VidAngel dodges liquidation, settles with movie studios

[Anna Kushina (櫛名アンナ)]

Provo-based VidAngel will be spared the full wrath of Hollywood’s studios, after reaching a settlement to end a four-year legal case over the company violating the studios’ copyrights by streaming filtered versions of their movies into customers’ homes.

VidAngel was facing liquidation when the company was ordered last year by a California jury to pay $62.4 million to the studios. Instead, under the terms of an agreement approved Friday in U.S. Bankruptcy Court in Utah, VidAngel will pay Disney and Warner Bros. $9.9 million in installments over the next 14 years.

Neal Harmon, VidAngel’s CEO, said in a statement that “we had to make painfully difficult concessions to arrive at this agreement, as did Disney and Warner Bros.” (The four Hollywood companies originally represented in the lawsuit were Disney, Warner Bros., LucasFilm Ltd. and Twentieth Century Fox. LucasFilm and Fox are now owned by Disney.)

VidAngel will drop its appeal of the lawsuit, and will agree not to decrypt, copy, stream or distribute any Disney or Warner Bros. content without the studios’ permission.

Harmon said the settlement will allow VidAngel, which declared Chapter 11 bankruptcy in October 2017, to “emerge from bankruptcy and move forward as a rapidly growing company.”

In March 2019, U.S. District Court Judge André Birotte Jr. ruled that the studios had proved that VidAngel violated the studios’ copyrights and the Digital Millennium Copyright Act, which includes protection for security software to keep movies from being pirated. Birotte rejected VidAngel’s argument that its filtered streaming service was protected by the Family Movie Act, passed in Congress in 2005.

VidAngel was launched in 2014, offering its customers Hollywood movies in a way that could filter out nudity, violence and profanity.

It was VidAngel’s methods that prompted the copyright suit. VidAngel would buy a DVD, use software to decrypt the studios’ anti-piracy measures, and store the movie as files in a streaming format. The company would “sell” the DVD to a customer for $20, then buy it back after viewing for $19, with the physical disc almost never leaving VidAngel’s hands. The result was, in practice, a streaming service from VidAngel to a customer’s streaming device for $1 per viewing.

The studios argued, successfully, that VidAngel violated their copyrights by making unauthorized copies of their films, and violated the DMCA by thwarting the studios’ anti-theft technology.

VidAngel now offers its filtering on streaming services, such as Netflix and Amazon. It also produces its own family-friendly shows, including its “Dry Bar Comedy” series of clean stand-up routines and the miniseries “The Chosen,” which depicts the life of Christ.