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Case 2:16-cv-04109-AB-PLA Document 189 Filed 07/10/17 Page 1 of 11 Page ID #:5870

1 GLENN D. POMERANTZ (SBN 112503)


glenn.pomerantz@mto.com
2 KELLY M. KLAUS (SBN 161091)
kelly.klaus@mto.com
3 ROSE LEDA EHLER (SBN 296523)
rose.ehler@mto.com
4 ALLYSON R. BENNETT (SBN 302090)
allyson.bennett@mto.com
5 MUNGER, TOLLES & OLSON LLP
350 South Grand Avenue, 50th Floor
6 Los Angeles, California 90071
Telephone: (213) 683-9100
7 Facsimile: (213) 687-3702
8 Attorneys for Plaintiffs and
Counter-Defendants
9
10 UNITED STATES DISTRICT COURT
11 CENTRAL DISTRICT OF CALIFORNIA
12 WESTERN DIVISION
13
14 DISNEY ENTERPRISES, INC.; Case No. 16-cv-04109-AB (PLAx)
LUCASFILM LTD. LLC;
15 TWENTIETH CENTURY FOX FILM PLAINTIFFS OPPOSITION TO
CORPORATION and WARNER VIDANGELS MOTION TO
16 BROS. ENTERTAINMENT INC., CLARIFY THAT PRELIMINARY
INJUNCTION DOES NOT APPLY
17 Plaintiffs and Counter- TO PERMANENTLY OWNED
Defendants, DISCS
18
vs. Judge: Hon. Andr Birotte Jr.
19 Date: July 31, 2017
VIDANGEL, INC., Time: 10:00 am
20 Crtrm.: 7B
Defendant and Counter-
21 Claimant. Trial Date: None Set
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PLAINTIFFS OPP. TO SECOND MOT. TO CLARIFY


16-CV-04109-AB (PLAX)
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1 TABLE OF CONTENTS
2 Page
3
INTRODUCTION ....................................................................................................... 1
4
BACKGROUND ......................................................................................................... 2
5
ARGUMENT ............................................................................................................... 3
6
I. THIS MOTION, LIKE VIDANGELS FIRST MOTION TO
7 CLARIFY, IS PROCEDURALLY IMPROPER ............................................ 3
8 II. STREAMING PLAINTIFFS WORKS TO THOUSANDS OF
VIDANGEL USERS PLAINLY VIOLATES THE PRELIMINARY
9 INJUNCTION ................................................................................................... 5
10 III. ALLOWING VIDANGEL TO STREAM PLAINTIFFS WORKS
WOULD BENEFIT VIDANGEL AND HARM PLAINTIFFS ....................... 6
11
A. VidAngels Motion Is Designed To Benefit VidAngel, Not Its
12 Users ........................................................................................................ 6
13 B. Plaintiffs Have Established Irreparable Injury From VidAngels
Infringing Activity .................................................................................. 7
14
CONCLUSION............................................................................................................ 8
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1 TABLE OF AUTHORITIES
2 Page(s)
3 FEDERAL CASES
4 Credit Suisse First Boston Corp. v. Grunwald,
5 400 F.3d 1119 (9th Cir. 2005) ............................................................................ 4, 5

6 Fed. Trade Commn v. Johnson,


No. 2:10-cv-02203-RLH-GWF, 2011 WL 3497161
7
(D. Nev. Aug. 10, 2011) ......................................................................................... 5
8
Fox Television Stations, Inc. v. BarryDriller Content Sys. PLC,
9 915 F. Supp. 2d 1138 (C.D. Cal. 2012) .................................................................. 8
10
McComb v. Jacksonville Paper Co.,
11 336 U.S. 187 (1949) ............................................................................................... 4
12 Natural Resources Defense Council, Inc. v. Sw. Marine Inc.,
13 242 F.3d 1163 (9th Cir. 2001) ................................................................................ 3
14 Oregon Natural Desert Assn v. McDaniel,
282 F.R.D. 533 (D. Or. 2012)................................................................................. 5
15
16 Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc.,
944 F.2d 597 (9th Cir. 1991) .............................................................................. 7, 8
17
18 Warner Bros. Entmt, Inc. v. WTV Sys., Inc.,
824 F. Supp. 2d 1003 (C.D. Cal. 2011) .................................................................. 8
19
FEDERAL STATUTES
20
21 17 U.S.C. 106............................................................................................................ 6
22 17 U.S.C. 1201.......................................................................................................... 6
23 RULES - OTHER
24 C.D. Cal. Local Rule 7-18 ........................................................................................... 5
25
26
27
28
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PLAINTIFFS OPP. TO SECOND MOT. TO CLARIFY
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1 INTRODUCTION
2 This is an audacious motion. VidAngel asks the Court to allow it not only to
3 publicly perform Plaintiffs works, admittedly in violat[ion] . . . of the Preliminary
4 Injunction, Decl. of David Quinto 6, filed July 3, 2017 (Dkt. 187-1), but to do so
5 from copies that VidAngel made by illegally ripping Plaintiffs discs and illegally
6 copying the works. In short, VidAngel wants to engage in illegal and enjoined
7 activity using the fruits of illegal and enjoined conduct. VidAngel is not asking the
8 Court to clarify the injunction; it is asking the Court to rewrite the injunction to
9 sanction blatantly illegal conduct. Aside from being an improper motion for
10 reconsideration, the motion raises issues pending before the Ninth Circuit. The
11 Court therefore lacks jurisdiction to consider it.
12 VidAngel says it asks for this relief as a courtesy to its users, a courtesy that
13 VidAngel says will not provide [VidAngel] any benefit and will impose a small
14 cost. Mot. at 1, 7 (Dkt. 187) (quotations omitted). Nonsense. VidAngel wants to
15 help itself, not its users. It wants to placate frustrated users who can no longer
16 watch copies of content that VidAngel told them they own; upsell those users to
17 subscriptions to VidAngels revamped service; and avoid spending money to
18 ameliorate those users anger.
19 If VidAngel wants to make wholein reality, to market tonearly 12,000
20 users who spent $20 for an illegal offering, VidAngel can mail the users the discs
21 they supposedly own. Those users can then use ClearPlays disc-playback service if
22 they want to watch filtered versions of the movies. This option assumes that
23 VidAngel still has its inventory of discs in its vault, and that the vault has as many
24 discs as there are owners. If VidAngel sold off its inventory (which was just
25 window-dressing for VidAngels meritless defenses) or if VidAngel otherwise
26 wants to make its users whole, it can refund them the full $20, rather than the token
27 $1 or $2 payment VidAngel claims it previously offered. Illegally streaming
28 Plaintiffs works in the hopes of avoiding several hundred thousand dollars of
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1 liability to these users ($20 x 15,153 discs = $303,060) is yet another financial
2 benefit that VidAngel fails to disclose in its motion.
3 However VidAngel chooses to address a customer-relations nightmare of its
4 own making, VidAngel has no rightprocedurally or substantivelyto have the
5 injunction changed to allow VidAngel to benefit from its blatant violations of
6 Plaintiffs rights.
7 BACKGROUND
8 The Courts Preliminary Injunction Order is clear: VidAngel is barred from,
9 among other conduct, streaming, transmitting or otherwise publicly performing
10 Plaintiffs copyrighted works. Order at 22 (Dkt. 144). The Court found that
11 VidAngel: (1) unlawfully circumvented the technological protection measures
12 (TPMs) that control access to Plaintiffs works; (2) unlawfully copied Plaintiffs
13 works onto VidAngels servers; and (3) unlawfully publicly performed Plaintiffs
14 works by streaming from the unlawful copies to VidAngels users. Id. at 6-11. The
15 Court rejected, among other meritless arguments, VidAngels claim that its users
16 purchased discs from VidAngel and thereby were receiving streams of private
17 performances. Id. at 10-11.
18 The instant Motion is not much different from VidAngels initial Motion to
19 Clarify (Dkt. 182). Both Motions ask the Court to change the Preliminary
20 Injunction Order to allow VidAngel to engage in conduct that the Court clearly
21 enjoined and that indisputably violates Plaintiffs rights. Plaintiffs asked VidAngel
22 to combine the two motions to spare the needless duplication of judicial and party
23 resources on briefing and arguing motions to amend the same Order. See Pls Opp.
24 to VidAngels Mot. to Clarify at 2 n.1 (Opp. to First Mot. to Clarify) (Dkt. 188).
25 VidAngel refused, claiming the motions address different technologies. Decl. of
26 Kelly M. Klaus Ex. A at 11, filed July 3, 2017 (6/28/17 email from D. Quinto) (Dkt.
27 188-4); see also Decl. of Scott Malzahn Ex. A, filed July 3, 2017 (6/26/17 email
28
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1 from J. Marquart at 1) (Dkt. 187-2): (VidAngel would use its old technology . . . .
2 This proposed activity has nothing to do with the new service.).
3 VidAngel uses the new versus old distinction as a trope to suit its tactical
4 aims. VidAngel claims this motion to clarify involves the old service and thus
5 should be briefed separately from its first motion to clarify, which purportedly
6 concerns the new service. At the same time, VidAngel argues the Court should
7 deny Plaintiffs discovery regarding the changes to the supposedly new service on
8 the ground that the service relies on VidAngels legacy technology and thus was
9 the subject of discovery in 2016. See VidAngels Opp. to Pls Ex Parte App. at 4-5
10 (Dkt. 184). VidAngels wordplay aside, the fact is VidAngel wants the injunction
11 amended to permit it to illegally stream from infringing copies of Plaintiffs works
12 to its users.
13 ARGUMENT
14 I. THIS MOTION, LIKE VIDANGELS FIRST MOTION TO
CLARIFY, IS PROCEDURALLY IMPROPER
15
16 Plaintiffs Opposition to VidAngels first motion to clarify demonstrates the
17 procedural impropriety of both that motion and this one. See Opp. to First Mot. to
18 Clarify at 4-8. Rather than repeat all of those arguments, Plaintiffs incorporate their
19 prior discussion, noting in particular:
20 Because the Preliminary Injunction Order is on appeal, this Court has
21 jurisdiction to modify the Order only if the modification (1) d[oes] not
22 materially alter the status of the case on appeal and (2) preserve[s]
23 the status quo. Natural Resources Defense Council, Inc. v. Sw.
24 Marine Inc., 242 F.3d 1163, 1166 (9th Cir. 2001).
25 VidAngel is not asking to preserve the status quo; it wants to change
26 the status quowhich enjoins VidAngel from streaming Plaintiffs
27 worksto allow it to stream those works. The change also would
28 materially alter the status of the appeal, by allowing VidAngel to
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1 stream Plaintiffs works to nearly 12,000 usersall while the Ninth


2 Circuit is considering whether the Court properly enjoined VidAngels
3 unlawful conduct. 1
4 This is not a proper Motion to Clarify. VidAngel cites cases for the
5 proposition that a party may seek clarification if it is unsure whether
6 particular conduct would violate an injunction. Mot. at 3 (citing
7 McComb v. Jacksonville Paper Co., 336 U.S. 187, 192 (1949), and
8 other cases). VidAngel is not under any illusion about what the
9 injunction bars. VidAngel knows that its streaming would be in
10 contravention of the terms of the preliminary injunction. Id. at 5;
11 Quinto Decl. Ex. A. VidAngel is not seeking to clarify the injunction.
12 It is seeking to amend the injunction.
13 This Motion is also procedurally improper for the additional reason that it
14 seeks to relitigate issues VidAngel already raised at the preliminary injunction stage,
15 and thus is an untimely and substantively meritless reconsideration motion. In this
16 Court, VidAngel opposed Plaintiffs motion for the preliminary injunction by citing
17 the thousands of users who allegedly owned discs. Klaus Decl., filed
18 concurrently, Ex. A at Tr. 6:3-6, 101:10-13, 102:6-8. This Court did not exempt
19 VidAngels streaming to those users from the Preliminary Injunction. See Order at
20 18-20. [A] motion that merely seeks to relitigate the issues underlying the original
21 preliminary injunction order should be treated as a motion for reconsideration
22 under Rule 59. Credit Suisse First Boston Corp. v. Grunwald, 400 F.3d 1119, 1124
23
1
VidAngels briefing to the Ninth Circuit repeatedly discusses its inability to stream
24 Plaintiffs works to thousands of users who supposedly own discs. See VidAngel
25 Opening Br. at 18, No. 16-56843 (9th Cir. Jan. 27, 2017) (Dkt. 42) (20% of
VidAngels discs are never sold back); id. at 54 (asserting that, because of the
26 injunction, VidAngels customers can no longer watch any streamed movies, not
27 even the discs they permanently own); id. at 58 (the injunction blocks access to
the many thousands of discs in VidAngels vault owned outright by many thousands
28 of VidAngel users . . . .).
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1 (9th Cir. 2005). VidAngel, however, is long past the 28-day limit for bringing a
2 Rule 59 motion with respect to the Preliminary Injunction, and VidAngel does not
3 and cannot meet the standards for reconsideration. See id. (motion seeking to
4 relitigate issues underlying preliminary injunction is subject to Rule 59(e)s ten-day
5 [now 28-day] limit, while a motion that in substance is based on new circumstances
6 that have arisen after the district court granted the injunction may be filed at any
7 time before entry of a final judgment.); Oregon Natural Desert Assn v. McDaniel,
8 282 F.R.D. 533, 540 (D. Or. 2012) (motion that was substantively a motion for
9 reconsideration was untimely); Fed. Trade Commn v. Johnson, No. 2:10-cv-
10 02203-RLH-GWF, 2011 WL 3497161, at *1 (D. Nev. Aug. 10, 2011) (request to
11 dissolve an injunction with respect to particular defendants was really an untimely
12 motion for reconsideration); see also C.D. Cal. Local Rule 7-18 (No motion for
13 reconsideration shall in any manner repeat any oral or written argument made in
14 support of or in opposition to the original motion.).
15 II. STREAMING PLAINTIFFS WORKS TO THOUSANDS OF
VIDANGEL USERS PLAINLY VIOLATES THE PRELIMINARY
16 INJUNCTION
17 The Preliminary Injunction bars VidAngel from streaming, transmitting or
18 otherwise publicly performing or displaying any of Plaintiffs copyrighted works.
19 Order at 22. VidAngel asks leave to do exactly what the Preliminary Injunction
20 forbids: to make infringing and enjoined public performances of Plaintiffs works.
21 VidAngel admits that streaming Plaintiffs works using its enjoined business
22 model would violate the Preliminary Injunction. See Mot. at 1 (Doing so would
23 violate the public performance prohibition of the Preliminary Injunction.); id. at 3
24 (Although doing so would violate the public performance prohibition of the
25 Preliminary Injunction . . . .). 2
26
2
27 See also Mot. at 4 (VidAngels request asks to engage in conduct prohibited by
the Preliminary Injunction); Quinto Decl. Ex. A (asking Plaintiffs consent for
28 VidAngel to engage in activity in contravention of the terms of the preliminary
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1 VidAngel argues that the amendment it seeks is narrow because the damage
2 from VidAngels violation of 1201 of the DMCA and infringement of Plaintiffs
3 exclusive reproduction rights under 106 has already been done as to 15,153 discs.
4 Id. at 1, 4. That is absurd. VidAngels argument is tantamount to saying that
5 because a thief already broke into a house and stole property, the thief should be
6 allowed to use the stolen property to its advantage indefinitely, since the harm
7 (purportedly) already has been done. 3
8 III. ALLOWING VIDANGEL TO STREAM PLAINTIFFS WORKS
WOULD BENEFIT VIDANGEL AND HARM PLAINTIFFS
9
A. VidAngels Motion Is Designed To Benefit VidAngel, Not Its Users
10
11 VidAngel claims that it would not derive any revenue from streaming
12 Plaintiffs works, without authorization or payment, to thousands of users. Mot.
13 at 5. That argument does not pass the straight-face test.
14 VidAngel is asking to continue to build its business on circumvention and
15 copyright infringement. It seeks to exploit its past violations of the DMCA and
16 copyright infringement to facilitate still more infringement in the future. And it
17 does so to help itself, not its users. VidAngel convinced thousands of people to pay
18 $20 for indefinite access to illegally created and streamed versions of Plaintiffs
19 works. The injunction bars VidAngel from continuing to engage in its unlawful
20 activity, leaving VidAngel to deal with angry and frustrated customers. See Klaus
21 Decl. Ex. B (Twitter post from December 20, 2016 asking so can I keep the movies
22 Ive purchased? I didnt ever return them because I watch them all the time. Should
23 I hurry & buy more?); Ex. C (user Facebook post asking So what about the
24 movies we purchased on the site before it went down? We bought Deadpool so will
25
injunction); id., Ex. B ([T]ransmitting filtered versions of the content of the
26 approximately 12,000 copies of Plaintiffs works to the consumers who currently
own copies of those motion pictures . . . would violate the Preliminary Injunction.).
27
3
As discussed infra, VidAngels proposed conduct would continue to harm
28 Plaintiffs, notwithstanding VidAngels contrary claim.
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1 it still be in our account?), id. (user Facebook post asking What about the movies
2 we have purchased and have been waiting to watch again?); Ex. D (similar posts).
3 Resuming its illegal streaming of these works allows VidAngel to assuage these
4 users and then try to upsell them to VidAngels new subscription offering. It also
5 allows VidAngel to avoid paying those customers hundreds of thousands of dollars
6 to eliminate potential damages claims. No matter how VidAngel tries to spin it, the
7 relief VidAngel seeks would benefit VidAngel.
8 B. Plaintiffs Have Established Irreparable Injury From VidAngels
Infringing Activity
9
10 Plaintiffs have no obligation to show irreparable harm in opposition to a
11 Motion to Clarify. See Opp. to First Mot. to Clarify at 19. The Court has already
12 found that the exact conduct VidAngel proposesstreaming to thousands of its
13 users from illegal copies of Plaintiffs worksirreparably harms Plaintiffs.
14 The nearly 12,000 users to whom VidAngel wants to illegally stream
15 Plaintiffs works may have streamed those works from Amazon, Hulu, Netflix, or
16 another of Plaintiffs authorized licensees. By keeping those users in VidAngels
17 unauthorized streaming ecosystem, VidAngel undermines the market for licensed
18 content through services that respect copyright law.
19 Moreover, VidAngels illegal streaming of Plaintiffs works would continue
20 other harm that the Court identified: it would interfer[e] with [Plaintiffs] basic
21 right to control how, when and through which channels consumers can view their
22 copyrighted works, including by performing works during authorized licensees
23 negotiated exclusivity periods, Order at 17. It would threaten harm to Plaintiffs
24 relationships and goodwill with authorized distributors. Id. In addition,
25 VidAngels illegal streaming would continue to undermine Plaintiffs requirements
26 regarding service quality and security of their works. See Cittadine Decl. 23-31,
27 filed August 22, 2016 (Dkt. 28); see also Order at 18 (harm to ones negotiating
28 position and/or goodwill with licensees is difficult to quantity); Rent-A-Center, Inc.
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1 v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991)
2 (harm to ones reputation or goodwill is irreparable); Fox Television Stations, Inc. v.
3 BarryDriller Content Sys. PLC, 915 F. Supp. 2d 1138, 1147 (C.D. Cal. 2012) (harm
4 to ones negotiating position is neither easily calculable, nor easily compensable);
5 Warner Bros. Entmt, Inc. v. WTV Sys., Inc., 824 F. Supp. 2d 1003, 1014 (C.D. Cal.
6 2011) (services that offer[] a sub-optimal customer experience and, thus, tarnish[]
7 customers perception of video on demand cause irreparable harm).
8 In short, the harm to Plaintiffs from VidAngels proposed amendment was
9 fully demonstrated when Plaintiffs sought and obtained the Preliminary Injunction,
10 and that harm remains manifest.
11 CONCLUSION
12 Plaintiffs respectfully submit the Court should deny VidAngels Motion.
13 DATED: July 10, 2017 MUNGER, TOLLES & OLSON LLP
14
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By: /s/ Kelly M. Klaus
16
KELLY M. KLAUS
17
18 Attorneys for Plaintiffs and
Counter-Defendants
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