Disney Enters., Inc. v. Vidangel, Inc.

• Citation: 371 F.Supp.3d 708
• Decision Date: 06 March 2019
• Docket Number: Case No. CV 16-04109 AB (PLAx)
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
• Parties: DISNEY ENTERPRISES, INC., et al., Plaintiffs, v. VIDANGEL, INC., Defendant.

371 F.Supp.3d 708

DISNEY ENTERPRISES, INC., et al., Plaintiffs,

v.VIDANGEL, INC., Defendant.

Case No. CV 16-04109 AB (PLAx)

United States District Court, C.D. California.

Signed March 6, 2019

Blanca F. Young, Juliana Mariko Yee, Munger Tolles and Olson LLP, San Francisco, CA, Glenn D. Pomerantz, Allyson Bennett, Rose Leda Ehler, Rowley Rice, Kelly M. Klaus, Munger Tolles and Olson LLP, Los Angeles, CA, for Plaintiffs.

Brian T. Grace, Ryan G. Baker, Scott Matthew Malzahn, Jaime W. Marquart, Baker Marquart LLP, Donald R. Pepperman, Maxwell M. Blecher, Taylor Chase-Wagniere, Blecher Collins Pepperman and Joye PC, Brendan Stephen Maher, Daniel L. Geyser, Elizabeth Rogers Brannen, Peter K. Stris, Stris and Maher LLP, Los Angeles, CA, David W. Quinto, VidAngel Inc, Beverly Hills, CA, Mark L. Eisenhut, Samuel G. Brooks, Call, and Jensen APC, Newport Beach, CA, J. Morgan Philpot, Pro Hac Vice, Attorney at Law, Alpine, UT, for Defendant.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT ON LIABILITY

ANDRÉ BIROTTE JR. UNITED STATES DISTRICT COURT JUDGE

Before the Court is a Motion for Summary Judgment on Liability ("Motion," Dkt. No. 248) filed by Plaintiffs Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, and Warner Bros. Entertainment Inc. ("Plaintiffs"). Defendant VidAngel, Inc. ("VidAngel") filed an opposition and Plaintiffs filed a reply. The Court heard oral argument on January 18, 2019. For the following reasons, the Motion is GRANTED.

I. BACKGROUND

This Order assumes familiarity with the Court's Order Granting Plaintiffs' Motion for a Preliminary Injunction and the Ninth Circuit's Opinion affirming it. See Disney Enterprises, Inc. v. VidAngel, Inc. , 224 F.Supp.3d 957, 964 (C.D. Cal. 2016) (" Disney I " or " PI Order"), aff'd , 869 F.3d 848 (9th Cir. 2017) (" Disney II ).

Plaintiffs produce and distribute copyrighted motion pictures and television shows. VidAngel offers a number of Plaintiffs' movies and television shows for video-on-demand streaming to its customers. VidAngel's service allows customers to apply filters to the works so that objectionable content—such as nudity or violence— is omitted, resulting a filtered stream. At issue in this action is VidAngel's streaming service based on DVDs and Blu-ray discs ("discs"). This service is described in detail in the PI Order, and, in relevant part, as follows by the Ninth Circuit¹ :

[VidAngel] purchases multiple authorized [discs] for each title it offers ... VidAngel uses AnyDVD HD, a software program, to decrypt one disc for each title, removing the CSS, AACS, and BD+ TPMs on the disc, and then uploads the digital copy to a computer.[ ] Or, to use VidAngel's terminology, the "[m]ovie is ripped from Blu–Ray to the gold master file." After decryption, VidAngel creates "intermediate" files, converting them to HTTP Live Streaming format and breaking them into segments that can be tagged for over 80 categories of inappropriate content. Once tagged, the segments are encrypted and stored in cloud servers.

Customers "purchase" a specific physical disc from VidAngel's inventory for $ 20. The selected disc is removed from VidAngel's inventory and "ownership" is transferred to the customer's unique user ID. However, VidAngel retains possession of the physical disc "on behalf of the purchasers," with the exception of the isolated cases in which the consumer asks for the disc. To date, VidAngel has shipped only four discs to purchasers.

After purchasing a disc, a customer selects at least one type of objectionable content to be filtered out of the work. VidAngel then streams the filtered work to that customer on "any VidAngel-supported device, including Roku, Apple TV, Smart TV, Amazon Fire TV, Android, Chromecast, iPad/iPhone and desktop or laptop computers." The work is streamed from the filtered segments stored in cloud servers, not from the original discs. Filtered visual segments are "skipped and never streamed to the user." If the customer desires that only audio content be filtered, VidAngel creates and streams an altered segment that mutes the audio content while leaving the visual content unchanged. VidAngel discards the filtered segments after the customer views them.

After viewing the work, a customer can sell the disc "back to VidAngel for a partial credit of the $ 20 purchase price," less $ 1 per night for standard definition purchases or $ 2 per night for high-definition purchases. VidAngel accordingly markets itself as a $ 1 streaming service. After a disc is sold back to VidAngel, the customer's access to that title is terminated.[ ] Virtually all (99.6%) of VidAngel's customers sell back their titles, on average within five hours, and VidAngel's discs are "re-sold and streamed to a new customer an average of 16 times each in the first four weeks" of a title's release.

Disney II , 869 F.3d at 853–54.

Plaintiffs sued VidAngel for copyright infringement, contending that VidAngel's streaming service copies and publicly performs their copyrighted works without authorization. See First Am. Compl ("FAC," Dkt. No. 64-72.)² Plaintiffs also assert that VidAngel violates the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201, et seq. , by circumventing technological protection measures ("TPM") on discs that contain Plaintiffs' works. FAC ¶¶ 73-81.

In the PI Order, the Court found that Plaintiffs showed a likelihood of success on the merits of their claims. First, the Court found that VidAngel circumvented Plaintiffs' TPMs by using software to allow read-access to the discs and upload files onto a computer, an unlawful practice referred to as "space-shifting." The Court also rejected VidAngel's defense under the Family Movie Act of 2005 ("FMA"), 17 U.S.C. § 110(11), finding that the FMA does not establish an exemption to the DMCA's anti-circumvention provision. Second, the Court found that VidAngel violated Plaintiffs' exclusive rights to copy and publicly perform their works, and rejected VidAngel's defenses, holding that the FMA did not apply because VidAngel's filtered transmissions were not from a "authorized copies" of the works as required for protection under the FMA, and that VidAngel was not likely to succeed on the merits of its fair use defense. The Ninth Circuit affirmed.

Plaintiffs now move for summary judgment on the issue of liability as to four works that they say are representative of all works in issue. They argue that this Court and the Ninth Circuit already determined that Plaintiffs established at least a prima facie case of liability and that VidAngel's defenses were without merit, and they contend that VidAngel simply cannot raise triable issues to overcome those rulings. VidAngel responds that new facts developed since the preliminary injunction litigation give rise to triable issues and preclude summary judgment.

Upon review of the record, the Court finds that there are no triable issues of material fact because VidAngel either admitted all of the material facts, or its purported factual disputes are not genuine. In addition, VidAngel cannot avoid the questions of law that this Court and the Ninth Circuit resolved against it. Thus, Plaintiffs are entitled to summary adjudication that VidAngel is liable for copyright infringement and for violating the DMCA.

II. UNDISPUTED FACTS

The undisputed material facts, taken from Plaintiffs' Separate Statement and VidAngel's Response thereto ("SUF," Dkt. No. 254), are as follows.³

Plaintiffs have valid copyright registrations, registered within five years of first publication, for each of the four representative works (Frozen, Star Wars: The Force Awakens, Ice Age , and Harry Potter and the Sorcerer's Stone ) ("Works"). SUF 1.

Plaintiffs have not authorized VidAngel to copy or stream (or otherwise exploit) their Works or to bypass or remove (or otherwise circumvent) the technological protection measures ("TPMs") that control access to their copyrighted works on DVDs or Blu-ray discs ("Discs"). SUF 2.

VidAngel has offered each of the Works on its service. SUF 3.

Plaintiffs use CSS, AACS and BD+ to control access to their copyrighted works on Discs. SUF 4.

CSS, AACS and BD+ are TPMs that control access to copyrighted works on Discs. SUF 5.

VidAngel circumvents Plaintiffs' TPMs by using "a commercially available software program to automatically allow read-access for the purpose of mounting the DVD [and Blu-ray] files for uploading onto a computer, in the process removing restrictions on DVD [and Blu-ray] encryption." SUF 6.

VidAngel copies the underlying digital files onto its computers. SUF 7; see also McDonald Decl. ¶¶ 13, 18, 19, 21, 22, 23, 25.

VidAngel stores "master" ripped digital copies of Plaintiffs' works to servers, from which it streams filtered content to its customers. SUF 8.

VidAngel's purpose is to bring "popular movies and shows" to viewers who may want to watch that work without certain "objectionable" content. SUF 9.

VidAngel's service is commercial. SUF 10.

III. LEGAL STANDARD

A motion for summary judgment must be granted when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the initial burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the nonmoving party will have the burden of proof at trial, the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case. Id. The nonmoving party then "must set forth specific facts showing that there is a genuine issue for trial." Anderson , 477 U.S. at 248, 106 S.Ct. 2505.

"Where the record taken as a...