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

Filing 36

Filed Appellant VidAngel, Inc. motion to seal portions of appellant's appendix, Vol 3 And Appellees' supplemental appendix Vol 5 UNDER SEAL. Deficiencies: None. Served on 01/18/2017. (Court-Entered filing of motion submitted under seal at [28] [10282874] (WL) [Entered: 01/27/2017 11:07 AM]

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

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

Appeal from the United States District Court
for the Central District of California
Case No. 16-cv-04109-AB (PLAx)
The Honorable André Birotte Jr., Presiding
APPELLEES’ SUPPLEMENTAL APPENDIX
VOLUME 5
(Pages S.A.958 - S.A.1045)

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

TABLE OF CONTENTS
Date

Description

Page

Volume 4 (Public and Redacted):
12/29/16

[ECF No. 168] [In Chambers] Order Setting Hearing on
Plaintiff’s Ex Parte Application Requesting an Order to
Show Cause Why Defendant Should Not Be Held
Contempt for Violating the Court’s Preliminary
Injunction Order ........................................................................ S.A.0750

12/23/16

[ECF No. 165] Declaration of Stephen H. Kay Filed in
Support of Plaintiffs’ Opposition to VidAngel’s Ex
Parte Application for a Stay.................................................... S.A.0751

12/23/16

[ECF No. 164-2] Declaration of David Quinto and
Exhibit A in Support VidAngel, Inc.’s Opposition to
Plaintiffs’ Ex Parte Application for an Order to Show
Cause ......................................................................................... S.A.0753

12/22/16

[ECF No. 161-1 to 161-3] Declaration of Kelly M.
Klaus and Exhibits A and B in Support of Ex Parte
Application for Order to Show Cause Why VidAngel
Should Not be Held in Contempt .............................................. S.A.0763

12/20/16

[ECF No. 156 to 156-2] Supplemental Declaration of
Kelly M. Klaus and Exhibits A and B Regarding
VidAngel’s Continuing Violation of Preliminary
Injunction, Filed in Further Support of Plaintiffs’
Opposition to VidAngel’s Ex Parte Application for a
Stay ............................................................................................ S.A.0772

12/15/16

[ECF No. 154] Plaintiffs’ Opposition to VidAngel’s Ex
Parte Application to Stay Preliminary Injunction
Pending Appeal or, Alternatively, Pending Decision by
the Ninth Circuit on Stay Appeal Pending .............................. S.A.0789

12/15/16

[ECF No. 154-1] Declaration of Rose Leda Ehler in
Support of Plaintiffs’ Opposition to VidAngel’s Ex
Parte Application to Stay Preliminary Injunction
Pending Appeal ......................................................................... S.A.0805

2

TABLE OF CONTENTS
Date

Description

Page

12/15/16

[ECF No. 154-8] Exhibit G to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Opposition to VidAngel’s
Ex Parte Application to Stay Preliminary Injunction
Pending Appeal ......................................................................... S.A.0809

12/15/16

[ECF No. 154-9] Exhibit H to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Opposition to VidAngel’s
Ex Parte Application to Stay Preliminary Injunction
Pending Appeal ......................................................................... S.A.0812

12/15/16

[ECF No. 154-11] Exhibit J to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Opposition to VidAngel’s
Ex Parte Application to Stay Preliminary Injunction
Pending Appeal ......................................................................... S.A.0814

10/3/16

[ECF No. 92] Redacted Version Sealed Supplemental
Declaration of Robert Schumann in Support of
Plaintiffs’ Motion for Preliminary Injunction........................... S.A.0817

10/3/16

[ECF No. 91] Redacted Version of Sealed Declaration
of Allyson Bennett in Support of Plaintiffs’ Motion for
Preliminary Injunction .............................................................. S.A.0830

10/3/16

[ECF No. 91-1] Exhibit A to Declaration of Allyson
Bennett in Support of Plaintiffs’ Motion for Preliminary
Injunction .................................................................................. S.A.0835

10/3/16

[ECF No. 91-2] Exhibit B to Declaration of Allyson
Bennett in Support of Plaintiffs’ Motion for Preliminary
Injunction .................................................................................. S.A.0842

10/3/16

[ECF No. 91-11] Exhibit K to Declaration of Allyson
Bennett in Support of Plaintiffs’ Motion for Preliminary
Injunction .................................................................................. S.A.0844

8/22/16

[ECF No. 30] Redacted Version of Sealed Declaration
of Rose Leda Ehler in Support of Plaintiffs’ Motion for
Preliminary Injunction .............................................................. S.A.0847
3

TABLE OF CONTENTS
Date

Description

Page

8/22/16

[ECF No. 30-1] Exhibit A to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Motion for Preliminary
Injunction .................................................................................. S.A.0855

8/22/16

[ECF No. 30-3] Exhibit C to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Motion for Preliminary
Injunction .................................................................................. S.A.0886

8/22/16

[ECF No. 30-7] Exhibit G to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Motion for Preliminary
Injunction .................................................................................. S.A.0888

8/22/16

[ECF No. 30-10] Exhibit J to Declaration of Rose Leda
Ehler in Support of Plaintiffs’ Motion for Preliminary
Injunction ........... ....................................................................... S.A.0915

8/22/16

[ECF No. 30-30] Redacted Version of Sealed Exhibit
DD to Declaration of Rose Leda Ehler in Support of
Plaintiffs’ Motion for Preliminary Injunction........................... S.A.0922

8/22/16

[ECF No. 30-31] Redacted Version of Sealed Exhibit
EE to Declaration of Rose Leda Ehler in Support of
Plaintiffs’ Motion for Preliminary Injunction........................... S.A.0923

8/22/16

[ECF No. 29] Redacted Version of Sealed Declaration
of Robert Schumann in Support of Plaintiffs’ Motion for
Preliminary Injunction .............................................................. S.A.0924

8/22/16

[ECF No. 28] Declaration of Tedd Cittadine in Support
of Plaintiffs’ Motion for Preliminary Injunction ...................... S.A.0939

7/22/16

[ECF No. 14] Stipulation Regarding Preliminary
Injunction Briefing and Hearing Schedule ............................... S.A.0953

Volume 5 (Filed Under Seal):
10/6/16

Supplemental Declaration of Robert Schumann in
Support of Plaintiffs’ Motion for Preliminary Injunction ........ S.A.0958

10/3/16

Declaration of Allyson Bennett in Support of Plaintiffs’
Motion for Preliminary Injunction .......................................... S.A.0971
4

TABLE OF CONTENTS
Date

Description

Page

8/22/16

Declaration of Robert Schumann in Support of
Plaintiffs’ Motion for Preliminary Injunction.......................... S.A.0976

8/22/16

Exhibit DD to Declaration of Rose Leda Ehler in
Support of Plaintiffs’ Motion for Preliminary Injunction ........ S.A.0991

8/22/16

Exhibit EE to Declaration of Rose Leda Ehler in
Support of Plaintiffs’ Motion for Preliminary Injunction ........ S.A.0995

5

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4037

Filed 10/06/16 Page 1 of 13

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 and
Counter-Defendants
9
10

UNITED STATES DISTRICT COURT

11

CENTRAL DISTRICT OF CALIFORNIA

12

WESTERN DIVISION

13
14 DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
15 TWENTIETH CENTURY FOX FILM
CORPORATION and WARNER
16 BROS. ENTERTAINMENT INC.,
Plaintiffs and CounterDefendants,

17
18
19
20

vs.
VIDANGEL, INC.,

Case No. 16-cv-04109-AB (PLAx)
FILED UNDER SEAL PURSUANT
TO ORDER OF THE COURT
DATED OCTOBER 5, 2016 [DKT.
97]
SUPPLEMENTAL DECLARATION
OF ROBERT SCHUMANN IN
SUPPORT OF PLAINTIFFS’
MOTION FOR PRELIMINARY
INJUNCTION

22

Judge: Hon. André Birotte Jr.
Date: October 31, 2016
Time: 10:00 a.m.
Crtrm.: 4

23

Trial Date:

21

Defendant and CounterClaimant.

None Set

24
25
26
27
28
S.A.0958

SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4038

Filed 10/06/16 Page 2 of 13

1 I, Robert Schumann, declare as follows:
2

1.

I have personal knowledge of the facts set forth herein, except as to

3 those stated on information and belief and, as to those, I am informed and believe
4 them to be true. If called as a witness, I could and would testify competently to the
5 facts stated herein.
6

2.

I submit the following supplemental declaration on behalf of Plaintiffs

7 in the above-referenced action. In addition to the materials listed in my declaration
8 of August 22, 2016, I have reviewed the declarations of Sigurd Meldal and Neal
9 Harmon; the deposition transcript of Tedd Cittadine; and VidAngel’s Opposition to
10 Plaintiffs’ Motion For Preliminary Injunction. I also have reviewed the other
11 documents identified in Exhibit A hereto and any other documents referenced in this
12 Supplemental Declaration or in my August 22 Declaration.
13

Dr. Meldal Agrees That CSS, AACS And BD+ Prevent Access To, And

14

Copying Of, Content On DVDs And Blu-Ray Discs

15

3.

As I explained in my August 22 Declaration, CSS, AACS and BD+ use

16 a combination of encryption and authentication measures to prevent unauthorized
17 access to or copying of the encrypted content on DVDs and Blu-ray discs. See
18 Schumann Decl. ¶¶ 20-34. These mechanisms are designed to ensure that the
19 content on a protected disc will be played only by authorized DVD and Blu-ray
20 players that have the necessary “keys” to decrypt the encrypted content and the
21 required credentials to authenticate the player to the disc drive. Absent the
22 introduction of illegal circumvention technology, DVD and Blu-ray players have
23 those keys and credentials only if they are licensed by the relevant licensing
24 organization, such as the DVD Copy Control Association (“DVD CCA”) in the case
25 of CSS; or the Advanced Access Content System Licensing Administrator (“AACS
26 LA”) in the case of AACS.
27

S.A.0959

4.

Although licensed players can decrypt content on discs protected by

28 CSS, AACS or BD+ during playback, licensed players cannot decrypt the content
-2SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4039

Filed 10/06/16 Page 3 of 13

1 on an encrypted disc to allow copying of that content. CSS, AACS and BD+ thus
2 ensure that a licensed player will enable the contemporaneous decryption of the disc
3 and playback of content on that viewer. CSS, AACS and BD+ do not otherwise
4 allow for access to that content, including access that would allow the user to copy
5 the content without encryption. In other words, if a user somehow were able to
6 bypass or remove the measures that prevent access and copying, the content still
7 would be encrypted, meaning that the user could not view the content, convert it to a
8 different format or edit that content. The user would need to decrypt the content in
9 order to carry out any of those processes.
10

5.

Dr. Meldal agrees with my conclusion that CSS, AACS and BD+ use a

11 combination of encryption and authentication to prevent unauthorized access to the
12 content on DVDs and Blu-ray discs. See Meldal Decl. ¶¶ 9-10 (stating that he
13 “agree[s] with [Mr. Schumann’s] descriptions of how CSS, AACS and BD+ each
14 function” and that “[b]y definition, it is impossible to access, view, copy or alter in
15 any way a motion picture contained on an encrypted digital disc without first
16 unlocking the encryption”). He also agrees that, in the absence of software that
17 removes or bypasses the encryption (software that is, as I discuss below, illegal),
18 CSS, AACS and BD+ would prevent the ordinary consumer from copying or
19 otherwise gaining access to the content on encrypted DVDs or Blu-ray discs. Id. at
20 ¶¶ 9-10, 12.
21

Dr. Meldal Agrees That VidAngel Decrypts The Encrypted Content On DVDs

22

And Blu-ray Discs

23

6.

As I explained in my August 22 Declaration, because VidAngel uses

24 DVDs and Blu-ray discs to obtain the copies of Plaintiffs’ works that VidAngel
25 streams, VidAngel must first use illegal software to decrypt the encrypted content
26 on the discs in order to allow it to create digital copies of that content (a process
27 generally referred to as “ripping”) and convert it to a useable format. At his

S.A.0960

28 deposition, Mr. Harmon described this process as “open[ing] a decrypted version of
-3SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

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Page ID #:4040

Filed 10/06/16 Page 4 of 13

1 the files,” and he confirmed that, to complete the process, VidAngel “use[s] a
2 program [it] purchas[ed] called AnyDVD HD.” Ex. B (Tr. 64:6-8). VidAngel’s
3 Director of Technology described VidAngel’s process for decrypting and copying
4 the content on encrypted DVDs even more bluntly:
] See Schumann Decl. Ex. D.

5
7.

6

Dr. Meldal’s declaration confirms that VidAngel accesses and copies

7 content from DVD and Blu-ray discs by using a “software program such as
8 AnyDVD HD.” Meldal Decl. ¶ 37(ii). Dr. Meldal states that VidAngel uses such
9 software “to automatically allow read-access for the purpose of mounting the DVD
10 or Blu-ray files for uploading onto a computer, in the process necessarily removing
11 restrictions on DVD or Blu-ray content access.” Id. That is a technical way of
12 saying that VidAngel uses AnyDVD HD and similar products to decrypt the
13 encrypted content on DVDs and Blu-ray discs, so that VidAngel can access the
14 content on those discs and copy that content onto VidAngel’s computer system
15 and/or servers in a usable format. As I have discussed, that is copying that CSS,
16 AACS and BD+ would prevent in the ordinary course of their operation.
8.

17

AnyDVD HD is software that, without authorization from copyright

18 owners or the licensing organizations for CSS, AACS or BD+, removes or bypasses
19 the encryption measures on DVDs and Blu-ray discs.
9.

20

AACS and BD+ are continually updated in response to software such

21 as AnyDVD HD. In turn, the developers of the unauthorized software will
22 frequently develop new techniques for bypassing the updated protection mechanism.
23 This in essence is a constant process of “cat-and-mouse” between the authorities that
24
25
26

S.A.0961

1

In this context, [
] is simply the process of combining multiple files that
27 have been ripped off of a DVD or Blu-ray disc (for example, the audio and video
files).
28
-4SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

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Page ID #:4041

Filed 10/06/16 Page 5 of 13

1 license AACS and BD+, and people and entities determined to bypass those
2 protection measures.
3

10.

AnyDVD HD enables its customers to receive updates to its illegal

4 circumvention software through an online database. When a customer like
5 VidAngel “buys” AnyDVD HD, that customer is not receiving a one-time product,
6 such as a software file on a computer disc. The customer instead is paying for a
7 subscription, which provides access to whatever is the most up-to-date version of
8 the illegal software. The customer then can use the updated software to circumvent
9 AACS and BD+ on new titles as they are released on Blu-ray discs.
10

11.

Dr. Meldal describes AnyDVD HD as “readily available software” that

11 is “easily accessible, despite the fact that much of that software is no longer readily
12 sold in the United States.” Meldal Decl. ¶ 12. Dr. Meldal neglects to mention,
13 however, the reason why such programs are generally unavailable in the United
14 States: They are widely recognized to be illegal ripping software, the sale and
15 distribution of which I understand to be prohibited under the DMCA.
16

12.

AnyDVD HD is currently sold by an entity called RedFox, which

17 operates from Belize. See Ex. C (screenshot of RedFox page discussing its
18 products, including AnyDVD HD, showing its URL as “www.redfox.bz”). RedFox
19 is a successor to the company SlySoft, which was shut down in February of this
20 year, and which previously sold AnyDVD HD.2 During its existence, SlySoft
21 operated from Antigua and Barbuda.
13.

22

SlySoft was included—along with sites like ThePirateBay.se and

23 Rapidgator.net—in the Office of United States Trade Representative’s (“USTR”)
24 2013 Out-of-Cycle Review of Notorious Markets, which “identifies select online
25
26

S.A.0962

2

See, e.g., ArtsTechnica, “DRM Defeaters Defeated? Slysoft Ceases Operations,”
27 available at http://arstechnica.com/tech-policy/2016/02/drm-defeaters-defeatedslysoft-ceases-operations/.
28
-5SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4042

Filed 10/06/16 Page 6 of 13

1 and physical marketplaces that reportedly engage in and facilitate substantial piracy
2 and counterfeiting.” Ex. D at 27. The USTR selects websites for inclusion “both
3 because they exemplify concerns about trademark counterfeiting and copyright
4 piracy on a global basis and because the scale and popularity of these marketplaces
5 can cause economic harm to U.S. and other IPR holders.” Id. The USTR report
6 described SlySoft as a company that “sells software that removes region coding and
7 other technological protection measures from optical disks so that they can be
8 viewed and copied without authorization of copyright holders.” Id. at 34.
9

14.

In 2014, the owner of SlySoft, Giancarla Bettini, was found guilty in

10 Antigua of criminally violating that country’s anti-circumvention law.3
15.

11

On February 5, 2016, shortly before SlySoft was shut down, AACS LA

12 requested that the USTR add Antigua and Barbuda as a priority watch country under
13 Section 182 of the Trade Act of 1974 for its “failure to provide adequate remedies to
14 enforce its prohibition on circumvention of technological protections measures.”
15 See Ex. E at 46. AACS LA noted that SlySoft’s AnyDVD HD program is “the best
16 known, and to [AACS LA’s] knowledge the most widely used, program for
17 circumventing implementations of AACS Technology and gaining access to the
18 motion picture content protected by [AACS].” Id. at 47.
16.

19

Dr. Meldal and I agree that, if VidAngel did not use AnyDVD HD or

20 similar products to decrypt DVDs and Blu-ray discs, VidAngel would be not have
21 the ability to: (a) copy the unencrypted digital content from encrypted discs;
22 (b) upload the content onto VidAngel’s internal computer system or third-party
23 servers; (c) convert that content to a format that facilitates streaming; or (d) stream it
24
25
26

S.A.0963

3

See, e.g., DigitalDigest.com, “SlySoft Owner Found Criminally Guilty For Making
27 Blu-ray Ripper,” available at http://www.digital-digest.com/news-63893-SlysoftOwner-Found-Criminally-Guilty-For-Making-Blu-ray-Ripper.html.
28
-6SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4043

Filed 10/06/16 Page 7 of 13

1 over the Internet. VidAngel takes all of these actions to operate its streaming
2 service.
3

17.

Dr. Meldal states that decryption is necessary for VidAngel to filter

4 content obtained from DVDs and Blu-ray discs. See Meldal Decl. ¶ 18. It is
5 fundamental, however, that decryption is necessary for VidAngel to stream the
6 content that it rips from DVDs and Blu-ray discs. If VidAngel did not decrypt using
7 illegal circumvention software, VidAngel would not be able convert the protected
8 content into the viewable digital copies that VidAngel uses to stream performances
9 to its customers.
10

18.

Dr. Meldal states that he finds VidAngel’s use of AnyDVD HD and

11 similar software to be analogous to the “unlocking” of encryption that occurs when
12 a licensed player is used to lawfully view a DVD or Blu-ray disc. Meldal Decl.
13 ¶ 40. Both processes involve decryption, but they are not equivalent. As I have
14 described above, an authorized DVD or Blu-ray player decrypts a DVD or Blu-ray
15 disc during playback pursuant to a license from the relevant licensing organization.
16 Decryption occurs with authorization and at the same time that the disc is played; no
17 permanent, decrypted copy of the content is made as part of the authorized
18 playback. CSS, AACS and BD+ are specifically designed to allow such authorized
19 decryption, while otherwise preventing access to the digital content on the protected
20 disc.
21

19.

VidAngel, by contrast, uses illegal ripping software to bypass CSS,

22 AACS and BD+ protection in order to create an unencrypted, permanent digital
23 copy of the content on the disc. I understand that the CSS, AACS and BD+
24 licensing terms do not authorize this type of access. Licensed disc players are
25 specifically designed to prevent—and, in the ordinary course of their operation, do
26 prevent—users like VidAngel from copying unprotected digital content from discs,
27 manipulating that content and streaming it over the Internet.
28
S.A.0964

-7SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4044

1

20.

Filed 10/06/16 Page 8 of 13

I therefore disagree with Dr. Meldal that “[i]t is inherent in the

2 decryption process that a local version of the unlocked content be created—be it in
3 memory or storage.” Id. ¶ 20. While it is true that licensed CSS, AACS and BD+
4 implementations must decrypt content, that decrypted content must be placed into
5 protected memory, cannot be maintained in that memory for longer than necessary
6 to affect the playback, and represents a minor fraction of the overall content at any
7 point in time. In short, licensed CSS, AACS, and BD+ implementation are allowed
8 to maintain ephemeral snipits of the content in the clear. They are specifically NOT
9 allowed to put it in “other storage” as Dr. Meldal states. As a result, a primary
10 purpose of using illegal ripping software is that, in the ordinary course of their
11 operation, CSS, AACS and BD+ use encryption, among other measures, to prevent
12 access to and copying of content contained on DVDs and Blu-ray discs. People use
13 AnyDVD HD and similar software precisely so that the content on the disc will be
14 stripped of its protective layers and copied to another medium without protection.
15

Dr. Meldal Agrees That VidAngel Creates Digital Copies Of The Content On

16

Blu-ray Discs And DVDs And Uploads That Content Onto Computer Servers

17

21.

My review of Dr. Meldal’s Declaration confirms my original opinion

18 about how VidAngel works. Dr. Meldal uses highly technical terms in his
19 declaration. The process that Dr. Meldal describes is quite straightforward:
20 (a) VidAngel purchases a copy of a movie on DVD or Blu-ray disc (I use “movie”
21 in this Declaration to refer to motion pictures and television programs contained on
22 DVDs or Blu-ray discs); (b) VidAngel inserts a copy of the disc into the optical
23 drive of a computer; (c) AnyDVD HD (or a similar ripping program) runs in the
24 background, decrypting the contents of the encrypted disc; (d) VidAngel copies the
25 content of the disc; (e) VidAngel uploads the digital copy of the content onto
26 computer servers; (f) VidAngel prepares the content for filtering and converts it into
27 the proper format for HTTP Live Streaming (“HLS”); and (g) VidAngel streams the

S.A.0965

28 content from a copy of the movie that VidAngel has uploaded to and stored on the
-8SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4045

Filed 10/06/16 Page 9 of 13

1 computer servers, not from the original DVD or Blu-ray disc. See Meldal Decl.
2 ¶ 37.
3

22.

Dr. Meldal’s declaration also confirms my original understanding of

4 how VidAngel’s filtering technology works. See id. VidAngel streams content to
5 its customers over the Internet via HLS. HLS works by dividing a movie into short
6 segments (generally, no more than ten seconds in length) that the user’s computer
7 then requests, in the correct order, to play the movie. VidAngel’s filtering
8 technology allows it to “tag” segments as containing particular types of content that
9 the user may want to filter. The user then selects which filters to apply.
10

23.

When a user chooses to filter a certain type of visual content, such as a

11 fight between two characters, VidAngel’s technology causes the user’s computer not
12 to obtain the stream of the segment that includes that particular piece of visual
13 content. That segment is skipped and never streamed to the user. If a user chooses
14 to filter audio content, VidAngel’s technology creates an altered segment that mutes
15 the audio content while leaving the visual content unchanged. The user’s computer
16 than downloads the altered segment, rather than the original segment.
17

24.

Dr. Meldal does not dispute that VidAngel [
].

18
19

25.

While I agree with Dr. Meldal about how VidAngel’s service operates,

20 I disagree with his conclusion that “VidAngel’s service does not even make a ‘copy’
21 of the original motion picture in any traditional sense.” Meldal Decl. ¶ 38. Based
22 on my review of Dr. Meldal’s declaration, Mr. Harmon’s deposition and VidAngel’s
23 documents, it is my professional opinion that VidAngel makes and stores at least
24 four different, digital copies of each work that it offers to its users. Those copies are
25 stored on the third-party servers that VidAngel leases and are streamed to
26 VidAngel’s customers over the Internet.
27

S.A.0966

26.

Mr. Harmon, for example, testified at his deposition that in order to

28 provide filtering, VidAngel must “make a copy of the M2TS files—or the MPEG 2
-9SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4046

Filed 10/06/16 Page 10 of 13

1 files” on the discs, and must “make a copy of the disc.” “M2TS” and “MPEG 2” are
2 merely different formats for storing audio-visual content. See Ex. B (Harmon Dep.
3 60:4-21). When Mr. Harmon refers to copying the “MPEG 2” and “M2TS” files, he
4 is referring to making a digital copy of the movie content on a DVD or Blu-ray disc
5 (after that content has been decrypted using AnyDVD HD).
6

27.

Dr. Meldal similarly refers to copying the content on discs and

7 uploading that content onto third party servers. Meldal Decl. ¶ 37.4 That content is
8 ultimately converted into a different format that facilitates HLS streaming.
9 According to Dr. Meldal, VidAngel creates at least four copies of the movie in that
10 format, each at a different “bitrate.” Id. ¶ 37(vi)(a).5
28.

11

Because, as I noted above, HLS operates by dividing content into short

12 segments, which are then downloaded by the customer’s computer and displayed to
13 the costumer in the correct order, VidAngel may not store the digital copies of
14 Plaintiffs’ works as a single file. Rather, at least according to Dr. Meldal’s
15 declaration, see Meldal Decl. ¶ 37(b), VidAngel appears to store that content in
16 segments. That the digital copies of the movies may be stored in segments,
17 however, does not mean that they are not copies. It is simply an artifact of how
18 streaming works. If one were to put all of the segments together, one would have
19 the entire movie, and in fact this is exactly what happens when a VidAngel user
20 “views” a movie. Further, these digital copies are the ones that are streamed to the
21
22
23

4

Dr. Meldal refers to copying “Matroska” files. As relevant here, “Matroska” is
24 simply a particular format for digitally storing audio or visual content—in this case,
the audio or visual content contained in the Matroska files is the digital copy of the
25
movie that VidAngel has ripped from a DVD or Blu-ray disc.
26 5 “Bitrate” is a term that refers to the amount of data allocated to represent the

S.A.0967

27 content in its compressed form, typically on average and typically described as bits
per second. Generally, files with higher bitrates allow for higher quality streaming.
28
-10SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4047

Filed 10/06/16 Page 11 of 13

1 user: The user’s computer requests each segment from VidAngel’s servers and plays
2 them in order.
3

29.

Dr. Meldal states that VidAngel’s technology “does not create any

4 watchable copy of Plaintffs’ works” and notes that “a user can view the contents of
5 each segment [of a movie] only after it has been streamed in sequence, decrypted
6 with the correct keys . . . and rendered with a VidAngel media player.” Meldal
7 Decl. ¶ 38. The fact that VidAngel places encryption on the segments it streams
8 does not mean that VidAngel has not copied the movie. The content on DVDs and
9 Blu-ray discs is also encrypted, and cannot be viewed absent decryption. But that
10 does not mean that DVDs and Blu-ray discs do not contain copies of movies.
11

It Is Possible To Run A Filtering Service Without Circumventing The

12

Technological Protection Measures On DVDs And Blu-Ray Discs

13

30.

I understand that VidAngel has argued that it is impossible to run a

14 service that filters streamed movies without using an illegal ripping product such as
15 AnyDVD HD to decrypt DVDs and Blu-ray discs. I disagree with that contention.
16

31.

Dr. Meldal himself makes clear that at least one company, ClearPlay,

17 provides filtering without circumvention. See Meldal Decl. ¶ 15. Dr. Meldal states
18 that ClearPlay operates by selling a special DVD player that allows customers to
19 apply filters when watching content on DVDs that they have lawfully obtained.
20 ClearPlay’s DVD player could not function unless it decrypted the content on DVDs
21 during playback. Dr. Meldal, however, states that ClearPlay has lawfully obtained
22 from DVD CCA the CSS “keys” that allow decryption during playback. Assuming
23 that ClearPlay’s DVD Player is properly licensed by the DVD CCA, then that player
24 is authorized to decrypt the content on DVDs during playback. I am not aware of
25 any evidence that ClearPlay uses illegal ripping software to remove CSS protections
26 from DVDs without authorization.
27
28
S.A.0968

-11SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4048

1

32.

Filed 10/06/16 Page 12 of 13

Dr. Meldal focuses on ClearPlay’s DVD player but, based on my own

2 investigation,6 I understand that ClearPlay also operates a streaming service that
3 allows users to filter content that they have lawfully obtained from Google Play
4 (which I understand to be an authorized licensee of Plaintiffs’ movies and television
5 content). I further understand that ClearPlay allows users to stream filtered content
6 to their computers or, through devices such as Apple TV or Google’s Chromecast
7 device, to their televisions. See Bennett Decl. Ex. A (ClearPlay streaming FAQ).
8 Because ClearPlay works on top of the stream that a user has lawfully obtained from
9 Google Play, I have no reason to believe that ClearPlay decrypts any encrypted
10 content without authorization.
11

That VidAngel Uses Encryption In Conjunction With Its Streaming Service

12

Does Not Mean That Plaintiffs’ Content Is Secure
33.

13

Dr. Meldal states that the copies of Plaintiffs’ works that VidAngel

14 stores on third-party servers are encrypted. Meldal Decl. ¶ 37. That the content is
15 encrypted, however, does not mean that it is secure. Just as illegal technology like
16 AnyDVD HD can be used to remove encryption from DVDs and Blu-ray discs,
17 encryption can also be broken when that content is delivered via streaming. I
18 understand from reviewing the deposition of Mr. Cittadine that, [because of these
19 concerns, Fox generally works with its licensees to ensure that its content is secure].
20 See Ex. F (Cittadine Dep. 240:17-241:18).
21
22
23
24
25
26
27
28
S.A.0969

6

Dr. Meldal references ClearPlay’s streaming service in passing. Meldal Decl.
¶ 15, Ex. D.
-12SUPP. DECL. OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

Case 2:16-cv-04109-AB-PLA Document 98-4 (Ex Parte)
Page ID #:4049

S.A.0970

-13-

Filed 10/06/16 Page 13 of 13

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.;
LUCASFILM LTD. LLC;
15 TWENTIETH CENTURY FOX FILM
CORPORATION and WARNER
16 BROS. ENTERTAINMENT INC.,
Plaintiffs and CounterDefendants,

17
18
19
20
21
22
23

vs.
VIDANGEL, INC.,
Defendant and CounterClaimant.

Case No. 16-cv-04109-AB (PLAx)
FILED UNDER SEAL PURSUANT
TO ORDER OF THE COURT
DATED OCTOBER 5, 2016 [DKT.
97]
DECLARATION OF ALLYSON
BENNETT IN SUPPORT OF
PLAINTIFFS’ MOTION FOR
PRELIMINARY INJUNCTION
Judge: Hon. André Birotte Jr.
Date: October 31, 2016
Time: 10:00 a.m.
Crtrm.: 4
Trial Date:

None Set

24
25
26
27
28
S.A.0971

DECLARATION OF ALLYSON BENNETT I/S/O PRELIMINARY INJUNCTION
CASE NO. 16-CV-04109-AB (PLAX)

1 I, Allyson Bennett, hereby declare:
2

1.

I am an attorney with the law firm of Munger, Tolles & Olson LLP,

3 counsel for Plaintiffs in this matter. I am a member of the California Bar and am
4 admitted to practice before this Court. I have knowledge of the matters set forth
5 below based on my direct involvement in this matter or the direct involvement of
6 other lawyers at my firm. If called as a witness, I could and would testify
7 competently to the facts stated herein.
8

2.

Attached as Exhibit A are true and correct copies of ClearPlay’s

9 Frequently Asked Questions about streaming, available at
10 https://www.clearplay.com/t-streaming_support.aspx and a ClearPlay Letter posted
11 to its website explaining that “ClearPlay filtering works together with movies
12 streamed from Google Play.” The Frequently Asked Questions document is
13 attached as Exhibit D to the declaration of VidAngel’s expert, Sigurd Meldal, but
14 the attachment to the Meldal declaration is not in color.
15

3.

Attached as Exhibit B is a true and correct copy of screenshot printouts

16 from ClearPlay’s Streaming Sign-Up Page, which features a video demonstrating
17 ClearPlay’s streaming product. The Video is accessible at
18 https://try.clearplay.com/streaming-sign-up/ (last visited October 2, 2016).1
19

4.

Attached as Exhibit C are true and correct copies of screenshot

20 printouts from VidAngel’s Facebook pages, containing user comments.
21

5.

Attached as Exhibit D are true and correct copies of screenshot

22 printouts from VidAngel’s Facebook pages, containing user comments posted since
23 the filing of Plaintiffs’ Motion on August 22, 2016.
24

6.

Attached as Exhibit E are true and correct copies of a screenshot

25 printout of the VidAngel “After Movie” survey in which VidAngel asks its users
26

S.A.0972

1

Plaintiffs have included a slipsheet with a true and correct copy of a screenshot of
27 the video. If the Court would prefer, Plaintiffs will submit DVDs containing copies
28 of these videos for the Court’s review.
-1DECLARATION OF ALLYSON BENNETT I/S/O PRELIMINARY INJUNCTION
CASE NO. 16-CV-04109-AB (PLAX)

1 “Would you have watched [name of movie] without a filter?” This Exhibit also
2 attaches the correspondence from VidAngel’s counsel, Mr. Marquart, to Plaintiffs’
3 counsel, in which Mr. Marquart represents that this document is the “on-line survey
4 questionnaire Mr. Harmon referred to [in his declaration].”
5

7.

To date, VidAngel has not disclosed to Plaintiffs the total number of

6 DVDs or Blu-ray Discs (“Discs”) VidAngel has purchased or the number of streams
7 it has made to users. Exhibit AA to the Declaration of Rose Leda Ehler (“Ehler
8 Decl.”) (Dkt. 30) is a document entitled [“VidAngel Board Meeting, July 20, 2016”]
9 (“Board Presentation). According to the Board Presentation, VidAngel has provided
10 at least [2 million streams, which the Board Presentation refers to as “purchases”]
11 since August 2015. Ehler Decl. Ex. AA at 315. At deposition, VidAngel’s CEO,
12 Mr. Harmon, testified that since January 2016, VidAngel has made between [1.5
13 million and 2 million] streams. Id. Ex. EE Tr. 190:2-8. VidAngel also produced an
14 Excel file containing a line for each Disc VidAngel has purchased (and its inventory
15 number). The bates number for that document is D00195 but I have not attached it
16 because a printout of the file is over 1,000 pages. That Excel file contains
17 approximately [103,450] entries, which would correspond to [103,450] Discs
18 purchases as of mid-July 2016, when VidAngel stated the spreadsheet was created.
19 A conservative estimate of the ratio of streams to Discs is [19.3
20 (=2,000,000/103,450)]. In other words, based on VidAngel’s documents and
21 information produced to date, it appears that VidAngel on average makes [between
22 19 and 20] streams to different users for each Disc VidAngel has purchased and
23 maintains in its inventory.
24

8.

Attached as Exhibit F is a true and correct copy of a screenshot printout

25 from VidAngel’s Facebook page showing an advertisement for Disney’s new
26 release, Captain America: Civil War (2016).
27

S.A.0973

9.

Attached hereto as Exhibit G is a true and correct copy of a screenshot

28 printout from the Harmon Brothers’ website showing the “Team.”
-2DECLARATION OF ALLYSON BENNETT I/S/O PRELIMINARY INJUNCTION
CASE NO. 16-CV-04109-AB (PLAX)

1

10.

Attached hereto as Exhibit H is a true and correct copy of

2 correspondence dated July 7, 2016, between Plaintiffs’ counsel and VidAngel’s
3 counsel. In that correspondence, VidAngel’s counsel agreed that Plaintiffs could
4 produce a single witness to testify regarding irreparable harm matters common to all
5 Plaintiffs.
6

11.

Attached as Exhibit I is a true and correct copy of correspondence

7 dated September 15 and 16, 2016, between counsel for VidAngel, Mr. Marquart,
8 and Plaintiffs’ counsel, in which Plaintiffs’ counsel requests the production of
9 underlying survey evidence.
10

12.

Attached as Exhibit J is a true and correct copy of deposition exhibit

11 No. 41 from the August 11, 2016, deposition of Defendants’ Rule 30(b)(6) designee
12 and CEO of VidAngel, Neal Harmon.
13

13.

Attached hereto as Exhibit K is a true and correct copy of

14 correspondence dated June 10, 2016, between Plaintiffs’ counsel and Mr. Harmon
15 asking VidAngel to “stipulate to the entry of a preliminary injunction during the
16 pendency of this litigation.” VidAngel considered this request until June 21, 2016
17 when VidAngel’s counsel informed Plaintiffs’ counsel that it would prefer to litigate
18 the issue.
19

14.

Attached as Exhibit L is a true and correct copy of correspondence

20 dated July 5 , 2016 from Plaintiffs’ counsel to VidAngel’s counsel regarding the
21 stipulated expedited discovery.
22

15.

Attached hereto as Exhibit M are true and correct copies of excerpts

23 from the August 11, 2016, deposition of Defendants’ Rule 30(b)(6) designee and
24 CEO of VidAngel, Neal Harmon.
25
26
27
28
S.A.0974

-3DECLARATION OF ALLYSON BENNETT I/S/O PRELIMINARY INJUNCTION
CASE NO. 16-CV-04109-AB (PLAX)

S.A.0975

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 and
Counter-Defendants
9
10

UNITED STATES DISTRICT COURT

11

CENTRAL DISTRICT OF CALIFORNIA

12

WESTERN DIVISION

13
14 DISNEY ENTERPRISES, INC.;
LUCASFILM LTD. LLC;
15 TWENTIETH CENTURY FOX FILM
CORPORATION and WARNER
16 BROS. ENTERTAINMENT INC.,
Plaintiffs and CounterDefendants,

17
18
19
20
21
22

vs.
VIDANGEL, INC.,
Defendant and CounterClaimant.

Case No. 16-cv-04109-AB (PLAx)
FILED UNDER SEAL PURSUANT
TO ORDER OF THE COURT
DATED AUGUST 23, 2016 (DKT. 32)
DECLARATION OF ROBERT
SCHUMANN 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

23
24
25
26
27
28
S.A.0976

DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

DECLARATION OF ROBERT SCHUMANN

1
2

I, Robert Schumann, declare as follows:

3

1.

I have been retained by Plaintiffs as an expert in this litigation. I have

4 personal knowledge of the facts set forth herein, except as to those stated on
5 information and belief and, as to those, I am informed and believe them to be true.
6 If called as a witness, I could and would testify competently to the facts stated
7 herein.
8

2.

I have worked in the computer and technology industry for the past 31

9 years. In 1985, I received a Bachelor of Science in Computer Science from
10 Rochester Institute of Technology. Since that time, I have worked in various facets
11 of the computer industry, in connection with the design and development of
12 computer software, computer networking systems, computer automation, consumer
13 electronics, large-scale database processing, physical and electronic Audio/Video
14 distribution systems, digital security and other content-protection systems. During
15 this time, I have been personally involved in and overseen the development and
16 licensing of sophisticated technical specifications including work on industry17 standard specifications for digital content processing and security; the design and
18 development of software in a variety of computer languages, including C++; the
19 design and development of consumer electronics products and devices, including
20 hardware DVD players, web-based services and the integration and licensing of
21 third-party software packages, technologies and associated technical specifications.
22

3.

I have seventeen issued and pending United States Patents, many of

23 which involve digital content protection and consumer products. I was a founding
24 member of the Digital Watermarking Alliance, an industry trade group for digital
25 watermarking, and have spoken extensively at trade shows and other professional
26 venues on content security.
27

S.A.0977

4.

From August of 1999 until October 2008, I was President and General

28 Manager of Cinea, Inc. Cinea specialized in developing and operating content
-2DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 security solutions for digital content, particularly motion picture content. Among
2 other products, Cinea developed and sold the SView DVD player for use in
3 professional content production as well as distribution of screeners to highly
4 controlled audiences. This was an enhanced, DVD CCA-licensed DVD player that
5 incorporated a Cinea-proprietary content security system in addition to the Content
6 Scramble System (CSS).
7

5.

I have previously testified in three cases regarding the Content

8 Scramble System and related technology: Universal City Studios, Inc. v. Reimerdes,
9 No. 00-Civ.-0277 (LAK) (S.D.N.Y. 2000), 321 Studios, Inc. v. Metro Goldwyn
10 Mayer Studios, Inc., No. C-02-1995-SI (N.D. Cal. 2004) and RealNetworks, Inc. v.
11 DVD Copy Control Association, Inc.,641 F. Supp. 2d 913 (N.D. Cal. 2009). I also
12 testified in an arbitration as an expert on the online video industry on behalf of
13 NBCUniversal and Hulu. Attached as Exhibit A is a copy of my resume.
14

6.

The following analysis is based upon my professional experience with

15 CSS, AACS and BD+, as well as my usage and testing of the VidAngel service. I
16 have also reviewed associated design and development documents, VidAngel’s
17 Answer and Counter Complaint, and the deposition testimony of Neal Harmon. I
18 have also reviewed the other documents identified in Exhibit B as well as any other
19 documents referenced in this Declaration.
20
21

The VidAngel Service
7.

VidAngel is an online streaming service that allows customers to watch

22 film and television content via the Internet on a variety of devices, including
23 personal computers, iPads, mobile phones, and on their television through a device
24 like Apple TV, Roku, or Google Chromecast. It also requires users to set at least
25 one filter. The filters have the effect of muting audio content or skipping
26 audiovisual content in categories specified by VidAngel and selected by the users.
27 Based on my own investigation of the VidAngel service, documents provided by
28
S.A.0978

-3DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 VidAngel and the deposition testimony of Neal Harmon, it is my professional
2 opinion that VidAngel operates as follows.
3

8.

VidAngel delivers content to users by streaming that content over the

4 Internet. In this context, “streaming” simply means the delivery of content to a
5 user’s device over the Internet. Here, VidAngel streams content to consumers
6 using, among other technologies, a video content delivery protocol called HTTP
7 Live Streaming, or HLS. Rather than using a single huge file, HLS divides the
8 content into many short media segments, with each segment generally lasting
9 between two and ten seconds and downloaded by the user’s device individually. At
10 the beginning of an HLS streaming session, the user’s device downloads an index
11 file, which provides the device a list of segment files that the device can then request
12 and play in order to watch the content.
13

9.

VidAngel’s filtering technology allows it to

14
For

15

16 example, VidAngel may “tag” certain segments as containing violence and others as
17 containing profanity. Until the lawsuit was filed, one category of filterable content
18 that VidAngel offered was skipping the opening or closing credits.
19
20

10.

When a user streams a movie or television show from VidAngel, the

21 filtering technology
22
When a user streams a movie and selects filters

23
24 for audiovisual content,
25
26
27

11.

28
S.A.0979

-4DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

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

12.

Based on my review of VidAngel’s documents and the deposition

13 testimony of Neal Harmon, I believe that
14
15
16
17
18
19
20
21
22

VidAngel Obtains Plaintiffs’ Content On DVDs And Blu-ray Discs

23

13.

To implement its streaming service, VidAngel requires a digital copy of

24 Plaintiffs’ films and television content. To acquire the digital version of a particular
25 piece of content VidAngel purchases copies of Plaintiffs’ movies and television
26 shows on DVDs and Blu-ray discs, circumvents the digital content protection
27 associated with the Blu-ray and DVD content and then copies that content onto its
28
S.A.0980

-5DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 servers. This process of removing content protection then copying the unprotected
2 content is popularly referred to as “ripping.”
3

14.

A DVD, or “Digital Versatile Disc,” is a high capacity digital storage

4 medium, which can store data such as personal files, emails, etc. Depending on its
5 configuration, a DVD can store up to a maximum of 18 gigabytes of data. By
6 comparison, a typical audio CD will store about 700 megabytes of data. Since one
7 gigabyte equals 1024 megabytes, a 9 gigabyte DVD holds many times more—more
8 than 12 times more—data than a 700 megabyte CD.
9

15.

DVDs’ large capacities allow them to store motion pictures (movies).

10 DVDs used to store motion pictures will most often hold approximately 9 gigabytes
11 of data. Content on DVDs is stored in a Standard Definition format. This format is
12 a relatively low-resolution format (640x480 pixels per frame) and thus provides a
13 good picture but not a modern High Definition image.
14

16.

Blu-ray discs are a newer high capacity storage medium. The term

15 “blu-ray” refers to the blue laser that is used to read the disc. Blu-ray discs can store
16 even more data than DVDs. A Blu-ray disc can store a maximum of 128 gigabytes
17 of data, and, when used for motion pictures, will most commonly hold about 50
18 gigabytes—more than five times the storage capacity of the typical DVD. Content
19 on Blu-ray discs is encoded in a high definition format, typically 1080P, which
20 represents an image of 1920x1280 pixels per frame. Blu-ray discs have a
21 significantly higher image quality than DVD discs due to their denser pixel count.
22

17.

Subject to the security and encryption restrictions discussed below,

23 both DVDs and Blu-ray discs are viewable either on a television (using a stand24 alone DVD player or Blu-ray player) or on a computer with a DVD or Blu-ray drive
25 and specialized playback software.
26

18.

DVDs and Blu-ray discs offer many advantages over VHS cassettes,

27 including a much better viewing experience, but they also make a more attractive

S.A.0981

28 target for individuals to copy their content without authorization. When one copies
-6DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 the contents from a VHS tape, the quality of the copy is less than that of the original.
2 The same is not true for digital formats like DVDs and Blu-ray discs. For those
3 formats, the copy and the original are of the same quality. Further, digital copies are
4 much easier to distribute than analog copies. Accordingly, a movie that has been
5 copied can easily be uploaded online and distributed around the world. There are,
6 therefore, security measures that can be used for both DVDs and Blu-ray discs to
7 protect their contents.
8

19.

Based on my review of VidAngel’s documents, my own review of the

9 VidAngel service, and the deposition testimony of Neal Harmon, I believe that
10 VidAngel almost always uses

as the source of the digital copies rather

. This allows VidAngel to make higher quality copies of the movies and

11 than

12 television shows. VidAngel will use
13 only when

as the source for their ripped content

are unavailable

14
15

” See Ex. D.

16

CSS Is An Effective Access-Control System For DVDs

17

20.

Plaintiffs in this case use the Content Scramble System (“CSS”) in

18 order to protect their copyrighted works on DVDs. CSS is a digital rights
19 management system that prevents access to—but not viewing of—digital copies of
20 works stored on DVDs in order to prevent effective copying. Both DVD player
21 manufacturers and DVD content distributors can obtained authorization to use CSS
22 only through a license from the DVD Copy Control Association (“DVD CCA”). A
23 license allows a DVD player manufacturer to obtain the necessary requirements and
24 specifications for building a CSS-compliant DVD player (i.e., one that is capable of
25 lawfully accessing and playing a DVD that is protected by CSS) and for obtaining
26 access to the necessary “keys” that enable the content on a CSS-protected DVD to
27 be lawfully unscrambled.
28
S.A.0982

-7DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1

21.

CSS uses several layers of different types of protection mechanisms,

2 including authentication, encryption, secure storage of encryption keys, time3 variable session keys, and other technological measures. CSS works slightly
4 differently depending on whether the user is using a computer or a standalone DVD
5 player to access a DVD disc. Because I understand VidAngel to use a computer to
6 circumvent CSS protections from DVDs, this declaration focuses on the aspects of
7 CSS that control access to CSS-protected content with computers.
8

22.

CSS has control measures that operate across three different mediums:

9 the DVD disc itself, software players (players that are implemented primarily as
10 software on computer systems) and the DVD drive (an optical DVD Disc reader that
11 is capable of operating as an internal or peripheral component of a personal
12 computer or other computing device). First, the data on the DVD disc is encrypted,
13 with decryption “keys” stored in areas of the disc that are inaccessible without
14 software that implements CSS. Second, the DVD drive provides an additional layer
15 of protection. It requires authentication, which requires that receiving software
16 programs are trustworthy, and uses other methods of encryption before it will
17 transmit certain types of information from the disc.
18

23.

For example, CSS provides for a “locking” mechanism, whereby a

19 computer’s DVD Drive will not allow access to CSS-protected content on a DVD
20 disc unless and until the DVD Drive has confirmed that the software seeking access
21 is an authentic CSS-compliant DVD player that can be trusted. If the DVD player
22 software is unable to provide this authentication, indicating to the DVD drive that it
23 is “safe” to release the DVD data, then the protected contents of the DVD will
24 remain “locked” in the DVD drive.
25

24.

CSS also utilizes encryption. Encryption selectively scrambles the

26 video stream. Only devices that have access to the “decryption keys” can
27 descramble the data. This encryption provides an additional layer of copy- and

S.A.0983

28 access-protection to the protection provided by the “locking” mechanism. Thus,
-8DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 even if one were able to defeat the “locking” mechanism and gain unauthorized
2 access to the protected files on the DVD disc, the data would be scrambled and thus
3 neither viewable nor playable.
4

25.

In addition to encryption, CSS utilizes an “authentication” mechanism,

5 which requires that an authorized player engage in a bi-directional dialogue with the
6 DVD Drive before playing back the video content of a DVD disc. This
7 authentication mechanism further ensures that the DVD content cannot be played
8 back unless such authentication with the DVD Drive is successful. Authentication
9 with the DVD Drive will fail if the DVD being played is not in the DVD Drive.
10

26.

Notably, the process described above allows a licensed-DVD player to

11 enable the viewing of an authorized DVD’s contents. The DVD CCA license
12 prohibits DVD players from copying, or enabling the copying of, the content on a
13 CSS-protected DVD.
14
15

AACS And BD+ Are Effective Access-Control Systems For Blu-ray Discs
27.

In order to protect the copyrighted content on Blu-ray discs, all

16 Plaintiffs use the Advanced Access Content System (“AACS”), and Twentieth
17 Century Fox Film Corporation (“Fox”) additionally uses BD+ protection for content
18 on Fox’s Blu-ray discs. Like CSS, both AACS and BD+ effectively prevent access
19 to the digital content on Blu-ray discs, while still allowing the viewing of that
20 content through the use of licensed Blu-ray players. Also similar to CSS, Blu-ray
21 player manufacturers and Blu-ray content distributors can obtain authorization to
22 use AACS and BD+ only through the authorized licensing organization.
23

28.

Like CSS, AACS uses a combination of encryption and authentication

24 to protect the content on Blu-ray discs. The content on a Blu-ray disc is encrypted.
25 It can be decrypted only by using certain “keys,” called “Title Keys.” Each Title
26 Key is also encrypted, using a different key generated from the “Media Key” (which
27 is necessary to decrypt the encrypted Title Key) stored on the Blu-ray disc, along

S.A.0984

28 with the encrypted Title Key. The place where the Media Key is stored is called the
-9DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 “Media Key Block.” In addition to storing Keys, the Media Key Block also
2 provides a mechanism whereby certain Blu-ray players can be prevented from being
3 able to play back content if the players become compromised.
4

29.

The Blu-ray disc also contains a Volume ID, which is an identifier

5 stored on the disc.
6

30.

In order to play content protected by AACS, licensed Blu-ray players

7 contain several “Device Keys” that allow the players to decrypt the content on the
8 Blu-ray disc. First, the Blu-ray player must decrypt the Media Key Block, which
9 provides the player with the Media Key. Second, the player must obtain the Volume
10 ID, which requires the player to have the correct certificate from the licensing body
11 that develops and licenses AACS (the Advanced Access Content System Licensing
12 Administrator (“AACS LA”)). Only by using both the Volume ID and the Media
13 Key can the player decrypt the Title Key, which is, in turn, used to decrypt the
14 encrypted content on the Blu-ray disc.
15

31.

In the absence of the appropriate keys and certificate, even if one were

16 able to copy the contents off a Blu-ray disc onto another storage device, the content
17 would still be encrypted. Thus, the content would be neither viewable nor playable.
18 Nor would a user be able to manipulate this encrypted content, such as by editing
19 the content or changing the files from one format to another.
20

32.

BD+ is a second, optional, layer of protection that can be used on top of

21 AACS. BD+ is a protection system that is implemented through the use of security
22 programs that are specific to a particular movie title (or a particular version of that
23 movie title) that are included on the Blu-ray disc. Those programs are then read and
24 executed by a special BD+ software module, known as a “virtual machine,” that is
25 included in licensed Blu-ray players. When executed by the Virtual Machine, the
26 BD+ security programs can perform various functions, including determining
27 whether the Blu-ray player has been compromised.
28
S.A.0985

-10DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1

33.

In addition, when a disc is protected by BD+, the files on the disc can

2 be scrambled in a way that is specific to the relevant title. The BD+ virtual machine
3 then obtains the title-specific code from the disc as well as a “fix-up” table that
4 allows the virtual machine to descramble the scrambled content. In the absence of a
5 licensed Blu-ray player, the content would remain scrambled and could not be
6 viewed or played.
7

34.

A key feature of both the AACS and BD+ protection systems is the

8 ability to dynamically change, over time, components of the system and thus allow
9 content owners to continually update their security protocols. Thus, entities that
10 seek to illegally remove AACS and/or BD+ protections from Blu-ray discs can do
11 so only if they are also able to continually update their software.
12 VidAngel Removes The Encryption From CSS-Protected DVDs And BD+ And
13

AACS-Protected Blu-ray Discs And Copies The Unencrypted Contents To Its

14

Internal Computer System

15

35.

As noted above, in order to obtain digital copies of Plaintiffs’ content,

16 VidAngel must copy that content off of DVDs and Blu-ray discs. VidAngel does so
17 as follows:
18

36.

Regardless of whether VidAngel uses DVDs or Blu-ray discs,
. In the

19

20 ordinary course, however, those files would remain encrypted by CSS, AACS
21 and/or BD+. Accordingly, even if VidAngel could copy the files, it could not view
22 them, play them, or manipulate them. VidAngel admits that it uses a product called
23 AnyDVD HD to remove CSS protection from DVDs and AACS and BD+
24 protection from Blu-ray discs.
25
26

37.

VidAngel places the disc, whether it be a Blu-ray disc or a DVD
AnyDVD HD then runs in the background,

27 circumventing the encryption from the DVD or Blu-ray disc.
28
S.A.0986

-11DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1
2

.

3

38.

AnyDVD HD is a well-known, windows-based circumvention software

4 that allows for read-access to DVDs protected by CSS and Blu-ray discs protected
5 by AACS and BD+, in the process removing those protections from the Blu-ray and
6 DVD discs.
39.

7

AnyDVD is currently sold by RedFox. RedFox is based in Belize.

8 According to RedFox’s website, RedFox is run by developers and staff members of
9 the former company SlySoft,1 whose owner was previously convicted in a foreign
10 jurisdiction of providing tools to circumvent AACS encryption.2 SlySoft, whose
11 logo was a red fox, was shut down earlier this year due to “regulatory
12 requirements.”3
13

VidAngel Prepares The Digital Files Obtained From The DVD And Blu-ray

14

Discs For Filtering And Streaming
40.

15

After obtaining the digital contents of DVDs and Blu-ray discs,

16 VidAngel prepares the content for filtering and streaming.
17
18
19
20
21
22
23

1

See “About,” RedFox.bz available at https://www.redfox.bz/en/about.html (last
visited Aug. 21, 2016).

2

Slysoft DVD Ripper Owner Found Guilty in Criminal Action, TorrentFreek
24 available at https://torrentfreak.com/slysoft-dvd-ripper-owner-found-guilty-in25 criminal-action-140403/ (last visited Aug. 21, 2106).
3
26 See Eric Bangeman, “DRM Defeaters Defeated? SlySoft Ceases Operations”,
ArsTechnica.com, available at http://arstechnica.com/tech-policy/2016/02/drm27 defeaters-defeated-slysoft-ceases-operations/ (last visited Aug. 21, 2016); see also
28 SlySoft, available at http://www.slysoft.com/ (last visited Aug. 21, 2016).
S.A.0987

-12DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1
2
3
4

41.

5
6
7
8
9
10
11
12
13
14
15

42.

16
17
18
19
20

By Removing The Encryption From DVDs And Blu-Ray Discs And Allowing

21

The Digital Content Of The Discs To Be Copied Onto A Computer In A

22 Useable Format, VidAngel Circumvents The Technological Measures Designed
23 To Prevent The Accessing And Copying of Copyrighted Content On DVDs And
24
25

Blu-ray Discs
43.

As described above, VidAngel not only accesses and copies files off of

26 DVDs and Blu-ray discs, but it does so in a way that allows the files to be viewed,
27 played, and edited. None of those functions would be possible if CSS, AACS or

S.A.0988

28 BD+ protections remained in place. Rather, VidAngel uses the circumvention
-13DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

1 software, AnyDVD HD, to remove the encryption from DVDs and Blu-ray discs to
2 make a usable copy of the digital content on the discs.
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
S.A.0989

-14DECLARATION OF ROBERT SCHUMANN
CASE NO. 16-CV-04109-AB (PLAX)

S.A.0990

EXHIBIT DD
FILED UNDER SEAL
PURSUANT TO
ORDER OF THE
COURT DATED
AUGUST 23, 2016
(DKT. 32)
S.A.0991

EHLER-365

From: JoEh Jackson .16r.iErOe,o.,en. .onl
Subject: V'dAngel Suppod: Josh Jackson gave you

oate:
To:

an awesome raling for your reply

Fobruary 19,2015 at 9:07 A[,{ Asia/Calcutla
[e-mail]

Josh Jackson - [e-mail]

gave you an awesome rating for your roply:

HiJosh,
YouTube videos do notapply to the new program. Whal you see is what you get on YouTube
videos. No sellback. Renlals and purchases only.
YouTube only works on lhe desktop and laptop with the chmme browser. There is nol an easy way
to get YouTube to your TV with o& filter unforlunately.
Angel HD works on iPhone, iPad, Apple TV, Roku, Chromecast, Android, etc. lt's the best way to
waleh the filtered movie on your TV.
As for the fee, in order for us to stream a filtered movie to you (unless we had liconsing directly
from the studios like YouTube does), you have to own the movie filst. We canl change to a rer{al
unless we get licensing from Hollylvood. We'll have to be a lot bigger lo do that. Until then, we sell
DVDS and Blu-Rays to you. vault them in ourwarehouse, and stream you a filtered movie. The buy
back system was the most crealive way \re could come up wth in o.der to offer you the value of a
Redbox while stayinq buttoned up leqallyGreat question though
- Neal

JoBh Jackson's commont
Greal, quick and courteous customer seryice

Review it by following the link below:

htlpsJtuidanoel.orooveho.mfil/oroove

clienl/tickets/240041 0

?
E

(

S.A.0992

CONFIDENTIAL

EXHIBIT DD
EHLER-366

D 13763

Subject
Date

Noal Harmon ne2r(avrcaroe or
Fwdi VidAngelSupport Josh Jackson g6ve you an awesome mtingforyour
reply
February 19. 20 5 at 9:1 0 AI\4 Asia/Calcu$a
Chani Boyce chai @vda,,Il€ rotr
1

ln the help section tomonow, underthe Youlube se6lion, we need to descdbe the difference
beh^/een YouTube and Angel HD
Forwarded message ------Fromt Josh Jackson <cuslomeiAoaooveho.com>
Date: Wed. Feb 18, 2015 at 8:37 Plv
Subject: VidAngel SupporL Josh Jackson gave you an awesome rating for your reply

------

To: [eaL@Ytlargelcom

Josh Jackson -

jeshtqjosllacfselp

[al2hy,.@In gave you an awesome Gting for your reply

HiJosh,
YouTube videos do not apply to the new program. What you see is what you get on YouTube
videos, No sell back. Rentals and purchases only.
YouTube only works on the desktop and laptop with the chrome browser- There is not an easy way
to get YouTube to your TV with ourfilter unfortunalely.
Angel HD works on iPhone, iPad, Apple TV, Roku, Chromecast. Android, etc. lt's the best way to
watch the filtered movie on yourTVAs for tlle fee, in order for us to stream a filtered movie to you (unless we had licensing directly

from the studios like YouTube does). you have to own the movie first. We cant change to a rental
unless we get licensing from Hollyv/ood. We'll have to be a lol bigge. to do that. Untilthen, we sell
DVDS and Blu-Rays to you, vault them in ourwarehouse, and stream you a liltered movie. The buy
back system was the most creative way we could come up with in order to offer you the value of a
Redbox while staying buttoned !p legally.
Great question though
- Neal

Josh Jacksoo's commenl
Great, quick and courteous customer seNice

Review it byfollowing tl€ link below:
httosJ/vidanoel.orooveho-mm/oroove client/lickets/240041 0

Neal

cell: 80

1-228{444

htoj/sw.vidanoel.com

D 13764

S.A.0993

CONFIDENTIAL

EXHIBIT DD
EHLER-367

D 13765

S.A.0994

CONFIDENTIAL

EXHIBIT DD
EHLER-368

EXHIBIT EE
FILED UNDER SEAL
PURSUANT TO
ORDER OF THE
COURT DATED
AUGUST 23, 2016
(DKT. 32)
S.A.0995

EHLER-369

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

UNITED STATES DISTRICT COURT

2

CENTRAL DISTRICT OF CALIFORNIA

3

·

WESTERN DIVISION

4
5

DISNEY ENTERPRISES, INC.;

)

6

LUCASFILM LTD., LLC;

) No. 16-cv-04109-

7

TWENTIETH CENTURY FOX FILM

)

8

CORPORATION and WARNER BROS. )

9

ENTERTAINMENT, INC.,

AB (PLAx)

)

10

Plaintiffs and Counter- )

11

Defendants,

)

12

VS.

)

13

VIDANGEL, INC.,

) Pages 1-325

14

Defendant and Counter-

)

15

Claimant.

)

16

____________________________ )

17
18

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY

19

VIDEOTAPED DEPOSITION OF FEDERAL RULE 30(b)(6)

20

WITNESS FOR VIDANGEL, INC.:

21

NEAL HARMON

22

THURSDAY, AUGUST 11, 2016

23

9:43 A.M.

24
25

Reported by:

LINDA NICKERSON
CSR No. 8746

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.0996 1-800-826-0277
EXHIBIT EE
EHLER-370

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 2

Deposition of NEAL HARMON, the witness, taken

2

on behalf of the Plaintiffs, on THURSDAY, AUGUST 11,

3

2016, 9:43 a.m., at 2029 Century Park East,

4

Sixteenth Floor, Los Angeles, California, before

5

LINDA NICKERSON, CSR No. 8746, pursuant to NOTICE.

6
7

APPEARANCES OF COUNSEL:

8
9

FOR PLAINTIFFS AND COUNTER-DEFENDANTS:

10

MUNGER, TOLLES & OLSON, LLP

11

BY:

12

560 Mission Street

13

Twenty-Seventh Floor

14

San Francisco, California

15

[phone]

16

[e-mail]

KELLY M. KLAUS, ESQ.

17

94105-2907

-and-

18

MUNGER, TOLLES & OLSON, LLP

19

BY:

20

355 South Grand Avenue

21

Suite 3500

22

Los Angeles, California

23

[phone]

24

[e-mail]

ALLYSON BENNETT, ESQ.

90071

25
DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.0997 1-800-826-0277
EXHIBIT EE
EHLER-371

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 3

APPEARANCES OF COUNSEL (Continued):

2
3

FOR DEFENDANT AND COUNTER-CLAIMANT:

4

BAKER MARQUART, LLP

5

BY:

6

JAIME W. MARQUART, ESQ.
SCOTT M. MALZAHN, ESQ.

7

2029 Century Park East

8

16th Floor

9

Los Angeles, California

90067

10

[phone]

11

[e-mail]

12

[e-mail]

13
14

ALSO PRESENT:

15

JEMAL JUDKINS (Videographer)

16

DAVID QUINTO (In-House Counsel)

17

GRANT ARNOW (Summer Associate)

18
19
20
21
22
23
24
25
DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.0998 1-800-826-0277
EXHIBIT EE
EHLER-372

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 4

I N D E X

2
3

WITNESS

4

EXAMINATION

PAGE

NEAL HARMON

By Mr. Klaus

10

5
6
7
8
9
10
11

E X H I B I T S

12

NUMBER

13

Exhibit 10

PAGE
23

14

DESCRIPTION
Data
(D 00002)

15

Exhibit 11

27

Plaintiffs' Titles

16

Exhibit 12

37

Screenshot

17
18

(D 00003)
Exhibit 13

37

19
20

(D 00004)
Exhibit 14

67

21
22

25

RedFox.bz Invoice O3F-R7Q
(D 00044)

Exhibit 15

77

23
24

Screenshot

Current Workflow
(D 00134-D 00137)

Exhibit 16

108

How to Rip/Mux/Upload DVDs
(D 00040)

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.0999 1-800-826-0277
EXHIBIT EE
EHLER-373

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 5

E X H I B I T S (Continued)

2

NUMBER

PAGE

DESCRIPTION

3

Exhibit 17

108

New Movie/TV Checklist

4
5

(D 00041-D 00043)
Exhibit 18

123

VidAngel, Inc.'s Answer and

6

Affirmative Defenses to

7

Complaint and

8

Counter-Complaint

9

Exhibit 19

132

10
11

(D 00045)
Exhibit 20

132

12
13

Abstract
(D 00115-D 00133)

Exhibit 21

136

14
15

Encoding and Segmenting

Board Meeting, dated 1-9-15
(D 02543-D 02559)

Exhibit 22

141

E-mail dated 10-10-14 from

16

Paul Ahlstrom with attachment

17

(D 14075-D 14097)

18

Exhibit 23

167

E-mail chain ending on

19

9-29-15 from Neal Harmon

20

(D 02416-D 02422)

21

Exhibit 24

177

Investor Update, dated

22

October 2015

23

(D 05632-D 05640)

24

///

25

///

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.1000 1-800-826-0277
EXHIBIT EE
EHLER-374

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 6

E X H I B I T S (Continued)

2

NUMBER

PAGE

DESCRIPTION

3

Exhibit 25

181

Press Release:

VidAngel Lets

4

Customers Stream Filtered

5

Movies for One Bleeping

6

Dollar

7

(D 14650-D 14651)

8

Exhibit 26

183

9

November 2015

10
11

(D 13619-D 13642)
Exhibit 27

205

12
13

Board Meeting, dated 1-21-16
(D 02337-D 02358)

Exhibit 28

206

14
15

Investor Intro, dated

Summary of Business
(D 14723-D 14724)

Exhibit 29

225

E-mail chain ending on

16

4-20-16 from Neal Harmon with

17

attachment

18

(D 02423-D 02474)

19

Exhibit 30

226

20
21

(D 02359-D 02373)
Exhibit 31

230

22
23

Message to Users
(D 00154)

Exhibit 32

24
25

Board Meeting, dated 7-20-16

238

E-mail from Liz to Kip
(D 00149)

///

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.1001 1-800-826-0277
EXHIBIT EE
EHLER-375

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 7

E X H I B I T S (Continued)

2

NUMBER

PAGE

DESCRIPTION

3

Exhibit 33

239

Service Organization Control

4

Report

5

(D 00007-D 00039)

6

Exhibit 34

244

7
8

(PL0000287)
Exhibit 35

248

9

Exhibit 36

250

Not Just

Facebook Screenshot
(PL0000293)

Exhibit 37

255

14
15

VidAngel:

(PL0000120-PL0000128)

12
13

Article:

for Religious Nuts

10
11

Twitter Screenshot

List of Opening & Closing
Credits Movies

Exhibit 38

256

E-mail dated 2-19-15 from

16

Josh Jackson with attachment

17

(D 13763-D 13765)

18

Exhibit 39

279

E-mail dated 5-28-14 from

19

Neal Harmon with attachment

20

(D 14018-D 14021)

21

Exhibit 40

288

E-mail dated 12-12-14 from

22

Neal Harmon with attachment

23

(D 14345-D 14349)

24

///

25

///

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.1002 1-800-826-0277
EXHIBIT EE
EHLER-376

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1

Page 8

E X H I B I T S (Continued)

2

NUMBER

PAGE

DESCRIPTION

3

Exhibit 41

288

E-mail dated 3-11-15 from

4

Neal Harmon

5

(D 14367-D 14368)

6

Exhibit 42

288

E-mail dated 3-14-15 from

7

Neal Harmon with attachment

8

(D 13807-D 13814)

9

Exhibit 43

301

Letter dated 7-23-15 from

10

David W. Quinto

11

(D 14747-D 14749)

12
13
14
15
16
17
18
19
20
21
22
23
24
25
DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.1003 1-800-826-0277
EXHIBIT EE
EHLER-377

YVer1f

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

Page 9

1

LOS ANGELES, CALIFORNIA

2

THURSDAY, AUGUST 11, 2016; 9:43 A.M.

3

09:41:06

4

THE VIDEOGRAPHER:

Here begins Volume

09:42:19

5

Number I in the 30(b)(6) deposition for VidAngel,

09:42:20

6

Neal Harmon, in the matter of Disney Enterprises

09:42:29

7

versus VidAngel, in the United States District

09:42:35

8

Court -- excuse me -- for the Central District of

09:42:41

9

California in the Western Division.

09:42:43

10

The case number

is 16-cv-04109-AB (PLAx).

11

09:42:46

Today's date is August 11, 2016.

The time

09:42:59

12

on the video monitor is 9:43.

13

today is Jemal Judkins, contracted by DTI at 20750

09:43:05

14

Ventura Boulevard, Suite 205, Woodland Hills,

09:43:12

15

California.

09:43:16

16

The video operator

09:43:02

This video deposition is taking place at

09:43:16

17

2029 Century Park East in Los Angeles, California.

09:43:20

18

Counsel, please voice identify yourselves

09:43:24

19

and state whom you represent.

09:43:28

20

MR. KLAUS:

09:43:29

I'm Kelly Klaus from Munger,

21

Tolles & Olson representing the plaintiffs.

22

joined by my colleague, Allyson Bennett, and also by

09:43:33

23

Grant Arnow who is a summer associate with our law

09:43:40

24

firm.

09:43:44

25

MR. MARQUART:

I'm

09:43:32

I'm Jaime Marquart of Baker,

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.1004 1-800-826-0277
EXHIBIT EE
EHLER-378

09:43:44

YVer1f

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

Page 10

1

Marquart, LLP, and we represent the defendant and

09:43:48

2

counter-complainant, VidAngel, Inc., and I am joined

09:43:52

3

by David Quinto of VidAngel, Inc.

09:43:56

4

THE VIDEOGRAPHER:

5

is Linda Nickerson of DTI.

6
7

The court reporter today

09:43:59
09:44:01

Would the reporter please swear in the

09:44:04

witness.

09:44:05

8
9

NEAL HARMON,

10

having been first duly sworn, was

11

examined and testified as follows:
09:44:14

12
13

THE VIDEOGRAPHER:

09:44:14

Please begin.

14
15
16

EXAMINATION
BY MR. KLAUS:

17

Q

Good morning, Mr. Harmon.

09:44:16

18

A

Good morning, Kelly.

09:44:17

19

Q

Could you please state and spell your full

09:44:18

20

09:44:22

name for the record.

21

A

Neal Harmon, N-e-a-l, H-a-r-m-o-n.

09:44:23

22

Q

Have you been deposed before, Mr. Harmon?

09:44:28

23

A

I have not.

09:44:31

24

Q

Your counsel, I'm sure, went over some of

09:44:32

25

09:44:39

the basic ground rules for the depo, but let me

DTI Court Reporting Solutions - Woodland Hills
www.deposition.com
S.A.1005 1-800-826-0277
EXHIBIT EE
EHLER-379

YVer1f

HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
NEAL HARMON, 30(B)(6) - 08/11/2016

1
2
3

Page 27

movies to include on VidAngel?
A

10:03:02

There have been a number of people who have

10:03:06

made that decision.

10:03:10

4

Q

Who does it today?

10:03:10

5

A

The content management is Ricky Cole.

10:03:11

6

Q

And who does Ricky Cole report to?

10:03:22

7

A

He reports to Liz Ellis.

10:03:30

8

Q

And Liz Ellis reports to you, correct?

10:03:32

9

A

Yes.

10:03:34

10

Q

If a -- if a -- if a movie is coming out on

10:03:35

11

DVD and it's had over $10 million in box office

10:03:52

12

sales, generally going to be something that VidAngel

10:03:57

13

is going to offer on its service?

10:04:00

14
15
16

MR. MARQUART:

Objection; foundation, vague

10:04:03

and ambiguous.
THE WITNESS:

10:04:04
Again, I think that this

10:04:04

17

document outlines that there needs to be a favorable

10:04:07

18

rating in addition to the sales.

10:04:12

19

MR. KLAUS:

I'm going to ask Ms. Nickerson

10:04:22

20

to mark and hand to you what we'll mark as Exhibit

10:04:23

21

11, and Exhibit 11, Mr. Harmon, is the list of

10:04:27

22

plaintiffs' titles that was attached as Exhibit A to

10:04:56

23

the complaint in this matter.

10:04:59

24
25

(The document referred to was marked by the
Reporter as Plaintiffs' Exhibit 11 for

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identification and is attached hereto.)

2

Page 28

BY MR. KLAUS:

3

Q

4

correct?

5

A

6
7

You've seen Exhibit 11 before today,

10:05:02
10:05:04

I've seen Exhibit A of the complaint

10:05:04

before.
Q

10:05:09
And is it your understanding, Mr. Harmon,

10:05:11

8

that all of the titles that are listed on Exhibit A

10:05:14

9

are currently available on VidAngel, Inc.?

10:05:18

10

MR. MARQUART:

11

THE WITNESS:

Objection; foundation.

10:05:22

That would be my

10:05:29

12

understanding, but I'm not certain without actually

10:05:30

13

checking that they're all there.

10:05:32

14

BY MR. KLAUS:

10:05:34

15

Q

When you looked at Exhibit A to the

10:05:34

16

complaint, did you -- were there any titles that you

10:05:41

17

believe were not available on VidAngel?

10:05:48

18

A

No.

10:05:53

19

Q

Has anyone at any time since the filing of

10:05:53

20

the complaint told you that any of the titles that

10:05:57

21

are listed on Exhibit A are not on VidAngel?

10:06:00

22
23
24
25

A

No.

10:06:03

MR. MARQUART:

Sir, please give me an

10:06:04

opportunity.
THE WITNESS:

10:06:06
Oh, I'm sorry, sorry.

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Anytime he asks you has

10:06:08

2

anyone told you, I'm going to make sure to remind

10:06:11

3

you not to disclose attorney-client communications.

10:06:12

4
5

THE WITNESS:

Okay.

Okay.

10:06:15

BY MR. KLAUS:
Okay.

10:06:15

6

Q

With that, your answer is the same,

10:06:15

7

I take it?

10:06:19

8

A

Yes, my answer is the same.

10:06:19

9

Q

And since the filing of the complaint, has

10:06:21

10

VidAngel removed any of the titles on Exhibit A from

10:06:24

11

its service?

10:06:27

12

MR. MARQUART:

13

THE WITNESS:

Foundation.

10:06:28

My answer would be the same.

10:06:29

14

To my knowledge, no.

10:06:33

15

BY MR. KLAUS:

10:06:34

16

Q

And is it also the case that unless the

10:06:34

17

court were to tell VidAngel to stop offering these

10:06:44

18

titles, you would leave all of these titles up on --

10:06:49

19

on VidAngel?

10:06:53

20

MR. MARQUART:

Objection; foundation, vague

10:06:54

21

and ambiguous, calls for a legal conclusion.

10:06:57

22

BY MR. KLAUS:

10:07:03

23

Q

You can answer the question, sir.

10:07:03

24

A

Okay.

10:07:04

25

Our understanding is that this

technology allows our customers to filter these

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movies and that this is their right to do so, and so

10:07:18

2

we will continue to offer them that technology, yes.

10:07:29

3

Q

So my -- and just to be clear, my question

10:07:38

4

was:

5

it's VidAngel's intent to continue to offer the

10:07:44

6

movies that are on Exhibit A, correct?

10:07:47

7

Unless and until a court tells you to stop,

A

8
9
10

10:07:40

To offer --

10:07:49

MR. MARQUART:

Sorry.

Same objections and

10:07:50

also please don't disclose any information you've

10:07:51

obtained from conversations with your counsel.

10:07:54

11

THE WITNESS:

Okay.

The -- the only

10:07:58

12

correction I would make to your statement is that we

10:08:04

13

will continue to offer filtered versions of the

10:08:07

14

titles.

10:08:09

15

BY MR. KLAUS:

10:08:11

16

Q

But with that -- with that amendment to

10:08:11

17

your answer, is the answer still, yes, you'll

10:08:15

18

continue to offer the filtered versions of the

10:08:18

19

titles until told to stop?

10:08:20

20

A

That's correct.

10:08:21

21

Q

Okay.

10:08:22

22

And you -- the complaint in this

case was filed on June the 9th.

23

10:08:28

Does that sound about right to you?

10:08:29

24

A

That sounds correct.

10:08:30

25

Q

And since that time, VidAngel has added

10:08:32

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other titles to its service offering, correct?
A

10:08:40

MR. MARQUART:

4

THE WITNESS:

6

10:08:37

Correct.

3

5

Page 31

Objection; foundation.

10:08:40

Oh, excuse me.

10:08:41

BY MR. KLAUS:
Q

10:08:42

And you will continue in the ordinary

10:08:42

7

course of your operations to add titles as they

10:08:47

8

become available and as you select them to be added,

10:08:50

9

correct?

10:08:53

10
11

MR. MARQUART:

Objection; vague and

10:08:54

ambiguous, foundation, calls for speculation.

12

THE WITNESS:

10:08:55

We do plan to continue to

10:08:56

13

offer titles.

10:09:02

14

BY MR. KLAUS:

10:09:03

15

Q

Okay.

And so just to take an example, one

10:09:03

16

of my clients Disney has released this summer on DVD

10:09:08

17

and Blu-ray the movie Zootopia.

10:09:13

18

You're familiar with Zootopia?

10:09:17

19

A

Yes.

10:09:18

20

Q

You've seen Zootopia?

10:09:19

21

A

I have.

10:09:20

22

Q

And that's a -- that's a -- that's a title

10:09:21

23

that you've added to -- to VidAngel, correct?

10:09:25

24

A

Correct.

10:09:28

25

Q

And you know that -- you're familiar with

10:09:29

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Pixar?

10:09:42

2

A

I am familiar with Pixar.

10:09:42

3

Q

You know that Pixar is part of the Walt

10:09:44

4

Disney Company?

5
6

10:09:46

MR. MARQUART:

Objection; foundation.

10:09:47

BY MR. KLAUS:

7

Q

Is that your general understanding?

10:09:48

8

A

That is my general understanding.

10:09:49

9

Q

Okay.

10:09:51

10

You know that Pixar released a movie

called Finding Dory this summer?

10:09:54

11

A

Yes.

10:09:57

12

Q

And you -- it has not yet been released on

10:09:57

13

DVD, but you understand that it's very likely that

10:10:04

14

the movie will be released on DVD and Blu-ray?

10:10:07

15

A

Yes.

10:10:14

16

Q

And it would be VidAngel's intent to add

10:10:14

17

Finding Dory to its offerings, correct?

18
19

MR. MARQUART:

10:10:17

Objection; foundation and

10:10:20

it's vague and ambiguous.

20

THE WITNESS:

10:10:21

We will add a -- in the

10:10:25

21

ordinary course of business, I understand that we

10:10:36

22

will add that title and its relevant tags for our

10:10:39

23

filtering technology.

10:10:45

24

BY MR. KLAUS:

10:10:46

25

Q

One of my clients is Warner Bros.

You've

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heard of Warner Bros.?

10:10:54

2

A

Yes.

10:10:55

3

Q

And are you familiar that Warner Bros.

10:10:56

4

released a motion picture called Suicide Squad

10:11:01

5

within the last couple weeks?

10:11:05

6

that?

7

A

I did hear about that movie.

10:11:06

8

Q

And the movie is still in theaters, but

10:11:08

9

Have you heard about

10:11:06

based on your understanding of the way the market

10:11:14

10

for home entertainment works, you would expect

10:11:17

11

Suicide Squad at some point in the future to be

10:11:21

12

released on DVD and Blu-ray, correct?

10:11:24

13

A

How are its sales?

10:11:26

14

Q

The news -- according to the newspaper

10:11:30

15

reports I read, about $150 million in box office

10:11:34

16

sales during its first weekend.

10:11:37

17

A

Then I -- I should anticipate that a lot of

10:11:39

18

customers would request that movie, and we will add

10:11:44

19

it in the ordinary course of business.

10:11:46

20

MR. MARQUART:

21

question that's asked.

22

Sir, please answer the

10:11:47
10:11:51

The question -- can you please read back

23

the question.

24

10:11:52

read back.

25

Please listen to the question as it's

10:11:53
10:11:56

THE REPORTER:

Well, he made a statement

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about the box office sales.

2

that.

The question is before

So read the question before that?

3
4

Page 34

MR. MARQUART:

Read the question before

that.

5

(The record was read as follows:

6

"Q

7

theaters, but based on your

8

understanding of the way the market

9

for home entertainment works, you

10

would expect Suicide Squad at some

11

point in the future to be released

12

on DVD and Blu-ray, correct?")

13

MR. MARQUART:

14

And the movie is still in

10:12:23

Please just answer the

10:12:24

question that was asked.

15

THE WITNESS:

Okay.

10:12:26

Yes, I would

16

understand that it would be released on DVD or

10:12:28

17

Blu-ray.

10:12:30

18

BY MR. KLAUS:

10:12:31

19

Q

Okay.

10:12:31

And based on what I've asked you to

20

assume about its box office numbers and commercial

10:12:33

21

popularity, you would expect that in the ordinary

10:12:38

22

course, that would be a title that you would add to

10:12:42

23

VidAngel's offering, correct?

10:12:46

24
25

MR. MARQUART:

10:12:48

Objection; assumes facts,

10:12:49

vague and ambiguous, and foundation.

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THE WITNESS:

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I would assume that we would

10:12:54

2

create tags for that movie and offer it as a title

10:12:55

3

to be filtered.

10:12:59

4

BY MR. KLAUS:

10:13:00

5
6

Q

You know that one of my clients in this

10:13:00

case is Twentieth Century Fox.

7

10:13:05

You understand that?

10:13:08

8

A

Yes.

10:13:08

9

Q

And are you familiar with the X-Men film

10:13:09

10

franchise?

10:13:14

11

A

Yes.

10:13:15

12

Q

And you know that the most -- the newest

10:13:16

13

installment in that is X-Men:

14

heard about that?

15
16

19

Have you

10:13:25
10:13:31

MR. MARQUART:

Foundation, vague and

10:13:31

ambiguous.

17
18

Apocalypse?

10:13:32

THE WITNESS:

I haven't heard about that.

10:13:32

BY MR. KLAUS:
Q

Okay.

10:13:34
IS IT your understanding that the

10:13:34

20

X-Men film franchise is a commercially popular

10:13:37

21

series of films?

10:13:41

22

A

Yes.

23

Q

Okay.

10:13:42
And if there's a new X-Men movie

10:13:43

24

that Fox releases on DVD and Blu-ray disc, would it

10:13:47

25

be your expectation that in the ordinary course,

10:13:53

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VidAngel would add that title to its service?

2

MR. MARQUART:

3

THE WITNESS:

10:13:58

Objection; foundation.

10:14:01

Again, in the ordinary course

10:14:04

4

of business, we would tag a popular movie like X-Men

10:14:06

5

and offer it on our service.

10:14:11

6

BY MR. KLAUS:

10:14:13

7

Q

And you will -- you will -- VidAngel will

10:14:13

8

continue to add these and other titles that my

10:14:20

9

clients release in the ordinary course unless and

10:14:26

10

until a court tells you that you can't do that,

10:14:33

11

correct?

10:14:35

12

MR. MARQUART:

Objection; vague and

10:14:36

13

ambiguous, calls for a legal conclusion, foundation.

10:14:38

14

BY MR. KLAUS:

10:14:43

15

Q

You can answer the question, sir.

10:14:43

16

A

Okay.

10:14:44

17

So could you repeat the question to

me one more time?

10:14:51

18

(The record was read as follows:

19

"Q

20

VidAngel will continue to add these

21

and other titles that my clients

22

release in the ordinary course

23

unless and until a court tells you

24

that you can't do that, correct?")

25

THE WITNESS:

10:14:52

And you will -- you will --

Oh, okay.

Provided that it

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matches the criteria that we've previously

10:15:09

2

discussed, we will at our customers' request tag the

10:15:12

3

movies and offer them on our site for filtering,

10:15:18

4

yes.

10:15:21

5

MR. KLAUS:

6

as Exhibit 12.

7

Ask the court reporter to mark

10:15:26

this as Exhibit 13.

8
9

I'll also ask you if you'll mark

MR. MARQUART:

10:15:28

Counsel, my understanding of

10:15:59

the current draft protective order in our interim

10:16:00

10

agreement is that all of the transcripts are

10:16:05

11

provisionally marked highly confidential and then

10:16:07

12

portions can be designated or de-designated.

10:16:10

13

But for my own ease of reference, I'd like

10:16:13

14

to note in certain instances when a particular topic

10:16:16

15

is going to be marked attorneys' eyes only or highly

10:16:22

16

confidential, and in this instance, I would like to

10:16:27

17

make that note to the record that Exhibits 12 and 13

10:16:29

18

appear to be highly confidential themselves -- I

10:16:34

19

know they were marked highly confidential and that

10:16:38

20

the testimony is likely to be highly confidential.

10:16:40

21

(The documents referred to were marked by

22

the Reporter as Plaintiffs' Exhibits 12 and 13 for

23

identification and are attached hereto.)

24

BY MR. KLAUS:

25

Q

10:16:51

Mr. Harmon, I put before you documents

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okay.

Say the question again.

2

Page 51

I'm sorry.

10:32:35

BY MR. KLAUS:

10:32:38

3

Q

I'll rephrase it.

10:32:38

4

A

Yeah.

10:32:39

5

Q

You get a -- you get -- you buy -- you buy

10:32:39

6

a package.

7

a combo pack, and you get the package -- an

10:32:49

8

individual package, you put a bar code on that

10:32:54

9

package, right?

10:32:55

You buy either a DVD, a Blu-ray disc, or

10:32:46

10

A

Uh-huh.

10:32:56

11

Q

Is that a yes?

10:32:56

12

A

Yes, that's a yes.

10:32:57

13

Q

And the bar code has, I take it, a number

10:32:59

14

that it's associated with, correct?

10:33:04

15

A

Yes.

10:33:06

16

Q

And that number is used in your inventory

10:33:07

17

tracking and management system, correct?

18

MR. MARQUART:

19

10:33:15

ambiguous, foundation.

20
21
22

THE WITNESS:

Objection; vague and

10:33:16
10:33:17

Yes.

10:33:18

BY MR. KLAUS:
Q

10:33:20

When VidAngel acquires a combo pack, does

10:33:20

23

it put one bar code or two bar codes on the combo

10:33:27

24

pack package?

10:33:32

25

MR. MARQUART:

Same objections.

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3
4
5
6

Q

Page 58

You just put it into a computer and what

10:40:08

happens once you put it into the computer?
A

10:40:11

We open the disc and we make a copy of the

10:40:14

MPEG 2 files.
Q

10:40:23

And in order to make that copy, you --

10:40:25

you've heard the term "ripping" before, right?

10:40:30

7

A

Uh-huh.

10:40:33

8

Q

You know -- that's a yes?

10:40:33

9

A

Yes.

10:40:34

10

Q

And you know generally what ripping refers

10:40:35

11

to, right?

12
13

10:40:37

MR. MARQUART:

Objection; vague and

10:40:38

ambiguous and calls for speculation as well.

10:40:42

14

Counsel, if you want to define some term

10:40:46

15

that you're using and we can use that definition,

10:40:48

16

that's fine, but that's vague and ambiguous and

10:40:50

17

calls for speculation.

10:40:52

18

BY MR. KLAUS:

19

Q

Well, let's see -- you know what, let's do

20

it this way.

21

10:40:53

You just told me that you -- you've

10:40:56

heard of the term "ripping."

10:40:59

22

What do you understand ripping to be?

10:41:00

23

MR. MARQUART:

10:41:04

Counsel -- Counsel, okay,

24

that's the same objections as before.

I'd prefer to

25

use language that the witness understands.

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1

Q

What is it?

11:11:08

2

A

It's a receipt.

11:11:09

3

Q

For what?

11:11:10

4

A

AnyDVD HD.

11:11:14

5

Q

And the date on this invoice is June 6,

11:11:17

6

2016.

7

11:11:22
Do you see that?

11:11:22

8

A

Yes.

11:11:23

9

Q

Did VidAngel purchase other software --

11:11:23

10

AnyDVD or other comparable software prior to June 6,

11:11:34

11

2016?

11:11:39

12

A

13
14

Q

Okay.

11:11:49
When did you first purchase AnyDVD?

MR. MARQUART:

11:11:50

Objection; foundation,

11:11:53

assumes facts.

17
18

11:11:40

yes, we did.

15
16

We purchased AnyDVD when we began our --

11:11:56

THE WITNESS:

Can I give you an estimate?

11:11:57

BY MR. KLAUS:

11:11:58

19

Q

Yeah, please.

11:11:58

20

A

I would estimate fourth quarter of 2014.

11:12:01

21

Q

And did VidAngel purchase AnyDVD from a

11:12:10

22

company called RedFox?

23

MR. MARQUART:

24
25

11:12:28
Objection; vague as to time.

11:12:30

BY MR. KLAUS:
Q

11:12:32

At the time that you -- at the time you

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first purchased AnyDVD, was it purchased from

11:12:35

2

RedFox?

11:12:38

3

MR. MARQUART:

4

THE WITNESS:

5

Foundation.

11:12:42

No.

11:12:43

BY MR. KLAUS:

11:12:43

6

Q

Was it from a company called SlySoft?

11:12:43

7

A

Yes.

11:12:46

8

Q

And is it your understanding that RedFox is

11:12:46

9

a continuation of SlySoft?

11:12:49

10

A

Yes.

11:12:52

11

Q

Do you know what happened to SlySoft?

11:12:52

12

A

Yes.

11:12:59

13

Q

What happened to them?

11:12:59

14

A

SlySoft changed their business name to

11:13:00

I don't know exactly what happened.

11:13:06

15

RedFox.

16

that they changed their business.

17

MR. MARQUART:

I know

11:13:15

I'm just going to interject

11:13:17

18

foundation, calls for speculation.

11:13:19

19

BY MR. KLAUS:

11:13:21

20

Q

Do you know -- have you heard of SlySoft's

11:13:21

21

former CEO -- familiar that he is subject to

11:13:27

22

criminal fines for distributing illegal ripping

11:13:36

23

software?

11:13:39

24
25

Do you know that?
MR. MARQUART:

Objection; foundation, calls

11:13:40

for speculation, and calls for a legal conclusion.

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Q

What is -- what is your understanding of a

11:48:30

front-channel mute?

3
4

Page 90

11:48:34

MR. MARQUART:

Objection; assumes facts,

11:48:36

foundation.

5

11:48:38

THE WITNESS:

I can only speak for my own

11:48:40

6

understanding here, but I assume that that means the

11:48:43

7

potentially objectionable content is contained in

11:48:48

8

the front center channel of the audio.

11:48:51

9

BY MR. KLAUS:

11:48:53

10

Q

And is it also correct to say that that's

11:48:53

11

the -- if that's the objectionable content somebody

11:48:56

12

wants taken out and that's where it's located,

11:49:01

13

that's where the mute will be in the playback?

11:49:04

14

A

That's correct.

11:49:08

15

Q

Okay.

11:49:09

16

If I could ask you to look at

paragraph number 17.

11:49:13

17

A

Okay.

18

Q

So Mr. McDonald writes here, "The

11:49:20

19

transformed segments are stored on the server and

11:49:22

20

streamed back to the user as the HTTP response."

11:49:28

Do you see that?

21

11:49:31
11:49:34

22

A

Yes.

23

Q

What are the transformed segments?

24
25

11:49:34

What's

11:49:37

your understanding of what that refers to?
MR. MARQUART:

11:49:39

Objection; foundation and

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server.

2

11:54:18
Do you see that?

11:54:18

3

A

Yes.

11:54:26

4

Q

And is it your understanding that the edge

11:54:26

5

server is the particular computer server owned by

11:54:31

6

the Cloud delivery company you contract with where

11:54:38

7

the content files are stored and then streamed to

11:54:44

8

VidAngel's customers?

11:54:48

9

what the edge server is?

Is that your understanding of

10

MR. MARQUART:

11

THE WITNESS:

12
13

11:54:51
Objection; foundation.

11:54:53

Yes, that's my understanding.

11:54:54

BY MR. KLAUS:

11:54:55

Q

11:54:55
11:55:00
11:55:08
11:55:13
11:55:18
11:55:28
11:55:31

20
21
22
23

MR. MARQUART:

Objection; vague and

11:55:34

ambiguous, foundation, calls for speculation.
THE WITNESS:

11:55:36

I'll have to hear that

11:55:39

question -- that whole phrase again, please.

24

(The record was read as follows:

25

11:55:40

"Q

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")
11

MR. MARQUART:

12

11:56:08

calls for speculation.

13

Objections were foundation,

11:56:09
11:56:22

THE WITNESS:

11:56:24
15
16

11:56:31

BY MR. KLAUS:

11:56:31

Q

11:56:34
11:56:38
11:56:40
11:56:44
21

MR. MARQUART:

22

11:56:46

calls for speculation.

23
24
25

Objection; foundation and

11:56:47
11:56:48

THE WITNESS:

11:56:49

BY MR. KLAUS:

11:56:49

Q

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12:16:27
12:16:28
3

MR. MARQUART:

4

THE WITNESS:

5

Objection; foundation.

12:16:29
12:16:30

BY MR. KLAUS:

12:16:30

6

Q

12:16:30

7

A

12:16:33

8

Q

12:16:34

9
10

MR. MARQUART:

13

12:16:38

ambiguous.

11
12

Objection; vague and

12:16:39

THE WITNESS:

12:16:39

BY MR. KLAUS:

12:16:39

Q

12:16:39
12:16:44

15

A

12:16:44
12:16:46
12:16:54
12:16:57

19

Q

12:16:58
12:17:04
12:17:09
12:17:11

23
24
25

MR. MARQUART:

Objection; foundation and

12:17:12

assumes facts.

12:17:13

THE WITNESS:

12:17:15

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12:17:17
12:17:22
3
4

BY MR. KLAUS:

12:17:28

Q

12:17:28
12:17:30

6

A

12:17:31

7

Q

12:17:31
12:17:38
12:17:44
12:17:49
12:17:51

12

A

12:17:52

13

Q

12:17:53
12:17:57
12:18:01
12:18:05
12:18:07

18
19

MR. MARQUART:

Objection; foundation, calls

12:18:12

for speculation.

20

12:18:13

THE WITNESS:

12:18:14
12:18:16

22
23

BY MR. KLAUS:

12:18:20

Q

12:18:20
12:18:23
12:18:28

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from needing a break and we're close to lunch, does

12:30:49

2

that --

12:30:51

3

MR. KLAUS:

That's fine.

I've only got

12:30:51

4

about five to ten minutes of questions on this for

12:30:52

5

right now.

12:30:55

6

MR. MARQUART:

7

I assume you

12:30:56

answered --

8

Okay.

BY MR. KLAUS:

9

Q

12:30:57

12:30:58

If you could look at -- if you could look

10

at page 2, there's a photo that takes up a big part

12:30:59

11

of this page.

12:31:02

12

12:31:05

First of all, tell me who is -- it says

13

that this is the manager of VidAngel's storage

12:31:11

14

vault.

12:31:14
Do you recognize her?

15

12:31:15

16

A

Yes.

12:31:16

17

Q

Who is that?

12:31:16

18

A

Liz Ellis.

12:31:17

19

Q

She's your COO?

12:31:18

20

A

Uh-huh.

12:31:20

21

Q

And she's also the manager.

12:31:21

I take it, one

22

of her duties is to manage the storage vault; is

12:31:24

23

that correct?

12:31:27

24
25

A

12:31:27

Well, she's responsible for it, the

12:31:33

management of the storage vault.

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I really don't know, but I

12:34:10

2

would say that is probably -- Revenant was one of

12:34:12

3

our more successful titles.

12:34:15

4

probably over average.

12:34:19

5

BY MR. KLAUS:

12:34:22

6

THE WITNESS:

Page 127

And the process that we've looked at

12:34:22

7

in some of the earlier documents about acquiring the

12:34:25

8

copy from the disc and then uploading that, does

12:34:29

9

VidAngel do that with respect to every one of the

12:34:36

physical copies in its inventory or a lower number?

12:34:44

10

Q

Okay.

So I would say it's

11

A

This process.

12:34:52

12

Q

By "this process," if you're looking at the

12:34:53

13

exhibits we looked at before, which I think were

12:34:56

14

Exhibits 15 through 17, those processes --

12:34:58

15

A

Okay.

12:35:05

16

Q

-- does VidAngel follow those processes

12:35:05

17

with respect to a single disc or with respect to

12:35:07

18

every disc that it has in its physical inventory?

12:35:12

19
20
21

A

We prepare the filtering information for

12:35:15

the title just one time.
Q

12:35:19

And the upload to the -- to the servers, do

12:35:22

22

you -- does VidAngel through its Cloud server

12:35:27

23

network that it contracts with -- strike that.

12:35:32

24

How many copies reside on the -- of a

12:35:38

25

particular title reside on the content delivery

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It's listed on page 33 --

12:38:22

2

Q

Yep.

12:38:25

3

A

-- lines 9 through pages 34, line 21.

12:38:26

4

Q

Yep.

12:38:31

5

A

This is a description of the copies that

12:38:36

6

are made in preparing the files for -- for

12:38:39

7

filtering.

12:38:46

8

Q

9

Okay.

Let me ask the question this way.

12:38:47

Is there a -- is there a single copy of The

12:38:51

10

Revenant located on an Amazon Cloud server that

12:38:59

11

corresponds to every one of the thousand physical

12:39:04

12

packages that Ms. Ellis is pictured behind on page 2

12:39:07

13

of your answer?

12:39:13

14

MR. MARQUART:

Objection; vague and

12:39:14

15

ambiguous as to "copy" and it assumes facts not in

12:39:15

16

evidence.

12:39:18

17

THE WITNESS:

So would you like me to read

12:39:26

18

how the system works for you or --

12:39:28

19

BY MR. KLAUS:

12:39:29

20

Q

No.

I'd like you to answer the question,

12:39:29

21

sir, which is Ms. Ellis is pictured behind something

12:39:32

22

that may be about a thousand physical copies.

12:39:36

23

Is there a -- is there on Amazon's Cloud

12:39:38

24

server a copy that corresponds to every one of those

12:39:41

25

discs?

12:39:44

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MR. MARQUART:

Page 131

So objection; vague and

12:39:46

2

ambiguous as to "copy," misstates his prior

12:39:47

3

testimony as to the process, and I'm not sure he can

12:39:49

4

answer the question as phrased, but --

12:39:53

5

THE WITNESS:

I will -- I will say this,

12:39:57

6

that this process that we use to prepare the movie

12:39:59

7

for filtering happens one time.

12:40:04

8

BY MR. KLAUS:

12:40:08

9
10
11

Q

Okay.

Okay.

Let me just ask a couple more

12:40:08

questions and then we can break for lunch.
A

Can I just make one addition?

12:40:14

I suppose it

12:40:16

12

could happen more than one time if there was a

12:40:19

13

mistake made in the process.

12:40:22

14

Q

Is the intent behind the process in its

12:40:23

15

ordinary course to have that happen one time per

12:40:28

16

title?

12:40:31

17

A

Yes, yes.

12:40:31

18

Q

Let me ask you -- Exhibit -- I'm going to

12:40:32

19

mark -- can you give me the folder with this Exhibit

12:40:50

20

10 -- tab 10.

12:40:56

21

And then also why don't you give me tab 11

12:41:05

22

and ask the court reporter to mark this as Exhibit

12:41:08

23

19 -- these will be very quick questions -- mark

12:41:10

24

this as Exhibit 20.

12:41:23

25

MR. MARQUART:

Each page -- well, I've got

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series of segments in the different bit rates are

02:13:52

2

displayed to the user according to their filter

02:13:56

3

preferences.

02:14:01

4
5

Q

Okay.

Anything else you want to add to

02:14:02

that answer?

6

A

No.

7

Q

Okay.

02:14:04
02:14:05
Thanks.

So, Mr. Harmon, let me

02:14:05

8

ask -- VidAngel was formed in about October 2013,

02:14:14

9

correct?

02:14:32

10

A

11
12

I believe that that was the month that we

02:14:32

formed VidAngel, LLC.
Q

02:14:39

And in around October 2013, during the

02:14:41

13

early years of VidAngel, we'll call them, during the

02:14:53

14

time period of VidAngel, one of the things that you

02:14:56

15

did was to develop a website that allowed customers

02:15:02

16

to filter movies and videos that were available on

02:15:05

17

YouTube and the Google Play Hollywood library; is

02:15:09

18

that correct?

02:15:13

19

A

Yes.

02:15:13

20

MR. MARQUART:

21

THE WITNESS:

22
23
24
25

Vague and ambiguous.
Excuse me.

02:15:13

Yes.

02:15:14

BY MR. KLAUS:
Q

02:15:17

And was that done with some form of like

02:15:17

what is commonly called a plug-in software program?
A

02:15:20

I believe the term that Google Chrome uses

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Page 136

is an extension.
Q

02:15:32

And so you -- VidAngel implemented its

02:15:33

3

filters through a Google Chrome extension during the

02:15:38

4

first part of VidAngel's existence, correct?

02:15:42

5

A

We implemented it via a Google Chrome

02:15:46

6

extension, and also through an embedded I-frame in

02:15:50

7

other instances.

02:15:54

8
9
10
11
12
13
14
15

Q

At some point during the year 2014, did

02:15:56

VidAngel decide to make what it called a pivot in

02:16:02

its business?

02:16:08

A

Yes, at some point in 2014, we changed the

02:16:08

direction of our business.
Q

02:16:18

Was it in around the October 2014 time

02:16:19

frame that you did that?
A

02:16:26

It was -- it was during a period of time

02:16:27

16

that -- really the decision built up throughout the

02:16:34

17

year of 2014.

02:16:45

18

MR. KLAUS:

Okay.

And just see if I can

02:16:49

19

put some context around this, ask the court reporter

02:16:54

20

to mark Exhibit 21 and hand that to you.

02:16:58

21

know when you have that.

22

Let me

02:17:07

(The document referred to was marked by the

23

Reporter as Plaintiffs' Exhibit 21 for

24

identification and is attached hereto.)

25

BY MR. KLAUS:

02:17:22

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Page 146

Do you see that?

02:30:14

2

A

Yes.

02:30:15

3

Q

And what's under here, up through "On

02:30:15

4

Ultraviolet," is your written response to his

02:30:18

5

question regarding the sustainability of the DVD

02:30:22

6

model, correct?

02:30:25

7

A

Yes.

02:30:25

8

Q

And you wrote to him, "Even though VidAngel

02:30:27

9

is using a license that comes with a disc purchase,

02:30:31

10

VidAngel is not" -- capital N-O-T -- "a disc

02:30:35

11

service.

02:30:40

12

superior to all other current streaming services

02:30:43

13

because it uses the best of all technology and

02:30:47

14

licensing available."

02:30:50

15

VidAngel is a streaming service that is

Do you see that?

02:30:53

16

A

Yes.

02:30:54

17

Q

What did you mean by the "license that

02:30:54

18
19

comes with a disc purchase"?
A

02:30:58

I would just provide for context that this

02:31:00

20

e-mail is sent by Paul and my reply are not

02:31:07

21

referencing the current technology of VidAngel.

02:31:15

22

They are referencing a technology that we -- I'm not

02:31:19

23

even sure what parts of it I can reveal because of

02:31:29

24

privilege, but it was a technology that we were

02:31:31

25

exploring and never offered to customers.

02:31:34

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Page 147

02:31:36

MR. MARQUART:

2

What was that technology?

02:31:38

Again, don't reveal any

3

communications with counsel.

4

the technology was, but don't reveal any

02:31:43

5

communications with counsel.

02:31:47

6

answer is going to be, but I heard something that

02:31:49

7

sounded like it could include.

02:31:51

8

THE WITNESS:

9

the technology?

Okay.

You can reveal what

02:31:40

I don't know what your

Yeah, the -- what was

02:31:53

Could you give me a more specific

02:32:05

10

question?

11

technology"?

02:32:10

12

BY MR. KLAUS:

02:32:11

13

Q

What do you mean by "What was the

02:32:08

You said that the service that you're

02:32:11

14

discussing in this e-mail exchange in Exhibit 22 is

02:32:13

15

not the current VidAngel service.

02:32:18

16
17
18

Tell me what the service was that you were

02:32:21

discussing with him.
A

02:32:23

To the best of my knowledge and memory,

02:32:24

19

this was a service that was based on the premise of

02:32:34

20

drawing -- actually drawing a similar analogy from

02:32:45

21

the marketplace.

02:32:48

22

heard of the service called Movie Swap?

23

Q

It was more akin to -- have you

02:32:52

I've heard of it, but that's just going to

02:32:58

24

lead me to ask you to continue to describe what that

02:33:01

25

is for the record.

02:33:03

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At any rate, it

02:33:04

2

was -- it was more like a service where people would

02:33:06

3

add their own DVDs, and they could trade or share.

02:33:10

4

I don't remember all the details of the service, but

02:33:19

5

this -- it was an idea that was a nascent idea that

02:33:21

6

never saw the light of day.

02:33:35

7

A

That's fine.

Is it accurate to say that the service that

02:33:40

8

VidAngel is offering today is not a disc service but

02:33:43

9

is a streaming service that is superior to all other

02:33:48

current streaming services?

02:33:52

10

Q

That's fine.

Page 148

11

A

No.

02:33:53

12

Q

In what way is that not an accurate

02:33:53

13
14

description of the service that you use today?
A

02:33:57

Well, this -- the servant that we use --

02:33:58

15

the service that we use today is -- is superior to

02:34:09

16

other services for people who want to filter their

02:34:12

17

movies and TV shows and could be considered by many

02:34:15

18

to be inferior to other services where their -- if

02:34:25

19

their goal is not to filter movies and TV shows.

02:34:32

20

So Netflix has an amazing offering and

21

other services have features that we don't have.

22

02:34:35

that is not a true statement.

23
24
25

Q

So

02:34:44
02:34:50

Is it a true statement that today VidAngel

02:34:51

is not a disc service?
A

02:34:56

I would say that VidAngel is a filtering

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2

A

Page 184

Yes, I believe that I compiled the slides

03:34:49

from information that was given me from others.

3

Q

4

deck?

5

A

03:34:53

And what was the purpose of this slide

03:34:55
03:34:58

This slide deck, November 2015, "Investor

03:35:01

6

Intro," this was a slide deck for prospective

03:35:05

7

investors in VidAngel.

03:35:09

8
9

Q

I'd like to ask you -- and just to ask a

couple of questions.

03:35:23

The first pictured slide,

03:35:26

10

which is 13620, "One bleeping dollar new releases $1

03:35:34

11

per night with sellback," do you see that?

03:35:41

12

A

Yes.

03:35:43

13

Q

Is this an introduction to prospective

03:35:43

14

investors, sort of a splash screen introduction to

03:35:48

15

them?

03:35:52

16

A

17
18

This was --

03:35:52

MR. MARQUART:

Objection; vague and

03:35:53

ambiguous.

19

03:35:54

THE WITNESS:

This was a -- I think this

03:35:54

20

was a screen capture from an image on our website.

03:35:58

21

BY MR. KLAUS:

03:36:07

22
23

Q

If you look at page 13622, it says,

03:36:07

"VidAngel vault (provisional patent protection)."

24
25

Okay.

03:36:15

Do you see that?
A

03:36:18

Yes.

03:36:19

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2
3

Q

Page 185

What is the -- what is it you were trying

03:36:19

to illustrate on this slide?
A

03:36:22

I'm trying to illustrate that new releases

03:36:28

4

we acquire discs, and we place them into our vault,

03:36:37

5

and then we sell them, and we buy them back.

03:36:50

6

And the second option is a hypothetical

03:36:56

7

scenario that doesn't exist where existing VidAngel

03:36:59

8

users could add their own movies to their VidAngel

03:37:04

9

library to be able to filter them.

03:37:11

10
11

Q
13637.

Let me ask, if you would, to turn to page

03:37:20

Let me know when you're there.

03:37:27

12

A

13637, 13637?

I'm on 13637.

03:37:30

13

Q

And are these financial projections that

03:37:59

14

you had developed to present to prospective

03:38:01

15

investors about how you hoped to grow the business?

03:38:05

16

A

Yes.

17

Q

And it says, in 2015, 18,770.

18

03:38:11
Do you see

03:38:11

that in terms of total number of customers?

03:38:19

19

A

Yes.

03:38:22

20

Q

To the best of your recollection, was that

03:38:22

21

approximately the number of customers that you had

03:38:24

22

or -- as of November 2015 or anticipated to have as

03:38:28

23

around year-end?

03:38:32

24
25

A

To the best of my recollection.

03:38:33

MR. MARQUART:

03:38:37

Sorry.

Objection; vague as

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Okay.

Page 189

Do you know what the -- and is it

03:42:25

2

your recollection that as of around November or

03:42:30

3

December of 2015, you had around 63,000 sales as you

03:42:36

4

describe them?

03:42:41

5
6

MR. MARQUART:

Objection; calls for

03:42:44

speculation, foundation.

03:42:45

7

You can answer if you're able.

03:42:45

8

THE WITNESS:

03:42:46

9
10
11

I really don't remember.

BY MR. KLAUS:
Q

03:42:48

Sound like it's probably something in that

03:42:48

ballpark of 63,000?

03:42:53

12

A

I think it was higher than that.

03:42:55

13

Q

Do you think it was over a hundred thousand

03:43:02

14

by year-end of 2015?

03:43:04

15

A

Could have been.

03:43:09

16

Q

It then -- if you move over, you're

03:43:10

17

anticipating for 2016 having 1.7 million movies

03:43:16

18

sold.

03:43:24

19

Do you see that?

03:43:24

20

A

Yes.

03:43:25

21

Q

What's your -- what are the number of

03:43:25

22

sales, as you describe them, so far during calendar

03:43:30

23

year 2016?

03:43:36

24

A

I don't know.

03:43:39

25

Q

Over a million?

03:43:39

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1

A

Uh-huh.

03:43:40

2

Q

Over 1 1/2 million?

03:43:41

3

A

Yes.

03:43:45

4

Q

Over 2 million?

03:43:46

5

A

I don't know.

03:43:47

6

Q

Do you think it's probably somewhere in the

03:43:47

7

range of 1 1/2 to 2 million sales?

03:43:51

8

A

I think that's likely.

03:43:53

9

Q

And there are columns for 2017 and 2018.

03:43:59

Do you see those?

03:44:07

10
11

A

For -- yes.

03:44:07

12

Q

And, again, it was your purpose in

03:44:10

13

preparing this slide with these projections to

03:44:14

14

extrapolate out based on your assumptions what you

03:44:20

15

thought the growth might be by the year-end 2017 and

03:44:25

16

year-end 2018?

03:44:28

17
18

Is that your purpose in this?

MR. MARQUART:

Objection; vague and

03:44:31

ambiguous.

19

THE WITNESS:

03:44:33
The purpose was to

03:44:34

20

communicate given a given set of assumptions what

03:44:38

21

would happen.

03:44:41

22

BY MR. KLAUS:

03:44:44

23

Q

Under "Marketing Costs," it says you had

03:44:44

24

about around just under a half million dollars in

03:44:48

25

marketing costs through the end of 2015.

03:44:53

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THE WITNESS:

Page 228

It's a reference to a

04:51:47

2

potential video script.

04:51:54

3

BY MR. KLAUS:

04:51:55

4
5

Q

And at this point, have you created such a

04:51:55

video?

04:51:58

6

A

No.

04:51:58

7

Q

There's a reference to "October timing,

04:51:58

8

prehearing or posthearing if we raise now."

9

04:52:04

Do you see that?

04:52:06

10

A

Yes.

04:52:06

11

Q

What is that a reference to?

04:52:15

12

A

Exactly what we said in the board meeting.

04:52:16

13

Q

Which is what?

04:52:19

14

A

"October timing, prehearing or posthearing,

04:52:20

15
16
17

if we raise money now."
Q

04:52:26

Are you referring to the hearing on the

04:52:30

motion for preliminary injunction in this case?

04:52:32

18

A

Yes.

04:52:36

19

Q

Let me switch to another topic, Mr. Harmon.

04:52:36

20

A

Okay.

04:52:51

21

Q

I'd like to talk to you about your buy and

04:52:59

22

sellback feature.

One element of the buy and

23

sellback feature is that if a customer who has

04:53:15

24

bought a DVD actually wants their disc shipped to

04:53:17

25

them, you'll ship it to them; is that right?

04:53:20

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1

A

Yes.

04:53:25

2

Q

How many people have requested to have

04:53:27

3

their discs shipped to them?

04:53:32

4

A

Eight.

04:53:35

5

Q

Eight total?

04:53:36

6

A

To my knowledge.

04:53:38

7

Q

How many discs have you actually shipped to

04:53:46

8

those people?

04:53:49

9

MR. MARQUART:

Objection; vague and

04:53:54

10

ambiguous as to "those people."

04:53:55

11

THE WITNESS:

04:54:02

We have shipped, to my

12

knowledge, four.

04:54:03

13

BY MR. KLAUS:

04:54:04

14
15
16

Q

Do you know why the -- you did not ship

04:54:04

this to the other four people?
A

04:54:13

To my understanding, it's because the other

04:54:14

17

people mistakenly requested that their discs be

04:54:16

18

shipped to them.

04:54:20

19

Q

The discs -- the four discs that you

04:54:36

20

shipped -- or provided back to people who requested

04:54:37

21

them, did you provide them the disc in its original

04:54:40

22

DVD or DVD/Blu-ray case?

04:54:49

23

A

I don't know.

04:54:51

24

Q

Do you know whether you provided them the

04:54:55

25

disc in any form that had their bar code on the

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a physical copy of a movie sent to them is someone

05:01:37

2

who's paid the full purchase price; in other words,

05:01:41

3

they've paid the 20 bucks and there's nothing to

05:01:44

4

credit them, correct?

05:01:46

5

A

Correct.

05:01:54

6

Q

And it's the case that even after VidAngel

05:01:54

7

returns the physical disc to that person, the person

05:01:57

8

is still able to view the movie through VidAngel;

05:02:03

9

is that correct?

05:02:10

10

MR. MARQUART:

Objection; vague and

05:02:11

11

ambiguous, vague as to time, mischaracterizes prior

05:02:12

12

testimony if it's intending to.

05:02:14

13

THE WITNESS:

05:02:19

They will still be able to

14

view the filtered version of the movie.

05:02:20

15

BY MR. KLAUS:

05:02:23

16

Q

On VidAngel?

05:02:23

17

A

On VidAngel.

05:02:24

18

Q

Even though they have physical possession

05:02:25

19

of the disc, they'll still be --

05:02:29

20

A

Yes, as long as they've agreed to this

05:02:29

21

affidavit.

05:02:32

22

Q

05:02:33

And can the person who does that, can they

23

change their filter settings for the movie on

05:02:39

24

VidAngel?

05:02:43

25

A

Yes.

05:02:44

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Page 246

Mr. Klaus.

2

05:17:57

MR. MARQUART:

Have you -- have you made a

05:17:57

3

decision one way or the other, yes or no?

4

please don't disclose any communications.

05:18:00

5

BY MR. KLAUS:

05:18:01

6

Q

And then

05:17:58

Have you made a decision one way or another

05:18:01

7

about whether it's possible it will be turned back

05:18:04

8

on?

05:18:06

9

A

I don't think we've made a decision.

05:18:07

10

Q

Has VidAngel also, since the lawsuit was

05:18:37

11

filed, disabled the filtering option that would

05:18:41

12

allow users to filter content -- filter either the

05:18:49

13

opening or closing credits only and still be able to

05:18:56

14

watch a movie on VidAngel?

05:18:59

15
16

MR. MARQUART:

05:19:01

speculation.

17
18

Objection; vague as to time,

05:19:03

THE WITNESS:

Could you please reread the

05:19:04

question.

05:19:06

19

(The record was read as follows:

20

"Q

21

lawsuit was filed, disabled the

22

filtering option that would allow

23

users to filter content -- filter

24

either the opening or closing

25

credits only and still be able to

Has VidAngel also, since the

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watch a movie on VidAngel?")

05:19:32

2

THE WITNESS:

As background, we -- having

05:19:32

3

created this service for the purpose of filtering,

05:19:37

4

have taken measures throughout our history to ensure

05:19:44

5

that that's what the service is used for, and among

05:19:48

6

those is writing the letters to the studios later

05:19:56

7

requiring filters.

05:20:04

8

and realizing that the movies could be watched in

05:20:14

9

their entirety with -- with only opening and closing

05:20:22

10

credits, we removed the opening and closing credits.

05:20:27

11

And after seeing the complaint

We got a few complaints about that because

05:20:30

12

there are certain films where the opening and

05:20:36

13

closing credits have content in them that are

05:20:39

14

objectionable.

05:20:41

15

but we need to alter our systems so that when you

05:20:45

16

select the opening and closing credits filters, you

05:20:49

17

also need to select an additional filter.

05:20:56

We'd like to add the feature back,

18

So, yes, it occurred post the filing of the

05:21:01

19

litigation, but it is a continuation of a history of

05:21:06

20

ensuring that our service is used for the purpose it

05:21:11

21

was designed, which is to filter movies and TV

05:21:14

22

shows.

05:21:20

23

BY MR. KLAUS:

05:21:20

24
25

Q

Were you aware before the lawsuit was filed

05:21:20

that various persons had publicly discussed the

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ability to watch essentially an entire movie on

05:21:39

2

VidAngel for only a dollar by disabling either the

05:21:44

3

opening or closing credits?

05:21:52

4
5

MR. MARQUART:

Objection; vague and

05:21:54

ambiguous as to "various persons," vague as to time.

6

THE WITNESS:

05:21:58

I may have been aware of that

7

fact.

I don't remember at this time.

8

topic of focus recently.

9

05:22:02

It's become a

05:22:04

timing.

So it's hard to sort out

05:22:09
05:22:14

10

MR. KLAUS:

Mark as Exhibit 35.

11

(The document referred to was marked by the

12

Reporter as Plaintiffs' Exhibit 35 for

13

05:22:19

identification and is attached hereto.)

14

THE WITNESS:

05:22:31

Oh, you know what, I just

15

remembered an article that mentioned only the

05:22:33

16

opening credits.

05:22:40

17

BY MR. KLAUS:

It was a USA Today article.

05:22:47

18

Q

Do you recall when that was?

05:22:47

19

A

January.

05:22:50

20

Q

Did you see it at that time?

05:22:51

21

A

Yes.

05:22:52

22

Q

And why didn't VidAngel disable the opening

05:22:53

23

or closing credit feature at that time when you saw

05:22:58

24

the USA Today article?

05:23:02

25

A

05:23:04

Because we -- the person who was

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1

STATE OF CALIFORNIA

)

2
3
4
5
6

Page 325

)
COUNTY OF ORANGE

ss

)

I, LINDA NICKERSON, CSR #8746, in and for
the State of California do hereby certify:
That, prior to being examined, the witness

7

named in the foregoing deposition was by me duly

8

sworn to testify the truth, the whole truth, and

9

nothing but the truth;

10

That said deposition was taken down by me in

11

shorthand at the time and place therein named, and

12

thereafter reduced to typewritten form at my

13

direction, and the same is a true, correct, and

14

complete transcript of the testimony at said

15

proceedings.

16

Before completion of the deposition, review

17

of transcript [X] was [ ] was not requested.

18

requested, any changes made by the deponent (and

19

provided to the reporter) during the period allowed

20

are appended hereto.

21

If

I further certify that I am not interested

22

in the event of the action.

23

WITNESS MY HAND this 15th day of August, 2016.

24
25

_____________________________
LINDA NICKERSON, CSR No. 8746

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