Aug 24 (Reuters) - A federal appeals court has sided with Hollywood studios by refusing to let VidAngel stream family-friendly versions of their movies that filter out profane language, sex and nudity, violence, and alcohol and drug use.
The 9th U.S. Circuit Court of Appeals on Thursday let stand a preliminary injunction against the Provo, Utah-based start-up, and in favor of Walt Disney Co and its LucasFilm unit, 20th Century Fox Film Inc and Warner Bros Entertainment .
U.S. District Judge Andre Birotte in Los Angeles had found that the studios were likely to prevail on their copyright claims, and absent an injunction suffer irreparable harm such as lost revenue and damaged relationships and goodwill with licensees.
The decision was a victory for Hollywood in its long fight against alleged piracy.
VidAngel said it was reviewing its next steps after the 3-0 decision by the Pasadena, California-based appeals court.
"On the legal front, we are just getting started," Chief Executive Neal Harmon said in a statement. "We will fight for a family's right to filter on modern technology all the way."
VidAngel buys DVDs and Blu-ray discs containing movies and TV shows, "rips" decrypted copies to computers, and streams sanitized content to customers for as little as $1.
Its lawyers said a 2005 federal law, the Family Home Movie Act, shielded VidAngel from piracy claims by letting viewers, including parents with children, filter unwanted content from "authorized" copies of movies.
Circuit Judge Andrew Hurwitz, however, said VidAngel's stance would create a "giant loophole" in copyright law, sanctioning infringement so long as copies of movies such as Disney's "Star Wars: The Force Awakens" were purchased legally.
"If the mere purchase of an authorized copy alone precluded infringement liability," Hurwitz wrote, "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."
He quoted the 2005 law's sponsor, Utah Republican Senator Orrin Hatch, as saying that the idea filtering was acceptable if it required copyright infringement "should be rejected as counter to legislative intent or technological necessity."
Spokesmen for Disney and Fox declined to comment. Warner Bros did not immediately respond to requests for comment. Donald Verrilli, the former U.S. solicitor general representing the studios, was not immediately available for comment.
The case is Disney Enterprises Inc et al v VidAngel Inc, 9th U.S. Circuit Court of Appeals, No. 16-56843. (Reporting by Jonathan Stempel in New York; Editing by Andrew Hay)