Category Archives: Legal Battle

Those posts that are relevant to the legal battle.

Full Roku App is Back! (BETA)

To our loyal VidAngel customers,

 

I am coming to the end of my 7th year working on the engineering side of VidAngel, and to say it’s been a difficult road would be putting it mildly. But I don’t need to tell that to  any of you. I know from the hundreds of films and television episodes I’ve watched with my family that the technical experience of finding and viewing content on VidAngel always seems to trend somewhere between glitchy and impossible.

We are on the 6th iteration of trying to make families and the studios happy! We want to focus less on litigation and more on our customers.

Even with the herculean efforts of our technical teams, we realize that over the past few months things have changed for the worse, and it’s because we’ve failed on a couple fundamental tasks:

 

1)    We lost our focus on the transparency you need in order to trust us, and

2)    We have given your feedback about the direction our products are going far less weight than  we should have. 

 

So, as we try to right the ship as an engineering company, I thought it would be helpful to first give a bit of background. We often get questions asking how our technology works, and while every detail is publicly available, it isn’t an easy follow. So let’s change that.

 

For example, in order to watch a Netflix or Amazon title on VidAngel, we have to verify you have the rights, through one of those services, to view it. And in order to verify those rights, our systems need to “talk” with the systems from Amazon or Netflix. This works just like a web browser … in fact, it is a web browser. When you hit the “play” button in VidAngel, we create a web browser in the cloud that uses your specific Netflix or Amazon account to navigate to that title. From there we verify that your subscription is still active,  you’ve paid your rental/purchase fee, you’re in the right geographic location, or any other requirement that might be in place for you to legally be able to watch Amazon and Netflix content (and thus filter it).

 

Neither Amazon or Netflix is in the filtering business, and they have a vested interest in building their apps in ways that work for their goals, needs, and customers, without regard for what effects changes might have on a system like I described above. Changes to their websites may have adverse effects on how VidAngel’s systems communicate with those of Netflix or Amazon.

 

This would not be an issue if we did not always ask Amazon and Netflix if you have access to watch the content. We have taken enormous and continual care to prevent people from watching any title with VidAngel filters when these verifications aren’t rock solid. We know that, if we want the media industry to believe we are fighting for the individual and family right to watch however works best for them, we need to respect the decisions they make about their products and content as well. And this is one of the major reasons why the VidAngel playback experience is often so up-and-down. 

 

This brings us to the middle of March, just several months ago when we were at the onset of the COVID-19 pandemic. At some point early in that month, Amazon Prime Video deployed a change to their systems that fundamentally altered our ability to verify our customers’ rights to legally watch and filter a title from Amazon’s services. This in no way means that we had been doing anything improper or untoward, or even that we’d been using our cloud browsers to navigate their site incorrectly.It was just a change they needed to make, and we were faced with a choice. We could turn off our Amazon filtering services until we had adjusted them to work with their changes (given that choosing to operate and serve Amazon content without verifying every single user ownership was never an option we would consider), or we could accelerate the rollout of a new product we’d been working on, one that communicated with Amazon and Netflix’s apps through your mobile phone rather than through a browser in the cloud.

 

Out of expediency, we chose the latter option. We had been working on the prototypes for several months already, and we wanted to get it into the hands of our customers as quickly as possible. Our new app is different in many ways, but one of the most crucial differences is that, by using your phone and your home wifi network, we can communicate even more clearly with Netflix and Amazon as to who is requesting to watch and filter a given title. It also opens the door for a wide range of your most requested  features to be developed, like community-based filters, closed caption and multilingual filtering, profile-based “allow/block” lists, and offline, “DVR-like” viewing/filtering. 

 

And this is how we found ourselves, VidAngelists, in a situation where we were offering a beta mobile app, a web app that only worked with Netflix, and some broken television apps that my 6-year-old daughter whined about whenever she discovered, every morning, that she could no longer watch Shrek on her “Rokuangel” (as I force her to call it).

 

We are committed to keeping you as informed as we can about our company’s direction. We also need your feedback to help guide that direction, which leads me to address a second question in my final few paragraphs: how can we at VidAngel take our fingers out of our ears and better listen to our customers?

 

Our television casting feature, a core feature of our new mobile apps, is something I’m very passionate about. Casting was what brought me to VidAngel, and after 6 and a half years, when we rolled out our new casting technology that can  talk to any family’s devices, I remember saying to myself, “This is incredible. Why would anyone ever want to install an app on their Roku or Apple TV again? You can do it all from your phone!” Yet now, with hindsight that’s 20/20, I realize I wasn’t really seeing the forest for the trees. Many of you don’t want to use the phone as your remote. Whether it’s because you’re like me and have younger kids who want to start their own shows, or you have teenagers who you can’t trust to set their filters properly, or you just want to relax on the couch, distraction free while your phone is in the other room, we hear your complaints. Thank you for your feedback over the past few months and telling us how important your specific VidAngel viewing experience is.

 

With that said, we’ve made a monumental push over the past few weeks and are now able to release two significant new(ish) products:

 

1)    An updated, still-a-work-in-progress-but-getting-there, version of the VidAngel Roku app that can work with your mobile device. This way you can, after a one-time sync between the two devices, browse, search, and watch on Roku the way you’ve always done in the past, with full access sans your mobile phone, you can find out more details at https://www.vidangel.com/roku and 

2)  A new chrome extension that will restore full access to enable your computer to connect to streaming services (no mobile syncing required!) and watch right in a browser.

 

Additionally, we are already hard at work to bring the same new features to the AppleTVs, FireTVs, and Android TVs out there.

 

Your patience is much appreciated, but even more so we appreciate your trust. We want to continue to make entertainment good for your home, and we can only do that once we’ve proven we deserve a place in  your home in the first place. 

 

Jarom McDonald

VP of Research and Innovation

VidAngel

Letter to Shareholders

May 5, 2020

 

Friends of VidAngel,

VidAngel exists to help you make entertainment good for your home. 

What is good for each of our homes is a personal choice. We’ve long known the motto “Be our guest.” At VidAngel, we believe “We’re your guest.” 

After all, it’s your home.

You choose how to watch. In 2013, we started developing software that was essentially a pre-programmed streaming remote. We have now gone through 6 successive attempts to build your skipping software. In each iteration, we hit a wall. We were sued over iteration number four, struggled through bankruptcy, and today Disney continues to oppose iteration number 6. We’re continuing to push through that for you, and in the meantime, we’re providing access to arguably the most exciting content of the COVID-19 era, produced by Netflix, Amazon and other streaming services. Watch however the BLEEP you want.

You choose what we make. In 2017, armed with the data around the skip choices families are making, we launched Dry Bar Comedy. Over 300 comedians have now performed, fine-tuning their sets to the audience and receiving  bonuses for better serving you. Additionally, with the help of 19,000 of you, we funded, produced, and distributed the award-winning dramatic series The Chosen

And you have responded. In April 2020, our business generated 5X the revenue of our skipping software pre-injunction. Dry Bar has over 2 billion views. The Chosen is offered globally, in dozens of languages, has tens of millions of views, and millions of dollars in revenue via its own app. It has been the #1 series on VidAngel for months. 

We hear you. 

Five. Times. Revenue.

 

So what’s next?

After emerging from bankruptcy (we hope during the June 18, 2020 confirmation hearing), we plan to raise up to $50 million to grow VidAngel. 

Our goal with these funds will be:

  1. Give our loyal investors, without whom we would not exist today, a chance to liquidate some of their shares (some people may need cash due to COVID-19 and won’t be able to wait for a potentially larger return). 
  2. Back many more creator projects, like The Chosen and Dry Bar Comedy, by building creator tools for:
    • – daily financial reporting and monthly payments (currently quarterly)
    • – better audience interaction (e.g. live streams, merchandise, uploads, notifications)
    • – creator cross-promotion (i.e. a simple way for The Chosen and Dry Bar to promote new creators’ projects with their massive audiences)
  3. Build better control over more content, allowing you, for example, to:
    • – find the very best content to watch or the best future content to back (rather than the primary focus being on skipping objectionable content)
    • – say exactly what kids are allowed to browse (specific list of approved titles with pre-set skips)
    • – watch with skips without having to wait for us to tag it (say hello to SkipBot and community made skips)

Thank you for trusting VidAngel as a guest in your home. We aim to build an entertainment company that centers around your kingdom, not ours. The best days are yet ahead.

 

Onward,

Neal Harmon

Co-founder and CEO

 

Click here for VidAngel’s SEC Reports

VidAngel Trustee Files Reorganization Plan with Bankruptcy Court

Company Submits Plan to Meet All Financial Obligations and Move Forward from Lawsuit as Vibrant and Growing Business

 

(Los Angeles, CA—March 5, 2020) VidAngel is announcing today that due to rapid
growth over the last year, its Trustee has filed a plan of reorganization which outlines a
strategy for the company to move out of bankruptcy. The company’s operating results,
as reflected by monthly filings over the past months and last year, reflect growth in
gross revenues, emerging success of new lines of business and the stability of the
company’s core business.

 

VidAngel, Inc. Trustee, George Hofmann, has issued the following statement:

“Bankruptcy law was established by Congress to give companies a chance to rehabilitate, get back on their feet, pay their creditors, and continue to move forward.
VidAngel has a reorganization plan that does just that. After entry of an adverse judgment in an amount that, initially, seemed insurmountable, the company’s business and revenues are growing, and the company is expanding into new lines of business. According to third party financial experts hired to advise me in the reorganization process, VidAngel’s robust growth makes paying the judgment in full feasible. I look
forward to the court confirming a plan so that VidAngel can emerge from bankruptcy, pay its debts and focus on growing a great business.”

 

VidAngel, Inc. CEO Neal Harmon has issued the following statement:

“We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team. We’ve gone from avoiding threats of a shutdown to being able to say, ‘just send us the bill’. VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.”

 

Reorganization Filing Facts

● In light of financial results reflecting VidAngel’s business growth and future
potential, VidAngel’s Trustee has decided to file a reorganization plan to pay the
adverse judgment in full.

● Third party experts have determined, given VidAngel’s financial results to date
and the anticipated stability and growth of its current lines of business, that it is
feasible to pay off the adverse judgment over a 14-year plan.

● Under the proposed plan, VidAngel’s appeal of the California court’s judgment
will continue, the shares of its investors will be preserved and VidAngel’s
management and board will control the company moving forward.

● The plan confirmation process is anticipated to take a minimum of 60 days.

 

What this means for VidAngel

Should the judge confirm the reorganization plan, VidAngel is moving out of bankruptcy and on from the lawsuit as a healthy company with exciting growth. 

 

What this means for the $62.4 Million Judgment 

This reorganization also means that we get to appeal both the summary judgment ruling and the $62.4 million judgment, and feel we have a strong case. But in the event that our appeal fails, the $62.4 million judgment is not a death sentence. Third party experts have opined that VidAngel can pay off the judgment over a 14 year period. That’s an unbiased third party who has looked at our financials and growth prospects and is saying that VidAngel can pay this off. All $62 million.

 

What this means for VidAngel Investors

We are especially happy to inform our investors that, if the Trustee’s plan is confirmed by the Bankruptcy Court, VidAngel investors will retain their equity in the company and have the opportunity to share the benefits of future success.

 

We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team. We’ve gone from avoiding threats of a shut down to being able to say, ‘just send us the bill.’ 

VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.

Thank you. We are so excited for the days ahead.

 

 

Permanent Injunction

VidAngel Fans,

 

Thursday night, the original 2016 preliminary injunction against VidAngel was ruled “permanent” — but with legally questionable modifications (here’s the order and the ruling).  In January 2017, we shut down our old system and have never since used it to offer anyone’s content. Instead, we pioneered a new system, but never offered Disney’s content on it.  We advised the court that we had not used the old system in any way for more than 32 months and “unequivocally” committed never to use it again absent a change in the law. But the judge nevertheless issued the new injunction.

 

Perplexingly, the judge granted Disney’s unusual (and legally questionable) request to broaden the injunction to include “parents, affiliates and subsidiaries,” and did so without requiring even that Disney identify those additional entities.

 

As we have done in the past, we will proceed with the utmost caution. We are removing the titles that are seemingly subject to the injunction. Once again we don’t know for sure which ones are because of the vagueness of the ruling. However, we know ABC and Hulu are owned by Disney and HBO is owned by TimeWarner, which also owns Warner Bros. Late last night we also removed Castle Rock. We have asked the studios if there are more entities now protected by the new injunction and await their answer. 

 

In light of this development, might we suggest that now is the time to reach out to your senator and/or Congressional representative to urge that they support the bill to update the Family Movie Act to permit filtering of all movies?

http://savefiltering.vidangel.com

We’re certain this comes as a blow to those who love ABC, HBO and Fox Searchlight. Let’s re-double our efforts to seek a solution! 

 

Sincerely,

Neal Harmon

 

CEO, VidAngel

 

 

 

How you can help Senator Mike Lee update the Family Movie Act

Senator Mike Lee is preparing to introduce an update to the Family Movie Act in the Senate. This important message from the CEO of VidAngel, Neal Harmon, and a letter from the President of the Parents Television Council, Tim Winter, explains how you can help.


Video Message from VidAngel:
(Can’t see the video? Click here.)


Letter from Parents Television Council:

As a parent, nothing is more important than protecting a child’s innocence.

And, as a veteran of the entertainment industry, the truth is that there are many in Hollywood who are actively engaged in creating content that strips that innocence away from our kids, damaging lives forever.

You know this already, that’s why you use and support VidAngel, because its incredible content filtering technology protects your family. The Parents Television Council wants to protect your right to filter out the graphic sex, violence and profanity that is so pervasive in today’s media, but I need your help.

Hollywood is fighting to remove your parental right to use content filtering technology for modern streaming devices.  They’ve convinced judges that you shouldn’t be able to use modern technologies to protect your family from material that you find harmful or offensive.

If we don’t act now, and if we don’t act together, we may lose that right forever. Please contact your senator to support your right to filter explicit content.

Legislation is being considered in Washington DC that will block the negative forces in Hollywood from taking away your right to use filtering technologies like VidAngel.  If that legislative remedy is to succeed, we need bipartisan support from the most influential legislators. That’s why your senator needs to hear from you today.

HOW YOU CAN PROTECT KIDS RIGHT NOW.  Please click on the link and send your personal plea to your Senator so that your rights to filter content are protected. It will only take a minute or two, but it will help you and your family for decades to come.

With urgent thanks,

Tim Winter

President

Parents Television Council

Agreement Reached on Chapter 11 and Chapter 7 Motions

All,

 

We have news.

 

First a refresher on bankruptcy – Chapter 11 means VidAngel still serves its customers and Chapter 7 means VidAngel is shut down.

 

We’ve reached an agreement with the studios to appoint a chapter 11 trustee in exchange for:

1) Withdrawing the studios’ chapter 7 motion

2) Under Bankruptcy law, the studios can elect whoever they choose if they don’t like the trustee that is appointed, but under this agreement, they only choose from four people we’ve agreed on in advance.

 

We decided to do this because we think it will allow an objective third party help us get through the chapter 11 reorganization process with more favorable results for the future of VidAngel. And it will save money that would have been spent on legal bills.

 

We are turning our sights to successful reorganization with the help of a trustee rather than spending unnecessary time and money fighting the studios’ motions. We’re optimistic about our prospects for reorganization.

 

Best regards,

Neal Harmon

Co-founder & CEO

VidAngel

Dear Haters: “I Could Be Wrong”

VidAngel has taken some pretty brutal uneducated attacks in the last week from those on social media who HATE skipping/filters: “criminals”, “theft”, “pirates”…

In response I remembered a few comments from the Judge, who ruled against VidAngel, that might offer some context into how civil disputes actually work (and perhaps a little less judging🤞).

“And, again, I could be wrong and the Ninth Circuit could be wrong. I have no ego about that, but, if we’re going to play by the rules, you have a ruling, you appeal it, and a decision is made.”

From the Judge during trial on Tuesday, June 11th

“They [VidAngel] think that the Family Movie Act generally allows them to do that.  And they may be right. The Supreme Court may take up this issue and they may decide it.”

-From the Judge during trial on Friday, June 14th

“Obviously, the verdict didn’t come out the way you [VidAngel] would have liked, but at least it’s been my observation that you all are fighters, that you all are fighters and are reflective, thoughtful, and you will persevere through this.”

“And you will take this matter, whether it’s appealing this trial or appealing to the Supreme Court or appealing to your legislature, I have no doubt that you have perseverance and intellect that will get you far in your respective careers. So I wish you all the best.”

From the Judge during trial on the day of the verdict, June 17th

 

If the judge who made the ruling himself isn’t 100% about his own ruling, I am pretty sure we can ignore all the self-righteous comments accusing others of being criminals or thieves.

He might be right in the end.  We might be right in the end. In a case of first impression, we won’t know until we finish moving through the court system.  This is a civil disagreement NOT a criminal case.

…and it isn’t over.

 

Letter From VidAngel CEO to Disney CEO

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Mr. Robert Iger

Chairman and CEO

The Walt Disney Company

500 South Buena Vista St.

Burbank, CA 91521-0001

June 21, 2019

 

Dear Mr. Iger,

 

During our court proceeding in Los Angeles, I made the point in my testimony that where I come from, people talk before they sue each other. We’ve tried to talk many times, and Disney has been unwilling to join in a conversation. So, on behalf of around 8,000 owners and tens of millions who want to skip a few things in Disney/Fox/Warner Bros. movies, I’ll continue this conversation publicly.

 

Let’s review a few quick facts…

1) VidAngel indisputably made your company and other Hollywood studios a profit. I think that’s why most of them did not join Disney in suing us.

2) You sued us for $125 million for it, and Federal District Court Judge Birotte commended both sides for an incredibly passionate fight. You won $62 million. We lost. At least for the moment.

3) Disney knows a trial and litigation (probably costing tens of millions to fight) in four courts could have been avoided by selling VidAngel a license.

 

The following is a proposal that could make everyone whole in this case if it were really about copyright protection and not about marginalizing the filtering market out of existence.

 

Mr. Iger, please take a close look at the raw data in this letter and ask yourself, “Does spending this kind of money to fight the filtering market make sense financially?”

 

VidAngel Made Money for Disney

Per an expert report at trial, unchallenged by alternative data or analysis, Disney et al would have been $229,752 poorer had VidAngel never offered their content on its service. These numbers are profits. VidAngel paid much more for the DVDs. I realize these numbers are nothing for Disney but we had barely tapped the market when Disney sued VidAngel.

(sources: Jeffrey Kinrich, MBA and CPA expert report, Dr. William Duckworth expert report and this survey data)

 

VidAngel Found a New Market for All Studios

A full 65% of the views for Disney et al content were views that would not have happened without VidAngel. Netflix, Amazon, Sony, Universal, Paramount and other studios who did not sue VidAngel also made profits from VidAngel’s success. 70% of the views for non-plaintiff content were views that would not have happened without VidAngel. There are so many reasons why people want to skip small bits of popular movies and TV shows.

An independent, peer-reviewed study conducted by UCLA Professor Doug Lichtman and Dr. Benjamin Nyblade found that there is a real and substantial market for filtered content, 98% of its customers used VidAngel to filter, and allowing families to select what they want to mute or skip does not decrease their enjoyment of the movies they watch. Remarkably, being able to choose to skip or mute a very small percentage of a movie makes all the difference to them. And NRG reports that 40 percent of Americans would want to use VidAngel.

(sources: Jeffrey Kinrich, MBA and CPA expert report, Dr. William Duckworth expert report and this survey data)

 

Disney Earned, VidAngel Lost and Damages Awarded

I don’t know if your legal team has communicated to you that building this new market for Disney came at great expense to VidAngel. We spent millions building technology and marketing to this new audience. You reaped profits, while we reaped losses. We happily invested to build a new market because we believe it will be very profitable when built.

(sources: Jeffrey Kinrich, MBA and CPA expert reportDr. William Duckworth expert report and this survey data)

 

Insults Don’t Change The Facts

While we made profits for Disney, you called us pirates as “your own strategy” according to the court transcript:

(Trial transcripts: June 11th AM and PM, June 12th AM and PM, June 13th AM and PM, June 14th AM and PM and June 17th)

 

Mr. Iger, Disney may call us what it wants, but the facts are:

1) Disney profited and VidAngel lost while building a brand new market for movies

2) VidAngel has always been open and honest about its purpose and actions

3) VidAngel asked for feedback, but none came

4) 9th Circuit called it a case of first impression (untested law  – Is VidAngel legal?)

5) VidAngel went to great expense to audit its movie purchases and systems to protect Disney’s interests

6) VidAngel asked you for a business solution to avoid the expense of the lawsuit

 

Although VidAngel’s service indisputably made it money, Disney litigated against us in 4 federal courts before getting a judgment of approximately $62.5 million.  At this point, VidAngel can keep going to the Supreme Court, hoping that the Court will protect Disney from itself. Or if this were not about filtering, we could say, “You won. We lost. How about a truce?”

 

Skip Foundation

It is more important to VidAngel that the option to skip exists than that VidAngel owns it.

 

Last week we filed a motion in the bankruptcy court to transfer our filtering assets to the Skip Foundation, Inc, a 501(c)(3) organization. This foundation will become the Wikipedia of skip technology as a free global resource. If the transaction is approved by the bankruptcy court, our patent and 10,000 titles with all skip data will be free for any company or any individual in the world to use as they see fit under copyleft and Wikipedia style licenses. And the entire world can contribute to the Skip Foundation’s library of content “skips” just like with Wikipedia. Those contributions could benefit VidAngel and Disney.

 

Disney, Netflix, Amazon and others could adopt the technology freely and implement the technology on top of their existing streaming contracts without an agreement of any kind with VidAngel.

 

Here’s What We Propose

We understand you want to protect your Intellectual Property.  You understand that VidAngel’s customers want to skip a few things in your movies in private. If the financial minds rather than the power minds within Disney prevail, this could be a solution.

 

We are prepared to consider giving Disney our Dry Bar Comedy series in satisfaction of the judgment. Dry Bar Comedy is the fastest growing comedy brand in the world with over 1.5 billion views to date. It is making millions. It is growing so fast because the creators are embracing the data behind the skips of families. You could publish its family friendly comedy on Disney+.

 

With the so called “debt” settled, VidAngel could freely transfer the “filtering” assets to the Skip Foundation and emerge from bankruptcy. “Filtering” would survive as “skipping”, regardless of VidAngel’s future fate. And Disney could profit from both the skip data and Dry Bar Comedy.

 

This proposal would settle the judgement, respect Disney’s IP, and grow Disney profit. VidAngel would be free to focus on The Chosen, VidAngel Studios, and generating profits for its own investors, while enjoying the benefits of the Skip Foundation.

 

I won’t hold my breath for your response and we are already preparing our appeal, but it doesn’t hurt to ask. The IMP and Sony Betamax cases changed the industry, but they dragged on for almost a decade. Change is coming. You can fight it or profit from it. What do you say? Are you open to meeting?

 

Best regards,

Neal Harmon

Co-founder & CEO

VidAngel

 

 

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Disney v VidAngel Trial – Verdict

The final verdict is:

Willfully infringed? Yes

Copyright Award: $75,000 per work

819 * $75,000 = $61,425,000

DMCA Award: $1,250

819 * $1,250 = $1,023,750

We find today’s ruling unfortunate, but it has not lessened our resolve to save filtering for families. VidAngel plans to appeal the District Court ruling, and explore options in the bankruptcy court. Our court system has checks and balances, and we are pursing options on that front as well.