A video-on-demand streaming service that enables the filtering of objectionable content to make it family friendly is breaking US copyright law, a federal appeals court ruled.

The service, VidAngel, buys movie discs and decrypts and rips them. It then streams versions that allow customers to filter out nudity, profanity, and violence. In doing so, it breached the performance rights of Disney, Lucasfilm, 20th Century Fox, and Warner Brothers, the court ruled. VidAngel purchased a disc for every stream it sold, some 2,500 titles in all.

"Star Wars is still Star Wars, even without Princess Leia's bikini scene," the opinion said. Just because objectionable content is removed, that doesn't necessarily transform the content enough to allow this type of behavior under a fair use analysis, the court wrote Thursday.

VidAngel also unsuccessfully argued that it was protected under the Family Movie Act (FMA) of 2005. That legislation allows the cracking of encryption to remove objectionable content so long as no fixed copy of the altered version is created.

The court didn't agree, however, because VidAngel didn't have the permission in the first place to stream the content.

Loophole alert

"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," the San Francisco-based 9th US Circuit Court of Appeals ruled. "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."

The appeals court upheld a lower court that issued a December injunction against the VidAngel service, which had recently raised $10 million.

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