John Carpenter

1. Streaming under the DMCA
Disney Enter., Inc. et al.
v.
VidAngel, Inc.
Presented by John Carpenter
© 2017 Workman Nydegger

2. • Disney Enterprise, Inc.
– American Diversified multinational mass media and entertainment
conglomerate
– 2nd largest media company in revenue
• LucasFilm, LLC.
– Purchased in 2012 at $4.06 billion
– Responsible for half the top 10 grossing films in history
• Twentieth Century Fox Film Corporation
– One half of 21st Century Fox Corp, almost $29 billion in annual revenue
• Warner Bros. Entertainment, Inc.
– Really dark superhero films.
Introduction – Disney et al.

3. • Founded in Provo, UT in 2013;
now headquartered in Palo Alta,
CA.
• December 2016: initiated
Regulation A+ securities offering
to raise legal funds
– Targeted $5 million: raised $6.25
in 28 hours1
– $10 Million raised in 5 days.1
• Offers DVDs and Blu-ray discs for
sale on the website, with instant
streaming options available with
filtering of the video content.
Introduction – VidAngel, Inc.
1 “VidAngel Boasts the Fastest Reg A+ Raise So Far”. https://www.equities.com/news/vidangel-
boasts-the-fastest-reg-a-raise-so-far

4. Introduction – VidAngel, Inc.
Source: https://www.vidangel.com/news/category/legal/

5. Facts
• Movie Studios commonly distribute films in a
process called windowing.
– Timing and price varied depending on
distribution method and content.
• Physical disc (Blu-ray)
• Digital download (Ultraviolet, iTunes)
• “Pay per view” on-demand streaming (Amazon)
• Subscription on-demand streaming (Netflix)

6. Facts
Source: Order Granting Plaintiffs’ Motion for Preliminary Injunction.
https://www.documentcloud.org/documents/3237153-VidAngel-Order.html
• VidAngel offered discs of over 2,500 movie
titles for purchase.
• VidAngel charges a flat $20 price for all discs.
– VidAngel holds the disc until the buyer requests shipment or
pickup, while providing remote access to a filtered version of
the content.
• The buyer can sell the disc back to VidAngel for a
discount price based on the format and duration of
ownership.
– For example:
• buy-back price = $20 – ($2/day) for a Blu-ray disc

7. Facts
Source: Order Granting Plaintiffs’ Motion for Preliminary Injunction.
https://www.documentcloud.org/documents/3237153-VidAngel-Order.html
• VidAngel decrypts the retail disc.
• The decrypted data (both audio and video) is broken into
thousands of fragments that are tagged with various properties.
• The tagged data is stored on VidAngel servers, awaiting
compilation by VidAngel software on-demand from the buyer.
– The tagged data is not viewable without the VidAngel
software.
• After compilation, the data is viewable as a remotely accessible
streamed multimedia file.

8. Defenses
Source: Order Granting Plaintiffs’ Motion for Preliminary Injunction.
https://www.documentcloud.org/documents/3237153-VidAngel-Order.html
• 1) The decryption does not violate 17 U.S.C. §1201(a) of
the Digital Millennium Copyright Act (DMCA).
• 2) The creation of the tagged data does not constitute
reproduction of a copy under 17 U.S.C. §106.
• 3) Providing a buyer access to the recompiled file does not
constitute a public performance under17 U.S.C. §106.
• 4) Fair Use under 17 U.S.C. §107.

9. #1 Decryption – VidAngel Argument
Source: https://www.law.cornell.edu/uscode/text/17/1201
– DMCA does not apply.
– The DMCA forbids unauthorized decryption.
– The Family Movie Act of 2005 allows filtering
and creates an exception to the Copyright Act
for decryption in order to filter.
– 17 U.S.C §1201(a)(1) states:
• “No person shall circumvent a technological measure
that effectively controls access to a work protected
under this title.”
– 17 U.S.C §1201(a)(2) states:
• “No person shall manufacture, import, offer to the
public, provide, or otherwise traffic in any technology,
product, service, device, component, or part thereof,
that . . . is primarily designed or produced for the
purpose of circumventing a technological measure that
effectively controls access to a work protected under
this title.”

10. Decryption - Response
– DMCA does apply.
– The DMCA forbids unauthorized decryption.
– 17 U.S.C §1201(a)(3) states:
• “to ‘circumvent a technological measure’ means to
descramble a scrambled work, to decrypt an encrypted
work, or otherwise to avoid, bypass, remove, deactivate,
or impair a technological measure, without the
authority of the copyright owner.”
Source: https://www.law.cornell.edu/uscode/text/17/1201

11. Family Movie Act
17 U.S.C. § 110(11):
“the making imperceptible, by or at the direction of a member of
a private household, of limited portions of audio or video
content of a motion picture, during a performance in or
transmitted to that household for private home viewing, from an
authorized copy of the motion picture, or the creation or
provision of a computer program or other technology that
enables such making imperceptible and that is designed and
marketed to be used, at the direction of a member of a private
household, for such making imperceptible, if no fixed copy of
the altered version of the motion picture is created by such
computer program or other technology.”
Source: https://www.law.cornell.edu/uscode/text/17/110

12. Space-shifting
– VidAngel’s argument: Decryption does not amount to
“circumvention” because VidAngel is only decrypting DVDs to
allow the viewing of the DVD on a different format (i.e., streaming
platform).
– 321 Studios v. MGM Studios, Inc., 307 F. Supp. 2d 1085 (N.D.
Cal. 2004)
• The court held that “the purchase of a DVD does not give the purchaser the
authority of the copyright holder to decrypt [Content Scrambling System].”
– Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2001)
• Defendants made a similar argument "that an individual who buys a DVD has the
'authority of the copyright owner' to view the DVD, and therefore is exempted from
the DMCA pursuant to subsection 1201(a)(3)(A) when the buyer circumvents an
encryption technology in order to view the DVD on a competing platform.”
• BUT Section 1201(a)(3)(A) only exempts from liability those “who would 'decrypt'
an encrypted DVD with the authority of a copyright owner, not those who would
'view' a DVD with the authority of a copyright owner."
Source: Order Granting Plaintiffs’ Motion for Preliminary Injunction.
https://www.documentcloud.org/documents/3237153-VidAngel-Order.html

13. Space-shifting
– The Librarian of Congress is required to review the exceptions
to the DMCA every three years.
– The 2015 review considered and declined an exemption to
allow circumvention of access controls on lawfully acquired
audiovisual works for the purpose of noncommercial space- or
format-shifting.1
– Does the Family Movie Act allow an exemption?
– Orrin Hatch: “the FMA “does not provide any exemption from
the anti-circumvention provisions of section 1201 of title 17.”
• “It would not be a defense to a claim of violation of section 1201 that the
circumvention is for the purpose of engaging in the conduct covered by this
new exemption in section 110(11).”2
Source: 1Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access
Control Technologies, 80 Fed. Reg. 65944 (Oct. 28, 2015).
2 150 Cong. Rec. S.11852-01 at S11853 (Statement of Senator Hatch) (RJN Ex. G at 269)

14. #2 Reproduction of a Copy
– VidAngel argued that the tagged data fragments do not
constitute illegally reproducing a copy.
– Only an “intermediate copy” is made, and the intermediate
copy is unviewable by a user.
– 17 U.S.C. § 101 provides that “in order to constitute a "copy"
for purposes of the Copyright Act, the allegedly infringing work
must be fixed in some tangible form, "from which the work can
be perceived, reproduced, or otherwise communicated, either
directly or with the aid of a machine or device." (emphasis
added).
Source: https://www.law.cornell.edu/uscode/text/17/101

15. #3 Public Performance of a Copy
– 17 U.S.C. § 101
– To perform or display a work “publicly” means—
(2) to transmit or otherwise communicate a performance or
display of the work to . . . the public, by means of any device or
process, whether the members of the public capable of receiving
the performance or display receive it in the same place or in
separate places and at the same time or at different times.
Source: https://www.law.cornell.edu/uscode/text/17/101

16. #3 Public Performance of a Copy
– Warner Bros. Entertainment Inc. v. WTV Systems, Inc., 824 F.
Supp. 2d 1003 (C.D. Cal. 2011).
• a service which streamed the contents of DVDs from DVD players
purportedly assigned to individual users also violated the public
performance right.
– On Command Video Corporation v. Columbia Pictures
Industries, 777 F. Supp. 787 (N.D. Cal 1991).
• “electronic rental” system infringed the public performance right.
• The court held that the “relationship between the transmitter of the
performance . . . and the audience,” was “a commercial, ‘public’ one
regardless of where the viewing takes place.”

17. #3 Public Performance of a Copy
– Am. Broad. Cos. V. Aereo, Inc., 134 S. Ct. 2498 (2014)
• held that internet streaming of copyrighted material captured from over-the-
air broadcast signals by thousands of separate antennae, each of which was
purportedly assigned separately to individual subscribers, infringed the
public performance right.
– Individual authorized sources of copyrighted material are held
to infringed the public performance but
– the Supreme Court declared that a transmission of a
copyrighted program is not made to “the public” when it is
made “to those who act as owners or possessors of the
relevant product.”
– The Court has “not considered whether the public performance
right is infringed when the user of a service pays primarily for
something other than the transmission of copyrighted works.”

18. #3 Public Performance of a Copy
– to those who act as owners or possessors of the relevant
product.”
– Judge Birotte states that the buyers of the DVD own the DVD,
even though the DVD is held by VidAngel.
– However, the tagged data streamed to the user is distinct from
the DVD
– Therefore, the buyer of the DVD is not receiving a product or
service to which the buyer acts as owner or possessor.

19. #4 Fair Use
– (1) the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit
educational purposes;
– (2) the nature of the copyrighted work;
– (3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
– (4) the effect of the use upon the potential market for or value
of the copyrighted work.
Source: https://www.law.cornell.edu/uscode/text/17/107