DISNEY ENTERPRISES, INC.; Lucas-Film Ltd. LLC; Twentieth Century Fox Film Corporation; Warner Brothers Entertainment, Inc., Plaintiffs-Counter-Defendants-Appellees, v. VIDANGEL, INC., Defendant-Counter-Claimant-Appellant.
No. 16-56843
United States Court of Appeals, Ninth Circuit
August 24, 2017
HURWITZ, Circuit Judge
Argued and Submitted June 8, 2017 Pasadena, California
SLUSA‘s jurisdictional bar, which applies in both state and federal courts, only kicks in when an individual plaintiff pleads 1) state-law claims as a 2) class action. So, assuming there are no other jurisdictional barriers, Hampton is free to return to the district court (or depart for an appropriate state court) to replead his state-law claims on an individual basis, or to plead new federal securities claims either as an individual or as a class representative. On what basis Hampton seeks to proceed, and in what forum, is up to him, and the district judge can set an appropriate schedule for that decision on remand.
CONCLUSION
For the reasons stated above and in our simultaneously-filed memorandum disposition, the judgment of the district court is AFFIRMED to the extent it concludes that Hampton‘s claims are barred, and VACATED to the extent it dismissed Hampton‘s claims with prejudice. The case is REMANDED for further proceedings consistent with this opinion.
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.
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.
Before: CARLOS T. BEA and ANDREW D. HURWITZ, Circuit Judges, and LESLIE E. KOBAYASHI,** District Judge.
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 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.
FACTUAL BACKGROUND
I. The copyrighted works.
Disney Enterprises, LucasFilm Limited, Twentieth Century Fox Film Corporation,
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
II. 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
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 customer an average of 16 times each in the first four weeks” of a title‘s release.
III. 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 other-
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
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
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 transmission to “come from an ‘authorized copy’ of the motion picture.”
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,”
We have jurisdiction of this appeal under
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.
I. 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, 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
Copyright owners have the exclusive right “to reproduce the copyrighted work in copies,” or to authorize another to do so.
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 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.
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.”
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 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
The statutory context of
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 any other section of this title or under any other paragraph of this section.”
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.”
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
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 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
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 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.”
(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 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.
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.
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.
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
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 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
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
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.”
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. 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,
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
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
To be sure, “unlawful circumvention under
VidAngel relies heavily on the DMCA‘s legislative history, which states that ”
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 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
II. 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 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
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 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 on-going, 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.
III. 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 ... 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 pre-date Winter and eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
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 Inc., 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
IV. 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 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.