'Family Friendly' Streaming Service Can't Revive Antitrust Claims Against Studios

Siding against VidAngel, a federal appellate court has refused to revive the company's claims that the major studios committed antitrust violations.

"VidAngel’s factual allegations do not give rise to a plausible claim for relief," a three-judge panel of the 9th Circuit Court of Appeals said in an decision issued Friday.

The ruling marked the second time the 9th Circuit ruled against VidAngel in its battle with the movie studios. Last year, the court upheld an injunction prohibiting the company from operating a supposedly "family friendly" streaming video service.

VidAngel, which declared bankrupcy last year, operated a streaming video service that allowed users to censor nudity, violence, and other material from videos. The company purchased newly released DVDs like "The Martian" and "Star Wars: The Force Awakens," and then streamed them from its own servers, without obtaining licenses from the studios. VidAngel effectively charged its users just $1 to stream the edited films.



In June of 2016, Disney, Warner Bros and 20th Century Fox sued VidAngel, arguing that the startup was infringing copyright by streaming programs without a license.

VidAngel argued that its activity was protected by the Family Movie Act, a 2005 law aimed at empowering parents to censor movies by stripping them of material they deem inappropriate for children. The Family Movie Act provides that copyright infringement laws don't apply to technology that mutes or hides "limited portions of audio or video content" from an authorized copy of the movie.

Last year, the 9th Circuit rejected that argument, ruling that the Family Movie Act doesn't apply to VidAngel because the company filters a version of the movie that was ripped from a DVD, as opposed to an "authorized" file.

The judges said at the time that VidAngel's interpretation of the 2005 Family Movie Act "would create a giant loophole in copyright law."

VidAngel also countersued the studios for alleged anticompetitive activity and for interference with "prospective economic relations." Among other claims, VidAngel alleged that the studios blocked potential deals with Google Play and YouTube.

A trial judge dismissed VidAngel's counterclaims last year, ruling that the company had not presented the kinds of facts that, if true, would support the conclusion that the studios acted anticompetitively.

VidAngel then appealed to the 9th Circuit. The judges on that court also found that VidAngel's allegations weren't strong enough to support its claims.

"VidAngel did not have prior commercial ties to Google, and the negotiations between them do not make it reasonably probable the contemplated economic advantage would have been realized but for the studios’ interference," the appellate judges wrote.

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