as reflected in the true and correct copies of recent articles

15

concerning VidAngel collectively attached as Exhibit C.

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VidAngel's Filtered Streaming Service Addresses an Important Public Need

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7.

Attached as Exhibit D is a true and correct copy of a letter dated July 26,

19

2000, signed on behalf of the American Academy of Pediatrics, the American Medical

20

Association, the American Academy of Child & Adolescent Psychiatry, the American

21

Academy of Family Physicians, the American Psychological Association, and the

22

American Psychiatric Association presented at the Impact of Entertainment Violence

23

on Children Congressional Public Health Summit. The letter expresses the belief of

24

the signatories that television and movies "are powerful learning tools" but asserts that

25

when they "showcase violence - and particularly in a context which glamorizes or

26

trivializes it - the lessons learned can be destructive." The signatories further noted

27

that "well over 1000 studios - including reports from the Surgeon General's Office,

28

the National Institute of Mental Health, and numerous studies conducted by leading

ER446

4

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 7 of 10 Page ID #:1998

1

figures within our medical and public health organizations ... point overwhelmingly

2

to a causal connection between media violence and aggressive behavior in some

3

children."

4

8.

Attached as Exhibit E is a true and correct copy of a letter sent to

5

VidAngel by the Deseret Management Corporation on behalf of itself and Bonneville

6

International Corporation, Bonneville Communications, KSL TV and Radio, Deseret

7

Digital Media, Deseret Book Company, and Deseret News Publishing Company "to

8

express our view that VidAngel provides a valuable service that is very much in the

9

public interest."

10
Disney Never Expressed any Pre-Litigation Concern to Me

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9.

In July 2015, and again in August 2015, I wrote to the general counsel of

each of 16 content providers, including both motion picture studios and television
networks. Among the addressees were the heads of the legal departments of the four
plaintiffs herein. (True and correct copies of the letters I sent to Disney are attached to
the Harmon Declaration, filed concurrently herewith.) Shortly thereafter, the firm I
was then a partner of reversed its earlier decision that I could represent VidAngel and
asked that I terminate my representation of it.
10.

In September 2015, I received a voicemail message from an in-house

lawyer at Fox and an e-mail message from an in-house lawyer at Time Warner, Inc.
asking that I get in touch with each to discuss my letters. I advised each by return
message that I no longer represented VidAngel and referred each to the Baker
Marquart firm. Each has now been designated by the plaintiffs as someone who
should be given access even to discovery materials designated as "Attorneys' Eyes
Only." I was therefore surprised to see the suggestion in Disney's Memorandum of
Points and Authorities that the lawyers were incompetent to understand the
significance of my letters, which provided a detailed description of VidAngel's
services and asked whether they believed that VidAngel' s service violated the

ER447

5

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 8 of 10 Page ID #:1999

1 copyright laws in any respect: "Mr. Quinto sent the letters to General Counsels, not to
2

people in business development." Id. at 10:16-17.

3

Disney Has Leveled Numerous DisinJ:enuous or
Flatly Untruthful Allegations at VidAngel

4
5

11.

Disney has untruthfully alleged that VidAngel "pays nothing for the

'If 1, and has falsely accused VidAngel of"cutting out
7 payments to copyright owners." Id., 'If 4. Disney has also mischaracterized VidAngel
8 as "no different from many other unlawful online services," id., 'If 1, and leveled the

6

9

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fact, VidAngel pays a lot. An accounting report I saw showed that through May 2016,

12
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unjust competitive advantage." Memorandum of Points and Authorities at 1:23-24. In

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patently false accusation that "VidAngel does not [pay], and it thereby acquires an

10

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rights it exploits," Complaint,

VidAngel had spent over a third of its gross revenues to buy DVD and Blu-ray discs

13

sold by the studios and to re-sell to consumers, many of whom would not otherwise

14

watch the movies recorded on them.

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Disney claims that "legitimate services negotiate and pay for the rights

16

they use [but] VidAngel does not, and it thereby acquires an unjust competitive

17

advantage." Memorandum of Points and Authorities at 1:22-24. As shown above,

18

though, that is simply untrue. VidAngel would love to negotiate to acquire streaming

19

rights to move away from its DVD/Blu-ray disc model, but Disney refuses to

20

negotiate, and even responds boorishly to requests to do so.

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Disney has also misrepresented that VidAngel does not use an

22

"authorized copy" to filter movies. Memorandum of Points and Authorities at 2:19-

23

21; at 21:27-22:2. But as Disney knows, VidAngel buys authorized copies sold by

24

Disney.

25

14.

Disney additionally mischaracterizes the "fundamental difference

26

between VidAngel and licensed VOD (video on demand) services" as one of

27

"permission," Complaint,

28

required to pay a streaming fee after buying a disc, they would pay Disney twice to

ER448

'If 3, but if, as Disney contends, VidAngel users were

6

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 9 of 10 Page ID #:2000

1 watch a movie once.
2

15.

Disney further misrepresents that "VidAngel makes many newly released

3

titles available for streaming well before they are available via licensed VOD

4

services." Complaint, ,-r 5. In fact, based on my experience in the industry, virtually all

5

popular motion pictures go through a standard release sequence: First to theaters,

6

second to expensive "collectors' edition" discs, third to streaming, fourth to ordinary

7

DVD and Blu-ray discs, fifth to subscription television channels, and last to free

8

television channels (unless, of course, they are really bad, in which case they go

9

"direct to DVD," or, as sometimes called, "dreck to DVD"). Disney implies that this

10

occurred with the most recent Star Wars movie. Complaint, ,-r 5. The implication is

11

once again dishonest - in fact, Disney made the film available for digital HD

12

"purchase" 1 (but not a single-day rental) on April 1, four days before it was available

13

on DVD (April 5). Thus, as always, VidAngel could not make that title available until

14

after it was available on digital HD. To my knowledge, that was the only time any of

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the plaintiffs herein made a digital version of a film available for "purchase" only (and

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not a single-day rental). To my knowledge, VidAngel has never streamed filtered

17

content of a movie "well before," or at all before, licensed VOD services did so.

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Disney further suggests that VidAngel can "undercut the pricing of

19

authorized distributors," and can even charge "about the same as Redbox." Complaint,

20

,-r 50. (Redbox is a DVD and Blu-ray disc rental service.) In fact, VidAngel and

21

Redbox buy discs at the same time, although Redbox undoubtedly obtains them at

22

lower cost.

23
24

17.

Disney also claims that VidAngel's "'buy-sellback' scheme is an

artifice[.]" Memorandum of Points and Authorities at 3:15. In fact, VidAngel sells

25
1

26
27

A VOD "purchase" is not really a purchase, but merely a license to stream a VOD
title within the authorized, closed system or a licensed VOD 2.rovider, with several
restrictions attached that do not allow for filtering. Meldal Dec. ,1,-r 25-27.

28

ER449

7

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 46 Filed 09/12/16 Page 10 of 10 Page ID #:2001

1

physical copies of DVDs to its customers at a set $20 price; VidAngel records the title

2

transfer and removes the purchased DVDs from its available inventory; VidAngel's

3

customers may retain ownership of the physical DVDs forever without paying any

4

additional fees; and VidAngel' s customers may ask that the DVDs be sent to them. 2

5

18.

With no small amount of chutzpah, Disney suggests that an earlier

6
7

VidAngel developed technology to filter content using Google Chromecast

10

devices but the studios prevented VidAngel from proceeding. They evidently advised

11

Google that their terms of service agreements prohibited Google from allowing any

12
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to its current service." Memorandum of Points and Authorities at 6:1-2. In fact,

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VidAngel technology, which relied on filtering content streamed by Google Play, was

third party to filter their content.

Complaint,~

47. Disney claims that VidAngel "decided to 'pivot' its business

Google then disabled filtering on Chromecast,

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forcing VidAngel to develop its current technology.

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I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

16

Executed this 12th day of September, 2016, at Los Angeles, California.

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David W. Quinto

20
21
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2

Disney does not challenge VidAngel' s right to repurchase disks and re-sell to
other customers. Such activity is protected by the first sale doctrine, Quality King
Distributors, Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135 140 (199"8'), and is no
different than a college bookstore that buys back books to reseli for the next semester.

28

ER450

8

DECLARATION OF DAVID W. QUINTO

Case 2:16-cv-04109-AB-PLA Document 45 Filed 09/12/16 Page 1 of 4 Page ID #:1946

21

UNITED STATES DISTRICT COURT

22

CENTRAL DISTRICT OF CALIFORNIA

23

WESTERN DIVISION

24 DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
25 TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
26 BROS. ENTERTAINMENT, INC.,
Plaintiffs,

27
28

CASE NO. CV16-04109-AB (PLAx)

DECLARATION OF JAIME W.
MARQUART IN SUPPORT OF
VIDANGEL'S MEMORANDUM OF
POINTS AND AUTHORITIES IN
OPPOSITION TO PRELIMINARY
INJUNCTION MOTION

vs.

ER451
DECLARATION OF JAIME MARQUART I/S/0 VIDANGEL'S OPPOSITION TO PRELIMINARY INJUNCTION

Case 2:16-cv-04109-AB-PLA Document 45 Filed 09/12/16 Page 2 of 4 Page ID #:1947

1 VIDANGEL, INC.,

Judge: Hon. Andre Birotte Jr.

2
3

Date: October 24, 2016
Time: 10:00 a.m.
Courtroom: 4

4

Filed concurrently herewith:

Defendant.

5
6

VIDANGEL, INC.,

7
8

Counterclaimant,
vs.

9 DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
10 TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
11 BROS. ENTERTAINMENT, INC.,
12
13

Counterclaim Defendants.

14

15
16
17
18

19
20
21

22
23
24
25
26
27

28

ER452
DECLARATION OF JAIME MARQUART 1/S/0 VIDANGEL'S OPPOSITION TO PRELIMINARY INJUNCTION

Case 2:16-cv-04109-AB-PLA Document 45 Filed 09/12/16 Page 3 of 4 Page ID #:1948

1 I, Jaime W. Marquart, hereby declare:
2

1.

I am a partner at Baker Marquart LLP, attorneys for defendant and

3

counter claimant VidAngel, Inc. ("VidAngel"). I submit this declaration in support

4

of defendant and counterclaimant VidAngel, Inc.'s ("VidAngel's") Application to

5

File Under Seal the specific documents described therein. I am over the age of 18

6

and make this declaration of my own personal knowledge. If called upon to testify

7

as to these matters, I would testify as follows.

8

2.

On October 9, 2015, I called an in-house lawyer at Fox who is

9
10

ex::

0

case. I did so after I was advised by David Quinto that she had left a message for

11
0
0

designated to receive Attorneys' Eyes Only, Highly Confidential documents in this

him asking that he call her. Mr. Quinto explained that she left the message after he

12

was asked by his then employer to terminate his representation of VidAngel. She

13

did not return my call. On October 16, 2015, I sent an e-mail message to a senior

14

in-house lawyer at Time Warner, Inc., the parent of plaintiff Warner Bros.

15

Entertainment Inc., who has also been designated to receive Attorneys' Eyes Only,

16

Highly Confidential documents in this case. He responded by e-mail asking that we

17

set a time to discuss the letters Mr. Quinto had sent on VidAngel's behalf. Although

18

we scheduled a time to speak to one another, he later canceled our scheduled call

19

and did not ask to re-schedule it. Other than those two contacts, I received no

20

communications from any plaintiff or any of their attorneys before they filed suit on

21

June 9, 2016. At no time did any employee, attorney, or representative of any ofthe

22

plaintiffs (or, for that matter, of any other recipient of Mr. Quinto's letters sent on

23

VidAngel's behalf) express any objection to VidAngel's service to me before this

24

action was commenced.

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3.

Attached as Exhibit A are true and correct copies of excerpts

26

from the August 9, 2016, deposition of Plaintiffs' Rule 30(b)(6) designee and the

27

senior vice president of digital distribution at Plaintiff Fox, Tedd Cittadine. The

28

excerpts in this exhibit have not been marked confidential pursuant to the protective

ER453

1

DECLARATION OF JAIME MARQUART 1/S/0
VIDANGEL'S OPPOSITION TO PRELIMINARY
TN.Tl JNCTTON

Case 2:16-cv-04109-AB-PLA Document 45 Filed 09/12/16 Page 4 of 4 Page ID #:1949

1 order in this case (Dkt. 21 ).
2

4.

Attached as Exhibit B true and correct copies of excerpts

3

from the August 9, 2016, deposition of Plaintiffs' Rule 30(b)(6) designee and the

4

senior vice president of digital distribution at Plaintiff Fox, Tedd Cittadine. The

5

excerpts in this exhibit have been marked highly confidential pursuant to the

6

protective order in this case (Dkt. 21 ).

7

5.

Attached as Exhibit C is a true and correct copy of the Errata Sheet

8

from the August 9, 2016, deposition of Plaintiffs' Rule 30(b)(6) designee and the

9

senior vice president of digital distribution at Plaintiff Fox.

10

6.

Attached as Exhibit D is a true and correct copy of a privilege log

11
ex:

0
0

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marked Highly Confidential pursuant to the Protective Order entered by this Court

12

on August 19,2016, Dkt. No. 23.

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Attached as Exhibit E is a true and correct copy of a letter from Kelly

Klaus, counsel for Plaintiffs in this matter, to me, dated August 24, 2016.

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I declare under the penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

18

Executed on September 12, 2016, at Los Angeles

19
20
21
22
23
24
25
26
27
28

ER454

2

DECLARATION OF JAIME MARQUART I/S/0
VIDANGEL'S OPPOSITION TO PRELIMINARY
TN.TTJNC:TTON

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 1 of 14 Page ID #:1967

EXHIBITB
REDACTED PUBLIC FILING

HIGHLY CONFIDENTIAL

ER455

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 2 of 14 Page ID #:1968

Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 1
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,
Plaintiffs,

)
)
)

)
)
)
)
)

) Case No. CV16-04109

vs.
VIDANGEL

I

INC .

)
)

I

)
)

____________________________ )
Defendant.

)

AND RELATED CROSS-ACTION.

______________________________ ))
(COMPLETE CAPTION ON THE FOLLOWING PAGE.)
C 0 N F I D E N T I A L
(PURSUANT TO PROTECTIVE ORDER, THE FOLLOWING
TRANSCRIPT HAS BEEN DESIGNATED
"HIGHLY CONFIDENTIAL")

Pursuant to Rule 30(b) (6)
VIDEOTAPED DEPOSITION OF TEDD CITTADINE
Tuesday, August 9, 2016
at 9:19 a.m.

eLitigation Services, Inc. - els®els-team.com

HIGHLY CONFIDENTIAL

ER456

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 3 of 14 Page ID #:1969

Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 83

A.

1

Uh-huh.
MR. KLAUS:

2

And just -- and so just --

3

just for my purposes, Mr. Marquart, when you're

4

using "filtering" in this depos-

5

unless you say otherwise, that's going to mean

6

"making imperceptible limited portions of audio or

7

video content of a motion picture"?

deposition,

8

MR. MARQUART:

Yes.

9

And I specifically mean to include the

10

examples that the witness gave, which would be

11

bleeping -- he mentioned to filter out or make

12

imperceptible audio -- and removing

13

which would be to skip the video.
MR. KLAUS:

14

15

~nd

cutting,

Removing, cutting, skipping

video?

16

MR. MARQUART:

17

MR. KLAUS:

18

MR. MARQUART:

Yes.

Okay.
Those were examples of

19

filtering that I also mean to include.

20

BY MR. MARQUART:

21
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REDACTED

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eLitigation Services, Inc. - [e-mail]

HIGHLY CONFIDENTIAL

ER457

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 4 of 14 Page ID #:1970

Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 84
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HIGHLY CONFIDENTIAL

ER458

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 5 of 14 Page ID #:1971
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 96
1

A.

-- more specifically.

2

Q.

Let's talk about those.

3

A.

Okay.

4

Q.

What's digital sell-through?

5

A.

Digital sell-through is a right that we

6

grant our clients to offer consumers the ability to

7

access content for a very long period of time,

8

whether it's by download or whether it's by stream,

9

to a number of authorized devices.
Q.

10
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13

Okay.

And the second category you

REDACTED

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eLitigation Services,

Inc.

- els®els-team.com

HIGHLY CONFIDENTIAL

ER459

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 6 of 14 Page ID #:1972
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
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- els®els-team.com

HIGHLY CONFIDENTIAL

ER460

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 7 of 14 Page ID #:1973
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
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eLitigation Services, Inc. - els®els-team.com

HIGHLY CONFIDENTIAL

ER461

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 8 of 14 Page ID #:1974
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 99
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HIGHLY CONFIDENTIAL

ER462

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 9 of 14 Page ID #:1975
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
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HIGHLY CONFIDENTIAL

ER463

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 10 of 14 Page ID
#:1976
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
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HIGHLY CONFIDENTIAL

ER464

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 11 of 14 Page ID
#:1977
Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)

1
2
3

--

REDACTED

4
5

BY MR. MARQUART:

6

Q.

And I know the answer to this.

7

But, to your knowledge, does Fox allow

8

any third party to assist that user in filtering

9

out content from their streamed copy?
MR. KLAUS:

10

Object to the form of the

11

question, outside the scope, calls for a legal

12

conclusion.

13

If you know of any third-party agreements

14

that specifically authorize that, you can say "Yes"

15

or "No."
THE DEPONENT:

16
17

BY MR. MARQUART:
Q.

18
19

No.

Okay.

Based on your counsel's

clarification, I have another question.
Does -- do you believe that Fox has to

20
21

authorize the filtering of that digital copy before

22

it may legally be filtered by the user?
MR. KLAUS:

23

Object to the form of the

24

question, calls for a legal conclusion.

It's

25

outside the scope of the deposition topics.
eLitigation Services, Inc. - els®els-team.com

HIGHLY CONFIDENTIAL

ER465

Page 102

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 12 of 14 Page ID
#:1978

Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 227
1

If it were illegal,

2

to that behavior, yes.

3

I would object to --

BY MR. MARQUART:

Q.

4
5

The -- the second example you mentioned

on Harm Number 2

6

A.

Uh-huh.

7

Q.

-- control of revenue and license

8

agreements was -- the second specific example you

9

gave, was that existing VOD users might complain to

10

you.
Do you recall that?

11
A.

12
13

Existing VOD users being existing VOD

clients?

14

Q.

Yeah.

Sorry.

15

A.

Yeah.

16

Q.

Let me specify that.

17

A.

Yeah.

18

Q.

So your existing VOD clients might come

19

20

distributors' activities and say that it's harming

21

,.....

to you and complain about the unauthorized

their business?

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24
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A.

Yes, they do complain.

REDACTED
eLitigation Services, Inc.

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HIGHLY CONFIDENTIAL

ER466

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 13 of 14 Page ID
#:1979

Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
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-

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Q.

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complaints?

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A.

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And you don't normally receive specific
They're normally generic?

Regarding specific unauthorized services,

that's --

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Q.

25

A.

If you -that's correct.

eLitigation Services, Inc.

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HIGHLY CONFIDENTIAL

ER467

Case 2:16-cv-04109-AB-PLA Document 45-2 Filed 09/12/16 Page 14 of 14 Page ID
#:1980

Highly Confidential -Pursuant to Protective Order
of Tedd Cittadine-Rule (30) (b) (6)
Page 343
A.

1
2

A -- a document called "Standard terms

and conditions"?

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Yes.

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,.....

Q.

A.

Yes, we typically have -- have that in

5
6
7

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our documents.

REDACTED

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--

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Q.

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Okay.

And just so I'm clear, in that

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that term that I just described -- making the

24

alteration, modification, or deletion -- that would

25

be a form of filtering like we discussed
eLitigation Services, Inc. - els®els-team.com

HIGHLY CONFIDENTIAL

ER468

Case 2:16-cv-04109-AB-PLA Document 45-4 Filed 09/12/16 Page 1 of 1 Page ID #:1986

EXHIBIT D FOR
PUBLIC FILING HAS
BEEN REDACTED IN
ITS ENTIRETY

EXHIBIT D
ER469

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 1 of 44 Page ID #:1791

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite 1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18 Attorneys for Defendant and
19 Counterclaimant VidAngel, Inc.
20

UNITED STATES DISTRICT COURT

21

CENTRAL DISTRICT OF CALIFORNIA

22

WESTERN DIVISION

23
24
25

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,
Plaintiffs,

26
vs.

27
28

VIDANGEL, INC.,

ER470

CASE NO. 16-cv-04109-AB (PLAx)
REDACTED VERSION OF
DOCUMENT PROPOSED TO BE
FILED UNDER SEAL
DECLARATION OF SIGURD
MELDAL IN SUPPORT OF
VIDANGEL’S MEMORANDUM OF
POINTS AND AUTHORITIES IN
OPPOSITION TO PRELIMINARY
INJUNCTION MOTION

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 2 of 44 Page ID #:1792

1

Defendant.

2
3

VIDANGEL, INC.,
Counterclaimant,

4
vs.

5
6
7
8

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

9

Counterclaim Defendants.

10

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

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ER471

1

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 3 of 44 Page ID #:1793

1

I, Dr. Sigurd Meldal, declare:

2

1.

I submit this declaration in support of defendant and counterclaimant

3

VidAngel, Inc.’s (“VidAngel’s”) Memorandum of Points and Authorities in

4

Opposition to Plaintiffs’ Motion for Preliminary Injunction. I have personal

5

knowledge of the facts set forth herein and, if called and sworn as a witness, I could

6

and would testify competently hereto.

7

2.

I have been retained by VidAngel as an expert in this case. I am a

San Jose State University and a computer scientist for Quandary Peak Research and

10

I have served as a consulting Professor in the Electrical Engineering Department at

11

BAKER MARQUART LLP

professor of computer engineering, software engineering and computer science at

9

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

8

Stanford University.

12

3.

I have received several honors and awards over the course of my

13

career, including the Fulbright-Hayes Fellowship, the Carl-Erik Fröberg Award, a

14

Certificate of Recognition from the California State Assembly, and a Certificate of

15

Special Recognition from the U.S. House of Representatives.

16

Professional Honors and Experience

17

4.

I have served on many professional committees and organizations. For

18

example, I serve as a Commissioner of the national Engineering Accreditation

19

Commission of the Accreditation Board for Engineering and Technology (ABET.)

20

(The Engineering Accreditation Commission of ABET defines the standards for

21

engineering education and determines whether programs are up to those standards or

22

not.) I am also a member of the Fulbright Association, and a Senior Member of the

23

Institute of Electrical and Electronics Engineers (IEEE) and of the Association for

24

Computing Machinery (ACM).

25
26
27
28

ER472

2

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 4 of 44 Page ID #:1794

1

5.

I have more than 30 years of experience working on security and

2

networked systems, starting with contributions to the surveillance systems for the

3

nuclear arms treaties of the ‘80s and including the creation of degree curricula in

4

security and privacy. I was the founding director of the Silicon Valley Big Data and

5

Cybersecurity Center as well as a member of the Strategic Task Force on

6

Cybersecurity for the State of California. I am also Co-Director of the NSF Science

7

and Technology Center for Research in Ubiquitous Secure Technologies (the “NSF

8

TRUST Center”) at the University of California, Berkeley.

9

6.

I have previously testified in a number of cases concerning intellectual

BAKER MARQUART LLP

property that relates to mobile devices, networked systems and services-oriented

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

architectures, including in particular smartphones, wireless communication and

12

telephony, network-based data systems, location-oriented web services and mobile

13

device positioning systems as well as streaming video content across the internet.

14

My Curriculum Vitae is attached as Exhibit A.

15

Documents and Things Reviewed

16

7.

The opinions expressed in this declaration are based on my professional

17

experience as well as my use and review of VidAngel’s service and the following

18

documents:

19

(i)

VidAngel’s Answer and Counter Complaint (Dkt. 11);

20

(ii)

The deposition testimony of Tedd Cittadine and Neal Harmon;

21

(iii)

Deposition exhibit 15 (a description of VidAngel’s filtering

22

technology), deposition exhibit 16 (a description of VidAngel’s process for

23

preparing discs for streaming), deposition exhibit 17 (VidAngel’s instructions

24

for adding new movie and television show titles to its inventory), and

25

deposition exhibit 19 (VidAngel’s encoding and segmenting checklist);

26
27
28

ER473

3

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 5 of 44 Page ID #:1795

1

(vi)

2

27), declarations of Tedd Cittadine (Unredacted) (Dkt. 28) and Robert

3

Schumann (Unredacted) (Dkt. 29) in support of Plaintiffs’ Motion for

4

Preliminary Injunction;

5

(v)

6

Entertainment Sales Update;

7

(vi)

8

Vudu, iTunes Store, and YouTube;

9

(vii)

10

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

13
14
15
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17
18
19
20

8.

23
24
25
26
27
28

The standard terms of service for VOD Google Play, Amazon Video,

ClearPlay, Inc.’s website available at https://www.clearplay.com.

In the mid to late 1990s, digital versatile discs (“DVDs”) began to

replace VHS tapes as the primary media onto which motion pictures were recorded
for sale in the home entertainment market. By 2005, the home entertainment market
was dominated by DVDs. Attached as Exhibit B is a true and correct copy of a
Digital Entertainment Group report dated January 8, 2007, stating that in 2005,
approximately 94% of digital home entertainment was consumed using discs. By
2006, this percentage increased to well over 99%. But as I will explain later, the
home entertainment market is now moving rapidly away from physical discs, to
services that stream a title directly to a user’s television or other device.
Discs Were Encrypted by the Late 1990s

21
22

The Digital Entertainment Group’s DEG Year-End 2006 Home

DVD and Blu-ray Discs Dominated the
Home Entertainment Market in 2005

11
12

The Plaintiffs’ Motion for a Preliminary Injunction (Unredacted) (Dkt.

9.

Encryption of DVDs also dates back to the 1990’s, and was the subject

of an appellate opinion in 2001. Universal City Studios, Inc. v. Corley, 273 F.3d
429 (2d Cir. 2001). In 2005, DVDs and Blu-ray discs bore security features,
commonly known as “encryption,” that encoded the content in such a way that the
disc’s contents could not be accessed, copied or modified without a decryption key.
A disc cannot be used without first decrypting it. Common forms of encryption
included Content Scramble System (“CSS”) for DVDs and Advanced Access

ER474

4

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 6 of 44 Page ID #:1796

1

Content System (“AACS”) for Blu-ray discs. I have read the Declaration of Robert

2

Schumann in Support of Plaintiffs’ Motion for Preliminary Injunction (“Schumann

3

Dec.”) and, for the purposes of my opinion expressed in this declaration, agree with

4

his descriptions of how CSS, AACS and BD+ each function (but disagree with his

5

assessment of their effectiveness, as noted below). (Schumann Dec. ¶¶ 20-34.)

6

CSS, AACS, and to a lesser extent BD+, remain the most common forms of

7

encryption for DVDs and Blu-ray discs today. (Schumann Dec. ¶¶ 20, 27.)

8

10.

By definition, it is impossible to access, view, copy or alter in any way

encryption. In 2005, all household DVD players were equipped with digital keys

11

BAKER MARQUART LLP

a motion picture contained on an encrypted digital disc without first unlocking the

10

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

9

that unlocked the encryption on the digital disc prior to sending the video to the

12

user’s television.

13

The Digital Millennium Copyright Act

14

11.

The DMCA addresses, to some extent, the forms of encryption

15

described above and in Mr. Schumann’s Declaration. It provides that “a

16

technological measure [i.e., encryption] ‘effectively controls access to a work’ if the

17

measure, in the ordinary course of its operation, requires the application of

18

information, or a process or a treatment, with the authority of the copyright owner,

19

to gain access to the work.”

20

12.

In the case of the encryption commonly used to access motion pictures

21

on Blu-rays and DVDs, it is undisputed that software capable of removing these

22

measures is ubiquitous and easily accessible, despite the fact that much of that

23

software is no longer readily sold in the United States. In light of the ease with

24

which one may currently decrypt a DVD or Blu-ray disc using readily available

25

software, DVD and Blu-ray encryption does not “effectively control access to a

26

work,” because these measures may be easily removed in the ordinary course of

27

their operation to gain access to the work. Accordingly, Robert Schumann’s opinion

28

ER475

5

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 7 of 44 Page ID #:1797

1

expressed throughout Paragraphs 20-34 (under the headings, “CSS Is An Effective

2

Access-Control System for DVDs,” and “AACS and BD+ Are Effective Access-

3

Control Systems for Blu-ray Discs”) that CSS, AACS and BD+ are effective access-

4

control systems is incorrect.

5

The 2005 Family Movie Act Authorized
Third Parties (Such as VidAngel) to Filter
Motion Pictures in Either of Two Ways

6
7

13.

I understand that The Family Home Movie Act of 2005 (“FMA”)

8

provides the legal context for the expert opinions expressed herein. The FMA

9

specifically provides that “it is not a violation of copyright” to:

10

[make] 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. . .creat[e] or provi[de]. . .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.

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11
12
13
14
15
16

17 U.S.C. § 110(11). As used in the FMA, “motion picture” is defined to include

17

television programs. The “making imperceptible . . . limited portions of audio or

18

video content of a motion picture” referenced in the FMA is commonly referred to

19

as “filtering.”

20

14.

The plain language of the FMA quoted above expressly authorizes and

21

exempts from copyright infringement two distinct methods for filtering motion

22

pictures. The first – and today far more important method – is the “transmission” or

23

streaming method. The word “transmission” has broad meaning in the context of

24

the Copyright Act. “To ‘transmit’ a performance or display is to communicate it by

25

any device or process whereby images or sounds are received beyond the place from

26

which they are sent.” 17 U.S.C. § 101. In turn, “device,” “machine,” and “process”

27

are defined to include “one now known or later developed.” Id. Accordingly, the

28

ER476

6

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 8 of 44 Page ID #:1798

1

FMA expressly authorized future processes for privately transmitting filtered

2

versions of motion pictures to members of households at their direction. In the

3

transmission method, a third party, at the direction of a member of the household,

4

makes imperceptible limited portions of an authorized copy of a motion picture's

5

audio or video content in a “transmission” to that household. This first method is

6

the more important today because it works across every type of device and mobile

7

platform for viewing content. This is also the method that VidAngel employs, as

8

described in more detail below.

9

15.

The FMA also exempts any computer program or other technology that

BAKER MARQUART LLP

filters an authorized copy of a motion picture “during a performance in” a private

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

household 17 U.S.C. § 110(11). In 2005, when the FMA was being created, this was

12

the only type of filtering service that existed. It was provided by a company called

13

ClearPlay, which sold specialized hardware to be installed in the user’s home. The

14

ClearPlay hardware unlocked encryption through the use of a built-in DVD/Blu-ray

15

disc drive equipped with a CSS “key” that unlocked the DVD’s CSS encryption. See

16

https://www.clearplay.com/p-450-clearplay-blu-ray-player-cp1126.aspx, a true and

17

correct copy of which is attached as Exhibit C. All DVD player manufacturers

18

obtained CSS keys through licenses from the DVD Copy Control Association

19

(“DVD CCA”) so that every home DVD player could unlock CSS encryption. Once

20

the home DVD player unlocked the CSS encryption, the ClearPlay set top box

21

provided the filtering. Because no fixed copy of the altered work was ever created

22

by the ClearPlay box, its service was expressly authorized by the FMA. The

23

ClearPlay set top box recently retailed for $249.99 and required an additional $7.99

24

per month subscription to ClearPlay for the filters. The ClearPlay method did not

25

allow a user to access filtered content on modern mobile devices. See

26

https://www.clearplay.com/t-streaming_support.aspx, a true and correct copy of

27

which is attached as Exhibit D (noting the ClearPlay Streaming Player works only

28

ER477

7

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 9 of 44 Page ID #:1799

1

on a Mac or PC computer using a Chrome browser, and only when the computer is

2

attached to the TV via HDMI cable or the “tab-cast” feature of the Chromecast in

3

order to work).

4

16.

The FMA expressly does not require that the household or the

5

technology provider operating at the direction of the household obtain the consent of

6

the copyright holder prior to filtering a work, provided that no fixed copy of the

7

altered work is created. 17 U.S.C. § 110(11). This lack of a consent requirement for

8

filtering is essential to any functioning market for filtering motion pictures because

9

the major studios that own those works and the directors that create them were

BAKER MARQUART LLP

vehemently opposed to the enactment of the FMA and to companies that provided

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

filtering technology. In fact, I have reviewed the deposition testimony of Tedd

12

Cittadine, who testified that no studio to his knowledge has ever privately licensed

13

any third party to filter any of its works. Deposition Transcript of Tedd Cittadine

14

attached as Exhibit B to the Declaration of Jaime W. Marquart filed concurrently

15

herewith (“Marquart Dec.”) at Tr. 83:21-84:21.

16

17.

Digitally encoded motion pictures to be distributed commercially are

17

usually encrypted. The content of the movie is transformed from its viewable format

18

into a representation where the content is no longer distinguishable from random

19

data – encrypted data. Without a subsequent decryption, the content information is

20

not accessible – it cannot be viewed or manipulated in any meaningful way. Thus

21

before the movie content can be displayed to a viewer, the encrypted data has to be

22

decrypted, or unlocked, reversing the encryption process to yield the original

23

information content.

24

18.

Since the encrypted representation of the content is indistinguishable

25

from random data, the movie content cannot be analyzed for objectionable content

26

subject to filtering, nor can such filtering be applied without the content first

27

becoming viewable again. It is thus impossible to view or filter for viewing a

28

ER478

8

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 10 of 44 Page ID #:1800

1

motion picture stored in a digitally encrypted format without first unlocking the

2

encryption. This is true in the case of DVD viewing, where a key contained within a

3

DVD player unlocks the encryption, and it also true in the case of streaming, where

4

a viewing application provided by the streaming service unlocks the encryption.

5

The reason for this is that, by definition, encryption prevents accessing, copying or

6

altering the content of the original files.

7

19.

In drafting the FMA, Congress obviously considered known

8

technologies. When Congress enacted the FMA, encrypted physical discs were the

9

dominant technology in the market. To transmit a filtered version of a motion

BAKER MARQUART LLP

picture stored on any physical disc sold in the home entertainment market, one must

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

first unlock the encryption of the content and make an intermediate version. The

12

reason for this is that a filter has to modify the movie content to be delivered to the

13

viewer, a process that requires the substitution of original content with the filtered

14

(e.g., muted audio or hidden video) content based on information regarding the time

15

points where the filter is to be invoked, and how. Such manipulation of the original

16

content cannot occur without that content being available, i.e., the encrypted data

17

has to be decrypted before any filtering can occur.

18
19

20.

It is inherent in the decryption process that a local version of the

unlocked content be created – be it in memory or other storage.

20

21.

Having made the movie content ready for a filtered transmission,

21

further transient versions are created. It is common to create different versions of the

22

content adapted to various presentation formats (e.g., for standard and high

23

definition resolutions) and for different transmission bandwidth environments (e. g.,

24

slower vs. faster connections between the servers and the consumer). Finally, for

25

broadly distributed content, when a customer requests a particular movie (as filtered

26

by filtering technologies such as VidAngel’s), the streaming media is usually moved

27

from the central servers to so-called “edge servers” to place the multimedia data

28

ER479

9

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 11 of 44 Page ID #:1801

1

repository closer to the consumer to avoid the massive network traffic congestion

2

that would result if all multimedia were transmitted from a single hub. (This is

3

commonly referred to as a “pull cache” technology.)

4

22.

The strategy of creating temporary versions of data such as movie

5

content to enable streaming transmissions is referred to as “caching,” and is a

6

standard practice in the computer and networking professions generally, and with

7

respect to streaming media content in particular.

8
9

23.

As is common industry practice for delivering of commercial digital

content, VidAngel’s technology ensures the integrity and the protection of such

BAKER MARQUART LLP

content against illegal access by encrypting the content prior to its delivery across

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the Internet to the customer (see below for details).

12
Technological Measures Implemented
by VOD Providers Impede Filtering

13
14

24.

Today, physical discs are rapidly being replaced by Video on Demand

15

(“VOD”) distribution. None of the VOD services described in Plaintiffs’ Complaint

16

– Netflix, Hulu, iTunes, Google Play, Amazon Video and VUDU – existed in April

17

2005, when the FMA was enacted. To deliver VOD content to a consumer, standard

18

VOD files are transmitted from the VOD provider’s server to a user’s television,

19

computer or mobile device in an encrypted format. The most popular VOD

20

providers all use a combination of legal and technological means to prevent

21

filtering. First, all the most popular VOD providers provide their own studio-

22

approved form of encryption for the motion picture files they stream to their users.

23

See, e.g., Marquart Dec. Ex A at Tr. 80:13 – 81:16. Second, their VOD distribution

24

systems are “closed systems.” In closed systems, the files are encrypted prior to

25

transmission to the user’s device and then may be opened and viewed only by using

26

a proprietary software application loaded on the user’s device. The use of a closed

27

system is intended to prevent any third party (or the user) from accessing or altering

28

ER480

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DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 12 of 44 Page ID #:1802

1

any VOD file transmitted to it. In closed systems, access to the VOD provider’s

2

proprietary software is necessary to alter the file, and no user or third party may

3

access, alter or add to that software. Id.

4

25.

I have read the declaration and deposition transcript of Plaintiffs’

5

witness, Tedd Cittadine, who testified that the market for VOD titles is divided into

6

two general types of transactions, rental (usually for a small period of time, such as

7

24-48 hours) and what the VOD providers characterize as “sell-through.” This

8

comports with my understanding of the market for VOD titles. In general, “sell-

9

through” is meant to mimic in some, but not other, respects the purchase of a

BAKER MARQUART LLP

physical disc, and VOD providers generally refer to a sell-through transaction as a

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“Purchase.” The price for a purchase of a VOD title is commensurate with the price

12

for purchasing a physical disc at retail, though it is usually reduced by a small

13

amount (as much as $5.00 for a new release), which reflects costs saved by not

14

having to manufacture, package, store, distribute and ship discs. A “sell-through”

15

transaction differs from a traditional purchase of a physical disc, however, in that it

16

is merely a license to view the VOD title within the VOD provider’s viewing

17

software subject to a long list of restrictions contained in terms of service

18

agreements that must be accepted to complete the “purchase.” The same is true of

19

“renting” a VOD title, with the additional term that a customer’s window to watch

20

the title expires within a short time.

21

26.

Third, their terms of service agreements prohibit filtering. I have

22

reviewed the standard terms of use for the four VOD providers mentioned in

23

Plaintiffs’ Complaint as marketing major motion pictures on a rental and “sell-

24

through” basis: Vudu, Google Play, iTunes, and Amazon Instant Video. Two other

25

services mentioned in Plaintiffs’ Complaint – Netflix and Hulu – provide VOD titles

26

on a subscription basis. However, I understand that Plaintiffs in this case have

27

compared VidAngel’s service to the non-subscription-based VOD providers. True

28

ER481

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DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 13 of 44 Page ID #:1803

1

and correct copies of the terms of service agreements for the four non-subscription-

2

based services are attached collectively as Exhibit E. Each of them provides that

3

the user may not modify any digital content purchased through the provider’s

4

system. Because these terms of service expressly prohibit modification of

5

audiovisual content in the ways necessary to filter (through automatic skipping and

6

muting), a user may not filter VOD content without violating the VOD provider’s

7

terms of service.

8

27.

9

Fourth, in addition to VOD terms of service, which prohibit filtering,

several technological issues make it impractical to apply filters accurately to a VOD

BAKER MARQUART LLP

title after it is opened within the VOD provider’s proprietary software on a user’s

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device. Due to varying transfer rates and other technical functionalities unique to

12

each VOD provider’s viewing application software, as well as operational

13

differences unique to each user’s device, it has not been possible for a third party to

14

create software compatible across multiple devices and applications to filter titles

15

after they have been opened in a particular VOD provider’s viewing application.

16

More importantly, such software cannot be written for even a simple application.

17

Closed systems contain security features that prevent the creation of filtering

18

software compatible with that system absent assistance from the VOD provider. To

19

develop filtering software that functions within a VOD provider’s closed system, a

20

developer typically must have the consent and participation of the VOD provider to

21

access its software for the purpose of developing software compatible with it. I

22

have been informed, and have confirmed in part through my review of Mr.

23

Cittadine’s deposition transcript, that no VOD provider and no Plaintiff has ever

24

consented to allow a third party to create software compatible with a VOD

25

provider’s closed system to allow users to apply customized filters to titles viewed

26

within the provider’s closed system.

27
28

ER482

12

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 14 of 44 Page ID #:1804

Google’s Purported YouTube Player “Exception”
Demonstrates That Plaintiffs Have Made It Infeasible to
Provide Filtered VOD Content to Consumers

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28.

One exception to the closed VOD delivery systems architecture and

terms of service described above is the YouTube Embeddable Player and its
application programing interface (“API”). The YouTube Embeddable Player API
also did not exist in April 2005, when the FMA was enacted. An API is a set of
function and interface definitions, the protocols for their use, and associated
programming tools that affords software developers controlled access to the API
owner’s software. An API permits the development of other software programs that
can interact with the API owner’s software. The additional software is often referred
to as a “plug-in” to the API owner’s software. In theory, the YouTube Embeddable
Player API allows a software developer to create a plug-in for the YouTube
Embeddable Player capable of allowing automatic skipping and muting of undesired
content in an encrypted motion picture file after the file is opened for viewing by the
YouTube Embeddable Player in a user’s Google Chrome browser. To my
knowledge, no other VOD provider’s player contains an API that would allow for
the creation of a plug-in capable of allowing automatic skipping and muting of
undesired content in an encrypted motion picture file after the file is opened for
viewing by the VOD provider’s player.
29.

Paragraph 47 of Plaintiffs’ Complaint alleges that the YouTube API

allows a third party – such as VidAngel – to filter VOD titles purchased from
Google. This is inaccurate in a number of ways. To begin, YouTube’s terms of
service – attached as Exhibit F – expressly prohibit a user (or anyone directed by the
user) from “alter[ing] or modify[ing] any part of” a motion picture viewed on the
YouTube Embeddable Player. The user also “agree[s] not to access Content
through any technology or means other than the video playback pages of the Service
itself, the Embeddable Player, or other explicitly authorized means YouTube may
designate.” The YouTube Paid Service Terms of Service – a true and correct copy

ER483

13

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 15 of 44 Page ID #:1805

1

of which is attached as Exhibit G – further prohibits copying the Paid Services or

2

the sublicensing them to any third party. These terms of service also do not allow a

3

user to “circumvent, reverse-engineer, modify, disable, or otherwise tamper with

4

any security technology that YouTube uses to protect the Paid Service or encourage

5

or help anyone else to do so.” All these restrictions expressly make it a violation of

6

YouTube’s Terms of Service to engage in any of the activities necessary to filter a

7

motion picture through YouTube’s Embeddable Player.

8
9

30.

In addition, the YouTube API Services Terms of Service for developers

writing software plug-ins that interact with the API – a true and correct copy of

BAKER MARQUART LLP

which is attached as Exhibit H – also prohibit any technology capable of filtering

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motion pictures viewed through the YouTube Player API. They provide that

12

developers may not “separate, isolate, or modify the audio or video components of

13

any YouTube audiovisual content made available through the YouTube API.”

14

Thus, any third party that attempts to provide a filtering plug-in for a YouTube

15

Embeddable Player does so in violation of YouTube’s terms of use. I have also read

16

Exhibit A to the Declaration of Neal Harmon, which is a notification from YouTube

17

informing VidAngel that its filtering plug-in for the YouTube Embeddable Player

18

violates the YouTube API Services Terms of Service.

19

31.

There are also several technological limits to creating a plug-in

20

compatible with the YouTube Embeddable Player API capable of accurately and

21

seamlessly filtering motion pictures purchased lawfully for viewing on the YouTube

22

Embeddable Player. To begin with, the Embeddable Player plug-in works only with

23

standard-definition content, not with the popular high-definition format typical of

24

DVDs or Blu-ray discs. More importantly, because the plug-in is not officially

25

supported by Google, changes to YouTube can cause the filters to fail. When that

26

happens, filtering is ineffective and users will see content that they did not want to

27

see until the plug-in is updated. Finally, slower computers cannot process both the

28

ER484

14

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 16 of 44 Page ID #:1806

1

video and the filter at the same time, resulting in missed filters. The end result is

2

that – without Google’s technical support and cooperation – no method of using a

3

YouTube Embeddable Player plug-in provides a consistent filtering experience for

4

the majority of users and no method would provide a high-definition filtering

5

experience for any user. In addition, this method does not work on modern mobile

6

devices.1

7

32.

Furthermore, these approaches to enabling a filtering functionality for

lower resolution, delays or stops, stuttering, and other impediments to smooth

10

viewing. Consequently, the commercial quality a viewer would expect when

11

BAKER MARQUART LLP

the customer suffer from reductions in the quality of the viewer experience such as

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enjoying the filtered content would be significantly jeopardized and diminished.

12

VidAngel Transmits Filtered Versions of Plaintiffs’
Motion Pictures to Owners of Authorized Copies of
the Motion Pictures Pursuant to the FMA

13
14

33.

VidAngel is an online video filtering service that operates under the

15

“transmission” filtering method authorized by the FMA. Its service allows

16

customers to stream filtered feature films and television shows via the Internet to a

17

wide range of devices, including desktop computers, laptops, iPads, smart phones,

18

and televisions (through devices like Roku, Google Chromecast, or Apple TV).

19
20
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1

I am also aware of certain “digital rights locker services,” such as UltraViolet
and Disney Movies Anywhere and disc-to-digital services such as VUDU and
Flixter, that claim to allow consumers to convert previously purchased DVDs or
Blu-ray discs into high quality digital files. See 37 CFR Part 201 (Exemption
to Prohibition on Circumvention of Copyright Protection Systems for Access
Control Technologies). These services merely provide the same digital right to a
user that he or she would obtain if purchasing a “sell-through” license from a VOD
provider for the disc the customer owns. The user then must follow the same terms
of service attendant to that VOD license, which prevent any third-party filtering in
the same way that other VOD services prevent filtering. Marquart Dec. Ex. B at Tr.
96:11-102:4.

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ER485

15

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 17 of 44 Page ID #:1807

1

VidAngel users can select from more than 80 unique filters when viewing a film or

2

television show. The filters have the effect of skipping audiovisual content or

3

muting audio content in categories created by VidAngel and selected by the user.

4

Example categories include sexual activity, nudity, drug use, obscenity, vulgarity,

5

the “F” word, blasphemy and violence. All users must select at least one filter, and

6

each user has the option to select as many other filters as apply to that content, thus

7

permitting users in most instances to select many thousands of different

8

combinations of filters, thus making a customer’s viewing experience individualized

9

and unique.

10

VidAngel’s Filtering Technology

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34.

VidAngel follows the first, “transmission,” method contemplated by

12

the FMA, requiring the purchase of an authorized copy of a physical disc, a filtered

13

version of which is then streamed to the user without making a fixed copy of the

14

filtered work. VidAngel delivers filtered content to users by streaming it over the

15

Internet using a video content delivery protocol called HTTP Live Streaming 2

16

(“HLS”). HLS divides the audiovisual content into short segments that are

17

frequently less than 4 seconds and never more than 10 seconds that are delivered

18

separately to a user’s device when viewed. The user’s device downloads each

19

segment individually. At the beginning of an HLS streaming session, the user’s

20

device downloads an index file which provides the device with a list of segment

21

files that the device can then request and play to display the content.3

22
23

35.

VidAngel’s filtering technology divides each feature film or television

show into hundreds or sometimes thousands of small segments (ranging from 2

24
25
26
27

2

R. Pantos, W. May, “HTTP Live Streaming,” Internet Engineering Task Force,
Apr. 4, 2016 (retrieved from https://tools.ietf.org/html/draft-pantos-http-livestreaming-19, Sept. 3, 2016)
3
Id.

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16

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 18 of 44 Page ID #:1808

1

tenths of a second to 10 seconds in length), for which each segment is identified and

2

“tagged” as associating with one or more available categories of filterable content.

3

When a user selects a filter category and streams a feature film or television show,

4

all segments that are tagged for that filter are omitted from the stream.

5

36.

If the filter concerns audiovisual content, the user’s device will not

6

download the segments that have been tagged for that filter. If the filter affects only

7

the audio, the user’s device downloads a version of the segment with the voice

8

soundtrack muted while other soundtracks continue to play, but leaves the video

9

portion unchanged.

10

37.

Based on my review of the documents that VidAngel has provided to

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me, it is my understanding that VidAngel’s system is designed and operates as

12

follows:

13

(i)

VidAngel lawfully purchases DVDs and Blu-ray discs;

14

(ii)

VidAngel places a DVD or Blu-ray disc into the optical drive of a

15

computer. VidAngel then uses a commercially available software program such as

16

AnyDVD HD to automatically allow read-access for the purpose of mounting the

17

DVD or Blu-ray files for uploading onto a computer, in the process necessarily

18

removing restrictions on DVD or Blu-ray content access;

19

(iii)

VidAngel uses a software program to extract the subtitle/caption data

20

files and then creates temporary (“locally cached”) Matroska files (erroneously

21

referred to by Plaintiffs’ expert, Robert Schumann, as “Mastroska” files) of the

22

feature films. Matroska files are multimedia files that can hold an unlimited number

23

of video, audio, picture, or subtitle tracks in one file;

24

(iv)

VidAngel uploads the subtitle/caption data files and Matroska files

25

(collectively known as the “pre-filter files” or “PF” files) onto a secure folder on a

26

third-party Internet service provider’s cloud storage service (“PCSS”) and uploads

27

the subtitle/caption into a separate PCSS folder (“PCSS cache” of these intermediate

28

ER487

17

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 19 of 44 Page ID #:1809

1

files);

2

(v)

VidAngel destroys the locally cached Matroska file;

3

(vi)

VidAngel boots an encoding and segmenting server (“ESS”) to run two

4

scripts, including an encoding script and a segmenting script, as follows:

5

a.

The encoding script temporarily copies the PF files from the PCSS

6

cache to the ESS, uses ffmpeg to prepare the PF files for tagging and filtering,

7

creates a single mp4 file (640 kilobytes per second bitrate) for tagging (when that is

8

not performed beforehand on YouTube or when corrections need to be made to the

9

tags), copies the mp4 file from the ESS to a secure PCSS location, creates four

BAKER MARQUART LLP

Transport Stream files (“TS files”) at 640, 1200, 2040 and 4080 bitrates for filtering,

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copies the TS files to a secure location on the PCSS, and deletes all copies and files

12

on the ESS. This script is run once for each title’s Matroska file.

13

b.

The segmenting script temporarily copies the TS files from the PCSS to

14

the ESS, segments the TS files for adaptive bitrate streaming (as per the HLS

15

specification) based on both 9-10 second intervals and the locations of each tag for

16

the title (which could be as short as 2 tenths of a second), creates thumbnail files for

17

player scrubbing preview for each non-filterable segment, saves a comma-separated

18

values (CSV) file containing the results of the segmenting process for each segment,

19

uploads the CSV file for use by the filtering system, encrypts the segments of each

20

bitrate with a new and unique encryption key, copies the unencrypted segments

21

from the ESS to a secure location on the PCSS, copies the encrypted segments from

22

the ESS onto a publicly accessible location on the PCSS (the “TS cache”), copies

23

the encryption keys from the ESS to a secure location on the PCSS, deletes older

24

revision files on the PCSS, and deletes all copies and files on the ESS;

25

(vii) VidAngel lawfully purchases additional DVDs and Blu-ray discs;

26

(viii) VidAngel enters the information concerning the additional discs into an

27

inventory system;

28

ER488

18

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 20 of 44 Page ID #:1810

1

(ix)

VidAngel applies bar codes to the disc packages;

2

(x)

VidAngel sells specific discs to specific customers;

3

(xi)

VidAngel requires each customer to select one or more filters; and

4

(xii) VidAngel streams encrypted content from the discs to each purchaser

5

while applying the filters chosen by that customer.

6

(xiii) At the customer’s device VidAngel software assembles the segments in

7

sequence, and for each segment decrypts the content, displays it and then discards

8

the segment.

9
VidAngel’s Technology Prevents File Sharing and Does
Not Create Any Watchable Copy of Plaintiffs’ Works

10

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38.

Based on my understanding of VidAngel’s system, at no point during

12

this process does VidAngel create a fixed copy of the altered (filtered) movie or

13

television show viewed by any user. In fact, VidAngel’s service does not even

14

make a “copy” of the original motion picture in any traditional sense. Rather, the

15

feature film or television show is altered (filtered) as it is divided into hundreds or

16

thousands of small segments and streamed to the user’s device using the HLS

17

protocol. A user can view the contents of each segment only after it has been

18

streamed in sequence, decrypted with the correct keys (keys which, themselves, are

19

protected and accessible only by a user who has legally purchased a disc from

20

VidAngel), and rendered with a VidAngel media player. After each unencrypted

21

segment is viewed, it is removed from the device's memory by the player and, for all

22

intents and purposes, is gone.

23

39.

I have read the description of VidAngel’s service in the Declaration of

24

Robert Schumann (Paragraphs 7 to 19 and 35 to 42), and the service, as he describes

25

it, also creates no fixed copy of the altered movie or television show.

26
27
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ER489

19

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 21 of 44 Page ID #:1811

The Purported Legal Violations Plaintiffs Complain of
Are Necessary to Provide any Filtering/Streaming
Service Authorized by the FMA

1
2
3

40.

The FMA provides that it is not a violation of copyright to “transmit” a

4

filtered motion picture to a consumer who lawfully purchased a copy of the

5

unfiltered work. To transmit a filtered version of a movie or television show from a

6

DVD or Blu-ray disc to a household, VidAngel must first unlock the encryption on

7

the DVD or Blu-ray disc. Only after the encryption is unlocked can VidAngel tag

8

audiovisual and audio segments of the movie or television show for filtering. This

9

process of unlocking the encryption contained on the disc is the functional

BAKER MARQUART LLP

equivalent of what occurs every time a person places the disc in a player to view the

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contents of the disc.

12

41.

As is common practice for Internet content delivery services (and

13

multimedia services in particular), VidAngel employs multiple delivery servers for

14

caching purposes to ensure that its users receive a seamless stream and avoid

15

creating network traffic congestion. VidAngel streams filtered content to users from

16

one of eight or more servers located in different parts of the United States. The

17

content is streamed to the user from whichever server is closest. The closer the user

18

is to the server, the faster the content reaches the user’s device, reducing the need

19

for buffering. Without the use of distributed servers, a viewer would see and hear a

20

motion picture briefly before it froze while the next segment of the motion picture

21

loaded, thereby diminishing the presentation quality of the media content. Rather

22

than see continuous motion, the viewer would experience a maddening start, stop,

23

start, stop viewing of the motion picture.

24

42.

Each VidAngel user experiences an individualized stream based on the

25

filters he or she selects. A user can choose from many thousands of different

26

combinations of filters for any movie or television show, creating a private viewing

27

experience. For two people to watch all of the exact same segments of a filtered

28

ER490

20

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 22 of 44 Page ID #:1812

1

motion picture streamed through VidAngel’s process, they would have to choose the

2

same combination of filter settings and receive each of the segments from the same

3

server.

4

43.

Decrypting and streaming a filtered version of a motion picture

method a third party such as VidAngel can employ to transmit a filtered version of a

7

motion picture to a household absent an express VOD license from the copyright

8

owner. It is my understanding that the studios refuse to license VOD rights to

9

VidAngel (or any other service that filters content). Moreover, the closed systems

10

of the VOD providers prevent the creation of technology that could permit filtering

11

BAKER MARQUART LLP

contained on a DVD or Blu-ray disc that the user has lawfully purchased is the only

6

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without their consent and participation. Thus, VidAngel’s method is the only

12

known method a third party could use to transmit filtered content to a household

13

without first obtaining the copyright holder’s consent.

14

44.

Importantly, VidAngel’s methodology ensures that any decrypted file

15

can be accessed only by the legal purchaser of the disc containing the file, and that

16

no filtered version could ever be conveyed to a member of the public by any means.

17

VidAngel’s decryption technology thus does not and cannot harm the market for the

18

work, nor does VidAngel’s decryption process result in injury to copyright owners.

19

45.

Tedd Cittadine declares that the following four harms he claims will

20

befall Plaintiffs if VidAngel’s service is not enjoined: (1) the service harms the

21

studios’ “basic right to control how, when and through which channels our content

22

is disseminated for viewing by consumers”; (2) the service causes “harm to the

23

online distribution of our content and to our relationships with authorized

24

distributors”; (3) the service causes “harm to our ability to secure and protect

25

content in an online environment”; and (4) the service causes “harm to the overall

26

development of the on-demand streaming market by the provision of user-viewing

27

experiences without our rigorous quality controls.” To begin with, I have reviewed

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ER491

21

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 23 of 44 Page ID #:1813

1

Mr. Cittadine’s declaration and his deposition transcript and have found no direct

2

evidence that VidAngel has actually caused any of these injuries; rather, Mr.

3

Cittadine has merely testified that VidAngel “threatens” serious harm to the studios.

4

More importantly, any service that transmits a filtered version of Plaintiffs’ motion

5

pictures pursuant to the FMA would “harm” the studios in each of these ways. By

6

definition, filtering does not allow Plaintiffs to control the manner in which a user

7

filters their works, and the FMA states that filtering shall occur without the studios’

8

consent. This necessarily means that viewing experiences will occur outside of the

9

studios’ control.

10

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

12

Executed on September 11, 2016, at Menlo Park, California.

13
14

_____________________________________

15

Dr. Sigurd Meldal

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ER492

22

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 24 of 44 Page ID #:1814

1

I, Dr. Sigurd Meldal, declare:

2

1.

I submit this declaration in support of defendant and counterclaimant

3

VidAngel, Inc.’s (“VidAngel’s”) Memorandum of Points and Authorities in

4

Opposition to Plaintiffs’ Motion for Preliminary Injunction. I have personal

5

knowledge of the facts set forth herein and, if called and sworn as a witness, I could

6

and would testify competently hereto.

7

2.

I have been retained by VidAngel as an expert in this case. I am a

8

professor of computer engineering, software engineering and computer science at

9

San Jose State University and a computer scientist for Quandary Peak Research and

10

I have served as a consulting Professor in the Electrical Engineering Department at

11

Stanford University.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
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3.

I have received several honors and awards over the course of my

13

career, including the Fulbright-Hayes Fellowship, the Carl-Erik Fröberg Award, a

14

Certificate of Recognition from the California State Assembly, and a Certificate of

15

Special Recognition from the U.S. House of Representatives.

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Professional Honors and Experience

17

4.

I have served on many professional committees and organizations. For

18

example, I serve as a Commissioner of the national Engineering Accreditation

19

Commission of the Accreditation Board for Engineering and Technology (ABET.)

20

(The Engineering Accreditation Commission of ABET defines the standards for

21

engineering education and determines whether programs are up to those standards or

22

not.) I am also a member of the Fulbright Association, and a Senior Member of the

23

Institute of Electrical and Electronics Engineers (IEEE) and of the Association for

24

Computing Machinery (ACM).

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ER493

2

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 25 of 44 Page ID #:1815

1

5.

I have more than 30 years of experience working on security and

2

networked systems, starting with contributions to the surveillance systems for the

3

nuclear arms treaties of the ‘80s and including the creation of degree curricula in

4

security and privacy. I was the founding director of the Silicon Valley Big Data and

5

Cybersecurity Center as well as a member of the Strategic Task Force on

6

Cybersecurity for the State of California. I am also Co-Director of the NSF Science

7

and Technology Center for Research in Ubiquitous Secure Technologies (the “NSF

8

TRUST Center”) at the University of California, Berkeley.

9

6.

I have previously testified in a number of cases concerning intellectual

property that relates to mobile devices, networked systems and services-oriented

11

architectures, including in particular smartphones, wireless communication and

12

telephony, network-based data systems, location-oriented web services and mobile

13

device positioning systems as well as streaming video content across the internet.

14

My Curriculum Vitae is attached as Exhibit A.

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2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
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15

Documents and Things Reviewed

16

7.

The opinions expressed in this declaration are based on my professional

17

experience as well as my use and review of VidAngel’s service and the following

18

documents:

19

(i)

VidAngel’s Answer and Counter Complaint (Dkt. 11);

20

(ii)

The deposition testimony of Todd Cittadine and Neal Harmon;

21

(iii)

Deposition exhibit 15 (a description of VidAngel’s filtering

22

technology), deposition exhibit 16 (a description of VidAngel’s process for

23

preparing discs for streaming), deposition exhibit 17 (VidAngel’s instructions

24

for adding new movie and television show titles to its inventory), and

25

deposition exhibit 19 (VidAngel’s encoding and segmenting checklist);

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ER494

3

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 26 of 44 Page ID #:1816

1

(vi)

2

27), declarations of Todd Cittadine (Unredacted) (Dkt. 28) and Robert

3

Schumann (Unredacted) (Dkt. 29) in support of Plaintiffs’ Motion for

4

Preliminary Injunction;

5

(v)

6

Entertainment Sales Update;

7

(vi)

8

Vudu, iTunes Store, and Youtube;

9

(vii)

10

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

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8.

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The standard terms of service for VOD Google Play, Amazon Video,
ClearPlay, Inc.’s website available at https://www.clearplay.com.

In the mid to late 1990s, digital versatile discs (“DVDs”) began to

replace VHS tapes as the primary media onto which motion pictures were recorded
for sale in the home entertainment market. By 2005, the home entertainment market
was dominated by DVDs. Attached as Exhibit B is a true and correct copy of a
Digital Entertainment Group report dated January 8, 2007, stating that in 2005,
approximately 94% of digital home entertainment was consumed using discs. By
2006, this percentage increased to well over 99%. But as I will explain later, the
home entertainment market is now moving rapidly away from physical discs, to
services that stream a title directly to a user’s television or other device.
Discs Were Encrypted by the Late 1990s

21
22

The Digital Entertainment Group’s DEG Year-End 2006 Home

DVD and Blu-ray Discs Dominated the
Home Entertainment Market in 2005

11
12

The Plaintiffs’ Motion for a Preliminary Injunction (Unredacted) (Dkt.

9.

Encryption of DVDs also dates back to the 1990’s, and was the subject

of an appellate opinion in 2001. Universal City Studios, Inc. v. Corley, 273 F.3d
429 (2d Cir. 2001). In 2005, DVDs and Blu-ray discs bore security features,
commonly known as “encryption,” that encoded the content in such a way that the
disc’s contents could not be accessed, copied or modified without a decryption key.
A disc cannot be used without first decrypting it. Common forms of encryption
included Content Scramble System (“CSS”) for DVDs and Advanced Access

ER495

4

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 27 of 44 Page ID #:1817

1

Content System (“AACS”) for Blu-ray discs. I have read the Declaration of Robert

2

Schumann in Support of Plaintiffs’ Motion for Preliminary Injunction (“Schumann

3

Dec.”) and, for the purposes of my opinion expressed in this declaration, agree with

4

his descriptions of how CSS, AACS and BD+ each function (but disagree with his

5

assessment of their effectiveness, as noted below). (Schumann Dec. ¶¶ 20-34.)

6

CSS, AACS, and to a lesser extent BD+, remain the most common forms of

7

encryption for DVDs and Blu-ray discs today. (Schumann Dec. ¶¶ 20, 27.)

8

10.

By definition, it is impossible to access, view, copy or alter in any way

a motion picture contained on an encrypted digital disc without first unlocking the

10

encryption. In 2005, all household DVD players were equipped with digital keys

11

that unlocked the encryption on the digital disc prior to sending the video to the

12

user’s television.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

9

13

The Digital Millennium Copyright Act

14

11.

The DMCA addresses, to some extent, the forms of encryption

15

described above and in Mr. Schumann’s Declaration. It provides that “a

16

technological measure [i.e., encryption] ‘effectively controls access to a work’ if the

17

measure, in the ordinary course of its operation, requires the application of

18

information, or a process or a treatment, with the authority of the copyright owner,

19

to gain access to the work.”

20

12.

In the case of the encryption commonly used to access motion pictures

21

on Blu-rays and DVDs, it is undisputed that software capable of removing these

22

measures is ubiquitous and easily accessible, despite the fact that much of that

23

software is no longer readily sold in the United States. In light of the ease with

24

which one may currently decrypt a DVD or Blu-ray disc using readily available

25

software, DVD and Blu-ray encryption does not “effectively control access to a

26

work,” because these measures may be easily removed in the ordinary course of

27

their operation to gain access to the work. Accordingly, Robert Schumann’s opinion

28

ER496

5

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 28 of 44 Page ID #:1818

1

expressed throughout Paragraphs 20-34 (under the headings, “CSS Is An Effective

2

Access-Control System for DVDs,” and “AACS and BD+ Are Effective Access-

3

Control Systems for Blu-ray Discs”) that CSS, AACS and BD+ are effective access-

4

control systems is incorrect.

5

The 2005 Family Movie Act Authorized
Third Parties (Such as VidAngel) to Filter
Motion Pictures in Either of Two Ways

6
7

13.

I understand that The Family Home Movie Act of 2005 (“FMA”)

8

provides the legal context for the expert opinions expressed herein. The FMA

9

specifically provides that “it is not a violation of copyright” to:

10

[make] 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. . .creat[e] or provi[de]. . .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.

11
BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

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17 U.S.C. § 110(11). As used in the FMA, “motion picture” is defined to include

17

television programs. The “making imperceptible . . . limited portions of audio or

18

video content of a motion picture” referenced in the FMA is commonly referred to

19

as “filtering.”

20

14.

The plain language of the FMA quoted above expressly authorizes and

21

exempts from copyright infringement two distinct methods for filtering motion

22

pictures. The first – and today far more important method – is the “transmission” or

23

streaming method. The word “transmission” has broad meaning in the context of

24

the Copyright Act. “To ‘transmit’ a performance or display is to communicate it by

25

any device or process whereby images or sounds are received beyond the place from

26

which they are sent.” 17 U.S.C. § 101. In turn, “device,” “machine,” and “process”

27

are defined to include “one now known or later developed.” Id. Accordingly, the

28

ER497

6

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 29 of 44 Page ID #:1819

1

FMA expressly authorized future processes for privately transmitting filtered

2

versions of motion pictures to members of households at their direction. In the

3

transmission method, a third party, at the direction of a member of the household,

4

makes imperceptible limited portions of an authorized copy of a motion picture's

5

audio or video content in a “transmission” to that household. This first method is

6

the more important today because it works across every type of device and mobile

7

platform for viewing content. This is also the method that VidAngel employs, as

8

described in more detail below.

9

15.

The FMA also exempts any computer program or other technology that

filters an authorized copy of a motion picture “during a performance in” a private

11

household 17 U.S.C. § 110(11). In 2005, when the FMA was being created, this was

12

the only type of filtering service that existed. It was provided by a company called

13

ClearPlay, which sold specialized hardware to be installed in the user’s home. The

14

ClearPlay hardware unlocked encryption through the use of a built-in DVD/Blu-ray

15

disc drive equipped with a CSS “key” that unlocked the DVD’s CSS encryption. See

16

https://www.clearplay.com/p-450-clearplay-blu-ray-player-cp1126.aspx, a true and

17

correct copy of which is attached as Exhibit C. All DVD player manufacturers

18

obtained CSS keys through licenses from the DVD Copy Control Association

19

(“DVD CCA”) so that every home DVD player could unlock CSS encryption. Once

20

the home DVD player unlocked the CSS encryption, the ClearPlay set top box

21

provided the filtering. Because no fixed copy of the altered work was ever created

22

by the ClearPlay box, its service was expressly authorized by the FMA. The

23

ClearPlay set top box recently retailed for $249.99 and required an additional $7.99

24

per month subscription to ClearPlay for the filters. The ClearPlay method did not

25

allow a user to access filtered content on modern mobile devices. See

26

https://www.clearplay.com/t-streaming_support.aspx, a true and correct copy of

27

which is attached as Exhibit D (noting the ClearPlay Streaming Player works only

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

28

ER498

7

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 30 of 44 Page ID #:1820

1

on a Mac or PC computer using a Chrome browser, and only when the computer is

2

attached to the TV via HDMI cable or the “tab-cast” feature of the Chromecast in

3

order to work).

4

16.

The FMA expressly does not require that the household or the

5

technology provider operating at the direction of the household obtain the consent of

6

the copyright holder prior to filtering a work, provided that no fixed copy of the

7

altered work is created. 17 U.S.C. § 110(11). This lack of a consent requirement for

8

filtering is essential to any functioning market for filtering motion pictures because

9

the major studios that own those works and the directors that create them were
vehemently opposed to the enactment of the FMA and to companies that provided

11

filtering technology. In fact, I have reviewed the deposition testimony of Tedd

12

Cittadine, who testified

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2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
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13

Deposition Transcript of Tedd Cittadine

14

attached as Exhibit B to the Declaration of Jaime W. Marquart filed concurrently

15

herewith (“Marquart Dec.”) at Tr. 83:21-84:21.

16

17.

Digitally encoded motion pictures to be distributed commercially are

17

usually encrypted. The content of the movie is transformed from its viewable format

18

into a representation where the content is no longer distinguishable from random

19

data – encrypted data. Without a subsequent decryption, the content information is

20

not accessible – it cannot be viewed or manipulated in any meaningful way. Thus

21

before the movie content can be displayed to a viewer, the encrypted data has to be

22

decrypted, or unlocked, reversing the encryption process to yield the original

23

information content.

24

18.

Since the encrypted representation of the content is indistinguishable

25

from random data, the movie content cannot be analyzed for objectionable content

26

subject to filtering, nor can such filtering be applied without the content first

27

becoming viewable again. It is thus impossible to view or filter for viewing a

28

ER499

8

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 31 of 44 Page ID #:1821

1

motion picture stored in a digitally encrypted format without first unlocking the

2

encryption. This is true in the case of DVD viewing, where a key contained within a

3

DVD player unlocks the encryption, and it also true in the case of streaming, where

4

a viewing application provided by the streaming service unlocks the encryption.

5

The reason for this is that, by definition, encryption prevents accessing, copying or

6

altering the content of the original files.

7

19.

In drafting the FMA, Congress obviously considered known

8

technologies. When Congress enacted the FMA, encrypted physical discs were the

9

dominant technology in the market. To transmit a filtered version of a motion
picture stored on any physical disc sold in the home entertainment market, one must

11

first unlock the encryption of the content and make an intermediate version. The

12

reason for this is that a filter has to modify the movie content to be delivered to the

13

viewer, a process that requires the substitution of original content with the filtered

14

(e.g., muted audio or hidden video) content based on information regarding the time

15

points where the filter is to be invoked, and how. Such manipulation of the original

16

content cannot occur without that content being available, i.e., the encrypted data

17

has to be decrypted before any filtering can occur.

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18
19

20.

It is inherent in the decryption process that a local version of the

unlocked content be created – be it in memory or other storage.

20

21.

Having made the movie content ready for a filtered transmission,

21

further transient versions are created. It is common to create different versions of the

22

content adapted to various presentation formats (e.g., for standard and high

23

definition resolutions) and for different transmission bandwidth environments (e. g.,

24

slower vs. faster connections between the servers and the consumer). Finally, for

25

broadly distributed content, when a customer requests a particular movie (as filtered

26

by filtering technologies such as VidAngel’s), the streaming media is usually moved

27

from the central servers to so-called “edge servers” to place the multimedia data

28

ER500

9

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 32 of 44 Page ID #:1822

1

repository closer to the consumer to avoid the massive network traffic congestion

2

that would result if all multimedia were transmitted from a single hub. (This is

3

commonly referred to as a “pull cache” technology.)

4

22.

The strategy of creating temporary versions of data such as movie

5

content to enable streaming transmissions is referred to as “caching,” and is a

6

standard practice in the computer and networking professions generally, and with

7

respect to streaming media content in particular.

8
9

23.

As is common industry practice for delivering of commercial digital

content, VidAngel’s technology ensures the integrity and the protection of such

10

content against illegal access by encrypting the content prior to its delivery across

11

the Internet to the customer (see below for details).

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

12

Technological Measures Implemented
by VOD Providers Impede Filtering

13
14

24.

Today, physical discs are rapidly being replaced by Video on Demand

15

(“VOD”) distribution. None of the VOD services described in Plaintiffs’ Complaint

16

– Netflix, Hulu, iTunes, Google Play, Amazon Video and VUDU – existed in April

17

2005, when the FMA was enacted. To deliver VOD content to a consumer, standard

18

VOD files are transmitted from the VOD provider’s server to a user’s television,

19

computer or mobile device in an encrypted format. The most popular VOD

20

providers all use a combination of legal and technological means to prevent

21

filtering. First, all the most popular VOD providers provide their own studio-

22

approved form of encryption for the motion picture files they stream to their users.

23

See, e.g., Marquart Dec. Ex A at Tr. 80:13 – 81:16. Second, their VOD distribution

24

systems are “closed systems.” In closed systems, the files are encrypted prior to

25

transmission to the user’s device and then may be opened and viewed only by using

26

a proprietary software application loaded on the user’s device. The use of a closed

27

system is intended to prevent any third party (or the user) from accessing or altering

28

ER501

10

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 33 of 44 Page ID #:1823

1

any VOD file transmitted to it. In closed systems, access to the VOD provider’s

2

proprietary software is necessary to alter the file, and no user or third party may

3

access, alter or add to that software. Id.

4

25.

I have read the declaration and deposition transcript of Plaintiffs’

5

witness, Tedd Cittadine, who testified that the market for VOD titles is divided into

6

two general types of transactions, rental (usually for a small period of time, such as

7

24-48 hours) and what the VOD providers characterize as “sell-through.” This

8

comports with my understanding of the market for VOD titles. In general, “sell-

9

through” is meant to mimic in some, but not other, respects the purchase of a
physical disc, and VOD providers generally refer to a sell-through transaction as a

11

“Purchase.” The price for a purchase of a VOD title is commensurate with the price

12

for purchasing a physical disc at retail, though it is usually reduced by a small

13

amount (as much as $5.00 for a new release), which reflects costs saved by not

14

having to manufacture, package, store, distribute and ship discs. A “sell-through”

15

transaction differs from a traditional purchase of a physical disc, however, in that it

16

is merely a license to view the VOD title within the VOD provider’s viewing

17

software subject to a long list of restrictions contained in terms of service

18

agreements that must be accepted to complete the “purchase.” The same is true of

19

“renting” a VOD title, with the additional term that a customer’s window to watch

20

the title expires within a short time.

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26.

Third, their terms of service agreements prohibit filtering. I have

22

reviewed the standard terms of use for the four VOD providers mentioned in

23

Plaintiffs’ Complaint as marketing major motion pictures on a rental and “sell-

24

through” basis: Vudu, Google Play, iTunes, and Amazon Instant Video. Two other

25

services mentioned in Plaintiffs’ Complaint – Netflix and Hulu – provide VOD titles

26

on a subscription basis. However, I understand that Plaintiffs in this case have

27

compared VidAngel’s service to the non-subscription-based VOD providers. True

28

ER502

11

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 34 of 44 Page ID #:1824

1

and correct copies of the terms of service agreements for the four non-subscription-

2

based services are attached collectively as Exhibit E. Each of them provides that

3

the user may not modify any digital content purchased through the provider’s

4

system. Because these terms of service expressly prohibit modification of

5

audiovisual content in the ways necessary to filter (through automatic skipping and

6

muting), a user may not filter VOD content without violating the VOD provider’s

7

terms of service.

8

27.

9

Fourth, in addition to VOD terms of service, which prohibit filtering,

several technological issues make it impractical to apply filters accurately to a VOD
title after it is opened within the VOD provider’s proprietary software on a user’s

11

device. Due to varying transfer rates and other technical functionalities unique to

12

each VOD provider’s viewing application software, as well as operational

13

differences unique to each user’s device, it has not been possible for a third party to

14

create software compatible across multiple devices and applications to filter titles

15

after they have been opened in a particular VOD provider’s viewing application.

16

More importantly, such software cannot be written for even a simple application.

17

Closed systems contain security features that prevent the creation of filtering

18

software compatible with that system absent assistance from the VOD provider. To

19

develop filtering software that functions within a VOD provider’s closed system, a

20

developer typically must have the consent and participation of the VOD provider to

21

access its software for the purpose of developing software compatible with it. I

22

have been informed,

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10

23

that no VOD provider and no Plaintiff has ever

24

consented to allow a third party to create software compatible with a VOD

25

provider’s closed system to allow users to apply customized filters to titles viewed

26

within the provider’s closed system.

27
28

ER503

12

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 35 of 44 Page ID #:1825

Google’s Purported YouTube Player “Exception”
Demonstrates That Plaintiffs Have Made It Infeasible to
Provide Filtered VOD Content to Consumers

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2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

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28.

One exception to the closed VOD delivery systems architecture and

terms of service described above is the YouTube Embeddable Player and its
application programing interface (“API”). The YouTube Embeddable Player API
also did not exist in April 2005, when the FMA was enacted. An API is a set of
function and interface definitions, the protocols for their use, and associated
programming tools that affords software developers controlled access to the API
owner’s software. An API permits the development of other software programs that
can interact with the API owner’s software. The additional software is often referred
to as a “plug-in” to the API owner’s software. In theory, the YouTube Embeddable
Player API allows a software developer to create a plug-in for the YouTube
Embeddable Player capable of allowing automatic skipping and muting of undesired
content in an encrypted motion picture file after the file is opened for viewing by the
YouTube Embeddable Player in a user’s Google Chrome browser. To my
knowledge, no other VOD provider’s player contains an API that would allow for
the creation of a plug-in capable of allowing automatic skipping and muting of
undesired content in an encrypted motion picture file after the file is opened for
viewing by the VOD provider’s player.
29.

Paragraph 47 of Plaintiffs’ Complaint alleges that the YouTube API

allows a third party – such as VidAngel – to filter VOD titles purchased from
Google. This is inaccurate in a number of ways. To begin, YouTube’s terms of
service – attached as Exhibit F – expressly prohibit a user (or anyone directed by the
user) from “alter[ing] or modify[ing] any part of” a motion picture viewed on the
YouTube Embeddable Player. The user also “agree[s] not to access Content
through any technology or means other than the video playback pages of the Service
itself, the Embeddable Player, or other explicitly authorized means YouTube may
designate.” The YouTube Paid Service Terms of Service – a true and correct copy

ER504

13

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 36 of 44 Page ID #:1826

1

of which is attached as Exhibit G – further prohibits copying the Paid Services or

2

the sublicensing them to any third party. These terms of service also do not allow a

3

user to “circumvent, reverse-engineer, modify, disable, or otherwise tamper with

4

any security technology that YouTube uses to protect the Paid Service or encourage

5

or help anyone else to do so.” All these restrictions expressly make it a violation of

6

YouTube’s Terms of Service to engage in any of the activities necessary to filter a

7

motion picture through YouTube’s Embeddable Player.

8
9

30.

In addition, the YouTube API Services Terms of Service for developers

writing software plug-ins that interact with the API – a true and correct copy of
which is attached as Exhibit H – also prohibit any technology capable of filtering

11

motion pictures viewed through the YouTube Player API. They provide that

12

developers may not “separate, isolate, or modify the audio or video components of

13

any YouTube audiovisual content made available through the YouTube API.”

14

Thus, any third party that attempts to provide a filtering plug-in for a YouTube

15

Embeddable Player does so in violation of YouTube’s terms of use. I have also read

16

Exhibit A to the Declaration of Neal Harmon, which is a notification from YouTube

17

informing VidAngel that its filtering plug-in for the YouTube Embeddable Player

18

violates the YouTube API Services Terms of Service.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

19

31.

There are also several technological limits to creating a plug-in

20

compatible with the YouTube Embeddable Player API capable of accurately and

21

seamlessly filtering motion pictures purchased lawfully for viewing on the YouTube

22

Embeddable Player. To begin with, the Embeddable Player plug-in works only with

23

standard-definition content, not with the popular high-definition format typical of

24

DVDs or Blu-ray discs. More importantly, because the plug-in is not officially

25

supported by Google, changes to YouTube can cause the filters to fail. When that

26

happens, filtering is ineffective and users will see content that they did not want to

27

see until the plug-in is updated. Finally, slower computers cannot process both the

28

ER505

14

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 37 of 44 Page ID #:1827

1

video and the filter at the same time, resulting in missed filters. The end result is

2

that – without Google’s technical support and cooperation – no method of using a

3

YouTube Embeddable Player plug-in provides a consistent filtering experience for

4

the majority of users and no method would provide a high-definition filtering

5

experience for any user. In addition, this method does not work on modern mobile

6

devices.1

7

32.

Furthermore, these approaches to enabling a filtering functionality for

8

the customer suffer from reductions in the quality of the viewer experience such as

9

lower resolution, delays or stops, stuttering, and other impediments to smooth

10

viewing. Consequently, the commercial quality a viewer would expect when

11

enjoying the filtered content would be significantly jeopardized and diminished.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

12

VidAngel Transmits Filtered Versions of Plaintiffs’
Motion Pictures to Owners of Authorized Copies of
the Motion Pictures Pursuant to the FMA

13
14

33.

VidAngel is an online video filtering service that operates under the

15

“transmission” filtering method authorized by the FMA. Its service allows

16

customers to stream filtered feature films and television shows via the Internet to a

17

wide range of devices, including desktop computers, laptops, iPads, smart phones,

18

and televisions (through devices like Roku, Google Chromecast, or Apple TV).

19
20
21
22
23
24
25

1

I am also aware of certain “digital rights locker services,” such as UltraViolet
and Disney Movies Anywhere and disc-to-digital services such as VUDU and
Flixter, that claim to allow consumers to convert previously purchased DVDs or
Blu-ray discs into high quality digital files. See 37 CFR Part 201 (Exemption
to Prohibition on Circumvention of Copyright Protection Systems for Access
Control Technologies). These services merely provide the same digital right to a
user that he or she would obtain if purchasing a “sell-through” license from a VOD
provider for the disc the customer owns.

26
27
28

ER506

15

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 38 of 44 Page ID #:1828

1

VidAngel users can select from more than 80 unique filters when viewing a film or

2

television show. The filters have the effect of skipping audiovisual content or

3

muting audio content in categories created by VidAngel and selected by the user.

4

Example categories include sexual activity, nudity, drug use, obscenity, vulgarity,

5

the “F” word, blasphemy and violence. All users must select at least one filter, and

6

each user has the option to select as many other filters as apply to that content, thus

7

permitting users in most instances to select many thousands of different

8

combinations of filters, thus making a customer’s viewing experience individualized

9

and unique.

10

VidAngel’s Filtering Technology

11

34.

VidAngel follows the first, “transmission,” method contemplated by

the FMA, requiring the purchase of an authorized copy of a physical disc, a filtered

13

version of which is then streamed to the user without making a fixed copy of the

14

filtered work. VidAngel delivers filtered content to users by streaming it over the

15

Internet using a video content delivery protocol called HTTP Live Streaming2

16

(“HLS”). HLS divides the audiovisual content into short segments that are

17

frequently less than 4 seconds and never more than 10 seconds that are delivered

18

separately to a user’s device when viewed. The user’s device downloads each

19

segment individually. At the beginning of an HLS streaming session, the user’s

20

device downloads an index file which provides the device with a list of segment

21

files that the device can then request and play to display the content.3

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

12

22
23

35.

VidAngel’s filtering technology divides each feature film or television

show into hundreds or sometimes thousands of small segments (ranging from 2

24
25
26
27

2

R. Pantos, W. May, “HTTP Live Streaming,” Internet Engineering Task Force,
Apr. 4, 2016 (retrieved from https://tools.ietf.org/html/draft-pantos-http-livestreaming-19, Sept. 3, 2016)
3
Id.

28

ER507

16

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 39 of 44 Page ID #:1829

1

tenths of a second to 10 seconds in length), for which each segment is identified and

2

“tagged” as associating with one or more available categories of filterable content.

3

When a user selects a filter category and streams a feature film or television show,

4

all segments that are tagged for that filter are omitted from the stream.

5

36.

If the filter concerns audiovisual content, the user’s device will not

6

download the segments that have been tagged for that filter. If the filter affects only

7

the audio, the user’s device downloads a version of the segment with the voice

8

soundtrack muted while other soundtracks continue to play, but leaves the video

9

portion unchanged.

10

37.

Based on my review of the documents that VidAngel has provided to

me, it is my understanding that VidAngel’s system is designed and operates as

12

follows:

13

(i)

VidAngel lawfully purchases DVDs and Blu-ray discs;

14

(ii)

VidAngel places a DVD or Blu-ray disc into the optical drive of a

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

15

computer. VidAngel then uses a commercially available software program such as

16

AnyDVD HD to automatically allow read-access for the purpose of mounting the

17

DVD or Blu-ray files for uploading onto a computer, in the process necessarily

18

removing restrictions on DVD or Blu-ray content access;

19

(iii)

VidAngel uses a software program to extract the subtitle/caption data

20

files and then creates temporary (“locally cached”) Matroska files (erroneously

21

referred to by Plaintiffs’ expert, Robert Schumann, as “Mastroska” files) of the

22

feature films. Matroska files are multimedia files that can hold an unlimited number

23

of video, audio, picture, or subtitle tracks in one file;

24

(iv)

VidAngel uploads the subtitle/caption data files and Matroska files

25

(collectively known as the “pre-filter files” or “PF” files) onto a secure folder on a

26

third-party Internet service provider’s cloud storage service (“PCSS”) and uploads

27

the subtitle/caption into a separate PCSS folder (“PCSS cache” of these intermediate

28

ER508

17

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 40 of 44 Page ID #:1830

1

files);

2

(v)

VidAngel destroys the locally cached Matroska file;

3

(vi)

VidAngel boots an encoding and segmenting server (“ESS”) to run two

4

scripts, including an encoding script and a segmenting script, as follows:

5

a.

The encoding script temporarily copies the PF files from the PCSS

6

cache to the ESS, uses ffmpeg to prepare the PF files for tagging and filtering,

7

creates a single mp4 file (640 kilobytes per second bitrate) for tagging (when that is

8

not performed beforehand on YouTube or when corrections need to be made to the

9

tags), copies the mp4 file from the ESS to a secure PCSS location, creates four
Transport Stream files (“TS files”) at 640, 1200, 2040 and 4080 bitrates for filtering,

11

copies the TS files to a secure location on the PCSS, and deletes all copies and files

12

on the ESS. This script is run once for each title’s Matroska file.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

13

b.

The segmenting script temporarily copies the TS files from the PCSS to

14

the ESS, segments the TS files for adaptive bitrate streaming (as per the HLS

15

specification) based on both 9-10 second intervals and the locations of each tag for

16

the title (which could be as short as 2 tenths of a second), creates thumbnail files for

17

player scrubbing preview for each non-filterable segment, saves a comma-separated

18

values (CSV) file containing the results of the segmenting process for each segment,

19

uploads the CSV file for use by the filtering system, encrypts the segments of each

20

bitrate with a new and unique encryption key, copies the unencrypted segments

21

from the ESS to a secure location on the PCSS, copies the encrypted segments from

22

the ESS onto a publicly accessible location on the PCSS (the “TS cache”), copies

23

the encryption keys from the ESS to a secure location on the PCSS, deletes older

24

revision files on the PCSS, and deletes all copies and files on the ESS;

25

(vii) VidAngel lawfully purchases additional DVDs and Blu-ray discs;

26

(viii) VidAngel enters the information concerning the additional discs into an

27

inventory system;

28

ER509

18

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 41 of 44 Page ID #:1831

1

(ix)

VidAngel applies bar codes to the disc packages;

2

(x)

VidAngel sells specific discs to specific customers;

3

(xi)

VidAngel requires each customer to select one or more filters; and

4

(xii) VidAngel streams encrypted content from the discs to each purchaser

5

while applying the filters chosen by that customer.

6

(xiii) At the customer’s device VidAngel software assembles the segments in

7

sequence, and for each segment decrypts the content, displays it and then discards

8

the segment.

9

VidAngel’s Technology Prevents File Sharing and Does
Not Create Any Watchable Copy of Plaintiffs’ Works

10
11

38.

Based on my understanding of VidAngel’s system, at no point during

this process does VidAngel create a fixed copy of the altered (filtered) movie or

13

television show viewed by any user. In fact, VidAngel’s service does not even

14

make a “copy” of the original motion picture in any traditional sense. Rather, the

15

feature film or television show is altered (filtered) as it is divided into hundreds or

16

thousands of small segments and streamed to the user’s device using the HLS

17

protocol. A user can view the contents of each segment only after it has been

18

streamed in sequence, decrypted with the correct keys (keys which, themselves, are

19

protected and accessible only by a user who has legally purchased a disc from

20

VidAngel), and rendered with a VidAngel media player. After each unencrypted

21

segment is viewed, it is removed from the device's memory by the player and, for all

22

intents and purposes, is gone.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

12

23

39.

I have read the description of VidAngel’s service in the Declaration of

24

Robert Schumann (Paragraphs 7 to 19 and 35 to 42), and the service, as he describes

25

it, also creates no fixed copy of the altered movie or television show.

26
27
28

ER510

19

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 42 of 44 Page ID #:1832

The Purported Legal Violations Plaintiffs Complain of
Are Necessary to Provide any Filtering/Streaming
Service Authorized by the FMA

1
2
3

40.

The FMA provides that it is not a violation of copyright to “transmit” a

4

filtered motion picture to a consumer who lawfully purchased a copy of the

5

unfiltered work. To transmit a filtered version of a movie or television show from a

6

DVD or Blu-ray disc to a household, VidAngel must first unlock the encryption on

7

the DVD or Blu-ray disc. Only after the encryption is unlocked can VidAngel tag

8

audiovisual and audio segments of the movie or television show for filtering. This

9

process of unlocking the encryption contained on the disc is the functional

10

equivalent of what occurs every time a person places the disc in a player to view the

11

contents of the disc.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

12

41.

As is common practice for Internet content delivery services (and

13

multimedia services in particular), VidAngel employs multiple delivery servers for

14

caching purposes to ensure that its users receive a seamless stream and avoid

15

creating network traffic congestion. VidAngel streams filtered content to users from

16

one of eight or more servers located in different parts of the United States. The

17

content is streamed to the user from whichever server is closest. The closer the user

18

is to the server, the faster the content reaches the user’s device, reducing the need

19

for buffering. Without the use of distributed servers, a viewer would see and hear a

20

motion picture briefly before it froze while the next segment of the motion picture

21

loaded, thereby diminishing the presentation quality of the media content. Rather

22

than see continuous motion, the viewer would experience a maddening start, stop,

23

start, stop viewing of the motion picture.

24

42.

Each VidAngel user experiences an individualized stream based on the

25

filters he or she selects. A user can choose from many thousands of different

26

combinations of filters for any movie or television show, creating a private viewing

27

experience. For two people to watch all of the exact same segments of a filtered

28

ER511

20

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 43 of 44 Page ID #:1833

1

motion picture streamed through VidAngel’s process, they would have to choose the

2

same combination of filter settings and receive each of the segments from the same

3

server.

4

43.

Decrypting and streaming a filtered version of a motion picture

contained on a DVD or Blu-ray disc that the user has lawfully purchased is the only

6

method a third party such as VidAngel can employ to transmit a filtered version of a

7

motion picture to a household absent an express VOD license from the copyright

8

owner. It is my understanding that the studios refuse to license VOD rights to

9

VidAngel (or any other service that filters content). Moreover, the closed systems

10

of the VOD providers prevent the creation of technology that could permit filtering

11

without their consent and participation. Thus, VidAngel’s method is the only

12

known method a third party could use to transmit filtered content to a household

13

without first obtaining the copyright holder’s consent.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

5

14

44.

Importantly, VidAngel’s methodology ensures that any decrypted file

15

can be accessed only by the legal purchaser of the disc containing the file, and that

16

no filtered version could ever be conveyed to a member of the public by any means.

17

VidAngel’s decryption technology thus does not and cannot harm the market for the

18

work, nor does VidAngel’s decryption process result in injury to copyright owners.

19

45.

Tedd Cittadine declares that the following four harms he claims will

20

befall Plaintiffs if VidAngel’s service is not enjoined: (1) the service harms the

21

studios’ “basic right to control how, when and through which channels our content

22

is disseminated for viewing by consumers”; (2) the service causes “harm to the

23

online distribution of our content and to our relationships with authorized

24

distributors”; (3) the service causes “harm to our ability to secure and protect

25

content in an online environment”; and (4) the service causes “harm to the overall

26

development of the on-demand streaming market by the provision of user-viewing

27

experiences without our rigorous quality controls.” To begin with, I have reviewed

28

ER512

21

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44 Filed 09/12/16 Page 44 of 44 Page ID #:1834

1

Mr. Cittadine’s declaration and his deposition transcript and have found no direct

2

evidence that VidAngel has actually caused any of these injuries; rather, Mr.

3

Cittadine has merely testified that VidAngel “threatens” serious harm to the studios.

4

More importantly, any service that transmits a filtered version of Plaintiffs’ motion

5

pictures pursuant to the FMA would “harm” the studios in each of these ways. By

6

definition, filtering does not allow Plaintiffs to control the manner in which a user

7

filters their works, and the FMA states that filtering shall occur without the studios’

8

consent. This necessarily means that viewing experiences will occur outside of the

9

studios’ control.

10
11

I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

BAKER MARQUART LLP
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

12

Executed on September 11, 2016, at Wilmington, Delaware.

13
14

_____________________________________

15

Dr. Sigurd Meldal

16
17
18
19
20
21
22
23
24
25
26
27
28

ER513

22

DECLARATION OF SIGURD MELDAL

Case 2:16-cv-04109-AB-PLA Document 44-4 Filed 09/12/16 Page 1 of 6 Page ID #:1859

EXHIBIT D

ER514

Case 2:16-cv-04109-AB-PLA Document 44-4 Filed 09/12/16 Page 2 of 6 Page ID #:1860
ClearPiay Streaming Instructions & FAQ

9/4/2016

a

I HELP

Open 10 AM·6 PM MST. 866·788-6992
LOGIN

I

ACTIVATE

I

SHOP

Home> Ctearl'lay Streaming Instructions & FAQ

ClearPiay Streaming Instructions & EAQ

How does it work?
1. Select your favorite movies to watch from our list of streaming titles (requires
Google Chrome). You can pick from our List of Movies you wish to view.

2. Click "Watch Instantly" at the top of the movie page.

Captain America: Winter Soldier
After the everds oflha

Aveng~rs,

Captam Rogers (aka Cap1::.m

S H.I.E.L.O. helpeng lo ke~p thtl' world safe. But then; 1s a Slllisttr plot growing 1
S HI E.L D., .snd when Nick Fury is taken out, i1't up to Capt am Amenca 10 lind the trait on
and hunt down the mystenou; Wmter Sold1er before an old ~nemy get$ its hand$ on a

weapon that could k1ll m1!hons

ClearPiay In Action!

DVD

Yes

Cle:arPiay mute& aroulld 15 iMhmces of language, rnostl)· of the mdd variety. There 1s no
$$xuatity or nudity, but thi; is a grittier, more VJOlsnt f4m Ihan previou; Marvel offerings. There
arw numerous beat downs and gun battl~i, 5-0 thlnos ran y~;~1 a hUlf jtJrnpy dunng iome of the

3. You will be taken to our ClearPiay Streaming Player.

4a. Log into our online streaming player with your ClearPiay account info.

https://www.clearplay.com/t-streaming_support.aspx

ER515

0_14759

1/5

Case 2:16-cv-04109-AB-PLA Document 44-4 Filed 09/12/16 Page 3 of 6 Page ID #:1861
ClearPiay Streaming Instructions & FAQ

9/4/2016

ClearPiay Member Login
Your ClearPiay Membership now Includes streaming video nlterlngl
To get started. please login to your ClearPiay account.

4b. If you aren't already a ClearPiay member, you can try it free for 30 days.

ClearPiay Free Trial
Enjoy 30 days FREE access to ClearPiay's
advanced parental control filters.

wyou love the servtce. ao nothing ana your card Ylill be blltea $7.99
each month as long as you subscribe to ClearPiay. Opt out :>nytime by calling
866-788-6992. Call before your tree trial period is over ano you won't oe cnarged

continue

5a. We stream movies from Google Play. Log into your Google Account to confirm
the rental/purchase of the movie you want to stream.

https://www.clearplay.com/t-stream i ng_support.aspx

ER516

D_14760

'215

Case 2:16-cv-04109-AB-PLA Document 44-4 Filed 09/12/16 Page 4 of 6 Page ID #:1862
9/4/~016

ClearPiay Streaming Instructions & FAQ

Log In to Google
The mov1e you are about to watch w11/ IJt?' streamed from your Gaogle Play account

wt1ere you r•ave rented or pun:.naseu tne rnov1e
Logm to tnat account to llegrn your Vlileo weam.

5b. If you have not rented/purchased the movie you will be asked to rent or buy the
movie in a new pop up window.

5c. Confirm rental or purchase terms (rentals are available within a limited timeframe
after confirmation).

https://www.clearplay.com/t-streaming_support.aspx

ER517

D_14761

315

Case 2:16-cv-04109-AB-PLA Document 44-4 Filed 09/12/16 Page 5 of 6 Page ID #:1863
ClearPiay Streaming Instructions & FAQ

91412016

1111
lo~l

!>•'

V

!:: YourEmail@ ...

D

,.~,

.......... ,..
Shop

Captain Arnerica: The Winter
Soldier

.•"•.. .'(['

6. Change your filter settings at the bottom of the screen and enjoy the show!

Enjoy The Stream!

- Does It cost extra?
Rental and purchase fees may apply but the filtering service is included free with
your Clearplay memebership
• Do I need the wireless FilterStik to make it work?
Nope. The FilterStick is only used for our players.
-What devices can I use to watch the movie?
Currently, Mac or PC.
-Can I adjust what I want to filter out?
Of course! Before the movie starts you can adjust your filter settings below the
player window.
-Which movies can I watch?
All the movies listed on our streaming movie list. (There are a lot.)
https://www.clearplay.com/t-streaming_support.aspx

ER518

0_14762

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Case 2:16-cv-04109-AB-PLA Document 44-4 Filed 09/12/16 Page 6 of 6 Page ID #:1864

9/4/.?016

Clear Play Streaming Instructions & FAQ

-Does this work on all streaming services?
ClearPiay Streaming works exclusively with rentals and purchases made through
Google Play.
- If I watch the movie directly on Google Play will it be filtered?
No. After renting/purchasing the movie at Google Play, begin filtered playback by
clicking the ClearPiay Streaming individual movie page.
-Can I use Google's Chromecast?
If you have a Chromecast then you can mirror your desktop or laptop to your TV by
using the Chrome Browser "cast" feature. Be aware that we have seen some
slowness with the video being playing on the TV when mirroring.
NOTE: Do not click on the "cast" icon on the ClearPiay streaming player. This will
play the movie on your TV through the Chromecast but it will not be filtered."
- Can I use Apple Air Play?
If you have an Apple TV then you can use Air Play to mirror your laptop to your TV.
This works natively for Safari on a Mac product. If you are on a windows platform
then there are several third party software's that will mirror your laptop or desktop to
your Apple TV.
- How Can I display the movie on my TV?
If you're using a laptop or desktop that has an HDMI port you can use an HOM I
cable to go from your computer to the TV. There are plenty of tutorials on the web
that will walk you through how to do that with your computer and Operating System.
If your computer does not have and HOM I cable port you can also use cables like
VGA to HDMI or DVI to HOM I, depending on how your computer is set up. You can
find them on Amazon or at any electronic store.
-Why won't the movie play after renting/purchasing it?
Be sure you're using the latest version of Google Chrome to stream it (other
browsers tend to run into caching problems). if you're experiencing problems, or
really want to try a different browser, clearing your browser's cache can help. Here's
how:
Internet Explorer
Mozilla Firefox
Google Chrome
Apple Safari
I cleared my browser's cache and I'm still getting an error message when I try
to watch my movie.
ClearPiay filtering is applied to the movie as it streams from Google Play, so if you're
running into issues your best bet is to check Google Play support documentation,

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© 2012 Cl.EARPLAY INC. CONTACT US NON-PROFIT SUPPORT FAQ BUY GIFTS HELP
ClearPlay Patents: 6.889,383. 6.698,799:7.526.784.7,543.318:7.577.970 7.975.021:8.117,282 More Pending

https://www.clearplay.com/t-streaming_support.aspx

ER519

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Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 1 of 25 Page ID #:1730

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

1 Ryan G. Baker (Bar No. 214036)
[e-mail]
2 Jaime Marquart (Bar No. 200344)
[e-mail]
3 Scott M. Malzahn (Bar No. 229204)
[e-mail]
4 Brian T. Grace (Bar No. 307826)
[e-mail]
5 BAKER MARQUART LLP
2029 Century Park East, Sixteenth Floor
6 Los Angeles, California 90067
Telephone: [phone]
7 Facsimile: [phone]
8 Peter K. Stris (Bar No. 216226)
[e-mail]
9 Brendan Maher (Bar No. 217043)
[e-mail]
10 Elizabeth Brannen (Bar No. 226234)
[e-mail]
11 Daniel Geyser (Bar No. 230405)
[e-mail]
12 STRIS & MAHER LLP
725 South Figueroa Street, Suite 1830
13 Los Angeles, California 90017
Telephone: [phone]
14 Facsimile: [phone]
15 David W. Quinto (Bar No. 106232)
[e-mail]
16 3007 Franklin Canyon Drive
Beverly Hills, California 90210
17 Telephone: [phone]
Facsimile: [phone]
18 Attorneys for Defendant and
19 Counterclaimant VidAngel, Inc.
20

UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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WESTERN DIVISION
DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

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ER520

Plaintiffs,
vs.

CASE NO. 16-cv-04109-AB (PLAx)
REDACTED VERSION OF
DOCUMENT PROPOSED TO BE
FILED UNDER SEAL
DECLARATION OF NEAL
HARMON IN SUPPORT OF
VIDANGEL’S MEMORANDUM OF
POINTS AND AUTHORITIES IN

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 2 of 25 Page ID #:1731

1

VIDANGEL, INC.,
Defendant.

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3

VIDANGEL, INC.,

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Counterclaimant,

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6

OPPOSITION TO PRELIMINARY
INJUNCTION MOTION

vs.

8

DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
CORPORATION; AND WARNER
BROS. ENTERTAINMENT, INC.,

9

Counterclaim Defendants.

7

10

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11
12

I, Neal Harmon, declare:
1.

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I am a founder and the Chief Executive Officer of defendant and

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counterclaimant VidAngel, Inc. (“VidAngel”). I submit this declaration in support

15

of VidAngel’s Memorandum of Points and Authorities in Opposition to Plaintiffs’

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Motion for Preliminary Injunction. I have personal knowledge of the facts set forth

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herein and, if called as a witness, I could and would testify competently thereto.
Why My Family Wanted to Watch Filtered Content

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2.

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Throughout my life, I have been a consumer of family-friendly movies

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and television programs. I was raised in rural Idaho. We did not watch movies with

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sex or nude scenes or with excessive violence and profanity in our home. For much

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of my childhood, this meant that my family did not have access to many mainstream

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movies and television shows, as they often included content at odds with my

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family’s beliefs and values. At times, we felt left out of popular American culture,

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as we were unable to watch the most popular movies and shows. Even

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entertainment offerings with messages and themes compatible with my family’s

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values and beliefs still included some scenes with content we found objectionable.

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ER521

1

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 3 of 25 Page ID #:1732

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Figure 1 - I was the third of 9 children and our family enjoyed movie experiences together. Here we are with our
parents, spouses and young children. We had movie night out on the lawn for our family reunion using VidAngel.

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9
10

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never know when a particular scene in a broad family comedy might include
material that made us uncomfortable. For this reason, my family was very excited
about the CleanFlicks service that debuted in 2000.

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3.

CleanFlicks was a business that produced edited versions of films to

remove content that was inappropriate for children or that other viewers might find

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offensive. CleanFlicks removed sexual content, profanity and some references to

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violence from movies, either by muting audio or cutting entire portions of the track.

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My family and I used the CleanFlicks service to watch the same movies the rest of

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the country found enjoyable and moving, without compromising our values. To our

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regret, a group of Hollywood directors engaged in litigation with CleanFlicks for

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copyright infringement and in 2006 a federal district court found that CleanFlicks’

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filtered movies infringed their copyrights. CleanFlicks’ service was held to infringe

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because, contrary to the requirements of the Family Movie Act (“FMA”),

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CleanFlicks did not allow each consumer to decide what to mute or delete. It also

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created fixed copies of filtered works. When CleanFlicks and similar services were

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put out of business, my family lost a major source of family-friendly content.

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Telephone: [phone]
Facsimile: (424) 652-785

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Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

We decided not to watch certain offerings we were interested in, because we could

4.

The FMA was enacted in 2005, in response to a lawsuit against a

number of different filtering companies, including ClearPlay. The FMA promised a

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2

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 4 of 25 Page ID #:1733

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clearly legal way to filter out content from popular films and television shows that

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families like mine found objectionable.

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5.

In 2012, Google announced the debut of Google Play. Google Play is a

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digital distribution service operated and developed by Google. Among other things,

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Google Play serves as a digital media store, offering music, magazines, books,

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movies and television programs. It is similar to services such as Apple iTunes,

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VUDU and Amazon Video. Google Play allows users to download media to various

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digital devices, including phones and Google TV. When Google debuted Google

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Play, I had already been experimenting with the YouTube JavaScript application

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through Google Play and watched on a YouTube Player in a Google Chrome web

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browser.

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6.

Telephone: [phone]
Facsimile: (424) 652-785

permitted automatic skipping and muting of movies and television shows purchased

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

programming interface (“API”). It allowed me to write program codes that

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

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Around the time Google Play debuted, I realized that the way users

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consume movies and other visual narratives was undergoing a profound shift away

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from traditional physical embodiments like DVDs and Blu-ray discs to digital

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streaming. The popularity of smart phones and tablets along with the development

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of internet infrastructure and other technologies offered users the potential to stream

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movies and television shows to many types of devices whenever a user desired.

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Remembering my family’s struggle to find appropriate film and television content, I

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realized there was a tremendous opportunity to serve the vast market of households

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with religious, moral and other objections to the adult content of most mainstream

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studio offerings in the context of this massive shift to streaming distribution.

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7.

Sometime in 2012, my brothers and I asked ourselves, “Why isn’t there

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a content filtering service for streaming?” Using my coding knowledge, I coded a

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filtering tool for the movie “Cinderella Man” on the YouTube Player in the Google

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Chrome browser. (YouTube is owned by Google.) The tool filtered the film for

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ER523

3

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 5 of 25 Page ID #:1734

1

swearing and a couple of especially gruesome punches. While it would play only the

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standard definition (“SD”) version of the movie on a computer, the tool succeeded

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in removing the objectionable content. “Cool,” we said, “it seems to work for SD

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content on the Chrome browser.” At the time, though, we realized that high

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definition (“HD”) content would become the industry standard for digital movie

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distribution. Realizing this, my brothers and I started to look for ways to create a

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filtering tool that would work on HD content streams.

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The Development That Led Us to Found VidAngel

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8.

In 2013, Google announced that it would conduct a private beta test of

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content on high-definition televisions by streaming it directly to a television set via

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Wi-Fi from the Internet or a local network. Users select the media to play using

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mobile and web apps that work with the Google Chromecast technology. The first-

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generation Chromecast was a video-streaming device that was made available for

16

purchase in July 2013. When Chromecast was announced, there was no company

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providing a content filtering service pursuant to the FMA that worked with HD

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video streams. My brothers and I saw a market opportunity to provide families with

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such a tool.

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9.

Telephone: [phone]
Facsimile: (424) 652-785

developed by Google. The players are physically small dongles and play video

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

the Chromecast streaming device. Chromecast is a line of digital media players

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

“The Chromecast is how we get filtered HD content on the television,”

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my brothers and I said to each other. “It’s time to build this.” To confirm our

22

intuitions concerning the potential market for such a service, we conducted research

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and found that about half of American parents would use a filtering service.

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Although we created VidAngel because we wanted it for our own children, we knew

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many other families would want to use it as well. We then set about creating the

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technology, business plan and infrastructure necessary for a filtering service. After

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many months of hard work, we launched a private beta VidAngel filtering service

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ER524

4

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 6 of 25 Page ID #:1735

1

capable of filtering HD content through Chromecast. It was and is my

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understanding that our beta service fully complied with the provisions of the FMA.

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We simply provided users with a tool they could use to filter digital content streams

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from Google Play using the Chromecast’s technology.
The Studios’ First Attempt to Block VidAngel

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6

10.

In January 2014, we raised $600,000 to launch VidAngel.com. After

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the private beta launch, we reached out to Google to ask whether we could purchase

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Chromecast devices at wholesale and then sell them to families who wanted to use

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VidAngel’s filtering service. Google responded that it would consider a bulk

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Chromecast API launch, even though we were attending a conference in California,

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we were so excited to launch that we did not sleep the entire night trying to get the

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system to work and be the first out the door on the list of Chromecast applications. It

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never worked.

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Telephone: [phone]
Facsimile: (424) 652-785

Softward Development Kit (SDK) on February 3, 2014. The day of Google’s

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

purchase agreement only after VidAngel successfully launched a public beta of its

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

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5

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 7 of 25 Page ID #:1736

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Telephone: [phone]
Facsimile: (424) 652-785

Figure 2 - I took this photo of my brothers Daniel and Jordan in our Redwood City, CA hotel on Tuesday,
Feb 4, 2014 at 8:05am after working through the night trying to understand why our programs no longer
worked

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

11.

We discovered that Google removed the technology from their SDK

16

that made the filtering service possible on native Chromecast. Google did not notify

17

us or publicly announce the removal of its technology. Based on conversations I

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later had with a Google representative, I am informed and believe that Google

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removed this technology at the request of the movie studios, which claimed that

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Google would be in violation of its agreement with them if it enabled VidAngel’s

21

filtering.

12.

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Also, on December 5, 2013, VidAngel received a notification from

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YouTube that VidAngel’s YouTube Player API programming violated the

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developers’ API Terms of Service for YouTube. Attached as Exhibit A is a true and

25

correct copy of that notification. Again based on later conversations with a Google

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representative, I am informed and believe that YouTube sent this notification

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because the studios told Google that it would be in violation of its agreement with

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ER526

6

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 8 of 25 Page ID #:1737

1

them if it enabled VidAngel’s filtering. As explained in more detail in Paragraphs

2

48-50 below, I later obtained a copy of Google Play’s VOD Distribution Agreement

3

with Sony, which confirmed this belief.

4

13.

That the technology enabling filtering had been quietly removed gave

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me pause about moving forward with the VidAngel service. Even though I

6

understood that our service was legal under the FMA, I was aware of the studios’

7

historical hostility to filtering. In light of that hostility, I was concerned that the

8

studios might again try to shut down our service despite the clear protections of the

9

FMA. VidAngel was a startup company without the deep pockets and litigation
campaign that would bankrupt VidAngel’s business – before VidAngel could

12

prevail in court under the FMA.

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15

Telephone: [phone]
Facsimile: (424) 652-785

14

VidAngel’s Attempt to Partner with Google Play
and the Studios’ Interference with Those Efforts
Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

budgets of the major studios, and I feared that the studios would wage a legal

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

14.

Because we had already raised money, we decided to test different

16

models and ultimately opted for seeing how many customers we could acquire if we

17

gave the filtering away for free -- even if users could watch only on the YouTube

18

Player in the Chrome browser on their computer, and only in SD format.

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15.

While VidAngel was working with counsel to develop a filtering

20

technology compliant with the law, someone from a different division of Google

21

reached out to partner with VidAngel to provide a filtering feature for all of Google

22

Play. VidAngel was thrilled to pursue this option, realizing that with Google’s

23

resources and reach in digital markets, VidAngel would finally be able to serve the

24

vast market of Americans desiring an effective digital streaming filtering tool. The

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partnership did not materialize because Google’s distribution contracts required

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them to seek permission from the studios to develop a filtering tool. I was advised

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by Google that the studios refused Google’s requests to develop such a tool with

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ER527

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DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 9 of 25 Page ID #:1738

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VidAngel.

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16.

After the studios rejected Google’s requests to allow the use of a

3

filtering tool, VidAngel realized that a small startup could not possibly negotiate a

4

filtering license with the studios. With the help of legal counsel, VidAngel then

5

decided to pursue the launch of its current filtering system.
VidAngel’s Current Streaming Technology

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7

17.

By mid-2014, it was clear that the VidAngel service, as it was then

11

but then had to return to the VidAngel site to select the filtering they desired. After

12

those steps, users could watch only an SD version of the content and only on their

13

computer. This multi-step process confused and frustrated customers. In addition,

14

the filters often did not work properly because computer processors struggled with

15

YouTube’s API. Further, the service was not then adapted to modern industry

16

standards for digital content streaming – users demanded HD content and needed to

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be able to watch the content on their mobile devices and high-definition set-top

18

boxes. By mid-2014, people simply did not watch SD movies exclusively on their

19

desktops computers and no major distributor of digital content limited their

20

distribution in this way.

21

Telephone: [phone]
Facsimile: (424) 652-785

Users would use their Google Play accounts to rent content viewable on YouTube,

Telephone: [phone]
Facsimile: [phone]

It required users first to create an account on VidAngel and then with Google Play.

10

BAKER MARQUART LLP

structured, using the YouTube Player API, could never achieve commercial success.

9

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

8

18.

In June 2014, the Supreme Court published its decision in American

22

Broadcasting Companies v. Aereo, 573 U.S. ___, 134 S. Ct. 2498. In that decision,

23

the Court noted: “an entity that transmits a performance to individuals in their

24

capacities as owners or possessors does not perform to ‘the public.’” This language

25

prompted me to seek legal advice concerning ways to provide a lawful filtering

26

service to the owners of movies under the FMA.

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19.

I am familiar with some of the litigation involving filtering technology

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ER528

8

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 10 of 25 Page ID #:1739

1

and the FMA. I know that in 2005, a federal court in Colorado dismissed a

2

copyright infringement claim against ClearPlay based on the FMA. Huntsman v.

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Soderbergh, No. Civ. A02CV01662RPMMJW, 2005 WL 1993421 (D. Colo. 2005).

4

The Court found that the FMA protected ClearPlay’s service from the studios’

5

infringement claims: “the effect of the Family Movie Act is that Congress made a

6

policy decision that those who provide the technology to enable viewers to edit

7

films for their private viewing should not be liable to the copyright owners for

8

infringing their copyright … .” I am also aware that the FMA protects a technology

9

that filters content “transmitted to [the] household for private home viewing.”
without making a “fixed copy of the altered version of the motion picture.”

12

VidAngel specifically designed its current technology to comply with the FMA and

13

the relevant Court decisions interpreting the FMA and copyright law.
20.

Telephone: [phone]
Facsimile: (424) 652-785

14

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

Today, VidAngel follows the FMA and transmits filtered content to users’ homes

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

Under the current service, customers buy an authorized DVD or Blu-

15

ray disc from VidAngel (which buys it at retail after the studios release it) and then

16

choose various filters provided by VidAngel to apply to the movie. VidAngel then

17

streams the filtered movie to the user’s home. VidAngel allows users to sell back

18

their disc to VidAngel if they choose not to own the movie permanently.

19

21.

In early 2015, VidAngel began privately testing the new service with

20

customers. Over the course of a few months, the service improved substantially and

21

we were able to expand it to the Google Play app store and Chromecast.

22

VidAngel Announces Its New Service to the Studios

23

22.

By July of 2015, VidAngel felt confident enough in its service to seek

24

feedback from the major movie studios. To that end, with the help of counsel,

25

VidAngel sent a letter on July 23, 2015, to the major studios and television networks

26

(including all plaintiffs herein) explaining its service and technology. A true and

27

correct copy of that July 23, 2015 letter as sent to Disney is attached as Exhibit B.

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ER529

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DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 11 of 25 Page ID #:1740

1

VidAngel’s letter explained that VidAngel operates under the FMA’s filtering

2

exemption, and works as follows: (1) VidAngel “purchases the DVD or Blu-ray disc

3

for the customer and stores it in a physical vault;” (2) it “streams” the contents of the

4

disc to the customer in a filtered format chosen by the customer; and (3) it then “re-

5

purchase[s] the disc at a discount from the sale price. . .based on the length of time

6

the customer has owned the disc.” VidAngel explained that it had grown from 43 to

7

4848 users in just under six months (a 10,000% growth rate) and now wished to buy

8

directly from the studios “to scale its business.” The letter invited the studios to

9

access the service and concluded:

10

If you have any questions concerning VidAngel’s technology or
business model, please feel free to ask. If you disagree with
VidAngel’s belief that its technology fully complies with the Copyright
Act or otherwise does not adequately protect the rights of copyright
owners, please let us know. VidAngel wants to take the concerns of
content owners into consideration and address them to the extent it can.

12
13

Unbeknownst to VidAngel at the time, Disney almost immediately accessed its

15

service. Attached as Exhibit C is true and correct copy of a printout from a

16

VidAngel user account showing that, on August 6, 2015, a Disney employee signed

17

up for a VidAngel account using a non-descript Gmail account and provided

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payment information for a Director of Antipiracy Operations at Disney. Even

19

though they were obviously investigating VidAngel, Plaintiffs did not respond to

20

VidAngel’s letter, so it sent a second letter on August 21, 2015. A true and correct

21

copy of the August 21, 2015 letter is attached as Exhibit D. VidAngel had over 750

22

titles available for the new filtering service when it sent its letters to Disney. Prior

23

to filing suit on June 9, 2016, none of the plaintiffs, nor any of the dozen other

24

entities to which VidAngel wrote, ever expressed to VidAngel that they believed its

25

services infringed their copyrights and none ever sent a cease and desist letter to

26

VidAngel.

27

Telephone: [phone]
Facsimile: (424) 652-785

14

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

23.

I understand that two of the plaintiffs confirmed receipt of VidAngel’s

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ER530

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DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 12 of 25 Page ID #:1741

1

letters and called or emailed VidAngel’s counsel. Warner Bros. Entertainment

2

Inc.’s parent, Time Warner, Inc., emailed VidAngel in October. VidAngel promptly

3

returned the email and even scheduled a call to answer his questions. Time Warner

4

later cancelled the call and never rescheduled it. Fox called VidAngel’s counsel in

5

September 2015 and left a message, but in my understanding did not return phone

6

calls placed to it in September and October by VidAngel’s counsel. Thereafter,

7

VidAngel heard nothing from Plaintiffs, through counsel or otherwise, until this

8

lawsuit was filed.
VidAngel Wanted the Studios’ Feedback for Many Reasons

9
10

24.

The letters were an important part of VidAngel’s strategy of developing

12

with the FMA, as a practical matter we understood that any legal challenge from the

13

studios would have significant financial consequences for VidAngel even if its

14

technology were ultimately vindicated by the Courts. It was important to assess the

15

studios’ attitude toward VidAngel’s new streaming system early on, to provide

16

VidAngel’s investors (and potential investors) with accurate information about the

17

studios’ position with respect to VidAngel’s technology. For that reason, the letters

18

requested feedback from the studios and invited them to examine VidAngel’s

19

technology and ask any questions they might have about it. Because the letters

20

invited a response from the studios and clearly described VidAngel’s technology,

21

VidAngel assumed that, to the extent the studios had a problem with VidAngel’s

22

technology, they would inform VidAngel if any of them disagreed that VidAngel’s

23

service complied with the FMA. Further, as VidAngel’s model involved purchasing

24

DVDs from the studios and was serving a market of customers that would never

25

watch un-filtered studio content, VidAngel was creating new revenue for the

26

studios. VidAngel believed then (and continues to believe) that there are very good

27

business reasons for the studios to support VidAngel’s model. Since VidAngel’s

Telephone: [phone]
Facsimile: (424) 652-785

new technology. Although VidAngel believed its new filtering system complied

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

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DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 13 of 25 Page ID #:1742

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service contributes to the studios’ bottom line, it was another reason to view the

2

studios’ silence in response to VidAngel’s letters as tacit approval of its service.

3

Had any studio expressed a complaint to VidAngel in response to the letters,

4

VidAngel would have discussed and considered any proposal to resolve it. In

5

particular, VidAngel could have adapted its technology in some way or, to the

6

extent the studios expressed an opinion that VidAngel’s technology was infringing,

7

VidAngel could have filed a declaratory relief suit concerning its technology.

8
9
10

25.

studios after sending two very direct letters, VidAngel opened its services to the
public in August 2015.

11

26.

The version of the system that was publicly launched in August 2015

solved the problems of the 2014 design: it simplified the user-interface, required

13

users to register only once with VidAngel, allowed users to watch HD content on

14

their favorite mobile devices and set-top boxes, and improved the filters so that they

15

were more seamless. By bringing VidAngel’s technology up to and beyond industry

16

standards and offering the features users expect of any content streaming service,

17

VidAngel found a large market for filtered movie and television content. As a

18

result, its customer base began to shoot up almost immediately.

19

Telephone: [phone]
Facsimile: (424) 652-785

12

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

Having received no feedback or objections to our technology from the

27.

In fact, today, VidAngel’s apps are rated higher by users than the

20

leading studio distribution platforms. For example, the VidAngel rating on Google

21

Play is 4.8 stars whereas Netflix is 4.4 stars, Hulu is 4.1 stars, and Disney Movies

22

Anywhere is 3.9 stars. For all ratings on the Apple App Store, VidAngel has 5 stars,

23

Netflix has 3.5 stars, Hulu has 2 stars, and Disney Movies Anywhere has 3.5 stars.

24

On Roku, VidAngel has 4.5 stars, Netflix has 3 stars, Hulu has 3.5 stars and Disney

25

Movies Anywhere has 3.5 stars.

26
27

28.

By the end of 2015, VidAngel’s monthly disc sales had grown to over

100,000. In January 2016, USA Today published an article about VidAngel’s

28

ER532

12

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 14 of 25 Page ID #:1743

1

services and the ability to stream filtered versions of Star Wars prequels for a net

2

cost (after buy and sellback) of as little as $1. A true and correct copy of this USA

3

Today article is attached as Exhibit E. On January 12, a Disney employee -- using

4

the secret VidAngel account created with payment information from Disney’s

5

Director of Antipiracy Operations -- logged on to VidAngel account and purchased

6

Frozen and a Star Wars prequel. (See Exhibit F hereto.) This same employee

7

purchased and sold back 17 total titles over the next four months.

8

29.

On March 3, 2016, Disney announced that it would release Star Wars:

12

titles available before they become available in other digital markets. This is untrue.

13

In fact, the film was available for digital download purchase four days before

14

VidAngel could buy DVDs. Attached as Exhibit F is a true and correct copy of an

15

article regarding Disney’s announcement. While the film was not made available

16

for shorter-term rentals when VidAngel began to make the filtered film available,

17

this is irrelevant because VidAngel does not rent titles. In any event, Star Wars:

18

The Force Awakens is the only major title released in this way, and it was clearly

19

done so at a time when the plaintiffs were planning litigation against VidAngel.

20

Despite VidAngel’s growing popularity, the imminent release of Star Wars: The

21

Force Awakens, and the fact that Plaintiffs had been discussing VidAngel with one

22

another and outside counsel for over seven months, Plaintiffs did not send VidAngel

23

a cease and desist letter or seek an injunction. Instead, on April 5, Plaintiffs

24

purchased, streamed and sold back the film. (See Exhibit C.)
VidAngel Invested Millions in Reliance Upon the Studios’ Silence

25
26
27

Telephone: [phone]
Facsimile: (424) 652-785

have used Star Wars: The Force Awakens to show that VidAngel purportedly makes

Telephone: [phone]
Facsimile: [phone]

“purchase” (but not a shorter rental period) on April 1. I am aware that Plaintiffs

11

BAKER MARQUART LLP

The Force Awakens on DVD on April 5. The film would be available for digital

10

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

9

30.

During the ten and a half months from VidAngel’s first letter to the

filing of Plaintiffs’ suit, VidAngel openly streamed filtered versions of every one of

28

ER533

13

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 15 of 25 Page ID #:1744

1

Plaintiffs’ most popular titles as soon as they were available on DVD. During this

2

time, VidAngel continued to purchase DVDs. In total, VidAngel has spent

6

raised $2.5 million in additional funding. VidAngel invested most of that funding to

7

develop its current model prior to Plaintiffs filing suit. Prior to the filing of this

8

lawsuit, VidAngel also had applications approved on every major mobile

9

application store and set-top box (e.g., Roku, Apple App Store, Apple TV, Amazon

10

Fire TV, Android TV and Kindle Fire). Monumental efforts went into each one of

11

these apps. In fact, VidAngel hired scores of tech, support and content employees.

12

VidAngel also hired scores of contractors to support the employees. Also, VidAngel

13

updated all the streaming technology to play more smoothly and built a multi-

14

thousand title content library. After several months passed without objection from

15

the studios, VidAngel concluded that the studios did not object to its service. In

16

response to media inquiries about the legality of its service, I cited VidAngel’s

17

letters and the studios’ lack of objection as a basis for VidAngel believing its service

18

did not infringe. Attached as Exhibit H are news articles containing my quotes

19

about the studios having no objection to VidAngel’s service. Today, over 500,000

20

families have used VidAngel’s filtering service.

21

Telephone: [phone]
Facsimile: (424) 652-785

and correct copy of an article from October 2015 announcing that VidAngel had

Telephone: [phone]
Facsimile: [phone]

in funding since it wrote to Plaintiffs in July 2015. Attached as Exhibit G is a true

5

BAKER MARQUART LLP

purchasing discs at retail. VidAngel has also spent millions of dollars

4

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

3

31.

In fact, it was not until VidAngel announced its intention to seek

22

significant financing that Disney finally decided to sue. On May 24, 2016, a couple

23

of weeks before the suit, VidAngel informed its better customers (including Disney,

24

which has purchased 17 titles with its secret VidAngel account) of its intent to raise

25

additional funds through Regulation A+ financing. Then, and only then, did Disney

26

finally decide to sue. I believe this litigation was intentionally timed to cut off

27

VidAngel’s access to cash flow at a critical stage in its development and prevent our

28

ER534

14

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 16 of 25 Page ID #:1745

1

modern filtering service from growing.

2

VidAngel Is a Filtering Company

3

32.

Because VidAngel has catered only to people who want to filter the

4

motion pictures they watch in their homes, we did not immediately recognize that

5

others might try to abuse VidAngel’s service or exploit loopholes in our service to

6

watch motion pictures without filtering. At the very early stages of our service, our

7

system allowed one to stream a movie even if no filter was selected. At that time,

8

we trusted that our audience was using our service for filtering.

9

33.

In December 2015, we created a #StopJarJar marketing campaign to

We discovered that the campaign was attracting users who were watching Star Wars

12

without filters. We therefore halted the campaign and began requiring filters to

13

watch movies on VidAngel.
34.

Telephone: [phone]
Facsimile: (424) 652-785

14

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

coincide with Star Wars 7 movie launch, giving away a free $20 Star Wars movie.

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

Later on, we discovered that other customers were setting a single

15

global filter (e.g., Jar Jar Binks) and then watching movies on the Roku that didn’t

16

have any tags for the selected filter, resulting in a few unfiltered streams. As soon as

17

we discovered potential loophole, we altered the system again so that it ensured that

18

a filter was set on each streamed movie. It has upset a few customers, but it has

19

allowed us to stay focused on our original target market of FMA-compliant filtering.

20

35.

When the studios sued us, they complained that the opening and

21

closing credits were another loophole of sorts. Because we had always tried to

22

prevent improper use of VidAngel, we immediately removed the opening and

23

closing credits tags altogether. VidAngel received a few complaints from those who

24

were abusing the system, but it also got complaints from those who used those

25

filters for legitimate purposes. One reason these filters were created was that credits

26

are often more than mere lists of the people who did certain tasks in creating the

27

film. Some movies save the most offensive content for the credits. The titles and

28

ER535

15

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 17 of 25 Page ID #:1746

1

credits feature allowed users to avoid such content. We are now updating our apps

2

to allow our customers to use the opening and closing credits filters provided that

3

they also pick at least one additional filter.

4

36.

All of the above steps to remove potential loopholes and focus

5

VidAngel’s viewing experience on filtering have been a part of our evolution, as we

6

become known to a larger audience of people. VidAngel is committed to ensuring

7

that people come to VidAngel to view filtered versions of motion pictures.

8
9

37.

Despite there being a few times where the system has been abused, our

data shows that 95.93 percent of VidAngel’s purchases came from users who

12

from users who voluntarily chose more than one filter. This indicates that our users

13

are overwhelmingly using VidAngel for filtering, and that the number of users

14

choosing multiple filters is increasing.

15

Telephone: [phone]
Facsimile: (424) 652-785

2016, and found that more recently 96.93 percent of VidAngel’s purchases came

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

voluntarily chose more than one filter. VidAngel also ran these numbers for July

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

38.

The studios claim that VidAngel is threatening the “legitimate

16

streaming market” because VidAngel’s sellback model allows a net cost of $1, but

17

the data prove otherwise. Because almost 96% of VidAngel’s purchasers have

18

selected multiple filters over VidAngel’s entire history, this means the version of the

19

film or television show VidAngel streams to them is of a different character than the

20

version available through other VOD providers like Google Play, Amazon Video,

21

VUDU and iTunes. VidAngel has had a long history of ensuring that it is reaching

22

its target filtering market.

23
24

39.

VidAngel has additional data showing that most of its users would not

have watched the movie they chose to see absent filtering:

25

SURVEY QUESTION: Would you have watched "[title]" without a filter?

26

Out of 180,227 movies watched, 92,225 users said they would not have

27

watched the movie at all without filters (as of 8/26/2016). These answers come from

28

ER536

16

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 18 of 25 Page ID #:1747

1

the account holders (usually parents). The numbers do not fully account for

2

hundreds of comments like these:

3

I would let my 13+ year old children watch without the filter. My younger
kids had to wait until Vidangel provided it.

4
5

My kids love this movie especially at Halloween but I hate it because it
needed to be edited. Thank you for editing it and putting it on your site.

6

The filter was great with younger kids watching (13 yr old in my case)

7

The filter was for the kids.

8

I wouldn't have let me kids watch without the filters.

9

My husband and I love the movie "Apollo 13" but we have never watched it
with our kids (youngest is age 7.) We muted the language that we feel is
inappropriate for our own household and were able to watch it with our
children. They loved it :)

10

12

I would have watched it without a filter with my older kids, but not the
youngers.

13

40.

This means that, while over half of all movies would not have been

watched by the account holders without filters at all, far more users would not have

15

watched the movie with their family without filters. This filtered-only viewership is

16

entirely additive to the studios’ market, and the purchases of those films and shows

17

would not have occurred without VidAngel.

18
19

Telephone: [phone]
Facsimile: (424) 652-785

14

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

41.

VidAngel’s Marketing Is About Filtering
VidAngel is constantly testing advertising messages and the studios

20

have cherry picked a few that never even got traction. While the studios say

21

VidAngel has an “unfair advantage” using its net cost with sellback and filters as a

22

marketing hook, what they fail to acknowledge is that VidAngel is not a direct

23

competitor to their distribution partners because those partners do not offer filtering.

24

42.

VidAngel learned in its early market testing that the market for filtered

25

content was far larger if customers did not have to pay an additional fee for filtering.

26

It seemed that customers felt they should be able to watch the movie however they

27

wanted after they had purchased the movie. As a company strategy, VidAngel

28

ER537

17

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 19 of 25 Page ID #:1748

1

wanted to reach broadest filtering audience possible and adjusted its marketing

2

messages accordingly.

3

43.

Historically, those who would like to enjoy filtered content had to pay a

4

premium price for the ability to do so (even purchase expensive hardware and a

5

subscription in addition to the cost of the movie). VidAngel’s messaging helps those

6

who think that filtering is more expensive and more difficult to realize that the

7

opposite is true. An analogy explains why VidAngel’s marketing references other

8

VOD services. People may believe that flying in an airplane is dangerous. Airlines

9

may highlight that the chances of dying in a car are higher than the chances of dying

Plane tickets do not directly compete with car sales, but the comparison is useful to

12

customers.

13

44.

The number of users voluntarily choosing more than one filter (over 96

percent in July) are evidence that the studios have mistakenly concluded that

15

VidAngel’s marketing highlighting net cost gives VidAngel an “unfair advantage,”

16

when the approach is ultimately attracting a filtering audience rather than competing

17

with all the many distributors who do not offer filtering.

18
19

Telephone: [phone]
Facsimile: (424) 652-785

14

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

in an airplane to dispel that myth and attract people to purchasing plane tickets.

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

The Studios Are Being Disingenuous Concerning the Lawsuit

45.

In their Complaint, the studios say they are suing VidAngel because it

20

is allegedly operating an "unlicensed VOD streaming service" even though

21

VidAngel is operating a remote filtering service under the FMA.

22

46.

Plaintiffs claim that "The FMA requires that any copy or performance

23

made pursuant to that statute be otherwise 'authorized'— that is, not violating the

24

copyright owner’s other exclusive rights." Complaint (Dkt No. 1), ¶ 44. Under this

25

position, the authority to filter content in the home resides with the studios, not with

26

the family. This position would essentially repeal the FMA, which does not require

27

any consent from the studios to filtering (consent they would definitely not give).

28

ER538

18

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 20 of 25 Page ID #:1749

1

47.

The ultimate irony is that the studios will not sell a streaming license

2

that permits filtering to anyone, putting companies like VidAngel in a Catch-22

3

position. Indeed, 10 years after the studios were compelled by the FMA to dismiss a

4

lawsuit with ClearPlay, the market has yet to see a studio-licensed streaming

5

product that supports filtering.

6

DVDs and Blu-ray Discs Are the Only “Authorized”
Copies of Plaintiff’s Movies Available for Filtering

7
8
9

48.

Due to the agreement the studios have made with the Directors Guild of

America (“DGA”), major studio agreements with their distributors have language
Google search for “VOD license agreement”):

13
14
15
16
17
18
19

CUTTING, EDITING AND INTERRUPTION. Licensee [Google]
shall not make, or authorize any others to make, any modifications,
deletions, cuts, alterations or additions in or to any Included Program
without the prior written consent of Licensor [Sony]. For the
avoidance of doubt, no panning and scanning, time compression or
similar modifications shall be permitted. Without limiting the
forgoing, Licensee shall not delete the copyright notice or credits from
the main or end title of any Included Program or from any other
materials supplied by Licensor hereunder. No exhibitions of any
Included Program hereunder shall be interrupted for intermission,
commercials or any other similar commercial announcements of any
kind.
Telephone: [phone]
Facsimile: (424) 652-785

12

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

similar to the Sony/Google agreement posted on WikiLeaks (which I found doing a

11
2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

10

49.

Discovering this language in the studios’ actual agreements helped me

20

realize that this was the reason Google was forced to remove technical support for

21

filtering HD content on the Chromecast and was forced to seek permission from the

22

studios to enable filtering on Google Play.

23

50.

What’s more, when the studios sign a deal for the rights to a specific

24

title, they seem to be required to include the following language in all of their

25

agreements. For example, in Sony’s agreement for the movies Fury and American

26

Hustle, the following language binds Sony:

27
28

ER539

[Sony] shall have the right...to make any and all changes and

19

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 21 of 25 Page ID #:1750

modifications in the Picture; provided, [Sony] shall comply with any
contractual right of first opportunity to make such changes granted to
Director.

1
2

5
6
7
8
9
10

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Given this language and the studio interpretation of the FMA, this

language trickles down through all agreements and ultimately hands the authority to
make any changes to the movie back to the director of the movie.
52.

The legislative history of the FMA reflect that the DGA refused to

testify or cooperate with Congress in any way when FMA was being debated in
Congress. The DGA and the studios would not seek a business deal with filtering
companies in 2004. And these are the same organizations who have not filled the
market need for filtering for the last decade, leading a few brothers from Idaho to
ask themselves, “Why isn’t there filtering for streaming?”
53.

If the court were to interpret the law as argued by the studios, then

VidAngel will not be able to operate under the “transmitted” language of the FMA
because the studios will not sell VidAngel a license that permits filtering. In fact,
Telephone: [phone]
Facsimile: (424) 652-785

4

51.

Telephone: [phone]
Facsimile: [phone]

3

they are unable to do so without cooperation from the DGA. And lack of
cooperation from the DGA is the reason the FMA was passed by Congress in the
first place. VidAngel is the only entity that provides a filtering service under the
FMA for those viewing title on modern mobile devices such as smartphones, tablets,
and SmartTVs.
VidAngel Would Love to Purchase a Filtered Streaming License
54.

VidAngel has various business reasons for which it is preferable to

purchase a streaming license that allows for filtering. For example:
a)

Discs will increasingly become less available and may eventually be

phased out of existence.
b)

New customers complain about VidAngel’s buy/sellback model and

ask why they can’t just rent the movies.
c)

A streaming license would allow VidAngel to provide both filtered and

unfiltered versions of movies.

ER540

20

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 22 of 25 Page ID #:1751

1

d)

There is a lot of overhead and waste in managing a vault of physical

3

e)

Acquiring physical discs through retailers is time consuming and

4

difficult.

5

f)

2

discs.

When customer demand exceeds our supply, VidAngel has to send

6

customers out-of-stock notices. VidAngel sent out almost 60,000 unique customers

7

over 250,000 out of stock notices last month alone. This means that VidAngel

8

turned away 250,000 requests for streams that it could have received income for if it

9

had a standard VOD distribution agreement that allows for filtering.

10

When VidAngel purchases more discs than it is ultimately able to sell,

it ends up with hundreds or thousands of discs that it will never sell.

12

55.

VidAngel assumed that it needed to have significant size before the

studios would ever consider a filtered licensing deal. Some contacts in Hollywood

14

told me to wait until we had over 1 million users, preferably over 5 million.

15

Telephone: [phone]
Facsimile: (424) 652-785

13

Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

g)

56.

In fact, VidAngel started talking with a local distributor in Utah about a

16

licensing deal in May of 2016, before the lawsuit. This distributor has agreed to

17

licensing its latest film to VidAngel because it has not signed an agreement with the

18

DGA and can permit filtering of content.

19
20

57.

After Plaintiffs filed their lawsuit, VidAngel inquired of some of the

plaintiffs whether they were open to a business solution rather than litigation.

21

58.

VidAngel also met with Sony, Lionsgate and Paramount about a

22

licensing deal since those studios had not sued them. VidAngel has reached out to

23

many others. These studios have either said, “this is complicated legally,” or

24

“maybe we can solve the problem with the airline cut,” or “you have to get the DGA

25

to agree first.” Multiple studios said they would get back to me after meeting with

26

their legal teams and never did.

27

59.

Finally, I am aware that my counsel has emailed counsel for Disney

28

ER541

21

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 23 of 25 Page ID #:1752

1

and offered to make certain changes to VidAngel’s model and that Plaintiffs’

2

counsel responded: “my clients absolutely will not engage in any joint licensing

3

discussions.” Counsel for VidAngel then offered to abandon its FMA exemption

4

defense (and with it the requirement that consumers must purchase copies of discs)

5

and instead pay a streaming license fee to stream filtered content, noting that this

6

arrangement would resolve Disney’s DMCA and infringement claims. Disney has

7

not responded to this offer.

8
9

60.

It appears that VidAngel is back to 2005 again, with no business

solution available to VidAngel.

10

New Releases on VidAngel Generate
Revenue Share Similar to Studio Contracts

12

61.

13

2
2

15

2 8
2 8

0
5

14

(
(

(
(
Telep n
Facsi le

17

4)
4)

)
)

16

T ep n
Facsi le

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

18
19
20

. By comparison, the Google Play and VUDU VOD Distribution Agreements

21

with Sony calls for Sony to receive 70% of the revenue day one, and receive 65%

22

for the four weeks thereafter for all new release rentals.

23

VidAngel Maintains It Has Robust Records of Every Transaction
In Its History Related to Each of Plaintiffs’ Titles

24
25

62.

VidAngel maintains records of every transaction. Those records

26

include the date purchased, date sold back, amounts paid to purchase and sell back,

27

the specific disc purchased and filters used. VidAngel maintains that data for every

28

ER542

22

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 24 of 25 Page ID #:1753

1

title VidAngel users have ever filtered and streamed.

2

VidAngel Will Suffer Tremendous Hardship If an Injunction Issues

3

63.

In the event that VidAngel is enjoined on October 24, 2016, the

4

following financial damages (immediate, and future) would be incurred in the

5

estimated 18-month timeframe for the trial to occur:

6
7
8
9
10

12

14
15
16
17
18
19
20

Telephone: [phone]
Facsimile: (424) 652-785

13
Telephone: [phone]
Facsimile: [phone]

BAKER MARQUART LLP

2029 CENTURY PARK EAST, 16TH FLOOR
LOS ANGELES, CA 90067
Tel: [phone] ● Fax: [phone]

11

21
22

VidAngel, formed just three years ago, has only 20 full-time employees. To date,

23

VidAngel has been capitalized with over $3.6 million and has spent

24

, purchasing discs.

25
26
27
28

ER543

23

DECLARATION OF NEAL HARMON

Case 2:16-cv-04109-AB-PLA Document 43 Filed 09/12/16 Page 25 of 25 Page ID #:1754

ER544

Case 2:16-cv-04109-AB-PLA Document 43-1 Filed 09/12/16 Page 1 of 2 Page ID #:1755

EXHIBIT A

ER545

Case 2:16-cv-04109-AB-PLA Document 43-1 Filed 09/12/16 Page 2 of 2 Page ID #:1756

Neal Harmon <[e-mail]>

[6-5739000002296] YouTube Terms of Service
[e-mail] <[e-mail]>
To: [e-mail]

Thu, Dec 5, 2013 at 3:16PM

December 5, 2013

VIA EMAIL ( [e-mail] )
Hi Mr. Harmon,
We are following up on correspondence between you and Brian Mendonca, legal counsel for
Chromecast. The Chromecast team remains concerned that your use of Chromecast marketing assets,
including but not limited to hosting a Chromecast video in a lightbox on your site, creates confusion as to
the affiliation between Chromecast and VidAngel. We ask that you address these concerns as soon as
possible.
In addition, I'm writing to discuss a couple of specific aspects of VidAngel's use of the You Tube
embedded player: that you are modifying the YouTube player, specifically the play button; and that you
are modifying the audio and video components of YouTube content.
We've worked hard to create YouTube offsite playback functionality that supports our uploaders'
expectations and maintains a consistent user experience -- so that users around the Web know what they
can expect when encountering YouTube content (player navigation, branding, ability to get back to the
YouTube.com site, etc). I'd like to draw your attention to Section 11.8 of the API Terms of Service, which
prohibits applications that "modify the audio or visual components of any YouTube audiovisual content" as
well as Section 48 of the YouTube Terms of Service which states that "You agree not to alter or modify
any part of the Service." Also, Section F of the YouTube Terms of Service that says "if you use the
Embeddable Player on your website, you may not modify, build upon, or block any portion or functionality
of the Embeddable Player."
As I'm concerned that your implementation takes away from the YouTube experience, I'm asking that you
utilize our embedded player for any YouTube video on your site in a manner consistent with our You Tube
Terms of Service (http://www.youtube.com/tlterms) and API Terms of Service (https://developers.googlst_
com/youtube/terms).
Thanks for your time, and please let us know if you have any questions.
Thanks,
The YouTube Legal Team

0_14771

ER546

Case 2:16-cv-04109-AB-PLA Document 43-2 Filed 09/12/16 Page 1 of 4 Page ID #:1757

EXHIBIT B

ER547

Case 2:16-cv-04109-AB-PLA Document 43-2 Filed 09/12/16 Page 2 of 4 Page ID #:1758

KUPFERSTEIN MANUEL & QUINTO LLP
il645 W. 0\..YMPIC

SOULCVA~O

SUITE 1000

1.05 ANGF.lES. CA 90064

P>-iONF.:

F'Ax.

14:?.4f 2.4e-eeso
t<4i:!-4J

Z4a-e.esz

July 23, 20 I 5

Alan Bravennan, Esq.
General Counsel
The Walt Disney Company
500 S. Buena Vista Street
Burbank, CA
Re: Proposed VidAngel Movie Streaming Service
Dear Mr. Bravennan:
We are counsel to VidAngel, Inc. We are writing to request The Walt Disney
Company's input concerning VidAngel's proposed streaming service for motion pictures
and television programs, specifically to inquire about buying DVD and Blu-ray discs
directly from The Walt Disney Company.
At the outset, we want to be clear concerning two things. First, the service
VidAngel proposes to provide is not intended to compete with existing services that
stream content ''as-is." Rather, it is designed to allow consumers who might not
otherwise purchase a particular DVD or Blu-ray movie or television show, due to
personal preferences, to choose what they wish to have "muted or skipped" while the
disc is played and streamed to them. These consumers generally want customized
(''muted or skipped") playback out of a concern that the DVD or Blu-ray might contain
material they they feel is inappropriate for their chi !dren or that they wish not to view or
hear. Second, VidAngel wants to work with content-providers, and eventually purchase
its Blu-ray and DVD discs directly from The Walt Disney Company, rather than from
distributors. VidAngel believes that it can, in essence, partner with content-providers to
allow consumers to benefit from the Family Home Movie Act, 17 U.S.C. 110 § ( 12),
while enabling a bigger market reach.
This is how VidAngel's business works:
l. VidAngeJ lawfully purchases DVD or Blu-ray movies and television shows that
it plans to stream.
2. VidAngel 's community users review and tag the content to identify over 20
categories of content that a customer might wish to have excluded when

D 14741

ER548

Case 2:16-cv-04109-AB-PLA Document 43-2 Filed 09/12/16 Page 3 of 4 Page ID #:1759

Alan Braverman, Esq.
General Counsel
July 23, 2015
Page 2
streamed to his or her family, such as profanity, vulgarity, blasphemy, nudity,
sex acts, etc.
3. Customers select movies/shows they wish to see, purchase them, and choose
which of the 20+ categories they want "muted or skipped" during the streaming.
Note that the original content is unchanged; however, the playback experience
is customized. Customers can adjust individual tags within the categories. For
example, a customer can choose to mute the "F" word or skip a rape scene in a
movie while keeping any or all of the other tagged content, thus allowing a
customer to feel comfortable permitting younger audiences to watch the movie.
Significantly, VidAngel does not make a copy of the altered version of the
movie; it customizes the playback to skip or mute particular words or scenes
based on each customer's preferences.
4. VidAngel purchases the DVD or Blu-ray disc for the customer and stores it in a
physical vault. The purchase of the disc is on a one-to-one disc-to-customer
basis prior to streaming its content to any customer. That is to say, there is a
physical copy owned by every customer prior to streaming any content to any
customer.
5. VidAngel's customers are allowed to have the contents of the discs they own
streamed to them as many times as they want, with the types of content they
identified muted or skipped. VidAngel does not, however, allow any one
customer to have a work streamed to two devices simultaneously, nor does it
allow any work to be streamed to any device that the customer has not
previously logged into using his or her personal VidAngel account.
6. At a customer's request, VidAngel will ship any physical DVD or Blu~ray the
customer owns to him or her or will re~purchasc the disc at a discount from the
sale price. The amount of the discount is based on the length of time the
customer bas owned that disc.
VidAngel began a Iimited beta test of its technology in January 2015 starting with
43 users and has grown the number of beta users to 4,848 users in June. To date, the
service has proved very popular among beta users. VidAngel has already legally
purchased many thousand Blu-ray and DVD discs to support these customers. Having
tested demand for the service, VidAngel now needs to discuss direct purchasing ofDVD
and Blu-ray content in order to scale its business.
To gauge the interest its service will generate among all parents, as opposed to
just the Beta test participants, VidAngel commissioned a consumer survey of randomly

D 14742

ER549

Case 2:16-cv-04109-AB-PLA Document 43-2 Filed 09/12/16 Page 4 of 4 Page ID #:1760

Alan Braverman, Esq.
General Counsel
July 23, 2015
Page 3
selected parents nationwide which asked whether they would use parental control
software that filters swearing and other content they view as inappropriate from movies
streamed to their homes. Forty-seven percent of the survey respondents said that they
would a) likely or b) very likely use it.
Significantly, VidAngel appears to be largely attracting consumers who would noi
otherwise watch certain DVD or Blu-ray content, as opposed to taking business away
from other companies that purchase Blu-ray and DVD copies of content. Since
launching the beta test in January, VidAngel has continuously surveyed its customers to
ask whether they would have watched the content they selected had VidAngel not
provided for their ability to mute or skip material they found offensive or did not wish
to see or hear. The survey found that 77 percent of viewers would not have purchased
that content had the ability to skip or mute certain language or content not been
offered. !fits business is successful, VidAngel's service will help grow the industry and
will likely result in a substantial net increase in the total sales ofDVD and Blu-ray discs.
You may access VidAngel's services at www.VidAngel.com. If you have any
questions concerning VidAngel's technology or business model, please feel free to
ask. If you disagree with VidAngel's belief that its technology fully complies with the
Copyright Act or otherwise does not adequately protect the rights of copyright owners,
please let us know. VidAngel wants to take the concerns of content owners into
consideration and address them to the extent it can. VidAngel hopes that it will be
viewed as a partner to content providers; substantially increasing legal sales of DVDs
and Blu-ray copies of content. Finally, VidAngel would appreciate knowing the volumes
required to buy DVD and Blu-Ray discs directly from The Walt Disney Company.
Please do not hesitate to contact with us any questions or concerns you might have.

n~

David W. Qumto

cc:

Neal Harmon

D 14743

ER550

Case 2:16-cv-04109-AB-PLA Document 43-3 Filed 09/12/16 Page 1 of 3 Page ID #:1761

EXHIBIT C

ER551

Case 2:16-cv-04109-AB-PLA Document 43-3 Filed 09/12/16 Page 2 of 3 Page ID #:1762
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ER553

[':
014754

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 1 of 14 Page ID #:632

1 GLENN D. POMERANTZ (SBN 112503)
[e-mail]
2 KELLY M. KLAUS (SBN 161091)
[e-mail]
3 ROSE LEDA EHLER (SBN 296523)
[e-mail]
4 ALLYSON R. BENNETT (SBN 302090)
[e-mail]
5 MUNGER, TOLLES & OLSON LLP
355 South Grand Avenue, Thirty-Fifth Floor
6 Los Angeles, California 90071-1560
Telephone: [phone]
7 Facsimile: [phone]
8 Attorneys for Plaintiffs
9
10

UNITED STATES DISTRICT COURT

11

CENTRAL DISTRICT OF CALIFORNIA

12

WESTERN DIVISION

13
14

DISNEY ENTERPRISES, INC.;
15 LUCASFILM LTD. LLC;
TWENTIETH CENTURY FOX FILM
16 CORPORATION and FOX BROS.
ENTERTAINMENT INC.,
17
Plaintiffs and CounterDefendants,
18
19

vs.

20 VIDANGEL, INC.,
21

Defendant and CounterClaimant.

Case No. 16-cv-04109-AB (PLAx)
DECLARATION OF TEDD
CITTADINE IN SUPPORT OF
PLAINTIFFS’ MOTION FOR
PRELIMINARY INJUNCTION
Judge: Hon. André Birotte Jr.
Date: October 24, 2016
Time: 10:00 a.m.
Crtrm.: 4
Trial Date:

None Set

22
23
24
25
26
27
28

ER554

DECLARATION OF TEDD CITTADINE I/S/O PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 2 of 14 Page ID #:633

1 I, Tedd Cittadine, declare as follows:
2

1.

I am the Senior Vice President, Digital Distribution at 20th Century

3 Fox Home Entertainment, which is part of Plaintiff Twentieth Century Fox Film
4 Corporation (“Fox”). I submit this declaration in support of the motion by Plaintiffs
5 in this action for a preliminary injunction. Except as to those matters stated on
6 information and belief, the facts stated herein are known to me personally. As to
7 those matters stated on information and belief, I am informed of the facts and
8 believe them to be true. If called upon and sworn as a witness, I could and would
9 testify competently to the contents of this Declaration.
10
11

INTRODUCTION
2.

In my position, I generally oversee our digital business, including the

12 negotiation of digital distribution agreements in the United States and Canada with
13 third party companies who provide our copyrighted entertainment content (motion
14 pictures and television shows, collectively “content”) directly to customers. We
15 refer to these business partners as our “clients.” I have worked in digital distribution
16 in various roles at Fox since 2009.
17

3.

From my professional experience, I am familiar with Fox’s efforts to

18 partner with our clients to distribute our content to consumers across a range of
19 digital viewing options. Through publicly available sources, such as industry
20 publications and the media, I also have knowledge about the analogous efforts of
21 other motion picture studios and the general means by which other studios,
22 including the other Plaintiffs in this action, distribute their content.
23

4.

I understand that Defendant VidAngel, Inc. markets a service that

24 allows consumers to stream our content, and the content of other creators of motion
25 pictures and television shows, over the internet for a fee of $1 or $2 a day. This sort
26 of consumer offering—daily access to a particular movie or television show—is
27 known generally as on-demand streaming. VidAngel does not have a license
28 agreement with Fox to copy, distribute or transmit Fox’s copyrighted content.
-1-

ER555

DECLARATION OF TEDD CITTADINE I/S/O PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 3 of 14 Page ID #:634

1

5.

In this Declaration, I describe Fox’s digital business generally and the

2 type of immediate and irreparable harm that Fox faces unless VidAngel’s
3 unauthorized exploitation of our content is enjoined: (a) harm to our basic right to
4 control how, when and through which channels our content is disseminated for
5 viewing by consumers; (b) harm to the market for the online distribution of our
6 content and to our relationships with authorized distributors, including undermining
7 the ability of these distributors to provide their licensed offerings; (c) harm to our
8 ability to secure and protect our content in the online environment; and (d) harm to
9 the overall development of the on-demand streaming market by the provision of
10 user-viewing experiences without our rigorous quality controls. I believe that the
11 other Plaintiffs in this lawsuit face similar harm from VidAngel’s unauthorized
12 activities. The threat of these harms has increased as VidAngel has grown in both
13 the number of titles it makes available and in the number of end consumers it serves.
FOX’S DIGITAL BUSINESS

14
15

6.

Fox is widely known and recognized for its motion pictures, many of

16 which are very popular with consumers—just to name a few, The Martian (2015),
17 Avatar (2009) and Home Alone (1990). Fox also has popular television content,
18 including the Homeland series.
19

7.

Fox and its affiliates invest substantial resources to bring motion

20 pictures and television shows to consumers. Each project involves substantial risk
21 because the upfront costs of producing, marketing and distributing a major motion
22 picture can be tens of millions of dollars or more. Our willingness to incur this risk
23 depends on our ability to earn a return on our substantial investment through
24 charging for the rights to reproduce, distribute and perform our content. The
25 success we have in achieving a return on our investment then determines whether
26 we can agree to produce new creative works and how much we can spend in doing
27 so.
28

ER556

-2DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 4 of 14 Page ID #:635

1

8.

The lynchpin of our business is our ability to charge for the right to

2 reproduce, distribute, perform or otherwise use our intellectual property. Being able
3 to control the exploitation of the exclusive rights we hold in our copyrighted works
4 is crucial to this endeavor. Copyright protection ensures this control, which allows
5 us to earn returns on our substantial investment and to continue producing film and
6 television content in the future.
7

9.

We offer Fox content to the public through a range of offerings that

8 meet customer demand and at retail price points (set by our clients) tailored to those
9 choices. Currently, Fox (as I understand is also true of the other Plaintiffs),
10 individually and through our affiliates and licensees, offer the following options:
11



Customers can see our movies in the theater;

12



they can buy a copy on DVD or Blu-ray Disc (“purchase a physical
Disc copy”);

13


14

they can download and license long-term digital rights to a copy

15

through a service like iTunes or Amazon Video (“purchase a digital

16

download copy”);


17

they can rent a physical copy at a brick-and-mortar store or kiosk, like
Redbox;

18


19

they can rent a movie on demand for a limited period of time through a

20

cable, satellite, or internet video-on-demand platform, such as iTunes

21

or Google Play (transactional “on-demand streaming”);


22

they can access and view a movie on demand through a subscription

23

streaming service like Netflix, Hulu, HBO NOW or HBO GO1

24

(subscription “on-demand streaming”);

25
26

1

HBO offers HBO NOW as a standalone on-demand streaming service. HBO GO
27 also streams on-demand but is included with the HBO cable television subscription
28 channel.
-3-

ER557

DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 5 of 14 Page ID #:636

1



or

2
3

they can watch it on a subscription cable television channel like HBO;



they can, eventually, watch it for free on network television.

4 Each of these options is known as a “distribution channel” and is designed to
5 provide different value to consumers matched to their willingness to pay. My
6 business focuses on the multiple online distribution channels.
7

10.

Fox’s digital distribution business has become increasingly important

8 in recent years, and we are always looking for new opportunities to grow our
9 business and respond to consumer demand through partnerships with current and
10 new clients.
11

11.

Fox’s partnerships with clients take time and resources. Including

12 myself, we have approximately 73 individuals who work full time either negotiating
13 or maintaining our relationships with our digital clients.
14

12.

We have also been very deliberate in our digital strategy and the terms

15 and conditions on which we have agreed to license our content to online services
16 like VUDU, iTunes, Google Play, Netflix and others. Just by way of general
17 example, Fox’s agreements for streaming often include, among other terms:
18 (a) detailed provisions requiring technological measures to protect the security of
19 the transmission of the content to ensure against unlawful access, copying and
20 piracy, (b) provisions requiring a certain level of quality for the content’s display, to
21 ensure that consumers are receiving appropriate value, and (c) restrictions on
22 making the content available during certain blackout periods where other clients
23 have paid for exclusive distribution rights. Unlicensed services such as VidAngel
24 act independent of these terms, thereby undermining our business and the market
25 more generally.
26
27
28

ER558

-4DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 6 of 14 Page ID #:637

1

VIDANGEL THREATENS FOX AND PLAINTIFFS WITH IMMEDIATE

2

AND IRREPARABLE HARM
13.

3

VidAngel threatens a variety of serious and irreparable harms to Fox

4 and the other Plaintiffs if permitted to continue its unauthorized operations.
5 VidAngel Harms Plaintiffs’ Right To Control The Distribution Of Their Content
14.

6

VidAngel’s unlicensed use of Fox’s content threatens the cornerstone

7 of our digital business—exclusive control over the distribution of our copyrighted
8 works. The ultimate success or failure of our business depends on a carefully
9 designed strategy to build demand for our content with consumers across a variety
10 of viewing options provided by our clients. We therefore negotiate with our clients
11 over how (under what conditions), when (on what date and for what duration), what
12 (which titles) and for how much (at what wholesale price) they can obtain the rights
13 to distribute and publicly perform our content.
15.

14

An example of how we strategically exercise our exclusive right to

15 control the dissemination of our content in order to maximize its value is the
16 strategy of “windowing.” At Fox, we enter into agreements with clients that restrict
17 when (in which “window”) after a particular Fox title is released to the home
18 entertainment market that particular client has the right to distribute or perform it.2
19 Clients are generally willing to pay more for the right to distribute or perform
20 movies in an earlier window when that content is new, or newer, to the movie21 watching public. Some clients will pay more for the exclusive right to distribute and
22 perform our movies during a particular time period. Fox must then negotiate
23 restrictions in other license agreements to allow for these exclusivity periods.
24 Because VidAngel operates illegally (free from licensing restrictions), it risks
25
2

Fox’s strategy is unique and the other Plaintiffs likely employ different specific
windowing strategies. Nonetheless, some form of windowing is central to any
27 distribution strategy and allows a content company to match different viewing
28 offerings with the willingness to pay of consumers.
-526

ER559

DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 7 of 14 Page ID #:638

1 making our movies available during windows occupied by different distribution
2 channels or exclusivity periods held by one or more specific clients, thus interfering
3 with Fox’s contractual commitments, its relationship with its clients and its ability to
4 negotiate similar deals in the future.
5

16.

I am aware that VidAngel has interfered with legitimate services’

6 negotiated rights by offering Plaintiffs’ content during exclusive windows. The
7 most salient example—albeit of a non-Fox title—is Star Wars: The Force Awakens
8 (2015), owned by Plaintiff Lucasfilm. It is well known that The Force Awakens was
9 an immensely popular motion picture. Its release to the home entertainment market
10 was very much anticipated and scheduled for April 5, 2016. Public reports made
11 clear that it would be available on DVD, Blu-ray Disc and digital download, but that
12 it would not be offered for on-demand streaming in that same window. On the very
13 same day, April 5th, VidAngel released The Force Awakens for on-demand
14 streaming, thereby competing directly with these other exclusive viewing options
15 and preempting legitimate on-demand streaming services.
16

17.

Although Star Wars: The Force Awakens is not a Fox title, unlicensed

17 use of such a popular film concerns me. VidAngel’s conduct shows that it has
18 interfered and (unless enjoined) will continue to interfere with exclusive windowing
19 rights, undermining our clients’ ability to maximize the value of the rights we grant
20 them and, in turn, harming Fox’s relationships with them and ability to negotiate for
21 similar rights in the future.
22 VidAngel Harms Plaintiffs’ Relationships With Clients By Undermining Their
23 Ability to Provide Licensed Offerings
24

18.

Fox’s relationships with the companies that distribute and perform our

25 content are very important. The success of our business is very much intertwined
26 with the success of their business.
27

19.

Our clients worry about unlicensed services in the market that compete

28 with their business on unfair terms. They complain to us in partnership meetings,
-6-

ER560

DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 8 of 14 Page ID #:639

1 and especially in negotiations, that it is difficult to compete with services that, like
2 VidAngel, do not act pursuant to licensing restrictions. This is especially true for
3 unlicensed services that do not pay for the content they exploit. Our clients
4 complain that it is difficult to compete with unlicensed services’ low-cost (or even
5 free) offerings. As a result, these unlicensed services are a problem for the entire
6 legitimate market for home entertainment, and in particular, for the online
7 distribution market.
8

20.

VidAngel is a quintessential example of the sort of unlicensed service

9 that undermines the market for authorized content and interferes with our client
10 relationships. VidAngel markets itself as offering discounted streaming—a mere $1
11 or $2 per day for movies and television episodes. In contrast, licensed services’
12 transactional on-demand streaming retail prices typically are $2.99 to $5.99 per
13 rental and their digital download prices typically are $9.99 to $19.99 for a
14 permanent copy. By offering consumers on-demand streaming at a lower price—
15 which VidAngel can offer only because it misappropriates Fox’s content—
16 VidAngel threatens the business of all of our clients who have negotiated legal,
17 authorized licenses for those rights.
18

21.

VidAngel’s marketing and advertising further threatens to confuse

19 consumers and upset the balance between on-demand streaming and physical
20 rentals. VidAngel operates an on-demand streaming service but some of its
21 marketing compares it to physical DVD rental services, like Redbox. This threatens
22 to confuse consumers because the two distribution channels offer different value
23 propositions. Fox makes its titles available in physical disc form to Redbox, which
24 generally operates in a later window than on-demand streaming services and only
25 offers physical rentals. Because consumers generally have a lower willingness to
26 pay in later release windows, Redbox charges a lower price to consumers (e.g., $1
27 per night for DVD rentals from its kiosks). In contrast, on-demand streaming
28 services operate in an earlier window and have the rights to stream Fox’s content
-7-

ER561

DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 9 of 14 Page ID #:640

1 over the internet, which many consumers find more convenient. VidAngel’s
2 marketing confuses the two—seemingly trying to convince consumers that they can
3 have the value of on-demand streaming of newer releases for the price of a Redbox
4 rental. By confusing consumers as to the different value propositions, VidAngel
5 threatens to undermine our clients’ abilities to provide their licensed offerings.
6

22.

These harms, in particular, only worsen as VidAngel grows. As a

7 relative matter, a very small and unknown unlicensed service does less harm
8 because it does not pose a serious threat to our clients’ businesses. Once an
9 unlicensed service reaches a certain size or level of notoriety, however, the threat
10 increases dramatically. I am aware that VidAngel, in recent months, has been
11 aggressively marketing its service to consumers and has grown its user-base
12 substantially. This concerns me because as VidAngel continues to grow and gain
13 consumers (at the expense of lawful services) the threat to our relationships with
14 clients and the market for authorized streaming will only increase.
15 VidAngel Harms Plaintiffs’ Ability To Secure And Protect Their Content
16

23.

VidAngel takes away Fox’s right to control the security with which our

17 content is transmitted to the public. This undermines the steps that Fox and the
18 other Plaintiffs take to prevent unauthorized access, illegal copying, and piracy—
19 problems that threaten serious harm to our industry.
20

24.

The internet has been a very valuable tool for digital distribution of our

21 content, especially with the rise of mobile devices. However, the internet can also
22 be used to access, copy and exploit our content on a mass scale. Our industry has
23 responded to this challenge by developing rigorous digital rights management
24 (“DRM”) technology and other means of ensuring the security of digital streams and
25 copies transmitted over the internet.
26

25.

Before Fox grants any client the right to stream or digitally distribute

27 our content, we do a thorough and detailed review of the service’s security
28 protocols. After investigating these security measures, we negotiate stringent
-8-

ER562

DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 10 of 14 Page ID #:641

1 security and protection requirements that the client must follow. Our agreements
2 also contain provisions for steps a client must take if there is a breach of that
3 security. Because VidAngel’s transmission of Fox’s content is unlicensed, Fox has
4 not had the ability to vet and negotiate security protocols to protect our content
5 when streamed by VidAngel. Likewise, Fox has no recourse if whatever security
6 measures VidAngel does use fail.
7 VidAngel Undermines Our Ability To Insist On Quality Controls, Which In Turn
8 Threatens The Continued Development Of The Online Market
9

26.

VidAngel’s unlicensed service further threatens the development and

10 growth of the on-demand streaming market. Fox works closely with its clients to
11 ensure that customers receive an optimal viewing experience. Customers’ positive
12 experiences with on-demand streaming encourages them to use licensed services
13 more. This is important to the continued and sustained growth of the on-demand
14 streaming market, and to digital home entertainment more broadly.
15

27.

VidAngel harms consumers’ perceptions of the on-demand streaming

16 market by providing a sub-optimal consumer experience, thereby tarnishing
17 consumer perception of on-demand streaming generally and discouraging
18 consumers from using legitimate on-demand streaming services. For instance,
19 before granting a client the rights to transmit our movies, Fox vets that entity to
20 ensure that it will provide a high-quality viewing experience to customers. In
21 contrast, Fox has no control over the quality of the transmission of the movies from
22 VidAngel and thus I worry that poor quality transmissions could lead to consumer
23 dissatisfaction and damage to consumer perception of on-demand streaming.
24

28.

A bad viewing experience could also tarnish consumers’ views of Fox

25 and our branded content. Consumers may come to associate the poor quality with
26 the Fox film they were attempting to watch (in addition to, or instead of VidAngel).
27 We want the movie-watching public to have the best possible experience so they
28

ER563

-9DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 11 of 14 Page ID #:642

1 continue to choose watching movies and television, and Fox-branded content in
2 particular, for their entertainment.
3

29.

I understand that VidAngel may tell its customers that certain movies

4 are “out-of-stock.” This message of unavailability is inconsistent with the idea of
5 video “on demand” and risks causing consumer frustration and confusion, thereby
6 hurting the broader on-demand streaming market. This is of particular significance
7 since the “always available, never out of stock” character of on-demand streaming is
8 one of the essential differentiating characteristics of the on-demand experience from
9 that of traditional, physical DVD rental (e.g. Redbox).
10

30.

I also understand that VidAngel limits the number of devices to which

11 a consumer can stream. The ability to stream on several devices for personal or
12 family use (e.g. mobile phone and tablet) is another value proposition of the on13 demand streaming market. Again, this availability across a number of devices
14 differentiates on-demand streaming from physical DVD rentals and is important to
15 encouraging consumers to purchase from authorized on-demand services.
16

31.

Fox invests significant amounts of money to market and promote the

17 availability of its various motion pictures and television shows for on-demand
18 streaming. Fox also expends substantial effort and resources in working with our
19 clients to ensure the best possible viewing experience for consumers. These efforts
20 will be hampered if VidAngel’s sub-optimal experience turns consumers away from
21 the on-demand streaming market and Fox’s movies and television shows.
22 The Harms That VidAngel Causes Are Immediate And Irreparable
23

32.

VidAngel threatens immediate harm to Fox because it directly

24 interferes with exclusive releases to particular licensees. For example, Fox grants
25 HBO exclusive windows for certain movies, in which they are not available for on26
27
28

ER564

-10DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 12 of 14 Page ID #:643

1 demand streaming on other services.3 Right now, both The Martian (2015) and
2 Brooklyn (2015) are within these HBO exclusive windows. Customers can watch
3 them on the HBO subscription cable channel through on-demand streaming on HBO
4 NOW or HBO GO. They are not available on other on-demand streaming services.
5 VidAngel nonetheless has these same movies available for on-demand streaming on
6 its service—directly impacting HBO’s exclusive window.
7

33.

Likewise, VidAngel threatens immediate harm to Fox because it

8 interferes with the exclusive windows for other distribution channels. New releases
9 are first released to distributors that sell digital download copies. Shortly thereafter
10 they are released for purchase on physical Disc. During these initial release
11 windows, they are typically not available for on-demand streaming. VidAngel,
12 however, offers newly released titles soon after they are released for purchase on
13 physical Disc. Accordingly, for each new release that VidAngel offers, it interferes
14 with the exclusive window that iTunes, Google Play, VUDU and others have to sell
15 digital downloads before the title becomes available for on-demand streaming.
16

34.

The threat from each of the harms that I have described above has

17 increased and continues to increase as VidAngel grows in size and more
18 aggressively markets its service. Specifically, each new Fox title that VidAngel
19 adds to its service poses a new threat to Fox’s ability to control its copyrighted
20 works and that work in particular.
21

35.

I am informed and believe that, in or around July 2015, VidAngel’s

22 outside counsel sent letters to the General Counsel of Fox’s corporate parent (and
23 the General Counsels of the corporate parents of the other Plaintiffs as well as other
24 motion picture studios) regarding its service. I understand from reviewing that letter
25 that VidAngel at that time claimed to have fewer than 5,000 users and was still in a
26
27

3

During these windows consumers can purchase permanent copies of Fox’s movies
28 through purchasing a physical Disc copy or a digital download copy.
-11-

ER565

DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 13 of 14 Page ID #:644

1 “limited beta test.” That letter does not say when VidAngel planned to launch its
2 service publicly. I am informed and believe that my colleagues in Fox’s legal
3 department, in conjunction with legal counsel through the Motion Picture
4 Association of America (“MPAA”), immediately commenced investigation of
5 VidAngel’s potential liability. I am further informed and believe that Fox’s legal
6 department, in conjunction with counsel for the other Plaintiffs, continued to
7 monitor VidAngel’s activities and growth through the first part of 2016 as VidAngel
8 began to more aggressively market its service, ultimately filing suit on June 9.
9

36.

VidAngel’s growth has been cause for concern. Our clients would not

10 notice (let alone complain) about a service with a mere 5,000 users, but one with
11 100,000 users is much more problematic. I am not aware of any specific complaints
12 about VidAngel, but know that VidAngel’s presence as one more, quickly growing,
13 unlicensed service in the market will frustrate our client relationships, negotiations
14 and the growth of the on-demand streaming market more generally.
15

37.

It is my strong belief that these harms to our relationships with clients

16 and the on-demand streaming market, though they are likely to be very significant,
17 will be extremely hard to measure in dollar terms. It will be extraordinarily difficult
18 to assess what impact VidAngel has on the on-demand streaming market, and how
19 much of that it is a result of negative consumer experiences with services like
20 VidAngel, and even more difficult to assess the effect on Fox of the disruption of its
21 relationships with legitimate licensees.
22

38.

For these reasons, Fox and the Plaintiffs will suffer immediate and

23 irreparable injury unless the Court enjoins VidAngel’s service.
24
25
26
27
28

ER566

-12DECLARATION OF TEDD CITTADINE ISO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 28 Filed 08/22/16 Page 14 of 14 Page ID #:645

22

ER567