A U.S. district judge has sided with Hollywood studios in their legal battle to block VidAngel, the streaming service that lets users filter unwanted language, sex and nudity from movies.
Judge Andre Birotte Jr. in Los Angeles granted a preliminary injunction against the Provo, Utah-based start-up, which allows people to stream cleaned-up versions of movies including "Star Wars: The Force Awakens" and "Deadpool" for $1 each.
Walt Disney Co., Lucasfilm, 20th Century Fox Film and Warner Bros. Entertainment in June sued VidAngel for illegally ripping DVDs and streaming without a license. The entertainment giants asked the court to block VidAngel from violating their copyrights.
VidAngel, which gained support from many families and religious leaders, relied on a quirky business model to eschew Hollywood's permission to stream movies. The company purchased thousands of DVDs and Blu-rays to make them available to stream through its website.
Users could purchase a new movie like "Zootopia" for $20. After they watched it, they could sell back the movie for a $19 credit, meaning the consumer actually paid only $1 to see the film — much less than they would have to pay iTunes or Amazon.
VidAngel's lawyers argued that the nascent company was protected from piracy accusations by a 2005 law called the Family Movie Act that says consumers can tweak movies they own for personal use. The company contended that what the studios really object to is the sanitizing of their films.
But the studios said that VidAngel merely used filtering as a clever way to circumvent the law.
Birotte, in his order, agreed with the studios' piracy claim.
"Plaintiffs have shown a strong likelihood of success on the merits of their claim that VidAngel has violated, and continues to violate [copyright law] by circumventing technological measures that effectively control access to Plaintiffs' copyrighted works and DVDs and Blu-ray discs," the judge wrote in his order granting the injunction.
VidAngel Chief Executive Neal Harmon vowed to appeal the decision and continue the legal battle with the studios. The company recently said it raised $10 million in a public offering to support its legal defense against the entertainment industry titans.
"Hollywood studios have followed a repeated pattern in their decades-long campaign to put movie filtering services out of business by seeking a shut-down decision in trial court," Harmon said in a statement. "Our customers have given us not just the mandate to fight this battle all the way to the Supreme Court, but the financial resources as well."
In a joint statement, Warner Bros., Disney and Fox said they were "gratified" by the court's ruling.
" This case was never about filtering," the statement read. "The court recognized that the Family Movie Act does not provide a defense to VidAngel's infringing acts of ripping, copying and streaming copyrighted movies and TV shows. We look forward to defending the court's decision against any appeal by VidAngel."
VidAngel had its genesis in 2012 when Harmon and his brother Jordan Harmon started adding filters to licensed movies on YouTube and Google Play. But they switched to their buy-and-sell-back model after they were kicked off YouTube for violating terms of service.
The business is the latest in a long line of filtered streaming companies to fight the entertainment industry and lose. In the 1990s and early 2000s, companies such as CleanFlicks re-edited and sold their own "clean" versions of popular movies, but ultimately were shut down. The exception was ClearPlay, which still sells DVD and Blu-ray devices that filter movies as they play.
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3:35 p.m.: This article was updated with a joint statement from Warner Bros., Disney and Fox.