VidAngel Files Countersuit against Studios, Cites FMA Act
The saga of perky filtered streaming upstart VidAngel versus Big Hollywood continues. In a brief filed 12 June 2016 and available here, VidAngel both makes its case against the allegations of the major studios involved and countersues with an antitrust suit, arguing that the Hollywood cabal restricts home filtering services, in violation of federal law.
From looking over the document, we’ve learned quite a few things. Bear in mind that while I’ve been told many times I’d be a good lawyer, I’m not a lawyer. Not even close. I ruminated over the whole law school thing for about as much time as it took me to complete my Del Taco meal. For what it’s worth, I do have a graduate degree in a delightfully esoteric field. So with that said, forgive any errors in understanding or interpretation on my part.
In a digital age, it’s easy to look at streaming services and assume they are entirely digital. That would make sense. When discussing the original suit against VidAngel on our podcast, we assumed VidAngel had avoided the pitfalls of Cleanflix and others because it did not sell altered DVDs, which was illegal. However, we also expressed concern that VidAngel effectively rented out films to consumers that were not even available for streaming elsewhere (like The Force Awakens, which was a big part of VidAngel’s marketing).
In what will make gold standard advocates happy, it turns out VidAngel actually keeps a vault full of physical DVDs and Blu-rays, each assigned its own SKU, that are then sold to customers. That SKU is assigned to a customer’s account and remains in the customer’s “care” until it is sold back. The documents also assert that because television shows contain multiple episodes per disc, VidAngel is forced to assign an entire disc to a customer even if that individual watches only one episode. VidAngel asserts that it spends approximately one-third of its revenue on the purchase of physical media, depriving Big Hollywood of nothing, as it is the exact same thing as the initial purchase of a Blu-ray at Best Buy that later gets sold to someone else. Big Hollywood only cares about and makes money from the initial sale.
Furthermore, VidAngel’s software only allows playback on one device at a time in a deliberate effort to mirror playing back the physical media that the customer owns until it sells it back to VidAngel.
Also of interesting note were sections about an aborted partnership with Google to offer branded VidAngel filters directly into the Google Play Movies app ecosystem. That would have been very cool, but VidAngel argues that Google was scared off by Big Hollywood.
Onto the right—or lack thereof—to alter copyrighted content. There’s a very fine line here, and any company looking to provide filtering services has to do its best to mollify the concerns of the studios. VidAngel cites the Family Home Movie Act of 2005 (FMA), which was a result of a Big Hollywood run-in with ClearPlay in 2004. Under FMA, individuals hold a right to filter out offensive material from film and television shows if it is for personal use.
The main kicker of FMA is that one cannot replace or alter the original work. That’s what typically gets Big Hollywood and the Director’s Guild of America in a tizzy, because they see it as a blatant altering of an artist’s product. That’s also the sort of thing that burned Cleanflix and others. VidAngel says that the original film stays the original film, and altered films are handled at home with a user and not controlled or housed on VidAngel’s servers. Ergo, VidAngel itself does not sell anything that is altered; it merely provides a tool that allows owners of content to filter in a way they wish, which is more effective than everyone doing it manually. (“Ah cripe, k, honey, hit mute right here in 3.. 2…”)
Perhaps the most damning is that VidAngel alleges it sent notifications to the studios in 2015 with a complete outline of its plan and promises to modify the service if anything ran against the grain. None of the parties involved raised any issues. Moreover, VidAngel notes that Disney’s anti-piracy chief actually signed up for a VidAngel account and purchased and sold back numerous movies. We can only hope his version of Bambi skipped over the reason the other animals have parents but Bambi is just chillin’ by himself.
According to VidAngel, the suit against it argues that the studios sat on things for a year until VidAngel reportedly changed its business model to the aforementioned potential Google partnership. For a period, VidAngel offered a plugin to the Chrome browser that allowed users to filter content directly in YouTube. Eventually, because Google was an indispensable third party, the plugin was pulled. Either way, that happened in 2014, not 2015 when VidAngel approached the studios. (That’s a very glossed-over version of it.)
The countersuit is long and complex, but worth a read. VidAngel’s arguments rest on a few crucial tenets: 1) It does not deprive Big Hollywood of the sale of physical copies of film anymore than a regular one-time brick-and-mortar sale does; 2) It does not alter the original film in any way; 3) It is allowed to develop a for-profit company that provides filtering software per the Family Home Movie Act.
Now—again, not a lawyer—the one issue I could see here is that the FMA was created at a time when physical media was king and distribution was easier to control. You remember all the DVD sales back then. Sure, what’s $5 for the two-disc version of Jumanji?! Ergo, while home filtering has been completely legal, it was way more complicated to do back then, typically involving the purchase of special DVD players that came with a subscription to a filtering service. The market has changed dramatically, but one could potentially argue that FMA wasn’t intended to cover the streaming purchase/rental market. One could argue many things, of course. VidAngel accounts for all of this in its suit, but if I see a potential hole, there it is.
I’d like to reiterate that This Week in Mormons is not an official representative of either party in this case, nor is our analysis any form of legal document to be used for anything, nor are we liable for any opinions thrown around in this article. If there are factual errors, we are happy to correct them. Any misinterpretations therein are entirely unintentional, either with respect to VidAngel or Big Hollywood.
It will be interesting to see how this plays out. Hopefully we get to the point when a lawyer gets to yell, “No, Your Honor, I hold this court in contempt!” Either way, poor Big Hollywood, it’s been a pretty rough year for them. I hope they can make it.