Disney Enterprises, Inc. v. Vidangel, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DISNEY ENTERPRISES, INC.; No. 16-56843

LUCASFILM LTD. LLC; TWENTIETH

CENTURY FOX FILM CORPORATION; D.C. No.

WARNER BROTHERS 2:16-cv-04109-

ENTERTAINMENT, INC., AB-PLA

Plaintiffs-Counter-Defendants-

Appellees,

OPINION

v.

VIDANGEL, INC.,

Defendant-Counter-Claimant-

Appellant.

Appeal from the United States District Court

for the Central District of California

André Birotte, Jr., District Judge, Presiding

Argued and Submitted June 8, 2017

Pasadena, California

Filed August 24, 2017

2 DISNEY ENTERPRISES V. VIDANGEL

Before: Carlos T. Bea and Andrew D. Hurwitz, Circuit

Judges, and Leslie E. Kobayashi, * District Judge.

Opinion by Judge Hurwitz

SUMMARY **

Preliminary Injunction / Copyright

The panel affirmed the district court’s preliminary

injunction against the defendant in an action under the

Copyright Act and the Digital Millennium Copyright Act.

Defendant VidAngel, Inc., operated an online streaming

service that removed objectionable content from movies and

television shows. VidAngel purchased physical discs

containing copyrighted movies and television shows,

decrypted the discs to “rip” a digital copy to a computer, and

then streamed to its customers a filtered version of the work.

The panel held that the district court did not abuse its

discretion in concluding that VidAngel’s copying infringed

the plaintiffs’ exclusive reproduction right. Because

VidAngel did not filter authorized copies of movies, it was

unlikely to succeed on the merits of its defense that the

Family Movie Act of 2005 exempted it from liability for

*

The Honorable Leslie E. Kobayashi, United States District Judge

for the District of Hawaii, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

DISNEY ENTERPRISES V. VIDANGEL 3

copyright infringement. VidAngel also was unlikely to

succeed on its fair use defense.

The panel held that the district court also did not abuse

its discretion in concluding that the plaintiffs were likely to

succeed on their DCMA claim. The panel held that the anti-

circumvention provision of the DMCA, 17 U.S.C. § 1201(a),

covered the plaintiffs’ technological protection measures,

which controlled both access to and use of the copyrighted

works.

The panel affirmed the district court’s findings regarding

the likelihood of irreparable harm, the balancing of the

equities, and the public interest.

COUNSEL

Peter K. Stris (argued), Elizabeth Rogers Brannen, Dana

Berkowitz, and Victor O’Connell, Stris & Maher LLP, Los

Angeles, California; Brendan S. Maher, Daniel L. Geyser,

and Douglas D. Geyser, Stris & Maher LLP, Dallas, Texas;

Ryan Geoffrey Baker, Jaime Wayne Marquart, and Scott M.

Malzahn, Baker Marquart LLP, Los Angeles, California;

David W. Quinto, VidAngel Inc., Beverly Hills, California;

Shaun P. Martin, University of San Diego School of Law,

San Diego, California; for Defendant-Counter-Claimant-

Appellant.

Donald B. Verrilli Jr. (argued), Munger Tolles & Olson LLP,

Washington, D.C.; Glenn D. Pomerantz, Kelly M. Klaus,

Rosa Leda Ehler, and Allyson R. Bennettt, Munger Tolles &

Olson LLP, Los Angeles, California; for Plaintiffs-Counter-

Defendants-Appellees.

4 DISNEY ENTERPRISES V. VIDANGEL

William A. Delgado, Willenken Wilson Loh & Delgado

LLP, Los Angeles, California; Susanna Frederick Fischer,

Columbus School of Law, The Catholic University of

America, Washington, D.C.; for Amici Curiae U.S.

Representatives John Hostettler and Spencer Bachus.

Mitchell L. Stoltz and Kit Walsh, San Francisco, California,

as and for Amicus Curiae Electronic Frontier Foundation.

James M. Burger, Thompson Coburn LLP, Washington,

D.C.; Mark Sableman, Thompson Coburn LLP, St. Louis,

Missouri; for Amicus Curiae ClearPlay, Inc.

Dean E. Short, Short Legal Group, Newport Coast,

California; Bruce H. Turnbull, Turnbull Law Firm PLLC,

Washington, D.C.; for Amici Curiae DVD Copy Control

Association Inc., and Advanced Access Content System

License Administrator LLC.

Eleanor M. Lackman and Lindsay W. Bowen, Cowan

DeBaets Abrahams & Sheppard LLP, New York, New York;

Keith Kupferschmid and Terry Hart, The Copyright

Alliance, Washington, D.C.; for Amicus Curiae The

Copyright Alliance.

OPINION

HURWITZ, Circuit Judge:

VidAngel, Inc. operates an online streaming service that

removes objectionable content from movies and television

shows. VidAngel purchases physical discs containing

copyrighted movies and television shows, decrypts the discs

DISNEY ENTERPRISES V. VIDANGEL 5

to “rip” a digital copy to a computer, and then streams to its

customers a filtered version of the work.

The district court found that VidAngel had likely

violated both the Digital Millennium Copyright Act and the

Copyright Act, and preliminarily enjoined VidAngel from

circumventing the technological measures controlling access

to copyrighted works on DVDs and Blu-ray discs owned by

the plaintiff entertainment studios, copying those works, and

streaming, transmitting, or otherwise publicly performing or

displaying them electronically. VidAngel’s appeal presents

two issues of first impression. The first is whether the

Family Movie Act of 2005 exempts VidAngel from liability

for copyright infringement. 17 U.S.C. § 110(11). The

second is whether the anti-circumvention provision of the

Digital Millennium Copyright Act covers the plaintiffs’

technological protection measures, which control both

access to and use of copyrighted works. 17 U.S.C.

§ 1201(a)(1). The district court resolved these issues against

VidAngel. We agree and affirm the preliminary injunction.

FACTUAL BACKGROUND

The copyrighted works.

Disney Enterprises, LucasFilm Limited, Twentieth

Century Fox Film Corporation, and Warner Brothers

Entertainment (“the Studios”) produce and distribute

copyrighted motion pictures and television shows. The

Studios distribute and license these works for public

dissemination through several “distribution channels”:

(1) movie theaters; (2) sale or rental of physical discs in

DVD or Blu-ray format; (3) sale of digital downloads

through online services, such as iTunes or Amazon Video;

(4) on-demand rental for short-term viewing through cable

and satellite television or internet video-on-demand

6 DISNEY ENTERPRISES V. VIDANGEL

platforms, such as iTunes or Google Play; and

(5) subscription on-demand streaming online outlets, such as

Netflix, Hulu, HBO GO, and cable television.

To maximize revenue, the Studios employ “windowing,”

releasing their works through distribution channels at

different times and prices, based on consumer demand.

Typically, new releases are first distributed through digital

downloads and physical discs, and are only later available

for on-demand streaming. The Studios often negotiate

higher licensing fees in exchange for the exclusive rights to

perform their works during certain time periods. Digital

distribution thus provides a large source of revenue for the

Studios.

The Studios employ technological protection measures

(“TPMs”) to protect against unauthorized access to and

copying of their works. They use Content Scramble System

(“CSS”) and Advanced Access Content System (“AACS”),

with optional “BD+,” to control access to their copyrighted

content on DVDs and Blu-ray discs, respectively. These

encryption-based TPMs allow consumers to use players

from licensed manufacturers only to lawfully decrypt a

disc’s content, and then only for playback, not for copying. 1

1

Thus, as the licensors of CSS and AACS, amicus curiae DVD

Copy Control Association, Inc. and Advanced Access Content System

License Administrator, LLC, explain, “[i]ndividual consumers

purchasing a DVD or Blu-ray Disc are not provided the keys or other

cryptographic secrets that are necessary for playback. They must use a

licensed player which, in turn, must abide by the technical specifications

and security requirements imposed by [their] licenses.”

DISNEY ENTERPRISES V. VIDANGEL 7

VidAngel’s streaming service.

VidAngel offers more than 2500 movies and television

episodes to its consumers. It purchases multiple authorized

DVDs or Blu-ray discs for each title it offers. VidAngel then

assigns each disc a unique inventory barcode and stores it in

a locked vault. VidAngel uses AnyDVD HD, a software

program, to decrypt one disc for each title, removing the

CSS, AACS, and BD+ TPMs on the disc, and then uploads

the digital copy to a computer. 2 Or, to use VidAngel’s

terminology, the “[m]ovie is ripped from Blu-Ray to the gold

master file.” After decryption, VidAngel creates

“intermediate” files, converting them to HTTP Live

Streaming format and breaking them into segments that can

be tagged for over 80 categories of inappropriate content.

Once tagged, the segments are encrypted and stored in cloud

servers.

Customers “purchase” a specific physical disc from

VidAngel’s inventory for $20. The selected disc is removed

from VidAngel’s inventory and “ownership” is transferred

to the customer’s unique user ID. However, VidAngel

retains possession of the physical disc “on behalf of the

purchasers,” with the exception of the isolated cases in

which the consumer asks for the disc. To date, VidAngel

has shipped only four discs to purchasers.

2

AnyDVD HD is sold by RedFox, a Belize-based company run by

former employees of a company convicted overseas for trafficking in

anti-circumvention technology and identified by the United States Trade

Representative as selling software that facilitates copyright violations.

AnyDVD is commercially available outside of the United States.

8 DISNEY ENTERPRISES V. VIDANGEL

After purchasing a disc, a customer selects at least one

type of objectionable content to be filtered out of the work. 3

VidAngel then streams the filtered work to that customer on

“any VidAngel-supported device, including Roku, Apple

TV, Smart TV, Amazon Fire TV, Android, Chromecast,

iPad/iPhone and desktop or laptop computers.” The work is

streamed from the filtered segments stored in cloud servers,

not from the original discs. Filtered visual segments are

“skipped and never streamed to the user.” If the customer

desires that only audio content be filtered, VidAngel creates

and streams an altered segment that mutes the audio content

while leaving the visual content unchanged. VidAngel

discards the filtered segments after the customer views them.

After viewing the work, a customer can sell the disc

“back to VidAngel for a partial credit of the $20 purchase

price,” less $1 per night for standard definition purchases or

$2 per night for high-definition purchases. VidAngel

accordingly markets itself as a $1 streaming service. After a

disc is sold back to VidAngel, the customer’s access to that

title is terminated. 4 Virtually all (99.6%) of VidAngel’s

customers sell back their titles, on average within five hours,

and VidAngel’s discs are “re-sold and streamed to a new

3

VidAngel initially permitted streaming without filters. It then

began requiring a filter, but soon discovered customers were selecting

inapplicable filters (e.g., a Star Wars character for a non-Star Wars

movie) to obtain unfiltered films. VidAngel subsequently required

filtering to correspond to the specific movie being streamed, but

permitted the single required filter to be simply for the opening or closing

credits. After the Studios brought this action, VidAngel began requiring

customers to “pick at least one additional [non-credits] filter.”

4

VidAngel previously permitted customers to select “automatic

sellback,” but eliminated that feature after this suit was filed.

DISNEY ENTERPRISES V. VIDANGEL 9

customer an average of 16 times each in the first four weeks”

of a title’s release.

VidAngel’s growth.

In July 2015, VidAngel sent letters to the Studios

describing its service. The letters explained that VidAngel

was in “a limited beta test of its technology” and had only

4848 users, and concluded: “If you have any questions

concerning VidAngel’s technology or business model,

please feel free to ask. If you disagree with VidAngel’s

belief that its technology fully complies with the Copyright

Act . . . please let us know.” The Studios did not respond,

but began monitoring VidAngel’s activities.

VidAngel opened its service to the general public in

August 2015. Its marketing emphasized that it could stream

popular new releases that licensed video-on-demand

services like Netflix could not, for only $1. For example,

when VidAngel began streaming Disney’s Star Wars: The

Force Awakens, it was available elsewhere only for purchase

on DVD or as a digital download, not as a short-term rental.

Similarly, VidAngel began streaming Fox’s The Martian

and Brooklyn while those works were exclusively licensed

to HBO for on-demand streaming. Customers responded

favorably. 5 And, a survey indicated that 51% of VidAngel’s

users would not otherwise watch their selections without

filtering.

5

For example, one customer tweeted: “Son asked for #StarWars A

New Hope. Not on Netflix, Google play charges $19.99. Streamed HD

on @VidAngel. $2 & hassle free!” Another gave VidAngel a 5-star

rating on Facebook, explaining: “We bought Star Wars and sold it back

for a total of $1 when it was like $5 to rent on Amazon. So even if you

don’t need content cleaned, it’s a great video service.”

10 DISNEY ENTERPRISES V. VIDANGEL

VidAngel eventually reached over 100,000 monthly

active users. When the Studios filed this suit in June 2016,

VidAngel offered over 80 of the Studios’ copyrighted works

on its website. VidAngel was not licensed or otherwise

authorized to copy, perform, or access any of these works.

PROCEDURAL BACKGROUND

The Studios’ complaint alleged copyright infringement

in violation of 17 U.S.C. § 106(1), (4), and circumvention of

technological measures controlling access to copyrighted

works in violation of the Digital Millennium Copyright Act

of 1998 (“DMCA”), 17 U.S.C. § 1201(a)(1)(A). VidAngel

denied the statutory violations, raising the affirmative

defenses of fair use and legal authorization by the Family

Movie Act of 2005 (“FMA”), 17 U.S.C. § 110(11). The

Studios moved for a preliminary injunction, and after

expedited discovery, the district court granted the motion.

The district court found that the Studios had

demonstrated a likelihood of success on the merits of both

their DMCA and copyright infringement claims. It first

found that VidAngel violated § 1201(a)(1)(A) of the DMCA

by circumventing the technological measures controlling

access to the Studios’ works. The district court also

concluded that VidAngel violated the Studios’ exclusive

right to reproduce their works under § 106(1) by making

copies of them on a computer and third-party servers. It also

held that VidAngel violated the Studios’ exclusive right to

publicly perform their works under § 106(4), because at

most the customers “own” only the physical discs they

“purchase,” not the digital content streamed to them.

The district court rejected VidAngel’s FMA defense,

holding that “VidAngel’s service does not comply with the

express language of the FMA,” which requires a filtered

DISNEY ENTERPRISES V. VIDANGEL 11

transmission to “come from an ‘authorized copy’ of the

motion picture.” § 110(11)). The district court also found

that VidAngel was not likely to succeed on its fair use

defense, emphasizing that the “purpose and character of the

use” and “effect of the use upon the potential market for or

value of the copyrighted work” factors weighed in favor of

the Studios. 17 U.S.C. § 107.

The district court concluded that the Studios had

demonstrated a likelihood of irreparable injury from

VidAngel’s interference “with their basic right to control

how, when and through which channels consumers can view

their copyrighted works” and with their “relationships and

goodwill with authorized distributors.” Finally, the court

found that “the balance of hardships tips sharply in [the

Studios’] favor.”

The court therefore preliminarily enjoined VidAngel

from copying and “streaming, transmitting, or otherwise

publicly performing or displaying any of Plaintiff’s

copyrighted works,” “circumventing technological measures

protecting Plaintiff’s copyrighted works,” or “engaging in

any other activity that violates, directly or indirectly,”

17 U.S.C. §§ 1201(a) or 106. VidAngel timely appealed. 6

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction of this appeal under 28 U.S.C.

§ 1292(a)(1) and review the district court’s entry of a

6

Both the district court and this court denied VidAngel’s motions

for a stay of the preliminary injunction. Before its motions were denied,

VidAngel continued to stream the Studios’ copyrighted works and added

at least three additional works to its inventory. The district court held

VidAngel in contempt for violating the preliminary injunction. The

contempt citation is not involved in this appeal.

12 DISNEY ENTERPRISES V. VIDANGEL

preliminary injunction for abuse of discretion. Garcia v.

Google, Inc., 786 F.3d 733, 739 (9th Cir. 2015) (en banc).

“Because our review is deferential, we will not reverse the

district court where it got the law right, even if we would

have arrived at a different result, so long as the district court

did not clearly err in its factual determinations.” Id. (citation

omitted, alteration incorporated); see also Pimentel v.

Dreyfus, 670 F.3d 1096, 1105 (9th Cir. 2012) (per curiam)

(asking whether the district court “identified the correct legal

rule” and whether its application of that rule “was

(1) illogical, (2) implausible, or (3) without support in

inferences that may be drawn from the facts in the record”

(citation omitted)).

DISCUSSION

A party can obtain a preliminary injunction by showing

that (1) it is “likely to succeed on the merits,” (2) it is “likely

to suffer irreparable harm in the absence of preliminary

relief,” (3) “the balance of equities tips in [its] favor,” and

(4) “an injunction is in the public interest.” Winter v. Nat.

Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). A preliminary

injunction may also be appropriate if a movant raises

“serious questions going to the merits” and the “balance of

hardships . . . tips sharply towards” it, as long as the second

and third Winter factors are satisfied. All. for the Wild

Rockies v. Cottrell, 632 F.3d 1127, 1134–35 (9th Cir. 2011).

The district court applied both of these standards.

Likelihood of success on the merits.

Likelihood of success on the merits “is the most

important” Winter factor; if a movant fails to meet this

“threshold inquiry,” the court need not consider the other

factors, Garcia, 786 F.3d at 740, in the absence of “serious

questions going to the merits,” All. for the Wild Rockies,

DISNEY ENTERPRISES V. VIDANGEL 13

632 F.3d at 1134–35. However, “once the moving party has

carried its burden of showing a likelihood of success on the

merits, the burden shifts to the non-moving party to show a

likelihood that its affirmative defense will succeed.” Perfect

10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1158 (9th Cir.

2007). Thus, if the Studios demonstrated a likelihood of

success on their copyright infringement and DMCA claims,

the burden shifted to VidAngel to show a likelihood of

success on its FMA and fair use affirmative defenses. Id.

A. Copyright infringement.

To establish direct copyright infringement, the Studios

must (1) “show ownership of the allegedly infringed

material” and (2) “demonstrate that the alleged infringers

violate at least one exclusive right granted to copyright

holders under 17 U.S.C. § 106.” Id. at 1159 (citation

omitted). VidAngel’s briefing on appeal does not contest the

Studios’ ownership of the copyrights, instead focusing only

on the second requirement.

Copyright owners have the exclusive right “to reproduce

the copyrighted work in copies,” or to authorize another to

do so. 17 U.S.C. § 106(1). VidAngel concedes that it copies

the Studios’ works from discs onto a computer. VidAngel

initially argued that because it lawfully purchased the discs,

it can also lawfully re-sell or rent them. But, lawful owners

“of a particular copy” of a copyrighted work are only entitled

to “sell or otherwise dispose of the possession of that copy,”

not to reproduce the work. 17 U.S.C. § 109(a). The district

court thus did not abuse its discretion in concluding that

VidAngel’s copying infringed the Studios’ exclusive

reproduction right. See MAI Sys. Corp. v. Peak Comput.,

Inc., 991 F.2d 511, 518 (9th Cir. 1993) (transferring digital

files “from a permanent storage device to a computer’s

RAM” is “copying” under § 106); Sega Enters. Ltd. v.

14 DISNEY ENTERPRISES V. VIDANGEL

Accolade, Inc., 977 F.2d 1510, 1518 (9th Cir. 1993) (holding

that § 106 “unambiguously . . . proscribes ‘intermediate

copying’” (citation omitted)). 7

B. Defenses to copyright infringement.

1. The Family Movie Act.

The FMA was designed to allow consumers to skip

objectionable audio and video content in motion pictures

without committing copyright infringement. Family

Entertainment and Copyright Act of 2005, Pub. L. No. 109-

9, Title II, §§ 201, 202(a), 119 Stat. 218 (2005). The statute

provides, in relevant part:

Notwithstanding the provisions of section

106, the following are not infringements of

copyright:

[. . .]

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

7

Indeed, at oral argument, VidAngel conceded that it relies entirely

on the FMA and fair use as affirmative defenses to the reproduction

claim.

DISNEY ENTERPRISES V. VIDANGEL 15

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.

17 U.S.C. § 110(11).

We have had no previous occasion to interpret the FMA,

so we begin with its text. See Hernandez v. Williams,

Zinman & Parham PC, 829 F.3d 1068, 1072 (9th Cir. 2016).

The statute clearly identifies two acts that “are not

infringements of copyright.” § 110(11). First, it authorizes

“making imperceptible”—filtering—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

performances or transmissions to private households, “from

an authorized copy of the motion picture.” Id. Second, the

statute authorizes the creation or distribution of any

technology that enables the filtering described in the first

provision and that is designed and marketed to be used, at

the direction of a member of a private household, for that

filtering, if no fixed copy of the altered version of the motion

picture is created by the technology. Id. Thus, the second

act authorized by the FMA—the creation or distribution of

certain technology that enables “such” filtering—necessarily

requires that the filtering be “from an authorized copy of the

motion picture.” Id.

Indeed, VidAngel concedes that under the FMA, “the

filtering must come ‘from an authorized copy’ of the movie.”

But, VidAngel argues that because it “begins its filtering

process with an authorized copy”—a lawfully purchased

16 DISNEY ENTERPRISES V. VIDANGEL

disc—“any subsequent filtered stream” is also “from” that

authorized copy.

We disagree. The FMA permits “the making

imperceptible . . . of limited portions of audio or video

content of a motion picture, during a performance in or

transmitted to [a private household], from an authorized

copy of the motion picture.” § 110(11) (emphasis added). It

does not say, as VidAngel would have us read the statute,

“beginning from” or “indirectly from” an authorized copy.

See id. VidAngel “would have us read an absent word into

the statute,” but, “[w]ith a plain, nonabsurd meaning in view,

we need not proceed in this way.” Lamie v. U.S. Tr.,

540 U.S. 526, 538 (2004). Rather, the most natural reading

of the statute is that the filtered performance or transmission

itself must be “from” an authorized copy of the motion

picture. See Yates v. United States, 135 S. Ct. 1074, 1085

(2015) (plurality opinion) (“The words immediately

surrounding [‘from’ in § 110(11)] . . . cabin the contextual

meaning of that term.”); Antonin Scalia & Bryan Garner,

Reading Law: The Interpretation of Legal Texts 148–49

(2012) (explaining that a “postpositive modifier”—that is,

one “positioned after” multiple phrases or clauses, such as

“from an authorized copy” here—modifies all the preceding

clauses, unless a “determiner” is repeated earlier in the

sentence). 8

8

In support of its argument that the transmission need only be the

culmination of a process that begins with the possession of an authorized

copy, VidAngel offers the following analogy: “Holiday cards are best

described as coming from loved ones, even though the mailman serves

as an intermediary. Only a hypertechnical interpretation would insist the

card came from the mailman.” But, VidAngel is not a mailman who

simply delivers movies from the seller to the customer in their original

form—it delivers digital, altered copies of the original works, not the

DISNEY ENTERPRISES V. VIDANGEL 17

The statutory context of § 110(11) supports this

interpretation. See Yates, 135 S. Ct. at 1081–82 (noting that

the interpretation of statutory language is “determined not

only by reference to the language itself, but as well by the

specific context in which that language is used, and the

broader context of the statute as a whole” (citation omitted,

alterations incorporated)). The FMA was enacted as part of

Title II of the Family Entertainment and Copyright Act of

2005, which is entitled “exemption from infringement for

skipping audio and video content in motion pictures.” Pub.

L. No. 109-9, § 202(a), 119 Stat. 218. It is found in a sub-

section of 17 U.S.C. § 110, which is entitled “Limitations on

exclusive rights: Exemption of certain performances and

displays.” These headings indicate that the FMA exempts

compliant filtered performances, rather than the processes

that make such performances possible. See Yates, 135 S. Ct.

at 1083 (looking to statute heading to “supply cues” of

Congress’s intent). Indeed, the title of § 110 indicates that it

is directed only at “certain performances and displays” that

would otherwise infringe a copyright holder’s exclusive

public performance and display rights, see 17 U.S.C.

§ 106(4), (5), (6), while other limitations on exclusive rights

in Title 17 are directed at the reproduction right. Compare

§ 110 with § 108 (“Limitations on exclusive rights:

Reproduction by libraries and archives”).

Moreover, the enacting statute was created “to provide

for the protection of intellectual property rights.” Pub. L.

No. 109-9, 119 Stat. 218. Notably, the FMA concludes by

noting: “Nothing in paragraph (11) shall be construed to

imply further rights under section 106 of this title, or to have

any effect on defenses or limitations on rights granted under

discs. Moreover, if we adopted VidAngel’s reading of “from,” the card

would be “from” Hallmark, the card creator, not the loved one.

18 DISNEY ENTERPRISES V. VIDANGEL

any other section of this title or under any other paragraph of

this section.” § 110. VidAngel’s interpretation of the

statute—which permits unlawful decryption and copying

prior to filtering—would not preserve “protection of

intellectual property rights” or not “have any effect” on the

existing copyright scheme. See Yates, 135 S. Ct. at 1083

(explaining that “[i]f Congress indeed meant to make” a

statute “an all-encompassing” exemption, “one would have

expected a clearer indication of that intent”).

VidAngel argues that the FMA was crafted “to avoid

turning on the technical details of any given filtering

technology,” citing the statutory authorization of “the

creation or provision of . . . other technology that enables

such making imperceptible.” § 110(11)). 9 But, the phrase

“such making imperceptible” clearly refers to the earlier

description of “making imperceptible,” which must be “from

an authorized copy of the motion picture.” § 110(11). Thus,

even if VidAngel employs technology that enables filtering,

the FMA exempts that service from the copyright laws only

if the filtering is from an authorized copy of the motion

picture. VidAngel’s interpretation, which ignores

“intermediate steps” as long as the initial step came from a

legally purchased title and the final result involves “no fixed

copy of the altered version,” ignores this textual limitation. 10

9

Because this argument was not raised below, we would be hard-

pressed to find that the district court abused its discretion by failing to

address it. We address it nonetheless.

10

At oral argument, VidAngel asserted that the FMA’s prohibition

on creating a “fixed copy of the altered version” contemplates that fixed

copies of the authorized copy can be made. We disagree. The FMA

states only that, when streaming from an authorized copy, “the altered

DISNEY ENTERPRISES V. VIDANGEL 19

More importantly, VidAngel’s interpretation would

create a giant loophole in copyright law, sanctioning

infringement so long as it filters some content and a copy of

the work was lawfully purchased at some point. But,

virtually all piracy of movies originates in some way from a

legitimate copy. If the mere purchase of an authorized copy

alone precluded infringement liability under the FMA, the

statute would severely erode the commercial value of the

public performance right in the digital context, permitting,

for example, unlicensed streams which filter out only a

movie’s credits. See 4 Patry on Copyright § 14:2 (2017). It

is quite unlikely that Congress contemplated such a result in

a statute that is expressly designed not to affect a copyright

owner’s § 106 rights. § 110. See Hernandez, 829 F.3d at

1075 (adopting an interpretation because it “is the only one

that is consistent with the rest of the statutory text and that

avoids creating substantial loopholes . . . that otherwise

would undermine the very protections the statute provides”).

And, although we need not rely upon legislative history,

it supports our conclusion. The FMA’s sponsor, Senator

Orrin Hatch, stated that the Act “should be narrowly

construed” to avoid “impacting established doctrines of

copyright” law and “sets forth a number of conditions to

ensure that it achieves its intended effect.” 151 Cong. Rec.

S450-01, S501 (daily ed. Jan. 25, 2005). Thus, “an

infringing performance . . . or an infringing transmission . . .

are not rendered non-infringing by section 110(11) by virtue

of the fact that limited portions of audio or video content of

the motion picture being performed are made imperceptible

during such performance or transmission in a manner

consistent with that section.” Id. Indeed, Senator Hatch

version of the motion picture” created by the filtering technology cannot

be fixed in a copy. § 110(11).

20 DISNEY ENTERPRISES V. VIDANGEL

stressed that “[a]ny suggestion that support for the exercise

of viewer choice in modifying their viewing experience of

copyrighted works requires violation of either the copyright

in the work or of the copy protection schemes that provide

protection for such work should be rejected as counter to

legislative intent or technological necessity.” Id.

Senator Hatch identified “the Clear Play model” as one

intended to be protected by the FMA. Id. So did the House

of Representatives. H.R. Rep. No. 109-33, pt. 1, at 70 (2005)

(minority views); Derivative Rights, Moral Rights, and

Movie Filtering Technology: Hearing Before the Subcomm.

on Courts, the Internet, and Intellectual Prop. of the H.

Comm. on the Judiciary, 108th Cong. (2004) (ClearPlay

CEO testimony). 11 ClearPlay sells a fast-forwarding device

which uses video time codes to permit customers to skip

specific scenes or mute specific audio; it does not make

copies of the films because the time codes are “integrated”

into the disc’s encrypted content and players licensed to

decrypt and play the content. Not surprisingly, therefore, the

only other court to construe the FMA has held that

ClearPlay’s technology “is consistent with the statutory

definition,” Huntsman v. Soderbergh, No.

Civ.A02CV01662RPMMJW, 2005 WL 1993421, at *1 (D.

Colo. Aug. 17, 2005), but that a filtering technology that

made digital copies from lawfully purchased discs and then

filtered them, as VidAngel does, is not, Clean Flicks of

11

Indeed, the legislative history stresses that the FMA was a

response to litigation between ClearPlay and several studios. 150 Cong.

Rec. H7654 (daily ed. Sept. 28, 2004) (statement of Rep. Jackson-Lee);

see also Family Movie Act of 2004, H.R. Comm. on the Judiciary Rep.

No. 108-670 at 41–42 (dissenting views) (opposing the FMA because it

“takes sides in a private lawsuit” and “is specifically designed to legalize

ClearPlay technology”).

DISNEY ENTERPRISES V. VIDANGEL 21

Colo., LLC v. Soderbergh, 433 F. Supp. 2d 1236, 1238, 1240

(D. Colo. 2006).

VidAngel does not stream from an authorized copy of

the Studios’ motion pictures; it streams from the “master

file” copy it created by “ripping” the movies from discs after

circumventing their TPMs. The district court therefore did

not abuse its discretion in concluding that VidAngel is

unlikely to succeed on the merits of its FMA defense to the

Studios’ copyright infringement claims.

2. Fair use.

“[T]he fair use of a copyrighted work, including such use

by reproduction in copies . . . is not an infringement of

copyright.” 17 U.S.C. § 107. In determining whether the

use of a copyrighted work is fair, we consider:

(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.

Id. Although we must consider all of these factors “together,

in light of the purposes of copyright,” we are not confined to

them; rather, we must conduct a “case-by-case analysis.”

Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577–78

(1994).

The district court correctly identified the four fair use

factors and applied them. VidAngel concedes that the

22 DISNEY ENTERPRISES V. VIDANGEL

district court correctly found that the second and third

factors—“the nature of the copyrighted work” and “the

amount and substantiality of the portion used in relation to

the copyrighted work as a whole”—weigh against finding

fair use. VidAngel claims, however, that the district court

abused its discretion with respect to the first and fourth

factors.

In addressing the first factor, the court asks “whether the

new work merely supersedes the objects of the original

creation, or instead adds something new, with a further

purpose or different character . . . [;] in other words, whether

and to what extent the new work is ‘transformative.’” Id. at

579 (citations omitted, alterations incorporated); see

§ 107(1). VidAngel concedes its use is commercial, and thus

“presumptively . . . unfair.” Leadsinger, Inc. v. BMG Music

Publ’g, 512 F.3d 522, 530 (9th Cir. 2008) (citation omitted).

But, it argues that its use is “profoundly transformative”

because “omissions can transform a work,” affirming

“[r]eligious convictions and parental views.”

The district court found, however, that “VidAngel’s

service does not add anything to Plaintiff’s works. It simply

omits portions that viewers find objectionable,” and

transmits them for the “same intrinsic entertainment value”

as the originals. This factual finding was not clearly

erroneous. Although removing objectionable content may

permit a viewer to enjoy a film, this does not necessarily

“add[] something new” or change the “expression, meaning,

or message” of the film. Campbell, 510 U.S. at 579. Nor

does reproducing the films’ discs in digital streaming format,

because “both formats are used for entertainment purposes.”

Kelly v. Arriba Soft Corp., 336 F.3d 811, 819 (9th Cir. 2003).

Star Wars is still Star Wars, even without Princess Leia’s

bikini scene.

DISNEY ENTERPRISES V. VIDANGEL 23

Moreover, VidAngel’s service does not require

removing a crucial plot element—it requires the use of only

one filter, which can be an audio filter temporarily silencing

a portion of a scene without removing imagery, or skipping

a gratuitous scene. Indeed, the FMA sanctions only making

“limited portions” of a work imperceptible. 17 U.S.C.

§ 110(11). The district court did not abuse its discretion in

finding that VidAngel’s use is not transformative. See Kelly,

336 F.3d at 819 (“Courts have been reluctant to find fair use

when an original work is merely retransmitted in a different

medium . . . . for entertainment purposes.” (footnote

omitted)).

The fourth fair use factor evaluates “the extent of market

harm caused by” the infringing activity and “whether

unrestricted and widespread conduct of the sort engaged by

the defendant . . . would result in a substantially adverse

impact on the potential market for the original.” Campbell,

510 U.S. at 590 (citation omitted, alteration incorporated);

see § 107(4). Because the district court concluded that

VidAngel’s use was commercial and not transformative, it

was not error to presume likely market harm. Leadsinger,

512 F.3d at 531.

VidAngel argues that its service actually benefits the

Studios because it purchases discs and expands the audience

for the copyrighted works to viewers who would not watch

without filtering. But, the district court found that

“VidAngel’s service [is] an effective substitute for

Plaintiff’s unfiltered works,” because surveys suggested that

49% of its customers would watch the movies without filters.

This finding was not clearly erroneous. VidAngel’s

purchases of discs also do not excuse its infringement. See

A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1017

(9th Cir. 2001) (“Any allegedly positive impact of

24 DISNEY ENTERPRISES V. VIDANGEL

defendant’s activities on plaintiffs’ prior market in no way

frees defendant to usurp a further market that directly derives

from reproduction of the plaintiffs’ copyrighted works.”)

(quoting UMG Recordings, Inc. v. MP3.com, Inc., 92 F.

Supp. 2d 349, 352 (S.D.N.Y. 2000)). And, the market factor

is less important when none of the other factors favor

VidAngel. See Leadsinger, 512 F.3d at 532. 12

Finally, VidAngel argues that its service is “a

paradigmatic example of fair use: space-shifting.” But, the

case it cites states only that a portable music player that

“makes copies in order to render portable, or ‘space-shift,’

those files that already reside on a user’s hard drive” is

“consistent with the [Audio Home Recording] Act’s main

purpose—the facilitation of personal use.” Recording Indus.

Ass’n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d

1072, 1079 (9th Cir. 1999). The reported decisions

unanimously reject the view that space-shifting is fair use

under § 107. See A&M Records, 239 F.3d at 1019 (rejecting

“space shifting” that “simultaneously involve[s] distribution

of the copyrighted material to the general public”); UMG

Recordings, 92 F. Supp. 2d at 351 (rejecting “space shift” of

CD files to MP3 files as “another way of saying that the

unauthorized copies are being retransmitted in another

12

VidAngel also argues that creating an “intermediate copy” for

filtering is a “classic fair use.” The cases it cites are inapposite, because

VidAngel does not copy the Studios’ works to access unprotected

functional elements it cannot otherwise access. See Sega, 977 F.2d at

1520 (“Where there is good reason for studying or examining the

unprotected aspects of a copyrighted computer program, disassembly for

purposes of such study or examination constitutes a fair use.”); Sony

Comput. Entm’t, Inc. v. Connectix Corp., 203 F.3d 596, 602–07 (9th Cir.

2000) (copying necessary “for the purpose of gaining access to the

unprotected elements of Sony’s software” was fair use and not a “change

of format”).

DISNEY ENTERPRISES V. VIDANGEL 25

medium—an insufficient basis for any legitimate claim of

transformation”). Indeed, in declining to adopt an

exemption to the DMCA for space-shifting, see 17 U.S.C.

§ 1201(a)(1)(C), the Librarian of Congress relied on the

Register of Copyright’s conclusion that “the law of fair use,

as it stands today, does not sanction broad-based space-

shifting or format-shifting.” Exemption to Prohibition on

Circumvention of Copyright Protection Systems for Access

Control Technologies, 80 Fed. Reg. 65944-01, 65960 (Oct.

28, 2015) (to be codified at 37 C.F.R. pt. 201). And, even

assuming space-shifting could be fair use, VidAngel’s

service is not personal and non-commercial space-shifting:

it makes illegal copies of pre-selected movies and then sells

streams with altered content and in a different format than

that in which they were bought. 13

13

Because the Studios are likely to succeed on the merits of their

reproduction claim, and VidAngel is unlikely to succeed on the merits of

its affirmative defenses, we therefore need not reach the district court’s

alternative § 106 ground for imposing the preliminary injunction—the

public performance right. See 17 U.S.C. § 502(a) (authorizing a court to

enter a temporary injunction “on such terms as it may deem reasonable

to prevent or restrain infringement of copyright”); Perfect 10, 508 F.3d

at 1159 (holding that plaintiff must show defendant infringed “at least

one exclusive right” under § 106); see also Video Pipeline, Inc. v. Buena

Vista Home Entm’t, Inc., 342 F.3d 191, 197 (3d Cir. 2003) (explaining

that “for preliminary injunction purposes, [plaintiff] needed to show”

only that the defendant’s action “likely violates any provision of § 106,”

and the district court’s injunction, based upon likely violations of

multiple subsections of § 106, “would not be affected by any conclusion

[the appellate court] might make as to whether” defendant’s actions

violated a different subsection of § 106). The district court properly

enjoined VidAngel from streaming, transmitting, or otherwise publicly

performing or displaying any of the Studios’ works, because such actions

all stem from either past or future unauthorized copying. See 2 Nimmer

on Copyright § 8.02(c) (2017) (“[S]ubject to certain . . . exemptions,

copyright infringement occurs whenever an unauthorized copy . . . is

26 DISNEY ENTERPRISES V. VIDANGEL

C. Circumvention of access control measures under

the Digital Millennium Copyright Act.

The district court also did not abuse its discretion in

finding that the Studios are likely to succeed on their DMCA

claim. In relevant part, that statute provides that “[n]o

person shall circumvent a technological measure that

effectively controls access to a [copyrighted] work.”

17 U.S.C. § 1201(a)(1)(A). Circumvention means “to

decrypt an encrypted work . . . without the authority of the

copyright owner.” § 1201(a)(3)(A). VidAngel concedes

that CSS, AACS, and BD+ are encryption access controls,

and that it “uses software to decrypt” them. But, it argues

that, “like all lawful purchasers, VidAngel is authorized by

the Studios to decrypt [the TPMs] to view the discs’

content.”

The argument fails. Section 1201(a)(3)(A) exempts from

circumvention liability only “those whom a copyright owner

authorizes to circumvent an access control measure, not

those whom a copyright owner authorizes to access the

work.” MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d

928, 953 n.16 (9th Cir. 2011). MDY acknowledged a circuit

split between the Second Circuit and the Federal Circuit

regarding “the meaning of the phrase ‘without the authority

of the copyright owner,’” and chose to follow the Second

Circuit’s approach in Universal City Studios, Inc. v. Corley.

made, even if it is used solely for the private purposes of the reproducer,

or even if the other uses are licensed.”); Flava Works, Inc. v. Gunter,

689 F.3d 754, 762–63 (7th Cir. 2012) (explaining that “copying videos

. . . without authorization” constitutes direct infringement and plaintiff

would therefore “be entitled to an injunction,” even if the defendant does

not “perform” the works itself).

DISNEY ENTERPRISES V. VIDANGEL 27

Id. (citing 273 F.3d 429, 444 (2d Cir. 2001)). 14 Corley

rejected the very argument VidAngel makes here: “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.” 273 F.3d at 444. Rather, the Second Circuit

explained, § 1201(a)(3)(A) “exempts from liability those

who would ‘decrypt’ an encrypted DVD with the authority

of the copyright owner, not those who would ‘view’ a DVD

with the authority of a copyright owner.” Id.

Like the defendant in Corley, VidAngel “offered no

evidence that [the Studios] have either explicitly or

implicitly authorized DVD buyers to circumvent encryption

technology” to access the digital contents of their discs. Id.

Rather, lawful purchasers have permission only to view their

purchased discs with a DVD or Blu-ray player licensed to

decrypt the TPMs. Therefore, VidAngel’s “authorization to

circumvent” argument fails. 15

VidAngel also argues, for the first time on appeal, that

the TPMs on the Studios’ discs are use controls under

14

Although MDY and Corley involved claims under § 1201(a)(2)

rather than § 1201(a)(1), both provisions rely on the definition of

circumvention in § 1201(a)(3)(A), so the same analysis applies to claims

under both provisions. See MDY, 629 F.3d at 953 n.16; Corley, 273 F.3d

at 444.

15

The two Ninth Circuit cases cited by VidAngel in support of its

argument interpret different phrases, “without authorization” and

“exceeds authorized access,” in a different statute, the Computer Fraud

and Abuse Act, 18 U.S.C. § 1030. See United States v. Nosal, 676 F.3d

854, 856–63 (9th Cir. 2012) (en banc); LVRC Holdings LLC v. Brekka,

581 F.3d 1127, 1132–35 (9th Cir. 2009).

28 DISNEY ENTERPRISES V. VIDANGEL

§ 1201(b) rather than access controls under § 1201(a), and

therefore it cannot be held liable for circumventing them.

Unlike § 1201(a), § 1201(b) does not prohibit circumvention

of technological measures. Rather, it “prohibits trafficking

in technologies that circumvent technological measures that

effectively protect ‘a right of a copyright owner,’” meaning

the “existing exclusive rights under the Copyright Act,” such

as reproduction. MDY, 629 F.3d at 944 (quoting

§ 1201(b)(1)). In other words, § 1201(b) governs TPMs that

control use of copyrighted works, while § 1201(a) governs

TPMs that control access to copyrighted works. Id. at 946

(explaining that DMCA “created a new anticircumvention

right in § 1201(a)(2) independent of traditional copyright

infringement and granted copyright owners a new weapon

against copyright infringement in § 1201(b)(1)”).

But, even assuming that VidAngel’s argument is not

waived, it fails. VidAngel contends that because the Studios

object only to decryption to copy—a use of the copyrighted

work—but permit those who buy discs to decrypt to view—

a way of accessing the work—the TPMs are “conditional

access controls [that] should be treated as use controls”

governed by § 1201(b). VidAngel therefore argues that

because it only circumvents use controls, but does not traffic,

it does not violate the DMCA. But, the statute does not

provide that a TPM cannot serve as both an access control

and a use control. Its text does not suggest that a defendant

could not violate both § 1201(a)(1)(A), by circumventing an

access control measure, and § 106, by, for example,

reproducing or publicly performing the accessed work.

Indeed, this court has acknowledged that a TPM could “both

(1) control[] access and (2) protect[] against copyright

infringement.” MDY, 629 F.3d at 946.

DISNEY ENTERPRISES V. VIDANGEL 29

To be sure, “unlawful circumvention under § 1201(a)—

descrambling a scrambled work and decrypting an encrypted

work—are acts that do not necessarily infringe or facilitate

infringement of a copyright.” Id. at 945. Thus, a defendant

could decrypt the TPMs on the Studios’ discs on an

unlicensed DVD player, but only then “watch . . . without

authorization, which is not necessarily an infringement of

[the Studios’] exclusive rights under § 106.” Id. But, when

a defendant decrypts the TPMs and then also reproduces that

work, it is liable for both circumvention in violation of

§ 1201(a)(1)(A) and copyright infringement in violation of

§ 106(1). See Murphy v. Millennium Radio Grp. LLC,

650 F.3d 295, 300 (3d Cir. 2011) (“Thus, for example, if a

movie studio encrypts a DVD so that it cannot be copied

without special software or hardware, and an individual uses

his own software to ‘crack’ the encryption and make copies

without permission, the studio may pursue the copier both

for simple infringement under the Copyright Act and,

separately, for his circumvention of the encryption . . . under

the DMCA.”). 16

VidAngel relies heavily on the DMCA’s legislative

history, which states that “1201(a)(2) and (b)(1) are ‘not

interchangeable,’” and that circumvention of a TPM

controlling access “is the electronic equivalent of breaking

into a locked room in order to obtain a copy of a book.”

MDY, 629 F.3d at 946–47 (citations omitted). VidAngel

argues that it instead was given the key to a locked room and

16

VidAngel argues that adopting this view would “deepen[] a

controversial split with the Federal Circuit” regarding whether § 1201(a)

requires an “infringement nexus.” See Chamberlain Grp., Inc. v. Skylink

Techs., Inc., 381 F.3d 1178 (Fed. Cir. 2004). But this panel is bound by

MDY. See 629 F.3d at 950. In any event, even assuming a nexus is

required for dual access-use controls, VidAngel’s circumvention was for

an infringing use—to copy.

30 DISNEY ENTERPRISES V. VIDANGEL

entered the room only to take a photograph of the room’s

contents. But, it was never given the “keys” to the discs’

contents—only authorized players get those keys.

VidAngel’s decision to use other software to decrypt the

TPMs to obtain a digital copy of the disc’s movie thus is

exactly like “breaking into a locked room in order to obtain

a copy of a [movie].” Id. at 947 (citation omitted). Nothing

in the legislative history suggests that VidAngel did not

circumvent an access control simply because there are

authorized ways to access the Studios’ works. See, e.g.,

WIPO Copyright Treaties Implementation and On-line

Copyright Infringement Liability Limitation, H.R. Rep. No.

105–551, pt. 1 at 18 (1998) (presuming that a defendant

“obtained authorized access to a copy of a work” before it

circumvented the TPMs or circumvented “in order to make

fair use of a work”).

Finally, VidAngel contends that a TPM cannot serve as

both an access and use control, because that would permit

copyright holders to prohibit non-infringing uses of their

works. It cites a Final Rule of the Library of Congress

stating that “implementation of merged technological

measures arguably would undermine Congress’s decision to

offer disparate treatment for access controls and use

controls.” Exemption to Prohibition on Circumvention of

Copyright Protection Systems for Access Control

Technologies, 65 Fed. Reg. 64,556-01, 64,568 (Oct. 27,

2000). But, the Rule also states that “neither the language of

section 1201 nor the legislative history addresses the

possibility of access controls that also restrict use.” Id. And,

it concludes that “[it] cannot be presumed that the drafters of

section 1201(a) were unaware of CSS,” which existed “when

the DMCA was enacted,” and “it is quite possible that they

anticipated that CSS would be” an access control measure

DISNEY ENTERPRISES V. VIDANGEL 31

despite involving “a merger of access controls and copy

controls.” Id. at 64,572 n.14.

Because VidAngel decrypts the CSS, AACS, and BD+

access controls on the Studios’ discs without authorization,

the district court did not abuse its discretion in finding the

Studios likely to succeed on their § 1201(a)(1)(A)

circumvention claim. 17

Irreparable harm.

A preliminary injunction may issue only upon a showing

that “irreparable injury is likely in the absence of an

injunction.” Winter, 555 U.S. at 22. VidAngel contends that

once the district court concluded the Studios were likely to

succeed on their copyright infringement claim, it relied on a

forbidden presumption of harm rather than “actual

evidence.” See Flexible Lifeline Sys., Inc. v. Precision Lift,

Inc., 654 F.3d 989, 998 (9th Cir. 2011) (per curiam).

However, the district court expressly rejected any such

presumption, instead extensively discussing the declaration

of Tedd Cittadine, Fox Senior Vice President of Digital

Distribution. Crediting this “uncontroverted evidence,” the

district court found that the Studios showed “VidAngel’s

service undermines [their] negotiating position . . . and also

damages goodwill with licensees,” because it offers the

17

VidAngel argued in its briefing that the FMA immunizes it from

liability for the DMCA claim, but conceded at oral argument that it is

“not arguing that the FMA is a defense to the DMCA claim.” And,

although it also claimed a fair use defense, VidAngel did not advance

any arguments for why its violation of § 1201(a)(1)(A) is a fair use

independent of those it advances for its copyright infringement. Thus,

even assuming that fair use can be a defense to a § 1201(a) violation, the

defense fails for the same reasons it does for the copyright infringement

claim.

32 DISNEY ENTERPRISES V. VIDANGEL

Studios’ works during negotiated “exclusivity periods” and

because licensees raised concerns about “unlicensed

services like VidAngel’s.”

VidAngel argues that these harms are “vague and

speculative,” but the district court did not abuse its discretion

in concluding otherwise. Although Cittadine’s declaration

does not state that licensees have specifically complained

about VidAngel, it says that licensees complain that “it is

difficult to compete with” unlicensed services. The Studios

also provided uncontroverted evidence that VidAngel

offered Star Wars: The Force Awakens before it was

available for legal streaming and offered The Martian and

Brooklyn during HBO’s exclusive streaming license.

This evidence was sufficient to establish a likelihood of

irreparable harm. The district court had substantial evidence

before it that VidAngel’s service undermines the value of the

Studios’ copyrighted works, their “windowing” business

model, and their goodwill and negotiating leverage with

licensees. See, e.g., WPIX, Inc. v. ivi, Inc., 691 F.3d 275,

285–86 (2d Cir. 2012) (holding that “streaming copyrighted

works without permission,” including at times “earlier . . .

than scheduled by the programs’ copyright holders or

paying” licensees was likely to cause irreparable harm to

copyright owners’ “negotiating platform and business

model”); Fox Television Stations, Inc. v. FilmOn X LLC,

966 F. Supp. 2d 30, 50 (D.D.C. 2013) (rejecting contention

that harms to negotiation leverage with licensees were “pure

speculation” and noting existence of an uncontroverted

“sworn declaration from a senior executive at Fox who states

that [licensees] have already referenced businesses like [the

defendant] in seeking to negotiate lower fees”). And,

although VidAngel argues that damages could be calculated

based on licensing fees, the district court did not abuse its

DISNEY ENTERPRISES V. VIDANGEL 33

discretion in concluding that the loss of goodwill,

negotiating leverage, and non-monetary terms in the

Studios’ licenses cannot readily be remedied with damages.

See Herb Reed Enters., LLC v. Fla. Entm't Mgmt., Inc.,

736 F.3d 1239, 1250 (9th Cir. 2013) (“Evidence of loss of

control over business reputation and damage to goodwill

could constitute irreparable harm.”); WPIX, 691 F.3d at 286.

VidAngel also argues that the Studios’ delay in suing

obviates a claim of irreparable harm. But, “courts are loath

to withhold relief solely” because of delay, which “is not

particularly probative in the context of ongoing, worsening

injuries.” Arc of Cal. v. Douglas, 757 F.3d 975, 990 (9th

Cir. 2014) (citation omitted). The district court found that

the Studios’ “delay in seeking an injunction was reasonable

under the circumstances, their alleged harms are ongoing,

and will likely only increase absent an injunction.” This

finding, based on the Studios’ cautious investigation of

VidAngel, their decision to sue only after VidAngel

expanded from beta-testing into a real threat, and

VidAngel’s admission that “it intends to continue to stream

[the Studios’] works and add other future releases, unless

enjoined,” was not an abuse of discretion.

Balancing the equities.

Before issuing a preliminary injunction, “courts must

balance the competing claims of injury and must consider

the effect on each party of the granting or withholding of the

requested relief.” Winter, 555 U.S. at 24 (citation omitted).

VidAngel argues that the district court abused its discretion

by failing to consider the harm to its “fledgling business”

from an injunction. However, the district court did consider

the harm to VidAngel—in both its original order and again

in denying a stay—and concluded that “lost profits from an

activity which has been shown likely to be infringing . . .

34 DISNEY ENTERPRISES V. VIDANGEL

merit[] little equitable consideration.” Triad Sys. Corp. v.

Se. Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995) (citation

omitted). VidAngel argues that the district court erred in

relying on cases that predate Winter and eBay Inc. v.

MercExchange, LLC, 547 U.S. 388 (2006). But, those

subsequent cases held only that the district court must

balance the harms to both sides before issuing an injunction,

Winter, 555 U.S. at 24; eBay Inc., 547 U.S. at 391–93, and

do not undermine the long-settled principle that harm caused

by illegal conduct does not merit significant equitable

protection.

The district court might have provided greater detail in

balancing the equities. But, contrary to VidAngel’s

assertions, the court did not conclude that the Studios were

“automatically” entitled to an injunction once it found that

their “copyright [was] infringed.” eBay, 547 U.S. at 392–

93. Nor did it relegate its “entire discussion” of the required

equity balancing to “one . . . sentence” without analysis.

Winter, 555 U.S. at 26. Rather, it concluded that the only

harm VidAngel asserted—financial hardship from ceasing

infringing activities—did not outweigh the irreparable harm

likely to befall the Studios without an injunction. This was

not an abuse of discretion. See All. for the Wild Rockies,

632 F.3d at 1138. 18

18

Moreover, most of the evidence VidAngel cites to show damage

to its business was not submitted to the district court until after the

preliminary injunction was issued. See, e.g., Declaration of David

Quinto in Support of VidAngel, Inc.’s Opposition to Plaintiffs’ Ex Parte

Application for an Order to Show Cause at 2 (“The parties never briefed

or explained . . . why it is impossible for VidAngel to comply

immediately with the preliminary injunction without ceasing business

activities entirely.”); Declaration of Neal Harmon in Support of

VidAngel, Inc.’s Ex Parte Application to Stay Preliminary Injunction

DISNEY ENTERPRISES V. VIDANGEL 35

Public interest.

Finally, the court must “pay particular regard for the

public consequences in employing the extraordinary remedy

of injunction.” Winter, 555 U.S. at 24 (citation omitted).

VidAngel argues that the preliminary injunction harms the

public’s interest in filtering, enshrined in the FMA. But, as

the district court recognized, this argument “relies on

VidAngel’s characterization of its service as the only

filtering service” for streaming digital content. It is

undisputed that ClearPlay offers a filtering service to Google

Play users, and the district court did not clearly err in finding

that other companies could provide something “similar to

ClearPlay’s.” That VidAngel believes ClearPlay’s service is

technically inferior to its own does not demonstrate that

consumers cannot filter during the pendency of this

injunction.

On the other hand, as the district court concluded, “the

public has a compelling interest in protecting copyright

owners’ marketable rights to their work and the economic

incentive to continue creating television programming” and

motion pictures. WPIX, 691 F.3d at 287 (citing Golan v.

Holder, 565 U.S. 302, 328 (2012)). The Studios own

copyrights to some of the world’s most popular motion

pictures and television shows. In light of the public’s clear

interest in retaining access to these works, and the ability to

do so with filters even while VidAngel’s service is

unavailable, we conclude that the district court did not abuse

Pending Appeal Or, Alternatively, Pending Decision by the Ninth Circuit

on Stay Pending Appeal at 5 (declaring that VidAngel can modify its

applications by January 2017).

36 DISNEY ENTERPRISES V. VIDANGEL

its discretion in finding that a preliminary injunction is in the

public interest. Id. at 288.

CONCLUSION

The judgment of the district court is AFFIRMED.