Last week saw developments in two cases involving the sale of digital content. In Disney v. VidAngel, the Ninth Circuit affirmed the district court’s preliminary injunction against VidAngel. Meanwhile, on the other side of the continent, the Second Circuit held the oral argument in Capitol Records v. ReDigi. After the oral argument, Capitol’s lawyer sent the Second Circuit a letter drawing its attention to the VidAngel decision, suggesting that the Ninth Circuit’s opinion should influence the Second Circuit’s reasoning. However, because of significant differences in the facts of the two cases, the Second Circuit should give the VidAngel decision little weight.
VidAngel operates a service that streams films with objectionable content removed. VidAngel purchases multiple copies of DVD or Blu-Ray discs for each film title it offers. It would decrypt one disc for each title, and upload a copy to its computer. It would then break the copy into segments that it tagged for different categories of inappropriate content. VidAngel reencrypted the segments and uploaded them to its cloud server as a master copy.
Customers could then purchase a specific disc from VidAngel’s physical inventory. Although ownership of the disc was transferred to the customer, the physical disc remained in VidAngel’s possession. The customer selected the type of content she wanted filtered, and VidAngel would stream the filtered film from the master copy. (The filter could be as trivial as removing the credits.) After watching the film, the customer could sell the disc back to VidAngel for a dollar less than VidAngel sold her the disc.
Disney and several other studios sued VidAngel for copyright infringement and violation of the Digital Millennium Copyright Act’s prohibition on the circumvention of technological protection measures. The district court found that the studios were likely to prevail on both claims.