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Case 2:16-cv-04109-AB-PLA Document 265 Filed 01/11/19 Page 1 of 24 Page ID #:6988

1 Ryan G. Baker (Bar No. 214036) Peter Stris (Bar No. 216226)
rbaker@bakermarquart.com peter.stris@strismaher.com
2 Jaime Marquart (Bar No. 200344) Brendan Maher (Bar No. 217043)
jmarquart@bakermarquart.com brendan.maher@strismaher.com
3 Scott M. Malzahn (Bar No. 229204) Elizabeth Brannen (Bar No. 226234)
smalzahn@bakermarquart.com elizabeth.brannen@strismaher.com
4 Brian T. Grace (Bar No. 307826) Daniel Geyser (Bar No. 230405)
bgrace@bakermarquart.com daniel.geyser@strismaher.com
5 BAKER MARQUART LLP
777 S. Figueroa Street, Suite 2850 STRIS & MAHER LLP
6 Los Angeles, California 90017 725 S. Figueroa St, Suite 1830
Telephone: (424) 652-7800 Los Angeles, CA 90017
7 Facsimile: (424) 652-7850 Telephone: (213) 995-6800
Facsimile: (213) 261-0299
8
David Quinto (Bar No. 106232)
9 dquinto@VidAngel.com
VIDANGEL, INC.
10 3007 Franklin Canyon Drive
Beverly Hills, CA 90210-1633
11 Telephone: (213) 604-1777
12 Attorneys for Defendant VidAngel, Inc.
13 UNITED STATES DISTRICT COURT
14 CENTRAL DISTRICT OF CALIFORNIA
15 WESTERN DIVISION
16 DISNEY ENTERPRISES, INC.; Case No. 2:16-cv-04109-AB-PLA
LUCASFILM LTD. LLC;
17 VIDANGEL’S NOTICE OF
TWENTIETH CENTURY FOX FILM MOTION AND MOTION TO
18 CORPORATION; AND WARNER MODIFY THE PRELIMINARY
JUNCTION
19 BROS. ENTERTAINMENT, INC.;
MVL FILM FINANCE LLC; NEW
20 LINE PRODUCTIONS, INC.; and [Declarations of David Quinto and
Douglas Lichtman, and [Proposed]
21 TURNER ENTERTAINMENT CO., Order filed concurrently herewith]
22 Plaintiffs, The Hon. André Birotte Jr.
23 vs. Date: February 8, 2019
Time: 10:00 a.m.
24 VIDANGEL, INC., Courtroom: 7B
25 Defendant. Trial Date: None Set
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VIDANGEL’S MOTION TO MODIFY
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1 TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
2 PLEASE TAKE NOTICE that on February 8, 2019, or as soon thereafter as
3 the matter may be heard before the Honorable André Birotte Jr., in Courtroom 7B of
4 the United States District Courthouse, 350 West First Street, Los Angeles, California
5 90012, Defendant and Counterclaimant VidAngel, Inc. (“VidAngel”) will, and
6 hereby does, respectfully move for an order modifying the Court’s December 12,
7 2016 order granting a preliminary injunction (the “Injunction Order”). Because
8 Plaintiffs have threatened to seek contempt should VidAngel offer to filter their
9 movies using a means not at issue in this litigation and never shown to cause a
10 probability of irreparable injury or, indeed, any injury at all, VidAngel seeks an order
11 modifying the Injunction Order by adding a paragraph (5) stating:
12 (5) except that providing a motion picture filtering service that requires each of
13 Defendant’s customers, or Defendant acting on its customers’ behalf, to pay a
14 streaming service licensed to transmit motion pictures copyrighted by
15 Plaintiffs to such consumers for private viewing shall not be deemed a
16 violation of paragraphs (2)-(4), above.
17 Such order would be without prejudice to Plaintiffs’ rights either to seek to
18 enjoin such service based on a showing of probable irreparable injury or to seek a
19 finding of infringement.
20 This motion is made following the conference of counsel pursuant to L.R. 7-3
21 on December 13, 2018.
22 This motion is based on the accompanying Memorandum of Points and
23 Authorities, the Declarations of David W. Quinto dated January 11, 2019 and Doug
24 Lichtman dated January 8, 2019, the proposed order submitted concurrently
25 herewith, and any other evidence and argument as may be presented in reply or at
26 oral argument.
27 ///
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1 DATED: January 11, 2019 Respectfully submitted,
2
By: /s/ David Quinto
3 David Quinto
4 Attorney for Defendant VidAngel, Inc.
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1 TABLE OF CONTENTS
2 Page(s)
3 I. PRELIMINARY STATEMENT ......................................................................... 1
4 II. STATEMENT OF FACTS.................................................................................. 2
5 A. VidAngel’s Technology and Business Model at Issue Herein ................. 2
6 B. The Irreparable Harm Threatened by VidAngel’s Business Model
7 at Issue ....................................................................................................... 3
8 C. VidAngel Developed a Stream-Based Service That Overcame the
9 Infirmities the Court Found in Its Disc-Based Service ............................. 4
10 D. As This Court Has Acknowledged, Plaintiffs Have Not Shown
11 That VidAngel’s Stream-Based Service Should Be Enjoined.................. 5
12 E. Although Irrelevant to the Preliminary Injunction Analysis, There
13 Is Powerful New Evidence That the Stream-Based Service Merits
14 Fair Use Protection.................................................................................... 7
15 III. ARGUMENT ...................................................................................................... 9
16 A. This Court May Modify Its Injunction Order ........................................... 9
17 B. Conduct That Does Not Threaten an Irreparable Injury May Not
18 Be Enjoined ............................................................................................. 10
19 C. The Preliminary Injunction Also Impermissibly Prohibits All Fair
20 Uses of Plaintiffs’ Motion Pictures. ........................................................ 14
21 D. The Preliminary Injunction Order Should Be Modified Because It
22 Is Impermissibly Overbroad ................................................................... 16
23 IV. CONCLUSION ................................................................................................. 17
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1 TABLE OF AUTHORITIES
2 Page(s)
3
Cases
4
Amoco Production Co. v. Village of Gambell,
5 480 U.S. 531 (1987) ........................................................................................ 11, 12
6
Campbell v. Acuff-Rose Music, Inc.,
7 510 U.S. 569 (1994) .............................................................................................. 14
8 E. & J. Gallo Winery v. Gallo Cattle Co.,
9 967 F.2d 1280 (9th Cir. 1992) ............................................................................... 16
10 eBay v. MercExchange L.L.C.,
547 U.S. 388 (2006) .............................................................................................. 11
11
12 Favia v. Indiana University of Pennsylvania,
7 F.3d 332 (3d Cir. 1993) ...................................................................................... 10
13
Herb Reed Enterprises, LLC v. Florida Entertainement Management,
14
736 F.3d 1239 (9th Cir. 2013) ............................................................................... 12
15
Language Line Services, Inc. v. Language Services,
16 No. CV 10-02605 RS, 2013 WL 12173920 (N.D. Cal. June 25, 2013) ................ 10
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Lapin v. Shulton, Inc.,
18 333 F.2d 169 (9th Cir. 1964) ................................................................................... 9
19 Mariscal-Sandoval v. Ashcroft,
20 370 F.3d 851 (9th Cir. 2004) ................................................................................... 9
21 Matarese v. LeFevre,
22 801 F.2d 98 (2d Cir. 1986) ...................................................................................... 9

23 MCA, Inc. v. Wilson,
677 F.2d 180 (2d Cir. 1981) .................................................................................. 15
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25 Monsanto Co. v. Geertson Seed Farms,
561 U.S. 139 (2010) ........................................................................................ 11, 13
26
Movie Systems, Inc. v. MAD Minneapolis Audio Distributors,
27 717 F.2d 427 (8th Cir. 1983) ................................................................................... 9
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1 N.L.R.B. v. Express Publishing Co.,
312 U.S. 426 (1941) .............................................................................................. 16
2
3 Nattional Grange of the Order of Patrons of Husbandry v. California
State Grange,
4 182 F. Supp. 3d 1065 (E.D. Cal. 2016) ................................................................. 10
5
OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc.,
6 602 Fed. Appx. 669 (9th Cir. 2015) ...................................................................... 11
7 Rowles Co. v. Barnes,
8 No. 4:14cv1045, 2014 WL 4966071 (E.D. Mo. Oct. 2, 2014) .............................. 16
9 Sony Corp. of America v. Universal City Studios, Inc.,
464 U.S. 417 (1984) .............................................................................................. 14
10
11 System Federation No. 91 v. Wright,
364 U.S. 642 (1961) .............................................................................................. 10
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TMX Funding, Inc. v. Impero Technoolgies, Inc.,
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No. C 10–00202 JF (PVT), 2010 WL 2077011 (N.D. Cal. May 2,
14 2010) ........................................................................................................................ 9
15 Transp., Inc. v. Mayflower Services, Inc.,
16 769 F.2d 952 (4th Cir. 1985) ................................................................................... 9
17 United States v. Oakland Cannabis Buyer’s Coop.,
18 190 F.3d 1109 (9th Cir.1999) ................................................................................ 13

19 Weinberger v. Romero-Barcelo,
456 U.S. 305 (1982) ........................................................................................ 11, 12
20
21 Williams v. Lesiak,
822 F.2d 1223 (1st Cir. 1987) ............................................................................... 10
22
Winter v. Natural Resources Defense Council, Inc.,
23 555 U.S. 7 (2008) ............................................................................................ 10, 12
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Statutes
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17 U.S.C. § 106............................................................................................................. 3
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27 17 U.S.C. § 107........................................................................................................... 14
28 17 U.S.C. §110(11) ....................................................................................................... 8
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1 Digital Millennium Copyright Act, 17 U.S.C. §§ 1201-04 .............................. 1, 3, 4, 5
2 Other Authorities
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Federal Rule of Civil Procedure 60(b) ......................................................................... 9
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Federal Rule of Civil Procedure 62(c) ........................................................................ 10
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3 Goldstein on Copyright, § 12.1 (3d ed. 2014) ......................................................... 15
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1 MEMORANDUM OF POINTS AND AUTHORITIES
2 I. Preliminary Statement
3 VidAngel seeks an order modifying the Preliminary Injunction Order
4 (“Injunction Order”) (ECF No. 144) to ensure the injunction is tethered to the
5 conduct that gave rise to its issuance, which conduct has been shown to create a
6 probability of irreparable injury. The Supreme Court has repeatedly emphasized that
7 injunctive relief may not issue except to prevent irreparable injury and that when no
8 probability of or actual irreparable injury has been shown, injunctive relief—
9 preliminary or permanent—is impermissible.
10 When the Injunction Order issued, VidAngel was offering its disc-based, buy-
11 sellback model (the “Disc-Based service”) to consumers. Relevant to this motion are
12 the Court’s holding that the Disc-Based service violated Plaintiffs’ rights under the
13 Digital Millennium Copyright Act, 17 U.S.C. §§ 1201-04 (“DMCA”) and its finding
14 that VidAngel’s use of its Disc-Based service with respect to Plaintiffs’ motion
15 pictures would probably cause Plaintiffs to suffer an irreparable injury by
16 undermining their relationship with the streaming services licensed to stream their
17 motion pictures.
18 VidAngel’s current Stream-Based service does not offend the DMCA and
19 eliminates entirely any risk to Plaintiffs’ relationships with their licensed streaming
20 services (“LSSs”) in that VidAngel now requires its customers to pay those
21 streaming services for the right to watch streamed content. VidAngel is thus driving
22 additional business to Plaintiffs’ streaming services. Unsurprisingly, the LSSs have
23 raised no objections to VidAngel’s new service and one streaming service even went
24 so far as to affirmatively direct a third-party DMCA watch service to stop sending
25 take-down notices related to VidAngel.
26 Importantly, by this motion VidAngel is not seeking a determination either
27 that its Stream-Based service is lawful or even that its use cannot be enjoined.
28 VidAngel’s position is merely that Plaintiffs have never made (or even attempted to
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1 make) any showing that use of its Stream-Based service with respect to Plaintiffs’
2 copyrighted motion pictures would probably result in an irreparable injury. Because
3 such a showing is required for injunctive relief, the Injunction Order should be
4 modified by restricting its application to VidAngel’s disc-based, buy-sellback model
5 unless and until Plaintiffs show that VidAngel’s Stream-Based service will probably
6 result in irreparable injury if used to filter their motion pictures.
7 II. Statement of Facts
8 A. VidAngel’s Technology and Business Model at Issue Herein
9 During 2015-16, VidAngel provided motion picture filtering services to the
10 public through what it referred to as its disc-based, buy-sellback model (the “Disc-
11 Based service”). Under its Disc-Based service, VidAngel purchased hundreds or
12 thousands of DVD and Blu-ray copies of a given motion picture, decrypted one copy
13 to “tag” it for potentially offensive content, and sold individual DVD or Blu-ray
14 discs to individual customers. The customers then selected filter settings. After
15 doing so, VidAngel streamed the motion picture to the customer who had purchased
16 a copy of it while applying the filters the customer had selected. Customers were
17 free either to sell the DVD and Blu-ray discs back to VidAngel at a reduced price or
18 to keep the discs they had purchased. Declaration of David W. Quinto dated January
19 11, 2019 (“Quinto Decl.”), ¶ 2.
20 Plaintiffs’ Complaint (“Cmplt.”) (ECF No. 1), filed June 9, 2016, alleged that
21 there was a “fundamental difference between VidAngel and licensed VOD (video-
22 on-demand) services” in that the latter paid Plaintiffs for the right to stream content
23 to members of the public whereas “by cutting out payments to copyright owners,
24 VidAngel [was] able to offer prices that undercut licensed services.” Cmplt. at 2: 4-
25 13. Further, “VidAngel offer[ed] content that [was] not available on licensed VOD
26 services.” Id. at 2:27-28.
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1 B. The Irreparable Harm Threatened by VidAngel’s Business Model at Issue
2 In its Order Granting Plaintiffs’ Motion for Preliminary Injunction
3 (“Injunction Order”) (ECF No.144), the Court first held that the decryption VidAngel
4 engaged in to “tag” potentially offensive motion picture content as part of its Disc-
5 Based service violated a provision of the DMCA codified at 17 U.S.C.
6 §1201(a)(1)(A), and that under controlling Ninth Circuit authority, such violation
7 was actionable even absent any showing of injury. Id. at 6-9.
8 Turning to Plaintiffs’ copyright infringement claim under 17 U.S.C. § 106, the
9 Court found that VidAngel’s Disc-Based service created a likelihood of irreparable
10 injury in two ways.
11 First, the Court noted that Plaintiffs claim a “basic right to control how, when
12 and through which channels consumers can view their copyrighted works” and that
13 “Plaintiffs exercise their rights through agreements with authorized distributors.”
14 Injunction Order at 17:3-10. The Court further noted that, “[s]ome licenses grant the
15 licensee an exclusive time window for performing a title” and that Plaintiffs may
16 “negotiate higher licensing fees in exchange for granting a licensee the exclusive
17 right to perform a movie or television show during a particular time period.” Id. at
18 17:10-13. The Court then found that VidAngel’s use of its Disc-Based service
19 “interferes with Plaintiffs’ exercise of their exclusive rights and frustrates Plaintiffs’
20 ability to negotiate for similar rights in the future.” Id. at 17:14-15.
21 Second, the Court found that, “VidAngel’s service undermines Plaintiffs[’]
22 negotiating position with licensees and also damages goodwill with licensees”
23 because VidAngel’s Disc-Based service competed with Plaintiffs’ licensees’
24 businesses “on unfair terms.” Id. at 17:21-18:18.
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1 C. VidAngel Developed a Stream-Based Service That Overcame the
2 Infirmities the Court Found in Its Disc-Based Service
3 VidAngel spent the six months following the issuance of the Injunction Order
4 feverishly working to develop a filtering technology (the “Stream-Based service”)
5 that corrected each of the infirmities on which this Court based its Injunction Order.
6 Specifically, VidAngel developed a technology that allows it to “tag” motion
7 pictures without engaging in decryption or disabling technological protection
8 measures (“TPMs”). It now pays licensed streaming services (“LSSs”) for decrypted
9 streams. Although it captures each stream (thereby creating a rendition of the motion
10 picture), it does not decrypt or disable TPMs. Since June 2017, VidAngel has used
11 that method to tag motion pictures released by all studios and networks, excepting
12 only motion pictures owned by Plaintiffs herein. Quinto Decl., ¶ 3.
13 VidAngel also eliminated any potential for the threatened irreparable injuries
14 the Court found in issuing the Injunction Order. VidAngel now requires that its
15 customers purchase the right to watch any given motion picture from an LSS, thus
16 driving more business to Plaintiffs’ licensees—as opposed to competing with them.
17 VidAngel has advised each of the LSSs whose services its supports what it is doing
18 and how it performs its services. Not only has there been no complaint but at
19 VidAngel’s request, one LSS directed its third-party DMCA watch service to stop
20 sending take-down notices concerning VidAngel. Quinto Decl., ¶ 4. As a result,
21 VidAngel’s Stream-Based service does not interfere with Plaintiffs’ “basic right to
22 control how, when and through which channels consumers can view their
23 copyrighted works.” See Injunction Order at 17:3-10. Nor does it “undermine[]
24 Plaintiffs[‘] negotiating position with licensees” or “damage[] [Plaintiffs’] goodwill
25 with licensees.” Id. at 17:21-18:18.
26 Unsurprisingly, no significant motion picture studio or television network not
27 affiliated with Plaintiffs or MGM has expressed any objection to VidAngel
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1 concerning its Stream-Based service, and no LSS has expressed any complaint,
2 either. Quinto Decl., ¶ 5.
3 D. As This Court Has Acknowledged, Plaintiffs Have Not Shown That
4 VidAngel’s Stream-Based Service Should Be Enjoined
5 This Court has twice recognized that whether VidAngel’s Stream-Based
6 service violates the DMCA or poses the probability of causing an irreparable injury
7 has yet to be determined. And, fearful of a finding they do not want, Plaintiffs chose
8 not to ask for declaratory relief when, following those rulings, they sought leave to
9 amend their Complaint herein.
10 On June 19, 2017, VidAngel filed a Motion to Clarify or Construct
11 Preliminary Injunction Order (ECF No. 182) and sought an order (ECF No. 182-2)
12 that its use of its Stream-Based service “in connection with Plaintiffs’ motion
13 pictures will not violate the terms of the [PI] Order.” Significantly, in opposing that
14 motion, Plaintiffs did not offer any evidence that VidAngel’s use of its Stream-Based
15 service to make individually filtered versions of their motion pictures available to
16 families would cause them any economic harm or injure them in any way. Instead,
17 they claimed that they lacked sufficient information to confirm that the Stream-Based
18 service did not offend the DMCA. ECF No. 188.
19 On August 2, 2017, the Court denied the motion without prejudice (ECF No.
20 198), holding that, “VidAngel’s request for a declaration that [its] new service
21 doesn’t violate the Court’s order is essentially an action for a declaratory judgment
22 and is not appropriate for resolution in a motion to clarify.” Id. at 4. The Court
23 further noted that there were “many” issues involved “in determining whether
24 VidAngel’s new service complies with the Copyright Act and the Court’s
25 preliminary injunction.” Id. at 6.
26 VidAngel then tried again, filing a Motion for Order Clarifying Preliminary
27 Injunction Order on August 18, 2017 (ECF No. 200), requesting an order declaring
28 that a streamed filtering service that was more than merely colorably different from
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1 its Disc-Based service would not violate the Injunction Order. Again, the Plaintiffs
2 offered no evidence that such a service would cause them any economic or
3 irreparable injury. In opposition to the motion, Plaintiffs could do no more than (i)
4 speculate that if consumers had a bad experience with the quality of VidAngel’s
5 streaming service, they might infer that all streaming services are poor quality and
6 might therefore choose not to watch unfiltered movies transmitted by licensed
7 streaming services, and (ii) speculate that VidAngel’s service might interfere with the
8 activities of licensed streaming services and thereby upset them. ECF No. 202.
9 VidAngel, however, has continuously used its Stream-Based service to allow
10 consumers to watch filtered versions of motion pictures not copyrighted by Plaintiffs
11 since June 2017 without objection from LSSs (and with the active assistance of one).
12 VidAngel is also unaware of any consumer who has chosen to forego watching all
13 streamed content as a result of using its Stream-Based service. Quinto Decl., ¶ 6.
14 On September 13, 2017, the Court denied that motion (ECF No. 207),
15 observing that the injunction “restrain[s] VidAngel from using Plaintiffs’ works in a
16 way that infringes the[ir] exclusive rights.” Id. at 4. In so holding, the Court left two
17 critical questions unanswered: Does VidAngel’s Stream-Based service infringe?
18 And if it infringes, does it cause a probability of irreparable injury as required to
19 enjoin its use?
20 And, although the Court may have believed that adding the qualifier that
21 VidAngel was enjoined from using Plaintiffs’ works only “in a way that infringes,”
22 the qualifier did not address the irreparable injury requirement, impermissibly failed
23 to clarify what conduct is enjoined, and, unless modification is granted,
24 impermissibly left VidAngel exposed to contempt if it uses its Stream-Based method
25 to filter and stream Plaintiffs’ motion pictures.
26 When Plaintiffs met and conferred with VidAngel on August 9, 2017,
27 concerning their intent to file an amended complaint herein, VidAngel asked whether
28 they would add a claim for declaratory relief addressing the Stream-Based service.
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1 They declined to do so on the basis that the terms of the Injunction Order are “clear.”
2 Quinto Decl., ¶ 8. Clear or not, that response begs the question whether there is a
3 legally-permissible basis to enjoin VidAngel from using its Stream-Based service.
4 On September 24, 2017, the Court granted Plaintiffs leave to file an Amended
5 Complaint (ECF No. 227), which was filed on October 6, 2017. ECF No. 228. The
6 Amended Complaint alleges the same two claims for relief as the initial complaint,
7 both of which are based entirely upon Plaintiffs’ express allegations describing only
8 the Disc-Based service. ECF No. 228 at 3, ¶ 3 (“VidAngel appears to circumvent the
9 technological protections measures on DVDs and Blu-ray discs”); at 5, ¶6
10 (“circumvent access controls on protected discs”); at 12, ¶ 40 (“unauthorized access
11 to and copying of the copyrighted content on DVDs and Blu-ray discs”); at 12, ¶ 41;
12 at 12, ¶ 42 (“content on DVDs or Blu-ray discs” and “TPMs effectively control
13 access to copyrighted content on DVDs and Blu-ray discs, respectively”); at 14, ¶¶
14 48-49; at 15, ¶ 51 (describing how, in Plaintiffs’ view, VidAngel’s use of “DVDs or
15 Blu-ray discs” are uniquely the problem at issue in the Amended Complaint); at 16, ¶
16 53; at 17, ¶ 56 (distinguishing VidAngel’s Disc-Based service from prior non-disc-
17 based filtering, and emphasizing that this action focuses on the Disc-Based service);
18 at 20, ¶ 76.
19 Plaintiffs make no mention in their Amended Complaint of the new filtering
20 technology developed by VidAngel after December 2016, nor any other anticipated
21 future service. ECF No. 228.
22 E. Although Irrelevant to the Preliminary Injunction Analysis, There Is
23 Powerful New Evidence That the Stream-Based Service Merits Fair Use
24 Protection
25 Although this motion raises the question only whether VidAngel’s Stream-
26 Based service should lawfully be enjoined and not whether that service is lawful, it is
27 worth noting that there is powerful new evidence that its Stream-Based service
28 merits fair use protection. Professor Doug Lichtman of the UCLA School of Law
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1 and Dr. Benjamin Nyblade, Director of Empirical Research for the UCLA School of
2 Law, spent more than a year conducting an independent study of VidAngel’s 2016
3 filtering data and recently reported their findings in a paper that they have submitted
4 for publication. Declaration of Douglas Lichtman (“Lichtman Decl.”) ¶ 2-3.
5 Professor Lichtman and Dr. Nyblade were not paid by VidAngel, not limited in what
6 they could examine, and not subject to any form of editorial control. Id. ¶ 4. They
7 were free to report any and all conclusions they reached. Id. ¶¶ 2, 4.
8 They found, among other things, that there is a substantial market for filtered
9 content; a typical VidAngel user applied 17 filter settings to the motion pictures he or
10 she watched in 2016; VidAngel users enjoyed watching filtered movies to the same
11 extent that others enjoy watching unfiltered movies; and filtering did not lessen
12 viewers’ opinion of the films’ directors. They then concluded that:
13 [C]opyright law’s fair use doctrine explicitly invites courts to consider public
14 policy1 when deciding whether to prohibit what might otherwise be infringing
15 activity. And, in our view, the public policy arguments here are compelling.
16 Specifically, when copyright law can do so without imposing any plausible
17 economic harm on copyright holders, copyright law should support parents
18 who want to shield their children from inappropriate content and should
19 likewise support individual viewers who want to avoid what they see as
20 unwelcome vulgarity, sexual content and violence.
21 ...
22 VidAngel currently offers a filtering service that works with a user’s Netflix
23 and Amazon accounts to filter only those films that the user can already legally
24 stream in unedited form. . . . These services strike us as achieving a balance
25
26
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27 By enacting the Family Movie Act, codified in principal part at 17 U.S.C.
§110(11), Congress declared that public policy favors allowing families to watch
28 filtered content streamed to them in the privacy of their homes.
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1 consistent with our empirical work and appropriately sympathetic to both
2 Hollywood’s and viewers’ legitimate concerns.
3 Quinto Decl., ¶¶ 9-10 and Exhibit A thereto (footnotes omitted).
4 In the proceedings on VidAngel’s motions to clarify, the Court did not reach
5 the merits of VidAngel’s fair use argument for its new filtering technology. See ECF
6 No. 198 at 3.
7 III. Argument
8 A. This Court May Modify Its Injunction Order
9 Federal Rule of Civil Procedure 60(b)(6) provides that on motion and just
10 terms, a court may relieve a party from an order for any “reason that justifies relief.”
11 Rule 60(b)(6) is “a grand reservoir of equitable power to do justice in a particular
12 case.” Matarese v. LeFevre, 801 F.2d 98, 106 (2d Cir. 1986). Under Rule 60(b), a
13 district court “clearly [has] both statutory and equitable authority to modify” an order
14 granting a preliminary injunction. Transp., Inc. v. Mayflower Servs., Inc., 769 F.2d
15 952, 954 (4th Cir. 1985). Thus, “the issuing court has continuing jurisdiction to
16 modify or revoke an injunction as changed circumstances may dictate.” Lapin v.
17 Shulton, Inc., 333 F.2d 169, 170 (9th Cir. 1964). See also Mariscal-Sandoval v.
18 Ashcroft, 370 F.3d 851, 859 (9th Cir. 2004) (“[S]ound judicial discretion may call for
19 the modification of the terms of an injunction decree.”).
20 “In modifying a preliminary injunction, a district court is not bound by a strict
21 standard of changed circumstances but is authorized to make any changes in the
22 injunction that are equitable in light of subsequent changes in the facts or the law, or
23 for any other good reason.” Movie Sys., Inc. v. MAD Minneapolis Audio Distribs.,
24 717 F.2d 427, 430 (8th Cir. 1983).
25 Modification is also appropriate when “there is no evidence that the
26 [defendant] present[s] any current or future threat to [plaintiffs’] interests.” TMX
27 Funding, Inc. v. Impero Techs., Inc., 2010 WL 2077011, at *12 (N.D. Cal. May 2,
28 2010).
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1 Because VidAngel’s Stream-Based filtering method had not yet been
2 developed and perforce could not have been considered by the Court in issuing its
3 Injunction Order, Rule 62(c) provides an additional basis for modification. Pursuant
4 to Rule 62(c), “[t]he court may modify . . . the scope of its injunction under its
5 continuing duty to supervise the relief granted if it is informed of new facts that
6 require additional supervisory action.” Nat’l Grange of the Order of Patrons of
7 Husbandry v. Cal. State Grange, 182 F. Supp. 3d 1065, 1074 (E.D. Cal. 2016); see
8 also Williams v. Lesiak, 822 F.2d 1223, 1227 (1st Cir. 1987) (“[W]here the order has
9 proved to be a faulty method for accomplishing the goal for which it was designed, it
10 would be error for a district court to refuse to grant a modification.”).
11 A motion to modify a preliminary injunction is meant “to relieve inequities
12 that arise after the original order,” and its “primary justification” is “to avoid the
13 injustice of requiring a defendant to continue complying with an injunctive order
14 under circumstances that would have prevented its entry in the first place.” Favia v.
15 Ind. Univ. of Pa., 7 F.3d 332, 337-38 (3d Cir. 1993).
16 For that reason, as well, a district court has “wide discretion” to modify an
17 injunction based on new facts. Sys. Fed’n No. 91 v. Wright, 364 U.S. 642, 647-48
18 (1961). Accordingly, a plaintiff may not rely on a court’s previous finding of a
19 threat of current or future irreparable harm to establish in “an attempt to establish a
20 continuing threat of harm” when under a balance of equities there is insufficient
21 harm to justify the burdens imposed on the defendant. Language Line Servs., Inc. v.
22 Language Servs., 2013 WL 12173920, at *2 (N.D. Cal. June 25, 2013).
23 B. Conduct That Does Not Threaten an Irreparable Injury May Not Be
24 Enjoined
25 The Supreme Court has repeatedly held that because a preliminary injunction
26 is an extraordinary remedy, one may “never [be] awarded as of right.” Winter v.
27 Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (citing Munaf v. Geren, 553
28 U.S. 674, 689 (2008)). “An injunction is a drastic and extraordinary remedy, which
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1 should not be granted as a matter of course.” Monsanto Co. v. Geertson Seed Farms,
2 561 U.S. 139, 165 (2010) (reversing grant of permanent injunction). “An injunction
3 should issue only where the intervention of a court of equity ‘is essential in order
4 effectually to protect property rights against injuries otherwise irremediable.’”
5 Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982) (quoting Cavanaugh v.
6 Looney, 248 U.S. 453, 456 (1919)).
7 The ineluctable lesson of foregoing Supreme Court authority is that “an
8 injunction must be ‘tailored to eliminate only the specific harm alleged.’” OTR
9 Wheel Eng’g, Inc. v. W. Worldwide Servs., Inc., 602 Fed. Appx. 669, 672 (9th Cir.
10 2015) (quoting E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1297 (9th
11 Cir. 1992)).
12 The Court has also made clear that neither a preliminary nor a permanent
13 injunction may issue except when the requesting party faces the probability of
14 suffering an irreparable injury absent injunctive relief—even when infringement is
15 proved. For example, in Amoco Production Co. v. Village of Gambell, 480 U.S. 531
16 (1987), the Ninth Circuit entered a preliminary injunction after determining that the
17 Secretary of the Interior had likely violated the Alaska National Interest Lands
18 Conservation Act. Id. at 534. The Supreme Court reversed, holding that the
19 presumption of irreparable harm “is contrary to traditional equitable principles.” Id.
20 at 545.
21 In eBay v. MercExchange L.L.C., 547 U.S. 388 (2006), the Supreme Court
22 held that a copyright owner has no automatic right to injunctive relief even if
23 infringement has been established: “[T]his Court has consistently rejected invitations
24 to replace traditional equitable considerations with a rule that an injunction
25 automatically follows a determination that a copyright has been infringed.” Id. at
26 392-93 (citing New York Times Co. v. Tasini, 533 U.S. 483, 505 (2001) (citing
27 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 n.10 (1994)); Dun v.
28 Lumbermen’s Credit Ass’n, 209 U.S. 20, 23-24 (1908)).
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1 In Winter, the Supreme Court further declared that, “[a] plaintiff seeking a
2 preliminary injunction must establish that he is likely to succeed on the merits, that
3 he is likely to suffer irreparable harm in the absence of preliminary relief, that the
4 balance of equities tips in his favor, and that an injunction is in the public interest.”
5 Id. at 20 (emphasis added) (citing Munaf at 689-690; Amoco Prod., 480 U.S. at 542;
6 Romero-Barcelo, 456 U.S. at 311-312.
7 The Court’s “frequently reiterated standard requires plaintiffs seeking
8 preliminary relief to demonstrate that irreparable injury is likely in the absence of an
9 injunction.” Winter, 555 U.S. at 22 (bolding added; italics in original) (citing Los
10 Angeles v. Lyons, 461 U.S. 95, 103 (1983); Granny Goose Foods, Inc. v. Teamsters,
11 415 U.S. 423, 441 (1974); O’Shea v. Littleton, 414 U.S. 488, 502 (1974)). See also
12 Herb Reed Enters., LLC v. Fla. Entm’t Mgmt., 736 F.3d 1239, 1249 (9th Cir. 2013)
13 (“[L]ikely irreparable harm must be demonstrated to obtain a preliminary injunction
14 in a copyright infringement case.”).
15 And, even if irreparable injury is shown, it may still be outweighed by the
16 public interest. See Winter 555 U.S. at 22 at 23. And “[i]n each case, courts ‘must
17 balance the competing claims of injury and must consider the effect on each party of
18 the granting or withholding of the requested relief.’” Id. at 24 (citing Amoco Prod. at
19 542).
20 The same limitations also apply to the issuance of a permanent injunction:
21 [I]t would be an abuse of discretion to enter a permanent injunction, after final
22 decision on the merits, along the same lines as the preliminary injunction. An
23 injunction is a matter of equitable discretion; it does not follow from success
24 on the merits as a matter of course. Romero-Barcelo, 456 U.S., at 313, 102 S.
25 Ct. 1798 (“[A] federal judge sitting as chancellor is not mechanically obligated
26 to grant an injunction for every violation of law”).
27 Winter 555 U.S. at at 32. Accordingly, “the balance of equities and consideration of
28 the public interest—are pertinent in assessing the propriety of any injunctive relief,
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1 preliminary or permanent.” Id. (citing Amoco Prod., 480 U.S. at 546, n.12 (“The
2 standard for a preliminary injunction is essentially the same as for a permanent
3 injunction with the exception that the plaintiff must show a likelihood of success on
4 the merits rather than actual success.”)). See also, Monsanto, 561 U.S. at 158 (“It is
5 not enough for a court considering a request for injunctive relief to ask whether there
6 is a good reason why an injunction should not issue; rather, a court must determine
7 that an injunction should issue . . . .”) (reversing grant of permanent injunction).
8 Because Plaintiffs have never shown 2, or for that matter even attempted to
9 show, that VidAngel’s use of its Stream-Based filtering model is likely to cause them
10 to suffer irreparable harm, the Injunction Order should be modified to carve out the
11 Stream-Based service unless and until Plaintiffs demonstrate that it causes a
12 probability of irreparable harm. Such a modification is supported by the doctrine
13 that injunctive relief should avoid prohibiting legitimate conduct. See, e.g., United
14 States v. Oakland Cannabis Buyer's Coop., 190 F.3d 1109, 1114 (9th Cir.1999) (per
15 curium) (describing the difficulty in “crafting an injunction that is broad enough to
16 prohibit illegal conduct, but narrow enough to exclude conduct that likely would be
17 legally privileged or justified”), rev'd on other grounds, 532 U.S. 483 (2001).
18
19
20
2
21 In seeking the Injunction Order, Plaintiffs speculated that they might be damaged if
someone gained unauthorized access to the tiny, encrypted bits of movies VidAngel
22 maintained in the Cloud, decrypted those bits, reassembled them in proper order, and
uploaded the reassembled motion picture to a file-sharing site. Not only is there no
23 evidence that such piracy has ever occurred, but Plaintiffs’ rank speculation begs the
question of why anyone would want to do that. VidAngel did not gain access to
24 movies until they had completed their runs in commercial theaters, been released to
the airlines, been released for streaming through various “windows,” and, finally,
25 been released on DVDs. By then, virtually all popular movies had already been
illegally viewed millions of times. Movie piracy often begins well before motion
26 pictures reach theaters. Many movies show up on torrent sites before they are
released commercially. See How-To-Geek, How Do Movies Leak Before They Come
27 Out on DVD and Blu-Ray?,(Sept. 21, 2016.
https://www.howtogeek.com/238032/htg-explains-how-do-movies-leak-before-they-
28 premiere/), accessed Jan. 11, 2019 (attached to Quinto Decl. as Exhibit B).____
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1 C. The Preliminary Injunction Also Impermissibly Prohibits All Fair Uses
2 of Plaintiffs’ Motion Pictures.
3 The Injunction Order is impermissibly overbroad for the additional reason that
4 it improperly prohibits VidAngel from engaging in any fair use of their works as
5 authorized by federal statute without confronting the risk of contempt. Section 107
6 of the Copyright Act (Limitations on exclusive rights: Fair use) provides that
7 everyone is privileged to use copyrighted works owned by others in certain
8 circumstances:
9 Notwithstanding the provisions of sections 106 and 106A, the fair use of a
10 copyrighted work, including such use by reproduction in copies or
11 phonorecords or by any other means specified by that section, for purposes
12 such as criticism, comment, news reporting, teaching (including multiple
13 copies for classroom use), scholarship, or research, is not an infringement of
14 copyright. . . .
15
16 (Emphasis added.) The Supreme Court has characterized the fair use defense as “an
17 equitable rule of reason.” Sony Corp. of Am. v. Universal City Studios, Inc., 464
18 U.S. 417, 418 (1984).
19 If past is prologue, Plaintiffs will claim that fair use requires a finding that the
20 defendant’s work is “transformative” and will argue that a work cannot be
21 transformative unless material is added. Such argument would be stuff and
22 nonsense. Not only does Section 107 nowhere impose such requirement but doing so
23 would prohibit paradigmatic fair uses, such as using movie clips in obituaries and hot
24 news reporting. Unsurprisingly, the Supreme Court has explained that,
25 “transformative use is not absolutely required for a finding of fair use.” Campbell,
26 510 U.S. at 579.
27 Further, as explained in Sony, a product “need merely be capable of
28 substantial noninfringing uses” to merit fair use protection. Sony, 464 U.S. at 442.
14 VIDANGEL’S MOTION TO MODIFY
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1 The evidence here is that the majority of VidAngel customers would not watch the
2 movies they watch without being able to filter them, the vast majority of the
3 remaining customers would prefer to wait to watch a filtered movie than watch it in
4 unfiltered form earlier, and, although no measurements have been made, it is a safe
5 assumption that the overwhelming majority of VidAngel users would not allow their
6 children to watch the movies they watch absent the ability to filter. See ECF No.
7 255, ¶ 3.
8 In MCA, Inc. v. Wilson, 677 F.2d 180 (2d Cir. 1981), the Second Circuit
9 addressed the balancing of the public good with a plaintiff’s financial interest,
10 explaining that when “a claim of fair use is made, a balance must sometimes be
11 struck between the benefit the public will derive if the use is permitted and the
12 personal gain the copyright owner will receive if the use is denied. The less adverse
13 effect that an alleged infringing use has on the copyright owner’s expectation of
14 gain, the less public benefit need be shown to justify the use.” Id. at 183.
15 In this case, that balancing test could not be more lopsided. VidAngel’s
16 Stream-Based method eliminates all potential economic injury Plaintiffs alleged in
17 seeking the Preliminary Injunction. The Injunction Order, however, precludes
18 VidAngel from making even fair use of Plaintiffs’ works. It flatly prohibits, without
19 exception, “copying Plaintiffs’ copyrighted works” and “displaying any of Plaintiffs’
20 copyrighted works . . . by means of any . . . device or process.” Injunction Order at
21 22 (ECF No. 144). Absent a showing that it causes a probability of injury in excess
22 of the public benefit of being able to filter streamed content children watch, the
23 application of the Preliminary Injunction to the Stream-Based method is
24 unjustifiable.
25 Given the various considerations that underlie the fair use analysis, whether
26 any given use is “fair” is typically not a question a judge can answer. As Professor
27 Goldstein has explained, “[t]he fact-intensive nature of fair use determinations makes
28 them particularly resistant to summary resolution.” 3 Goldstein on Copyright, § 12.1
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1 at 12:5 (3d ed. 2014). Accordingly, even if there were no irreparable injury
2 requirement and only fair use mattered, enjoining conduct that has not undergone a
3 fact-intensive fair use analysis would still be prohibited.
4 D. The Preliminary Injunction Order Should Be Modified Because It Is
5 Impermissibly Overbroad
6 For purposes of a preliminary injunction, it is insufficient that the conduct to
7 be enjoined might be unlawful. Rather, the touchstone requirement is that the
8 enjoined conduct create a probability of irreparable injury. Thus, although it is true
9 that a district court has “broad power to restrain acts which are of the same type or
10 class as unlawful acts which the court has found to have been committed or whose
11 commission in the future, unless enjoined, may be fairly anticipated from the
12 defendant's conduct in the past[,] . . . the mere fact that a court has found that a
13 defendant has committed an act in violation of a statute does not justify an injunction
14 broadly to obey the statute and thus subject the defendant to contempt proceedings
15 if he shall at any time in the future commit some new violation unlike and unrelated
16 to that with which he was originally charged.” N.L.R.B. v. Express Pub’g Co., 312
17 U.S. 426, 435 (1941).
18 Similarly, in Rowles Co. v. Barnes, 2014 WL 4966071 (E.D. Mo. Oct. 2,
19 2014), the plaintiff’s motion to modify a preliminary injunction to prohibit the
20 defendants from “infringing” his copyright was denied because it was “overbroad
21 and ambiguous and provides no guidance to Defendants, or any other party,
22 regarding what would be considered infringing conduct.”
23 Consistent with the reasoning expressed in the foregoing decisions, the Ninth
24 Circuit requires that an injunction must be “tailored to eliminate only the specific
25 harm alleged.” E. & J. Gallo Winery, 967 F.2d at 1297.
26 Here, no probability or irreparable injury has ever been shown with respect to
27 VidAngel’s Stream-Based service (and independent researchers have made a strong
28 empirical showing that the Stream-Based service merits fair use protection).
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1 Because conduct may not be enjoined unless there is a probability of
2 irreparable injury, the Injunction Order should be modified to correct its overbreadth.
3 IV. Conclusion
4 For the reasons set forth herein, the Court order that the Preliminary Injunction
5 entered herein be modified by adding a paragraph (5) stating:
6 (5) except that providing a motion picture filtering service that requires each of
7 Defendant’s customers, or Defendant acting on its customers’ behalf, to pay a
8 streaming service licensed to transmit motion pictures copyrighted by
9 Plaintiffs to such consumers for private viewing shall not be deemed a
10 violation of paragraphs (2)-(4), above.
11
12 DATED: January 11, 2019 Respectfully submitted,
13
14
15 By: /s/ David Quinto
16 David Quinto
17 Attorney for Defendant VidAngel, Inc.
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17 VIDANGEL’S MOTION TO MODIFY
PRELIMINARY INJUNCTION