VidAngel Declares Bankruptcy to Put Copyright Fight on Hold

VidAngel, the Utah-based streaming service that filters out offensive content, declared Chapter 11 bankruptcy on Wednesday.

The filing is designed to put its copyright battle with three major studios on hold, as it seeks to expand its new filtering service.

“We have millions in the bank, and we’re already making millions on the new system,” said CEO Neal Harmon. “Business will continue as usual for our customers and our employees and all our team.”

VidAngel’s original service gave family audiences the power to filter out violence, sexual content, and foul language from mainstream studio releases. The company did not have a license with the content owners. Instead, it bought up copies of DVD’s, decrypted them, and then “sold” them to users who accessed them online and then “sold” them back to VidAngel. VidAngel argued this was permissible under the federal Family Movie Act, which was designed to allow filtering of offensive content.

But Warner Bros, Disney and 20th Century Fox disagreed, and filed suit for copyright infringement. The studios argued that VidAngel was essentially operating a pirate streaming service, offering customers the chance to stream popular movies outside their streaming windows.

Judge Andre Birotte issued an injunction in December 2016, which forced VidAngel to shut down. VidAngel lost its subsequent appeals. Though the case has not yet gone to trial, VidAngel is potentially on the hook for a massive copyright infringement verdict.

In June, the company launched a new service, which filters out content on streaming services like Netflix and Amazon.

David Quinto, the company’s general counsel, said the bankruptcy filing would allow VidAngel time to develop its new service.

“It will also ensure that if the studios get a judgment against VidAngel, VidAngel will be able to pay that judgment in full and continue its business operations,” Quinto said.

Quinto said that customers who have VidAngel credits will not lose a penny.

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