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Video filtering service Vidangel gets huge reprieve following $62.4M jury verdict

SHARE Video filtering service Vidangel gets huge reprieve following $62.4M jury verdict

Employees work at VidAngel’s office in Provo on Wednesday, July 20, 2016.

Spenser Heaps, Deseret News

PROVO — Video filtering service Vidangel announced Friday it is off the hook for most of a $62.4 million jury verdict in a long-running federal copyright dispute with Disney and a group of Hollywood movie studio plaintiffs, reaching a settlement that reduces its liability to $9.9 million.

Disney and fellow plaintiffs Warner Brothers, 20th Century Fox, Lucasfilm, Marvel, NewLine Cinema and Castle Rock Entertainment agreed to discount the original settlement with the caveat that Vidangel agrees not to decrypt, copy, stream or distribute content of Disney, Warner Brothers, and their affiliates without permission from the studios.

The settlement, which was approved in Utah Bankruptcy Court by Judge Kevin Anderson, also stipulates a “three strikes” system that outlines penalties to be assessed against Vidangel if it breaks the no usage without permission agreement.

According to court documents, Vidangel has 14 years to retire its debt to the studios and has agreed to make 56 quarterly payments of around $177,000. The company also agreed to drop an appeal of the jury verdict it filed earlier this year.

Vidangel CEO Neal Harmon said the agreement allows the company to emerge from its bankruptcy proceedings and begin new endeavors.

“After a long and extremely difficult legal battle in one of the biggest copyright cases in decades, we have finally come to an agreement in which VidAngel can emerge from bankruptcy and move forward as a rapidly-growing company,” Harmon said in a statement. “As with any compromise, we had to make painfully difficult concessions to arrive at this agreement, as did Disney and Warner Brothers. We want to thank the team at Disney and Warner Brothers for negotiating this settlement in good faith.

“We also want to thank our fans and supporters, millions of people who have stood with us through thick and thin over the last four years of a battle that all too often looked lost and hopeless.”

The multimillion-dollar June 2019 verdict came after years of legal wrangling in which Disney, Warner Brothers and 20th Century Fox argued VidAngel infringed on their copyrighted content by ripping copies of movie discs, copying them and streaming them to customers for $1 per movie.

The plaintiffs argued that in some cases, VidAngel was streaming content before it became available on licensed streaming services like Netflix, Amazon Prime and others.

VidAngel offers a service that filters out content of movies and television shows that may be objectionable to some viewers like nudity, profanity and violence.

The damages assessed by the California jury followed a summary judgment issued in March 2019 by U.S. District Court Judge André Birotte Jr. in favor of the major production companies.

In his ruling, Birotte wrote that VidAngel is liable for copyright infringement and had violated the plaintiffs’ public performance rights. The judge dismissed VidAngel’s arguments that its filtering service was protected by the 2005 Family Movie Act, and found that the company failed to make a viable argument based on fair use law.

At the conclusion of the jury trial, a spokesman for the plaintiffs’ group said the ruling and assessed damages represented a warning to others that the unlawful use of protected content will be punished.

Disney and fellow plaintiffs at one point said they were entitled to double damage assessments since VidAngel was found to have infringed on copyright protections twice — first by “ripping” or bypassing security protections of commercially produced DVD/Blu-ray videos, and then again when it made copies for streaming the content to VidAngel customers. At trial, the plaintiffs were seeking about $125 million in damages, based on the argument that Vidangel had committed willful infringement and therefore should be assessed the maximum level of damages.

Courts assess copyright infringement at one of three stipulated levels of innocent, ordinary or willful, with per-title damages that range from $200 at the lowest level to $150,000 at the top of the willful infringement assessment.

Vidangel’s legal team argued that it had only committed innocent infringement and was only liable for about $600,000 in damages, total.

The jury found that VidAngel’s infringement was willful and determined the studios were entitled to damages of $75,000 for each of the 819 works in question, plus another $1,250 per title for violation of the Digital Millennium Copyright Act.

Shortly after the company entered Chapter 11 bankruptcy protection in October 2017, which included naming over 100,000 customers as creditors in the action, Harmon said the decision would allow VidAngel to position itself to deal with any legal outcomes of the infringement litigation.

Harmon said at the time that the pause afforded by the bankruptcy proceeding would allow VidAngel to accrue “enough revenue from our new system to pay any damages.” That new system was a change from using movie discs as source material for the filtering service to filtering content sourced from licensed streaming services, which continues to be available.