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Case 2:16-cv-04109-AB-PLA Document 166 Filed 12/29/16 Page 1 of 5 Page ID #:5295

UNITED STATES DISTRICT COURT


CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

Case No.: CV 16-04109-AB (PLAx)


Title:

Date:

December 29, 2016

Disney Enterprises, Inc. et al v. VidAngel Inc.

Present: The Honorable

ANDR BIROTTE JR., United States District Judge

Carla Badirian
Deputy Clerk

N/A
Court Reporter

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None Appearing

None Appearing

Proceedings:

[In Chambers] Order DENYING Defendants Ex Parte


Application to Stay Preliminary Injunction Pending Appeal Or
Alternatively, Pending Decision by the Ninth Circuit On Stay
Pending Appeal (Dkt. No. 147)

This matter is before the court on Defendant VidAngel, Inc.s (VidAngel) ex parte
application to stay the Court's December 12, 2016 preliminary injunction order granting
Plaintiffs Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film
Corporation, and Warner Bros. Entertainment Inc. (Plaintiffs) Motion for Preliminary
Injunction. (Dkt. No. 144, Order.) The Courts Order enjoined VidAngel from
copying, streaming, transmitting or otherwise publicly performing or displaying any of
Plaintiffs copyrighted works. (Id.) VidAngel was also enjoined from circumventing
technological measures protecting Plaintiffs copyrighted works or engaging in any
activity that violates Plaintiffs anti-circumvention right under 1201 of the Copyright Act,
17 U.S.C. 1201(a), or infringing Plaintiffs exclusive rights under 106 of the Copyright
Act, 17 U.S.C. 106. (Id.) VidAngel requests that the Order be stayed in its entirety
pending resolution of its appeal of the Court's Order to the Ninth Circuit. VidAngel
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alternatively moves this Court to stay its Order pending VidAngel's motion to the Ninth
Circuit for a stay of the injunction which VidAngel intends to file should the instant motion
be denied.
For the reasons set forth below, the court DENIES VidAngel's motion for a stay in
its entirety.
I.

LEGAL STANDARD

Federal Rule of Civil Procedure 62(c) provides that "[w]hile an appeal is pending
from an interlocutory order or final judgment that grants . . . an injunction, the court may
suspend, modify, restore, or grant an injunction on terms for bond or other terms that
secure the opposing party's rights." In determining whether to issue a stay pending an
interlocutory appeal, courts must consider: (1) whether the stay applicant has made a
strong showing that he is likely to succeed on the merits; (2) whether the applicant will be
irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure
the other parties interested in the proceeding; and (4) where the public interest lies.
Hilton v. Braunskill, 481 U.S. 770, 776, 107 S. Ct. 2113, 95 L. Ed. 2d 724 (1987). "The
first two factors of the traditional standard are the most critical." Nken v. Holder, 556 U.S.
418, 434, 129 S. Ct. 1749, 173 L. Ed. 2d 550 (2009).
In applying these factors, the Ninth Circuit employs a "sliding scale" approach
whereby "the elements of the . . . test are balanced, so that a stronger showing of one
element may offset a weaker showing of another." Alliance for the Wild Rockies v. Cottrell,
632 F.3d 1127, 1131 (9th Cir. 2011); see also Leiva-Perez v. Holder, 640 F.3d 962, 964-66
(9th Cir. 2011) (noting that the sliding scale test for preliminary injunctions described in
Alliance for the Wild Rockies is the "essentially the same" as the test used in the stay
context, and holding that this approach "remains in place" following the Supreme Court's
decision in Nken). The Ninth Circuit has adopted and applied a version of the sliding
scale approach under which a preliminary injunction could issue where the likelihood of
success is such that serious questions going to the merits were raised and the balance of
hardships tips sharply in [plaintiff's] favor. Alliance for the Wild Rockies, 632 F.3d at
1131-32. "Serious questions" are those which are "substantial, difficult, and doubtful, as
to make them fair ground for litigation and thus for more deliberative investigation."
Senate of State of Cal. v. Mosbacher, 968 F.2d 974, 977-78 (9th Cir. 1992) (citing Gilder v.
PGA Tour, Inc., 936 F.2d 417, 422 (9th Cir.1991)); see also Republic of the Philippines v.
Marcos, 862 F.2d 1355, 1362 (9th Cir. 1988) ("'serious questions' refers to questions which
cannot be resolved one way or the other at the hearing on the injunction and as to which the
court perceives a need to preserve the status quo lest one side prevent resolution of the
questions or execution of any judgment by altering the status quo").
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II.

DISCUSSION
a. Likelihood of Success on the Merits

VidAngel's application for a stay raises the same arguments made in its original
opposition to Plaintiffs' motion for a preliminary injunction. (Dkt. No. 42) The Court
addressed each of VidAngel's arguments in its Order, and will not repeat the analysis here.
For the reasons set forth in the Order, the Court determined that the Plaintiffs have
demonstrated a strong likelihood of success on the merits of their claims that VidAngels
service violates Plaintiffs rights pursuant to 1201(a) of the Digital Millennium
Copyright Act (DMCA), 17 U.S.C. 1201(a), and infringes Plaintiffs exclusive rights
under 106 of the Copyright Act, id. 106.
A district court's decision regarding preliminary injunctive relief is subject to limited
review. Harris v. Bd. of Supervisors, L.A. Cnty, 366 F.3d 754, 760 (9th Cir. 2004) (review
"limited and deferential) The Ninth Circuit will reverse a district court's issuance of a
preliminary injunction only if the district court abused its discretion by basing its decision
on an erroneous legal standard or on clearly erroneous factual findings. Alliance for the
Wild Rockies, 632 F.3d at 1131. Moreover, the Courts factual findings are reviewed for
clear error and will not be reversed "as long as [the] findings are plausible in light of the
record viewed in its entirety. Nat'l Wildlife Fed'n v. Nat'l Marine Fisheries Serv., 422
F.3d 782, 795 (9th Cir. 2005). Considering the deferential standard of review and the
Courts determination that the Plaintiffs have demonstrated a strong likelihood of success
on the merits of its claims, VidAngel has not shown that it is likely to prevail on the merits
of the appeal.
b. Balance of the Hardships
VidAngel raises similar arguments from its original opposition regarding the harms
it will suffer if the injunction is not stayed. Specifically, VidAngel contends that the
injunction threatens to destroy VidAngels unique market position and its market value
and will cause serious financial loss. (Dkt. No. 147 at 12.) VidAngel also asserts that
the injunction threatens to damage customer goodwill. (Id.) The Court addressed these
arguments by noting that [Defendants] cannot complain of the harm that will befall it
when properly forced to desist from its infringing activities." Triad Sys. Corp. v.
Southeastern Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995). Where the only hardship
that the defendant will suffer is lost profits from an activity which has been shown likely to
be infringing, such an argument in defense 'merits little equitable consideration [on an
appeal from a preliminary injunction].'" Id. (citing Concrete Mach. Co. v. Classic Lawn
Ornaments, Inc., 843 F.2d 600, 612 (1st Cir. 1988); accord Apple Comput., Inc. v. Franklin
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Comput. Corp., 714 F.2d 1240, 1255 (3d Cir. 1983) (in motion for preliminary injunction,
district court should not consider the devastating effect of the injunction on the
infringers business). (Order at 21.)
The Court determined that the Plaintiffs demonstrated a likelihood of imminent,
irreparable injury in the absence of an injunction. (Order at 16-20.) The Court
specifically found that VidAngels service caused irreparable harm by undermining
Plaintiffs negotiating position with licensees and also by damaging goodwill with
licensees, some of whom had specifically referenced unlicensed services like
VidAngelsduring negotiation meetings. (Id. at 18.) VidAngel argues that the
Plaintiffs goodwill with licensees will be largely unaffected pending the outcome on
appeal considering this Court's ruling in Plaintiffs' favor in the Order. (Dkt. No. 147 at
13.) The Court is not persuaded by this argument. The evidence in the record shows that
Plaintiffs irreparable harms specifically arise from VidAngels unlicensed use of
Plaintiffs works. Allowing VidAngel to continue offering the Plaintiffs copyrighted
works without a license will only increase these harms.
Based on the foregoing, the Court holds that the balance of the hardships tips sharply
in the favor of the Plaintiffs.
c. Public Interest
VidAngel has not sufficiently shown that the public interest supports a stay of the
preliminary injunction. Plaintiffs have shown a likelihood of success on the merits of
their claims that VidAngels service violates 1201(a), and 106 of the Copyright Act.
As the Court noted in its Order, "it is virtually axiomatic that the public interest can only be
served by upholding copyright protections and correspondingly, preventing the
misappropriation of skills, creative energies, and resources which are invested in the
protected work." Warner Bros. Entm't, Inc. v. WTV Sys., 824 F. Supp. 2d 1003, 1015 (C.D.
Cal. 2011) (citing Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255
(3rd Cir. 1983)). VidAngel essentially restates its argument that an injunction severely
undercuts the public interest in protecting every persons right to watch filtered content in
private. (Oppo. at 32.) However, VidAngel has not refuted the evidence in the record
that indicates that ClearPlay offers a filtering service to Google Play users who access
authorized streams from GooglePlays licensed service. (Bennett Decl. Ex. A. at 5-6.)
VidAngels assertions regarding Clearplays filtering service are immaterial to the Courts
analysis.1 The presence of market alternatives to VidAngels filtering service belies its
claim that an injunction would effectively end the publics ability to watch filtered
movies. (Oppo. at 33.)
1 VidAngel argues that that ClearPlay does not provide a legal filtering alternative and is technically inferior to
VidAngels service. (Dkt. No. 147 at 14.)
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d. Conclusion
For the foregoing reasons, the Court finds that VidAngel has not shown a likelihood
that it will prevail on its appeal, nor has it shown that the balance of hardships tips sharply
in its favor or that the public interest is best served by a stay. Therefore, the Court denies
VidAngels motion for a stay in its entirety.
IT IS SO ORDERED.

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