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Michael R. Johnson, Esq. (A7070) Kelly M. Klaus (pro hac vice) David H. Leigh, Esq. (A9433) Rose Leda Ehler (pro hac vice) RAY QUINNEY & NEBEKER P.C. MUNGER, TOLLES & OLSON LLP 36 South State Street, 14th Floor 350 South Grand Avenue, 50th Floor Salt Lake City, Utah 84111 Los Angeles, California 90071-3426 Telephone: (801) 532-1500 Telephone: (213) 683-9100 Facsimile: (801) 532-7543 Facsimile: (213) 687-3702 Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

Brent O. Hatch (5715) HATCH, JAMES & DODGE, P.C. 10 West Broadway, Suite 400 Salt Lake City, UT 84101 Telephone: 801-839-4811 Facsimile: 801-363-6666 Email: [email protected]

Attorneys for the Movants Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, Warner Bros. Entertainment Inc., MVL Film Finance, LLC, New Line Productions, Inc., and Turner Entertainment Co.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

In re: Case No. 17-29073

VIDANGEL, INC., Chapter 11

Debtor. Judge Kevin R. Anderson

REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF MOTION FOR RELIEF FROM THE AUTOMATIC STAY PURSUANT TO 11 U.S.C. §362(d) (DKT. 194) ______

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Movants respectfully request that the Court take judicial notice, pursuant to Federal Rule

of Evidence 201, of the materials identified below and attached as Exhibits A-Q hereto. This

Request for Judicial Notice (“RJN”) is filed in support of Movants’ Supplemental Brief in

Support of their Motion for Relief from the Automatic Stay Pursuant to 11 U.S.C. § 362(d).

Exhibits A-Q are court filings which satisfy the requirements of Rule 201. Courts

routinely take judicial notice of filings, transcripts and orders of other court proceedings. See

U.S. v. Ahidley, 486 F.3d 1184, 1192 n.5 (10th Cir. 2007) (“[W]e may exercise our discretion to take judicial notice of publicly-filed records in our court and certain other courts concerning matters that bear directly upon the disposition of the case at hand.”) (collecting cases); see also

Ordonez v. Canyons School Dist., No. 213CV00245DAKEJF, 2018 WL 3654767, at *2 n.2 (D.

Utah 2018) (unpublished) (same).

Exhibit A: A true and correct copy of the Complaint for Copyright Infringement and

Violation of Digital Millennium Copyright Act in the action captioned Disney Enterprises, Inc., et al. v. VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United States District Court, Central

District of California, filed on June 9, 2016, Dkt. No. 1.

Exhibit B: A true and correct copy of the First Amended Complaint for Copyright

Infringement and Violation of Digital Millennium Copyright Act in the action captioned Disney

Enterprises, Inc., et al. v. VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United States

District Court, Central District of California, filed on October 6, 2017, Dkt. No. 228.

Exhibit C: A true and correct copy of Vidngel, Inc.’s Amended Answer and

Affirmative Defenses to Complaint and First Amended Counterclaims in the action captioned

Disney Enterprises, Inc., et al. v. VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United

States District Court, Central District of California, filed on September 16, 2016, Dkt. No. 77.

1

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Exhibit D: A true and correct copy of Plaintiffs’ Notice of Motion and Motion to

Dismiss VidAngel’s First Amended Counterclaims and Strike VidAngel’s Affirmative Defense of Copyright Misuse in the action captioned Disney Enterprises, Inc., et al. v. VidAngel, Inc.,

Case No. 16-cv-04109-AB (PLAx), United States District Court, Central District of California,

filed on October 14, 2016, Dkt. No. 103.

Exhibit E: A true and correct copy of the Order Granting Plaintiffs’ Motion to

Dismiss Defendant’s First Amended Counterclaims and Strike Defendant’s Affirmative Defense

of Copyright Misuse (Dkt. No. 103) in the action captioned Disney Enterprises, Inc., et al. v.

VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United States District Court, Central District

of California, filed on August 10, 2017, Dkt. No. 199.

Exhibit F: A true and correct copy of VidAngel’s Notice of Motion and Motion for

Entry of Judgment on Dismissal of Its Counterclaims Under Rule 54(b) in the action captioned

Disney Enterprises, Inc., et al. v. VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United

States District Court, Central District of California, filed on August 31, 2017, Dkt. No. 203.

Exhibit G: A true and correct copy of the Order Granting VidAngel’s Motion for

Entry of Final Judgment Dismissing VidAngel’s First, Second and Third Counterclaims (Dkt.

No. 2013) in the action captioned Disney Enterprises, Inc., et al. v. VidAngel, Inc., Case No. 16- cv-04109-AB (PLAx), United States District Court, Central District of California, filed on

October 5, 2017, Dkt. No. 226.

Exhibit H: A true and correct copy of the Order Re: Jury/Court Trial in the action captioned Disney Enterprises, Inc., et al. v. VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx),

United States District Court, Central District of California, filed on September 28, 2017, Dkt.

No. 215.

2

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Exhibit I: A true and correct copy of Plaintiffs’ Motion for Partial Summary

Judgment on Liability in the action captioned Disney Enterprises, Inc., et al. v. VidAngel, Inc.,

Case No. 16-cv-04109-AB (PLAx), United States District Court, Central District of California, filed on September 29, 2017, Dkt. No. 222.

Exhibit J: A true and correct copy of the Stipulation Regarding Request to Set

Pretrial and Trial Schedule in the action captioned Disney Enterprises, Inc., et al. v. VidAngel,

Inc., Case No. 16-cv-04109-AB (PLAx), United States District Court, Central District of

California, filed on September 20, 2017, Dkt. No. 212.

Exhibit K: A true and correct copy of the Order Regarding Briefing Schedule for

Plaintiffs’ Partial Motion for Summary Judgment in the action captioned Disney Enterprises,

Inc., et al. v. VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United States District Court,

Central District of California, filed on October 2, 2017, Dkt. No. 224.

Exhibit L: A true and correct copy of the [In Chambers] Order Staying Case Pending

Bankruptcy in the action captioned Disney Enterprises, Inc., et al. v. VidAngel, Inc., Case No.

16-cv-04109-AB (PLAx), United States District Court, Central District of California, filed on

October 31, 2017, Dkt. No. 231.

Exhibit M: A true and correct copy of Status Report Pursuant to In Chambers Order

[Dkt. 231] Regarding Status of Proceedings Following VidAngel’s Filing of Chapter 11

Bankruptcy Petition [Dkt. 229] in the action captioned Disney Enterprises, Inc., et al. v.

VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United States District Court, Central District

of California, filed on February 28, 2018, Dkt. No. 236.

Exhibit N: A true and correct copy of Status Report Pursuant to In Chambers Order

[Dkt. 231] Regarding Status of Proceedings Following VidAngel’s Filing of Chapter 11

3

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Bankruptcy Petition [Dkt. 229] in the action captioned Disney Enterprises, Inc., et al. v.

VidAngel, Inc., Case No. 16-cv-04109-AB (PLAx), United States District Court, Central District of California, filed on June 28, 2018, Dkt. No. 237.

Exhibit O: A true and correct copy of the Motion to Dismiss or, in the Alternative, to

Transfer or stay in the action captioned VidAngel, Inc. v. Sullivan Entertainment Group, Inc., et al., Case No. 2:17-cv-00989, United States District Court, Central District of Utah, filed on

October 26, 2017, Dkt. No. 58.

Exhibit P: A true and correct copy of the Memorandum Decision and Order Granting

Motion to Dismiss in the action captioned VidAngel, Inc. v. Sullivan Entertainment Group, Inc., et al., Case No. 2:17-cv-00989, United States District Court, Central District of Utah, filed on

July 27, 2018, Dkt. No. 129.

Exhibit Q: A true and correct copy of VidAngel’s Notice Consenting to Dismissal

Without Prejudice in the action captioned VidAngel, Inc. v. Sullivan Entertainment Group, Inc., et al., Case No. 2:17-cv-00989, United States District Court, Central District of Utah, filed on

August 3, 2018, Dkt. No. 130.

CONCLUSION

Movants respectfully request that the Court take judicial notice of Exhibits A-Q.

4

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DATED this 14th day of September, 2018.

Kelly M. Klaus (pro hac vice) Rose Leda Ehler (pro hac vice) Munger, Tolles & Olson LLP 350 South Grand Avenue, 50th Floor Los Angeles, California 90071-3426 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Email: [email protected] Email: [email protected]

—and—

Brent O. Hatch Hatch, James & Dodge, P.C. 10 West Broadway, Suite 400 Salt Lake City, UT 84101 Telephone: 801-839-4811 Facsimile: 801-363-6666 Email: [email protected]

—and—

Michael R. Johnson, Esq. David H. Leigh, Esq. Ray Quinney & Nebeker P.C. 36 South State Street, 14th Floor Salt Lake City, Utah 84111 Telephone: (801) 532-1500 Facsimile: (801) 532-7543 Email: [email protected] Email: [email protected]

/s/ Michael R. Johnson Michael R. Johnson

Attorneys for the Movants

5

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CERTIFICATE OF SERVICE I hereby certify that on this 14th day of September, 2018, I electronically filed the foregoing Request for Judicial Notice in Support of Movants’ Motion for Relief from the Automatic Stay Pursuant to 11 U.S.C. §362(d) with the Clerk of Court using the CM/ECF system, which sent notification of such filing to the electronic filing users in this case as follows:

• J. Thomas Beckett [email protected], [email protected];[email protected];[email protected] • Laurie A. Cayton tr [email protected], [email protected];[email protected];[email protected] • Grace S. Pusavat [email protected] • Brian M. Rothschild [email protected], [email protected] • United States Trustee [email protected]

/s/ ElizaTito

6

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EXHIBIT A Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 2 of 306 Case 2:16-cv-04109 Document 1 Filed 06/09/16 Page 1 of 20 Page ID #:1

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor 6 Los Angeles, CA 90071-1560 Tel: (213) 683-9100 7 Fax: (213) 687-3702

8 Attorneys for Plaintiffs

9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12 13 DISNEY ENTERPRISES, INC.; CASE NO. LUCASFILM LTD. LLC; TWENTIETH 14 CENTURY FOX FILM COMPLAINT FOR COPYRIGHT CORPORATION; and WARNER INFRINGEMENT AND 15 BROS. ENTERTAINMENT INC., VIOLATION OF DIGITAL MILLENNIUM COPYRIGHT ACT 16 Plaintiffs, 17 vs. DEMAND FOR JURY TRIAL 18 VIDANGEL, INC., 19 Defendant. 20 21 22 23 24 25 26 27 28

COMPLAINT

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1 Plaintiffs Disney Enterprises, Inc. (“Disney”), Lucasfilm Ltd. LLC 2 (“Lucasfilm”), Twentieth Century Fox Film Corporation (“Fox”), and Warner Bros. 3 Entertainment Inc. (“Warner Bros.”) (“Plaintiffs”), through their undersigned 4 counsel, hereby bring this Complaint against VidAngel, Inc. (“Defendant” or 5 “VidAngel”) for infringing Plaintiffs’ exclusive rights under the Copyright Act (17 6 U.S.C. § 101 et seq.) and for violating the Digital Millennium Copyright Act 7 (§ 1201 et seq.) (“DMCA”). This Court has subject matter jurisdiction pursuant to 8 28 U.S.C. §§ 1331, 1338(a), and 17 U.S.C. §§ 501(b), 1203(a). Plaintiffs allege, on 9 personal knowledge as to themselves and information and belief as to others, as 10 follows: 11 INTRODUCTION 12 1. VidAngel operates a video-on-demand (“VOD”) service that streams 13 popular movies and television shows. VidAngel charges users for watching that 14 content but has no authorization and pays nothing for the rights it exploits. At its 15 core, VidAngel is no different from many other unlawful online services. Plaintiffs 16 bring this action to stop VidAngel’s infringement of their rights. 17 2. VidAngel’s VOD service looks and feels very similar to licensed 18 services such as Netflix, Hulu, and iTunes. Users can search for copyrighted motion 19 picture content by popularity, genre or categories (e.g., “New Releases”):

20 21 22 23 24 25 26 27 28

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1 And, like these other services, VidAngel streams movies via computer, mobile 2 device (e.g., a smartphone, iPad, or tablet), or internet-connected television (e.g., 3 through Apple TV, Chromecast or Roku). 4 3. But there is a fundamental difference between VidAngel and licensed 5 VOD services: VidAngel does not have permission to copy Plaintiffs’ movies and 6 television shows or to stream them to VidAngel’s users. Instead, VidAngel appears 7 to circumvent the technological protection measures on DVDs and Blu-ray discs to 8 create unauthorized copies and then uses those copies to stream Plaintiffs’ works to 9 the public without authorization. 10 4. By running this service without a license, VidAngel blatantly violates 11 the Copyright Act and confers on itself unfair and unlawful advantages vis-à-vis 12 licensed services in the VOD marketplace. First, by cutting out payments to 13 copyright owners, VidAngel is able to offer prices that undercut licensed services 14 and charge only $1 for daily access to movies in standard definition format. 15 VidAngel emphatically touts its below-market pricing:

16 17 18 19 20 21 22 23 24 25 26 5. Second, because VidAngel absolves itself of having to abide by 27 contractual restrictions, VidAngel offers content that is not available on licensed 28 VOD services. For example, VidAngel makes many newly released titles available

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1 for streaming well before they are available via licensed VOD services. Recently, 2 VidAngel exploited this competitive advantage to offer Star Wars: The Force 3 Awakens for $1 a day at a time when lawful VOD services did not yet have the right 4 to offer that work for single-day access at all:

5 6 7 8 9 10 11

12 13 VidAngel also flaunts this unfair competitive advantage by expressly promoting a 14 selection of titles that are available on VidAngel but “Not Available on Netflix”: 15

16 17 18 19 20 21 22 23 24 25 26 6. VidAngel publicly defends its unlicensed activities with legally and 27 factually false claims. For example, VidAngel insists that it has the right to bypass 28 copyright owner consent because VidAngel says it is “selling,” not renting, movies

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1 to its users. It does not matter whether VidAngel sells or rents movies. In either 2 case, VidAngel would need copyright owner consent to circumvent access controls 3 on protected discs, make copies of that content, and stream performances of the 4 content to the public. VidAngel does not have consent to do any of these things. 5 And, VidAngel is not “selling” movies. VidAngel is simply providing an 6 unauthorized dollar-a-day VOD rental service. 7 7. VidAngel also asserts that the Family Movie Act of 2005 (“FMA”) 8 justifies its unlicensed activities because VidAngel offers its users the ability to skip 9 and mute words and images that VidAngel thinks its users may find objectionable. 10 The FMA does not justify VidAngel’s violation of Plaintiffs’ rights. The FMA 11 narrowly permits technology that “mak[es] imperceptible,” at a home user’s 12 direction, limited portions of content during playback “from an authorized copy” of a 13 motion picture. 17 U.S.C. § 110(11). Nothing in the FMA gives VidAngel the right 14 to copy or publicly perform Plaintiffs’ copyrighted content without authorization. 15 Nor does the FMA give VidAngel the right to circumvent the technological 16 protection measures on DVDs and Blu-ray discs that safeguard access to Plaintiffs’ 17 content. This Complaint does not challenge the FMA or businesses acting lawfully 18 under it. This Complaint does challenge VidAngel’s operation of a business that 19 goes far beyond conduct allowed under the FMA and that is based on the unlawful 20 exploitation of Plaintiffs’ rights. 21 THE PARTIES 22 8. Plaintiff Disney Enterprises, Inc. is a corporation duly incorporated 23 under the laws of the State of Delaware with its principal place of business in 24 Burbank, California. Disney owns and controls the copyrights and exclusive rights 25 in the content that it or its affiliates produce or distribute (“Disney’s Copyrighted 26 Works”). 27 9. Disney has obtained Certificates of Copyright Registration for the 28 Copyrighted Works. The attached Exhibit A includes several of Disney’s

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1 Copyrighted Works, along with their registration numbers, that VidAngel has 2 infringed and continues to infringe. 3 10. Plaintiff Lucasfilm Ltd. LLC is a limited liability corporation duly 4 incorporated under the laws of the State of California with its principal place of 5 business in San Francisco, California. Lucasfilm owns and controls the copyrights 6 and exclusive rights in the content that it or its affiliates produce or distribute 7 (“Lucasfilm’s Copyrighted Works”). 8 11. Lucasfilm has obtained Certificates of Copyright Registration for the 9 Copyrighted Works. Exhibit A includes several of Lucasfilm’s Copyrighted Works, 10 along with their registration numbers, that VidAngel has infringed and continues to 11 infringe. 12 12. Plaintiff Twentieth Century Fox Film Corporation is a corporation duly 13 incorporated under the laws of the State of Delaware with its principal place of 14 business in Los Angeles, California. Fox owns and controls the copyrights and 15 exclusive rights in the content that it or its affiliates produce or distribute (“Fox’s 16 Copyrighted Works”). 17 13. Fox has obtained Certificates of Copyright Registration for the 18 Copyrighted Works. Exhibit A includes several of Fox’s Copyrighted Works, along 19 with their registration numbers, that VidAngel has infringed and continues to 20 infringe. 21 14. Plaintiff Warner Bros. Entertainment Inc. is a corporation duly 22 incorporated under the laws of the State of Delaware with its principal place of 23 business in Burbank, California. Warner Bros. owns and controls the copyrights and 24 exclusive rights in the content that it or its affiliates produce or distribute (“Warner 25 Bros.’ Copyrighted Works”). 26 15. Warner Bros. has obtained Certificates of Copyright Registration for the 27 Copyrighted Works. Exhibit A includes several of Warner Bros.’ Copyrighted 28

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1 Works, along with their registration numbers, that VidAngel has infringed and 2 continues to infringe. 3 16. Defendant VidAngel, Inc. is a Delaware corporation with its principal 4 place of business at 249 N. University Ave. Provo, Utah 84601. VidAngel also has 5 offices in California. 6 JURISDICTION AND VENUE 7 17. This Court has subject matter jurisdiction over this Complaint pursuant 8 to 28 U.S.C. §§ 1331, 1338(a), and 17 U.S.C. §§ 501(b), 1203(a). 9 18. Venue is proper in this district pursuant to 28 U.S.C. §§ 1391(b) 10 1400(a). 11 BACKGROUND FACTS 12 Plaintiffs and Their Copyrighted Works 13 19. Plaintiffs or their affiliates produce or distribute some of the most 14 popular and critically acclaimed motion pictures and television shows in the world. 15 20. For Disney, this copyrighted content includes motion pictures produced 16 by Walt Disney Pictures, Pixar and Marvel Studios, LLC. Disney or its affiliates 17 own and distribute television programming developed by or for ABC as well as other 18 networks, including, the Disney Channels, Free Form, and ESPN. 19 21. For Lucasfilm, this copyrighted content includes the motion pictures and 20 television programming it has produced. 21 22. For Fox, this copyrighted content includes motion pictures produced by 22 Twentieth Century Fox and Fox 2000, Fox Searchlight Pictures, and Twentieth 23 Century Fox Animation. Fox or its affiliates own and distribute television 24 programming developed by Twentieth Century Fox Television and Fox21 Television 25 Studios for broadcast networks including FOX, FX, ABC, CBS, NBC and TBS, as 26 well as for cable networks, including, FX, Showtime, and A&E. 27 23. For Warner Bros., this copyrighted content includes motion pictures 28 produced by Warner Bros. Entertainment Inc. and its predecessors, its production

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1 partners, and its affiliates. Warner Bros. or its affiliates produce or distribute 2 television programming developed by, among others, Warner Bros. Television, for 3 broadcast networks including ABC, CBS, NBC, and The CW, as well as for cable 4 networks and VOD providers such as Netflix. 5 24. Plaintiffs have produced and distribute some of the most popular 6 copyrighted works today and historically. 7 a. Some of Disney’s well-known feature-length motion pictures include 8 Inside Out (2015), Big Hero 6 (2014), Frozen (2013), Toy Story 3 (2010), 9 Up (2009), WALL-E (2008), Finding Nemo (2003), Monsters, Inc. (2001), 10 The Lion King (1994), Aladdin (1992) and Beauty and the Beast (1991). 11 b. Some of Lucasfilm’s well-known feature-length motion pictures include 12 Star Wars: The Force Awakens (2015), Indiana Jones and the Kingdom of 13 the Crystal Skull (2008), Star Wars: Episode III – Revenge of the Sith 14 (2005), Star Wars: Episode II – Attack of the Cones (2002), Star Wars: 15 Episode I – The Phantom Menace (1999) and Indiana Jones and the Last 16 Crusade (1989). 17 c. Some of Fox’s well-known feature-length motion pictures include The 18 Martian (2015), The Revenant (2015), The Peanuts Movie (2015), Life of 19 Pi (2013), Avatar (2009), Mrs. Doubtfire (2003), Ice Age (2002), 20 Independence Day (2000) and Home Alone (1990). 21 d. Some of Warner Bros.’ well-known feature-length motion pictures 22 include San Andreas (2015), The Intern (2015), Gravity (2013), Man of 23 Steel (2013), ARGO (2012), The Dark Knight (2008), Harry Potter and 24 the Sorcerer’s Stone (2001) and The Iron Giant (1999). 25 VidAngel currently offers each of these movies, as well as television shows and 26 numerous other of Plaintiffs’ Copyrighted Works, for VOD streaming. 27 28

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1 25. Plaintiffs have invested (and continue to invest) substantial resources 2 and effort each year to develop, produce, distribute and publicly perform their 3 Copyrighted Works. 4 26. Plaintiffs own and have the exclusive U.S. rights (among others) to 5 reproduce and publicly perform their Copyrighted Works, including by means of 6 streaming those works over the internet to the public. 7 27. Plaintiffs distribute and publicly perform their Copyrighted Works in 8 various formats and through multiple distribution channels, including: for exhibition 9 in theaters; through television broadcasts; through cable and direct-to-home satellite 10 services (including basic, premium, “pay-per-view” and VOD services); and through 11 authorized, licensed internet VOD services such as Netflix, Hulu, iTunes, Google 12 Play, Amazon Video and VUDU. Plaintiffs also distribute their works to the home 13 viewing market, including on DVDs and Blu-ray discs. 14 28. Disney also owns and operates Disney Movies Anywhere, Disney’s 15 platform that enables consumers to access Disney, Marvel, Pixar and Lucasfilm titles 16 across digital video platforms and devices using their accounts with participating 17 licensed internet video services. 18 29. Plaintiffs have not provided authorization, permission or consent to 19 VidAngel to copy or publicly perform the Copyrighted Works, or to exercise any 20 other rights affecting their copyrights with respect to the Copyrighted Works. 21 VidAngel’s Unlawful Service 22 30. VidAngel operates a VOD streaming service located online at 23 http://www.vidangel.com and available through a mobile application, which users 24 can download and use on their internet-connected smartphones, tablets and 25 televisions. In addition to streaming movies and television shows, VidAngel offers 26 users who want to skip or mute content within certain categories the ability to select 27 filter settings that will make such content imperceptible during playback. VidAngel 28 users must select at least one category to filter. As discussed below, however, the

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1 single category can include the opening or closing credits, thus allowing VidAngel to 2 stream essentially the entire movie unfiltered. 3 31. VidAngel accomplishes the very core of its service—copying and 4 streaming copyrighted motion picture content—by violating copyright law and 5 Plaintiffs’ rights. VidAngel obtains the Copyrighted Works it streams by apparently 6 circumventing technological protection measures designed to prevent unauthorized 7 access to and copying of the copyrighted content on DVDs and Blu-ray discs. 8 VidAngel then copies that protected content and streams the Copyrighted Works 9 from those unauthorized copies, by internet transmissions, to members of the public. 10 VidAngel’s justifications for its blatant infringing conduct are without merit. 11 VidAngel Circumvents Technological Protection Measures to Access and 12 Copy Plaintiffs’ Copyrighted Works 13 32. DVDs and Blu-ray discs are optical discs that contain recorded material 14 in digital form. Each type of disc includes technological protection measures (or 15 “TPMs”) that protect against unauthorized access to and copying of the copyrighted 16 content that is encrypted on those discs. The TPMs that protect Plaintiffs’ content on 17 DVDs and Blu-ray discs include the Content Scramble System (for DVDs) and the 18 Advanced Access Content System and/or BD+ (for Blu-ray discs). 19 33. The TPMs protect audiovisual content on DVDs and Blu-ray discs 20 through the use of encryption and keys embedded in the content recorded on the 21 physical discs. Licensing organizations control access to the TPM technologies, so 22 as to secure authorized playback of content on DVDs or Blu-ray discs and so as not 23 to permit unauthorized access to or copying of copyrighted content. These licensing 24 and technology systems allow copyright owners to distribute their content on DVDs 25 or Blu-ray discs, while limiting unauthorized copying or redistribution of that 26 content. The TPMs effectively control access to copyrighted content on DVDs and 27 Blu-ray discs, respectively. 28

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1 34. VidAngel circumvents the TPMs on DVD and Blu-ray discs to access 2 Plaintiffs’ Copyrighted Works for the purpose of copying those works and has no 3 authorization to do so. VidAngel’s circumvention of the TPMs violates Section 1201 4 of the DMCA. 5 VidAngel’s Unauthorized Copying and Streaming to the Public of Plaintiffs’ 6 Copyrighted Content 7 35. After circumventing the TPMs, VidAngel makes unauthorized digital 8 copies of the works on the underlying DVD and Blu-ray discs and uses the 9 unauthorized copies to transmit performances of Plaintiffs’ Copyrighted Works to 10 members of the public. 11 36. VidAngel markets itself as transmitting performances of copyrighted 12 works, through VOD streaming, to members of the public:

13 14 15 16 17 18 19 20 21 37. VidAngel’s unauthorized copying and streaming of the Copyrighted 22 Works violates Plaintiffs’ exclusive rights to reproduce and publicly perform the 23 Copyrighted Works under 17 U.S.C. §§ 106(1), (4). 24 VidAngel’s Efforts to Characterize Its Service as Legitimate Fail 25 38. VidAngel offers two fictions to justify its unlicensed VOD service. 26 Both are meritless. 27 28

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1 (a) VidAngel’s “Sale” Fiction Does Not Justify its Illegal VOD 2 Service 3 39. VidAngel claims its service is legal because it is selling, not renting, 4 content to its users. Indeed, VidAngel publicly admits that it would be illegal for it 5 to offer a VOD “rental” service without authorization from copyright owners.1 But 6 VidAngel is wrong that the sale/rental distinction makes a difference. In either case, 7 VidAngel would need to obtain copyright owner authorization to decrypt 8 copyrighted content on protected discs, to copy that content, and to stream that 9 content to the public. 10 40. VidAngel nevertheless perpetrates the fiction that it is “selling” discs to 11 its users in the first place. VidAngel itself explains the “buy and sellback” 12 transaction in terms that highlight the fact it is charging users as little as a dollar a 13 day for temporary VOD access to popular movies and television shows. The 14 following screenshot and language from a “how-to” use VidAngel video posted right 15 on the service’s homepage show that the purported “sale” is a gimmick:

16 In 15 seconds, here’s how VidAngel lets 17 you watch movies for one dollar. You buy a movie for 20 dollars. Don’t worry, it ends 18 up being one dollar. Since you own the 19 movie, you can legally set your filters. Now watch your movie. Then, with the click of a 20 button, sell it back to us for 19 dollars of 21 credit. That means each movie is only one dollar. It’s that simple. Buy for 20, set 22 filters, watch it, sell it back for 19. Enjoy 23 your one dollar movie.2 24 25

26 1 VidAngel’s “How To” page includes the following question and response: “Why can’t I just rent movies? It is not legal for VidAngel to rent movies to you.” 27 2 www.vidangel.com 28

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1 VidAngel, by its own “don’t worry” assurance, confesses to its users (and the 2 world) that VidAngel is providing a dollar-a-day VOD rental service. 3 41. Although VidAngel purports to “sell” copyrighted content, it 4 discourages users from “keeping” the content they purportedly “purchase.” Before 5 watching a movie or television show, the user can check a box to “Auto-Sellback” 6 after he or she has finished watching the content:

7 8 9 10 11 12 13 14 If the VidAngel user does not select the “Auto-Sellback” option, a popup message 15 appears when the user has finished his or her viewing; the popup encourages the 16 user to “SELL BACK NOW” for the daily price. VidAngel’s “Buy, Watch, Sell 17 Back” is a fiction that fails to hide VidAngel’s real business: providing a VOD 18 streaming service to users in return for a daily fee. 19 42. VidAngel’s offering of individual episodes of television shows further 20 evidences “Buy, Watch, Sell Back” to be a complete fiction. Plaintiffs distribute 21 entire seasons of television shows, rather than individual episodes, on DVDs or Blu- 22 ray discs. Therefore, VidAngel cannot actually be “selling” a disc containing 23 television programming to its users when it offers to stream television shows on a 24 per-episode basis only—a method not available on DVD or Blu-ray products. 25 43. Regardless of the label, VidAngel is running an unlicensed VOD 26 streaming service. When a user requests that VidAngel stream a movie or television 27 show, VidAngel streams (without authorization) the underlying copyrighted content 28 from a digital copy that VidAngel made (without authorization). At all relevant

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1 times, VidAngel, not the user, has dominion and control over the digital copy and (to 2 the extent it still exists) whatever physical DVD or Blu-ray disc VidAngel used to 3 access and copy the content in the first instance. VidAngel needs, and does not have, 4 Plaintiffs’ authorization to copy and stream their content. 5 (b) VidAngel Cannot Use The Family Movie Act to Justify its 6 Illegal Streaming Service 7 44. The FMA does not shield VidAngel’s unlicensed service. The FMA 8 provides that one does not infringe copyright by (a) “making imperceptible, by or at 9 the direction of a member of a private household … limited portions” of motion 10 picture content “during a performance in or transmitted to that household for private 11 home viewing, from an authorized copy of the motion picture”; or (b) creating or 12 providing computer technology that enables lawful making-imperceptible activity. 13 17 U.S.C. § 110(11). But, the FMA does not “impact[] established doctrines of 14 copyright.” 151 Cong. Rec. S501 (daily ed. Jan. 25, 2005) (Sen. Hatch). The FMA 15 requires that any copy or performance made pursuant to that statute be otherwise 16 “authorized”—that is, not violating the copyright owner’s other exclusive rights. 17 17 U.S.C. § 110(11). Likewise, the FMA does not sanction the circumvention of the 18 TPMs that protect access to the copyrighted content on DVDs or Blu-ray discs. See 19 151 Cong. Rec. at S502 (FMA does not allow circumvention “for the purpose of 20 engaging in the conduct covered by” the FMA). 21 45. VidAngel is not “mak[ing] imperceptible . . . limited portions” of 22 motion picture content in the course of an otherwise lawful transmission. 17 U.S.C. 23 § 110(11). Rather, VidAngel provides on-demand access to the motion picture itself, 24 without any authorization to do so. Nothing in the FMA authorizes such conduct. 25 46. VidAngel also permits users to watch essentially unfiltered movies and 26 television shows by selecting to filter just the credits and nothing more. If a user 27 wants to watch an unfiltered version of the content, he or she can do so through 28 VidAngel with minimal effort and at a fraction of the price charged by licensed

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1 services. Indeed, some people already have started to make social media postings 2 touting the fact they can use VidAngel to watch movies and television shows 3 essentially unfiltered; as VidAngel continues to grow, more and more current and 4 potential users will be encouraged to use the service in the same way:

5 6 7 8 9 10 11 12 47. VidAngel did not always offer its filtering service through its current 13 infringing model. VidAngel originally distributed an internet web browser “plug-in” 14 that muted and skipped content as it was streamed from other services—notably, 15 Google Play, which is authorized to provide Plaintiffs’ content. Presumably, 16 VidAngel altered its business model to profit directly from the unlawful copying and 17 exploitation of the Copyrighted Works at the expense of Plaintiffs and their 18 relationships with streaming service licensees—authorized services that are being 19 undercut by VidAngel’s unauthorized service. 20 VidAngel’s Conduct Causes Immediate and Irreparable Harm 21 48. VidAngel currently claims to have more than 1,500 titles available for 22 streaming and claims to be adding motion pictures at a rate of 60 per week. 23 VidAngel intends to offer streaming of all new movies that have received more than 24 $10 million in domestic sales. 25 49. If left unabated, VidAngel will undermine Plaintiffs’ relationships with 26 their authorized licensees and interfere with Plaintiffs’ ability to negotiate with those 27 legitimate VOD services. Because VidAngel cuts out payments to copyright owners 28 for the rights it exploits, VidAngel is able to undercut licensed services, which pay

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1 for the same content. VidAngel explicitly advertises itself as a way to “Save on 2 Popular New Releases” compared to licensed VOD services:

3 4 5 6 7 8 9 10 50. Public media outlets have picked up on VidAngel’s ability to undercut 11 the pricing of authorized distributors. One online review noted the price comparison: 12 “Even if you turn the filter entirely off, it’s the cheapest streaming rental out there, 13 and about the same as Redbox, without the hassle of going to the store, or 3 14 remembering to return the disc.” 15 51. If VidAngel continues offering performances of copyrighted content not 16 yet available on authorized streaming services, VidAngel also will interfere with 17 Plaintiffs’ ability to distribute their content, including through authorized licensees or 18 other legitimate distribution channels. VidAngel offers an entire category of movies 19 and television programs, including many of the Copyrighted Works, that are “Not on 20 Netflix.” As described above, VidAngel recently advertised that it offers Star Wars: 21 The Force Awakens for $1 per day when that title was not available for single-day 22 rental elsewhere. Licensed VOD services, in contrast, often are not authorized to 23 offer single-day “rentals” until weeks after VidAngel offers such access for the same 24 titles.

25 3 “Rent Edited Streaming ‘Clean Flicks’ – A Review of VidAngel’s New Edited 26 Movie Service,” Mormon Life Hacker (Jun. 9, 2015) available at < http://mormonlifehacker.com/rent-edited-streaming-clean-flicks-review-vidangel- 27 movie-service/>. 28

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1 52. VidAngel’s circumvention of the TPMs and its making unauthorized 2 copies undermines Plaintiffs’ ability to negotiate for quality controls in the 3 dissemination of their copyrighted content. 4 53. By characterizing VidAngel as a legitimate and lawful alternative to 5 licensed online services, VidAngel threatens to confuse consumers and the public 6 and drive up early and immediate adoption of the VidAngel service by numerous 7 additional end users. 8 54. VidAngel’s unlawful conduct and unfair competition with licensed 9 distribution channels causes Plaintiffs immediate and irreparable harm. Unless 10 enjoined, VidAngel’s illegal actions will continue. 11 FIRST CAUSE OF ACTION 12 (Copyright Infringement, 17 U.S.C. §§ 106(1), (4)) 13 55. Plaintiffs incorporate herein by reference each and every averment 14 contained in paragraphs 1 through 54 inclusive. 15 56. VidAngel infringes Plaintiffs’ exclusive rights to copy and make public 16 performances of the Copyrighted Works, in violation of 17 U.S.C. § 106(1), (4). 17 57. VidAngel does not have Plaintiffs’ authorization to make digital copies 18 of the Copyrighted Works. 19 58. VidAngel does not have Plaintiffs’ authorization to publicly perform the 20 Copyrighted Works. 21 59. VidAngel’s acts of infringement are willful, in disregard of and with 22 indifference to Plaintiffs’ rights. 23 60. As a direct and proximate result of the infringements by VidAngel, 24 Plaintiffs are entitled to damages and VidAngel’s profits in amounts to be proven at 25 trial. 26 61. Alternatively, at their election, Plaintiffs are entitled to statutory 27 damages, up to the maximum amount of $150,000 per statutory award by virtue of 28

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1 VidAngel’s willful infringement, or for such other amounts as may be proper under 2 17 U.S.C. § 504. 3 62. Plaintiffs further are entitled to recover their attorneys’ fees and full 4 costs pursuant to 17 U.S.C. § 505. 5 63. As a direct and proximate result of the foregoing acts and conduct, 6 Plaintiffs have sustained and will continue to sustain substantial, immediate and 7 irreparable injury, for which there is no adequate remedy at law. Unless enjoined 8 and restrained by this Court, VidAngel will continue to infringe Plaintiffs’ rights in 9 their Copyrighted Works. Plaintiffs are entitled to injunctive relief under 17 U.S.C. 10 § 502. 11 SECOND CAUSE OF ACTION 12 (Violation of the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201, et seq.) 13 64. Plaintiffs incorporate herein by reference each and every averment 14 contained in paragraphs 1 through 54 inclusive. 15 65. Section 1201(a)(1)(A) of the DMCA provides in pertinent part that 16 “[n]o person shall circumvent a technological measure that effectively controls 17 access to a work protected under [the Copyright Act].” 17 U.S.C. § 1201(a)(1)(A). 18 66. Plaintiffs use TPMs to effectively control access to, and to protect the 19 exclusive rights of copyright in, motion pictures, television programs, and other 20 works protected by the Copyright Act. 21 67. On information and belief, VidAngel circumvents the TPMs of the 22 DVD and Blu-ray discs containing the Copyrighted Works, and, therefore, VidAngel 23 has violated 17 U.S.C. § 1201(a)(1)(A). 24 68. This circumvention in violation of the DMCA constitutes a separate and 25 independent unlawful act and claim for relief from those stated in the first cause of 26 action. 27 69. Plaintiffs have sustained and will sustain actual damage as the result of 28 VidAngel’s DMCA violations, including, among other things, damages to the value

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1 of the Copyrighted Works and the reduction in Plaintiffs’ goodwill in the 2 Copyrighted Works. 17 U.S.C. § 1203(c)(2). Plaintiffs are also entitled to 3 VidAngel’s profits from its violations of the DMCA. Id. 4 70. Alternatively, and at their election, Plaintiffs are entitled to an award of 5 the maximum statutory damages as permitted by the DMCA. Id. § 1203(c)(3). 6 71. VidAngel’s conduct, unless enjoined and restrained by this Court, will 7 cause immediate and irreparable injury to Plaintiffs who have no adequate remedy at 8 law. Pursuant to 17 U.S.C. § 1203(b)(2), Plaintiffs are entitled to preliminary and 9 permanent injunctions prohibiting VidAngel’s further violations of § 1201. 10 72. Plaintiffs are further entitled to their attorneys’ fees and full costs 11 pursuant to 17 U.S.C. § 1203. 12 PRAYER FOR RELIEF 13 WHEREFORE, Plaintiffs pray for judgment against VidAngel and against all 14 of its affiliates, agents, servants, employees, partners and all persons in active 15 concert or participation with it, for the following relief: 16 1. For Plaintiffs’ damages and VidAngel’s profits in such amount as may 17 be found; alternatively, at Plaintiffs’ election, for maximum statutory damages; or 18 for such other amounts as may be proper pursuant to 17 U.S.C. §§ 504(c), 1203(c). 19 2. For preliminary and permanent injunctions enjoining VidAngel, and 20 all persons acting in concert or participation with it, from publicly performing, 21 reproducing, or otherwise infringing in any manner any copyrighted work owned or 22 controlled by Plaintiffs (including without limitation any Copyrighted Work) and 23 from circumventing technological measures protecting any copyrighted work 24 owned or controlled by Plaintiffs (including without limitation any Copyrighted 25 Works). 26 3. For prejudgment interest according to law. 27 4. For Plaintiffs’ attorneys’ fees and full costs incurred in this action 28 pursuant to 17 U.S.C. §§ 505 and 1203.

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1 5. For all such further and additional relief, in law or in equity, to which 2 Plaintiffs may be entitled or which the Court deems just and proper. 3 DEMAND FOR JURY TRIAL 4 Plaintiffs demand a trial by jury on all issues triable by jury. 5

6 DATED: June 9, 2016 MUNGER, TOLLES & OLSON LLP

7 8 By: /s/ Kelly M. Klaus KELLY M. KLAUS 9 Attorney for Plaintiffs 10

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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Plaintiff Title U.S. Copyright Registration Number Disney Enterprises, Inc. Aladdin PA 583905 Disney Enterprises, Inc. Beauty and the Beast PA 542647 Disney Enterprises, Inc. Big Hero 6 PA 1923820 Disney Enterprises, Inc. Finding Nemo PA 1146502 Disney Enterprises, Inc. Frozen PA 1871077 Disney Enterprises, Inc. Inside Out PA 1949250 Disney Enterprises, Inc. Monsters, Inc. PA 1038178 Disney Enterprises, Inc. The Good Dinosaur PA 1969623 Disney Enterprises, Inc. The Lion King PA 659979 Disney Enterprises, Inc. Toy Story 3 PA 1688323 Disney Enterprises, Inc. Up PA 1635067 Disney Enterprises, Inc. WALL-E PA 1606305 Lucasfilm Ltd. LLC Indiana Jones and the PA 1597330 Kingdom of the Crystal Skull Lucasfilm Ltd. LLC Indiana Jones and the Last PA 416488 Crusader Lucasfilm Ltd. LLC Red Tails PA 1775333 Lucasfilm Ltd. LLC Star Wars: Episode I, The PA 933148 Phantom Menace Lucasfilm Ltd. LLC Star Wars: Episode II, Attack PA 1072580 of the Clones Lucasfilm Ltd. LLC Star Wars: Episode III, PA 1271265 Revenge of the Sith Lucasfilm Ltd. LLC Star Wars: Episode IV, A New PA 1337268 Hope LP 47760 Lucasfilm Ltd. LLC Star Wars: Episode V, The PA 72282 Empire Strikes Back Lucasfilm Ltd. LLC Star Wars: Episode VI, Return PA 172810 of the Jedi Lucasfilm Ltd. LLC Star Wars: Episode VII, The Force Awakens PA1975592 Lucasfilm Ltd. LLC Strange Magic PA 1931312 Lucasfilm Ltd. LLC Willow PA 397211 Twentieth Century Fox Film Avatar Corporation PA 1395488 Twentieth Century Fox Film Firefly, The Train Job Corporation PA 1097185 Twentieth Century Fox Film Firefly, Bushwhacked Corporation PA 1097186 Twentieth Century Fox Film Firefly, Shindig Corporation PA 1110455 Twentieth Century Fox Film Firefly, Serenity Corporation PA 1121054

Disney Enterprises, Inc., et al., v. VidAngel, Inc. – Exhibit A Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 23 of 306 Case 2:16-cv-04109 Document 1-1 Filed 06/09/16 Page 2 of 4 Page ID #:22

Twentieth Century Fox Film Firefly, Safe Corporation PA 1110953 Twentieth Century Fox Film Firefly, Jaynestown Corporation PA 1110456 Twentieth Century Fox Film Firefly, Our Mrs. Reynolds Corporation PA 1097187 Twentieth Century Fox Film Firefly, Out of Gas Corporation PA 1097349 Twentieth Century Fox Film Firefly, Ariel Corporation PA 1110954 Twentieth Century Fox Film Firefly, War Stories Corporation PA 1110620 Twentieth Century Fox Film Firefly, Heart of Gold Corporation PAU 2743962 Twentieth Century Fox Film Firefly, Objects In Space Corporation PA 1121057 Twentieth Century Fox Film Firefly, Trash Corporation PAU 2771565 Twentieth Century Fox Film Firefly, The Message Corporation PAU 2807885 Twentieth Century Fox Film Home Alone Corporation PA 490001 Twentieth Century Fox Film Ice Age Corporation PA 1072377 Twentieth Century Fox Film Independence Day Corporation PA 795170 Twentieth Century Fox Film Life of Pi Corporation PA 1813312 Twentieth Century Fox Film Mrs. Doubtfire Corporation PA 659812 Twentieth Century Fox Film Rio 2 Corporation PA 1889875 Twentieth Century Fox Film The Martian PA 1958485 Corporation Twentieth Century Fox Film The Peanuts Movie PA 1961805 Corporation Twentieth Century Fox Film The Revenant Corporation PA 1968552 Warner Bros. Entertainment Argo PA 1815987 Inc. Warner Bros. Entertainment Arrow, Pilot PA1397684 Inc. Warner Bros. Entertainment Arrow, Honor Thy Father PA1397685 Inc. Warner Bros. Entertainment Arrow, Lone Gunmen PA1397686 Inc.

Disney Enterprises, Inc., et al., v. VidAngel, Inc. – Exhibit A Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 24 of 306 Case 2:16-cv-04109 Document 1-1 Filed 06/09/16 Page 3 of 4 Page ID #:23

Warner Bros. Entertainment Arrow, An Innocent Man PA1397687 Inc. Warner Bros. Entertainment Arrow, Damaged PA1397688 Inc. Warner Bros. Entertainment Arrow, Legacies PA1397689 Inc. Warner Bros. Entertainment Arrow, Muse of Fire PA1397690 Inc. Warner Bros. Entertainment Arrow, Vendetta PA1397702 Inc. Warner Bros. Entertainment Arrow, Year’s End PA1397692 Inc. Warner Bros. Entertainment Arrow, Burned PA1397691 Inc. Warner Bros. Entertainment Arrow, Trust But Verify PA1397701 Inc. Warner Bros. Entertainment Arrow, Vertigo PA1397700 Inc. Warner Bros. Entertainment Arrow, Betrayal PA1397698 Inc. Warner Bros. Entertainment Arrow, The Odyssey PA1397699 Inc. Warner Bros. Entertainment Arrow, Dodger PA1397697 Inc. Warner Bros. Entertainment Arrow, Dead to Rights PA1397696 Inc. Warner Bros. Entertainment Arrow, The Huntress Returns PA1397695 Inc. Warner Bros. Entertainment Arrow, Salvation PA1397693 Inc. Warner Bros. Entertainment Arrow, Unfinished Business PA1397694 Inc. Warner Bros. Entertainment Arrow, Home Invasion PA1397487 Inc. Warner Bros. Entertainment Arrow, The Undertaking PA1397488 Inc. Warner Bros. Entertainment Arrow, Darkness on the Edge PA1397486 Inc. of Town Warner Bros. Entertainment Arrow, Sacrifice PA1397485 Inc. Warner Bros. Entertainment Harry Potter and the PA 1063646 Inc. Sorcerer’s Stone Warner Bros. Entertainment Iron Giant PA 707197 Inc. Warner Bros. Entertainment Man of Steel PA 1850644 Inc.

Disney Enterprises, Inc., et al., v. VidAngel, Inc. – Exhibit A Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 25 of 306 Case 2:16-cv-04109 Document 1-1 Filed 06/09/16 Page 4 of 4 Page ID #:24

Warner Bros. Entertainment Pan PA 1958852 Inc. Warner Bros. Entertainment San Andreas PA 1946168 Inc. Warner Bros. Entertainment The Dark Knight PA 1606857 Inc. Warner Bros. Entertainment The Intern PA 1956935 Inc.

Disney Enterprises, Inc., et al., v. VidAngel, Inc. – Exhibit A Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 26 of 306

EXHIBIT B Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 27 of 306 Case 2:16-cv-04109-AB-PLA Document 228 Filed 10/06/17 Page 1 of 22 Page ID #:6516

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, Fiftieth Floor 6 Los Angeles, CA 90071-3426 Tel: (213) 683-9100 7 Fax: (213) 687-3702

8 Attorneys for Plaintiffs

9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12 13 DISNEY ENTERPRISES, INC.; CASE NO. 16-cv-04109-AB (PLAx) LUCASFILM LTD. LLC; TWENTIETH 14 CENTURY FOX FILM FIRST AMENDED COMPLAINT CORPORATION; WARNER BROS. FOR COPYRIGHT 15 ENTERTAINMENT INC. ; MVL FILM INFRINGEMENT AND FINANCE LLC; NEW LINE VIOLATION OF DIGITAL 16 PRODUCTIONS, INC.; and TURNER MILLENNIUM COPYRIGHT ACT ENTERTAINMENT CO., 17 Plaintiffs, DEMAND FOR JURY TRIAL 18 vs. 19 VIDANGEL, INC., 20 Defendant. 21

22 23 24 25 26 27 28

FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 Plaintiffs Disney Enterprises, Inc. (“Disney”), Lucasfilm Ltd. LLC 2 (“Lucasfilm”), Twentieth Century Fox Film Corporation (“Fox”), Warner Bros. 3 Entertainment Inc. (“Warner Bros.”), MVL Film Finance LLC (“Marvel”), New 4 Line Productions, Inc. (“New Line”); and Turner Entertainment Co. (“Turner”), 5 “Plaintiffs”), through their undersigned counsel, hereby bring this First Amended 6 Complaint against VidAngel, Inc. (“Defendant” or “VidAngel”) for infringing 7 Plaintiffs’ exclusive rights under the Copyright Act (17 U.S.C. § 101 et seq.) and for 8 violating the Digital Millennium Copyright Act (§ 1201 et seq.) (“DMCA”). This 9 Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a), and 17 10 U.S.C. §§ 501(b), 1203(a). Plaintiffs allege, on personal knowledge as to themselves 11 and information and belief as to others, as follows: 12 INTRODUCTION 13 1. VidAngel operates a video- on-demand (“VOD”) service that streams 14 popular movies and television shows.1 VidAngel charges users for watching that 15 content but has no authorization and pays nothing for the rights it exploits. At its core, 16 VidAngel is no different from many other unlawful online services. Plaintiffs bring 17 this action to stop VidAngel’s infringement of their rights. 18 2. VidAngel’s VOD service looks and feels very similar to licensed services 19 such as Netflix, Hulu, and iTunes. Users can search for copyrighted motion picture 20 content by popularity, genre or categories (e.g., “New Releases”):

21 22 23 24

25 1 On December 12, 2016, the Court granted Plaintiffs’ Motion for Preliminary Injunction (Dkt. 144). On August 24, 2017, the Ninth Circuit affirmed the Court’s 26 Order (Dkt. 201). As Plaintiffs are amending the complaint to add MVL Film Finance LLC, New Line Productions, Inc. and Turner Entertainment Co. as named 27 Plaintiffs, Plaintiffs have not changed the substantive allegations herein. 28 -1- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 2 3 4 5 6 7 8 9 10 And, like these other services, VidAngel streams movies via computer, mobile 11 device (e.g., a smartphone, iPad, or tablet), or internet-connected television (e.g., 12 through Apple TV, Chromecast or Roku). 13 3. But there is a fundamental difference between VidAngel and licensed 14 VOD services: VidAngel does not have permission to copy Plaintiffs’ movies and 15 television shows or to stream them to VidAngel’s users. Instead, VidAngel appears to 16 circumvent the technological protection measures on DVDs and Blu-ray discs to 17 create unauthorized copies and then uses those copies to stream Plaintiffs’ works to the 18 public without authorization. 19 4. By running this service without a license, VidAngel blatantly violates the 20 Copyright Act and confers on itself unfair and unlawful advantages vis-à-vis licensed 21 services in the VOD marketplace. First, by cutting out payments to copyright owners, 22 VidAngel is able to offer prices that undercut licensed services and charge only $1 for 23 daily access to movies in standard definition format. VidAngel emphatically touts its 24 below-market pricing:

25 26 27 28 -2- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 2 3 4 5 6 7 8 9 10 11 5. Second, because VidAngel absolves itself of having to abide by 12 contractual restrictions, VidAngel offers content that is not available on licensed VOD 13 services. For example, VidAngel makes many newly released titles available for 14 streaming well before they are available via licensed VOD services. Recently, 15 VidAngel exploited this competitive advantage to offer Star Wars: The Force 16 Awakens for $1 a day at a time when lawful VOD services did not yet have the right to 17 offer that work for single-day access at all:

18 19 20 21 22 23 24 25 26 VidAngel also flaunts this unfair competitive advantage by expressly promoting a 27 selection of titles that are available on VidAngel but “Not Available on Netflix”:

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1 2 3 4 5 6 7 8 9 10

11 6. VidAngel publicly defends its unlicensed activities with legally and 12 factually false claims. For example, VidAngel insists that it has the right to bypass 13 copyright owner consent because VidAngel says it is “selling,” not renting, movies to 14 its users. It does not matter whether VidAngel sells or rents movies. In either case, 15 VidAngel would need copyright owner consent to circumvent access controls on 16 protected discs, make copies of that content, and stream performances of the content to 17 the public. VidAngel does not have consent to do any of these things. And, VidAngel 18 is not “selling” movies. VidAngel is simply providing an unauthorized dollar-a-day 19 VOD rental service. 20 7. VidAngel also asserts that the Family Movie Act of 2005 (“FMA”) 21 justifies its unlicensed activities because VidAngel offers its users the ability to skip 22 and mute words and images that VidAngel thinks its users may find objectionable. 23 The FMA does not justify VidAngel’s violation of Plaintiffs’ rights. The FMA 24 narrowly permits technology that “mak[es] imperceptible,” at a home user’s direction, 25 limited portions of content during playback “from an authorized copy” of a motion 26 picture. 17 U.S.C. § 110(11). Nothing in the FMA gives VidAngel the right to copy or 27 publicly perform Plaintiffs’ copyrighted content without authorization. Nor does the 28 -4- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 FMA give VidAngel the right to circumvent the technological protection measures on 2 DVDs and Blu-ray discs that safeguard access to Plaintiffs’ content. This Complaint 3 does not challenge the FMA or businesses acting lawfully under it. This Complaint 4 does challenge VidAngel’s operation of a business that goes far beyond conduct 5 allowed under the FMA and that is based on the unlawful exploitation of Plaintiffs’ 6 rights. 7 THE PARTIES 8 8. Plaintiff Disney Enterprises, Inc. is a corporation duly incorporated under 9 the laws of the State of Delaware with its principal place of business in Burbank, 10 California. Disney owns and controls the copyrights and exclusive rights in the 11 content that it or its affiliates produce or distribute (“Disney’s Copyrighted Works”). 12 9. Disney has obtained Certificates of Copyright Registration for the 13 Copyrighted Works. The attached Exhibit A includes several of Disney’s Copyrighted 14 Works, along with their registration numbers, that VidAngel has infringed and 15 continues to infringe. 16 10. Plaintiff Lucasfilm Ltd. LLC is a limited liability corporation duly 17 incorporated under the laws of the State of California with its principal place of 18 business in San Francisco, California. Lucasfilm owns and controls the copyrights and 19 exclusive rights in the content that it or its affiliates produce or distribute 20 (“Lucasfilm’s Copyrighted Works”). 21 11. Lucasfilm has obtained Certificates of Copyright Registration for the 22 Copyrighted Works. Exhibit A includes several of Lucasfilm’s Copyrighted Works, 23 along with their registration numbers, that VidAngel has infringed and continues to 24 infringe. 25 12. Plaintiff Twentieth Century Fox Film Corporation is a corporation duly 26 incorporated under the laws of the State of Delaware with its principal place of 27 business in Los Angeles, California. Fox owns and controls the copyrights and 28 -5- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 exclusive rights in the content that it or its affiliates produce or distribute (“Fox’s 2 Copyrighted Works”). 3 13. The Copyright Office has issued Certificates of Copyright Registration 4 for Fox’s Copyrighted Works. Amended Exhibit A includes several of Fox’s 5 Copyrighted Works, along with their registration numbers, that VidAngel has 6 infringed and intends to continue to infringe. 7 14. Plaintiff Warner Bros. Entertainment Inc. is a corporation duly 8 incorporated under the laws of the State of Delaware with its principal place of 9 business in Burbank, California. Warner Bros. owns the copyrights or has exclusive 10 rights in the content that it or its affiliates produce or distribute (“Warner Bros.’ 11 Copyrighted Works”). 12 15. The Copyright Office has issued Certificates of Copyright Registration 13 for Warner Bros.’ Copyrighted Works. Amended Exhibit A includes several of 14 Warner Bros.’ Copyrighted Works, along with their registration numbers, that 15 VidAngel has infringed and continues to infringe. 16 16. Plaintiff MVL Film Finance LLC is a corporation duly incorporated 17 under the laws of the State of Delaware with its principal place of business in Burbank, 18 California. Marvel is a wholly owned, indirect subsidiary of Disney. Marvel owns the 19 copyrights or has exclusive rights in the content that it or its affiliates produce or 20 distribute (“Marvel’s Copyrighted Works”). 21 17. The Copyright Office has issued Certificates of Copyright Registration 22 for Marvel’s Copyrighted Works. Amended Exhibit A includes several of Marvel’s 23 Copyrighted Works, along with their registration numbers, that VidAngel has 24 infringed and intends to continue to infringe. 25 18. Plaintiff New Line Productions, Inc. is a corporation duly incorporated 26 under the laws of the State of California with its principal place of business in 27 Burbank, California. New Line is a wholly owned, indirect subsidiary of Warner 28 -6- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 Bros. New Line owns the copyrights or has exclusive rights in the content that it or its 2 affiliates produce or distribute (“New Line’s Copyrighted Works”). 3 19. The Copyright Office has issued Certificates of Copyright Registration 4 for New Line’s Copyrighted Works. Amended Exhibit A includes several of New 5 Line’s Copyrighted Works, along with their registration numbers, that VidAngel has 6 infringed and intends to continue to infringe. 7 20. Plaintiff Turner Entertainment Co. is a corporation duly incorporated 8 under the laws of the State of Delaware with its principal place of business in Burbank, 9 California. Turner is a wholly owned subsidiary of Warner Bros. Turner owns the 10 copyrights or has exclusive rights in the content that it or its affiliates produce or 11 distribute (“Turner’s Copyrighted Works”). 12 21. The Copyright Office has issued Certificates of Copyright Registration 13 for Turner’s Copyrighted Works. Amended Exhibit A includes several of Turner’s 14 Copyrighted Works, along with their registration numbers, that VidAngel has 15 infringed and intends to continue to infringe. 16 22. Defendant VidAngel, Inc. is a Delaware corporation with its principal 17 place of business at 249 N. University Ave. Provo, Utah 84601. VidAngel also has 18 offices in California. 19 JURISDICTION AND VENUE 20 23. This Court has subject matter jurisdiction over this Complaint pursuant to 21 28 U.S.C. §§ 1331, 1338(a), and 17 U.S.C. §§ 501(b), 1203(a). 22 24. Venue is proper in this district pursuant to 28 U.S.C. §§ 1391(b) 1400(a). 23 BACKGROUND FACTS 24 Plaintiffs and Their Copyrighted Works 25 25. Plaintiffs or their affiliates produce or distribute some of the most popular 26 and critically acclaimed motion pictures and television shows in the world. 27 26. For Disney, this copyrighted content includes motion pictures produced 28 by Walt Disney Pictures, Pixar and Marvel Studios, LLC. Disney or its affiliates own -7- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 and distribute television programming developed by or for ABC as well as other 2 networks, including, the Disney Channels, Free Form, and ESPN. 3 27. For Lucasfilm, this copyrighted content includes the motion pictures and 4 television programming it has produced. 5 28. For Fox, this copyrighted content includes motion pictures produced by 6 Twentieth Century Fox and Fox 2000, Fox Searchlight Pictures, and Twentieth 7 Century Fox Animation. Fox or its affiliates own and distribute television 8 programming developed by Twentieth Century Fox Television and Fox21 Television 9 Studios for broadcast networks including FOX, FX, ABC, CBS, NBC and TBS, as 10 well as for cable networks, including, FX, Showtime, and A&E. 11 29. For Warner Bros., this copyrighted content includes motion pictures 12 produced by Warner Bros. Entertainment Inc. and its predecessors, its production 13 partners, and its affiliates. Warner Bros. or its affiliates produce or distribute 14 television programming developed by, among others, Warner Bros. Television, for 15 broadcast networks including ABC, CBS, NBC, and The CW, as well as for cable 16 networks and VOD providers such as Netflix. 17 30. For Marvel, this copyrighted content includes motion pictures produced 18 by Marvel Studios, LLC and Marvel Productions LLC. 19 31. For New Line, this copyrighted content includes motion pictures owned 20 or produced by New Line Productions, Inc. 21 32. For Turner, this copyrighted content includes motion pictures owned by 22 Turner and/or produced by affiliates or predecessors including 23 Metro-Goldwyn-Mayer Inc. and Warner Bros. 24 33. Plaintiffs have produced and distribute some of the most popular 25 copyrighted works today and historically. 26 a. Some of Disney’s well-known feature-length motion pictures include 27 Inside Out (2015), Big Hero 6 (2014), Frozen (2013), Toy Story 3 (2010), 28 -8- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 Up (2009), WALL-E (2008), Finding Nemo (2003), Monsters, Inc. (2001), 2 The Lion King (1994), Aladdin (1992) and Beauty and the Beast (1991). 3 b. Some of Lucasfilm’s well-known feature-length motion pictures include 4 Star Wars: The Force Awakens (2015), Indiana Jones and the Kingdom of 5 the Crystal Skull (2008), Star Wars: Episode III – Revenge of the Sith 6 (2005), Star Wars: Episode II – Attack of the Cones (2002), Star Wars: 7 Episode I – The Phantom Menace (1999) and Indiana Jones and the Last 8 Crusade (1989). 9 c. Some of Fox’s well-known feature-length motion pictures include The 10 Martian (2015), The Revenant (2015), The Peanuts Movie (2015), Life of 11 Pi (2013), Avatar (2009), Mrs. Doubtfire (2003), Ice Age (2002), 12 Independence Day (2000) and Home Alone (1990). 13 d. Some of Warner Bros.’ well-known feature-length motion pictures include 14 San Andreas (2015), The Intern (2015), Gravity (2013), Man of Steel 15 (2013), ARGO (2012), The Dark Knight (2008), Harry Potter and the 16 Sorcerer’s Stone (2001) and The Iron Giant (1999). 17 e. Some of Marvel’s well-known feature-length motion pictures include 18 Captain America: Civil War (2016); Ant-Man (2015); Avengers: Age of 19 Ultron (2015); Guardians of the Galaxy (2014); Iron Man 3 (2013); 20 Captain America: The First Avenger (2011); Thor (2011); and Iron Man 21 (2008). 22 f. Some of New Line’s well-known feature-length motion pictures include; 23 17 Again (2009); Austin Powers in Goldmember (2002); Lord of the Rings: 24 The Fellowship of the Ring (2001); and Dumb and Dumber (1994). 25 g. Some of Turner’s well-known feature-length motion pictures include 2001: 26 A Space Odyssey (1968); Ben Hur (1959); and North by Northwest (1959). 27 VidAngel currently offers each of these movies, as well as television shows and 28 numerous other of Plaintiffs’ Copyrighted Works, for VOD streaming. -9- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 34. Plaintiffs have invested (and continue to invest) substantial resources and 2 effort each year to develop, produce, distribute and publicly perform their Copyrighted 3 Works. 4 35. Plaintiffs own and have the exclusive U.S. rights (among others) to 5 reproduce and publicly perform their Copyrighted Works, including by means of 6 streaming those works over the internet to the public. 7 36. Plaintiffs distribute and publicly perform their Copyrighted Works in 8 various formats and through multiple distribution channels, including: for exhibition 9 in theaters; through television broadcasts; through cable and direct-to-home satellite 10 services (including basic, premium, “pay-per-view” and VOD services); and through 11 authorized, licensed internet VOD services such as Netflix, Hulu, iTunes, Google 12 Play, Amazon Video and VUDU. Plaintiffs also distribute their works to the home 13 viewing market, including on DVDs and Blu-ray discs. 14 37. Disney also owns and operates Disney Movies Anywhere, Disney’s 15 platform that enables consumers to access Disney, Marvel, Pixar and Lucasfilm titles 16 across digital video platforms and devices using their accounts with participating 17 licensed internet video services. 18 38. Plaintiffs have not provided authorization, permission or consent to 19 VidAngel to copy or publicly perform the Copyrighted Works, or to exercise any other 20 rights affecting their copyrights with respect to the Copyrighted Works. 21 VidAngel’s Unlawful Service 22 39. VidAngel operates a VOD streaming service located online at 23 http://www.vidangel.com and available through a mobile application, which users can 24 download and use on their internet-connected smartphones, tablets and televisions. In 25 addition to streaming movies and television shows, VidAngel offers users who want to 26 skip or mute content within certain categories the ability to select filter settings that 27 will make such content imperceptible during playback. VidAngel users must select at 28 least one category to filter. As discussed below, however, the single category can -10- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 include the opening or closing credits, thus allowing VidAngel to stream essentially 2 the entire movie unfiltered. 3 40. VidAngel accomplishes the very core of its service—copying and 4 streaming copyrighted motion picture content—by violating copyright law and 5 Plaintiffs’ rights. VidAngel obtains the Copyrighted Works it streams by apparently 6 circumventing technological protection measures designed to prevent unauthorized 7 access to and copying of the copyrighted content on DVDs and Blu-ray discs. 8 VidAngel then copies that protected content and streams the Copyrighted Works from 9 those unauthorized copies, by internet transmissions, to members of the public. 10 VidAngel’s justifications for its blatant infringing conduct are without merit. 11 VidAngel Circumvents Technological Protection Measures to Access and 12 Copy Plaintiffs’ Copyrighted Works 13 41. DVDs and Blu-ray discs are optical discs that contain recorded material 14 in digital form. Each type of disc includes technological protection measures (or 15 “TPMs”) that protect against unauthorized access to and copying of the copyrighted 16 content that is encrypted on those discs. The TPMs that protect Plaintiffs’ content on 17 DVDs and Blu-ray discs include the Content Scramble System (for DVDs) and the 18 Advanced Access Content System and/or BD+ (for Blu-ray discs). 19 42. The TPMs protect audiovisual content on DVDs and Blu-ray discs 20 through the use of encryption and keys embedded in the content recorded on the 21 physical discs. Licensing organizations control access to the TPM technologies, so as 22 to secure authorized playback of content on DVDs or Blu-ray discs and so as not to 23 permit unauthorized access to or copying of copyrighted content. These licensing and 24 technology systems allow copyright owners to distribute their content on DVDs or 25 Blu-ray discs, while limiting unauthorized copying or redistribution of that content. 26 The TPMs effectively control access to copyrighted content on DVDs and Blu-ray 27 discs, respectively. 28 -11- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 43. VidAngel circumvents the TPMs on DVD and Blu-ray discs to access 2 Plaintiffs’ Copyrighted Works for the purpose of copying those works and has no 3 authorization to do so. VidAngel’s circumvention of the TPMs violates Section 1201 4 of the DMCA. 5 VidAngel’s Unauthorized Copying and Streaming to the Public of Plaintiffs’ 6 Copyrighted Content 7 44. After circumventing the TPMs, VidAngel makes unauthorized digital 8 copies of the works on the underlying DVD and Blu-ray discs and uses the 9 unauthorized copies to transmit performances of Plaintiffs’ Copyrighted Works to 10 members of the public. 11 45. VidAngel markets itself as transmitting performances of copyrighted 12 works, through VOD streaming, to members of the public:

13 14 15 16 17 18 19 20 21 46. VidAngel’s unauthorized copying and streaming of the Copyrighted 22 Works violates Plaintiffs’ exclusive rights to reproduce and publicly perform the 23 Copyrighted Works under 17 U.S.C. §§ 106(1), (4). 24 VidAngel’s Efforts to Characterize Its Service as Legitimate Fail 25 47. VidAngel offers two fictions to justify its unlicensed VOD service. Both 26 are meritless. 27 28 -12- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 (a) VidAngel’s “Sale” Fiction Does Not Justify its Illegal VOD 2 Service 3 48. VidAngel claims its service is legal because it is selling, not renting, 4 content to its users. Indeed, VidAngel publicly admits that it would be illegal for it to 5 offer a VOD “rental” service without authorization from copyright owners.2 But 6 VidAngel is wrong that the sale/rental distinction makes a difference. In either case, 7 VidAngel would need to obtain copyright owner authorization to decrypt copyrighted 8 content on protected discs, to copy that content, and to stream that content to the 9 public. 10 49. VidAngel nevertheless perpetrates the fiction that it is “selling” discs to 11 its users in the first place. VidAngel itself explains the “buy and sellback” transaction 12 in terms that highlight the fact it is charging users as little as a dollar a day for 13 temporary VOD access to popular movies and television shows. The following 14 screenshot and language from a “how-to” use VidAngel video posted right on the 15 service’s homepage show that the purported “sale” is a gimmick:

16 In 15 seconds, here’s how VidAngel lets you 17 watch movies for one dollar. You buy a movie for 20 dollars. Don’t worry, it ends up 18 being one dollar. Since you own the movie, 19 you can legally set your filters. Now watch your movie. Then, with the click of a button, 20 sell it back to us for 19 dollars of credit. That 21 means each movie is only one dollar. It’s that simple. Buy for 20, set filters, watch it, 22 sell it back for 19. Enjoy your one dollar 23 movie.2 24 VidAngel, by its own “don’t worry” assurance, confesses to its users (and the world) 25 that VidAngel is providing a dollar-a-day VOD rental service. 26

27 2 www.vidangel.com 28 -13- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 50. Although VidAngel purports to “sell” copyrighted content, it discourages 2 users from “keeping” the content they purportedly “purchase.” Before watching a 3 movie or television show, the user can check a box to “Auto-Sellback” after he or she 4 has finished watching the content:

5 6 7 8 9 10 11 12 If the VidAngel user does not select the “Auto-Sellback” option, a popup message 13 appears when the user has finished his or her viewing; the popup encourages the user 14 to “SELL BACK NOW” for the daily price. VidAngel’s “Buy, Watch, Sell Back” is 15 a fiction that fails to hide VidAngel’s real business: providing a VOD streaming 16 service to users in return for a daily fee. 17 51. VidAngel’s offering of individual episodes of television shows further 18 evidences “Buy, Watch, Sell Back” to be a complete fiction. Plaintiffs distribute entire 19 seasons of television shows, rather than individual episodes, on DVDs or Blu-ray 20 discs. Therefore, VidAngel cannot actually be “selling” a disc containing television 21 programming to its users when it offers to stream television shows on a per-episode 22 basis only—a method not available on DVD or Blu-ray products. 23 52. Regardless of the label, VidAngel is running an unlicensed VOD 24 streaming service. When a user requests that VidAngel stream a movie or television 25 show, VidAngel streams (without authorization) the underlying copyrighted content 26 from a digital copy that VidAngel made (without authorization). At all relevant times, 27 VidAngel, not the user, has dominion and control over the digital copy and (to the 28 extent it still exists) whatever physical DVD or Blu-ray disc VidAngel used to access -14- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 and copy the content in the first instance. VidAngel needs, and does not have, 2 Plaintiffs’ authorization to copy and stream their content. 3 (b) VidAngel Cannot Use The Family Movie Act to Justify its 4 Illegal Streaming Service 5 53. The FMA does not shield VidAngel’s unlicensed service. The FMA 6 provides that one does not infringe copyright by (a) “making imperceptible, by or at 7 the direction of a member of a private household … limited portions” of motion 8 picture content “during a performance in or transmitted to that household for private 9 home viewing, from an authorized copy of the motion picture”; or (b) creating or 10 providing computer technology that enables lawful making-imperceptible activity. 17 11 U.S.C. § 110(11). But, the FMA does not “impact[] established doctrines of 12 copyright.” 151 Cong. Rec. S501 (daily ed. Jan. 25, 2005) (Sen. Hatch). The FMA 13 requires that any copy or performance made pursuant to that statute be otherwise 14 “authorized”—that is, not violating the copyright owner’s other exclusive rights. 17 15 U.S.C. § 110(11). Likewise, the FMA does not sanction the circumvention of the 16 TPMs that protect access to the copyrighted content on DVDs or Blu-ray discs. See 17 151 Cong. Rec. at S502 (FMA does not allow circumvention “for the purpose of 18 engaging in the conduct covered by” the FMA). 19 54. VidAngel is not “mak[ing] imperceptible . . . limited portions” of motion 20 picture content in the course of an otherwise lawful transmission. 17 U.S.C. § 21 110(11). Rather, VidAngel provides on-demand access to the motion picture itself, 22 without any authorization to do so. Nothing in the FMA authorizes such conduct. 23 55. VidAngel also permits users to watch essentially unfiltered movies and 24 television shows by selecting to filter just the credits and nothing more. If a user wants 25 to watch an unfiltered version of the content, he or she can do so through VidAngel 26 with minimal effort and at a fraction of the price charged by licensed services. Indeed, 27 some people already have started to make social media postings touting the fact they 28 can use VidAngel to watch movies and television shows essentially unfiltered; as -15- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 VidAngel continues to grow, more and more current and potential users will be 2 encouraged to use the service in the same way:

3 4 5 6 7 8 9 10 56. VidAngel did not always offer its filtering service through its current 11 infringing model. VidAngel originally distributed an internet web browser “plug-in” 12 that muted and skipped content as it was streamed from other services—notably, 13 Google Play, which is authorized to provide Plaintiffs’ content. Presumably, 14 VidAngel altered its business model to profit directly from the unlawful copying and 15 exploitation of the Copyrighted Works at the expense of Plaintiffs and their 16 relationships with streaming service licensees—authorized services that are being 17 undercut by VidAngel’s unauthorized service. 18 VidAngel’s Conduct Causes Immediate and Irreparable Harm 19 57. VidAngel currently claims to have more than 1,500 titles available for 20 streaming and claims to be adding motion pictures at a rate of 60 per week. VidAngel 21 intends to offer streaming of all new movies that have received more than $10 million 22 in domestic sales. 23 58. If left unabated, VidAngel will undermine Plaintiffs’ relationships with 24 their authorized licensees and interfere with Plaintiffs’ ability to negotiate with those 25 legitimate VOD services. Because VidAngel cuts out payments to copyright owners 26 for the rights it exploits, VidAngel is able to undercut licensed services, which pay for 27 the same content. VidAngel explicitly advertises itself as a way to “Save on Popular 28 New Releases” compared to licensed VOD services: -16- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1

2 3 4 5 6 7 8 59. Public media outlets have picked up on VidAngel’s ability to undercut 9 the pricing of authorized distributors. One online review noted the price comparison: 10 “Even if you turn the filter entirely off, it’s the cheapest streaming rental out there, and 11 about the same as Redbox, without the hassle of going to the store, or remembering to 12 return the disc.”3 13 60. If VidAngel continues offering performances of copyrighted content not 14 yet available on authorized streaming services, VidAngel also will interfere with 15 Plaintiffs’ ability to distribute their content, including through authorized licensees or 16 other legitimate distribution channels. VidAngel offers an entire category of movies 17 and television programs, including many of the Copyrighted Works, that are “Not on 18 Netflix.” As described above, VidAngel recently advertised that it offers Star Wars: 19 The Force Awakens for $1 per day when that title was not available for single-day 20 rental elsewhere. Licensed VOD services, in contrast, often are not authorized to offer 21 single-day “rentals” until weeks after VidAngel offers such access for the same titles. 22 61. VidAngel’s circumvention of the TPMs and its making unauthorized 23 copies undermines Plaintiffs’ ability to negotiate for quality controls in the 24 dissemination of their copyrighted content. 25 62. By characterizing VidAngel as a legitimate and lawful alternative to 26 licensed online services, VidAngel threatens to confuse consumers and the public and 27 28 -17- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 drive up early and immediate adoption of the VidAngel service by numerous 2 additional end users. 3 63. VidAngel’s unlawful conduct and unfair competition with licensed 4 distribution channels causes Plaintiffs immediate and irreparable harm. Unless 5 enjoined, VidAngel’s illegal actions will continue. 6 FIRST CAUSE OF ACTION 7 (Copyright Infringement, 17 U.S.C. §§ 106(1), (4)) 8 64. Plaintiffs incorporate herein by reference each and every averment 9 contained in paragraphs 1 through 63 inclusive. 10 65. VidAngel infringes Plaintiffs’ exclusive rights to copy and make public 11 performances of the Copyrighted Works, in violation of 17 U.S.C. § 106(1), (4). 12 66. VidAngel does not have Plaintiffs’ authorization to make digital copies of 13 the Copyrighted Works. 14 67. VidAngel does not have Plaintiffs’ authorization to publicly perform the 15 Copyrighted Works. 16 68. VidAngel’s acts of infringement are willful, in disregard of and with 17 indifference to Plaintiffs’ rights. 18 69. As a direct and proximate result of the infringements by VidAngel, 19 Plaintiffs are entitled to damages and VidAngel’s profits in amounts to be proven at 20 trial. 21 70. Alternatively, at their election, Plaintiffs are entitled to statutory 22 damages, up to the maximum amount of $150,000 per statutory award by virtue of 23 VidAngel’s willful infringement, or for such other amounts as may be proper under 17 24 U.S.C. § 504. 25 71. Plaintiffs further are entitled to recover their attorneys’ fees and full costs 26 pursuant to 17 U.S.C. § 505. 27 72. As a direct and proximate result of the foregoing acts and conduct, 28 Plaintiffs have sustained and will continue to sustain substantial, immediate and -18- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 irreparable injury, for which there is no adequate remedy at law. Unless enjoined and 2 restrained by this Court, VidAngel will continue to infringe Plaintiffs’ rights in their 3 Copyrighted Works. Plaintiffs are entitled to injunctive relief under 17 U.S.C. § 502. 4 SECOND CAUSE OF ACTION 5 (Violation of the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201, et seq.) 6 73. Plaintiffs incorporate herein by reference each and every averment 7 contained in paragraphs 1 through 63 inclusive. 8 74. Section 1201(a)(1)(A) of the DMCA provides in pertinent part that “[n]o 9 person shall circumvent a technological measure that effectively controls access to a 10 work protected under [the Copyright Act].” 17 U.S.C. § 1201(a)(1)(A). 11 75. Plaintiffs use TPMs to effectively control access to, and to protect the 12 exclusive rights of copyright in, motion pictures, television programs, and other works 13 protected by the Copyright Act. 14 76. On information and belief, VidAngel circumvents the TPMs of the DVD 15 and Blu-ray discs containing the Copyrighted Works, and, therefore, VidAngel has 16 violated 17 U.S.C. § 1201(a)(1)(A). 17 77. This circumvention in violation of the DMCA constitutes a separate and 18 independent unlawful act and claim for relief from those stated in the first cause of 19 action. 20 78. Plaintiffs have sustained and will sustain actual damage as the result of 21 VidAngel’s DMCA violations, including, among other things, damages to the value of 22 the Copyrighted Works and the reduction in Plaintiffs’ goodwill in the Copyrighted 23 Works. 17 U.S.C. § 1203(c)(2). Plaintiffs are also entitled to VidAngel’s profits from 24 its violations of the DMCA. Id. 25 79. Alternatively, and at their election, Plaintiffs are entitled to an award of 26 the maximum statutory damages as permitted by the DMCA. Id. § 1203(c)(3). 27 80. VidAngel’s conduct, unless enjoined and restrained by this Court, will 28 cause immediate and irreparable injury to Plaintiffs who have no adequate remedy at -19- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 law. Pursuant to 17 U.S.C. § 1203(b)(2), Plaintiffs are entitled to preliminary and 2 permanent injunctions prohibiting VidAngel’s further violations of § 1201. 3 81. Plaintiffs are further entitled to their attorneys’ fees and full costs 4 pursuant to 17 U.S.C. § 1203. 5 PRAYER FOR RELIEF 6 WHEREFORE, Plaintiffs pray for judgment against VidAngel and against all 7 of its affiliates, agents, servants, employees, partners and all persons in active concert 8 or participation with it, for the following relief: 9 1. For Plaintiffs’ damages and VidAngel’s profits in such amount as may 10 be found; alternatively, at Plaintiffs’ election, for maximum statutory damages; or for 11 such other amounts as may be proper pursuant to 17 U.S.C. §§ 504(c), 1203(c). 12 2. For preliminary and permanent injunctions enjoining VidAngel, and all 13 persons acting in concert or participation with it, from publicly performing, 14 reproducing, or otherwise infringing in any manner any copyrighted work owned or 15 controlled by Plaintiffs (including without limitation any Copyrighted Work) and 16 from circumventing technological measures protecting any copyrighted work owned 17 or controlled by Plaintiffs (including without limitation any Copyrighted Works). 18 3. For prejudgment interest according to law. 19 4. For Plaintiffs’ attorneys’ fees and full costs incurred in this action 20 pursuant to 17 U.S.C. §§ 505 and 1203. 21 5. For all such further and additional relief, in law or in equity, to which 22 Plaintiffs may be entitled or which the Court deems just and proper. 23 DEMAND FOR JURY TRIAL 24 Plaintiffs demand a trial by jury on all issues triable by jury. 25 26 27 28 -20- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1

2 DATED: September 29, 2017 MUNGER, TOLLES & OLSON LLP

3 4 By: /s/ Kelly M. Klaus KELLY M. KLAUS 5 Attorney for Plaintiffs 6

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -21- FIRST AM. COMPLAINT 16-CV-04109-AB (PLAX)

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1 Ryan G. Baker (Bar No. 214036) Peter Stris (Bar No. 216226) [email protected] [email protected] 2 Jaime Marquart (Bar No. 200344) Brendan Maher (Bar No. 217043) [email protected] [email protected] 3 Scott M. Malzahn (Bar No. 229204) Elizabeth Brannen (Bar No. 226234) [email protected] [email protected] 4 Brian T. Grace (Bar No. 307826) [email protected] Daniel Geyser (Bar No. 230405) 5 BAKER MARQUART LLP [email protected] 2029 Century Park East, Sixteenth Fl. STRIS & MAHER LLP 6 Los Angeles, California 90067 725 S. Figueroa St, Suite 1830 Telephone: (424) 652-7800 Los Angeles, CA 90017 7 Facsimile: (424) 652-7850 Telephone: (213) 995-6800 Facsimile: (213) 261-0299 8 Maxwell M. Blecher (Bar No. 26202) David Quinto (Bar No. 106232) 9 [email protected] [email protected] Donald R. Pepperman (Bar No. 109809) VIDANGEL, Inc. 10 [email protected] 3007 Franklin Canyon Drive Taylor C. Wagniere (Bar No. 293379) Beverly Hills, CA 90210-1633 11 [email protected] Telephone: (213) 604-1777 BLECHER COLLINS & PEPPERMAN, P.C. 12 515 S. Figueroa St., Suite 1750 Los Angeles, California 90071 13 Telephone: (213) 622-4222 Facsimile: (213) 622-1656 14 Attorneys for Defendant and 15 Counterclaimant VidAngel, Inc.

16 UNITED STATES DISTRICT COURT 17 CENTRAL DISTRICT OF CALIFORNIA 18 WESTERN DIVISION 19 DISNEY ENTERPRISES, INC.; CASE NO. 2:16-cv-04109-AB-PLA 20 LUCASFILM LTD. LLC; TWENTIETH CENTURY FOX FILM VIDANGEL, INC.’S AMENDED 21 CORPORATION; AND WARNER ANSWER AND AFFIRMATIVE BROS. ENTERTAINMENT, INC., DEFENSES TO COMPLAINT; AND 22 FIRST AMENDED Plaintiffs, COUNTERCLAIMS 23 vs. [DEMAND FOR JURY TRIAL] 24 VIDANGEL, INC., Judge: Hon. André Birotte Jr. 25 Courtroom 4 Defendant. 26

27 28

AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 VIDANGEL, INC.,

2 Counterclaimant,

3 vs.

4 DISNEY ENTERPRISES, INC.; LUCASFILM LTD. LLC; 5 TWENTIETH CENTURY FOX FILM CORPORATION; WARNER BROS. 6 ENTERTAINMENT, INC., AND DOES 1-100, 7 Counterclaim-Defendants. 8 9 AMENDED ANSWER 10 Defendant VidAngel, Inc. (“VidAngel”) hereby answers plaintiffs Disney 11 Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation and 12 Warner Bros. Entertainment, Inc.’s (collectively, “Plaintiffs’”) Complaint. 13 INTRODUCTORY STATEMENT 14 Plaintiffs’ carefully selected and misleading allegations distort relevant facts 15 and law. 16 Plaintiffs repeatedly suggest that VidAngel needs their permission to offer a 17 filtering service, despite Congressional law which expressly authorizes VidAngel’s 18 service without need for any such consent. In enacting the Family Movie Act 19 (“FMA”), Congress protected the right of families to filter and view content 20 according to their personal preferences. This right is codified in Copyright Act 21 Section 110 (“Limitations on exclusive rights: Exemption of certain performances 22 and displays”). That section provides that “making imperceptible (i.e., filtering) . . . 23 at the direction of a member of a private household, of limited portions of audio or 24 video content of a motion picture [defined to include television programs, as well], 25 during a performance in or transmitted [e.g., streamed] to that household for private 26 home viewing, from an authorized copy of the motion picture” does not violate the 27 Copyright Act. Because the Digital Millennium Copyright Act is part of the 28 Copyright Act, it is subject to the same exemption. Hence, VidAngel is well within -1- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 its rights to legally decrypt DVDs and Blu-rays for the purpose of allowing families 2 to view filtered movies. 3 In asking this Court to impose a consent requirement on VidAngel’s filtering 4 service, Plaintiffs are effectively asking that the Court repeal a federal statute enacted 5 to protect American families. 6 Plaintiffs further suggest they do not derive financial benefit from VidAngel’s 7 business. In fact, the opposite is true. VidAngel spends one-third of all capital raised 8 to lawfully purchase thousands of DVD and Blu-ray discs, which are then re-sold to 9 VidAngel users. Shown below is the manager of VidAngel’s storage vault pictured 10 with lawfully purchased copies of The Revenant. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 VidAngel’s inventory of The Revenant, one of over 2,000 titles available 27 28 -2- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 The majority of VidAngel’s purchases represent sales that would not occur but for its 2 filtering service, because most of VidAngel’s customers would not acquire and watch 3 a particular film without filtering. 4 Plaintiffs’ repeated characterization of VidAngel’s service as a “rental” service 5 is yet another deliberate mischaracterization. As shown in the picture below, each 6 disc lawfully purchased by VidAngel is assigned an individual bar code. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VidAngel’s discs are marked with individual bar codes 26

27 28 -3- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 These specific, identifiable discs are re-sold by VidAngel to its customers. Once a 2 VidAngel customer purchases a disc, that disc is no longer available for sale. The 3 purchasing customer may request that the physical disc be mailed to him or her or 4 may allow VidAngel to maintain custody of it. The discs are maintained in a physical 5 vault, which is kept locked and protected by round-the-clock electronic monitoring. 6 When a customer purchases one episode of a television show available on a disc 7 containing multiple episodes, VidAngel cannot sell any other episode for an obvious 8 reason – the entire disc is in its vault and the entire disc belongs to that one customer. 9 After VidAngel lawfully acquires DVDs for a particular title, it prepares the 10 DVD’s content for filtering by tagging a digital copy of each film to identify over 80 11 categories of content – such as profanity, nudity and violence. To use VidAngel’s 12 service, users must first purchase movies and may view them only after selecting 13 their desired content filters. Works are filtered as requested by each customer and 14 transmitted to each household privately, at the direction of a member of the 15 household. VidAngel never makes a fixed copy of any filtered work. Once a 16 VidAngel user has viewed a filtered film he or she purchased, the user may, at his or 17 her option, keep the title or sell it back to VidAngel. 18 VidAngel’s business model is predicated on providing a filtering service in a 19 completely lawful manner. VidAngel wrote to Plaintiffs and other content owners 20 over a year ago to describe its service and request feedback regarding any concerns 21 with respect to copyright or other issues. In those letters, VidAngel promised that if 22 any of the studios raised an issue with VidAngel’s service, VidAngel would attempt 23 to modify it to address the purported infirmity. Although neither the Plaintiffs nor 24 any other copyright owner raised any issue in response to the letters, at least one of 25 the Plaintiffs signed up for VidAngel’s service shortly after receiving VidAngel’s 26 letter. Using an alias name, Albert Podrasky, Plaintiff Disney Enterprises, Inc.’s 27 worldwide anti-piracy head, opened a VidAngel account on August 6, 2015. He then 28 purchased and sold back numerous DVDs. Plaintiffs Twentieth Century Fox and -4- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 Time Warner also responded to VidAngel’s offer to meet, but they did not raise any 2 concerns regarding VidAngel’s model. 3 Plaintiffs disingenuously imply that, following a year of inaction, they have 4 sued now only because VidAngel changed its business model. (Complaint ¶ 47.) 5 The truth is that during a 2014 beta test, VidAngel used an earlier business model (a 6 Google Play “plug-in” and HD Chromecast support), which required Google’s active 7 assistance. After initially supporting VidAngel, Google notified VidAngel that the 8 method being tested violated YouTube’s Terms and Conditions and withdrew 9 Chromecast support. When VidAngel wrote to the Plaintiffs and other studios (in 10 July 2015), it was already using its current business model, which Mr. Podrasky 11 began examining early last August. Given their delay, Plaintiffs cannot credibly 12 argue that VidAngel’s service has irreparably harmed them.1 13 Plaintiffs’ complaint is not surprising in light of Plaintiffs’ longstanding 14 hostility toward any form of filtering under the FMA, as the framers of the FMA 15 acknowledges in its legislative history. It appears that Plaintiffs also complain 16 because VidAngel’s service is damaging their relationships with “streaming service 17 licensees” to whom Plaintiffs have sold lucrative streaming licenses that do not 18 permit filtered streaming.2 But Plaintiffs cannot demand a separate license for 19 filtering their content when doing so is specifically authorized by the FMA, which 20 Congress enacted to protect the right of families to enjoy the cinematic arts in their 21 22 1 Moreover, courts may not enjoin a technology, such as VidAngel’s, that has 23 “substantial non-infringing uses.” Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). Plaintiffs nowhere dispute that VidAngel’s technology has 24 such uses. 2 25 In fact, Plaintiffs have interfered with VidAngel’s attempts to partner with streaming content providers to filter movies. Plaintiffs have also sought to 26 improperly expand their copyright monopoly, seeking to deprive consumers of their 27 right to buy and sell copyrighted works. As alleged in VidAngel’s Amended Counterclaims, Plaintiffs should be held accountable for their improper actions. 28 -5- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 homes while omitting offensive or otherwise objectionable content. VidAngel exists 2 to provide families a means to implement the spirit and purpose of the FMA. This 3 Court should protect the FMA and reject Plaintiffs’ renewed effort to render that 4 important legislation meaningless. 5 RESPONSES TO SPECIFIC ALLEGATIONS 6 1. Paragraph 1 contains legal arguments, opinions and conclusions that 7 require no response. VidAngel otherwise denies the allegations of this paragraph. 8 2. VidAngel admits the image in paragraph 2 appears to be a screenshot 9 from VidAngel’s website. Additionally, VidAngel admits its users can search for 10 content by popularity, genre and other categories. Among other things, users can 11 search for content by a motion picture’s “inspiring score,” which is the average score 12 given by users on a rating scale of 1 to 100 as to whether a motion picture is 13 inspiring. VidAngel denies the remaining allegations in this paragraph. 14 3. Paragraph 3 contains legal arguments, opinions and conclusions that 15 require no response. VidAngel otherwise denies the allegations of this paragraph. 16 4. VidAngel admits the image in paragraph 4 appears to be an 17 advertisement that previously appeared on VidAngel’s website. Paragraph 4 contains 18 legal arguments, opinions and conclusions that require no response. VidAngel 19 otherwise denies the allegations of this paragraph. 20 5. VidAngel admits the images in paragraph 5 appear to be screenshots 21 from VidAngel’s website. The remainder of this paragraph contains legal arguments, 22 opinions and conclusions that require no response. VidAngel otherwise denies the 23 allegations of this paragraph. 24 6. Paragraph 6 contains legal arguments, opinions and conclusions that 25 require no response. VidAngel otherwise denies the allegations of this paragraph. 26 7. Paragraph 7 contains legal arguments, opinions and conclusions that 27 require no response. VidAngel otherwise denies the allegations of this paragraph. 28 -6- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 8. VidAngel is without sufficient information or knowledge to form a 2 belief as to the truth of the allegations of paragraph 8. 3 9. VidAngel is without sufficient information or knowledge to form a 4 belief as to the truth of the averment that Disney has obtained Certificates of 5 Copyright Registration for the Copyrighted Works. The remainder of Paragraph 9 6 contains legal arguments, opinions and conclusions that require no response. 7 VidAngel otherwise denies the allegations of this paragraph. 8 10. VidAngel is without sufficient information or knowledge to form a 9 belief as to the truth of the allegations of paragraph 10. 10 11. VidAngel is without sufficient information or knowledge to form a 11 belief as to the truth of the averment that Lucasfilm has obtained Certificates of 12 Copyright Registration for the Copyrighted Works. The remainder of Paragraph 11 13 contains legal arguments, opinions and conclusions that require no response. 14 VidAngel otherwise denies the allegations of this paragraph. 15 12. VidAngel is without sufficient information or knowledge to form a 16 belief as to the truth of the allegations of paragraph 12. 17 13. VidAngel is without sufficient information or knowledge to form a 18 belief as to the truth of the averment that Fox has obtained Certificates of Copyright 19 Registration for the Copyrighted Works. The remainder of Paragraph 13 contains 20 legal arguments, opinions and conclusions that require no response. VidAngel 21 otherwise denies the allegations of this paragraph. 22 14. VidAngel is without sufficient information or knowledge to form a 23 belief as to the truth of the allegations of paragraph 14. 24 15. VidAngel is without sufficient information or knowledge to form a 25 belief as to the truth of the averment that Warner Bros. has obtained Certificates of 26 Copyright Registration for the Copyrighted Works. The remainder of Paragraph 15 27 contains legal arguments, opinions and conclusions that require no response. 28 VidAngel otherwise denies the allegations of this paragraph. -7- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 16. VidAngel admits that it is a Delaware corporation with its principal 2 place of business at 249 N. University Avenue, Provo, Utah 84601. VidAngel 3 otherwise denies the allegations of this paragraph. 4 17. VidAngel admits that this Court has subject matter jurisdiction over the 5 Complaint. 6 18. VidAngel admits that venue is proper in this district. 7 19. VidAngel lacks sufficient information or knowledge to form a belief as 8 to the truth of the allegations of paragraph 19. 9 20. VidAngel lacks sufficient information or knowledge to form a belief as 10 to the truth of the allegations of paragraph 20. 11 21. VidAngel lacks sufficient information or knowledge to form a belief as 12 to the truth of the allegations of paragraph 21. 13 22. VidAngel lacks sufficient information or knowledge to form a belief as 14 to the truth of the allegations of paragraph 22. 15 23. VidAngel lacks sufficient information or knowledge to form a belief as 16 to the truth of the allegations of paragraph 23. 17 24. VidAngel is without sufficient information or knowledge to form a 18 belief as to the truth of the averments in the preamble of paragraph 24. 19 (a) VidAngel is without sufficient information or knowledge to form 20 a belief as to the truth of the allegations of paragraph 24(a). 21 (b) VidAngel is without sufficient information or knowledge to form 22 a belief as to the truth of the allegations of paragraph 24(b). 23 (c) VidAngel is without sufficient information or knowledge to form 24 a belief as to the truth of the allegations of paragraph 24(c). 25 (d) VidAngel is without sufficient information or knowledge to form 26 a belief as to the truth of the allegations of paragraph 24(d). 27 VidAngel admits that it has previously offered each of the motion picture titles listed 28 in paragraph 24 for sale and online filtering. -8- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 25. VidAngel lacks sufficient information or knowledge to form a belief as 2 to the truth of the allegations of paragraph 25. 3 26. VidAngel lacks sufficient information or knowledge to form a belief as 4 to the truth of the allegations of paragraph 26. 5 27. VidAngel lacks sufficient information or knowledge to form a belief as 6 to the truth of the allegations of paragraph 27. 7 28. VidAngel lacks sufficient information or knowledge to form a belief as 8 to the truth of the allegations of paragraph 28. 9 29. Paragraph 29 contains legal arguments, opinions and conclusions that 10 require no response. VidAngel otherwise denies the allegations of this paragraph. 11 30. VidAngel admits that it operates an online video service located at 12 http://vidangel.com, which is also available through a mobile application users may 13 access on their internet-connected smartphones, tablets and televisions (apps for 14 televisions can only be used through a set-top box like Roku, Apple TV and Amazon 15 Fire TV). Additionally, VidAngel admits that it currently offers users the ability to 16 skip or mute content within certain filter categories, including language, 17 sex/nudity/immodesty, violence/blood/gore and alcohol or drug use. Users must 18 apply at least one filter in order to view a video. VidAngel otherwise denies the 19 allegations of this paragraph. 20 31. Paragraph 31 contains legal arguments, opinions and conclusions that 21 require no response. VidAngel otherwise denies the allegations of this paragraph. 22 32. VidAngel admits that DVDs and Blu-ray discs are optical discs that 23 contain recorded material in digital form. VidAngel lacks sufficient information or 24 knowledge to form a belief as to the truth of the remainder of this paragraph. 25 VidAngel otherwise denies the allegations of this paragraph. 26 33. VidAngel lacks sufficient information or knowledge to form a belief as 27 to the truth of the allegations of paragraph 33. 28 -9- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 34. Paragraph 34 contains legal arguments, opinions and conclusions that 2 require no response. VidAngel otherwise denies the allegations of this paragraph. 3 35. Paragraph 35 contains legal arguments, opinions and conclusions that 4 require no response. VidAngel otherwise denies the allegations of this paragraph. 5 36. VidAngel admits that the image in Paragraph 36 is an advertisement that 6 previously appeared on the Internet. VidAngel otherwise denies the remaining 7 allegations of Paragraph 36. 8 37. Paragraph 37 contains legal arguments, opinions and conclusions that 9 require no response. VidAngel otherwise denies the allegations of this paragraph. 10 38. Paragraph 38 contains legal arguments, opinions and conclusions that 11 require no response. VidAngel otherwise denies the allegations of this paragraph. 12 39. VidAngel admits VidAngel’s “How Does VidAngel’s Sellback Work?” 13 page contains the question and response quoted in footnote 1. The remainder of 14 paragraph 39 contains arguments, opinions and legal conclusions that require no 15 response. VidAngel otherwise denies the allegations of this paragraph. 16 40. VidAngel admits the screenshot and language from a “how-to” use 17 VidAngel video posted on the service’s homepage contains the picture and quoted 18 language contained in paragraph 40. The remainder of this paragraph contains 19 arguments, opinions and legal conclusions that require no response. VidAngel 20 otherwise denies the allegations of this paragraph. 21 41. VidAngel admits VidAngel sells copyrighted content and permits users 22 to sell that content back to VidAngel. VidAngel further admits the image in 23 paragraph 41 appears to be a screenshot from VidAngel’s website. VidAngel admits 24 that it previously allowed users to select between auto or manual sell-back when a 25 user purchased video content. VidAngel admits that, when watching from a desktop 26 or laptop web browser, the system is designed to show the user a sell-back button 27 over the closing credits of the film. The remainder of this paragraph contains 28 -10- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 arguments, opinions and legal conclusions that require no response. VidAngel 2 otherwise denies the allegations of this paragraph. 3 42. Paragraph 42 contains legal arguments, opinions and conclusions that 4 require no response. VidAngel otherwise denies the allegations of this paragraph. 5 43. Paragraph 43 contains legal arguments, opinions and conclusions that 6 require no response. VidAngel otherwise denies the allegations of this paragraph. 7 44. Paragraph 44 contains legal arguments, opinions and conclusions that 8 require no response. VidAngel otherwise denies the allegations of this paragraph. 9 45. Paragraph 45 contains legal arguments, opinions and conclusions that 10 require no response. VidAngel otherwise denies the allegations of this paragraph. 11 46. VidAngel admits that users previously were able to filter out opening 12 and closing credits. Additionally, VidAngel lacks sufficient information or 13 knowledge to form a belief as to the truth of the averment that “some people already 14 have started to make social media postings touting the fact they can use VidAngel to 15 watch movies and television shows essentially unfiltered.” Paragraph 46 also 16 contains legal arguments, opinions and conclusions that require no response. 17 VidAngel otherwise denies the allegations of this paragraph. 18 47. VidAngel admits that, as part of beta testing, it previously distributed an 19 internet web browser “plug-in” that muted and skipped content streamed from other 20 services. VidAngel denies the remaining allegations in paragraph 47. 21 48. VidAngel admits that it currently offers more than 2,000 titles, which 22 includes television episodes and movies. VidAngel otherwise denies the allegations 23 of paragraph 48. 24 49. Deny. 25 50. VidAngel is without sufficient information and knowledge to form a 26 belief as to the truth of the allegations of paragraph 50. 27 51. VidAngel lacks sufficient information or knowledge to form a belief as 28 to the truth of the allegations of paragraph 51. -11- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 52. VidAngel is without sufficient information and knowledge to form a 2 belief as to the truth of the allegations of paragraph 52. 3 53. Deny. 4 54. Deny. 5 FIRST CLAIM FOR RELIEF 6 55. VidAngel incorporates its answers to paragraphs 1-54 as if set forth fully 7 herein. 8 56. Deny. 9 57. Deny. 10 58. Deny. 11 59. Deny. 12 60. Deny. 13 61. Deny. 14 62. Deny. 15 63. Deny. 16 SECOND CLAIM FOR RELIEF 17 64. VidAngel incorporates its answers to paragraphs 1-63 as if set forth fully 18 herein. 19 65. VidAngel admits that the quoted language in paragraph 65 appears in 20 Section 1201(a)(1)(A) of the Digital Millennium Copyright Act. Otherwise denied. 21 66. VidAngel lacks sufficient information or knowledge to form a belief as 22 to the truth of the allegations of paragraph 66. 23 67. Deny. 24 68. Deny. 25 69. Deny. 26 70. Deny. 27 71. Deny. 28 72. Deny. -12- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 AFFIRMATIVE DEFENSES 2 Pursuant to Rule 8(c) of the Federal Rules of Civil Procedure, VidAngel 3 further pleads the following separate and additional defenses. By pleading these 4 defenses, VidAngel does not in any way agree or concede that it has the burden of 5 proof or persuasion on any of these issues. VidAngel reserves the right to assert such 6 additional affirmative defenses as discovery indicates are proper. 7 FIRST AFFIRMATIVE DEFENSE 8 (Failure to State a Claim) 9 The complaint fails to state a claim upon which relief can be granted. 10 SECOND AFFIRMATIVE DEFENSE 11 (Legal Authorization) 12 VidAngel’s business is authorized by the Family Movie Act of 2005, codified 13 as 17 U.S.C. §110(11). 14 THIRD AFFIRMATIVE DEFENSE 15 (Fair Use) 16 The complaint is barred, in whole or in part, by the doctrine of fair use. 17 FOURTH AFFIRMATIVE DEFENSE 18 (Comparative Fault) 19 The complaint is barred, in whole or in part, based on the doctrine of 20 comparative fault. 21 FIFTH AFFIRMATIVE DEFENSE 22 (Failure to Mitigate Damages) 23 The complaint is barred, in whole or in part, based on Plaintiffs’ failure to 24 mitigate damages. 25 SIXTH AFFIRMATIVE DEFENSE 26 (Estoppel) 27 The complaint is barred, in whole or in part, based on the principles of 28 estoppel. -13- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 SEVENTH AFFIRMATIVE DEFENSE 2 (Laches) 3 The complaint is barred, in whole or in part, by the doctrine of laches. 4 EIGHTH AFFIRMATIVE DEFENSE 5 (Unclean Hands) 6 The complaint is barred, in whole or in part, by the doctrine of unclean hands. 7 NINTH AFFIRMATIVE DEFENSE 8 (Waiver) 9 The complaint is barred, in whole or in part, by the doctrine of waiver. 10 TENTH AFFIRMATIVE DEFENSE 11 (First Amendment) 12 The complaint is barred, in whole or in part, because application of the 13 Copyright Act to impose liability in this case would violate the First Amendment to 14 the United States Constitution. 15 ELEVENTH AFFIRMATIVE DEFENSE 16 (Copyright Abandonment) 17 The complaint is barred, in whole or in part, to the extent any Plaintiffs have 18 forfeited or abandoned copyright or failed to comply with all necessary formalities. 19 TWELFTH AFFIRMATIVE DEFENSE 20 (Innocent Infringers) 21 The complaint is barred, in whole or in part, to the extent any persons, based on 22 whose behavior seek to hold VidAngel liable, are innocent infringers. 23 THIRTEENTH AFFIRMATIVE DEFENSE 24 (Supervening Events) 25 The complaint is barred, in whole or in part, because any alleged injury or loss 26 sustained by Plaintiffs was caused by intervening or supervening events over which 27 VidAngel had and has no control. 28 FOURTEENTH AFFIRMATIVE DEFENSE -14- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 (Responsibility of Third Parties) 2 The complaint is barred, in whole or in part, because any alleged injury or loss 3 sustained by Plaintiffs was the fault and responsibility of third parties over whom 4 VidAngel had and has no control, and for whose actions VidAngel had and has no 5 responsibility. 6 FIFTEENTH AFFIRMATIVE DEFENSE 7 (Express or Implied License) 8 The complaint is barred, in whole or in part, because Plaintiffs have granted an 9 express or implied license in their copyrighted works to VidAngel. 10 SIXTEENTH AFFIRMATIVE DEFENSE 11 (First Sale Doctrine) 12 The complaint is barred, in whole or in part, by the first sale doctrine. 13 SEVENTEENTH AFFIRMATIVE DEFENSE 14 (Copyright Misuse) 15 The complaint is barred, in whole or in part, by the copyright misuse doctrine. 16 17 ADDITIONAL AFFIRMATIVE DEFENSE 18 (Subsequently Discovered Defense) 19 VidAngel has insufficient knowledge or information upon which to form a 20 belief as to whether it may have additional affirmative defenses, and reserves the 21 right to assert additional defenses if and as it learns of facts that may support such 22 defenses. 23 WHEREFORE, VidAngel prays for relief as follows: 24 1. That the complaint be dismissed, with prejudice and in its entirety; 25 2. That Plaintiffs take nothing by this action and that judgment be entered 26 against Plaintiffs and in favor of VidAngel; 27 3. That VidAngel be awarded its costs incurred in defending this action; 28 -15- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 4. That VidAngel be granted such other and further relief as the Court may 2 deem just and proper. 3 PRAYER 4 WHEREFORE, VidAngel prays for a judgment as follows: 5 1. That Plaintiffs take nothing by the complaint; 6 2. That no preliminary or permanent injunctions be entered against 7 VidAngel. 8 3. That the complaint be dismissed with prejudice; 9 4. That VidAngel recover its costs of suit incurred herein, including 10 reasonable attorneys’ fees; and 11 5. That VidAngel be awarded any other and further relief as the Court may 12 deem just and proper. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -16- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 VIDANGEL’S FIRST AMENDED COUNTERCLAIMS 2 For its Amended Counterclaims against Plaintiffs Disney Enterprises, Inc., 3 Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, and Warner Bros. 4 Entertainment, Inc.’s (collectively “Counterclaim-Defendants”), VidAngel avers as 5 follows: 6 THE PARTIES 7 1. Counterclaimant VidAngel, Inc. is a corporation duly incorporated under 8 the laws of the State of Delaware with its principal place of business in Provo, Utah. 9 VidAngel is the leading entertainment platform empowering users to filter movies 10 and television shows as expressly authorized by Congress. Using VidAngel’s 11 proprietary technology, consumers view content they own in a customized experience 12 that offers the greatest degree of personal choice in the entertainment marketplace – 13 all as expressly authorized by Congress in the Family Home Movie Act of 2005, as 14 explained more fully below. 15 2. Counterclaim-Defendant Disney Enterprises, Inc. (“Disney”) is a 16 Delaware corporation with its principal place of business in Burbank, California. 17 3. Counterclaim-Defendant Lucasfilm Ltd., LLC (“Lucasfilm”) is a limited 18 liability company organized under the laws of the State of California with its 19 principal place of business in San Francisco, California. Lucasfilm is a wholly- 20 owned subsidiary of Disney. 21 4. Counterclaim-Defendant Twentieth Century Fox Film Corporation 22 (“Fox”) is a Delaware corporation with its principal place of business in Los Angeles, 23 California. 24 5. Counterclaim-Defendant Warner Bros. Entertainment Inc. (“Warner 25 Bros.”) is a Delaware corporation with its principal place of business in Burbank, 26 California. 27 6. VidAngel does not presently know the true names and capacities of the 28 Counterclaim-Defendants sued herein as DOES 1 through 100 and therefore is suing -17- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 those Counterclaim-Defendants by fictitious names pursuant to Federal Rule of Civil 2 Procedure 19. VidAngel will amend its Counterclaims to allege the true identities of 3 DOES 1 through 100 once they are ascertained. VidAngel is informed and believes 4 each of the Counterclaim-Defendants sued as DOES 1 through 100 is in some manner 5 responsible for the occurrences, injuries and other damages alleged in these 6 Counterclaims. 7 JURISDICTION AND VENUE 8 7. This Court has original and exclusive jurisdiction over these Amended 9 Counterclaims pursuant to 28 U.S.C. §§ 1331, 1337(a), 1338, 2201 and 15 U.S.C. §§ 10 1, 15, 26. 11 8. Venue is proper in this District pursuant to 15 U.S.C. §§ 22 and 28 12 U.S.C. §§ 1391(b) and 1400(a). Many of the unlawful acts alleged herein were 13 performed and occurred in material part within this District. 14 SUMMARY OF COUNTERCLAIMS 15 9. There exists a demand for a service which allows parents to filter motion 16 pictures and television content to eliminate objectionable material, such as violence, 17 sex and profanity. In response to that demand, Congress enacted the Family Home 18 Movie Act (“FMA”) to allow filtering without violating legitimate copyright 19 protection. Counterclaimant VidAngel founded its business on providing such 20 filtering services consistent with the FMA. Contrary to the spirit and purpose of the 21 FMA, Counterclaim-Defendants have each executed an agreement with the Directors 22 Guild of America (“DGA”) which the industry understands as prohibiting the 23 filtering of motion picture and television content except in very limited 24 circumstances. Counterclaim-Defendants, and their unnamed studio co-conspirators, 25 have relied on this agreement to justify their anticompetitive conduct designed to 26 prevent VidAngel from fulfilling its mission to filter such content. When entering 27 into this agreement with the DGA, each Counterclaim-Defendant knew that every 28 other studio (i.e., each of its competitors) would be asked to and required to sign a -18- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 similar agreement; in fact, Counterclaim-Defendants insisted that they do so to insure 2 that no entity would secure a competitive advantage. In furtherance of the 3 combination to eliminate filtering—and contrary to their own economic self- 4 interest—Counterclaim-Defendants then refused to enter into licensing agreements to 5 allow VidAngel to stream and filter content, rejected VidAngel’s offers to buy 6 enormous quantities of DVDs from Counterclaim-Defendants, and interfered with 7 YouTube and Google Play’s efforts to expand VidAngel’s platform, viability and 8 customer base. In fact, Counterclaim-Defendants and their unnamed co-conspirators 9 have deliberately and repeatedly thwarted the efforts of VidAngel, and other filtering 10 services, at every turn. In so doing, Counterclaim-Defendants have frustrated the will 11 of Congress, effectively eviscerated the ability of parents to shield their children from 12 objectionable material, and seriously diminished VidAngel’s ability to function in the 13 market. Moreover, having forced VidAngel to an awkward and cumbersome method 14 of operation, as described more fully herein, Counterclaim-Defendants have now 15 conjured up a copyright infringement claim against VidAngel. These Amended 16 Counterclaims, based on the Sherman and Clayton Antitrust Acts, seek damages for, 17 and injunctive relief against, the unlawful collusive acts described herein. 18 FACTUAL ALLEGATIONS 19 The Family Movie Act of 2005 20 10. Many parents struggle to find ways to shield their children and others 21 within their homes from viewing or listening to violence, sex, profanity and other 22 content they find objectionable in television programs and motion pictures. There is 23 great demand for services that allow them to filter out these objectionable elements. 24 A recent survey conducted for VidAngel found that approximately 47% of parents 25 want online filtering services. Unsurprisingly, many are not sufficiently technology- 26 savvy to filter content on their own; instead, they must and do rely on third-party 27 services, including but not limited to VidAngel. 28 11. In response to the demand from parents and other consumers to control -19- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 the content they view in the privacy of their homes, Congress enacted the Family 2 Home Movie Act of 2005. The FMA, codified at 17 U.S.C. § 110(11), specifically 3 provides that it is not a violation of copyright to create or provide a “computer 4 program or other technology that enables” filtering “by or at the direction of a 5 member of a private household, of limited portions of audio or video content of a 6 motion picture, during a performance in or transmitted to that household for private 7 home viewing, from an authorized copy of the motion picture.” As used in the FMA, 8 “motion picture” is defined to include television programs. The FMA immunized 9 from copyright infringement and expressly authorizes: (1) a third party to create a 10 computer program or other technology; (2) that enables a member of a private 11 household to make imperceptible limited portions of an authorized copy of a motion 12 picture’s audio or video content; (3) to transmit that technology or computer program 13 to a household at the direction of a member of a private household; and (4) if no fixed 14 copy of the altered version is created. 15 12. The legislative history of the FMA describes the origin of the FMA as 16 follows: 17 The Committee strongly believes that, subject to certain conditions, copyright and trademark law should not be used to limit a parent’s right 18 to control what their children watch in the privacy of their own home. A dispute involving this issue is currently being heard in the U.S. District 19 Court for the District of Colorado [Huntsman v. Soderbergh, No. Civ. A02CV01662RPMMJW (D. Colo.)]. Testimony provided by the 20 Register [of Copyright] on June 17, 2004, makes clear that some parties to the suit should not face liability for their current actions, while others 21 appear to be in violation of existing copyright law. The “Family Movie Act” clarifies the liability, if any, for the companies that are a party to 22 this case and to other companies not a party to this case that may be interested in providing such services in the future. 23 24 H.R. Rep. 109-33 at 5. 25 13. The FMA does not dictate what type of content families may make 26 imperceptible. The FMA was “drafted in a content-neutral manner so that its 27 operation and impact do not depend upon whether the content . . . made imperceptible 28 contains items that are often viewed as offensive, such as profanity, violence, or -20- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 sexual acts. . . .The goal of the legislation [is] to give the viewer the ability to make 2 imperceptible limited portions of [a] work that he or she chooses not to see for 3 themselves or their family, whether or not the skipped content is viewed as 4 objectionable by most, many, few, or even one viewer.” Id. at 224. 5 14. The Director’s Guild of America is an entertainment guild of some 6 16,000 motion picture and television directors and members of directorial teams in 7 the United States. The Motion Picture Association of America (“MPAA”) is a trade 8 organization that represents the major studios and “serves as the voice and advocate 9 of the American motion picture, home video and television industries.” Each 10 Counterclaim-Defendant, or its parent, is a member of the MPAA. Both the DGA 11 and MPAA vigorously opposed the FMA. Id. at 69. 12 15. In drafting the FMA, Congress specifically considered whether the 13 public would benefit from having for-profit companies offer such filtering services. 14 Following subcommittee hearings, the House Copyright Committee (the 15 “Committee”) concluded that: 16 The for-profit nature of the entities providing services to the public that the legislation addresses has no bearing on the operation of the immunity 17 from liability. The Committee is unable to discern a credible basis for creating a distinction between the for-profit or non-profit nature of 18 companies that offer services covered by the Act. 19 Id. at 225. Thus, Congress understood that the content filtering permitted by the 20 FMA would likely be provided by for-profit companies. 21 16. Likewise, federal courts have recognized that the FMA protects filtering 22 services from the studios’ infringement claims: “the effect of the Family Movie Act is 23 that Congress made a policy decision that those who provide the technology to enable 24 viewers to edit films for their private viewing should not be liable to the copyright 25 owners for infringing their copyright. . . .” Huntsman v. Soderbergh, No. Civ. 26 A02CV01662RPMMJW, 2005 WL 1993421 (D. Colo. 2005). 27 17. VidAngel’s Counterclaims are brought to give the FMA efficacy and 28 -21- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 defeat the collaborative efforts of the studios, and particularly the anticompetitive 2 actions taken by Counterclaim-Defendants and the DGA to prevent filtering and 3 thereby circumvent Congress’ intent and neuter the FMA. 4 The Studios’ Hostility Toward Filtering 5 18. Unfortunately, due to the hostility of the major motion picture studios, 6 the commercial market for online filtering services has been slow to develop. 7 VidAngel is one of few companies that enable consumers to filter out violence, 8 profanity, nudity, sexual acts and other content in motion pictures and television 9 programs. In fact, VidAngel allows consumers to choose to filter any combination of 10 over 80 categories of content. All of the market participants, including VidAngel, 11 have had their growth stunted by the studios, including the Counterclaim-Defendants. 12 As a result, many – if not most – consumers have been unable to realize the promise 13 and benefits of the FMA. 14 19. But for the conduct described herein, there would be a vibrant “filtering” 15 industry with numerous for-profit entities competing with VidAngel and others. 16 Counterclaim-Defendants, the DGA and/or the other major studios have sued nearly 17 every filtering company over the years. Nearly all of the targeted companies, which 18 operated with business models different than VidAngel’s, have since ceased 19 operations. 20 20. The major motion picture studios, and the directors they employ, 21 historically have been hostile to any alterations made to a director’s final cut. They 22 have long argued that a director’s “moral right” should prohibit any alterations to the 23 director’s work. As members of Congress have noted in rejecting that contention, 24 such concern for artistic integrity does not extend to opportunities to sell product 25 placements in films, the use of test audiences to modify their works to make them 26 “more commercial,” and other “assaults” on artistic integrity. 27 21. The studios and others opposing the FMA also argue that parents should 28 not allow children to watch a movie unless the parent approves the content of the -22- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 entire movie. Congress also rejected that contention. 2 22. In 2014, all major motion picture and television studios, including those 3 named as Counterclaim-Defendants herein as well as those not named, entered into a 4 written agreement with the DGA (the “DGA Agreement”). That agreement is 5 understood and implemented by the parties to prohibit the studios from entering into 6 distribution agreements that allow secondary editing or filtering of movies or 7 television programs, save for a few narrow exceptions. 8 23. In particular, Section 7-509 of the DGA Agreement, entitled “Editing 9 Theatrical Motion Pictures,” prohibits any alteration to a motion picture, including 10 such nuances as the “placement of or changes in commercial breaks,” without the 11 involvement, consultation or final approval of the director. These provisions of the 12 DGA Agreement, standing alone, are an unreasonable restraint on trade in violation 13 of Section 1 of the Sherman Act. 14 24. Section 7-509 of the DGA Agreement has been understood and enforced 15 by the studios as prohibiting all filtering. For example, when VidAngel approached 16 the studios to obtain licensing to stream filtered movies, non-party Lionsgate 17 Entertainment, Inc., (“Lionsgate”) advised VidAngel that it could not enter into such 18 an agreement with VidAngel unless VidAngel got permission from the DGA first. In 19 2014, VidAngel approached non-party Google Inc. (“Google”) to discuss the 20 possibility of streaming filtered content through Google Play. As detailed below, the 21 negotiations ended when Mark Fleming, a Google representative, informed VidAngel 22 on December 14, 2015 that Google was concerned a “blocker” to the deal was that 23 the “directors won’t let this happen” and that even if the studios were interested, 24 “their existing deals with the production companies/directors/etc. may not allow for it 25 . . . and therefore those [contracts] will need to get renegotiated first. . .” Conversely, 26 a local distributor in Utah, who started negotiations in May 2016, agreed to a 27 licensing deal with VidAngel because it is not a signatory to the DGA Agreement and 28 can permit filtering of content. -23- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 25. Each Counterclaim-Defendant and each non-defendant studio 2 voluntarily signed the DGA Agreement knowing full well that every other studio 3 would be asked to and would sign the same agreement so that all studios agreed there 4 would be no filtering of motion pictures save for in a few narrow and well-defined 5 exceptions (i.e. in-flight entertainment). Indeed, to avoid any studio(s) getting a 6 competitive advantage, each studio sought and received DGA assurance that all 7 studios would be required to and would sign the same agreement. Accordingly, the 8 studios have each agreed with the DGA and further have agreed with every other 9 studio that each would abide by the industry agreement not to filter. 10 26. On July 1, 2014, over 150 studios, production companies and other 11 entities, including Counterclaim-Defendants and/or their parents and subsidiaries, 12 signed the DGA Agreement. 13 27. The studios entered the DGA Agreement as part of a concerted effort to 14 prohibit the lawful provision of online filtering services pursuant to the FMA. The 15 studios were, or should have been, aware that the DGA Agreement could and would 16 be used in an anticompetitive manner, as alleged above, to restrict or extinguish the 17 market for online filtering services within the United States and this is exactly what 18 they contemplated and have accomplished. 19 28. Moreover, and perhaps more importantly, the studios license film 20 content only on the express written condition that the licensee not filter. In 21 furtherance of the studios’ concerted effort to prohibit lawful provision of online 22 filtering services, the studios, including Counterclaim-Defendants, have entered into 23 anticompetitive agreements with the major digital content distributors which include 24 standard terms and conditions that restrict content editing and filtering of any kind 25 without their prior written consent. At least one of those agreements, involving non- 26 parties Google and Sony Pictures Entertainment (“Sony”), included the following 27 language: 28 -24- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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CUTTING, EDITING AND INTERRUPTION. Licensee [Google] 1 shall not make, or authorize any others to make, any modifications, deletions, cuts, alterations or additions in or to any Included Program 2 without the prior written consent of Licensor [Sony]. For the avoidance of doubt, no panning and scanning, time compression or similar 3 modifications shall be permitted, provided, however, Licensee may make reasonable adjustments to size, color, brightness, contrast, etc. of 4 any of the Included Programs as necessary to preserve the integrity of the original picture of the Copy as delivered by Licensor to Licensee. 5 Without limiting the foregoing, Licensee shall not delete the copyright notice or credits from the main or end title of any Included Program or 6 from any other materials supplied by Licensor hereunder. No exhibitions of any Included Program hereunder shall be interrupted for 7 intermission, commercials or any other similar commercial announcements of any kind. Notwithstanding the foregoing, Licensee 8 shall be entitled to insert a promotional card displaying Licensee’s logo or brand name prior to the Included Program provided that such 9 promotional card runs for no longer than 3 seconds. 10 29. Likewise, when the studios, including Counterclaim-Defendants, sign a 11 deal for the rights to a specific movie title, the studios are required to include the 12 following language in all of their agreements. For example, in Sony’s agreement for 13 the movies Fury and American Hustle, the following language binds Sony: 14 [Sony] shall have the right...to make any and all changes and 15 modifications in the Picture; provided, [Sony] shall comply with any contractual right of first opportunity to make such changes granted to 16 Director. 17 30. This language (or requirements just like it) ultimately trickles down 18 through all agreements and purports to hand the authority to make any changes back 19 to the director. Indeed, all of Counterclaim-Defendants’ agreements with major 20 digital content distributors contain similar standard terms and conditions which 21 restrict content filtering of any kind without the studios’ prior consent. 22 Counterclaim-Defendants are, or should have been, aware that such agreements are 23 anticompetitive. 24 31. To avoid any studio having a competitive advantage, it is reasonable and 25 plausible to infer that each of the studios has entered agreements with the major 26 content distributors that contain terms and conditions similar to those mentioned 27 above, extending the restrictions on editing and filtering found in the DGA 28 Agreement to the major content distributors. This network of vertical DGA-studio -25- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 agreements operates to substantially restrict, if not eliminate, competition and 2 therefore violates the antitrust laws. 3 32. During congressional deliberations over the FMA, the House Copyright 4 Committee acknowledged that it was “aware of concerns regarding the legislation’s 5 impact upon moral rights, particularly those of movie directors.” While preserving 6 the directors’ right to control the editing of content in the public sphere, the 7 Committee granted individual viewers the right to filter content for viewing within 8 the privacy of their homes, with the assistance of remote technology offered by for- 9 profit companies. It wrote: 10 The Committee had hoped to receive testimony from a representative of the director’s community on this issue [of moral rights] at one of the 11 Committee hearings on the issue, but no director was willing to testify. The Committee is aware of numerous motion pictures being edited for 12 screen size, content, and time purposes with or without the director’s consent so that a motion picture can be displayed on the 48-3 aspect 13 ratios of standard definition televisions, on an airplane with objectionable language removed, and on television channels in the 14 traditional 90 or 120 minute time slots. The Committee sees no difference between the impact upon the moral rights of directors of such 15 modifications and someone wanting to prevent certain content from being displayed on their television. 16 17 H.R. Rep. 109-33 at 225. Thus, Congress fairly protected the directors and studios 18 from the threat of public censorship, while simultaneously granting individuals the 19 right to customize content in a private setting. 20 33. The Committee weighed the studios’ objection to filtering content and 21 determined that neither copyright nor trademark law should be used to limit a 22 parent’s right to control what his or her family watches in private. Accordingly, for- 23 profit companies and private individuals have the right to filter motion pictures in 24 accordance with the FMA, notwithstanding the hostility of the motion picture 25 industry to this type of alteration of their content. 26 The United States Market for Online Filtering of 27 Film and Television Content 28 34. When the FMA was enacted in 2005, physical media was king in the -26- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 home entertainment world. DVDs were by far the most popular video format for 2 Americans. According to the Digital Entertainment Group (the “DEG”), in 2006 3 Americans spent $22.8 billion on DVD sales and rentals, representing 99% of home 4 entertainment spending. DEG Year-End 2006 Home Entertainment Sales Update, 5 The Digital Entm’t Grp. (Jan. 8, 2007), http://degonline.org/wp- 6 content/uploads/2014/02/f_4Q06.pdf. At that time, most households had DVD 7 players and almost every desktop or laptop computer had a DVD drive. 8 35. Today, the home entertainment landscape is dramatically different. 9 Sales of DVDs and Blu-ray discs have steadily declined in recent years. In 2014, the 10 DEG reported that for the first time, Americans spent more on digital video providers 11 than physical discs. 12 36. Americans are also using new methods to view video content, as 13 consumers shift from physical discs to digital content that may be viewed on a 14 number of different devices. In 2015, the Pew Research Center reported that 68% of 15 American adults owned smartphones and 45% owned tablet computers. 16 Unsurprisingly, it has become increasingly difficult to purchase laptops with DVD 17 drives, as consumers demand lightweight portable devices and as digital delivery of 18 content becomes more feasible and prevalent. 19 37. As a result, there is a nationwide demand for online filtering services 20 that transmit filtered content over the internet, at the direction of heads of household, 21 to personal computers and other devices, including mobile applications, smart phones 22 and remote streaming devices. The market for filtered movies is, according to 23 National Research Group, 56 million people. Improvements in internet access and 24 speed have enabled viewers to unplug and rely heavily on streaming as a main source 25 of video consumption. From 2010 to 2015, the increasing prevalence of 26 smartphones, tablets and other internet-connected devices has mirrored and largely 27 been driven by the increased effectiveness and reliability of streaming video. Many 28 Americans rely upon these devices to watch their media content. Thus, the demand -27- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 for movies and television programs available for online remote filtering is larger 2 today than ever. 3 38. Counterclaim-Defendant Disney recognizes the need and demand for 4 online filtering services to control the content of what is available to children in 5 particular. Disney owns and markets a device called “Circle” which, according to its 6 website (https://meetcircle.com/circle/filter/) allows parents to set and customize 7 filters to ensure their children are not exposed to unwanted content on the internet, 8 social media or streaming television services. 9 VidAngel’s Three Early Business Models and 10 Counterclaim-Defendants’ Anticompetitive Conduct 11 39. To address the substantial demand for online filtering, VidAngel was 12 formed in October 2013 to provide customers the ability to control the content they 13 view at home. Using innovative and proprietary software, VidAngel created a 14 catalog of videos that could be filtered by users. Once a video is selected, a user can 15 choose from over 80 categories of filters, including sex, violence and profanity, to 16 mute or skip portions of the audio or video to permit a family-friendly viewing 17 experience. 18 40. Method 1: Traditional Streaming License. VidAngel solicited each of 19 the studios for a traditional streaming license, inducing the Counterclaim-Defendant 20 studios, but each and every studio declined. This unanimity could not exist in a 21 competitive environment and the unanimous and consistent declination to license 22 streaming content evidences and supports the inference that the studios have agreed 23 to “kill off” filtering. 24 41. Method 2: Buying discs straight from the studios. VidAngel requested 25 to buy DVDs and Blu-rays from the studios directly, thus funneling revenue straight 26 to the studios without any profits siphoned off by an intermediate retailer, such as 27 Walmart. Further evidencing collusion and acting contrary to their best business 28 interests, each studio declined or ignored these requests. -28- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 42. Method 3: Streaming through YouTube and Chromecast. Because the 2 studios refused to grant it a traditional streaming license and would not otherwise sell 3 physical DVDs to it, VidAngel developed a website to allow customers to filter 4 movies and videos available on YouTube and the Google Play Hollywood library.3 5 In 2012, Google launched Google Play to provide movies, TV shows, music and 6 books to Google and Android users. Importantly, the movies on Google Play were 7 delivered using YouTube’s infrastructure, meaning that every movie and show 8 available on Google Play was also available for purchase and/or rent on YouTube. 9 This was important because YouTube ran in a user’s web browser using a type of 10 software (called a Javascript API) that made it possible for VidAngel to manipulate 11 the playback of ordinary (but not high-definition) video and audio on a user’s desktop 12 computer. One limitation of this method was that without the official collaboration of 13 Google, the Javascript API would not work on Google Play apps, mobile devices, 14 Roku and other mobile platforms. At that time, though, Google supported the 15 technical capabilities for VidAngel to deliver a filtered HD movie to a family’s TV. 16 43. For some time, customers also could use VidAngel’s Chrome extension 17 (an additional piece of software that can be loaded into a user’s Google Chrome web 18 browser) and VidAngel.com to stream filtered movies that appeared on YouTube to 19 their computers. They could also use a Chromecast (a small piece of hardware that 20 plugs into newer HDTVs) to stream HD filtered movies to their HDTVs. 21 44. From approximately November 2013 to February 3, 2014, while 22 Chromecast was undergoing its own private beta test, VidAngel was able to access 23 technical features within the Chromecast private beta that allowed VidAngel to filter 24 high-definition titles available on Google Play to a user’s HDTV. During this time, 25 26 3 At all relevant times, Google Play’s Hollywood library was made available on 27 YouTube (although Hollywood movies were only available on YouTube in standard definition format). Google was and is the owner of YouTube. 28 -29- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 VidAngel reached out to Google to ask whether VidAngel could purchase 2 Chromecast devices at wholesale and then sell them to families who wanted to use 3 VidAngel’s filtering services. Google responded that it would consider a bulk 4 purchase agreement only after VidAngel successfully launched a public beta of its 5 Software Development Kit on February 3, 2014. 6 45. Once Chromecast launched on February 3, 2014, however, VidAngel 7 discovered that Google had removed the technology that made the filtering service 8 possible on native Chromecast. Google did not notify VidAngel or publicly 9 announce the removal of its technology. As a result of these abrupt changes, 10 VidAngel no longer had any support for its high-definition product on Chromecast 11 and lost the time, resources and energy that had gone into developing VidAngel’s 12 technology for use of this platform. 13 46. Counterclaim-Defendants, and the studios acting collectively, induced 14 and persuaded Google to terminate all technical support offered to VidAngel for its 15 Chromecast application for filtering HD content by contending that such support 16 violated the studios’ contracts with Google. Google stood to profit from VidAngel’s 17 purchase, promotion and distribution of the Chromecast device and offered no 18 justification, business or otherwise, for suddenly eliminating the technical features 19 that allowed VidAngel’s services to function with Chromecast. 20 47. The studios also induced and persuaded other major digital content 21 distributors (e.g., Google Play, Netflix, Amazon, and Hulu) to refuse to support 22 VidAngel’s online filtering service. On or about December 5, 2013, VidAngel 23 received a notice from YouTube’s legal department averring that VidAngel was 24 breaking its terms of use because the VidAngel application was designed to “modify 25 the audio or visual components of . . . content.” YouTube took the position that 26 VidAngel’s content filtering, even as authorized by the FMA, violated YouTube’s 27 terms of use. 28 48. Shortly after VidAngel filed its original Counterclaims, Google changed -30- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 its terms of use and/or protocol on YouTube to introduce more restrictive terms 2 which make YouTube less practicable and useable for filtering. 3 49. Counterclaim-Defendants combined with one another (and others) to 4 unlawfully pressure Google to withhold its Chromecast and YouTube support 5 services from VidAngel. Counterclaim-Defendants did so, at least in part, in 6 furtherance of a conspiracy to prevent filtered streaming of their works. 7 Google Play Sought to Partner with VidAngel Then Abruptly Terminates 8 Negotiations After Interference from the Studios 9 50. The studios again pressured Google to withdraw support of VidAngel in 10 late 2014 and early 2015. In November 2014, a Google Play representative Mark 11 Fleming (who was a customer of VidAngel and a fan of the product) reached out to 12 VidAngel and expressed interest in a partnership between Google and VidAngel to 13 allow consumers to use VidAngel’s filtering technology directly on Google Play’s4 14 various platforms. On or about December 12, 2014, VidAngel’s CEO met with Mr. 15 Fleming and other Google representatives to discuss the viability of VidAngel’s 16 filters on Google Play’s various streaming platforms. Google Play’s representatives 17 informed VidAngel that Google was interested in this partnership, but Google Play 18 was concerned that their licensing agreements with the studios prohibited secondary 19 editing of any kind, which could interfere with an otherwise positive business 20 relationship. 21 51. Mr. Fleming and VidAngel’s CEO exchanged several emails after the 22 meeting and continued negotiations until March 2015. On December 14, 2014, Mr. 23 Fleming expressed concern in an email to VidAngel’s CEO that the studios’ 24

25 4 Google Play is Google’s official store for digital content distribution. It can be 26 accessed through web browsers, smartphones and various other modern devices. 27 Google Play sells and rents movie and television content pursuant to license agreements with the movie and television studios. 28 -31- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 agreements with the directors prohibited filtering, and in order to comply with the 2 terms of these agreements, Google would need to get approval from the director of 3 each and every movie VidAngel wanted to filter, or alternatively, wait until a “painful 4 cascade” of renegotiations occurred between each studio and the DGA and/or each 5 studio and each director. 6 52. In March 2015, Mr. Fleming met with executives from non-party Sony 7 to discuss the opportunity to use VidAngel’s online filtering service on Google Play’s 8 platforms. Mr. Fleming insisted that none of the negotiations with VidAngel and 9 Sony be in writing. After meeting with Sony, Mr. Fleming informed VidAngel’s 10 CEO that Sony and the rest of the MPAA member studios refused to allow Google to 11 partner with VidAngel. After March 2015, Google Play ceased all negotiations of a 12 partnership with VidAngel. 13 53. Google has an extensive library of movies and television shows 14 available for purchase or rent on Google Play. Google Play’s “Movies & TV” 15 website has a section dedicated to motion pictures produced by major studios. In this 16 section, it promotes, sells and rents motion pictures from Counterclaim-Defendants 17 Warner Bros., Disney and Fox, among others. Google depends on the studios to 18 supply content for this library. 19 54. In the absence of the DGA Agreement and in a competitive market, at 20 least one or more the studios, including Counterclaim-Defendants, would agree to a 21 streaming license with VidAngel to provide filtering services because such an 22 agreement would be profitable for the studios. Nonetheless, as a result of the studios’ 23 collective agreement, the market for online remote filtering has been “killed off” and 24 is virtually non-existent – despite being protected by the FMA. VidAngel is the only 25 significant company in the United States that presently provides online filtering 26 services for high-definition motion pictures and television shows over the internet, 27 whether the consumer is using a laptop, smart phone, tablet or other device capable of 28 streaming video. Counterclaim-Defendants have frustrated the will of Congress and -32- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 the American people as expressed by the adoption of the FMA. 2 VidAngel Launches Its Current Business Model 3 55. Contrary to Plaintiffs’ allegations (Complaint ¶ 47), prior to VidAngel 4 developing its current model, there was no effective way to deliver filtered content 5 pursuant to the FMA to the overwhelming majority of viewers without the 6 cooperation of Google and other content distributors. By 2014, the traditional ways 7 of filtering movies were no longer available to the overwhelming majority of 8 consumers. 9 56. Alternatives to VidAngel’s current model are cumbersome, expensive 10 and often ineffective. ClearPlay, for example, offers a DVD filtering experience 11 which requires the purchase and installation of a $249.99 DVD-player in addition to 12 an $8/month subscription fee. Consumers must acquire a DVD on their own, 13 purchase and install the additional equipment, subscribe to the service, place the 14 physical DVD in the player, and download filters just to view a filtered title. At 15 times, differences between the content a consumer purchased (e.g., a director’s cut 16 with bonus footage additions or a separate edition of the film) and the content upon 17 which the ClearPlay filters are based cause ClearPlay’s filters to fail. 18 57. Even VidAngel’s pioneering filtering software, which functioned on top 19 of Google Play streaming content, was fraught with problems. That software worked 20 only with standard definition content, not the popular high-definition format. More 21 importantly, as noted above, Google Play began to prevent VidAngel’s software from 22 functioning properly on the Chromecast. Because VidAngel’s software was not 23 officially supported by Google, changes to YouTube caused the filters to fail. When 24 that happened, users would see content that they did not want to see until VidAngel 25 updated its software. Those experiences damaged VidAngel’s credibility. Finally, 26 slower computers could not process both the video and the filter at the same time, 27 resulting in missed profanity or nudity filters. The end result was that – without 28 Google’s technical support and cooperation – no method enabled a consistent -33- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 filtering experience for the majority of VidAngel users and no method would provide

2 a high-definition filtering experience for any VidAngel users. 3 58. Unable to use Google Play and YouTube’s platform due to 4 Counterclaim-Defendants’ opposition to VidAngel’s online filtering service, 5 VidAngel built its current proprietary platform, and developed software and other 6 technology to enable private persons to engage lawfully in personal movie filtering as 7 contemplated and expressly authorized by the FMA. Its technology allows the 8 owners of digital video discs or Blu-ray discs (collectively referred to as “DVDs”) to 9 filter objectionable content. 10 59. At present, VidAngel has more than 2,500 movies and television 11 episodes currently available for purchase in its library. VidAngel has lawfully 12 purchased and owns physical copies of each of these titles in DVD format before 13 selling the DVDs to VidAngel customers. VidAngel spends one-third of all capital 14 raised just to purchase those DVDs lawfully. VidAngel acquires numerous DVDs for 15 each of its titles from various public and private sellers. Plaintiffs falsely allege that 16 they receive no payment from VidAngel as a result of its service (Complaint ¶¶ 49- 17 50), Plaintiffs in truth receive the same payment for each of these first sales to 18 VidAngel as they would receive from any lawful first purchaser. 19 60. Following its purchase from VidAngel’s suppliers, VidAngel enters each 20 DVD it has purchased into an inventory management application database and 21 assigns a unique barcode to each physical disc case. When a consumer purchases a 22 DVD, that particular DVD is held in VidAngel’s vault for the customer and VidAngel 23 records the purchase by assigning the unique barcode for the DVD to its owner. Only 24 a customer who owns a DVD in the vault may access the title for filtering. The vault 25 is locked and under 24-hour surveillance using multiple video cameras. 26 61. VidAngel’s trained personnel and contractors carefully review all titles 27 available for resale for potentially objectionable content. VidAngel has developed 28 -34- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 more than 80 codes or tags for different kinds of content that a viewer might prefer 2 not to hear or see. 3 62. Using VidAngel’s proprietary tagging application, customers are able to 4 select their own filtering options and stream content they own to their personal 5 devices. Users are shown a listing of the various types of potentially objectionable 6 content identified in the purchased work, as well as the number of occurrences of 7 each such type of content within the work. The user then selects the types of content 8 he or she wishes to have silenced or deleted. The user has access to set any 9 combination of filters in the following categories: profanity, sex/nudity/immodesty, 10 violence, drug/alcohol use, and objectionable/disturbing. The user’s unique selection 11 of filters creates a custom filter. Filters may be modified before and during the 12 viewing process and are saved to the user’s unique customer ID. 13 63. Before watching a particular movie or television episode, a customer 14 must purchase a physical DVD containing the complete, unaltered version of the title 15 from VidAngel. Every DVD available for purchase by a customer was first lawfully 16 acquired by VidAngel as described above. VidAngel typically maintains the physical 17 DVD on behalf of the purchasers, but purchasers may request that the DVD be sent to 18 them or retrieve the DVD from VidAngel’s offices. VidAngel will not provide its 19 filtering service, however, if the DVD is not in its or the customer’s possession. That 20 requirement ensures that the one-to-one correspondence between the disc and the user 21 is maintained. 22 64. Users are able to access the contents of their DVDs only by owning 23 them. The purchase price for each DVD is $20. To purchase a disc, users must log- 24 on to the VidAngel website. First-time users are required to provide an email address 25 to establish a unique user ID and create a password. Upon providing this 26 information, users have the ability to access the current inventory of disks available to 27 purchase. 28 -35- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 65. Once a purchase transaction has occurred, the disc is removed from 2 available inventory and the title is transferred to that customer’s unique user ID. 3 After a customer purchases a physical DVD and selects his or her desired filters, the 4 user is permitted to play a filtered version of the work on one device screen at a time. 5 VidAngel filters the specific content identified by its customer to be screened as the 6 content is streamed to the customer but makes no permanent fixed copy of the work 7 as streamed. Neither VidAngel nor its users make any alteration to the underlying 8 work. 9 66. A subscriber is able to view the stream instantaneously on any 10 VidAngel-supported device, including Roku, Apple TV, Smart TV, Amazon Fire TV, 11 Android, Chromecast, iPad/iPhone and desktop or laptop computers. 12 67. VidAngel’s service relies on HTTP Live Streaming (“HLS”) encryption 13 to let customers enjoy video over HTTP for playback on devices running iOS, 14 including the iPhone, iPad, iPod Touch, Roku, Chromecast, and desktop and laptop 15 computers. VidAngel’s service utilizes the Advanced Encryption Standard (“AES”), 16 as well as other technologies, to seamlessly protect content from non-authorized 17 streaming, piracy, and redistribution by others, with no detectable difference to video 18 playback. VidAngel employs a one-screen policy for playback based on the user’s 19 account, IP address and other information. 20 68. Once a user has viewed it, the user may re-sell a movie or television 21 program back to VidAngel for a partial credit of the $20 purchase price. The sell- 22 back price decreases $1 per night for standard definition (SD) purchases and $2 per 23 night for high-definition (HD) purchases. Once a user sells the movie back to 24 VidAngel, the user’s access is immediately terminated. If the user decides to sell the 25 disk back, the remaining balance is credited back to the user’s VidAngel account. 26 The credit can be used towards future purchases. For example: A $20 SD disk is 27 owned for 2 nights at $1 per night and sold back for $18 in sell-back credit. If a 28 VidAngel customer keeps a DVD for more than 20 days, he or she can now view it -36- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 through the VidAngel platform in perpetuity or sell it back for $1 or $2 in credit. Or, 2 VidAngel will send the DVD to the customer upon request at any time. 3 69. VidAngel has designed and engineered its filtering service to promote 4 compliance with copyright law and the FMA. For example, just as a physical DVD 5 could not be played simultaneously on multiple devices, VidAngel restricts a user’s 6 playback to one device at a time. VidAngel also streams a filtered work to just one of 7 a user’s registered devices at a time. 8 VidAngel Reached Out to Counterclaim-Defendants to Explain Its Service 9 70. Before VidAngel made its new service available to the public at large, 10 VidAngel wrote to the general counsels of each of the Counterclaim-Defendants, as 11 well as other content owners, on July 23, 2015, with follow-up letters on August 21, 12 2015, introducing its business model and offering to meet with them to discuss the 13 distribution of their content for filtering under the FMA. Attached as Exhibits A and 14 B are true and correct copies of letters sent to Counterclaim-Defendants (or their 15 parents), in July and August of 2015. VidAngel had over 750 titles available when it 16 sent its letters to Counterclaim-Defendants asking for their input or offering to 17 discuss VidAngel’s business model. 18 71. Unbeknownst to VidAngel at the time, Counterclaim-Defendant Disney 19 almost immediately accessed VidAngel’s service after receiving VidAngel’s first 20 letter. On August 6, 2015, a Disney employee signed up for a VidAngel account 21 using a non-descript Gmail account and providing payment information for the 22 Director of Antipiracy Operations at Disney. Between August 2015 and April 2016, 23 this Disney employee purchased and sold back 17 titles using VidAngel’s services. 24 Despite this apparent interest in VidAngel, Disney did not respond to VidAngel’s 25 offer to meet or discuss VidAngel’s business. 26 72. Also in response to VidAngel’s letters and growing user base, 27 Counterclaim-Defendants, including Fox, sought guidance from the MPAA and each 28 other concerning VidAngel’s filtering services in or around July and August 2015. In -37- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 fact, 59 employees of Counterclaim-Defendants, the MPAA, or other MPAA studios 2 exchanged 124 messages concerning VidAngel in August 2015 alone. During early 3 2016, Fox again discussed VidAngel’s services with the MPAA, and consulted with 4 co-Counterclaim-Defendants Disney and Warner Bros. on the issue. Although it was 5 seemingly interested and possibly concerned about VidAngel, Fox never met with 6 VidAngel to discuss VidAngel’s service or operations. In fact, although Fox and 7 Time Warner, Inc. (Warner Bros.’ parent) were the only Counterclaim-Defendants to 8 respond to VidAngel’s offer to meet, Fox failed to appear for two scheduled 9 appointments. Likewise, Time Warner cancelled a conference call at the last minute 10 and then failed to reschedule. 11 73. Overall, Counterclaim-Defendants’ in-house counsel and outside counsel 12 discussed VidAngel over 1,300 times by email alone before finally filing suit. At no 13 point did any Counterclaim-Defendant send VidAngel a cease-and-desist letter, seek 14 an injunction or any other type of relief. 15 The Studios’ Choice to Enforce Their Anticompetitive Agreements 16 74. Because unfiltered content falls outside the FMA, a service streaming 17 unfiltered content (i.e. Netflix) is required to negotiate and pay for a streaming 18 license with each studio. The studios generally charge $3.50 per title to allow third 19 party services to stream unfiltered content for 24 to 48 hours. After the third parties 20 add their own mark-up, consumers usually pay around $5.00 to watch new releases 21 through these streaming services. 22 75. VidAngel has sought a streaming license from the studios, including 23 Counterclaim-Defendants. Because of the restrictive and exclusionary terms of the 24 DGA Agreement, the studios, including Counterclaim-Defendants, have refused to 25 grant VidAngel a streaming license that would permit filtering. As a result, under 26 VidAngel’s current business model, the studios profit from VidAngel’s initial 27 purchase of each DVD title, but not each time that title is re-sold and streamed to a 28 new customer. This allows VidAngel to offer consumers lower prices than unfiltered -38- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 streaming services, typically $1.00-2.00 net cost per title. 2 76. Not only are VidAngel’s prices lower, but its apps also are rated higher 3 by users than the leading distribution platforms endorsed by the studios. For 4 example, the VidAngel rating on Google Play is 4.8 stars whereas Netflix is 4.4 stars, 5 Hulu is 4.1 stars, and Disney Movies Anywhere is 3.9 stars. For all ratings on the 6 Apple App Store, VidAngel has 5 stars, Netflix has 3.5 stars, Hulu has 2 stars, and 7 Disney Movies Anywhere has 3.5 stars. On Roku, VidAngel has 4.5 stars, Netflix 8 has 3 stars, Hulu has 3.5 stars and Disney Movies Anywhere has 3.5 stars. 9 77. About 96% of VidAngel’s purchases have come from users who chose 10 more than one filter. This filtered-only viewership adds to the studios’ bottom lines 11 because these purchases would not have occurred but for VidAngel and its filtering 12 services. Nonetheless, the studios have economic and other control motives to 13 subvert VidAngel’s business because VidAngel’s DVDs are re-sold and streamed to a 14 new customer an average of 16 times each in the first four weeks of the new release. 15 Because Counterclaim-Defendants have denied VidAngel a streaming license, they 16 do not receive a profit from each instance a title is re-sold and streamed like they 17 would from a service, such as Netflix, that has a streaming license. Although this 18 could be easily remedied by granting VidAngel a streaming license with a per use 19 charge, Counterclaim-Defendants have instead chosen to enforce their 20 anticompetitive agreements which prohibit filtering by denying VidAngel such a 21 license rather than confronting the DGA or changing the terms of their contracts with 22 the directors who produce their motion picture and television content. 23 78. In addition to the studios’ economic and control motivations, 24 VidAngel’s success has also detracted from Counterclaim-Defendant Disney’s 25 reputation and brand as the longstanding guardian of children and family interests in 26 the industry. 27 79. There are significant drawbacks to VidAngel’s current business model 28 because it does not have a streaming license. For example, VidAngel spends one- -39- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 third of all capital raised on the purchase of DVDs and has high overhead costs 2 stemming from the maintenance of its secure vault. It also sustains losses when it 3 overstocks its inventory with a particular title that its customers ultimately do not 4 purchase, or is forced to send “out of stock” notices when its inventory on a 5 particularly popular title is too low. VidAngel sent over 250,000 out of stock notices 6 in August 2016 alone – meaning VidAngel turned away 250,000 potential purchases 7 it could have consummated if it had a standard streaming distribution agreement that 8 allowed for filtering. Despite its attempts to cooperate, collaborate and consult with 9 each studio, VidAngel has been forced into this inefficient business model by virtue 10 of their collective anticompetitive conduct. 11 FIRST COUNTERCLAIM FOR RELIEF 12 By VidAngel against All Counterclaim-Defendants 13 (Violation of Section 1 of the Sherman Act (15 U.S.C. § 1)) 14 80. VidAngel incorporates herein by reference each and every averment 15 contained in all preceding paragraphs. 16 Relevant Product/Service Market 17 81. The relevant product/service market for antitrust purposes in this case is 18 the implementation of online remote filtering services for high-grossing motion 19 picture productions and high-rated television productions, including without 20 limitation, the implementation of filtering services for digital content applications 21 available on modern mobile devices, including smartphone and remote streaming 22 devices. 23 82. There is extremely low cross-elasticity of demand and/or no reasonably 24 interchangeable substitutes for online remote filtering services. Over VidAngel’s 25 entire history, nearly 96% of VidAngel’s purchasers selected multiple filters, 26 demonstrating the fact that the version of the motion picture or television show 27 VidAngel streams is of a different character than the version available through other 28 -40- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 non-filtering streaming services like Google Play, Amazon Video, VUDU and 2 iTunes. 3 Relevant Geographic Market 4 83. The relevant geographic market for antitrust purposes in this case is the 5 entire United States which is the area of effective competition in which the parties 6 operate and to which customers can practically turn for online remote filtering 7 services. 8 Antitrust Standing 9 84. VidAngel has the requisite standing to assert antitrust claims against 10 these Counterclaim-Defendants because VidAngel is a participant and competitor in 11 the relevant market and has suffered injury by reason of the unreasonable restraints 12 and concerted exclusionary conduct of the Counterclaim-Defendants. 13 Contracts and Combination to Unreasonably Restrain Competition 14 85. Even without consideration or aggregation of their unnamed co- 15 conspirators, Counterclaim-Defendants represent nearly 57% percent of motion 16 picture revenue, and over a period of many decades, have established collective and 17 total control over motion picture, film and television productions in the U.S. – the 18 raw material needed to effectively compete in the relevant online remote filtering 19 services market. To date in 2016, each Counterclaim-Defendant enjoys the following 20 market shares based on overall gross revenue in the motion picture industry: Fox, 21 14.1%; Warner Bros., 16.5%; and Disney (through its subsidiary Buena Vista), 22 26.2%. The production and distribution of all motion pictures accounts for 23 approximately $11.5 billion dollars annually. Accordingly, Counterclaim-Defendants 24 collectively have market power because of their ability to exclude competition and/or 25 control prices or output in the filtering services market. 26 86. Counterclaim-Defendants also have significant television-related 27 ventures. Warner Bros.’s television outlets produced more than 70 series in the 2015- 28 2016 season and comprise the largest television production company measured by -41- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 revenue and library. Disney’s television portfolio includes the Disney Channel, ABC 2 Television Network, 50% ownership of A&E Network, and an 80% stake in ESPN. 3 Disney and Fox, among others, are co-owners of the streaming television service 4 Hulu. In addition to Hulu, Fox’s television ventures also include FOX News, Fox 5 Sports Networks, FOX Sports, FX, and National Geographic. 6 87. As evidenced above, the motion picture and television production and 7 distribution markets are controlled by an oligopoly of entrenched and vertically- 8 integrated enterprises. As a result, there are high barriers to entry, including capital 9 and access to talent, which limit access to potential new entrants. Further, 10 Counterclaim-Defendants’ restrictions, threats and arrangements have created a 11 barrier that precludes effective entry by other competitors. As a result, the quality 12 and variety of offerings in the online remote filtering market have been reduced and 13 constrained. 14 88. As set forth above, Counterclaim-Defendants and their unnamed co- 15 conspirators entered into one or more agreements that unreasonably restrained 16 interstate trade in violation of Section 1 of the Sherman Act and Section 4 of the 17 Clayton Act, 15 U.S.C. §§ 1, 15. 18 89. Counterclaim-Defendants voluntarily entered into a written contract with 19 the DGA on July 1, 2014, as described above, in which they agreed to prohibit 20 secondary editing or filtering of motion pictures or television programs and which 21 prohibits Counterclaim-Defendants from entering into distribution agreements that 22 permit such filtering. These agreements impose vertical non-price restraints on 23 distributors, exhibitors, and other companies in the market for online remotefiltering 24 services of motion pictures and television shows and amount to a group boycott or 25 other concerted refusal to deal with VidAngel in violation of the antitrust laws. 26 90. Counterclaim-Defendants have entered into licensing agreements with 27 Google Play and other digital content distributors. In furtherance of their 28 combination to restrain the market for online filtering services, Counterclaim- -42- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 Defendants have inserted provisions into those license agreements which prohibit 2 these distributors from implementing filtering services for digital content applications 3 available on modern mobile devices, including smartphones and remote streaming 4 devices. 5 91. In furtherance of their combination to restrain the market for online 6 filtering services, Counterclaim-Defendants placed pressure on Google Play to not 7 enter into a partnership with VidAngel and to deny VidAngel access to Google Play’s 8 services. Counterclaim-Defendants orchestrated this boycott of VidAngel to further 9 their own commercial profit, artificially raise prices, reduce output and force 10 VidAngel out of business. 11 92. The actions complained of herein will continue to restrain and adversely 12 affect interstate commerce in that provision of filtering services crosses state lines. 13 Each Counterclaim-Defendant and VidAngel purchase a substantial volume of goods, 14 services, and supplies in interstate commerce which are, or are threatened to be, 15 adversely affected by the unlawful conduct alleged herein. 16 Antitrust Injury and Damage to VidAngel 17 93. The anticompetitive scheme and plan of the Counterclaim-Defendants to 18 unreasonably restrain trade in the above-described trade and commerce has been done 19 with the intent to specifically eliminate online filtering of motion picture and 20 television productions as a viable industry. 21 94. A copyright holder enjoys a “distribution right” and may initially sell, or 22 not sell, copies of a copyrighted work to others on such terms as he or she sees fit. 23 However, the copyright holder’s distribution right is limited to the first sale of the 24 copyrighted item. Under the “first sale” doctrine, codified at 17 U.S.C. § 109(a), “the 25 distribution right may be exercised solely with respect to the initial disposition of 26 copies of a work, not to prevent or restrict the resale or other further transfer of 27 possession of such copies.” 28 95. Counterclaim-Defendants’ right to control distribution of a copy of a -43- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 copyrighted movie release ends once the copy has been sold. The distribution right 2 may not lawfully be exercised after the initial sale, “to prevent or restrict the resale or 3 further transfer of possession of such copies.” 4 96. Counterclaim-Defendants’ attempts to prevent and restrict VidAngel 5 from offering its buy-sell-back service to customers constitute an attempt to 6 unlawfully restrict the resale of goods. Any such attempt is an illegal restraint of 7 trade. 8 97. Counterclaim-Defendants’ collusive conduct and unlawful contracts 9 have produced antitrust injury, and unless enjoined by this Court, will continue to 10 produce at least the following actual and demonstrative anticompetitive, exclusionary 11 and injurious effects upon competition and consumers in interstate commerce: 12 (a) competition and output in the relevant filtering market has been 13 substantially and reasonably restricted, lessened, foreclosed and eliminated; 14 (b) barriers to entry into the relevant filtering market have been raised 15 which has prevented or delayed the entry of new filtering competitors; 16 (c) consumer choice has been, and will continue to be, significantly 17 reduced, limited and constrained as to selection, price and quality of filtering services 18 in the United States; 19 (d) consumer access to VidAngel’s competitive filtering services has 20 been artificially restricted and reduced and its filtering service offerings will continue 21 to be excluded from the market; and 22 (e) the will of the people and of Congress in enacting the FMA has 23 been frustrated, subverted and thwarted. 24 98. As a result of Counterclaim-Defendants’ concerted activity, VidAngel 25 was denied access to Google Play’s digital distribution service and therefore has 26 suffered antitrust injury. Counterclaim-Defendants’ conduct has had an 27 anticompetitive effect on the development of the market for online filtering services 28 for high-quality video content within the United States; in fact, their misconduct has -44- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 substantially deprived and actually threatens to effectively extinguish that market. 2 99. There are no business, technological or other efficiencies that require or 3 justify Counterclaim-Defendants’ imposition of such exclusionary and 4 anticompetitive conditions and restrictions. 5 100. By reason of, and as a direct and proximate result of the violations 6 alleged herein, Counterclaimant VidAngel has suffered and may continue to suffer 7 substantial financial injury in its business and property by Counterclaim-Defendants’ 8 and unnamed co-conspirators continuing violations of the antitrust laws. 9 Counterclaim-Defendants’ unlawful conduct was calculated to eliminate 10 Counterclaimant as a viable competitor in the filtering market. Due to Counterclaim- 11 Defendants’ contract and combination, VidAngel lost substantial profits and profit 12 opportunities. Counterclaim-Defendants’ coordinated and focused anticompetitive 13 conduct has cumulatively, incrementally, and unreasonably restricted competition and 14 devastated VidAngel’s business. As a result, VidAngel has been deprived of 15 revenues and profits they would have otherwise made, suffered diminished market 16 growth and sustained a loss of goodwill and going concern value. Counterclaim- 17 Defendants’ conduct has decreased VidAngel’s business volume and substantially 18 diminished its business value. 19 101. VidAngel does not yet know the precise extent of its past damages and 20 when ascertained will ask leave of this Court to insert said sum herein. 21 SECOND COUNTERCLAIM FOR RELIEF 22 By VidAngel against All Counterclaim-Defendants 23 (Intentional Interference with 24 Prospective Economic Advantage) 25 102. VidAngel incorporates herein by reference each and every averment 26 contained in all preceding paragraphs. 27 103. This Court has jurisdiction over this Second Counterclaim for Relief 28 based on the doctrine of supplemental jurisdiction (28 U.S.C. § 1367) because this -45- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 Counterclaim for Relief arises from the same transactions and from a common 2 nucleus of operative facts as alleged in the federal causes of action. 3 104. VidAngel has developed advantageous prospective business and 4 economic relationships with business partners to expand VidAngel’s business, 5 visibility and availability to consumers, and which promise a continuing probability 6 of future economic benefit to VidAngel. Counterclaim-Defendants knew, or 7 reasonably should have known, of the existence of those prospective economic 8 advantages. 9 105. Counterclaim-Defendants, with the intent of disrupting and destroying 10 VidAngel’s business relationships, have deliberately undertaken the illegal practices 11 described herein thereby inducing VidAngel’s actual and prospective partners, such 12 as YouTube and Google Play, not to enter into such prospective contractual 13 relationships with VidAngel. As such Counterclaim-Defendants’ conduct was 14 wrongful. 15 106. By means of the alleged actions, including but not limited to the unfair, 16 anticompetitive and/or predatory acts set herein, Counterclaim-Defendants intended 17 to pressure and induce these customers to end or disrupt their prospective economic 18 relationships with VidAngel. As a direct and proximate result of Counterclaim- 19 Defendants’ actions as alleged herein, many of the economic benefits from 20 Counterclaimant’s prospective customers have been lost. Counterclaim-Defendants 21 knew these disruptions or interferences were substantially certain to occur as a result 22 of their conduct. 23 107. Counterclaim-Defendants’ conduct was a substantial factor in causing 24 financial injury to VidAngel and has rendered it more difficult for VidAngel to 25 remain and survive as a viable competitor. VidAngel has sustained and will continue 26 to sustain damages, the exact amount of which is extremely difficult to calculate, and 27 presently unknown, but which will be proven at trial. 28 108. Counterclaim-Defendants’ wrongful conduct in interfering with such -46- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 prospective business contractual relations is intentional, malicious and without 2 justification and such conduct and overall scheme was undertaken solely to hinder, if 3 not eliminate, competition. Their anticompetitive conduct was not privileged or 4 excused and was without any legitimate business justification. Counterclaim- 5 Defendants have knowingly engaged in such wrongful conduct for the purpose of 6 excluding competition, damaging VidAngel’s goodwill, and to deprive consumers of 7 the benefits of free and open competition. Counterclaim-Defendants committed each 8 of the foregoing acts willfully, fraudulently, oppressively, maliciously and with the 9 wrongful intention of injuring VidAngel’s prospective business relationships. 10 Accordingly, VidAngel is entitled to punitive and exemplary damages sufficient to 11 serve as an example and to punish Counterclaim-Defendants. 12 109. As a result of the foregoing acts, VidAngel has suffered, and will 13 continue to suffer, irreparable injury for which there is no adequate remedy at law 14 unless Counterclaim-Defendants are enjoined by this Court. 15 THIRD COUNTERCLAIM FOR RELIEF 16 By VidAngel against All Counterclaim-Defendants 17 (Unfair Competition in Violation of 18 Cal. Bus. & Prof. Code §§ 17200 et seq.) 19 110. VidAngel incorporates herein by reference each and every averment 20 contained in all preceding paragraphs. 21 111. This Court has jurisdiction over this Third Counterclaim for Relief based 22 on the doctrine of supplemental jurisdiction (28 U.S.C. § 1367) because this 23 Counterclaim for Relief arises from the same transactions and from a common 24 nucleus of operative facts as alleged in the federal causes of action. 25 112. Section 17200 et seq. of the California Business & Professions Code is 26 written in the disjunctive and broadly covers three varieties of unfair competition – 27 acts that are unlawful, or unfair, or fraudulent. The statute’s intent and purpose is to 28 protect both consumers and competitors by promoting fair competition in commercial -47- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 markets for goods and services. 2 113. Counterclaimant VidAngel is a “person” within the meaning of 3 California Business & Professions Code § 17201. 4 114. As alleged herein, Counterclaim-Defendants’ conduct constitutes 5 “unfair” business practices. A practice may be deemed unfair even if not specifically 6 proscribed by some other law although here the conduct violates both the FMA and 7 the Sherman Act. Conduct that significantly threatens or harms competition, or 8 threatens an incipient violation of an antitrust law, may be deemed to be “unfair.” 9 115. As alleged herein, Counterclaim-Defendants’ anticompetitive conduct is 10 also “unlawful.” Within the meaning of § 17200, virtually any violation of any civil 11 or criminal federal, state or municipal, statutory, regulatory, court-made, or local law 12 can serve as a predicate for an “unlawful” claim. 13 116. By reason of, and as a direct and proximate result of Counterclaim- 14 Defendants’ unfair and unlawful practices and conduct, Counterclaimant VidAngel 15 has suffered and will continue to suffer, economic injury to its business and property. 16 117. Counterclaim-Defendants’ unfair and unlawful conduct has caused 17 economic harm to Counterclaimant VidAngel, competition and consumers. 18 118. Pursuant to Section 17203, the entry of permanent and mandatory 19 injunctive relief against Counterclaim-Defendants is necessary to enjoin the ongoing 20 wrongful business conduct. An injunction is needed to enable and restore 21 competition in the online filtering market. 22 FOURTH COUNTERCLAIM FOR RELIEF 23 By VidAngel against All Counterclaim-Defendants 24 (Declaratory Relief Regarding VidAngel’s Current System) 25 119. VidAngel incorporates herein by reference each and every averment 26 contained in all preceding paragraphs. 27 120. An actual controversy has arisen and now exists between VidAngel and 28 Counterclaim-Defendants concerning whether VidAngel’s current system violates -48- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 copyright law. VidAngel’s system is designed and operates as follows: 2 (a) VidAngel lawfully purchases Blu-rays and DVDs (both referred to as 3 “DVD” in this prayer); 4 (b) VidAngel uses a commercially available software program to 5 automatically allow read-access for the purpose of mounting the DVD 6 files for uploading onto a computer, in the process removing restrictions 7 on DVD encryption; 8 (c) VidAngel extracts the subtitle/caption data files and then creates 9 Matroska files of the feature films; 10 (d) VidAngel uploads the subtitle/caption data files and Matroska files 11 (collectively known as the “pre-filter files” or “PF” files) onto a secure 12 folder on a third-party Internet service provider’s cloud storage service 13 (“CSS”) and uploads the subtitle/caption into a separate CSS folder; 14 (e) VidAngel destroys the Matroska files; 15 (f) VidAngel boots an encoding and segmenting server (“ESS”) to run two 16 scripts, including an encoding script and a segmenting script. 17 (g) The encoding script temporarily copies the PF files from the CSS to the 18 ESS, uses ffmpeg to prepare the PF files for tagging and filtering, creates 19 a single mp4 file (640 kilobytes per second bitrate) for tagging (when 20 that is not performed beforehand on YouTube or when corrections need 21 to be made to the tags), copies the mp4 file from the ESS to a secure 22 CSS location, creates four Transport Stream files (“TS files”) at 640, 23 1200, 2040 and 4080 bitrates for filtering, copies the TS files to a secure 24 location on the CSS, and deletes all copies and files on the ESS, and is 25 run once for each title’s Matroska file; 26 (h) The segmenting script temporarily copies the TS files from the CSS to 27 the ESS, segments the TS files for adaptive bitrate streaming (the HLS 28 specification) based on both 9-10 second intervals and the locations of -49- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 each tag for the title (which could be as short as 2 tenths of a second), 2 creates thumbnail files for player scrubbing preview for each non- 3 filterable segment, saves a comma-separated values (CSV) file 4 containing the results of the segmenting process for each segment, 5 uploads the CSV file for use by the filtering system, encrypts each 6 segment of each bitrate with a new and unique encryption key, copies 7 the unencrypted segments from the ESS to a secure location on the CSS, 8 copies the encrypted segments from the ESS onto a publicly accessible 9 location on the CSS, copies the encryption keys from the ESS to a secure 10 location on the CSS, deletes older revision files on the CSS, and deletes 11 all copies and files on the ESS; 12 (i) VidAngel lawfully purchases additional DVDs; 13 (j) VidAngel enters the information concerning the additional DVDs into an 14 inventory system; 15 (k) VidAngel applies bar codes to the DVD packages; 16 (l) VidAngel sells specific, individual DVDs to specific customers; 17 (m) VidAngel requires each customer to select one or more filters; and 18 (n) VidAngel streams content from the DVD to each purchaser while 19 applying the filters chosen by that customer. 20 121. Counterclaim-Defendants contend that VidAngel’s operating system as 21 described in the preceding paragraph infringes their exclusive rights to copy and 22 make public performances of their copyrighted works in violation of 17 U.S.C. § 101 23 et seq., whereas VidAngel contends that this system is fully consistent with the FMA 24 and otherwise complies with copyright law. 25 122. VidAngel desires a judicial determination of the legality of its current 26 operating system, and the respective rights and duties of the parties. A judicial 27 declaration is necessary and appropriate so that VidAngel and Counterclaim- 28 Defendants may ascertain their rights and duties under copyright law. -50- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 123. VidAngel desires a judicial determination of the legality of its buy-sell- 2 back provision, and the respective rights and duties of the parties. A judicial 3 declaration is necessary and appropriate so that VidAngel and Counterclaim- 4 Defendants may ascertain their rights and duties under copyright, antitrust and unfair 5 competition law. 6 FIFTH COUNTERCLAIM FOR RELIEF 7 By VidAngel against All Counterclaim-Defendants 8 (Declaratory Relief Regarding Decryption of DVD Format 9 for the Purpose of Filtering Under the FMA) 10 124. VidAngel incorporates herein by reference each and every averment 11 contained in all preceding paragraphs. 12 125. An actual controversy has arisen and now exists between VidAngel and 13 Counterclaim-Defendants concerning whether the creation of a decrypted version of 14 lawfully purchased DVDs for the purpose of filtering pursuant to the FMA violates 15 copyright law. Counterclaim-Defendants contend that the mere act of creating a 16 decrypted version of a lawfully purchased DVD of their title violates Section 17 1201(a)(1)(A) of the Digital Millennium Copyright Act and infringes their 18 reproduction rights in violation of 17 U.S.C. §§ 1201, et seq. VidAngel contends that 19 the making of a decrypted copy as the necessary first step in making a lawfully 20 purchased DVD capable of being filtered is fully consistent with the FMA and 21 otherwise complies with all copyright laws. 22 126. VidAngel desires a judicial determination of the legality of decrypting 23 DVDs for the sole purpose of converting them into a format capable of being filtered 24 to streaming devices pursuant to the FMA, and the respective rights and duties of the 25 parties with respect to this practice. A judicial declaration is necessary and 26 appropriate so that VidAngel and Counterclaim-Defendants may ascertain their rights 27 and duties under copyright law. 28 -51- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 SIXTH COUNTERCLAIM FOR RELIEF 2 By VidAngel against All Counterclaim-Defendants 3 (Declaratory Relief Regarding Remote Streaming of 4 Filtering Technology Under the FMA) 5 127. VidAngel incorporates herein by reference each and every averment 6 contained in all preceding paragraphs. 7 128. An actual controversy has arisen and now exists between VidAngel and 8 Counterclaim-Defendants concerning whether the practice of remotely streaming a 9 filtering technology to users is permissible under the FMA. Counterclaim- 10 Defendants contend that such a practice infringes their exclusive right to publicly 11 perform their copyrighted works in violation of 17 U.S.C. § 101 et seq. VidAngel 12 contends that such a practice is fully consistent with the FMA and otherwise complies 13 with copyright law. 14 129. VidAngel contends that the plain language of the FMA endorses the use 15 of remote streaming of filtering technology. The FMA provides that it is not a 16 violation of copyright for a third party, operating at the direction of a member of a 17 private household, to make limited portions of audio or video content imperceptible 18 “during a performance . . . transmitted to that household for private home viewing . . 19 . .” 17 U.S.C. § 110(11) (emphasis added). Such a transmission is clearly broad 20 enough to include remote streaming; indeed, the Copyright Act states that “[t]o 21 transmit a performance or display is to communicate it by any device or process 22 whereby images or sounds are received beyond the place from which they are sent.” 23 17 U.S.C. § 101 (emphasis added). The legislative history also makes clear that 24 remote streaming of filtering technology is authorized by the FMA: 25 The bill as proposed in the Senate makes clear that, under certain 26 conditions, “making imperceptible” of limited portions of audio or 27 video content of a motion picture-that is, skipping and muting limited portions of movies without adding any content-as well as the creation 28 or provision of a computer program or other technology that enables -52- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 such making imperceptible, does not violate existing copyright or trademark laws. That is true whether the movie is on prerecorded 2 media, like a DVD, or is transmitted to the home, as through pay-per- 3 view and “video-on-demand” services.

4 150 Cong. Rec. S11852-01. Additionally, VidAngel privately transmits its filtering 5 technology to an individual user in his own household consistent with established 6 copyright law. See Fox Broad. Co. v. Dish Network LLC, 2015 WL 1137593, at *13 7 (C.D. Cal. Jan. 20, 2015) (holding that transmissions to owners or valid possessors of 8 copyrighted programming are not public performances). 9 130. VidAngel desires a judicial determination of the legality of remotely 10 streaming a filtering technology to users and the respective rights and duties of the 11 parties with respect to this practice. A judicial declaration is necessary and 12 appropriate so that VidAngel and Counterclaim-Defendants may ascertain their rights 13 and duties under copyright law. 14 SEVENTH COUNTERCLAIM FOR RELIEF 15 By VidAngel against All Counterclaim-Defendants 16 (Declaratory Relief Regarding Prior Authorization Under the FMA) 17 131. VidAngel incorporates herein by reference each and every averment 18 contained in all preceding paragraphs. 19 132. An actual controversy has arisen and now exists between VidAngel and 20 Counterclaim-Defendants concerning whether the FMA requires VidAngel to obtain 21 prior authorization from Counterclaim-Defendants before streaming Counterclaim- 22 Defendants’ copyrighted works to individual users pursuant to the FMA. 23 Counterclaim-Defendants contend that without their prior authorization, the 24 streaming of filtered versions of their works infringes their exclusive rights to copy 25 and publicly perform their works in violation of 17 U.S.C. § 101 et seq., whereas 26 VidAngel contends that the FMA requires no such prior authorization. 27 133. VidAngel contends that the FMA expressly allows the filtering and 28 -53- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 streaming of third-party works at the direction of private persons without obtaining 2 authorization from the copyright holder to make limited alterations to the copyrighted 3 content. The plain language of the FMA permits a third party operating “by or at the 4 direction of a member of a private household” to filter audio or video content “from 5 an authorized copy of the motion picture . . . .” 17 U.S.C. § 110(11). Nothing in the 6 FMA requires a third party to obtain authorization from copyright holders before 7 making “limited portions of audio or video content” imperceptible for performance in 8 “private home viewing[.]” Id.; see also 150 Cong. Rec. S11852-01 (stating that 9 “skipping and muting from an unauthorized or ‘bootleg’ copy of a motion picture 10 would not be exempt.”) Consistent with the plain language of the FMA and 11 copyright law, VidAngel contends that it lawfully operates at the direction of 12 members of private households and properly purchased and owned “authorized 13 cop[ies]” of the titles at issue in DVD format before selling the DVDs to its 14 customers. 15 134. VidAngel desires a judicial determination as to whether it is required by 16 the FMA to obtain Counterclaim-Defendants’ prior authorization before providing its 17 filtering service to individuals under the FMA, and the respective rights and duties of 18 the parties with respect to this practice. A judicial declaration is necessary and 19 appropriate so that VidAngel and Counterclaim-Defendants may ascertain their rights 20 and duties under copyright law. 21 PRAYER FOR RELIEF 22 WHEREFORE, VidAngel respectfully requests that this Court award the 23 following relief: 24 1. That the conduct alleged in the First Counterclaim for Relief herein be 25 adjudged to be in violation of Section 1 of the Sherman Act (15 U.S.C. § 1). 26 2. That, pursuant to Section 4 of the Clayton Act (15 U.S.C. § 15), 27 VidAngel recover treble the amount of its actual damages sustained by reason of 28 those federal antitrust violations. -54- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 3. That, pursuant to Section 4 of the Clayton Act (15 U.S.C. § 15), 2 VidAngel be awarded a reasonable attorneys’ fee and costs of litigation. 3 4. That, pursuant to Section 16 of the Clayton Act (15 U.S.C. § 26), the 4 Court enjoin Counterclaim-Defendants from their continuing anticompetitive and 5 wrongful conduct. 6 5. That the conduct alleged in the Second Counterclaim for Relief herein be 7 adjudged to constitute intentional interference with prospective advantage. 8 6. That VidAngel be awarded punitive or exemplary damages on its tort 9 claim. 10 7. That the conduct alleged in the Third Counterclaim for Relief herein be 11 adjudged to be unfair and/or unlawful business practice in violation of § 17200 of the 12 California Business & Professions Code. 13 8. That pursuant to § 17203 of the California Business & Professions Code, 14 the unfair and/or unlawful business practices of Counterclaim-Defendants be 15 permanently enjoined. 16 9. That pursuant to Section 1021.5 of the California Code of Civil 17 Procedure, VidAngel be awarded reasonable attorneys’ fees. 18 10. Pursuant to 28 U.S.C. § 2201, a declaration that VidAngel’s current 19 system does not violate copyright law, to the extent it operates as follows: 20 (a) VidAngel lawfully purchases Blu-rays and DVDs (both referred to as 21 “DVD” in this prayer); 22 (b) VidAngel uses a commercially available software program to 23 automatically allow read-access for the purpose of mounting the DVD 24 files for uploading onto a computer, in the process removing restrictions 25 on DVD encryption; 26 (c) VidAngel extracts the subtitle/caption data files and then creates 27 Matroska files of the feature films; 28 (d) VidAngel uploads the subtitle/caption data files and Matroska files -55- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 (collectively known as the “pre-filter files” or “PF” files) onto a secure 2 folder on a third-party Internet service provider’s cloud storage service 3 (“CSS”) and uploads the subtitle/caption into a separate CSS folder; 4 (e) VidAngel destroys the Matroska files; 5 (f) VidAngel boots an encoding and segmenting server (“ESS”) to run two 6 scripts, including an encoding script and a segmenting script. 7 (g) The encoding script temporarily copies the PF files from the CSS to the 8 ESS, uses ffmpeg to prepare the PF files for tagging and filtering, creates 9 a single mp4 file (640 kilobytes per second bitrate) for tagging (when 10 that is not performed beforehand on YouTube or when corrections need 11 to be made to the tags), copies the mp4 file from the ESS to a secure 12 CSS location, creates four Transport Stream files (“TS files”) at 640, 13 1200, 2040 and 4080 bitrates for filtering, copies the TS files to a secure 14 location on the CSS, and deletes all copies and files on the ESS, and is 15 run once for each title’s Matroska file; 16 (h) The segmenting script temporarily copies the TS files from the CSS to 17 the ESS, segments the TS files for adaptive bitrate streaming (the HLS 18 specification) based on both 9-10 second intervals and the locations of 19 each tag for the title (which could be as short as 2 tenths of a second), 20 creates thumbnail files for player scrubbing preview for each non- 21 filterable segment, saves a comma-separated values (CSV) file 22 containing the results of the segmenting process for each segment, 23 uploads the CSV file for use by the filtering system, encrypts each 24 segment of each bitrate with a new and unique encryption key, copies 25 the unencrypted segments from the ESS to a secure location on the CSS, 26 copies the encrypted segments from the ESS onto a publicly accessible 27 location on the CSS, copies the encryption keys from the ESS to a secure 28 location on the CSS, deletes older revision files on the CSS, and deletes -56- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 all copies and files on the ESS; 2 (i) VidAngel lawfully purchases additional DVDs; 3 (j) VidAngel enters the information concerning the additional DVDs into an 4 inventory system; 5 (k) VidAngel applies bar codes to the DVD packages; 6 (l) VidAngel sells specific, individual DVDs to specific customers; 7 (m) VidAngel requires each customer to select one or more filters; and 8 (n) VidAngel streams content from the DVD to each purchaser while 9 applying the filters chosen by that customer. 10 11. A declaration that the buy-sell-back provision in VidAngel’s current 11 business model complies with the FMA and does not otherwise violate copyright law, 12 and that Counterclaim-Defendants’ attempts to prevent VidAngel from offering its 13 buy-sell-back service to customers constitute an attempt to unlawfully restrict the 14 resale of goods; 15 12. A declaration that VidAngel’s current practice of decrypting DVDs for 16 the sole purpose of converting them into a format capable of being filtered to 17 streaming devices pursuant to the FMA does not violate the Digital Millennium 18 Copyright Act and does not infringe the reproduction rights of copyright holders; 19 13. A declaration that VidAngel’s current practice of remotely streaming its 20 filtering technology to users is permissible under the FMA and does not infringe the 21 public performance rights of copyright holders; 22 14. A declaration that VidAngel is not required to obtain prior authorization 23 from Counterclaim-Defendants before streaming Counterclaim-Defendants’ 24 copyrighted works to individual users pursuant to the FMA; 25 15. Such further relief as this Court deems just and appropriate.

26 27 28 -57- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 DATED: September 16, 2016 Respectfully submitted,

2 BLECHER COLLINS & PEPPERMAN, P.C. 3

4 By: /s/ Maxwell M. Blecher 5 Maxwell M. Blecher

6 7 BAKER MARQUART LLP

8 9 By: /s/ Ryan G. Baker Ryan G. Baker 10 11 Attorneys for Defendant and Counterclaimant VidAngel, Inc. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -58- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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1 DEMAND FOR JURY TRIAL 2 VidAngel hereby demands trial by jury pursuant to Rule 38(b) of the Federal 3 Rules of Civil Procedure and Civil Local Rule 38-1. 4 5 DATED: September 16, 2016 Respectfully submitted,

6 BLECHER COLLINS & PEPPERMAN, P.C. 7

8 By: /s/ Maxwell M. Blecher 9 Maxwell M. Blecher 10 BAKER MARQUART LLP 11 12 By: /s/ Ryan G. Baker 13 Ryan G. Baker 14 Attorneys for Defendant and Counterclaimant 15 VidAngel, Inc. 16 17 85973.3 18 19 20 21 22 23 24 25 26 27 28 -59- AMENDED ANSWER, AFFIRMATIVE DEFENSES AND FIRST AMENDED COUNTERCLAIMS

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EXHIBIT D Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 111 of 306 Case 2:16-cv-04109-AB-PLA Document 103 Filed 10/14/16 Page 1 of 36 Page ID #:4171

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON R. BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor 6 Los Angeles, California 90071-1560 Telephone: (213) 683-9100 7 Facsimile: (213) 687-3702

8 Attorneys for Plaintiffs and Counterclaim 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) 15 LUCASFILM LTD. LLC, TWENTIETH CENTURY FOX FILM REDACTED VERSION OF 16 CORPORATION and WARNER DOCUMENT PROPOSED TO BE BROS. ENTERTAINMENT INC., FILED UNDER SEAL 17 Plaintiffs and Counterclaim PLAINTIFFS’ NOTICE OF 18 Defendants, MOTION AND MOTION TO DISMISS VIDANGEL’S FIRST 19 vs. AMENDED COUNTERCLAIMS AND STRIKE VIDANGEL’S 20 VIDANGEL, INC., AFFIRMATIVE DEFENSE OF COPYRIGHT MISUSE; 21 Defendant and Counter- MEMORANDUM OF POINTS AND Claimant. AUTHORITIES IN SUPPORT 22 THEREOF

23 Judge: Hon. André Birotte Jr.. Date: December 19, 2016 24 Time: 10:00 a.m. Crtm.: 4 25 Filed concurrently herewith: 26 (1) Request for Judicial Notice (2) [Proposed] Order

27 28

PLAINTIFFS’ NOTICE OF MOTION AND MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD: 2 PLEASE TAKE NOTICE that on December 19, 2016, at 10:00 a.m., before 3 the Honorable André Birotte Jr. in Courtroom 4 of the United States District Court 4 for the Central District of California, located at 312 North Spring Street, Los 5 Angeles, California 90012, Plaintiffs and Counter-Defendants Disney Enterprises, 6 Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation and Warner 7 Bros. Entertainment Inc. (collectively, “Plaintiffs”) will and hereby do move for an 8 Order (i) dismissing Defendant and Counter-Claimant VidAngel, Inc.’s 9 (“VidAngel”) First Amended Counterclaims (“amended counterclaim” or “FAC”) 10 pursuant to Federal Rule of Civil Procedure 12(b)(6) and the Declaratory Judgment 11 Act, 17 U.S.C. § 2201; and (ii) striking VidAngel’s affirmative defense of copyright 12 misuse pursuant to Federal Rule of Civil Procedure 12(f). This motion is made 13 following the conference of counsel pursuant to Local Rule 7-3 which took place on 14 October 7, 2016. 15 This Motion is made on the following grounds, as further explained in the 16 accompanying Memorandum of Points and Authorities and supporting papers: 17 1. VidAngel fails to plead a plausible Sherman Act Section 1 claim based 18 on any alleged horizontal conspiracy (First Counterclaim). VidAngel’s allegations 19 are conclusory or contrary to matters that the Court may judicially notice or to 20 VidAngel’s own allegations. At most, VidAngel has alleged facts that demonstrate 21 independent, rational business behavior, which does not violate antitrust law. 22 2. VidAngel fails to plead a plausible Sherman Act Section 1 claim based 23 on any alleged vertical conspiracy (also part of the First Counterclaim). VidAngel 24 does not plead, as it must, that any Plaintiff has market power in a relevant market, 25 or that Plaintiffs’ separate agreements harm competition. 26 3. VidAngel fails to plead the required element of antitrust injury, which 27 is required for both its horizontal and vertical conspiracy claims. 28 -1- PLAINTIFFS’ NOTICE OF MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 4. VidAngel fails to plead a claim for intentional interference with 2 prospective economic advantage (Second Counterclaim). Among other defects, 3 VidAngel’s allegations are conclusory; VidAngel fails to plead an independent 4 wrong by Plaintiffs; and VidAngel fails to plead the existence of an economic 5 relationship that was reasonably likely to result in economic advantage to VidAngel. 6 5. VidAngel fails to plead a violation of California’s unfair competition 7 law (“UCL”), Cal. Bus. & Prof. Code §§ 1700 et seq. (Third Counterclaim). 8 6. VidAngel’s declaratory judgment counterclaims (Fourth through 9 Seventh) are duplicative of Plaintiffs’ Digital Millennium Copyright Act (“DMCA”) 10 and copyright infringement claims and VidAngel’s defenses to those claims. The 11 Court should exercise its discretion to dismiss those counterclaims. 12 7. VidAngel’s copyright misuse affirmative defense (VidAngel’s 13 Seventeenth Affirmative Defense, added at the same time VidAngel amended its 14 counterclaim) should be stricken. VidAngel bases this defense on its antitrust 15 counterclaims, and the defense fails along with those claims. 16 This Motion is based upon this Notice of Motion and Motion; the attached 17 Memorandum of Points and Authorities; the Request for Judicial Notice and 18 Exhibits thereto; all documents on file in this action; and such further or 19 additional evidence or argument as may be presented before or at the time of the 20 hearing on this Motion. 21 22 DATED: October 14, 2016 MUNGER, TOLLES & OLSON LLP 23

24 By: 25 /s/ Kelly M. Klaus KELLY M. KLAUS 26 Attorneys for Plaintiffs and Counter-Defendants 27 28 -2- PLAINTIFFS’ NOTICE OF MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF CONTENTS 2 Page 3 MEMORANDUM OF POINTS AND AUTHORITIES ...... 1 4 INTRODUCTION ...... 1 5 FACTUAL BACKGROUND ...... 2 6 A. VidAngel Builds A Business Around Circumventing Access Controls And Infringing Copyrights ...... 2 7 B. VidAngel’s Amended Counterclaim ...... 3 8 ARGUMENT ...... 4 9 I. EACH PLAINTIFF HAS THE RIGHT TO RESTRICT THE 10 DISSEMINATION AND USE OF ITS COPYRIGHTED WORKS ...... 4 11 II. VIDANGEL FAILS TO PLEAD AN ANTITRUST CLAIM ...... 5 12 A. VidAngel Does Not Plausibly Allege A Horizontal Conspiracy...... 6 13 1. The Plain Language Of The DGA Basic Agreement Does Not Prohibit Filtering ...... 7 14 (a) The Plain Language Of The DGA Basic Agreement 15 Is Inconsistent With VidAngel’s Allegations ...... 7 16 (b) VidAngel Does Not Plausibly Allege That The Motion Picture Industry “Understands” And 17 “Enforces” The DGA Basic Agreement To Bar Filtering ...... 9 18 2. VidAngel’s Other Allegations Of A Horizontal Agreement 19 Are Conclusory, Internally Contradictory, And Implausible...... 10 20 3. Rational Independent Business Behavior Does Not State A 21 Section 1 Claim ...... 15 22 B. VidAngel Does Not Plausibly Allege Vertical Conspiracies ...... 16 23 1. VidAngel Has Not Adequately Alleged Market Power In A Relevant Market ...... 17 24 2. VidAngel Has Not Alleged Harm To Competition ...... 18 25 C. VidAngel’s Claims Of Antitrust Injury Fail ...... 19 26 III. VIDANGEL FAILS TO STATE A TORTIOUS INTERFERENCE 27 CLAIM ...... 20 28 IV. VIDANGEL FAILS TO STATE A UCL CLAIM ...... 22 -i- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF CONTENTS (continued) 2 Page 3 V. VIDANGEL’S DECLARATORY RELIEF CLAIMS ARE DUPLICATIVE AND SHOULD BE DISMISSED ...... 23 4 VI. VIDANGEL’S COPYRIGHT MISUSE DEFENSE SHOULD BE 5 STRICKEN ...... 23 6 VII. VIDANGEL SHOULD NOT BE GRANTED LEAVE TO AMEND ...... 24 7 CONCLUSION ...... 25

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -ii- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES 2 Page(s)

3 FEDERAL CASES 4 A&M Records, Inc. v. A.L.W., Ltd., 5 855 F.2d 368 (7th Cir. 1988) ...... 5 6 A&M Records v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) ...... 23 7 8 Abogados v. AT&T, Inc., 223 F.3d 932 (9th Cir. 2000) ...... 20 9 Adaptive Power Sols., LLC v. Hughes Missile Sys. Co., 10 141 F.3d 947 (9th Cir. 1998) ...... 18 11 Adobe Sys. Inc. v. One Stop Micro, Inc., 12 84 F. Supp. 2d 1086 (N.D. Cal. 2000) ...... 4 13 Airs Aromatics, LLC v. Op. Victoria’s Secret Stores Brand Mgmt., 14 744 F.3d 595 (9th Cir. 2014) ...... 24

15 Apple Inc. v. Psystar Corp., 16 658 F.3d 1150 (9th Cir. 2011) ...... 24 17 Ashcroft v. Iqbal, 18 556 U.S. 662 (2009) ...... 16 19 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ...... 6, 7, 15, 16 20 21 Brantley v. NBC Universal Inc., 675 F.3d 1192 (9th Cir. 2012) ...... 6, 17, 18, 19 22 Cal. Expanded Metal Prods. Co. v. ClarkWestern Dietrich Bldg. Sys. 23 LLC, 24 No. CV 12-10791 DDP, 2014 WL 5475214 (C.D. Cal. Oct. 29, 2014) ...... 22 25 26 City of San Jose v. Office of the Comm’r of Baseball, 776 F.3d 686 (9th Cir. 2015) ...... 22, 23 27 Computer Place, Inc. v. Hewlett-Packard Co., 28 607 F. Supp. 822 (N.D. Cal. 1984) ...... 21 -iii- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES (continued) 2 Page(s) 3 CRST Van Expedited, Inc. v. Werner Enters., Inc, 479 F.3d 1099 (9th Cir. 2007) ...... 20, 21 4 5 Dominick v. Collectors Universe, Inc., No. 2:12-CV-04782-ODW, 2012 WL 4513548 (C.D. Cal. Oct. 1, 6 2012) ...... 17 7 Feitelson v. Google Inc., 8 80 F. Supp. 3d 1019, 1028-29 (N.D. Cal. 2015) ...... 20

9 Fox Film Corp. v. Doyal, 10 286 U.S. 123 (1932) ...... 4 11 Freeman v. Lasky, Haas & Cohler, 410 F.3d 1180 (9th Cir. 2005) ...... 19 12 13 In re Gilead Sciences Sec. Litig., 536 F.3d 1049 (9th Cir. 2008) ...... 7 14 Ill. Tool Works v . Indep. Ink, Inc., 15 547 U.S. 28 (2006) ...... 17 16 Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 17 466 U.S. 2 (1984) ...... 17 18 Kendall v. Visa U.S.A., Inc., 19 518 F.3d 1042 (9th Cir. 2008) ...... 6, passim

20 Leegin Creative Leather Prods. Inc. v. PSKS, Inc., 21 551 U.S. 877 (2007) ...... 16 22 LGS Architects, Inc. v. Concordia Homes of Nev., 23 434 F.3d 1150 (9th Cir. 2006) ...... 5 24 LiveUniverse, Inc. v. MySpace, Inc., 304 F. App’x 554 (9th Cir. 2008) ...... 22 25 26 McKenna v. WhisperText, No. 15-CV-00424-PSG, 1015 WL 5264750 (N.D. Cal. 2015) ...... 3 27 MDY Indus., LLC v. Blizzard Entm’t, Inc., 28 629 F.3d 928 (9th Cir. 2010) ...... 23 -iv- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES (continued) 2 Page(s) 3 Metro-Goldwyn-Mayer Distrib. Corp. v. Bijou Theater Co., 59 F.2d 70 (1st Cir. 1932) ...... 4 4 5 Miller v. Yokohama Tire Corp., 358 F.3d 616 (9th Cir. 2004) ...... 24 6 In re Musical Instruments & Equip. Antitrust Litig., 7 798 F.3d 1186 (9th Cir. 2015) ...... 5, 7, 15 8 Newcal Indus., Inc. v. Ikon Office Solution, 9 513 F.3d 1038 (9th Cir. 2008) ...... 17 10 O’Connor v. Uber Tech., Inc., 11 58 F. Supp. 3d 989, 999 (N.D. Cal. 2014) ...... 22

12 Orchard Supply Hardware LLC v. Home Depot USA, Inc., 13 967 F. Supp. 2d 1347 (N.D. Cal. 2013) ...... 18 14 Pac. Bell Tel. Co. v. Linkline Commc’ns, Inc., 15 555 U.S. 438 (2009) ...... 16 16 Pardi v. Kaier Found. Hosp., 389 F.3d 852 (9th Cir. 2004) ...... 21, 22 17 18 Perfect 10, Inc. v. Google, Inc., 653 F.3d 976 (9th Cir. 2011) ...... 5 19 Philips Med. Capital, LLC v. Med. Insights Diagnostics Ctrs., Inc., 20 471 F. Supp. 2d 1035 (N.D. Cal. 2007) ...... 23 21 Pilch v. French Hosp., 22 No. CV 98-9470 CAS(CWX), 2000 WL 33223382 (C.D. Cal. Apr. 23 28, 2000) ...... 17 24 PNY Techs., Inc. v. SanDisk Corp., No. 11-CV-04689-WHO, 2014 WL 1677521 (N.D. Cal. Apr. 25, 25 2014) ...... 9 26 Practice Mgmt. Info. Corp. v. Am. Medial Ass’n, 27 121 F.3d 516 (9th Cir. 1997) ...... 24 28 -v- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES (continued) 2 Page(s) 3 Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (2003) ...... 19 4 5 R.C. Dick Geothermal Corp. v. Thermogenics, Inc., 619 F. Supp. 441 (1985) ...... 17 6 Ralph C. Wilson Indus., Inc. v. American Broadcasting Co., 7 598 F. Supp. 694 (N.D. Cal. 1984) ...... 5, 18 8 Ramirez v. Ghilotti Bros. Inc., 9 941 F. Supp. 2d 1197 (N.D. Cal. 2013) ...... 23 10 Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc., 11 No. 12-CV-05847-WHO, 2013 WL 5694452 (N.D. Cal. 2013) ...... 21

12 S.O.S., Inc. v. Payday, Inc., 13 886 F.2d 1081 (9th Cir. 1989) ...... 4 14 Silicon Knights, Inc. v. Crystal Dynamics, Inc., 15 983 F. Supp. 1303 (N.D. Cal. 1997) ...... 21 16 Stewart v. Abend, 495 U.S. 207 (1990) ...... 4 17 18 Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F.3d 991 (9th Cir. 2008) ...... 19 19 Top Rank, Inc. v. Haymon, 20 No. CV 15-4961-JFW, 2015 WL 9948936 (C.D. Cal. Oct. 16, 2015) ...... 17, 18 21 Watershed Asset Mgmt., L.L.C. v. Watershed Capital, LLC, 22 No. C 13–03852 WHA, 2014 WL 785847 (N.D. Cal. Feb. 25, 2014) ...... 21 23 STATE CASES 24 Berryman v. Merit Prop. Mgmt., 25 152 Cal. App. 4th 1544 (2007) ...... 22

26 Cel–Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 27 20 Cal. 4th 163 (1999) ...... 22 28 -vi- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES (continued) 2 Page(s) 3 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (1999) ...... 20 4 5 Salma v. Capon, 161 Cal. App. 4th 1275 (2008) ...... 21 6 7 FEDERAL STATUTES 8 17 U.S.C. § 110(11) ...... 5

9 STATE STATUTES 10 Cal. Bus. & Prof. Code § 17200 ...... 4, 22 11 FEDERAL RULES 12 Rule 12(f) ...... 23 13 Rule 15(a)(2) ...... 4 14 15 OTHER AUTHORITIES 16 U.S. Dep’t of Justice and the Fed. Trade Comm’n, Antitrust Guidelines for the Licensing of Intellectual Property (1995) § 2.3 ...... 5 17 18 19 20 21 22 23 24 25 26 27 28 -vii- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION 3 VidAngel’s legal theories are as flawed as its “factual” allegations are 4 deficient and misleading. VidAngel mischaracterizes the Family Movie Act 5 (“FMA”), which provides a narrow exception to copyright infringement, as 6 explained in Plaintiffs’ preliminary injunction motion. VidAngel bases its claims on 7 the erroneous assumption that content owners must license their content for 8 streaming and copying to enable filtering. As a matter of law, content owners have 9 the exclusive right to control how and where their content is streamed and copied. 10 VidAngel mischaracterizes documents and takes events out of chronological 11 order in an effort to give the illusion there is some factual basis for its claims. 12 VidAngel tries to weave a conspiracy out of terms in the Directors Guild of America 13 (“DGA”) agreement that predate VidAngel’s existence and that say nothing about 14 filtering. VidAngel’s claims also rest on its misleading theory that Plaintiffs refused 15 to grant VidAngel licenses and interfered with VidAngel’s business relationships, 16 when VidAngel’s own allegations contradict that timeline. VidAngel does not, and 17 cannot, point to a single occasion on which it attempted to license content from 18 Plaintiffs before this lawsuit was initiated. Moreover, VidAngel does not credibly 19 allege that any of the Plaintiffs had even heard of VidAngel until years after the 20 alleged anticompetitive activity. 21 In short, VidAngel has not come close to pleading facts that make its claims 22 plausible. Rather, VidAngel largely relies on legal conclusions and bald assertions. 23 When VidAngel does allege facts, they are conclusory or contradict the few facts 24 that are well-pleaded or matters properly subject to judicial notice. When 25 considered under the applicable pleading standards, each of VidAngel’s causes of 26 action fails to state a claim. 27 From its inception, VidAngel’s counterclaim has been a transparent attempt to 28 divert attention from its blatant violation of Plaintiffs’ rights. VidAngel has -1- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 amended once already in response to Plaintiffs’ original motion to dismiss. Because 2 VidAngel has again failed to state a plausible claim, Plaintiffs respectfully request 3 that the Court dismiss the amended counterclaim with prejudice. 4 FACTUAL BACKGROUND 5 A. VidAngel Builds A Business Around Circumventing Access Controls And Infringing Copyrights 6 7 VidAngel’s counterclaim purports to tell the story of how it evolved into the 8 service that is the subject of Plaintiffs’ complaint. VidAngel originally offered users 9 software filters that manipulated authorized streams made from YouTube and 10 Google Play. VidAngel also developed an application to enable filters to 11 manipulate the playback of content streamed to users’ televisions via Google’s 12 “Chromecast” device. FAC ¶¶ 42-43. VidAngel’s allegations and judicially 13 noticeable admissions explain why this business model failed. First, “slower 14 computers” had difficulty simultaneously processing the authorized video feed and 15 VidAngel’s software filters. Id. ¶ 57. Second, in December 2013, YouTube’s legal 16 department told VidAngel that its service violated YouTube’s terms of use. Id. ¶ 17 47; Harmon Decl. (Dkt. 43) (RJN Ex. 7) Ex. A. Third, in February 2014, Google 18 “removed the technology that made the filtering service possible on native 19 Chromecast.” FAC ¶ 45. 20 Later in 2014, VidAngel pivoted to its current model. Rather than provide 21 filters for users streaming from authorized services, VidAngel decided to stream 22 Plaintiffs’ movies and TV shows directly to its users without seeking the kinds of 23 licenses obtained by other legitimate streaming services. Instead, VidAngel buys 24 copies of DVDs and Blu-ray discs (“Discs”) containing Plaintiffs’ copyrighted 25 works, id. ¶ 58; “remov[es] restrictions on DVD and [Blu-ray] encryption,” i.e., 26 circumvents the access-control measures on the Discs, thereby violating the DMCA, 27 id. ¶ 120(b); copies the content from the Discs to computer servers, thereby 28 infringing Plaintiffs’ exclusive reproduction rights, id. ¶ 120(b), (d); and streams -2- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 performances of that content for a daily fee, infringing Plaintiffs’ exclusive public 2 performance rights, id. ¶¶ 67-68. 3 VidAngel admits that a service does not have to operate unlawfully to provide 4 filters: VidAngel alleges that another company, ClearPlay, offers DVD players that 5 allow subscribers to filter the content of DVDs that they have lawfully obtained. Id. 6 ¶ 56. And, as VidAngel pointed out in its original counterclaim, ClearPlay also 7 provides filters that run on top of authorized streams from Google Play. 8 CounterCompl. (Dkt. 11) ¶ 34.1 9 B. VidAngel’s Amended Counterclaim 10 Plaintiffs filed suit on June 9, challenging VidAngel’s circumvention of the 11 access controls on Plaintiffs’ Discs and its unauthorized copying and streaming of 12 Plaintiffs’ works—not filtering. Compl. ¶ 7. Plaintiffs also are not challenging the 13 FMA. 14 VidAngel answered and counterclaimed on July 12. VidAngel’s original 15 counterclaim alleged many of the same causes of action that are in the current 16 counterclaim. VidAngel did not originally assert a defense of copyright misuse. 17 During pre-motion meet-and-confers, Plaintiffs repeatedly explained the numerous 18 deficiencies in VidAngel’s counterclaim and urged VidAngel to amend its 19 counterclaim rather than force Plaintiffs to file a potentially unnecessary motion. 20 VidAngel did not amend before the then-existing motion deadline, and so 21 Plaintiffs on August 26 filed a motion to dismiss. Dkt. 35. On September 16, the 22 day its opposition was due, VidAngel filed its amended counterclaim. Dkt. 77. 23 1 24 VidAngel deleted its original allegation that ClearPlay offers filters to support streaming, likely because VidAngel realized this fact undermines its claim that 25 Plaintiffs’ lawsuit “threatens to effectively extinguish” the market for online 26 streaming services. FAC ¶ 98. The Court, however, can consider VidAngel’s “prior allegations” in determining “whether an amended complaint plausibly suggests an 27 entitlement to relief.” McKenna v. WhisperText, No. 15-CV-00424-PSG, 1015 WL 28 5264750, at *3 (N.D. Cal. 2015) (quotation omitted). -3- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 VidAngel also substantively amended its answer, including by adding an affirmative 2 defense based on copyright misuse. VidAngel amended its answer without the leave 3 of Court or Plaintiffs’ consent that by Rule 15(a)(2) requires. 4 VidAngel’s first claim alleges that Plaintiffs violated Section 1 of the 5 Sherman Act. FAC ¶¶ 80-101. Its second claim alleges tortious interference. Id. 6 ¶¶ 102-109. Its third claim alleges unfair competition in violation of the UCL, Cal. 7 Bus. & Prof. Code § 17200. Id. ¶¶ 110-118. Its fourth through seventh claims seek 8 judicial declarations that VidAngel operates a lawful service. Id. ¶¶ 119-134. All of 9 its claims are deficient. 10 ARGUMENT 11 I. EACH PLAINTIFF HAS THE RIGHT TO RESTRICT THE DISSEMINATION AND USE OF ITS COPYRIGHTED WORKS 12 13 Despite the fact that VidAngel never sought a license until after this litigation 14 was filed, VidAngel’s counterclaim is based on the unsupported premise that each 15 Plaintiff is required to license the rights to copy and stream its content for use with a 16 filtering service. For nearly a century, however, the law has been clear that owners 17 of intellectual property rights may control whether and how others may use their 18 intellectual property. See Stewart v. Abend, 495 U.S. 207, 228-29 (1990) (citing 19 Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932)); S.O.S., Inc. v. Payday, Inc., 20 886 F.2d 1081, 1087-89 (9th Cir. 1989). 21 In particular, a copyright owner has the right to restrict how third-party 22 licensees disseminate its content. Among other things, the copyright owner may 23 restrict the persons to whom the licensee may distribute copies of the work (e.g., 24 only to educational end users but not others, see Adobe Sys. Inc. v. One Stop Micro, 25 Inc., 84 F. Supp. 2d 1086, 1093 (N.D. Cal. 2000)); when the licensee may publicly 26 perform a work (e.g., on certain dates but not others, see Metro-Goldwyn-Mayer 27 Distrib. Corp. v. Bijou Theater Co., 59 F.2d 70, 77 (1st Cir. 1932)); or how the 28 licensee may use a work (e.g., to be incorporated into certain works but not others, -4- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 see LGS Architects, Inc. v. Concordia Homes of Nev., 434 F.3d 1150, 1156-57 (9th 2 Cir. 2006), overruled on other grounds by Perfect 10, Inc. v. Google, Inc., 653 F.3d 3 976, 979 (9th Cir. 2011)). 4 Section 1 of the Sherman Act prohibits unlawful agreements to restrain trade; 5 it does not abridge a copyright owner’s right to decide to whom and for what 6 purposes it will license its works. See A&M Records, Inc. v. A.L.W., Ltd., 855 F.2d 7 368, 372 (7th Cir. 1988) (no antitrust violation for refusal to rent copyrighted 8 records); see also Ralph C. Wilson Indus., Inc. v. American Broadcasting Co., 598 9 F. Supp. 694 (N.D. Cal. 1984) (rejecting Section 1 claim based on exclusive 10 licensing of TV programs). Indeed, the federal antitrust guidelines for intellectual 11 property recognize that “limitations on intellectual property licenses may serve 12 procompetitive ends by allowing the licensor to exploit its property as efficiently 13 and effectively as possible.” U.S. Dep’t of Justice and the Fed. Trade Comm’n, 14 Antitrust Guidelines for the Licensing of Intellectual Property (1995) § 2.3. 15 The FMA, 17 U.S.C. § 110(11), does not alter Plaintiffs’ right to choose to 16 whom they license their content or for what purposes. The FMA states only that the 17 act of “making imperceptible” (i.e., filtering) limited portions of content during 18 playback from an authorized copy of a movie, or providing technology to enable 19 such filtering, does not itself infringe copyright. See id. The FMA does not impose 20 any obligation on content owners to permit the circumvention of access controls on 21 Discs or license the copying or public performance of their content to allow 22 filtering. 23 II. VIDANGEL FAILS TO PLEAD AN ANTITRUST CLAIM 24 To state a Sherman Act Section 1 claim, VidAngel must plead facts that if 25 proved would make it plausible that Plaintiffs were parties to [1] an “agreement[] 26 [2] that unreasonably restrain[s] trade.” In re Musical Instruments & Equip. 27 Antitrust Litig., 798 F.3d 1186, 1192 (9th Cir. 2015). VidAngel also must plausibly 28 allege antitrust injury, which is “injury of the type the antitrust laws were intended -5- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 to prevent and that flows from that which makes defendants’ acts unlawful.” 2 Brantley v. NBC Universal Inc., 675 F.3d 1192, 1200 (9th Cir. 2012) (quotation 3 omitted). 4 VidAngel alleges two different types of agreements that restrain trade. First, 5 VidAngel alleges that Plaintiffs are parties to horizontal agreements among 6 themselves and unnamed other studios to block VidAngel and others from 7 participating in an alleged market for online filtering. Second, VidAngel alleges 8 that each Plaintiff is party to vertical agreements with largely unnamed streaming 9 licensees that prohibit those licensees from doing business with VidAngel. 10 VidAngel’s claim based on each type of agreement fails for multiple reasons. See 11 Sections A & B, infra. VidAngel’s allegations of antitrust injury fail for being 12 conclusory and barred by the Noerr-Pennington doctrine. See Section C, infra. 13 A. VidAngel Does Not Plausibly Allege A Horizontal Conspiracy 14 To plead any conspiracy (horizontal or vertical), VidAngel must allege that 15 Plaintiffs agreed (either among themselves, with their competitors, or with their 16 licensees) to engage in conduct that violates the antitrust laws. VidAngel must 17 allege facts that “cross[]” the line “between the factually neutral and the factually 18 suggestive” in order “to enter the realm of plausible liability.” Bell Atlantic Corp. v. 19 Twombly, 550 U.S. 544, 557 n.5 (2007). It must plead facts, not conclusory 20 assertions, about the “specific time, place, or person involved in the alleged 21 conspirac[y].” Id. at 565 n.l0. “A bare allegation of a conspiracy is almost 22 impossible to defend against, particularly where the defendants are large institutions 23 with hundreds of employees entering into contracts and agreements daily.” Kendall 24 v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008). VidAngel must therefore 25 “answer the basic questions: who, did what, to whom (or with whom), where, and 26 when?” Id. at 1048. 27 VidAngel must also allege more than that each Plaintiff supposedly took 28 similar actions. “[M]ere allegations of parallel conduct—even consciously parallel -6- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 conduct—are insufficient to state a claim under § 1.” In re Musical Instruments & 2 Equip. Antitrust Litig., 798 F.3d at 1193; Twombly, 550 U.S. at 556 (“an allegation 3 of parallel conduct and a bare assertion of conspiracy will not suffice” to survive a 4 motion to dismiss). VidAngel cannot simply allege facts that “could just as easily 5 suggest rational, legal business behavior by the [Plaintiffs] as they could suggest an 6 illegal conspiracy.” Kendall, 518 F.3d at 1049. 7 VidAngel alleges a purported horizontal conspiracy flowing from the DGA 8 Basic Agreement and extending through to Plaintiffs’ purported pressure on their 9 streaming service licensees to boycott VidAngel. None of VidAngel’s allegations, 10 alone or in combination, plausibly allege a conspiracy. 11 1. The Plain Language Of The DGA Basic Agreement Does Not Prohibit Filtering 12 (a) The Plain Language Of The DGA Basic Agreement Is 13 Inconsistent With VidAngel’s Allegations 14 VidAngel’s overarching claim is that [1] all Plaintiffs are parties to an 15 agreement with the Directors Guild of America (“DGA”) (the “Alliance of Motion 16 Picture Television Producers and Directors Guild of America, Inc. Basic Agreement 17 of 2014” or “DGA Basic Agreement”), [2] that agreement “prohibit[s] all filtering,” 18 and [3] in furtherance of the claimed conspiracy, Plaintiffs have pursued a group 19 boycott of VidAngel. FAC ¶ 24. The problem for VidAngel is that the DGA Basic 20 Agreement does not say what VidAngel claims it says.2 It is the agreement’s actual 21 terms, and not VidAngel’s characterization of those terms, that control. In re Gilead 22 Sciences Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Those terms undermine 23 VidAngel’s claim. 24 VidAngel alleges that Section 7-509 of the DGA Basic Agreement “prohibits 25 any alteration of a motion picture . . . without the involvement, consultation or final

26 2 The DGA Basic Agreement is publicly available, and the Court may notice it on 27 this motion. See RJN Ex. 1 (DGA Basic Agreement, available at 28 https://www.dga.org/contracts/agreements.aspx). -7- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 approval of the director.” FAC ¶ 23 (emphasis VidAngel’s). But nothing in Section 2 7-509, or any other provision of the DGA, says that. See RJN Ex. 1 § 7-509. The 3 DGA Basic Agreement simply gives directors a consultation right with respect to 4 editing and does nothing to limit studios’ ability to license content to filtering 5 services. Specifically, Section 7-509 says that the director must be consulted with 6 regarding, or allowed to participate in, the editing of motion pictures in certain 7 circumstances, which vary based on how the motion picture will be aired (on 8 network television, on airplaines, etc.). Section 7-509(g) discusses the director’s 9 right to participate in editing for basic cable and “New Media,” which includes 10 streaming services. See id; DGA Basic Agreement Side Letter 15 (RJN Ex. 3). 11 That section states that if a producer uses “its own facilities in the United States” to 12 re-edit a theatrical motion picture for distribution via basic cable or new media, the 13 director has the right to participate in the editing process of the English language 14 version. RJN Ex. 1 § 7-509(g). 15 Nothing in these provisions “prohibit[s] the studios from entering into 16 distribution agreements that allow secondary editing or filtering.” FAC ¶ 22. The 17 DGA Basic Agreement, like most collective bargaining agreements, is negotiated at 18 regular intervals (generally every three years), and provisions in the current 19 agreement may go back decades. That is true of the provisions in the 2014 version 20 of Section 7-509, which have existed in the same material form since 1978— 21 decades before the advent of movie filters, the FMA, or VidAngel. RJN Ex. 2. 22 Unsurprisingly, the provisions do not speak about filtering at all. The provisions 23 speak to the circumstances in which the directors must be allowed to participate in 24 editing movies. Thus, while VidAngel says that the DGA Basic Agreement 25 generally forbids editing of movies, FAC ¶ 22, in fact, the agreement specifically 26 contemplates the editing of movies. See RJN Ex. 1 § 7-509. The DGA Basic 27 Agreement simply does not speak to filtering, much less prohibit it. 28 -8- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 (b) VidAngel Does Not Plausibly Allege That The Motion Picture Industry “Understands” And “Enforces” The 2 DGA Basic Agreement To Bar Filtering 3 VidAngel tries to plead around the plain language by alleging that the DGA 4 Basic Agreement “is understood and enforced” to prohibit any studio from doing 5 business with a filtering service. FAC ¶ 24. VidAngel’s unsupported allegations 6 are not plausible in light of the Agreement’s plain language, which does not speak 7 to, much less prohibit, filtering. See PNY Techs., Inc. v. SanDisk Corp., No. 11-CV- 8 04689-WHO, 2014 WL 1677521, at *6-8 (N.D. Cal. Apr. 25, 2014) (rejecting “bare 9 assertions” of a “de facto exclusive dealing” arrangement that “reach[e]d beyond the 10 express terms” of the contracts at issue). 11 First, VidAngel alleges that, “when VidAngel approached the studios to 12 obtain licensing to stream filtered movies”—when this happened and which 13 “studios” it allegedly approached, VidAngel does not say—one studio, Lionsgate, 14 said that VidAngel first would have to “g[e]t permission from the DGA.” FAC 15 ¶ 24. Lionsgate, of course, is not a Plaintiff. VidAngel pleads no facts showing that 16 Plaintiffs have that same understanding. 17 Second, VidAngel alleges that the DGA Basic Agreement’s purported bar on 18 filtering “trickles down” to Plaintiffs’ “rights” agreements with directors, and then 19 to licenses with streaming services. Id. ¶ 30. VidAngel supports this contention 20 with quotations from documents that VidAngel and its counsel know were stolen 21 during a criminal cyber-attack on a non-party studio, Sony Pictures. Id. ¶¶ 28-29. 22 One quotation—which VidAngel says is from unspecified “deal[s] for the rights to” 23 two specific Sony movies—says nothing about filtering and nothing about Sony’s 24 agreements with licensees. Id. ¶ 29. The other quotation—allegedly from a Sony 25 streaming license—merely provides that while the licensee has the right to stream 26 Sony’s movies, it does not have the right to edit those movies without Sony’s 27 consent; nothing about filtering. There is nothing nefarious about a copyright owner 28 forbidding licensees from making derivative works of its copyrighted content. -9- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 Moreover, nothing in the quoted language regulates the circumstances of director 2 participation in movie editing that is the subject of DGA Basic Agreement Section 3 7-509. 4 Third, VidAngel alleges that because an unidentified “distributor” that is not 5 party to the DGA Basic Agreement purportedly licensed VidAngel, conversely, 6 anyone who is a party to the DGA Basic Agreement must know that it bars filtering. 7 FAC ¶ 24. This is wholly circular and conclusory. Moreover, VidAngel does not 8 allege anything about what the distributor said about the deal, what the terms of the 9 deal were or even who the distributor is. VidAngel may have signed a deal with an 10 unidentified entity that was supposedly not a party to the DGA Basic Agreement, 11 but that hardly means that anyone who did not sign such a deal must have been 12 barred from doing so by the DGA Basic Agreement. 13 Fourth, VidAngel alleges that a Google representative purportedly “informed” 14 it in December 2015 that Google was concerned that “directors” would be 15 “blocker[s]” to any VidAngel-Google deal, and that this concern purportedly 16 “ended” the VidAngel-Google “negotiations.” Id. This allegation is contradicted by 17 the communication from the Google representative: that email shows that Mr. 18 Fleming was addressing VidAngel’s concerns, not raising Google’s; the email is 19 from December 2014, not 2015; and neither the email nor any concern “ended” 20 VidAngel’s negotiations with Google, which by VidAngel’s own allegation 21 continued at least until March 2015. RJN Ex. 4; FAC ¶ 52 22 In sum, none of VidAngel’s allegations makes it plausible to believe that 23 Plaintiffs “understood and enforced” the DGA Basic Agreement to prohibit filtering, 24 especially when the agreement, on its face, does no such thing. 25 2. VidAngel’s Other Allegations Of A Horizontal Agreement Are Conclusory, Internally Contradictory, And Implausible 26 27 VidAngel’s additional allegations purporting to show that Plaintiffs and other 28 unnamed “studios” acted in furtherance of an alleged conspiracy to boycott and -10- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 harm VidAngel, like those concerning the DGA Basic Agreement, are conclusory 2 and wholly implausible. 3 VidAngel’s allegations in this category are spread out across various sections 4 of the counterclaim, and VidAngel, by design, does not clearly spell out the timeline 5 of relevant events.3 VidAngel’s own allegations and judicially noticeable 6 documents make the chronology quite clear: 7 Date Alleged Events 8 Oct.-Nov. VidAngel is formed; it provides software allowing users to (1) filter 9 2013: content streamed over YouTube or Google Play, and (2) filter content 10 streamed to user’s TVs by way of Google’s Chromecast device. FAC 11 ¶¶ 39, 42-44. 12 Feb. 2014: Google removes technical features for Chromecast that VidAngel 13 claims were required for its filters to work on Chromecast streams. 14 Id. ¶ 45. 15 July 2014: Effective Date of the 2014 version of the DGA Basic Agreement. 16 Dec. 2014: Mark Fleming of Google contacts VidAngel about a potential deal. 17 Mr. Fleming and Neal Harmon, VidAngel’s CEO, have one meeting 18 and exchange e-mails (including the email discussed supra, at 10). 19 FAC ¶¶ 50-51. 20 Jan. 2015: VidAngel beta tests its current service. CounterCompl. Ex. A; FAC 21 ¶ 70. 22 Mar. 2015: Mr. Fleming tells VidAngel about a meeting with Sony Pictures; no 23 further VidAngel-Google negotiations after March 2015. Id. ¶ 52. 24 25

26 3 Similarly, VidAngel omits highly relevant dates, such as the date VidAngel itself 27 purportedly asked Plaintiffs for streaming licenses, see FAC ¶¶ 40, 75, which 28 occurred after this suit was filed. -11- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 July 2015: Mr. Quinto writes Plaintiffs and others about VidAngel’s “proposed 2 streaming service” and asks to discuss directly buying Discs. 3 CounterCompl. Ex. A; FAC ¶ 70. VidAngel points to no facts 4 showing that Plaintffs knew of VidAngel’s existence before this. 5 June 2016: Plaintiffs file this litigation. 6 Aug. 2016: VidAngel asks Plaintiffs to engage in improper joint licensing 7 discussions; Plaintiffs refuse. Quinto Decl. (Dkt. 46) (RJN Ex. 6) Ex. 8 A; Harmon Decl. ¶¶ 57-59. VidAngel does not allege ever asking 9 Plaintiffs for a license before this. 10 11 The actual chronology illuminates the implausibility of VidAngel’s allegations. 12 Google’s termination of technical support for VidAngel’s filters for 13 Chromecast. VidAngel insists that Plaintiffs and other studios forced Google to 14 terminate technical support for VidAngel’s original filtering service in early 2014. 15 To make this allegation appear plausible, VidAngel states that it tried to work with 16 the Chromecast device “because of” Plaintiffs’ refusal to license VidAngel or sell it 17 Discs. FAC ¶ 42; see also id. ¶¶ 40-42 (alleging that requesting licenses and trying 18 to buy Discs were the first two of VidAngel’s “early business models,” and that 19 VidAngel’s filters for streams with the Chromecast device were “Method 3”). By 20 presenting the facts in this way, VidAngel implies that Plaintiffs (and others), 21 having rebuffed VidAngel’s outreach, then forced Google to block technological 22 support for VidAngel’s filters on Chromecast streams. As discussed above, 23 however, this chronology is contradicted by VidAngel’s own allegations and 24 judicially noticeable documents: VidAngel did not ask (and does not allege that it 25 asked) either for a streaming license or to buy DVDs from Plaintiffs until after it 26 had adopted and abandoned its Chromecast model. FAC ¶ 70; CounterCompl. Exs. 27 A-B; Quinto Decl. Ex. A; Harmon Decl. ¶¶ 8-9, 14-22, 57-59. Hence, VidAngel’s 28 problems with Chromecast long predated any alleged outreach to Plaintiffs. -12- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 VidAngel’s allegations that Plaintiffs interfered with VidAngel’s Chromecast 2 filters also are conclusory and lack the specificity required to satisfy the pleading 3 standard. VidAngel does not allege who “induced and persuaded” Google, FAC ¶ 4 46, when they did so or how. See Kendall, 518 F.3d at 1048. 5 Unsuccessful negotiations with Google Play. VidAngel also alleges that, 6 around March 2015, the studios colluded to block a new deal between it and Google 7 Play. VidAngel restates its allegations regarding its late 2014 discussions with Mr. 8 Fleming of Google. FAC ¶¶ 50-51. VidAngel then alleges that in March 2015, Mr. 9 Fleming told VidAngel that Google had “met with” unnamed Sony Pictures 10 executives, and that “Sony and the rest of the MPAA member studios refused” to 11 allow Google to work with VidAngel; and after March 2015, Google “ceased” 12 negotiations. Id. ¶¶ 50-52. These allegations fail to demonstrate that any Plaintiff 13 sought to block VidAngel from working with Google, let alone that Plaintiffs as a 14 group undermined a potential agreement. 15 First, the allegations are conclusory. VidAngel does not allege that Mr. 16 Fleming ever spoke with any Plaintiff, let alone which individuals were involved, or 17 what any Plaintiff said that constituted a “refus[al].” VidAngel’s allegations should 18 be disregarded on that basis alone.4 See Kendall, 518 F.3d at 1048. 19 Second, judicially noticeable documents contradict the allegations. Mr. 20 Fleming’s December 2014 e-mail did not “express[] concern . . . that the studios’ 21 agreements with the directors prohibited filtering.” FAC ¶ 51. Rather, Mr. Fleming 22 addressed VidAngel’s concerns about Google’s and licensing 23 agreements by noting that 24 25 4 26 Further, as explained in Subsection 3, infra, even if VidAngel has adequately alleged that each Plaintiff “refused” to allow Google to partner with VidAngel, it 27 has not alleged any facts suggesting that they did so pursuant to an agreement, as 28 opposed to because doing so was in each Plaintiff’s individual business interest. -13- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 2 3 4 5 RJN Ex. 4.5 Nothing in that e-mail supports any 6 inference that any Plaintiff, let alone Plaintiffs collectively, sought to block the deal 7 between VidAngel and Google. 8 Other streaming services. VidAngel alleges—without any supporting facts— 9 that “studios” “induced and persuaded” “Netflix, Amazon, and Hulu” not “to 10 support VidAngel[].” FAC ¶ 47. This allegation is even more conclusory than 11 VidAngel’s allegations with respect to Google. It does not allege when such 12 persuasion occurred, who was involved, or why Netflix, Amazon or Hulu would 13 agree. Nor does VidAngel allege what kind of “support” it wanted from Netflix, 14 Amazon and Hulu, or whether it ever actually sought such “support.” 15 Refusal to negotiate a joint license. VidAngel also purports to find evidence 16 of a conspiracy in Plaintiffs’ refusal to engage in joint licensing discussions in 17 response to Mr. Quinto’s August 29, 2016 email, sent well after this action had been 18 filed. FAC ¶ 40; Quinto Decl. Ex. A; Harmon Decl. ¶¶ 57-59. The timing and 19 circumstances of that “offer” and Plaintiffs’ response do not justify any inference of

20 21 5 Similarly, VidAngel’s allegations about what Mr. Fleming told VidAngel in March 22 2015 are contradicted by Mr. Harmon’s near contemporaneous account of that conversation. In a March 11, 2015 email to his brother Jeffrey, Mr. Harmon said 23 that Mr. Fleming told him that 24 25 26 Id. Mr. Harmon’s account of what Mr. Fleming told him does not say anything about 27 any studio—much less any Plaintiff in this case—refusing to permit Google to work 28 with VidAngel. -14- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 a conspiracy. Mr. Quinto’s email (like his prior letter) was sent for purposes of 2 litigation and should be considered in that light. If Plaintiffs (which are 3 competitors) had engaged in joint licensing discussions, VidAngel undoubtedly 4 would be pointing to those discussions as evidence of collusion. Because Plaintiffs 5 refused to take the bait, VidAngel instead argues that Plaintiffs have agreed 6 collectively that none will grant VidAngel a license. 7 3. Rational Independent Business Behavior Does Not State A Section 1 Claim 8 9 VidAngel’s antitrust claim boils down to the allegation that because no major 10 motion picture studio has granted VidAngel a streaming license—a license it asked 11 Plaintiffs to discuss only after it had been sued for engaging in the illegal ripping of 12 DVDs, and copying and streaming of Plaintiffs’ work—and because Google decided 13 not to work with VidAngel, a conspiracy must be at work. VidAngel’s claims, 14 however, allege, at most, parallel conduct, which is insufficient to state a Section 1 15 claim. See, e.g., FAC ¶ 40 (alleged refusal to license); id. ¶ 41 (alleged refusal to 16 purchase DVDs); Twombly, 550 U.S. at 556. 17 Courts in the Ninth Circuit have “distinguished permissible parallel conduct 18 from impermissible conspiracy by looking for certain ‘plus factors.’” In re Musical 19 Instruments & Equip. Antitrust Litig., 798 F.3d at 1194. VidAngel alleges that 20 Plaintiffs acted “contrary to their best business interests” by not licensing VidAngel 21 “because such an agreement would be profitable for the studios.” FAC ¶¶ 40-41, 22 54. But the record on this motion shows the “rational, legal business” reasons why 23 each Plaintiff, unilaterally, would (1) not license VidAngel and (2) bar its own 24 downstream licensees from editing movies without each Plaintiff’s consent. See 25 Kendall, 518 F.3d at 1049. 26 First, VidAngel alleges that each Plaintiff, and the directors who are 27 important to each Plaintiff’s business of making movies, object to the filtering of 28 -15- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 their content. See, e.g., FAC ¶ 20. Therefore, each Plaintiff would be independently 2 motivated not to allow their movies to be filtered. 3 Second, VidAngel itself contends that “the studios have economic . . . 4 motives” not to sell Discs to VidAngel because, unlike authorized licensees, 5 VidAngel does not pay Plaintiffs each time VidAngel streams a movie from a copy 6 ripped from a single Disc. Id. ¶ 77. 7 Third, VidAngel asked Plaintiffs collectively to negotiate a streaming license, 8 and did so only after this lawsuit was filed, in a transparent attempt to set up its 9 antitrust claims. See Quinto Decl. Ex. A. VidAngel’s illegal practice of ripping 10 Plaintiffs’ Discs and deliberately engaging in widespread infringement before 11 coming to Plaintiffs provides ample reason for Plaintiffs to refuse to negotiate with 12 VidAngel—let alone negotiate collectively. Moreover, VidAngel does not allege the 13 terms on which it made its request, defeating an inference that a license would have 14 been economically beneficial for Plaintiffs. Id. ¶ 40. 15 In short, every supposed action that Plaintiffs took is at least consistent with, 16 and “more likely explained by, lawful, unchoreographed free-market behavior” than 17 an antitrust conspiracy. Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009) (citing 18 Twombly, 550 U.S. at 567). 19 B. VidAngel Does Not Plausibly Allege Vertical Conspiracies 20 VidAngel also alleges that each Plaintiff’s license agreements with its 21 licensees violates antitrust law. Generally, “businesses are free to choose the parties 22 with whom they will deal, as well as the prices, terms, and conditions of that 23 dealing.” Pac. Bell Tel. Co. v. Linkline Commc’ns, Inc., 555 U.S. 438, 448 (2009). 24 Thus, non-price, vertical restraints—like the agreements between each Plaintiff and 25 its licensees—are analyzed under the rule of reason. Leegin Creative Leather 26 Prods. Inc. v. PSKS, Inc., 551 U.S. 877, 901 (2007). Under the rule of reason, 27 VidAngel must allege “(1) a contract, combination or conspiracy among two or 28 more persons or distinct business entities; (2) by which the persons or entities -16- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 intended to harm or restrain trade or commerce among the several States, or with 2 foreign nations; (3) which actually injures competition.” Brantley, 675 F.3d at 1197 3 (quotations omitted). VidAngel must also allege that each Plaintiff has “market 4 power within a ‘relevant market.’” Newcal Indus., Inc. v. Ikon Office Solution, 513 5 F.3d 1038, 1044 (9th Cir. 2008); accord Dominick v. Collectors Universe, Inc., No. 6 2:12-CV-04782-ODW (CWx), 2012 WL 4513548, at *5-7 (C.D. Cal. Oct. 1, 2012). 7 VidAngel fails to allege (1) that any Plaintiff has market power or (2) that any 8 alleged agreement injured competition. 9 1. VidAngel Has Not Adequately Alleged Market Power In A Relevant Market 10 11 Market power is “the ability to force a purchaser to do something that he 12 would not do in a competitive market.” Dominick, 2012 WL 4513548, at *6-7 13 (quotation omitted). Market power can be alleged through either plausible 14 allegations that any Plaintiff owns a “dominant share” of the relevant market, or 15 allegations of “direct evidence of the injurious exercise of market power.” Top 16 Rank, Inc. v. Haymon, No. CV 15-4961-JFW (MRWx), 2015 WL 9948936, at *7 17 (C.D. Cal. Oct. 16, 2015) (dismissing claims for failure to allege market power) 18 (quotation omitted). 19 VidAngel has pled neither. First, VidAngel alleges that each Plaintiff has a 20 market share that is insufficient as a matter of law to confer market power. FAC 21 ¶ 85 (14.1% (Fox), 16.5% (WB) and 26.2% (Disney)); see Jefferson Parish Hosp. 22 Dist. No. 2 v. Hyde, 466 U.S. 2, 26 & n.43 (1984) (30 percent market share 23 insufficient), overruled on other grounds by Ill. Tool Works v . Indep. Ink, Inc., 547 24 U.S. 28 (2006); Pilch v. French Hosp., No. CV 98-9470 CAS(CWX), 2000 WL 25 33223382, at *7 (C.D. Cal. Apr. 28, 2000) (33.2 percent market insufficient). And 26 in the absence of a horizontal agreement, VidAngel may not rely on Plaintiffs’ 27 collective market shares. See, e.g., R.C. Dick Geothermal Corp. v. Thermogenics, 28 Inc., 619 F. Supp. 441, 451 n.8 (1985) (refusing to aggregate market share in the -17- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 absence of an agreement); Ralph C. Wilson Indus., Inc. 598 F. Supp. 694 at 704 n.10 2 (same); see also Orchard Supply Hardware LLC v. Home Depot USA, Inc., 967 F. 3 Supp. 2d 1347, 1362 (N.D. Cal. 2013) (similar for harm to competition). Second, 4 VidAngel has not even tried to plausibly allege “direct evidence of the injurious 5 exercise of market power” by any Plaintiff. See Top Rank, 2015 WL 9948936, at *8 6 (citation and quotation omitted). 7 VidAngel’s failure to allege market power is unsurprising: It is implausible 8 that any Plaintiff could control all other producers and distributors of motion 9 pictures or the supply or terms of motion picture licensing. Indeed, VidAngel’s own 10 pleading makes clear that, even collectively, Plaintiffs do not control the terms of 11 motion picture licensing: For example, VidAngel alleges that it has entered into a 12 licensing agreement with a distributor in Utah. FAC ¶ 24. 13 2. VidAngel Has Not Alleged Harm To Competition 14 VidAngel’s vertical antitrust claims must also be dismissed because it has not 15 alleged that any Plaintiff’s agreements injure competition. See Adaptive Power 16 Sols., LLC v. Hughes Missile Sys. Co., 141 F.3d 947, 951 (9th Cir. 1998) (an 17 antitrust plaintiff “must not only establish that the defendants had market power,” 18 but also that the allegedly anticompetitive conduct “injured competition”). 19 VidAngel asserts that “competition and output in the relevant filtering market has 20 been substantially and reasonably [sic] restricted, lessened, foreclosed and 21 eliminated.” FAC ¶ 97. But VidAngel cannot “merely recite the bare legal 22 conclusion that competition has been restrained,” Brantley, 675 F.3d at 1198; it 23 must allege facts that would suggest that each Plaintiff’s non-exclusive, vertical 24 agreements with its licensees, which in no way bind any other Plaintiff or licensee, 25 could plausibly injure competition. It cannot do so. 26 The Ninth Circuit has made clear that non-exclusive vertical licensing 27 agreements, even when adopted industrywide, do not injure competition when no 28 particular entity’s agreements prevent any other entity from licensing in a different -18- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 way if doing so would be competitively advantageous. See id. at 1204 (no injury to 2 competition where multiple television programmers required distributors to sell the 3 programmers’ television channels only as part of a package where there was no 4 “allegation that any programmer’s decision to offer its channels only in packages 5 constrained other programmers from offering their channels individually”). It also 6 is clear under Ninth Circuit law that VidAngel may not show injury to competition 7 based on injury to itself. See, e.g., FAC ¶¶ 97-98; Brantley, 675 F.3d at 1200, 1202. 8 C. VidAngel’s Claims Of Antitrust Injury Fail 9 As noted, VidAngel also must allege antitrust injury to support its claim. 10 Brantley, 675 F.3d at 1200. VidAngel alleges two types of antitrust injury, neither 11 of which can survive this motion. 12 First, VidAngel alleges antitrust injury from Plaintiffs’ alleged attempts to bar 13 VidAngel’s “buy-sellback” service. FAC ¶¶ 94-96. Plaintiffs have tried to prevent 14 VidAngel from operating its illegal business only by filing suit.6 All of this arises 15 out of Plaintiffs’ litigation. Under the Noerr-Pennington doctrine, VidAngel cannot 16 seek to hold Plaintiffs liable for their litigation, which is constitutionally protected 17 petitioning activity. Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F.3d 991, 18 1006 (9th Cir. 2008). 19 Litigation is excepted from Noerr-Pennington only if it is “sham.” Freeman 20 v. Lasky, Haas & Cohler, 410 F.3d 1180, 1183 (9th Cir. 2005). Litigation is sham 21 only if it is both objectively and subjectively baseless. Prof’l Real Estate Investors, 22 Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61 (2003). Litigation is 23 objectively baseless only if “no reasonable litigant could realistically expect success 24 on the merits.” Id. at 60. As the preliminary injunction motion demonstrates, 25 Plaintiffs’ claims are hardly baseless; they are overwhelmingly likely to succeed on 26

27 6 VidAngel has pointed to “buy-sellback” to support its defense, and Plaintiffs have 28 demonstrated that “buy-sellback” is fiction and of no effect as a defense. -19- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 the merits. Because Plaintiffs’ lawsuit is not sham, it cannot be the basis for 2 VidAngel’s claim of antitrust injury. 3 Second, VidAngel alleges antitrust injury from supposed lost “profits and 4 profit opportunities” when Google Play stopped discussions with VidAngel. FAC 5 ¶¶ 98-100. VidAngel has not plausibly alleged that any Plaintiff did anything to 6 prevent it from entering an agreement with Google Play. Any allegations of lost 7 profits are speculative and conclusory and do not flow from any injury to 8 competition—only to VidAngel. VidAngel thus has failed to show antitrust 9 injury—an independent ground for dismissal. See, e.g., Feitelson v. Google Inc., 80 10 F. Supp. 3d 1019, 1028-29 (N.D. Cal. 2015) (claims that reduced innovation and 11 choice constituted antitrust injury rejected as “too conclusory and speculative”). 12 III. VIDANGEL FAILS TO STATE A TORTIOUS INTERFERENCE CLAIM 13 14 To state a claim for intentional interference with prospective economic 15 advantage, VidAngel must allege “(1) an economic relationship between the 16 plaintiff and some third party, with the probability of future economic benefit to the 17 plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on 18 the part of the defendant designed to disrupt the relationship; (4) actual disruption of 19 the relationship; and (5) economic harm to the plaintiff proximately caused by the 20 acts of the defendant.” See CRST Van Expedited, Inc. v. Werner Enters., Inc, 479 21 F.3d 1099, 1108 (9th Cir. 2007) (citation and quotation omitted). Further, an act can 22 constitute tortious interference only if it is independently wrongful. See, e.g., Korea 23 Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1153 (1999). 7 VidAngel’s 24 tortious interference claims fail for multiple reasons. 25 7 26 Because Plaintiffs and Google are all based in California, and (although the amended counterclaim does not specify) the alleged acts of interference would 27 likely have taken place in California, California law applies. See, e.g., Abogados v. 28 AT&T, Inc., 223 F.3d 932, 934-936 (9th Cir. 2000). -20- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 First, VidAngel’s tortious interference allegations contain no factual detail. 2 At most, they incorporate VidAngel’s antitrust allegations, which are themselves 3 conclusory. See Watershed Asset Mgmt., L.L.C. v. Watershed Capital, LLC, No. C 4 13–03852 WHA, 2014 WL 785847, at *3 (N.D. Cal. Feb. 25, 2014) (dismissing 5 claims lacking “factual allegations to support an inference” of interference). 6 Second, VidAngel has not alleged that Plaintiffs took any action that was 7 “wrongful by some measure beyond the fact of the interference itself.” See CRST 8 Van Expedited, 479 F.3d at 1107–10 (citation and quotation omitted). An act is 9 independently wrongful only “if it is proscribed by some constitutional, statutory, 10 regulatory, common law, or other determinable legal standard.” Id. (citation and 11 quotation omitted). Because VidAngel’s antitrust claims fail, VidAngel has alleged, 12 at most, that each Plaintiff unilaterally enforced its own separate agreement with its 13 own licensees. “The exercise of a contractual right cannot be the basis for a claim 14 of tortious interference.” Computer Place, Inc. v. Hewlett-Packard Co., 607 F. 15 Supp. 822, 835 (N.D. Cal. 1984). 16 Third, VidAngel has not alleged that Plaintiffs interfered with an existing 17 economic relationship that was “reasonably probable” to result in an economic 18 benefit to VidAngel. FAC ¶¶ 104-106; Pardi v. Kaier Found. Hosp., 389 F.3d 852, 19 852 (9th Cir. 2004); Salma v. Capon, 161 Cal. App. 4th 1275, 1291 (2008) (“A 20 plaintiff must establish an existing relationship to establish a claim for intentional 21 interference. . . .”). Alleging interference with relationships with unidentifiable 22 “customers” or “partners,” as VidAngel alleges here, is insufficient. See, e.g., 23 Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc., No. 12-CV-05847-WHO, 2013 24 WL 5694452 , at *20 (N.D. Cal. 2013); Silicon Knights, Inc. v. Crystal Dynamics, 25 Inc., 983 F. Supp. 1303, 1312 (N.D. Cal. 1997). VidAngel does identify YouTube 26 and Google Play. For those entities, however, the alleged act of interference—that 27 Plaintiffs licensed their content on the condition that the licensees not support 28 VidAngel filtering—predates any economic relationship with VidAngel. See, e.g., -21- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 FAC ¶ 50; see also O’Connor v. Uber Tech., Inc., 58 F. Supp. 3d 989, 999 (N.D. 2 Cal. 2014) (relationship must exist “at the time of the interfering conduct”). 3 Finally, VidAngel has not alleged any economic relationship that was 4 reasonably probable to result in economic benefit to VidAngel, but only “a 5 speculative expectation that a potentially beneficial relationship will arise.” See 6 Pardi, 389 F.3d at 852 (citation and quotation omitted). VidAngel alleges it started 7 negotiations with Google in late 2014. Allegations of “preliminary discussions . . . 8 concern[ing] only the possibility of a licens[e] agreement” are insufficient to state a 9 tortious interference claim. Cal. Expanded Metal Prods. Co. v. ClarkWestern 10 Dietrich Bldg. Sys. LLC, No. CV 12-10791 DDP (MRWx), 2014 WL 5475214, at 11 *4 (C.D. Cal. Oct. 29, 2014). 12 IV. VIDANGEL FAILS TO STATE A UCL CLAIM 13 California’s UCL, Cal. Bus. & Prof. Code § 17200, prohibits “acts or 14 practices that are [1] unlawful, or [2] unfair, or [3] fraudulent.” Cel–Tech 15 Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 180 (1999) (quotation 16 omitted). VidAngel alleges violations under prongs one and two. 17 VidAngel has not pled “unlawful” conduct: The “unlawful” prong “borrows 18 violations of other laws . . . and makes those unlawful practices actionable under the 19 UCL.” Berryman v. Merit Prop. Mgmt., 152 Cal.App.4th 1544, 1554 (2007). 20 VidAngel does not state a violation of any law, and therefore does not state a claim 21 under this prong. See id. (“[A] violation of another law is a predicate for stating a 22 cause of action under the UCL’s unlawful prong.”). 23 VidAngel has not pled “unfair” conduct: “Where,” as here, “the same 24 conduct is alleged to support both a plaintiff’s federal antitrust claims and state-law 25 unfair competition claim, a finding that the conduct is not an antitrust violation 26 precludes a finding of unfair competition.” LiveUniverse, Inc. v. MySpace, Inc., 304 27 F. App’x 554, 557–58 (9th Cir. 2008); see also City of San Jose v. Office of the 28 -22- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 Comm’r of Baseball, 776 F.3d 686, 691–92 (9th Cir. 2015). VidAngel’s UCL claim 2 thus falls with its antitrust claim. 3 V. VIDANGEL’S DECLARATORY RELIEF CLAIMS ARE DUPLICATIVE AND SHOULD BE DISMISSED 4 5 “[A] court may decline to hear a claim for declaratory relief if adjudication of 6 the issues raised in other claims would fully and adequately determine all matters 7 actually in controversy between the parties.” Philips Med. Capital, LLC v. Med. 8 Insights Diagnostics Ctrs., Inc., 471 F. Supp. 2d 1035, 1048 (N.D. Cal. 2007). 9 VidAngel seeks declarations that (1) its “current” system is legal; 10 (2) VidAngel is entitled to decrypt Discs without liability under the DMCA; (3) the 11 FMA authorizes VidAngel’s service; and (4) the FMA relieves VidAngel of the 12 obligation to get licenses to stream Plaintiffs’ copyrighted works. FAC ¶¶ 110-134. 13 All of these claims will be resolved by Plaintiffs’ claims for relief or VidAngel’s 14 defenses. Indeed, VidAngel has presented these same contentions in defending 15 against Plaintiffs’ motion for preliminary injunction. Dkt. 42 at 10-18. Stated as 16 declaratory relief claims, these contentions are duplicative and should be dismissed. 17 VI. VIDANGEL’S COPYRIGHT MISUSE DEFENSE SHOULD BE STRICKEN 18 19 VidAngel alleges no facts to support its misuse defense, but instead relies on 20 its antitrust allegations. Because VidAngel has not plausibly alleged an antitrust 21 claim, the misuse defense should be stricken under rule 12(f). Ramirez v. Ghilotti 22 Bros. Inc., 941 F. Supp. 2d 1197, 1204 (N.D. Cal. 2013) (court may strike 23 affirmative defense that is insufficiently pleaded or fails as a matter of law). 24 “Copyright misuse is an equitable defense to copyright infringement.” MDY 25 Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 941 (9th Cir. 2010). The 26 doctrine bars copyright owners “from leveraging their limited monopoly [conferred 27 by copyright] to allow them control of areas outside the monopoly.” A&M Records 28 v. Napster, Inc., 239 F.3d 1004, 1026 (9th Cir. 2001). The Ninth Circuit has -23- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 “applied the doctrine sparingly,” Apple Inc. v. Psystar Corp., 658 F.3d 1150, 1157 2 (9th Cir. 2011), and has found misuse in just one case, where a copyright holder 3 licensed the use of its work on the licensee’s “promise not to use competitors’ 4 products.” Practice Mgmt. Info. Corp. v. Am. Medial Ass’n, 121 F.3d 516, 521 (9th 5 Cir. 1997). It is not misuse for a copyright owner to “refus[e] to license a 6 copyrighted work” or to license “only on terms the copyright owner finds 7 acceptable.” Napster, 239 F.3d at 1027. 8 For the reasons discussed above, VidAngel’s allegations that Plaintiffs agreed 9 to boycott VidAngel, or force third parties to boycott VidAngel, fail to state a claim. 10 To the extent they establish anything, VidAngel’s allegations show only that each 11 Plaintiff exercised its exclusive rights under the Copyright Act to control the use of 12 its copyrighted works. That is not an antitrust violation. Section I, supra. Nor is it 13 misuse. Napster, 239 F.3d at 1026. 14 VII. VIDANGEL SHOULD NOT BE GRANTED LEAVE TO AMEND 15 “A district court may dismiss a complaint without leave to amend if 16 ‘amendment would be futile.’” Airs Aromatics, LLC v. Op. Victoria’s Secret Stores 17 Brand Mgmt., 744 F.3d 595, 600 (9th Cir. 2014). “Where [a party] has previously 18 filed an amended [pleading], as [VidAngel] has done here, the district court’s 19 discretion to deny leave to amend is particularly broad.” Miller v. Yokohama Tire 20 Corp., 358 F.3d 616, 622 (9th Cir. 2004) (quotation omitted) (affirming dismissal of 21 amended complaint without leave to amend where plaintiff (a) filed it in response to 22 motion to dismiss and (b) pointed to no additional facts suggesting it could cure 23 deficiencies). Because any further effort to amend would be futile, the amended 24 counterclaim should be dismissed with prejudice. 25 26 27 28 -24- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 CONCLUSION 2 Plaintiffs respectfully request that the Court dismiss with prejudice 3 VidAngel’s amended counterclaim and strike its copyright misuse defense. 4 5 DATED: October 14, 2016 MUNGER, TOLLES & OLSON LLP 6 By: /s/ Kelly M. Klaus 7 KELLY M. KLAUS 8 Attorney for Plaintiffs and Counter-Defendants

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -25- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 CERTIFICATE OF SERVICE 2 I hereby certify that on October 14, 2016, I authorized the electronic filing of 3 the foregoing with the Clerk of the Court using the CM/ECF system, which will 4 send e-mail notification of such filing to all registered parties. I certify under 5 penalty of perjury under the laws of the United States of America that the foregoing 6 is true and correct. 7 8 DATED: October 14, 2016 MUNGER, TOLLES & OLSON LLP 9

10 By: /s/ Kelly M. Klaus 11 Kelly M. Klaus

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -26- PLAINTIFFS’ MOTION TO DISMISS 16-CV-04109-AB (PLAX)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 WESTERN DIVISION 11 12 DISNEY ENTERPRISES, INC.; Case No. 16-cv-04109-AB (PLAx) LUCASFILM LTD. LLC; 13 TWENTIETH CENTURY FOX FILM [PROPOSED] ORDER GRANTING CORPORATION and WARNER PLAINTIFFS’ MOTION TO 14 BROS. ENTERTAINMENT INC., DISMISS VIDANGEL’S FIRST AMENDED COUNTERCLAIMS 15 Plaintiffs and Counter- AND STRIKE VIDANGEL’S Defendants, AFFIRMATIVE DEFENSE OF 16 COPYRIGHT MISUSE vs. 17 VIDANGEL, INC., Judge: Hon. André Birotte Jr. 18 Defendant and Counter- Date: December 19, 2016 19 Claimant. Time: 10:00 a.m. Crtrm.: 4 20

Trial Date: None Set 21

22 Having considered Plaintiffs’ Motion To Dismiss VidAngel’s First Amended 23 Counterclaims And Motion To Strike VidAngel’s Affirmative Defense Of 24 Copyright Misuse, the related papers submitted by the parties, and the argument of 25 counsel, and good cause appearing therefor, 26 [1] The Motion is hereby GRANTED; 27 28

[PROPOSED] ORDER GRANTING MOTION TO DISMISS AND MOTION TO STRIKE 16-CV-04109-AB (PLAX)

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1 [2] VidAngel’s First Amended Counterclaims are dismissed with 2 prejudice; 3 [3] VidAngel’s affirmative defense of copyright misuse is stricken with 4 prejudice; and 5 [4] Plaintiffs’ Request for Judicial Notice is granted. 6

7 IT IS SO ORDERED. 8

9 DATED:______10 THE HONORABLE ANDRÉ BIROTTE JR. 11

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- [PROPOSED] ORDER GRANTING MOTION TO DISMISS AND MOTION TO STRIKE 16-CV-04109-AB (PLAX)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 DISNEY ENTERPRISES, INC.; Case No. 2:16-cv-04109 – AB (PLAx) 10 LUCASFILM LTD. LLC; TWENTIETH CENTURY FOX FILM 11 CORPORATION and WARNER BROS. ENTERTAINMENT, INC., ORDER GRANTING PLAINTIFFS’ 12 MOTION TO DISMISS Plaintiff, DEFENDANT’S FIRST AMENDED 13 COUNTERCLAIMS AND STRIKE v. DEFENDANT’S AFFIRMATIVE 14 DEFENSE OF COPYRIGHT VIDANGEL, INC., MISUSE (DKT. NO. 103) 15 Defendant. 16

17 18 Pending before the Court is Plaintiffs Disney Enterprises, Inc., Lucasfilm Ltd. 19 LLC, Twentieth Century Fox Film Corporation, and Warner Bros. Entertainment 20 Inc.’s (“Plaintiffs”) Motion to (i) Dismiss Defendant and Counter-Claimant VidAngel, Inc.’s (“VidAngel”) First Amended Counterclaims (“FACC”) pursuant to Federal 21 Rule of Civil Procedure 12(b)(6) and the Declaratory Judgment Act, 17 U.S.C. § 22 2201; and (ii) Strike VidAngel’s affirmative defense of Copyright misuse pursuant to 23 Federal Rule of Civil Procedure 12(f). 24 Plaintiffs bring this motion on the grounds that VidAngel fails to plead a plausible 25 Sherman Act § 1 claim based on any alleged vertical or horizontal conspiracy (First 26 Counterclaim). Plaintiffs also assert that VidAngel fails to plead claims for 27 intentional interference with prospective economic advantage (Second Counterclaim) and violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. 28

1.

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1 Code §§ 1700 et seq. (Third Counterclaim). Additionally, Plaintiffs contend that 2 VidAngel’s declaratory judgment counterclaims (Fourth through Seventh Counterclaims) are duplicative of Plaintiffs’ Digital Millennium Copyright Act 3 (“DMCA”) and copyright infringement claims and VidAngel’s defenses to those 4 claims, and the Court should exercise its discretion to dismiss those counterclaims. 5 Finally, Plaintiffs argue that VidAngel’s copyright misuse affirmative defense 6 (Seventeenth Affirmative Defense) should be stricken because VidAngel bases this defense on its antitrust counterclaims, and thus the defense fails along with those 7 claims. VidAngel filed an opposition to the instant motion (Dkt. No. 132), and 8 Plaintiffs filed a reply (Dkt. No. 142). The Court heard oral arguments from the 9 parties and took Plaintiffs’ motion under submission. Upon consideration of the parties’ arguments, papers and the case file, the court hereby GRANTS Plaintiffs’ 10 motion. 11 12 I. BACKGROUND

13 a. Factual and Procedural Background 14 VidAngel is a filtering company that provides technology which enables 15 viewers to eliminate objectionable material from motion pictures and television 16 programs. (FACC, ¶ 9). In their first amended answer and counterclaims, VidAngel 17 alleges that major motion picture studios and directors have historically been hostile to any alterations made to the director’s final cut. (FACC, ¶ 20). In 2014, several major 18 motion picture and television studios, including Plaintiffs, entered into a written 19 agreement with the Director’s Guild of America (the “DGA Agreement”). (Id., ¶¶ 26- 20 27). VidAngel contends that Section 7-509 of the DGA Agreement, entitled “Editing Theatrical Motion Pictures,” prohibits any alteration to a motion picture, without the 21 involvement, consultation or final approval of the director. (Id., ¶ 23). VidAngel also 22 alleges that Section 7-509 of the DGA Agreement has been understood and enforced 23 by the studios as prohibiting all filtering. (Id., ¶ 24). VidAngel avers that the studios 24 entered the DGA Agreement as part of a concerted effort to prohibit the lawful provision of online filtering services and the provisions of section 7-509 of the DGA 25 Agreement are an unreasonable restraint on trade in violation of Section 1 of the 26 Sherman Act. (Id., ¶ ¶ 23, 27). 27 28

2.

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1 VidAngel also alleges that Plaintiffs only license film content pursuant to 2 anticompetitive agreements which include terms and conditions that restrict content editing and filtering of any kind without their prior written consent. (Id., ¶ 24). 3 VidAngel asserts that Plaintiffs refused to enter into licensing agreements with 4 VidAngel and also rejected VidAngel’s offers to buy DVDs directly from Plaintiffs. 5 (Id., ¶ ¶ 40, 41). VidAngel contends that these actions run counter to each individual 6 Plaintiff’s best interests, and therefore are evidence of collusion. (Id., ¶ 41). Finally, VidAngel alleges that Plaintiffs induced and persuaded Google and other major digital 7 content distributors to refuse to support VidAngel’s filtering service. (Id., ¶ ¶ 46, 47). 8 VidAngel contends that Plaintiffs’ actions have seriously diminished the ability of 9 VidAngel and other filtering services to function in the market. (Id., ¶ 9).

10 On June 9, 2016, Plaintiffs commenced this action by filing a complaint against 11 VidAngel. (Complaint, Dkt. No. 1). On July 5, 2016, VidAngel filed an answer and 12 counterclaim. (Dkt. No. 11). On September 16, 2016, VidAngel filed an Amended 13 Answer and Affirmative Defenses, as well as First Amended Counterclaims. (Dkt. No. 77). On October 8, 2016, Plaintiffs filed the instant motion. (Dkt. No. 119). 14 15 II. LEGAL STANDARD 16 Rule 8 requires a “short and plain statement of the claim showing that the pleader 17 is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The statement must provide enough 18 detail to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotations 19 omitted). The complaint must also be “plausible on its face,” allowing the Court to 20 “draw the reasonable inference that the defendant is liable for the misconduct 21 alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility 22 that a defendant has acted unlawfully.” Id. Labels, conclusions, and “a formulaic 23 recitation of the elements of a cause of action will not do.” Id. (quoting Twombly, 550 24 U.S. at 555).

25 Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may 26 move to dismiss a pleading for “failure to state a claim upon which relief can be 27 granted.” Fed. R. Civ. P. 12(b)(6). When ruling on a Rule 12(b)(6) motion, “a judge must accept as true all of the factual allegations contained in the complaint.” Erickson 28

3.

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1 v. Pardus, 551 U.S. 89, 94 (2007). But a court is “not bound to accept as true a legal 2 conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted). Furthermore, courts are not bound to “accept as true allegations that 3 contradict matters properly subject to judicial notice or by exhibit. Nor is the court 4 required to accept as true allegations that are merely conclusory, unwarranted 5 deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 6 266 F.3d 979, 988 (9th Cir. 2001) (citation omitted), amended on other grounds, 275 F.3d 1187 (9th Cir. 2001). The complaint is properly dismissed if it fails to "plead 7 'enough facts to state a claim to relief that is plausible on its face.'" Weber v. Dep't of 8 Veterans Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 9 544).

10 III. JUDICIAL NOTICE 11 "Generally, a district court may not consider any material beyond the pleadings in 12 ruling on a Rule 12(b)(6) motion. However, a court may consider judicially 13 noticeable documents, such as documents attached to a complaint, documents 14 incorporated by reference in the complaint, or documents that form the basis of the complaint. United States v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003). 15 Additionally, "documents whose contents are alleged in a complaint and whose 16 authenticity no party questions, but which are not physically attached to the pleading, 17 may be considered in ruling on a Rule 12(b)(6) motion to dismiss" without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 18 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court 19 may take judicial notice of "matters of public record." Mack v. South Bay Beer 20 Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986). Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001). 21 22 Plaintiffs request that the Court take Judicial Notice of the following documents: (1) Directors Guild of America, 2014 Basic Agreement, Section 7-509; (2) Directors 23 Guild of America, 1978 Basic Agreement, Section 7-509; (3) Directors Guild of 24 America, 2014 Side Letter 15; (4) December 15, 2014 email exchange between Mark 25 Fleming and Neal Harmon; (5) 2014 email from Neal Harmon to Jeffrey Harmon; (6) 26 Exhibit A to the Declaration of David Quinto (Dkt. 46-1); and (7) Declaration of Neal Harmon and Exhibit A thereto (Dkt. 43 and 43-1). The Court grants judicial notice 27 with respect to documents 1-4, 6 and 7, because they are either incorporated by 28

4.

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1 reference in the First Amended Counterclaims or are publically available on the 2 Director’s Guild’s website. The Court declines to take judicial notice of the 2014 email from Neal Harmon to Jeffrey Harmon, because it is not incorporated by 3 reference into the complaint, and the Court is not aware of any legal authority 4 permitting the Court to take notice of this type of document in connection with a 5 12(b)(6) motion. The email at issue includes what Plaintiffs allege is a near- 6 contemporaneous account of Harmon’s conversation with Google executive Mark Fleming. The conversation with Fleming forms the basis of one of VidAngel’s claims. 7 Plaintiffs contend that the email is analogous to a phone transcript which was the 8 subject of a request for judicial notice in Hoffman v. Cenlar Agency, Inc., No. 12-CV- 9 414-L (NLS), 2013 WL 1285126, at *1-2 (S.D. Cal. Mar. 27, 2013). However, in Hoffman, the plaintiff alleged that the defendant wrongfully recorded a telephone 10 conversation in violation of California’s eavesdropping statute, Cal. Penal Code § 11 632. Id. at *2. Because the recording of the phone call itself was the subject of the 12 claim, the court took judicial notice of the recording and a transcript of the recording. 13 Here, it is not the email itself which forms the basis of VidAngel’s claims, rather it is the conversation referenced in the email that forms the basis of a claim. Therefore, 14 the Court declines to take judicial notice of the aforementioned email. The remaining 15 documents are either incorporated by reference in the First Amended Counterclaims 16 or are publically available. Moreover, VidAngel does not genuinely dispute the facts Plaintiffs seek to judicially notice. Accordingly, judicial notice of the requested 17 documents is proper. (See Plaintiffs’ Request for Judicial Notice (“RJN”) Dkt. No. 18 119). 19 IV. DISCUSSION 20

21 a. Whether VidAngel has plausibly alleged a violation of Section 1 of the Sherman Act (First Counterclaim) 22 Section 1 of the Sherman Act prohibits "[e]very contract, combination in the 23 form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the 24 several States, or with foreign nations." 15 U.S.C. § 1. Under Rule 8(a)(2), a party 25 asserting a claim under section 1 “must plead not just ultimate facts (such as a 26 conspiracy), but evidentiary facts which, if true, will prove: (1) a contract, combination or conspiracy among two or more persons or distinct business entities; 27 (2) by which the persons or entities intended to harm or restrain trade or commerce 28

5.

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1 among the several States, or with foreign nations; (3) which actually injures 2 competition.” Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008) (citing Les Shockley Racing Inc. v. Nat'l Hot Rod Ass'n, 884 F.2d 504, 507 (9th Cir. 3 1989)); see also Twombly, 550 U.S. at 544. 4 5 VidAngel alleges that Plaintiffs are parties to two different types of agreements in restraint of trade. First, VidAngel contends that the Plaintiffs have entered into 6 horizontal agreements among themselves and other studios which have eliminated 7 companies like VidAngel from participating in online filtering. VidAngel also alleges 8 that each individual Plaintiff has entered into vertical agreements that prohibit streaming licensees from doing business with filtering companies. The Court analyzes 9 each allegation in turn. 10 11 i. Whether VidAngel has plausibly alleged a horizontal 12 conspiracy 13 As discussed above, VidAngel alleges that each of the Plaintiffs entered the 14 2014 DGA Agreement as part of a concerted effort to prohibit the lawful provision of online filtering services. (FACC, ¶ 27). Specifically, VidAngel asserts that section 7- 15 509 of the 2014 DGA Agreement, entitled “Editing Theatrical Motion Pictures,” 16 prohibits any alteration to a motion picture without the approval of the director. (Id., 17 ¶¶ 23–24, 26). VidAngel argues that the terms of section 7-509 operate as an unreasonable restraint on trade in violation of Section 1 of the Sherman Act. (Oppo. 18 at 5). Section 7-509 of the 2014 DGA Agreement establishes an obligation for the 19 studios to consult with directors when editing motion pictures. The studios’ 20 obligation to consult with directors varies based on the media platform upon which the movie is to be broadcast. While the terms of section 7-509 certainly limit the studios’ 21 ability to edit films without initially consulting the director, the language of this 22 provision does not support VidAngel’s contention that the studios must obtain the 23 approval of the director. The Ninth Circuit addressed a related issue in Tristar 24 Pictures v. Dir.'s Guild of Am., 160 F.3d 537 (9th Cir. 1998). There, the appellant movie studio edited a 118 minute film down to 90 minutes for exhibition on network 25 television. The director was initially consulted with regard to the edits but ultimately 26 refused to participate. The studio then proceeded to perform the edits over the 27 objection of the director. While the studio’s right to unilaterally make edits to a movie was not at issue in the Tristar Pictures decision, the Ninth Circuit observed that 28

6.

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1 section 7-509 of the DGA Agreement arguably grants a studio the right “to edit the 2 film as it sees fit.” Id. at 541.

3 Plaintiffs contend that the DGA Basic Agreement is typically negotiated at 4 three year intervals, with some provisions of the agreement remaining unchanged for 5 decades. (Mot. at 8). Plaintiffs also assert, and VidAngel does not dispute that the 6 current version of section 7-509 has remained materially unchanged since 1978, which predates the creation of movie filters by decades. Thus, VidAngel argues that section 7 7-509 does not prohibit, nor even address filtering. (Id.) It is clear that section 7-509 8 does not prohibit secondary editing by companies like VidAngel. The only subsection 9 of section 7-509 that even addresses streaming services such as VidAngel is 7-509(g). (See RJN, Ex. 1 § 7-509(g)). Section 7-509(g) addresses a director’s right to edit 10 motion pictures which are to be exhibited on basic cable television and “New Media” 11 which includes streaming services.1 However, this subsection only applies if the 12 studio “edits the motion picture at its own facilities in the United States.” (RJN, Ex. 1 13 § 7-509(g)). The circumstances required for section 7-509(g) to apply are not presented by secondary editing services such as VidAngel’s. VidAngel argues that 14 the Court cannot interpret the provisions of a contract on a 12(b)(6) motion. However, 15 the case they cite, FT Travel--N.Y., LLC v. Your Travel Ctr., Inc., clearly states that 16 "[w]here a contract's language is clear and unambiguous, a court may dismiss a breach of contract claim on a Rule 12(b)(6) motion to dismiss." FT Travel - N.Y., LLC v. 17 Your Travel Ctr., Inc., 112 F. Supp. 3d 1063, 1090 n.134 (C.D. Cal. 2015) (citing 18 Maniolos v. United States, 741 F.Supp.2d 555, 567 (S.D.N.Y. 2010)). The language 19 of section 7-509 of the DGA agreement is clear and unambiguous with regard to the fact that it does not prohibit editing nor does it prohibit or even address filtering 20 services like VidAngel’s service. Indeed, even VidAngel concedes that the terms of 21 section 7-509 do not explicitly forbid filtering. (Oppo. at 9). 22 23 Despite their concession that section 7-509 doesn’t prohibit filtering, VidAngel contends that the terms have nonetheless been “understood and implemented” by the 24 parties to prohibit studios from entering into agreements that allow secondary editing 25 or filtering of movies or television programs. (Id.) This argument fails for multiple 26 reasons. First, the Ninth Circuit has held that allegations that "[an] anticompetitive agreement [is] a secret term of an otherwise public agreement” are insufficient to state 27

28 1 See DGA Basic Agreement Side Letter 15 (RJN, Ex. 3)

7.

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1 a claim for a violation of section 1 of the Sherman Act. PharmaRX Pharm., Inc. v. 2 GE Healthcare, Inc., 596 Fed. Appx. 580, 580-81 (9th Cir. 2015) (citing William O. Gilley Enters., Inc. v. Atl. Richfield Co., 588 F.3d 659, 665 (9th Cir. 2009)). Second, 3 VidAngel’s allegations that they have been advised by several potential business 4 partners that no agreement would be possible without director or DGA approval, are 5 either implausible or are contradicted by evidence in the record. 6 VidAngel makes two primary allegations in support of their contention that the 7 DGA agreement has been “understood and enforced” as prohibiting filtering. First, 8 VidAngel alleges that non-party Lionsgate Entertainment, Inc. advised VidAngel that 9 in order to enter into a licensing agreement to stream filtered movies, VidAngel would first need to obtain the permission of the DGA. However, there is no indication that 10 Lionsgate’s position stems from the DGA Agreement. In fact, the explicit language of 11 section 7-509 does not prohibit filtering, nor provide that DGA approval is required in 12 order to edit or filter a movie. Therefore, the Court finds the inference that 13 Lionsgate’s requirement of DGA approval stems from section 7-509 implausible. In fact, VidAngel itself asserts that major motion picture studios and directors have 14 historically been hostile to any alterations made to a director’s final cut. (FACC, ¶ 15 20). Plaintiffs argue that this evidences an independent motivation for each studio to 16 not allow their movies to be filtered. (Mot. at 15-16). It is inherently clear that movie directors are integral to a studio’s production of motion pictures. Therefore, the Court 17 finds it plausible that a movie studio such as Lionsgate might independently employ a 18 rational business strategy that would require DGA approval before entering into a 19 licensing agreement which might upset directors. VidAngel argues the Court cannot choose between competing inferences at this stage of the proceedings. VidAngel cites 20 Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011), for the proposition that “[i]f there 21 are two alternative explanations, one advanced by defendant and the other advanced 22 by plaintiff, both of which are plausible, plaintiff’s complaint survives a motion to 23 dismiss under Rule 12(b)(6).” Id. (emphasis added). Given the fact that Defendant’s inference is unsupported by the plain language of the DGA agreement, the Court finds 24 it implausible. Moreover, “Allegations of facts that could just as easily suggest 25 rational, legal business behavior by the defendants as they could suggest an illegal 26 conspiracy are insufficient to plead a violation of the antitrust laws.” Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1049 (9th Cir. 2008). Lionsgate is not a party to this 27 action, and there is no indication that Plaintiffs share Lionsgate’s position with regard 28

8.

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1 to DGA approval. The Supreme Court in Twombly emphasized the “need at the 2 pleading stage for allegations plausibly suggesting (not merely consistent with) agreement.” Twombly 550 U.S. at 557. VidAngel’s allegation with regard to non- 3 party Lionsgate does not plausibly suggest that Plaintiffs are a party to a conspiracy to 4 prohibit filtering, or that this conspiracy stems from the DGA agreement. 5 6 VidAngel also alleges that Google representative Mark Fleming informed VidAngel that Google was concerned that a “blocker” to a potential licensing deal was 7 that “the directors won’t let this happen” and that the studios’ “existing deals with the 8 production companies/directors/etc. may not allow for it and therefore those [contracts] 9 will need to get renegotiated first.” (FACC, ¶ 24). VidAngel misrepresents these statements which were contained in an email dated December 15, 2014. In the email 10 Fleming is responding to specific questions set forth in a December 11, 2014 email 11 from VidAngel CEO Neal Harmon. In response to Harmon’s question about whether 12 Google’s licensing would allow them to partner with VidAngel, Fleming responds, “I 13 need to work w/ our legal and biz dev teams to see if there’s any language in our current contracts that may block this.” (RJN, Ex. 4). Fleming further states that he 14 will receive this information “after our initial pitch, at which point they review our 15 deals to see if any terms exist to halt this.” Harmon also asked Fleming to speculate 16 whether the studios would “redo the Google Play licensing” to permit them to license VidAngel, if there was indeed a current block to such an agreement. (Id.) Fleming 17 replies “If there is a block on this w/ the current contracts” they would need to get “an 18 amendment to allow it.” He also states that “it can get a bit more complicated” and 19 the studios “existing deals with production companies/directors/etc. may not allow for it” and thus would “need to get renegotiated first.” He ends his answer with 20 “hopefully this isn’t the case.” Contrary to VidAngel’s contention that Fleming 21 expressed concerns that there were “blockers” to a potential deal, Fleming did not 22 purport to know whether there were any “blockers” and only addressed that issue in 23 response to specific questions in Harmon’s email.

24 VidAngel alleges that several months later Harmon met with executives from 25 non-party Sony in order to discuss the option of partnering with VidAngel. (FACC, ¶ 26 52). After the meeting, Fleming allegedly told VidAngel that the MPAA studios and Sony refused to allow Google to partner with VidAngel. (Id.) Non-party Sony’s 27 alleged refusal to allow Google to partner with VidAngel does not lead to the 28

9.

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1 plausible inference that section 7-509 of the DGA Agreement, as “understood and 2 enforced” by the parties thereto prohibits filtering. As discussed above, the explicit language of 7-509 doesn’t prohibit filtering, and Defendant’s attempts to argue that 3 there is a “secret term”, or private understanding of the publically available DGA 4 Agreement is unavailing. Additionally, Plaintiffs persuasively argue that it is 5 plausible to infer that studios have an independent motivation not to allow filtering 6 due to the fact that directors have historically been hostile to such changes to motion pictures. VidAngel does not allege that either Sony or Fleming stated that the basis of 7 Sony’s refusal was the DGA Agreement or some other unstated agreement between 8 the studios. 9 Defendant’s allegation that Fleming informed them that “the rest of the MPAA 10 member studios refused to allow Google to partner with VidAngel” is also insufficient. 11 “To allege an agreement between antitrust co-conspirators, the complaint must allege 12 facts such as a ‘specific time, place, or person involved in the alleged conspiracies’ to 13 give a defendant seeking to respond to allegations of a conspiracy an idea of where to begin.” Kendall 518 F.3d at 1042 (citing Twombly, 550 U.S. at 565 n.10). VidAngel 14 only alleges that executives of non-plaintiff Sony were present at the meeting with 15 Fleming. There is no allegation that any other MPAA studios were present, nor is 16 there any indication which of the studios, if any, communicated with Fleming. Based on the lack of necessary detail with regard to this allegation, the Court cannot find that 17 Fleming’s statement supports a plausible inference that the Plaintiff studios conspired 18 to prohibit a partnership between Google and Vidangel, or to prohibit the licensing of 19 filtering in general. In a footnote on page 5 of their opposition, VidAngel argues that Kendall doesn’t impose a heightened pleading standard in antitrust claims, and also 20 doesn’t apply in cases where discovery has not been conducted. However, the court in 21 Bay Area Surgical Mgmt. LLC v. Aetna Life Ins.Co., 166 F. Supp. 3d 988 (N.D. Cal. 22 2015) rejected an identical argument, in part due to the Ninth Circuit’s statement that 23 the Kendall decision specifically “concern[ed] the pleading requirements to state a claim for antitrust violations under Section 1 of the Sherman Act following the 24 Supreme Court's recent pronouncement in Bell Atlantic Corp. v. Twombly, 127 S. Ct. 25 1955, 1964-66, 167 L. Ed. 2d 929 (May 21, 2007).” Id. at 995 n.2 (citing Kendall, 26 518 F.3d at 1044). While the Court in Kendall did allow discovery, nowhere in the decision do they state that this is required, and district courts in the Ninth Circuit have 27 applied Kendall to cases at the pleading stage where no discovery has been conducted. 28

10.

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1 See generally PharmaRX Pharm., Inc.v. GE Healthcare, Inc., 596 Fed. Appx. 580 2 (9th Cir. 2015) see also Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc., No. 12- CV-05847-WHO, 2013 WL 5694452, (N.D. Cal. Oct. 18, 2013). All of VidAngel’s 3 allegations with regard to Plaintiff studios’ understanding and implementation of 4 section 7-509 of the DGA agreement suffer from the same lack of specificity, and thus 5 do not meet the pleading requirements to state a claim for a violation of Section 1 of 6 the Sherman Act.

7 VidAngel also alleges Plaintiffs have engaged in other coordinated exclusionary 8 conduct that constitutes a concerted refusal to deal. (Oppo. at 12). Specifically, 9 VidAngel alleges that Plaintiff studios have uniformly: (1) rejected VidAngel’s attempts to obtain licensing agreements; (2) refused to sell VidAngel DVDs directly 10 without the use of an intermediate wholesaler; (3) declined VidAngel’s offers to 11 negotiate a mutually agreeable solution concerning the studios’ copyright concerns; 12 and (4) prevented distributors and third-party services from using VidAngel’s services 13 by including the restrictive anti-filtering terms of the DGA Agreement into distribution agreements and by threatening or coercing parties not to do business with 14 VidAngel. (Id.) VidAngel argues that these actions all run counter to each Plaintiff’s 15 economic self-interest and were undertaken in furtherance of their conspiracy to 16 eliminate filtering. (Id. at 2).

17 With regard to Plaintiffs’ refusal to negotiate a licensing agreement, VidAngel 18 contends that absent an agreement to eliminate filtering, Plaintiffs would not each 19 reject negotiating a licensing agreement with VidAngel because such an agreement would provide additional revenue and could expand their motion picture and 20 television audiences. (Id. at 12). However Plaintiffs contend, and VidAngel does not 21 dispute, that VidAngel first approached Plaintiffs to negotiate a license after litigation 22 was initiated in this action. (Mot. at 15). Moreover, Plaintiffs assert that VidAngel 23 attempted to negotiate with Plaintiffs jointly, and was not rebuffed by “each” individual Plaintiff as the countercomplaint seems to suggest. (Id. at 16). Plaintiffs’ 24 refusal to engage in joint licensing discussions with a company that they allege is 25 operating an infringing service is a rational business decision and does not support a 26 plausible inference of an agreement to eliminate filtering.

27 28

11.

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1 VidAngel also argues that Plaintiffs’ refusal to sell them DVDs runs counter to 2 Plaintiff’s economic self-interest because Plaintiffs could eliminate payments to intermediate retailers by selling directly to VidAngel. (FACC, ¶ 41.) However, in 3 paragraph 77 of their countercomplaint, VidAngel states that the studios have 4 economic motives “to subvert VidAngel’s business because VidAngel’s DVDs are re- 5 sold and streamed to a new customer an average of 16 times each in the first four 6 weeks of the new release” and Plaintiffs “do not receive a profit from each instance a title is re-sold and streamed” on VidAngel’s website. (FACC, ¶ 77.) VidAngel 7 seemingly concedes that Plaintiffs have rational economic motives not to deal with 8 VidAngel. While Plaintiffs might reap some profit by avoiding intermediate retailers, 9 the evidence in the record shows that VidAngel would buy and resell these discs to multiple customers in short time frames. VidAngel would likely contend that these 10 customers would not otherwise buy the unfiltered DVD’s from Plaintiffs, however 11 there is no indication that Plaintiffs shared this belief. Thus, Plaintiffs could 12 reasonably contend that the sale of DVDs to VidAngel might ultimately be 13 detrimental to their economic interests, and their refusal to sell to VidAngel could constitute rational independent business behavior. Moreover, as described above, the 14 fact that directors oppose filtering could also be a legitimate business reason for 15 Plaintiff studios’ refusal to do business with VidAngel. Because all of the 16 aforementioned allegations could just as easily constitute rational, legal business behavior as they could suggest an illegal agreement, they are insufficient to plead a 17 violation of section 1 of the Sherman Act. 18 19 VidAngel finally argues that Plaintiffs induced a group boycott of VidAngel’s services by distributors and third-party services by injecting the restrictive anti- 20 filtering terms of the DGA Agreement into distribution agreements and by threatening 21 or otherwise coercing third parties not to do business with VidAngel. The Court will 22 later address the distribution agreements in relation to VidAngel’s allegations of 23 vertical conspiracies. VidAngel specifically alleges that the studios “induced and persuaded other major digital content distributors (e.g., Google Play, Netflix, Amazon, 24 and Hulu) to refuse to support VidAngel’s online filtering service.” (FACC, ¶ 47.) 25 As discussed above, VidAngel’s lack of specific details renders this allegation 26 insufficient under Kendall. VidAngel does not allege which Plaintiffs engaged in this action, when it occurred, nor do they allege that they ever sought to partner with 27 Netflix, Amazon, or Hulu. VidAngel also fails to specify what these distributors did 28

12.

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1 that constituted a refusal to support VidAngel. VidAngel’s only specific allegations 2 are with regard to their efforts to work with Google. Specifically VidAngel alleges that: (1) on December 5, 2013, VidAngel received a notice from YouTube’s legal 3 department which stated that VidAngel’s content filtering violated YouTube’s terms 4 of use (FACC, ¶ 47); and (2) in February 2014, Google removed technology from 5 Chromecast that enabled Plaintiff’s filtering technology to work with the Chromecast 6 Device (Id., ¶ 45). VidAngel alleges that the Plaintiffs conspired to pressure Google to take these actions. However, VidAngel does not offer any facts that would render 7 this allegation plausible. VidAngel does not allege or otherwise offer evidence that 8 Plaintiffs were aware of their service prior to VidAngel’s letter to general counsel for 9 each Plaintiff in July 2015. VidAngel states that the letters introduced VidAngel’s business model and invited the Plaintiffs to meet and discuss the distribution of 10 content for filtering pursuant to the Family Movie Act. (Id., ¶ 70). Moreover, 11 VidAngel CEO Neal Harmon’s email correspondence with Mark Fleming of Google 12 contradicts VidAngel’s allegations. The email correspondence occurred in December 13 2014, several months after VidAngel alleges that Plaintiffs pressured Google to remove support for VidAngel. At the time of the email correspondence, Fleming 14 stated that he had been talking about VidAngel’s filtering service to the internal teams 15 at Google and had gotten a fairly positive response. (RJN, Ex 4). Harmon also stated 16 that he did not know whether Google’s licensing agreements or the MPAA studios’ agreements would prohibit Google from partnering with VidAngel. (Id.) These 17 statements are inconsistent with Google having been pressured by the MPAA studios 18 to remove support for VidAngel just months earlier. VidAngel’s failure to allege facts 19 in support of their assertion that Plaintiffs pressured Google to withdraw its support is fatal to its claims. “It is not enough merely to include conclusory allegations that 20 certain actions were the result of a conspiracy; the plaintiff must allege facts that make 21 the conclusion plausible.” See Kendall 518 F.3d at 1047-48. 22 23 The aforementioned allegations are either insufficient pursuant to Kendall, or contradicted by evidence which is properly subject to judicial notice. For the 24 foregoing reasons, the Court finds that VidAngel has not sufficiently alleged that 25 Plaintiffs were party to a horizontal conspiracy to prohibit filtering in violation of 26 Section 1 of the Sherman Act.

27 28

13.

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1 2 ii. Whether VidAngel has plausibly alleged a vertical conspiracy.

3 VidAngel’s vertical conspiracy claims are based on their allegation that each 4 Plaintiff’s license agreements with its licensees violate antitrust law. Defendants 5 contend, and Plaintiffs acknowledge that non-price, vertical restraints, like the licensing agreements at issue, are analyzed under the rule of reason.2 Under the rule 6 of reason, VidAngel must allege: “(1) a contract, combination or conspiracy among 7 two or more persons or distinct business entities; (2) by which the persons or entities 8 intended to harm or restrain trade or commerce among the several States, or with foreign nations; (3) which actually injures competition.” Brantley v. NBC Universal 9 Inc., 675 F.3d 1192, 1197 (9th Cir. 2012). Additionally, “[i]n order to state a valid 10 claim under the Sherman Act, a plaintiff must allege that the defendant has market 11 power within a ‘relevant market.’ That is, the plaintiff must allege both that a ‘relevant market’ exists and that the defendant has power within that market.” Newcal 12 Indus. v. Ikon Office Sol., 513 F.3d 1038, 1044 (9th Cir. 2008) 13 14 Market power may be demonstrated through either "direct evidence of the 15 injurious exercise of market power," or by "circumstantial evidence pertaining to the structure of the market." Top Rank, Inc. v. Haymon, No. CV 15-4961-JFW (MRWx), 16 2015 U.S. Dist. LEXIS 164676, at *21-22 (C.D. Cal. Oct. 16, 2015) (citing Rebel Oil 17 Co., Inc. v. Atl. Richfield Co., 51 F.3d 1421, 1434 (9th Cir. 1995)). "To demonstrate 18 market power circumstantially, a plaintiff must: (1) define the relevant market, (2) show that the defendant owns a dominant share of that market, and (3) show that there 19 are significant barriers to entry and show that existing competitors lack the capacity to 20 increase their output in the short run." Id. Finally, “[a]lthough market power need not 21 be pled with specificity, the allegations must be sufficiently detailed "to raise a right to relief above the speculative level." Rick-Mik Enters., Inc. v. Equilon Enters. LLC, 532 22 F.3d 963, 973 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 555). 23 24 VidAngel alleges that the individual Plaintiffs have the following respective 25 market shares: Fox - 14.1%; Warner Brothers - 16.5%; and Disney - 26.2%. (FACC, ¶ 85). Courts generally hold that these individual market shares are insufficient as a 26

2 27 Although VidAngel does not address the rule of reason in their opposition, Defense conceded at oral argument that the vertical agreements at issue are analyzed under the 28 rule of reason.

14.

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1 matter of law to confer market power. See Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 2 466 U.S. 2, 26 & n.43 (1984) (30 percent market share insufficient); Pilch v. French Hosp., No. CV 98-9470 CAS(CWX), 2000 WL 33223382, at *7 (C.D. Cal. Apr. 28, 3 2000) (33.2 percent market share insufficient). VidAngel argues that Plaintiffs’ levels 4 of market power may be aggregated with one another as well as the unnamed co- 5 conspirator studios because they have combined to sign and enforce the DGA 6 Agreement. (Oppo. at 18). However the cases they cite hold that “[t]he aggregation of market shares of several rivals is justified if the rivals are alleged to have conspired 7 to monopolize.” Rebel Oil Co., 51 F.3d at 1437 (9th Cir. 1995); see also United 8 States v. Am. Airlines, Inc., 743 F.2d 1114, 1115–1122 (5th Cir. 1984). However, as 9 discussed above, VidAngel has not sufficiently alleged that the Plaintiffs engaged in a horizontal conspiracy. Therefore, VidAngel’s allegation that Plaintiffs own a 10 dominant share fails as a matter of law, because each individual Plaintiff’s market 11 share is insufficient to confer market power. Due to their failure to show that 12 Plaintiffs have market power, VidAngel’s allegations that Plaintiffs engaged in a 13 vertical conspiracy also fail as a matter of law.

14 b. VidAngel’s Claim for Intentional Interference with Prospective 15 Economic Advantage (Second Counterclaim) 16 In order to state a claim for intentional interference with prospective economic 17 advantage, VidAngel must allege “(1) an economic relationship between the plaintiff 18 and some third party, with the probability of future economic benefit to the plaintiff; 19 (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the 20 relationship; and (5) economic harm to the plaintiff proximately caused by the acts of 21 the defendant.” See CRST Van Expedited, Inc. v. Werner Enters., Inc, 479 F.3d 1099, 22 1108 (9th Cir. 2007). Plaintiffs argue that VidAngel fails to allege that Plaintiffs 23 interfered with an existing economic relationship that was “reasonably probable” to result in an economic benefit to VidAngel. (Mot at 21). In Pardi v. Kaiser 24 Permanente Hosp., Inc., 389 F.3d 840, 852 (9th Cir. 2004), the Ninth Circuit held that 25 a mere “speculative expectation that a potentially beneficial relationship will arise” is 26 insufficient to demonstrate an economic relationship between the plaintiff and some third party.” Moreover, the Court finds that VidAngel only engaged in preliminary 27 discussions with Google as evidenced by the communications with Mark Fleming. 28

15.

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1 Allegations of “preliminary discussions . . .concern[ing] only the possibility of a 2 licens[e] agreement” are insufficient to state a tortious interference claim. Cal. Expanded Metal Prods. Co. v. ClarkWestern Dietrich Bldg. Sys. LLC, No. CV 12- 3 10791 DDP (MRWx), 2014 WL 5475214, at *4 (C.D. Cal. Oct. 29, 2014)(citing Sole 4 Energy Co. v. Petrominerals Corp., 128 Cal. App. 4th 212, 243, 26 Cal. Rptr. 3d 798 5 (2005)). 6 VidAngel also alleges that they have developed advantageous prospective 7 business and economic relationships with business partners to expand VidAngel’s 8 business, visibility and availability to consumers, and that these relationships promise 9 a continuing probability of future economic benefit to VidAngel. (FACC, ¶ 104). VidAngel contends that Plaintiffs knew, or reasonably should have known, of the 10 existence of those prospective economic advantages. (Id.) This is a conclusory 11 allegation that merely recites the elements of an intentional interference claim. The 12 California Supreme Court in Youst v. Longo, 43 Cal. 3d 64, 71, 233 Cal. Rptr. 294, 13 298, 729 P.2d 728, 733 (1987) held that “as a matter of law, a threshold causation requirement exists for maintaining a cause of action for [intentional interference with 14 prospective economic advantage], namely, proof that it is reasonably probable that the 15 lost economic advantage would have been realized but for the defendant's 16 interference.” Id. (emphasis in original). VidAngel falls woefully short of this threshold by simply alleging the existence of advantageous prospective economic 17 relationship with unidentified partners. Moreover, there are no factual allegations 18 which would permit the Court to determine whether it is reasonably probable that 19 these relationships would have resulted in an economic benefit to VidAngel. Finally, as discussed above, the Court finds that VidAngel’s allegation that Plaintiffs pressured 20 Google to remove their support for VidAngel is contradicted by the email 21 correspondence with Mark Fleming, as well as VidAngel’s other allegations which 22 tend to show that Plaintiffs became aware of VidAngel’s service in July 2015, well 23 after the alleged claims of interference. For the foregoing reasons, the Court finds that VidAngel does not sufficiently plead a claim for intentional interference with 24 prospective economic advantage. 25 26 27 28

16.

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1 2 c. VidAngel’s UCL Claims (Third Counterclaim)

3 California’s Unfair Competition Law (“UCL”), prohibits “any unlawful, unfair 4 or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. VidAngel 5 asserts that Plaintiffs’ alleged anticompetitive actions constitute both “unlawful” and 6 “unfair” conduct for the purposes of the UCL. (FACC, ¶¶ 112-115). “Under its “unlawful” prong, ‘the UCL borrows violations of other laws … and makes those 7 unlawful practices actionable under the UCL.’” Berryman v. Merit Prop. Mgmt., Inc., 8 152 Cal. App. 4th 1544, 1554, 62 Cal. Rptr. 3d 177, 185 (2007) (quoting Lazar v. 9 Hertz Corp., 69 Cal. App. 4th 1494, 1505, 82 Cal. Rptr. 2d 368 (1999)). “Thus, a violation of another law is a predicate for stating a cause of action under the UCL's 10 unlawful prong.” Id. VidAngel’s claim under the “unlawful” prong is premised on 11 VidAngel’s allegations that Plaintiffs’ violated section 1 of the Sherman Act. Since 12 VidAngel fails to sufficiently allege antitrust claims, their UCL claim under the 13 “unlawful” prong fails as well.

14 Likewise, VidAngel’s claim under the “unfair” prong of the UCL is also 15 premised on their antitrust allegations. “Where the same conduct is alleged to support 16 both a plaintiff’s federal antitrust claims and state-law unfair competition claim, a finding that the conduct is not an antitrust violation precludes a finding of unfair 17 competition.” LiveUniverse, Inc. v. MySpace, Inc., 304 F. App’x 554, 557–58 (9th 18 Cir. 2008); see also Carter v. Variflex, Inc., 101 F. Supp. 2d 1261, 1270 (C.D. Cal. 19 2000) ("Thus, in light of the Court's findings under the Sherman Act, the Court finds that Variflex has failed to produce sufficient evidence to support its California 20 unfair competition claim."); Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363, 375, 21 113 Cal. Rptr. 2d 175 (2001) ("If the same conduct is alleged to be both an antitrust 22 violation and an 'unfair' business act or practice for the same reason. . . the 23 determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not 'unfair' toward consumers."). Therefore VidAngel’s 24 claim under the “unfair” prong of the UCL fails along with its antitrust claims. 25 26 27 28

17.

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1 2 d. VidAngel’s Declaratory Relief Claims (Fourth through Seventh

3 Counterclaims)

4 In VidAngel’s fourth through seventh claims for relief it seeks declarations that: 5 (1) its “current” system is legal; (2) VidAngel is entitled to decrypt Discs without 6 liability under the DMCA; (3) the FMA authorizes VidAngel’s service; and (4) the FMA relieves VidAngel of the obligation to get licenses to stream Plaintiffs’ 7 copyrighted works. The exercise of jurisdiction under the Federal Declaratory 8 Judgment Act, 28 U.S.C. § 2201(a), is committed to the sound discretion of the 9 federal district courts. Huth v. Hartford Ins. Co., 298 F.3d 800, 802 (9th Cir. 2002) (Citing Wilton v. Seven Falls Co., 515 U.S. 277, 282-83, 132 L. Ed. 2d 214, 115 S. Ct. 10 2137 (1995); Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494-95, 86 L. Ed. 11 1620, 62 S. Ct. 1173 (1942); Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1223 12 (9th Cir. 1998) (en banc)). Therefore, even if the district court has subject matter 13 jurisdiction, “the district court must also be satisfied that entertaining the action is appropriate. This determination is discretionary, for the Declaratory Judgment Act is 14 ‘deliberately cast in terms of permissive, rather than mandatory, authority.’" Dizol, 15 133 F.3d at 1223 (quoting Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 16 250, 97 L. Ed. 291, 73 S. Ct. 236 (1952)). Among the reasons for which a court may properly decline to hear a claim for declaratory relief are: “avoid[ing] needless 17 determination of state law issues… discourag[ing] litigants from filing declaratory 18 actions as a means of forum shopping; and avoid[ing] duplicative litigation.” Huth, 19 298 F. 3d at 803.

20 Each of the issues that VidAngel raises in its claims for declaratory relief will 21 be decided through Plaintiff’s claims in this action or Defendants affirmative defenses 22 thereto. Because this would amount to duplicative litigation, the Court, in its 23 discretion, denies VidAngel’s fourth through seventh claims for declaratory relief.

24 e. VidAngel’s Copyright Misuse Defense 25 26 Plaintiffs move to strike VidAngel’s seventeenth affirmative defense of copyright misuse. Under Federal Rule of Civil Procedure 12(f), a district court may strike from 27 the pleadings "an insufficient defense or any redundant, immaterial, impertinent, or 28

18.

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1 scandalous matter." Copyright misuse is an affirmative defense to copyright 2 infringement. Apple, Inc. v. Psystar Corp., 658 F.3d 1150, 1157 (9th Cir. 2011). The purpose of the copyright misuse defense is to "prevent[] holders of copyrights 'from 3 leveraging their limited monopoly to allow them control of areas outside 4 the monopoly.'" Id. (quoting A&M Records v. Napster, Inc., 239 F.3d 1004, 1026 (9th 5 Cir. 2001)). 6 In Triad Sys.Corp. v. Se. Express Co., 64 F.3d 1330, 1337 (9th Cir. 1995), the 7 Ninth Circuit adopted the Fourth Circuit's view that copyright misuse involves 8 restraining development of competing products. The Ninth Circuit has only upheld 9 the copyright misuse defense in one case, Practice Mgmt. Info. Corp. v. AMA, 121 F.3d 516 (9th Cir. 1997). There, the copyright licensor prevented licensees from 10 using any competitor’s product. VidAngel has not alleged that Plaintiffs’ licensing 11 agreements prevent licensees from using competing products. Rather VidAngel 12 alleges that Planitiffs license film content only on the express written condition that 13 the licensee not filter. (FACC, ¶ 28). The allegations here are analogous to those in A&M Records v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). In Napster the Ninth 14 Circuit upheld a district court’s rejection of a copyright misuse defense where 15 plaintiffs’ licensing agreements merely sought to control reproduction and distribution 16 of their copyrighted works. Id. at 1026. The Napster Court held that the exclusive rights of copyright holders “include the right, within broad limits, to curb the 17 development of such a derivative market by refusing to license a copyrighted work or 18 by doing so only on terms the copyright owner finds acceptable.” Id. (quoting UMG 19 Recordings, Inc. v. MP3. com, Inc., 92 F. Supp. 2d 349, 351 (S.D.N.Y.). VidAngel does not allege facts showing that Plaintiffs licensing agreements improperly extended 20 their rights pursuant to the Copyright Act to control an area outside of the Plaintiffs’ 21 copyrighted works. Although VidAngel alleges that Plaintiffs sought to eliminate 22 filtering, this is not the proper subject of a copyright misuse claim. VidAngel has not, 23 and cannot allege that their filtering service is “a competing product” to Plaintiffs’ movie production studios. Moreover, VidAngel seeks to use Plaintiffs’ copyrighted 24 works in conjunction with its filtering service, and therefore, this case does not 25 implicate an “area outside the monopoly” conferred by Plaintiffs registered 26 copyrights. Based on the foregoing, the Defendant has not adequately plead copyright misuse. Therefore, the Court strikes this affirmative defense. 27

28

19.

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1 V. CONCLUSION 2 For the foregoing reasons, the Court hereby Plaintiff’s Motion to 3 GRANTS Dismiss Defendant’s First Amended Counterclaims pursuant to Federal Rule of Civil 4 Procedure 12(b)(6). Additionally, the Court hereby STRIKES VidAngel’s copyright 5 misuse defense pursuant to Federal Rule of Civil Procedure 12(f). Because VidAngel 6 has previously amended its countercomplaint, and there is no indication in the record or the pleadings that VidAngel can identify additional facts to support its claims, the 7 Court hereby DISMISSES VidAngel’s Counterclaims WITHOUT leave to amend. 8 9 IT IS SO ORDERED.

10 Dated: August 10, 2017 ______11 HONORABLE ANDRÉ BIROTTE JR. 12 UNITED STATES DISTRICT COURT JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

20.

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EXHIBIT F Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 171 of 306 Case 2:16-cv-04109-AB-PLA Document 203 Filed 08/31/17 Page 1 of 12 Page ID #:6126

1 Ryan G. Baker (Bar No. 214036) Peter Stris (Bar No. 216226) [email protected] [email protected] 2 Jaime Marquart (Bar No. 200344) Brendan Maher (Bar No. 217043) [email protected] [email protected] 3 Scott M. Malzahn (Bar No. 229204) Elizabeth Brannen (Bar No. 226234) [email protected] [email protected] 4 Brian T. Grace (Bar No. 307826) [email protected] Daniel Geyser (Bar No. 230405) 5 BAKER MARQUART LLP [email protected] 2029 Century Park East, Sixteenth Fl. STRIS & MAHER LLP 6 Los Angeles, CA 90067 725 S. Figueroa St, Suite 1830 Telephone: (424) 652-7800 Los Angeles, CA 90017 7 Facsimile: (424) 652-7850 Telephone: (213) 995-6800 Facsimile: (213) 261-0299 8 David Quinto (Bar No. 106232) Maxwell M. Blecher (Bar No. 26202) 9 [email protected] [email protected] VIDANGEL, INC. Donald R. Pepperman (Bar No. 109809) 10 3007 Franklin Canyon Drive [email protected] Beverly Hills, CA 90210-1633 Taylor C. Wagniere (Bar No. 293379) 11 Telephone: (213) 604-1777 [email protected] BLECHER COLLINS & PEPPERMAN, P.C. 12 515 S. Figueroa St., Suite 1750 Los Angeles, CA 90071 13 Telephone: (213) 622-4222 Facsimile: (213) 622-1656 14 Attorneys for Defendant and Counterclaimant VidAngel, Inc. 15 UNITED STATES DISTRICT COURT 16 CENTRAL DISTRICT OF CALIFORNIA 17 WESTERN DIVISION 18 DISNEY ENTERPRISES, INC.; Case No. 2:16-cv-04109-AB-PLA 19 LUCASFILM LTD. LLC; TWENTIETH CENTURY FOX FILM VIDANGEL’S NOTICE OF 20 CORPORATION; AND WARNER MOTION AND MOTION FOR BROS. ENTERTAINMENT, INC., ENTRY OF FINAL JUDGMENT ON 21 DISMISSAL OF ITS Plaintiffs, COUNTERCLAIMS UNDER RULE 22 54(b) vs. 23 [Declaration of Maxwell M. Blecher VIDANGEL, INC., and [Proposed] Order filed concurrently 24 herewith] Defendant. 25 Judge: Hon. André Birotte Jr.

26 Date: October 6, 2017 Time: 10:00 a.m. 27 Courtroom: 7B

28 Trial Date: None Set

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1 VIDANGEL, INC.,

2 Counterclaimant,

3 vs.

4 DISNEY ENTERPRISES, INC.; LUCASFILM LTD. LLC; 5 TWENTIETH CENTURY FOX FILM CORPORATION; WARNER BROS. 6 ENTERTAINMENT, INC., AND DOES 1-100, 7 Counterclaim-Defendants. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 NOTICE OF MOTION AND MOTION 2 TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF 3 RECORD: 4 PLEASE TAKE NOTICE that on October 6, 2017, at 10:00 a.m., or as soon 5 thereafter as the matter may be heard before the Honorable Andre Birotte Jr., in 6 Courtroom 7B of the United States District Courthouse, 250 West First Street, Los 7 Angeles, California 90012, defendant and counterclaimant VidAngel, Inc., 8 (“VidAngel”) will, and hereby does, respectfully move this Court for an Order, 9 pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, entering a final 10 judgment against VidAngel on the first, second, and third counterclaims set forth in 11 its First Amended Counterclaims that this Court previously dismissed with prejudice. 12 VidAngel submits that the dismissal with prejudice by this Court of the specified 13 counterclaims in its First Amended Counterclaims is a final decision and that there is 14 no just reason for delay in directing entry of an appealable final judgment. 15 This Motion is made following the conference of counsel pursuant to L.R. 70-3 16 which took place on August 11 and August 14, 2017. (Declaration of Maxwell M. 17 Blecher.) 18 This Motion is based on the accompanying Memorandum of Points and 19 Authorities, the Declaration of Maxwell M. Blecher, the proposed Order submitted 20 concurrently herewith, and any other evidence and argument as may be presented in 21 reply or at oral argument. 22 23 24 25 26 27 28

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1 Dated: August 31, 2017 Respectfully submitted, 2 BLECHER COLLINS & PEPPERMAN, P.C. 3 4 By: /s/ Maxwell M. Blecher 5 Maxwell M. Blecher 6 Attorneys for Defendant and Counterclaimant VidAngel, Inc. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 MEMORANDUM OF POINTS AND AUTHORITIES 2 Defendant and counterclaimant VidAngel submits this Memorandum is support 3 of its Motion requesting that the Court enter an appealable final judment, pursuant to 4 Fed. R. Civ. P. 54(b), dismissing with prejudice the first, second, and third 5 counterclaims set forth in VidAngel’s First Amended Counterclaims. 6 I. BACKGROUND OF COMPLAINT AND FIRST AMENDED

7 COUNTERCLAIMS Plaintiffs Disney Enterprises, Inc. (“Disney”); LucasFilm Ltd. LLC 8 (“LucasFilm”); Twentieth Century Fox Film Corporation (“Fox”); and Warner Bros. 9 Entertainment, Inc. (“Warner Bros.”) (collectively “plaintiffs” and/or “counterclaim- 10 defendants”) initiated this civil action by filing their Complaint (“Comp.”) on June 9, 11 2016. (Dkt. No. 1.) The Complaint asserts two claims: (1) alleged copyright 12 infringement of plaintiffs’ copyrighted works pursuant to 17 U.S.C. §§ 106(1), (4); 13 and (2) alleged violations of the Digital Millennium Copyright Act (“DMCA”), 17 14 U.S.C. §§ 1201 et seq. 15 As to their copyright infringement claim, plaintiffs allege that VidAngel made 16 unauthorized digital copies of some of their copyrighted works and unauthorized 17 public performances of some of their copyrighted works. (Comp. ¶¶ 57–58.) The 18 DMCA claim alleges that VidAngel circumvented technological protection measures 19 of DVD and Blu-ray discs containing certain copyrighted works owned by the 20 plaintiffs. (Comp. ¶ 67.) Plaintiffs’ Complaint asserts two statutory claims both 21 arising under the federal copyright laws. Plaintiffs do not assert or raise any claims 22 relating to antitrust, unfair competition, and/or tortious interference. 23 VidAngel’s First Amended Counterclaims assert seven counterclaims: (1) 24 violations of Section 1 of the Sherman Act (15 U.S.C. § 1); (2) state law based claim 25 for intentional interference with prospective economic advantage; (3) violation of the 26 California Unfair Competition Law (Cal. Bus. & Prof. Code §§ 17200, et seq.; (4) 27 declaratory relief regarding VidAngel’s then-current video filtering system; (5) 28

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1 declaratory relief regarding decryption of DVD format for the purpose of filtering 2 videos under the Family Movie Act (“FMA”); (6) declaratory relief regarding remote 3 video streaming of filtering technology under the FMA; and (7) declaratory relief 4 regarding prior authorization under the FMA. 5 The thrust of VidAngel’s claims for damages/injunctive relief (counterclaims 6 one through three) is that the plaintiffs and other co-conspirators have interpreted and 7 enforced their 2014 written agreement with the Director’s Guild of America to 8 prohibit filtering of video content. This concerted boycott has decimated VidAngel, 9 which provides online video filtering services. VidAngel also alleges that the 10 plaintiffs and other co-conspirators have entered into film licensing agreements that 11 include anticompetitive terms and conditions that unreasonably restrict the editing 12 and filtering of film content. Finally, VidAngel’s counterclaims allege that the 13 plaintiffs have interfered with its business relationships with third parties by inducing 14 and persuading Google and other major digital content distributors to refuse to 15 support VidAngel’s existing or potential online filtering services. 16 VidAngel’s instant motion only seeks entry of an appealable final judgment on 17 VidAngel’s first, second and third counterclaims. The Court denied or dismissed 18 with prejudice VidAngel’s declaratory relief counterclaims, four through seven, on 19 the grounds that the issues raised in these counterclaims “will be decided through 20 Plaintiff’s [sic] [copyright] claims in this action or Defendants affirmative defenses 21 thereto.” (Dkt. No. 199 at 18.) Unlike VidAngel’s first through third counterclaim, 22 the Court declined to hear VidAngel’s declaratory relief claims because they are 23 purportedly “duplicative” of the copyright claims and defenses to be litigated. (Id.) 24 As to these declaratory relief counterclaims, VidAngel will wait to appeal the 25 correctness of that ruling until such time that the resolution of plaintiffs’ two 26 copyright claims are resolved and appealed. 27 28

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1 II. PROCEEDINGS LEADING TO A FINAL DISMISSAL ORDER OF FIRST AMENDED COUNTERCLAIMS 2 On July 5, 2016, VidAngel filed an Answer and Counterclaims in response to 3 plaintiffs’ Complaint. (Dkt. No. 11.) On September 16, 2016, VidAngel filed an 4 Amended Answer and First Amended Counterclaims. (Dkt. No. 7.) 5 Plaintiffs/counterclaim-defendants filed a motion to dismiss VidAngel’s First 6 Amended Counterclaims and to strike VidAngel’s copyright misuse affirmative 7 defense. (Dkt. No. 119.) VidAngel filed an opposition to that motion on November 8 15, 2016 (Dkt. No. 132), and plaintiffs/counterclaim-defendants filed a reply brief 9 (Dkt. No. 142). On December 19, 2016, this Court heard oral argument from counsel 10 for the respective parties, and took counterclaim-defendants’ motion under 11 submission. 12 On August 10, 2017, the Court entered an Order granting 13 plaintiffs’/counterclaim-defendants’ motion to dismiss VidAngel’s First Amended 14 Counterclaims pursuant to Fed. R. Civ. P. 12(b)(6) and to strike its affirmative 15 defense of copyright misuse pursuant to Fed. R. Civ. P. 12(f). (Dkt. No. 199.) 16 VidAngel’s First Amended Counterclaims were dismissed with prejudice and without 17 leave to amend. (Dkt. No. 199 at 20.) Specifically, this Court dismissed with finality 18 VidAngel’s: (1) Section One of the Sherman Act counterclaim (first counterclaim); 19 (2) intentional interference with prospective advantage counterclaim (second 20 counterclaim); (3) unfair competition counterclaim (third counterclaim); and (4) 21 declaratory relief counterclaims relating to the Family Movie Act, copyright 22 infringement, and the DMCA (fourth through seventh counterclaims). The Court also 23 struck VidAngel’s seventeenth affirmative defense of copyright misuse. 24 By this Motion, VidAngel requests the Court to enter a final judgment pursuant 25 to Rule 54(b) with respect to only counterclaims one through three of its First 26 Amended Counterclaims because these counterclaims are separate and discrete from 27 the legal and factual issues to be adjudicated concerning plaintiffs’ two copyright 28

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1 claims. There is simply no legitimate basis to hold up an appeal by VidAngel on 2 these three counterclaims pending a trial or resolution of the plaintiffs’ non- 3 overlapping copyright claims. 4 III. LEGAL STANDARDS APPLICABLE TO A MOTION FOR ENTRY OF 5 FINAL JUDGMENT PURSUANT TO RULE 54(b) 6 A district court “may direct entry of a final judgment as to one or more, but 7 fewer than all, claims or parties only if the court expressly determines that there is no 8 just reason for delay.” Fed.R.Civ.P. 54(b). The Rule expressly includes one or more 9 counterclaims.1 Id. Further, the Supreme Court has instructed that counterclaims 10 whether compulsory or permissive, present no special difficulties for Rule 54(b) 11 determinations, and are not to be evaluated any differently from other types of claims. 12 Cold Metal Process Co. v. United Eng'g & Foundry Co., 351 U.S. 445, 452 (1956). 13 In addition to the requirement that there be multiple claims, the Supreme Court 14 has enumerated a two-part test to determine whether a trial court may enter an 15 appealable final judgment pursuant to Rule 54(b). See Curtiss-Wright Corp. v. Gen. 16 Elec. Co., 446 U.S. 1, 7–10 (1980). First, the district court must determine that it is 17 dealing with a final judgment. Id. at 7. “It must be a ‘judgment’ in the sense that it is 18 a decision upon a cognizable claim for relief, and it must be ‘final’ in the sense that it 19 is an ultimate disposition of an individual claim entered in the course of a multiple 20 claims action.” Id. (internal quotations omitted). A “final decision” is generally one 21 “by which a district court disassociates itself from a case.” Mohawk Indus., Inc. v. 22 Carpenter, 558 U.S. 100, 103 (2009) (citation omitted). 23 Second, the trial court must determine whether there is any “just reason for 24 delay.” Curtiss-Wright, 446 U.S. at 8. Entry of final judgment under Rule 54(b) “is 25 26 1 The Federal Rules are to “be construed, administered and employed by the court and 27 the parties to secure the just, speedy, and inexpensive determination of every action and proceeding. Fed. R. Civ. P. 1. 28

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1 proper if it will aid expeditious decision of the case.” Texaco, Inc. v. Ponsoldt, 939 2 F.2d 794, 797 (9th Cir. 1991) (internal quotations omitted). “It is left to the sound 3 judicial discretion of the district court to determine the appropriate time when each 4 final decision in a multiple claims action is ready for appeal.” Curtiss-Wright, 446 5 U.S. at 8 (internal quotations omitted). The Ninth Circuit has embraced a “pragmatic 6 approach focusing on severability and efficient judicial administration.” Wood v. 7 GCC Bend, LLC, 422 F.3d 873, 880 (9th Cir. 2005). Accordingly, in making this 8 evaluation, courts consider: (1) whether the claims under review are separable from 9 the others that are remaining to be adjudicated; and (2) whether the nature of the 10 claims already decided is such that no appellate court would have to decide the same 11 issues more than once. See Curtiss-Wright, 446 U.S. at 7-10. 12 Finally, in instances where dismissed antitrust counterclaims are both factually 13 and legally severable from the remaining adjudicated claims, a separate final 14 judgment should be entered on the antitrust counterclaims. Int'l Longshore & 15 Warehouse Union v. ICTSI Oregon, Inc., 863 F.3d 1178, 1185–86 (9th Cir. 2017). 16 Even claims that are not separate and independent from the remaining claims may be 17 certified for appeal, “so long as resolving the claims would ‘streamline the ensuing 18 litigation.’” Noel v. Hall, 568 F.3d 743, 747 (9th Cir. 2009) (quoting Texaco, 939 19 F.2d at 798). Moreover, even if there is factual or legal overlap between claims, 20 certification of some of the claims may be appropriate if “the case is complex and 21 there is an important or controlling legal issue that cuts across (and cuts out or at least 22 curtails) a number of claims.” U.S. Fid. & Guar. Co. v. Lee Investments LLC, 641 23 F.3d 1126, 1140 (9th Cir. 2011) (quoting Wood, 422 F.3d at 881). 24 IV. THE COURT’S DISMISSAL OF VIDANGEL’S ANTITRUST AND 25 RELATED UNFAIR COMPETITION COUNTERCLAIMS WITH PREJUDICE IS A “FINAL” JUDGMENT 26 A judgment is final for purposes of Rule 54(b) when it “terminates the 27 litigation between the parties.” Parr v. United States, 351 U.S. 513, 518 (1956) 28

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1 (citation omitted). On August 10, 2017 this Court entered an Order dismissing with 2 prejudice, and without leave to amend, all of VidAngel’s counterclaims. (Dkt. No. 3 199.) That Order constitutes a final decision adjudicating and ultimately disposing of 4 each of VidAngel’s counterclaims asserted in its First Amended Counterclaims. 5 V. THERE IS NO JUST REASON FOR DELAY IN ENTERING A FINAL 6 JUDGMENT ON VIDANGEL’S ANTITRUST AND RELATED UNFAIR COMPETITION COUNTERCLAIMS 7 After the Court has determined whether a judgment is “final,” it must then 8 determine whether, in its broad and sound discretion, any “just reason for delay” 9 exists. This determination is made by balancing judicial administrative interests and 10 the equities. Curtiss-Wright, 446 U.S. at 8–10. VidAngel submits there is no reason 11 for delay for this Court to enter an appealable final judgment on VidAngel’s first, 12 second, and third counterclaims because: (1) these counterclaims are separate from 13 the remaining copyright claims to be tried; (2) the legal issues raised by the 14 counterclaims are complex and not routine; (3) no duplicative or unnecessary appeals 15 would result; (4) waiting for resolution of the copyright claims could mean a delay of 16 several years; and (5) VidAngel will incur additional severe financial losses if forced 17 to wait for review of its counterclaims. 18 19 A. Certification Will Serve Judicial Administrative Interests Because VidAngel’s Counterclaims Raise Discrete Factual and Legal Issues 20 Separate and Severable from Plaintiffs’ Copyright Infringement and 21 DCMA Claims 22 As demonstrated above, there is virtually no factual or legal overlap between 23 VidAngel’s counterclaims (one through three) and the plaintiffs’/counter-defendants’ 24 remaining two copyright claims to be adjudicated. See Trugman-Nash, Inc. v. New 25 Zealand Dairy Bd., Milk Prod. Holdings (N. Am.) Inc., 954 F. Supp. 733, 738 26 (S.D.N.Y. 1997) (Rule 54(b) motion granted where “[t]he viability of plaintiffs’ 27 antitrust claims present issues unrelated to the commercial claims of breach of 28 contract, quantum meruit and common law fraud that precede them in the

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1 complaint.”); Purdy Mobile Homes, Inc. v. Champion Home Builders Co., 71 F.R.D. 2 341, 342 (E.D. Wash. 1976), aff'd, 594 F.2d 1313 (9th Cir. 1979) (granting Rule 3 54(b) motion where federal claims, including Sherman Act antitrust claim, required 4 “proof of different facts to be successful and are each separate claims for relief.”). 5 Consequently, Rule 54(b) certification is warranted because there is no risk of 6 multiple or duplicative appeals that raise any of the same issues. See Curtiss-Wright, 7 446 U.S. at 6 (“no appellate court would have to decide the same issues more than 8 once even if there were subsequent appeals.”) 9 Moreover, VidAngel’s antitrust counterclaim is separate from plaintiffs’ 10 copyright claims and, in the intellectual property context, antitrust counterclaims 11 generally are not “compulsory.” See, e.g., Mercoid Corp. v. Mid-Continent Invest. 12 Co., 320 U.S. 661, 668–71 (1944); Hydranautics v. FilmTec Corp., 70 F.3d 533, 13 536–37 (9th Cir. 1995). Even if some overlap existed, however, Rule 54(b) 14 certification would still be appropriate. See Wood, 422 F.3d at 881 (“Both the 15 Supreme Court and our court have upheld certification on one or more claims despite 16 the presence of facts that overlap remaining claims . . .”); see also Sears, 351 U.S. at 17 430–38; Int'l Longshore & Warehouse, 863 F.3d at 1185–87. Here, judicial 18 administrative interests weigh heavily in favor of granting Rule 54(b) certification. 19 B. The Equities Weigh in Favor of Certification for Appeal 20 The equities also weigh in favor of granting VidAngel’s Motion for Rule 54(b) 21 certification. Resolution of plaintiffs’ remaining copyright claims will not moot 22 VidAngel’s appeal on its counterclaims. Moreover, there will be absolutely no 23 prejudice or harm to the remaining litigation, or the plaintiffs, by entering an 24 appealable final judgment on the specified counterclaims now. There is no 25 compelling need to preserve the status quo because the viability of VidAngel’s 26 severable counterclaims will not be affected by the outcome of the copyright claims. 27 In sum, VidAngel submits that it makes sense to have the appellate process now with 28 respect to these discrete counterclaims rather than wait months or even years.

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1 Finally, VidAngel’s business has suffered financially by reason of the 2 counterclaim-defendants’ exclusionary and anticompetitive conduct. VidAngel 3 should be afforded an opportunity at this juncture to seek review of these valuable 4 claims. See Purdy, 71 F.R.D. at 343 (“The Court’s prior Order deprived plaintiff of 5 [antitrust] claims upon which he might have recovered treble damages. If this Order 6 was incorrect plaintiff has been foreclosed from pursuing an important avenue of 7 relief.”). 8 VI. CONCLUSION 9 For the reasons set forth herein and in the interests of judicial economy, 10 counterclaimant VidAngel respectfully submits that this Court grant this Motion and 11 direct entry of a final judgment on counterclaims one through three of VidAngel’s 12 First Amended Counterclaims so that appellate review can be promptly sought 13 without delay. 14 15 Dated: August 31, 2017 Respectfully submitted, 16 BLECHER COLLINS & PEPPERMAN, P.C. 17 18

19 By: /s/ Maxwell M. Blecher 20 Maxwell M. Blecher Attorneys for Defendant 21 and Counterclaimant VidAngel, Inc. 22

23

24

25 92008.1 26 27 28

- 10 - 2:16-cv-04109-AB-PLA NOTICE OF MOTION AND MOTION FOR ENTRY OF FINAL JUDGMENT ON COUNTERCLAIMS

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EXHIBIT G Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 184 of 306 Case 2:16-cv-04109-AB-PLA Document 226 Filed 10/05/17 Page 1 of 5 Page ID #:6509

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No.: CV 16-04109-AB (PLAx) Date: October 5, 2017

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

Present: The Honorable ANDRÉ BIROTTE JR., United States District Judge

Carla Badirian N/A

Deputy Clerk Court Reporter

Attorneys Present for Plaintiff: Attorneys Present for Defendant:

N/A N/A

Proceedings: Order Granting VidAngel’s Motion for Entry of Final Judgment Dismissing VidAngel’s First, Second and Third Counterclaims (Dkt. No. 203) Before the Court is Defendant VidAngel’s (“VidAngel”) Motion for Entry of Final Judgment on the Dismissal of its Counterclaims Under Rule 54(b). (“Mot.”, Dkt. No. 203). VidAngel moves for entry of final judgment pursuant to Federal Rule of Civil Procedure 54(b) on the grounds that the Court’s dismissal of VidAngel’s Counterclaims with prejudice is a final decision, and there is no just reason for delay. (Mot. at 1). Plaintiffs Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, and Warner Bros. Entertainment Inc.(“Plaintiffs”) filed an opposition (“Oppo.”, Dkt. No. 210), and Plaintiffs filed a reply (“Reply”, Dkt. No. 213). The Court finds the motion appropriate for resolution without oral argument and VACATES the hearing set for October 6, 2017. See Fed. R. Civ. Proc. 78(b), Local Rule 7-15. For the following reasons, the Court GRANTS VidAngel’s Motion.

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a. Factual and Procedural Background

On June 9, 2016, Plaintiffs commenced this action by filing a complaint alleging that VidAngel was infringing upon Plaintiffs’ exclusive rights under the Copyright Act (17 U.S.C. § 101 et seq.), and violating the Digital Millennium Copyright Act (§ 1201 et seq.) (“DMCA”), with regard to several of Plaintiffs’ copyrighted works. (Dkt. No. 1). On July 12, 2016, VidAngel filed an answer and counterclaim, which they subsequently amended on September 16, 2016. (Amended Answer and First Amended Counterclaims, (“FACC”), Dkt. No. 77). On October 14, 2016, Plaintiffs filed a motion to dismiss VidAngel’s First Amended Counterclaims and strike VidAngel’s affirmative defense of copyright misuse. (Dkt. No. 103). Plaintiffs sought dismissal of all counterclaims, but specifically sought to dismiss the First, Second and Third Counterclaims on the grounds that: (1) VidAngel failed to plead a plausible Sherman Act § 1 claim based on any alleged vertical or horizontal conspiracy (First Counterclaim); (2) VidAngel failed to plead a claim for intentional interference with prospective economic advantage (Second Counterclaim); and (3) VidAngel failed to plead a claim for violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq. (Third Counterclaim). (Court’s August 10, 2017 Order, Dkt. No. 199 at 1-2). On, August 10, 2017 the Court granted Plaintiffs’ motion, dismissing each of VidAngel’s counterclaims with prejudice. VidAngel filed the instant motion on August 31, 2017.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 54(b) provides that:

When an action presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.

Fed. R. Civ. P. 54(b).

In determining whether to enter an appealable final judgment pursuant to Rule 54(b) a court must conduct a two-part inquiry. See Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 7-8, 100 S. Ct. 1460, 64 L. Ed. 2d 1 (1980). First, the judgment must be final with respect to one or more claims. Id. Second, "the district court must go on to determine whether there is any just reason for delay." Id. at 8. The Supreme Court has made clear that "[n]ot all final judgments on

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III. DISCUSSION

There is no dispute that the Court’s dismissal of VidAngel’s counterclaims constitutes a final judgment. A district court's judgment is final where it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S. Ct. 631, 89 L. Ed. 911 (1945). The Court dismissed VidAngel’s First, Second and Third counterclaims with prejudice. This constitutes "an ultimate disposition of [] individual claim[s] entered in the course of a multiple claims litigation." Wood v. GCC Bend, LLC, 422 F.3d 873, 878 (9th Cir. 2005) (quoting Curtiss-Wright, 466 U.S. at 7). Thus, the Court’s decision constituted a final judgment.

Rule 54(b) also requires a court to make an express finding that there is no "just reason for delay" in entering a judgment as to less than all claims. In evaluating whether there are just reasons to delay, a court "must take into account judicial administrative interests as well as the equities involved." Curtiss-Wright, 446 U.S. at 8. Among the factors to be considered in assessing judicial administrative interests are: whether certification would result in unnecessary appellate review; whether the claims finally adjudicated were separate, distinct, and independent of any of the other claims or counterclaims involved; whether review of these adjudicated claims would be mooted by any future developments in the case; and whether the nature of the claims was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals. Id. at 5.

VidAngel’s First, Second and Third Counterclaims are both factually and legally separable from the remaining claims and counterclaims at issue in the case. Plaintiff’s claims arise under § 106 of the Copyright Act, 17 U.S.C. § 106, and § 1201(a) of the Digital Millennium Copyright Act, 17 U.S.C. § 1201(a), and involve factual allegations that VidAngel violated Plaintiff’s rights by copying and publically displaying Plaintiff’s copyrighted works without a license. (See Complaint, Dkt. No. 1, ¶¶ 1-4). VidAngel’s counterclaims do not arise under copyright law, nor is there any factual overlap with Plaintiff’s claims. VidAngel’s First Counterclaim alleges that Plaintiffs violated section 1 of the Sherman Act, 15 U.S.C. § 1, by entering into horizontal and vertical agreements in an effort to prohibit secondary editing or filtering of motion pictures. (FACC at ¶¶ 88-90). VidAngel’s Second Counterclaim alleges that Plaintiffs intentionally interfered with VidAngel’s prospective economic advantage by inducing VidAngel’s actual and prospective partners not to enter into contractual relationships with VidAngel. (Id. at ¶¶

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Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 187 of 306 Case 2:16-cv-04109-AB-PLA Document 226 Filed 10/05/17 Page 4 of 5 Page ID #:6512 104-05). VidAngel’s Third Counterclaim largely relies on the allegations relevant to VidAngel’s antitrust claim (First Counterclaim), asserting that Plaintiffs alleged actions constitute “unfair” and “unlawful” conduct pursuant to California’s Unfair Competition Law, California Business and Professions Code §§ 17200 et seq. VidAngel does not seek the entry of final judgment for the remainder of its counterclaims, all of which seek declaratory relief with regard to the legality of VidAngel’s technology under copyright law and the Family Movie Act, codified at 17 U.S.C. § 110(11). Because Plaintiffs’ claims are factually and legally distinct from the counterclaims at issue, review of the counterclaims would not be mooted by any future developments in this case. Moreover, while it is possible that a subsequent appeal could be taken, it would occur after summary judgment or trial and, thus, would not present the same pleading issues. Based on the foregoing, the Court finds that all of the factors identified in Curtiss-Wright regarding judicial administrative interests are met in the instant matter.

VidAngel contends that their resources have been considerably drained by the litigation and requiring them to wait for an appeal of the dismissal of their counterclaims would be severely prejudicial. This case is set for trial in approximately eight months, thus VidAngel would experience a considerable delay in appealing the Court’s denial of its counterclaims if the Court denies their request for entry of final judgment. Plaintiffs contend that they would be prejudiced by the entry of final judgment because they would be required to litigate simultaneously in three courts. (Oppo at 4-5). The Court is aware of VidAngel’s declaratory judgment action in the District of Utah. While Plaintiffs clearly have a vested interest in that litigation, none of the Plaintiffs are named as Defendants in that action, therefore the Court does not consider this factor for the purpose of weighing the equities in the instant matter. The Ninth Circuit holds that district courts have substantial discretion when weighing equitable factors such as prejudice and delay. See Noel v. Hall, 568 F.3d 743, 747 (9th Cir. 2009). Although the prospect of waiting over eight months for an appeal is not unduly burdensome, it does tip the equities slightly in favor of VidAngel. Moreover, as mentioned above, all of the Curtiss-Wright factors regarding judicial administrative interests are met in the instant matter. Considering these factors in conjunction with the equity considerations, the Court finds that there is no just reason for delay, and therefore grants VidAngel’s motion for the entry of final judgment pursuant to Rule 54(b).

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS Plaintiffs’ Motion for the Entry of Final Judgment pursuant to Federal Rule of Civil Procedure 54(b).

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For the reasons stated in the accompanying order granting VidAngel’s Motion for Entry of Final Judgment pursuant to FRCP 54(b), Judgment is hereby entered in favor of Plaintiffs and against Defendant VidAngel. With respect to the Court’s August 10, 2017 Order, (Dkt. No. 199) the Clerk shall enter partial final judgment dismissing VidAngel’s First, Second and Third Counterclaims.

IT IS SO ORDERED.

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EXHIBIT H Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 190 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 1 of 18 Page ID #:6392 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 CENTRAL DISTRICT OF CALIFORNIA 12 DISNEY ENTERPRISES, INC., et al. Case No. 2:16−cv−04109−AB−PLA 13 Plaintiff(s), 14 ORDER RE: JURY/COURT v. TRIAL 15 VIDANGEL INC. I. SCHEDULE 16 Defendant(s). II. TRIAL PREPARATION 17 III. CONDUCT OF 18 ATTORNEYS AND 19 20 PARTIES 21 22 23 24 25 26 27 28

1 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 191 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 2 of 18 Page ID #:6393 1 I. SCHEDULE 2 The Scheduling Order governing this case is set forth in the Schedule of 3 Pretrial and Trial Dates chart below. Whether this is a jury trial or court trial is 4 indicated in the upper right hand box. If the parties wish to set additional dates, 5 they may file a Stipulation and Proposed Order so seeking. This may be especially 6 appropriate in class actions, patent cases, or cases for benefits under the Employee 7 Retirement Income Security Act of 1974 (“ERISA”). 8 Please refer to the Court’s Standing Order for requirements for specific 9 motions, discovery, certain types of filings, courtesy copies, emailing signature 10 items to chambers, alternative dispute resolution, and other matters pertaining to 11 all cases. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

2 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 192 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 3 of 18 Page ID #:6394 1 JUDGE ANDRÉ BIROTTE JR. SCHEDULE OF PRETRIAL AND TRIAL DATES 2 Trial and Final Pretrial Conference Dates Court Order 3 mm/dd/yyyy 6/5/2018 at 8:30 a.m. [ X ] Jury Trial 4 Trial [ ] Court Trial 7 Days 5 Final Pretrial Conference (“FPTC”) [L.R. 16], Hearing on Motions In 5/16/2018 at 11:00 a.m. Limine 6 Event 1 Weeks Note: Hearings shall be on Fridays at 10:00 a.m. Before Court Order 7 Other dates can be any day of the week. FPTC mm/dd/yyyy Last Date to Hear Motion to Amend Pleadings /Add Parties 10/27/2017 8 [Friday]

9 Non-Expert Discovery Cut-Off 17 1/5/2018 10 Expert Disclosure (Initial) 1/19/2018 11 Expert Disclosure (Rebuttal) 2/2/2018 12

13 Expert Discovery Cut-Off 12 2 2/23/2018

Last Date to Hear Motions [Friday] 14 • Rule 56 Motion due at least 5 weeks before hearing • Opposition due 2 weeks after Motion is filed 12 3/2/2018 15 • Reply due 1 week after Opposition is filed 3/9/2018 16 [ ] 1. Magistrate Judge Deadline to Complete Settlement Conference [L.R. 16-15] 10 [ ] 2. Court’s Mediation Panel [ X ] 3. Private Mediation 17 Trial Filings (first round) • Motions in Limine 18 • Memoranda of Contentions of Fact and Law [L.R. 16-4] • Witness Lists [L.R. 16-5] • Joint Exhibit List [L.R. 16-6.1] 19 • Joint Status Report Regarding Settlement 3 4/23/2018 • Proposed Findings of Fact and Conclusions of Law [L.R. 52] (court trial only) 20 • Declarations containing Direct Testimony, if ordered (court trial only) 21 Trial Filings (second round) • Oppositions to Motions In Limine 22 • Joint Proposed Final Pretrial Conference Order [L.R. 16-7] • Joint/Agreed Proposed Jury Instructions (jury trial only) • Disputed Proposed Jury Instructions (jury trial only) 23 • Joint Proposed Verdict Forms (jury trial only) • Joint Proposed Statement of the Case (jury trial only) 2 4/30/2018 • Proposed Additional Voir Dire Questions, if any (jury trial 24 only) • Evidentiary Objections to Decls. of Direct Testimony (court 25 trial only) 26 1 The parties may seek dates for additional events by filing a separate Stipulation and Proposed Order. Class actions and patent and ERISA cases in particular may need to vary from the above. 27 2 The parties may wish to consider cutting off expert discovery prior to the deadline for filing an MSJ. 28

3 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 193 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 4 of 18 Page ID #:6395 1 A. Deadlines for Motions. 2 All motions must be noticed to be heard on or before their respective 3 deadlines. All unserved parties will be dismissed at the time of the pretrial 4 conference pursuant to Local Rule 16-8.1. 5 B. Discovery Cut-Off and Discovery Disputes 6 1. Discovery Cut-off: The cut-off date for discovery is not the 7 date by which discovery requests must be served; it is the date by which all 8 discovery, including all hearings on any related motions, must be completed. 9 Thus, written discovery must be served, and depositions must begin, sufficiently 10 in advance of the discovery cut-off date to permit the discovering party enough 11 time to challenge via motion practice responses deemed to be deficient. Given the 12 requirements to meet and confer and to give notice, in most cases a planned motion 13 to compel must be discussed with opposing counsel at least six weeks before the 14 cut-off. 15 2. Expert Cut-off: All expert disclosures must be made in writing. 16 The parties should begin expert discovery shortly after the initial designation of 17 experts. The final pretrial conference and trial dates will not be continued merely 18 because expert discovery is not completed. Failure to comply with these or any 19 other orders concerning expert discovery may result in the expert being excluded 20 as a witness. 21 3. Discovery Disputes: Counsel must use best efforts to resolve 22 discovery problems among themselves in a courteous, reasonable and professional 23 manner. Counsel must adhere to the Civility and Professionalism Guidelines at 24 http://www.cacd.uscourts.gov/attorneys/admissions/civility-and-professionalism- 25 guidelines. 26 4. Discovery Motions: Discovery motions are handled by the 27 Magistrate Judge assigned to the case. Any motion challenging the adequacy of 28 discovery responses must be filed, served, and calendared sufficiently in advance

4 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 194 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 5 of 18 Page ID #:6396 1 of the discovery cut-off date to permit the responses to be obtained before that 2 date if the motion is granted. 3 C. Law and Motion and Local Rule 7-3 4 The Court reminds the parties of their obligation under Local Rule 7-3 to 5 meet and confer to attempt to resolve disputes before filing a motion. This Court 6 also requires the parties to meet and confer on any other request for relief (except 7 those identified in Local Rules 7-3 and 16-12). 8 Please see the Standing Order for specific instructions regarding Motions to 9 Dismiss, Motions to Amend, Motions for Summary Judgment, and other requests. 10 D. Settlement Conference/Alternative Dispute Resolution Procedures 11 Pursuant to Local Rule 16-15, the parties in every case must participate in a 12 Settlement Conference or Alternative Dispute Resolution (“ADR”) procedure. 13 The Scheduling Order indicates the procedure the parties shall use. If the parties 14 prefer an ADR procedure other than the one ordered by the Court, they shall file a 15 Stipulation and Proposed Order. This request will not necessarily be granted. 16 Counsel shall file a Joint Report regarding the outcome of settlement 17 discussions, the likelihood of possible further discussions, and any help the Court 18 may provide with regard to settlement negotiations, by 7 days after the settlement 19 conference. No case will proceed to trial unless all parties, including the principals 20 of all corporate parties, have appeared personally at a settlement conference. 21 E. Final Pretrial Conference/Proposed Final Pretrial Conference 22 Order 23 The Court has set a Final Pretrial Conference (“FPTC”) pursuant to Federal 24 Rule of Civil Procedure 16 and Local Rule 16-8. THE COURT REQUIRES 25 STRICT COMPLIANCE WITH FED. R. CIV. P. 16 AND 26, AND LOCAL 26 RULE 16. Each party appearing in this action must be represented at the FPTC 27 by the lead trial counsel for that party. Counsel must be prepared to discuss 28 streamlining the trial, including presentation of testimony by deposition excerpts

5 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 195 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 6 of 18 Page ID #:6397 1 or summaries, time limits, stipulations as to undisputed facts, and qualification of 2 experts by admitted resumes. 3 The parties must file a proposed Proposed Final Pretrial Conference Order 4 (“Proposed FPTCO”) 2 weeks (14 days) before the FPTC. The parties must adhere 5 to this deadline so chambers can prepare. A template for the Proposed FPTCO is 6 available on Judge Birotte’s webpage. The parties MUST use this template. 7 In specifying the surviving pleadings under section 1, state which claims or 8 counterclaims have been dismissed or abandoned, e.g., “Plaintiff’s second cause 9 of action for breach of fiduciary duty has been dismissed.” Also, in multiple-party 10 cases where not all claims or counterclaims will be prosecuted against all remaining 11 parties on the opposing side, please specify to which party each claim or counter- 12 claim is directed. 13 The parties must attempt to agree on and set forth as many uncontested facts 14 as possible. The Court will usually read the uncontested facts to the jury at the start 15 of trial. A carefully drafted and comprehensively stated stipulation of facts will 16 shorten the trial and increase jury understanding of the case. 17 In drafting the factual issues in dispute, the parties should attempt to state 18 issues in ultimate fact form, not in the form of evidentiary fact issues. The issues 19 of fact should track the elements of a claim or defense on which the jury will be 20 required to make findings. 21 Issues of law should state legal issues on which the Court will be required to 22 rule during the trial and should not list ultimate fact issues to be submitted to the 23 trier of fact. 24 The parties shall email the Proposed FPTCO in Microsoft Word format to 25 chambers at [email protected]. 26 II. TRIAL PREPARATION 27 THE PARTIES MUST STRICTLY COMPLY WITH LOCAL RULE 16. 28 Pursuant to Local Rule 16-2, lead trial counsel for each party are required to meet

6 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 196 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 7 of 18 Page ID #:6398 1 and confer in person 40 days in advance to prepare for the FPTC. Please review 2 Local Rule 16-2. This Order sets forth some requirements different from or in 3 addition to those set out in Local Rule 16. The Court may take the FPTC off 4 calendar or impose other sanctions for failure to comply with these requirements. 5 A. Schedule for Filing Pretrial Documents for Jury and Court Trials 6 All pretrial document copies shall be delivered to the Court “binder-ready” 7 (three-hole punched on the left side, without blue-backs, and stapled only in the 8 top left corner). Except for motions in limine, oppositions, the Joint Status Report 9 Regarding Settlement, and Declarations containing direct testimony, Counsel shall 10 email all of the above, including any amended documents, in Microsoft Word 11 format to [email protected]. 12 The schedule for filing pretrial documents is as follows: 13 At least 3 weeks (21 days) before the Final Pretrial Conference: 14 • Motions in Limine 15 • Memoranda of Contentions of Fact and Law 16 • Witness Lists 17 • Joint Exhibit List 18 • Joint Status Report Regarding Settlement 19 • Proposed Findings of Fact and Conclusions of Law (court trial only) 20 • Declarations containing Direct Testimony (court trial only) 21 At least 2 weeks (14 days) before the Final Pretrial Conference: 22 • Oppositions to Motions in Limine 23 • Joint Proposed Final Pretrial Conference Order 24 • Joint/Agreed Proposed Jury Instructions (jury trial only) 25 • Disputed Proposed Jury Instructions (jury trial only) 26 • Joint Proposed Verdict Forms (jury trial only) 27 • Joint Statement of the Case (jury trial only) 28 • Proposed Additional Voir Dire Questions, if any (jury trial only)

7 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 197 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 8 of 18 Page ID #:6399 1 • Evidentiary Objections to Declarations of Direct Testimony (court 2 trial only) 3 1. Motions in Limine 4 Motions in limine will be heard and ruled on at the FPTC. The Court may 5 rule on motions in limine orally only instead of in writing. All motions in limine 6 must be filed at least 3 weeks (21 days) before the final pretrial conference; 7 oppositions must be filed at least 2 weeks (14 days) before the final pretrial 8 conference; there will be no replies. Motions in limine and oppositions must not 9 exceed 10 pages in length. 10 Before filing a motion in limine, counsel must meet and confer to determine 11 whether opposing counsel intends to introduce the disputed evidence and to attempt 12 to reach an agreement that would obviate the motion. Motions in limine should 13 address specific issues (e.g., not “to exclude all hearsay”). Motions in limine 14 should not be disguised motions for summary adjudication of issues. The Court 15 may strike excessive or unvetted motions in limine. 16 2. Witness Lists 17 Witness Lists must be filed 3 weeks (21 days) before the FPTC. They 18 must be in the format specified in Local Rule 16-5, and must also include for 19 each witness (i) a brief description of the testimony, (ii) what makes the testimony 20 unique, and (iii) a time estimate in hours for direct and cross-examination 21 (separately stated). Please follow the template posted to Judge Birotte’s webpage. 22 Any Amended Witness List must be filed by 12:00 p.m. (noon) the Friday before 23 trial. 24 3. Joint Exhibit List 25 The Joint Exhibit List must be filed 3 weeks (21 days) before the FPTC. 26 It must be in the format specified in Local Rule 16-6, and shall include an 27 additional column stating any objections to authenticity and/or admissibility, and 28 the reasons for the objections. Please follow the template posted to Judge Birotte’s

8 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 198 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 9 of 18 Page ID #:6400 1 webpage. Any Amended Joint Exhibit List must be filed by 12:00 p.m. (noon) the 2 Friday before trial. 3 4. Jury Instructions (jury trial only) 4 Jury instructions must be filed no later than 2 weeks (14 days) prior to the 5 FPTC. The parties shall make every attempt to agree upon jury instructions before 6 submitting proposals to the Court. The Court expects counsel to agree on the 7 substantial majority of jury instructions, particularly when pattern or model 8 instructions provide a statement of applicable law. The parties shall meet and 9 confer on jury instructions according to the following schedule: 10 • 4 weeks (28 days) before FPTC: Counsel shall exchange proposed jury 11 instructions (general and special) 12 • 3 weeks (21 days) before FPTC: Counsel shall exchange any objections to the 13 instructions 14 • Until 2 weeks (14 days) before FPTC: Counsel shall meet and confer with the 15 goal of reaching an agreement on one set of Joint/Agreed Jury Instructions. 16 • 2 weeks (14 days) before FPTC: Counsel shall file their (1) Joint/Agreed 17 Proposed Jury Instructions and their (2) Disputed Jury Instructions. 18 If the parties disagree on any proposed jury instructions, they shall file: 19 (i) 1 set of Joint/Agreed Proposed Jury Instructions to which all parties agree; 20 and (ii) 1 set of Disputed Jury Instructions, which shall include a “redline” of any 21 disputed language and/or the factual or legal basis for each party’s position as 22 to each disputed instruction. Where appropriate, the disputed instructions shall be 23 organized by subject, so that instructions that address the same or similar issues are 24 presented sequentially. If there are excessive or frivolous disagreements over jury 25 instructions or the special verdict form, the Court will order the parties to further 26 meet and confer before trial and/or during trial until they substantially narrow their 27 disagreements. 28 \\\

9 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 199 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 10 of 18 Page ID #:6401 1 Sources: When the Manual of Model Jury Instructions for the Ninth 2 Circuit provides an applicable jury instruction, the parties should submit the most 3 recent version, modified and supplemented to fit the circumstances of this case. 4 Where California law applies, counsel should use the current edition of the 5 Judicial Council of California Civil Jury Instructions (“CACI”). If neither applies, 6 counsel should consult the current edition of O’Malley, et al., Federal Jury Practice 7 and Instructions. Counsel may submit alternatives to these instructions only if there 8 is a reasoned argument that they do not properly state the law or that they are 9 incomplete. The Court seldom if ever gives instructions derived solely from cases. 10 Format: Each requested instruction shall (1) cite the authority or 11 source of the instruction, (2) be set forth in full, (3) be on a separate page, (4) be 12 numbered, (5) cover only one subject or principle of law, and (6) not repeat 13 principles of law contained in any other requested instruction. If a standard 14 instruction has blanks or offers options (i.e. “he/she”), the parties must fill in 15 the blanks or make the appropriate selections in their proposed instructions. 16 Index: The Proposed Instructions must have an index that includes 17 the following for each instruction, as illustrated in the example below: 18 • the number of the instruction; 19 • the title of the instruction; 20 • the source of the instruction and any relevant case citations; and 21 • the page number of the instruction. 22 Example: 23 Instruction Number Title Source Page Number 24 1 Trademark-Defined 9th Cir. 8.5.1 1 25 (15.U.S.C. § 1127) 26 During the trial and before closing argument, the Court will meet with counsel 27 to settle the instructions, and counsel will have an opportunity to make a further 28 record concerning their objections.

10 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 200 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 11 of 18 Page ID #:6402 1 5. Joint Verdict Forms (jury trial only) 2 The parties shall make every attempt to agree upon a verdict form before 3 submitting proposals to the Court. Counsel shall file a proposed verdict form(s) 4 no later than 2 weeks (14 days) before the FPTC. If the parties are unable to agree 5 on a verdict form, the parties shall file one document titled “Competing Verdict 6 Forms” which shall include: (i) the parties’ respective proposed verdict form; (ii) a 7 “redline” of any disputed language; and (iii) the factual or legal basis for each 8 party’s respective position if the entire form is being disputed. 9 6. Joint Statement of the Case (jury trial only) 10 By 2 weeks (14 days) before the FPTC, counsel must file a Joint Statement 11 of the Case for the Court to read to the panel of prospective jurors before 12 commencement of voir dire. This should be a brief neutral statement no more 13 than one page long. 14 7. Voir Dire (jury trial only) 15 The Court will conduct the voir dire. The Court asks prospective jurors basic 16 questions (jurors’ place of residence, employment, whether familiar with the parties 17 or counsel, etc.), and may ask additional case-specific questions. By 2 weeks 18 (14 days) before the FPTC, counsel may, but are not required to, file proposed 19 case-specific voir dire questions for the Court’s consideration. 20 Generally, a jury consists of eight jurors. In most cases, the Court seats 16 21 prospective jurors in the jury box and conducts its initial voir dire. Each side has 3 22 peremptory challenges. If 16 jurors are seated in the box and all 6 peremptory 23 challenges are exercised, the remaining 8 jurors will constitute the jury panel. 24 If fewer than 6 peremptory challenges are exercised, the 8 jurors in the lowest 25 numbered seats will be the jury. The Court will not necessarily accept a stipulation 26 to a challenge for cause. If one or more challenges for cause are accepted, and all 27 6 peremptory challenges are exercised, the Court may decide to proceed with 6 or 28 7 jurors.

11 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 201 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 12 of 18 Page ID #:6403 1 8. Proposed Findings of Fact and Conclusions of Law (court trial 2 only) 3 For any trial requiring findings of fact and conclusions of law, counsel for 4 each party shall, no later than 3 weeks (21 days) before the FPTC, file and serve 5 on opposing counsel its Proposed Findings of Fact and Conclusions of Law in the 6 format specified in Local Rule 52-3. 7 The parties may submit Supplemental Proposed Findings of Fact and 8 Conclusions of Law during the trial. Once trial concludes, the Court may order 9 the parties to file Revised Proposed Findings of Fact and Conclusions of Law. 10 9. Declarations for Direct Testimony (court trial) 11 When ordered by the Court in a particular case, each party shall, at least 3 12 weeks (21 days) before the FPTC, file declarations containing the direct testimony 13 of each witness whom that party intends to call at trial. If such declarations are filed, 14 each party shall file any evidentiary objections to the declaration(s) submitted by 15 any other party by 2 weeks (14 days) before the FPTC. Such objections shall be 16 submitted in the following three-column format: (i) the left column should contain 17 a verbatim quote of each statement objected to (including page and line number); 18 (ii) the middle column should set forth a concise objection (e.g., hearsay, lacks 19 foundation, etc.) with a citation to the Fed. R. Evid. or, where applicable, a case 20 citation; and (iii) the right column should provide space for the court’s ruling on 21 the objection. The Court anticipates issuing its ruling on the objections the same 22 date as the FPTC. 23 B. Trial Exhibits 24 Trial exhibits that consist of documents must be submitted to the Court in 25 three-ring binders. Counsel shall submit to the Court 1 original set of exhibit 26 binders, and 2 copies: the original set shall be for the witnesses, and the 2 copies 27 are for the Court. All exhibits must be placed in three-ring binders indexed by 28 exhibit number with tabs or dividers on the right side. Exhibits shall be numbered

12 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 202 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 13 of 18 Page ID #:6404 1 1, 2, 3, etc., not 1.1, 1.2, etc. The defendant’s exhibit numbers shall not duplicate 2 plaintiff’s numbers. For all 3 sets of binders, the spine of each binder shall 3 indicate the volume number and the range of exhibit numbers included in the 4 volume. 5 • The original set of exhibits shall have official exhibit tags (yellow tags for 6 plaintiff’s exhibits, and blue tags for defendant’s exhibits) affixed to the 7 front upper right-hand corner of the exhibit, with the case number, case 8 name, and exhibit number stated on each tag. Tags may be obtained from 9 the Clerk’s Office, or counsel may print their own exhibit tags using Forms 10 G-14A and G-14B on the “Court Forms” section of the Court’s website. 11 • The 2 sets of copies of the exhibits shall not have official exhibit tags but 12 must be indexed with tabs or dividers on the right side. 13 Counsel will review the exhibit list and the exhibit binders with the Courtroom 14 Deputy Clerk (“CRD”) before the admitted exhibits are given to the jury. 15 The Court provides audio/visual equipment for use during trial. More 16 information is available at http://www.cacd.uscourts.gov/clerk-services/courtroom- 17 technology. The Court does not permit exhibits to be “published” by passing them 18 up and down the jury box. Exhibits may be displayed briefly using the screens in 19 the courtroom, unless the process becomes too time-consuming. 20 Counsel must meet and confer not later than 10 days before trial to stipulate as 21 far as possible to foundation, to waiver of the best evidence rule, and to exhibits 22 that may be received into evidence at the start of the trial. The exhibits to be so 23 received will be noted on the Court’s copy of the exhibit list. 24 C. Materials to Present on First Day of Trial 25 Counsel must present these materials to the CRD on the first day of trial: 26 1. The 3 sets of exhibit binders (1 original, 2 copies) described above. 27 2. Any deposition transcripts to be used at trial, either as evidence or 28 for impeachment. These lodged depositions are for the Court’s use;

13 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 203 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 14 of 18 Page ID #:6405 1 counsel must use their own copies during trial. 2 D. Court Reporter 3 Any party requesting special court reporter services for any hearing (i.e., real 4 time transmission, daily transcripts) shall notify the court reporter at least 2 weeks 5 before the hearing date. 6 E. Jury Trial 7 On the first day of trial, court will commence at 8:30 a.m. and conclude at 8 approximately 4:30 p.m., with a 1-hour lunch break. Counsel must appear at 8:30 9 a.m. to discuss preliminary matters with the Court. The Court will call a jury panel 10 only when it is satisfied that the matter is ready for trial. Jury selection usually takes 11 only a few hours. Counsel should be prepared to proceed with opening statements 12 and witness examination immediately after jury selection. 13 Fridays are usually reserved for the Court’s calendar, so generally there will 14 not be trial on Fridays. Therefore, during the first week, trial days are generally 15 Tuesday through Thursday. After the first week, trial days are generally Monday 16 through Thursday. Trial days are from 9:00 a.m. to approximately 4:30 p.m., with 17 two 15-minute breaks and a 1-hour lunch break. 18 III. CONDUCT OF ATTORNEYS AND PARTIES 19 A. Meeting and Conferring Throughout Trial 20 The parties must meet and confer on an ongoing basis throughout trial on 21 all issues as they come up. The Court will not resolve any issue during trial unless 22 and until the parties have attempted to resolve it themselves. The Court strictly 23 enforces this rule. 24 B. Opening Statements, Examining Witnesses, and Summation 25 Counsel must use the lectern. Counsel must not consume time by writing out 26 words, drawing charts or diagrams, etc. Counsel may prepare such materials in 27 advance. The Court will establish and enforce time limits for opening statements 28 and closing arguments, and for examination of witnesses.

14 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 204 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 15 of 18 Page ID #:6406 1 C. Objections to Questions 2 Counsel must not use objections to make a speech, recapitulate testimony, or 3 attempt to guide the witness. 4 When objecting, counsel must rise to state the objection and state only that 5 counsel objects and the legal ground of objection. If counsel wishes to argue an 6 objection further, counsel must ask for permission to do so. 7 D. General Decorum 8 1. Counsel must not approach the CRD or the witness box 9 without specific permission and must return to the lectern when the purpose 10 for approaching has been accomplished. 11 2. Counsel must rise when addressing the Court, and when the 12 Court or the jury enters or leaves the courtroom, unless directed otherwise. 13 3. Counsel must address all remarks to the Court. Counsel must 14 not address the CRD, the court reporter, persons in the audience, or opposing 15 counsel. Any request to re-read questions or answers shall be addressed to the 16 Court. Counsel must ask the Court’s permission to speak with opposing counsel. 17 4. Counsel must not address or refer to witnesses or parties by 18 first names alone, with the exception of witnesses under 14 years old. 19 5. Counsel must not offer a stipulation unless counsel have 20 conferred with opposing counsel and have verified that the stipulation will be 21 acceptable. 22 6. While Court is in session, counsel must not leave counsel table 23 to confer with any person in the back of the courtroom without the Court’s 24 permission. 25 7. Counsel must not make facial expressions, nod, shake their 26 heads, comment, or otherwise exhibit in any way any agreement, disagreement, 27 or other opinion or belief concerning the testimony of a witness. Counsel shall 28 admonish their clients and witnesses not to engage in such conduct.

15 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 205 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 16 of 18 Page ID #:6407 1 8. Counsel must never talk to jurors at all, and must not talk to 2 co-counsel, opposing counsel, witnesses, or clients where the conversation can be 3 overheard by jurors. Counsel should admonish their clients and witnesses to avoid 4 such conduct. 5 9. Where a party has more than one lawyer, only one may conduct 6 the direct or cross-examination of a particular witness, or make objections as to that 7 witness. 8 E. Promptness of Counsel and Witnesses 9 1. Promptness is expected from counsel and witnesses. Once 10 counsel are engaged in trial, this trial is counsel’s first priority. The Court will not 11 delay the trial or inconvenience jurors. 12 2. If a witness was on the stand at a recess or adjournment, 13 counsel who called the witness shall ensure the witness is back on the stand and 14 ready to proceed when trial resumes. 15 3. Counsel must notify the CRD in advance if any witness should 16 be accommodated based on a disability or for other reasons. 17 4. No presenting party may be without witnesses. If a party’s 18 remaining witnesses are not immediately available and there is more than a brief 19 delay, the Court may deem that party to have rested. 20 5. The Court attempts to cooperate with professional witnesses 21 and generally accommodates them by permitting them to be called out of sequence. 22 Counsel must anticipate any such possibility and discuss it with opposing counsel. 23 If there is an objection, counsel must confer with the Court in advance. 24 F. Exhibits 25 1. Each counsel must keep counsel’s own list of exhibits and 26 must note when each has been admitted into evidence. 27 2. Each counsel is responsible for any exhibits that counsel 28 secures from the CRD and must return them before leaving the courtroom at the

16 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 206 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 17 of 18 Page ID #:6408 1 end of the session. 2 3. An exhibit not previously marked must, at the time of its first 3 mention, be accompanied by a request that it be marked for identification. Counsel 4 must show a new exhibit to opposing counsel before the court session in which it is 5 mentioned. 6 4. Counsel must advise the CRD of any agreements with respect 7 to the proposed exhibits and as to those exhibits that may be received without 8 further motion to admit. 9 5. When referring to an exhibit, counsel must refer to its exhibit 10 number. Witnesses should be asked to do the same. 11 6. Counsel must not ask witnesses to draw charts or diagrams, 12 or ask the Court’s permission for a witness to do so. Any graphic aids must be fully 13 prepared before the court session starts. 14 G. Depositions 15 1. In using depositions of an adverse party for impeachment, 16 counsel may adhere to either one of the following procedures: 17 a. If counsel wishes to read the questions and answers as 18 alleged impeachment and ask the witness no further questions on that subject, 19 counsel shall first state the page and line where the reading begins and the 20 page and line where the reading ends, and allow time for any objection. 21 Counsel may then read the portions of the deposition into the record. 22 b. If counsel wishes to ask the witness further questions 23 on the subject matter, the deposition shall be placed in front of the witness and 24 the witness told to read the relevant pages and lines silently. Then counsel 25 may either ask the witness further questions on the matter and thereafter read 26 the quotations, or read the quotations and thereafter ask further questions. 27 Counsel should have an extra copy of the deposition for this purpose. 28 \\\

17 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 207 of 306 Case 2:16-cv-04109-AB-PLA Document 215 Filed 09/28/17 Page 18 of 18 Page ID #:6409 1 2. Where a witness is absent and the witness’s testimony is 2 offered by deposition, counsel may (a) have a reader occupy the witness chair and 3 read the testimony of the witness while the examining lawyer asks the questions, 4 or (b) have counsel read both the questions and the answers. 5 H. Using Numerous Answers to Interrogatories and Requests for 6 Admission 7 Whenever counsel expects to offer a group of answers to interrogatories or 8 requests for admissions extracted from one or more lengthy documents, counsel 9 should prepare a new document listing each question and answer and identifying 10 the document from which it has been extracted. Copies of this new document 11 should be given to the Court and opposing counsel. 12 I. Advance Notice of Unusual or Difficult Issues 13 If any counsel anticipate that a difficult question of law or evidence will 14 necessitate legal argument requiring research or briefing, counsel must give 15 the Court advance notice. Counsel are directed to notify the CRD at the day’s 16 adjournment if an unexpected legal issue arises that could not have been foreseen 17 and addressed in advance. Counsel must also advise the CRD at the end of each 18 trial day of any issues that must be addressed outside the presence of the jury 19 so that there is no interruption of the trial. THE COURT WILL NOT KEEP 20 JURORS WAITING. 21 22 Parties appearing pro se must comply with the Federal Rules of Civil 23 Procedure and the Local Rules. See Local Rules 1-3 and 83-2.2.3. 24 IT IS SO ORDERED. 25

26 Dated: September 28, 2017

27 HONORABLE ANDRÉ BIROTTE JR. 28 UNITED STATES DISTRICT COURT JUDGE

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EXHIBIT I Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 209 of 306 Case 2:16-cv-04109-AB-PLA Document 222 Filed 09/29/17 Page 1 of 19 Page ID #:6467

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON R. BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, Fiftieth Floor 6 Los Angeles, California 90071-3426 Telephone: (213) 683-9100 7 Facsimile: (213) 687-3702

8 Attorneys for Plaintiffs

9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12 DISNEY ENTERPRISES, INC.; Case No. 16-cv-04109-AB (PLAx) LUCASFILM LTD. LLC; 13 TWENTIETH CENTURY FOX FILM PLAINTIFFS’ MOTION FOR CORPORATION and WARNER PARTIAL SUMMARY JUDGMENT 14 BROS. ENTERTAINMENT INC., ON LIABILITY; MEMORANDUM OF POINTS AND AUTHORITIES 15 Plaintiffs, IN SUPPORT THEREOF

16 vs. Judge: Hon. André Birotte Jr.

17 VIDANGEL, INC., Date: November 17, 2017 Time: 10:00 a.m. 18 Defendant. Crtrm.: 7B

19 Filed concurrently herewith: (1) Statement of Uncontroverted Facts 20 and Conclusions of Law (2) [Proposed] Order 21

Trial Date: June 5, 2018 22 23 24 25 26 27 28

MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: 2 PLEASE TAKE NOTICE that on November 17, 2017, at 10:00 a.m., before 3 the Honorable André Birotte Jr., in Courtroom 7B of the above-captioned Court, 4 located at 350 West First Street, Los Angeles, California 90012, Plaintiffs Disney 5 Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, 6 and Warner Bros. Entertainment Inc. (collectively, “Plaintiffs”) will and hereby do 7 move for Partial Summary Judgment finding Defendant VidAngel, Inc. 8 (“VidAngel”) liable for violating § 1201(a) of the Digital Millennium Copyright Act 9 (“DMCA”), 17 U.S.C. § 1201(a), and for infringing Plaintiffs’ exclusive rights 10 under § 106 of the Copyright Act, id. § 106(1), (4). 11 This Motion is made on the grounds that there are no disputed issues of 12 material fact, and Plaintiffs are entitled to judgment as a matter of law because 13 (a) Plaintiffs own or control the exclusive rights with respect to works on DVD and 14 Blu-ray discs (“Discs”) that are the subject of Plaintiffs’ DMCA and infringement 15 claims; (b) VidAngel circumvented technological protection measures that 16 effectively control access to those works on Discs, in violation of § 1201(a); 17 (c) VidAngel infringed one or more exclusive rights under copyright to each such 18 work; and (d) VidAngel cannot present a triable issue of fact as to any affirmative 19 defense. 20 Plaintiffs move for partial summary judgment with respect to four 21 representative works. As to each of these works, the issues of VidAngel’s 22 circumvention and infringement liability are identical. The Court’s ruling as to 23 these representative works will guide the liability determination as to the remainder 24 of the copyrighted works for which Plaintiffs are entitled to seek relief. Plaintiffs 25 have requested that VidAngel present a complete list of the titles used in its service. 26 Once Plaintiffs have had the opportunity to review that list, Plaintiffs will work with 27 VidAngel to prepare a stipulated list of the copyrighted works that will be the 28 subject of Plaintiffs’ claim for damages at trial. The parties can present any disputes

NOTICE OF MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 regarding Plaintiffs’ ownership or exclusive rights with respect to any particular 2 works before or (if necessary) at trial. 3 This Motion is based upon this Notice of Motion and Motion; the attached 4 Memorandum of Points and Authorities; Plaintiffs’ Statement of Undisputed 5 Material Facts (“SUMF”) and Conclusions of Law; all documents on file in this 6 action; and such further or additional evidence or argument as may be presented 7 before or at the time of the hearing on this Motion. 8 9 DATED: September 29, 2017 MUNGER, TOLLES & OLSON LLP 10

11 By: /s/ Kelly M. Klaus 12 KELLY M. KLAUS Attorney for Plaintiffs 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 TABLE OF CONTENTS 2 Page 3 INTRODUCTION ...... 1 4 STATEMENT OF UNDISPUTED FACTS ...... 1 5 ARGUMENT ...... 2 6 I. APPLICABLE LEGAL STANDARDS ...... 2 7 A. Summary Judgment ...... 2 8 B. Law Of The Case ...... 2 9 II. PLAINTIFFS’ FIRST CAUSE OF ACTION: VIDANGEL 10 CIRCUMVENTED IN VIOLATION OF § 1201(a) OF THE DMCA ...... 3

11 III. PLAINTIFFS’ SECOND CAUSE OF ACTION: VIDANGEL INFRINGED AT LEAST ONE EXCLUSIVE RIGHT OF 12 COPYRIGHT UNDER § 106 ...... 4

13 A. Plaintiffs Own And Have Valid Copyright Registrations For The Works VidAngel Exploited Without Authorization ...... 4 14 B. VidAngel Violated At Least One Of Plaintiffs’ Exclusive Rights 15 Under § 106 ...... 5

16 1. VidAngel Violated Plaintiffs’ Reproduction Right ...... 5

17 2. VidAngel Violated Plaintiffs’ Exclusive Right To Publicly Perform Their Copyrighted Works ...... 5 18 IV. VIDANGEL’S DEFENSES FAIL AS A MATTER OF LAW ...... 6 19 A. VidAngel’s Fair Use Defense Fails As A Matter Of Law ...... 6 20 1. Factor 1: VidAngel’s wholesale copying and public 21 performance of the Works are commercial and non- transformative as a matter of law...... 6 22 2. Factor 2: VidAngel has conceded that the nature of the 23 Works weighs against fair use...... 8

24 3. Factor 3: VidAngel has conceded that the amount and substantiality of its use weighs against fair use...... 8 25 4. Factor 4: Even if VidAngel could show a fact issue 26 regarding market harm—and it cannot—a dispute on this factor cannot defeat summary judgment...... 8 27 B. VidAngel’s Remaining Defenses Cannot Preclude Summary 28 Judgment ...... 11 -i- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 TABLE OF CONTENTS (continued) 2 Page 3 CONCLUSION ...... 11 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -ii- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES 2 Page(s)

3 FEDERAL CASES 4 A&M Records, Inc. v. Napster, Inc., 5 239 F.3d 1004 (9th Cir. 2001) ...... 4, 10 6 Am. Broad. Cos. v. Aereo, Inc., 134 S. Ct. 2498 (2014)...... 5 7 8 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ...... 2 9 , 10 Arista Records LLC v. Myxer Inc. 2011 U.S. Dist. LEXIS 109668 (C.D. Cal. Apr. 1, 2011) ...... 8 11 Campbell v. Acuff-Rose Music, Inc., 12 510 U.S. 569 (1994) ...... 7, 8 13 Celotex Corp. v. Catrett, 14 477 U.S. 317 (1986) ...... 2

15 Chinatown Neighborhood Ass’n v. Harris, 16 33 F. Supp. 3d 1085, 1094 (N.D. Cal. 2014)...... 3 17 Classical Silk, Inc. v. Dolan Grp., Inc., 18 No. CV1409224ABMRWX, 2016 WL 7638113 (C.D. Cal. 2016), ...... 4 19 Clean Flicks of Colo., LLC v. Soderbergh, 433 F. Supp. 2d 1236 (D. Colo. 2006) ...... 6, 7 20 21 Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848 (9th Cir. 2017)...... passim 22 Elvis Presley Enters. v. Passport Video, 23 349 F.3d 622 (9th Cir. 2003) ...... 7, 8 24 Kelly v. Arriba Soft Corp., 25 336 F.3d 811 (9th Cir. 2003) ...... 7 26 L.A. News Serv. v. Tullo, 27 973 F.2d 791 (9th Cir. 1992) ...... 8 28 -iii- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES (continued) 2 Page 3 Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522 (9th Cir. 2008) ...... 6, 9 4 5 Lone Star Sec. & Video, Inc. v. City of Los Angeles, 989 F. Supp. 2d 981 (C.D. Cal. 2013) ...... 3 6 , 7 MAI Sys. Corp. v. Peak Comput., Inc. 991 F.2d 511 (9th Cir. 1993) ...... 4, 5 8 MDY Industries, LLC v. Blizzard Entm’t, Inc., 9 629 F.3d 928 (9th Cir. 2011) ...... 4 10 Morris v. Guetta, 11 No. LA CV12-00684 JAK, 2013 WL 440127 (C.D. Cal. 2013) ...... 9

12 On Command Video Corp. v. Columbia Pictures Indus., 13 777 F. Supp. 787 (N.D. Cal. 1991) ...... 5 14 Penguin Random House LLC v. Colting, No. 17-CV-386 (JSR), 2017 WL 3977000 (S.D.N.Y. Sept. 7, 2017) ...... 7 15 16 Practice Mgmt. Info. Corp. v. AMA, 121 F.3d 516 (9th Cir. 1997) ...... 11 17 18 Ranchers Cattlemen Action Legal Fund United Stockgrowers of Am. v. U.S. Dep’t of Agric., 19 499 F.3d 1108 (9th Cir. 2007) ...... 3

20 Reed v. Town of Gilbert, Ariz., 21 707 F.3d 1057 (9th Cir. 2013) ...... 3 22 Siegel v. Warner Bros. Entm’t Inc., 23 542 F. Supp. 2d 1098 (C.D. Cal. 2008) ...... 4 24 Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) ...... 9 25 26 Triad Sys. Corp. v. Se. Express Co., 64 F.3d 1330 (9th Cir. 1995) ...... 11 27 UMG Recordings, Inc. v. MP3.Com, Inc., 28 92 F. Supp. 2d 349 (S.D.N.Y. 2000) ...... 6, 10 -iv- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 TABLE OF AUTHORITIES (continued) 2 Page 3 Universal City Studios, Inc. v. Corley, 273 F.3d 429 (2d Cir. 2001) ...... 4 4 5 Warner Bros. Entm’t, Inc. v. WTV Sys., Inc., 824 F. Supp. 2d 1003 (C.D. Cal. 2011) ...... 5 6 , 7 Worldwide Church of God v. Philadelphia Church of God, Inc. 227 F.3d 1110 (9th Cir. 2000) ...... 6, 9 8 Wright v. Warner Books, Inc., 9 953 F.2d 731 (2d Cir. 1991) ...... 6 10 FEDERAL STATUTES 11 17 U.S.C. § 101 ...... 5 12 17 U.S.C. § 106 ...... 1, 4, 5 13 14 17 U.S.C. § 106(1) ...... 4 15 17 U.S.C. § 106(4) ...... 5

16 17 U.S.C. § 109(a) ...... 11 17 17 U.S.C. § 107 ...... 7 18 17 U.S.C. § 110(11) ...... 11 19 20 17 U.S.C. § 410(c) ...... 4 21 17 U.S.C. § 1201(a) ...... 1, 2, 3 22 17 U.S.C. § 1201(a)(1)(A) ...... 3 23 17 U.S.C. § 1201(a)(3)(A) ...... 3 24 17 U.S.C. § 1201(a)(3)(B) ...... 3 25 FEDERAL RULES 26 27 Fed. R. Civ. P. 56 ...... 2 28 Fed. R. Civ. P. 56(a) ...... 2 -v- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION 3 This motion presents a narrow question: whether VidAngel can avoid a 4 liability judgment on the basis of its fair use defense. 5 The answer is no. This Court and the Ninth Circuit decided that Plaintiffs 6 established a prima facie case for DMCA liability and infringement and that 7 VidAngel’s defenses, including its fair use defense, were meritless. These decisions 8 rested on legal rules that VidAngel cannot overcome. 9 Summary judgment on liability therefore should be granted, and the issues for 10 trial narrowed to damages.1 11 STATEMENT OF UNDISPUTED FACTS 12 The facts that are material to this motion are narrow, undisputed, and 13 established as a result of the preliminary injunction proceedings in this Court and 14 the Ninth Circuit. 15 1. Plaintiffs have submitted valid copyright registrations, registered within 16 five years of first publication, for each work at issue on this motion (the “Works”).2 17 SUMF ¶ 1. Plaintiffs have not authorized VidAngel to circumvent technological 18 protection measures (“TPMs”) controlling access to the Works on Discs, or to 19 exercise any of the exclusive rights of copyright under § 106 (including the rights to 20 copy or publicly perform those works). Id. ¶ 2. 21 22 1 Plaintiffs have focused this Motion on four representative works, one for each 23 Plaintiff. These works are Disney’s Frozen (2013); Lucasfilm’s Star Wars: The 24 Force Awakens (2015); Fox’s Ice Age (2002); and Warner Bros.’ Harry Potter and (2001). The Court’s ruling as to these representative works 25 the Sorcerer’s Stone should control the liability determination as to all other works that Plaintiffs own (or 26 to which they have exclusive rights) and that VidAngel exploited in its service. 27 2 Plaintiffs and VidAngel filed a stipulation to amend the complaint to add three new plaintiffs. See Dkt. 221. When the new plaintiffs are added to the case, Plaintiffs 28 will file a supplement to include a representative work for each. -1- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 2. Plaintiffs use TPMs (CSS, AACS and BD+) to control access to the Works 2 on Discs. Id. ¶ 4. These TPMs are access-control measures under the DMCA. Id. 3 ¶ 5; Ninth Cir. Op. (Dkt. 201) at 6, 26.3 VidAngel circumvented the access controls 4 on Discs containing each of the Works. Id. ¶ 6. 5 3. VidAngel copied the Works onto its computers and servers located around 6 the country. Id. ¶ 7. VidAngel used the “master” digital copies it created to stream 7 the Works to VidAngel’s paying customers. Id. ¶ 8. 8 ARGUMENT 9 I. APPLICABLE LEGAL STANDARDS 10 A. Summary Judgment 11 Summary judgment should be granted if the movant shows “there is no 12 genuine dispute as to any material fact and the movant is entitled to judgment as a 13 matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 14 317, 322 (1986). A factual issue will not defeat summary judgment unless it is both 15 “material”—i.e., “[it] might affect the outcome of the suit under the governing 16 law”—and “genuine”—i.e., “a reasonable jury could return a verdict for the 17 nonmoving party” based on the non-moving party’s claim. Anderson v. Liberty 18 Lobby, Inc., 477 U.S. 242, 248 (1986). 19 Rule 56 expressly authorizes the Court to grant summary judgment on part of 20 a claim, such as liability, leaving damages issues for trial. Fed. R. Civ. P. 56(a) 21 (“Motion for . . . Partial Summary Judgment . . . A party may move for summary 22 judgment, identifying . . . the part of each claim . . . on which summary judgment is 23 sought.”). 24 B. Law Of The Case 25 The Ninth Circuit’s opinion conclusively resolved a number of issues as a 26 matter of law. While preliminary injunction decisions may generally be revisited in 27 3 The Ninth Circuit opinion is reported at Disney Enterprises, Inc. v. VidAngel, Inc., 28 869 F.3d 848 (9th Cir. 2017). -2- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 later proceedings, the “law-of-the-case doctrine . . . can apply even when the issue 2 arises from a preliminary-injunction ruling, particularly where legal conclusions 3 have been made and no new evidence has been adduced.” See Lone Star Sec. & 4 Video, Inc. v. City of Los Angeles, 989 F. Supp. 2d 981, 989 (C.D. Cal. 2013) (citing 5 Reed v. Town of Gilbert, Ariz., 707 F.3d 1057, 1067 (9th Cir. 2013)); see also 6 Chinatown Neighborhood Ass’n v. Harris, 33 F. Supp. 3d 1085, 1094 (N.D. Cal. 7 2014) (“[A] higher court’s conclusions on pure issues of law are binding, even when 8 those issues were decided at the preliminary injunction phase”) (citing Ranchers 9 Cattlemen Action Legal Fund United Stockgrowers of Am. v. U.S. Dep’t of Agric., 10 499 F.3d 1108, 1114 (9th Cir. 2007)). 11 II. PLAINTIFFS’ FIRST CAUSE OF ACTION: VIDANGEL CIRCUMVENTED IN VIOLATION OF § 1201(a) OF THE DMCA 12 To prevail on their circumvention claim, Plaintiffs must prove that (1) they 13 employ TPMs “that effectively control[] access to a work protected” by copyright; 14 and (2) VidAngel “circumvent[ed]” those measures. 17 U.S.C. § 1201(a)(1)(A). 15 A TPM effectively controls access to a copyrighted work if, “in the ordinary 16 course of its operation, [it] requires the application of information, or a process or a 17 treatment, with the authority of the copyright owner, to gain access to the work.” Id. 18 at § 1201(a)(3)(B). To circumvent is “to descramble a scrambled work, to decrypt 19 an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a 20 technological measure, without the authority of the copyright owner.” Id. at 21 § 1201(a)(3)(A). 22 Plaintiffs employ TPMs on Discs containing the Works, and VidAngel 23 circumvented these TPMs: 24 (1) The TPMs that Plaintiffs use “are encryption access controls” under the 25 DMCA. Ninth Cir. Op. at 26 (“VidAngel concedes that CSS, AACS, and BD+ are 26 encryption access controls”); SUMF ¶ 5. 27 28 -3- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 (2) VidAngel circumvented these TPMs by “‘us[ing] software to decrypt’” 2 them. Ninth Cir. Op. at 26 (noting VidAngel conceded this point); SUMF ¶ 6. As a 3 matter of law, VidAngel circumvented in violation of § 1201(a)(1)(A). See Ninth 4 Cir. Op. at 26-27 (citing MDY Industries, LLC v. Blizzard Entm’t, Inc., 629 F.3d 928 5 (9th Cir. 2011) and Universal City Studios, Inc. v. Corley, 273 F.3d 429, 444 (2d 6 Cir. 2001)). 7 III. PLAINTIFFS’ SECOND CAUSE OF ACTION: VIDANGEL INFRINGED AT LEAST ONE EXCLUSIVE RIGHT OF COPYRIGHT 8 UNDER § 106 9 To prevail on their infringement claim, Plaintiffs need establish only that 10 (1) they own or control the exclusive rights at issue; and (2) VidAngel infringed at 11 least one such exclusive right. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 12 1013 (9th Cir. 2001). 13 A. Plaintiffs Own And Have Valid Copyright Registrations For The Works VidAngel Exploited Without Authorization 14 Certificates of registration issued by the Copyright Office create a 15 presumption of copyright validity and ownership. 17 U.S.C. § 410(c). Plaintiffs 16 have submitted valid copyright registrations for the Works, registered within five 17 years of first publication. SUMF ¶ 1. Copyright registrations “are self- 18 authenticating under Rule 902 of the Federal Rules of Evidence.” Classical Silk, 19 Inc. v. Dolan Grp., Inc., No. CV1409224ABMRWX, 2016 WL 7638113, at *1, n.2 20 (C.D. Cal. 2016), reconsideration denied, No. CV1409224ABMRWX, 2016 WL 21 7637668 (C.D. Cal. Mar. 1, 2016); see also Siegel v. Warner Bros. Entm’t Inc., 542 22 F. Supp. 2d 1098, 1121 (C.D. Cal. 2008) (admitting copyright registration 23 certificates as self-authenticating on summary judgment). VidAngel admitted that it 24 has used each of the Works on its service, meaning it copied and streamed 25 performances of them. SUMF ¶ 3. 26 27 28 -4- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 B. VidAngel Violated At Least One Of Plaintiffs’ Exclusive Rights Under § 106 2 1. VidAngel Violated Plaintiffs’ Reproduction Right 3 Plaintiffs have the exclusive right “to reproduce” the Works “in copies.” 17 4 U.S.C. § 106(1). VidAngel copied the Works from Discs onto its computers and 5 servers. Ninth Cir. Op. at 13; PI Order (Dkt. 144) at 9; SUMF ¶ 7. As a matter of 6 law, this conduct infringes Plaintiffs’ reproduction right. Ninth Cir. Op. at 13-14 7 (citing MAI Sys. Corp. v. Peak Comput., Inc., 991 F.2d 511, 518 (9th Cir. 1993) 8 (“transferring digital files ‘from a permanent storage device to a computer’s RAM’ 9 is ‘copying’ under § 106”)). 10 VidAngel’s infringement of Plaintiffs’ reproduction right is in and of itself 11 sufficient to impose liability. See Ninth Cir. Op. at 25 n.13. 12 2. VidAngel Violated Plaintiffs’ Exclusive Right To Publicly 13 Perform Their Copyrighted Works 14 Plaintiffs have the exclusive right “to perform the copyrighted work 15 publicly.” 17 U.S.C. § 106(4). This Court concluded that VidAngel’s streaming is 16 a public performance because VidAngel “transmit[s]” “performance[s]” “of the 17 work[s]” to members of “the public.” 17 U.S.C. § 101 (definition of public 18 performance and “to transmit”); PI Order at 11 (citing Am. Broad. Cos. v. Aereo, 19 Inc., 134 S. Ct. 2498 (2014) (“Aereo”); Warner Bros. Entm't, Inc. v. WTV Sys., Inc., 20 824 F. Supp. 2d 1003, 1006-07, 1010 (C.D. Cal. 2011); On Command Video Corp. 21 v. Columbia Pictures Indus., 777 F. Supp. 787 (N.D. Cal. 1991)). 22 VidAngel argued to this Court and to the Ninth Circuit that its sell-buyback 23 scheme transformed its public streaming into “private” performances. Although the 24 Ninth Circuit did not address this argument, see Ninth Cir. Op. at 25 n.13, this Court 25 rejected it, even assuming VidAngel’s view of the facts. VidAngel’s users “view a 26 stream from a master copy stored on a server, not a DVD temporarily ‘owned’ by 27 the user.” PI Order at 11; see also SUMF ¶ 8 (VidAngel concedes to streaming 28 -5- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 from a master copy). Nothing has changed; neither as a matter of fact nor as a 2 matter of law that warrants any different conclusion now. 3 IV. VIDANGEL’S DEFENSES FAIL AS A MATTER OF LAW 4 A. VidAngel’s Fair Use Defense Fails As A Matter Of Law 5 The question of fair use is appropriate on summary judgment: “if, even after 6 resolving all issues in favor of the opposing party, a reasonable trier of fact can 7 reach only one conclusion, a court may conclude as a matter of law whether the 8 challenged use qualifies as a fair use of the copyrighted work.” Worldwide Church 9 of God v. Philadelphia Church of God, Inc., 227 F.3d 1110, 1115 (9th Cir. 2000) 10 (deciding question of fair use on summary judgment because there were not issues 11 of material fact); see also Wright v. Warner Books, Inc., 953 F.2d 731, 735 (2d Cir. 12 1991) (noting that the “mere fact that a determination of the fair use question 13 requires an examination of the specific facts of each case does not necessarily mean 14 that in each case involving fair use there are factual issues to be tried”); Clean Flicks 15 of Colo., LLC v. Soderbergh, 433 F. Supp. 2d 1236, 1237 (D. Colo. 2006) (granting 16 “partial summary judgment” on liability for copyright infringement claims and 17 rejecting fair use defense); UMG Recordings, Inc. v. MP3.Com, Inc., 92 F. Supp. 2d 18 349, 353 (S.D.N.Y. 2000) (same). 19 The Ninth Circuit rejected VidAngel’s position on all four of the statutory fair 20 use factors. Ninth Cir. Op. at 21-25; see also 17 U.S.C. § 107(1)-(4) (fair use 21 factors). Those decisions are binding conclusions of law. 22 1. Factor 1: VidAngel’s wholesale copying and public performance of the Works are commercial and non- 23 transformative as a matter of law. 24 It is undisputed that VidAngel’s use is commercial. SUMF ¶ 10. It is 25 therefore “presumptively . . . unfair.” Ninth Cir. Op. at 22 (citing Leadsinger, Inc. v. 26 BMG Music Publ’g, 512 F.3d 522, 530 (9th Cir. 2008)). 27 VidAngel’s use is also not transformative. VidAngel’s use, like Plaintiffs’ 28 use, is to provide users with popular movies and television shows “for entertainment -6- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 purposes.” Ninth Cir. Op. at 22 (citing Kelly v. Arriba Soft Corp., 336 F.3d 811, 2 819 (9th Cir. 2003)); SUMF ¶ 9. VidAngel most recently described its purpose as to 3 “enable consumers to enjoy the benefits conferred by Congress in the FMA.” First 4 Mot. to Clarify (Dkt. 182) at 13. The Ninth Circuit considered and rejected this 5 argument. The Ninth Circuit held: “[a]lthough removing objectionable content may 6 permit a viewer to enjoy a film,” the use is not transformative because it “does not 7 necessarily ‘add[] something new’ or change the ‘expression, meaning, or message’ 8 of the film.” Ninth Cir. Op. at 22 (citing Campbell v. Acuff-Rose Music, Inc., 510 9 U.S. 569, 579 (1994)). Addressing VidAngel’s form of filtering in particular, the 10 Court rejected the idea that omitting scenes or audio transformed the work: “Star 11 Wars is still Star Wars, even without Princess Leia’s bikini scene.” Id. Nothing 12 about the Ninth Circuit’s conclusion on the first fair use factor will change with 13 further discovery. 14 Other courts have reached the same conclusion on similar facts. For example, 15 simple abridgements are not transformative and are not protected by fair use. 16 Penguin Random House LLC v. Colting, No. 17-CV-386 (JSR), 2017 WL 3977000 17 at *8 (S.D.N.Y. Sept. 7, 2017) (noting that “U.S. law no longer protects 18 abridgements as fair use”). Alterations made to remove adult themes do not make 19 an infringer’s use transformative. As Judge Rakoff explained in Penguin Random 20 House, “the mere removal of adult themes does not meaningfully ‘recast’ the work 21 any more than an airline’s editing of R-rated films so that they can be shown to 22 children on a flight absolve the airline from paying a royalty.” 2017 WL 3977000 at 23 *9. VidAngel’s skipping and muting of selected content does not recast or 24 transform the work. See also Clean Flicks, 433 F. Supp. 2d at 1241 (rejecting that 25 “edits” which were only “a small percentage of most of the films copied” met the 26 definition of transformative). 27 28 -7- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 2. Factor 2: VidAngel has conceded that the nature of the Works weighs against fair use. 2 VidAngel has conceded that the second factor—“the nature of the 3 copyrighted work”—weighs against finding fair use. Ninth Cir. Op. at 21-22 4 (noting VidAngel conceded this Court’s prior ruling was correct on this factor). It 5 also never seriously challenged this factor before this Court. Nor could it— 6 Plaintiffs’ movies and television shows are “squarely within the core of copyright 7 protection.” Elvis Presley Enters. v. Passport Video, 349 F.3d 622, 629 (9th Cir. 8 2003). 9 3. Factor 3: VidAngel has conceded that the amount and 10 substantiality of its use weighs against fair use. 11 VidAngel also has conceded that the third factor—“the amount and 12 substantiality of the portion used in relation to the copyrighted work as a whole”— 13 weighs against fair use. Ninth Cir. Op. at 21-22 (noting VidAngel conceded this 14 Court’s prior ruling was correct on this factor). It is undisputed that VidAngel 15 copies the entirety of the Works and then performs substantially all of them, 16 including the heart of the Works. SUMF ¶¶ 7, 8; Ninth Cir. Op. at 23 (“VidAngel’s 17 service does not require removing a crucial plot element”). This factor weighs 18 against fair use, and no facts VidAngel could discover would change that. PI Order 19 at 13-15 (citing Campbell, 510 U.S. at 586; Elvis Presley Enters., 349 F.3d at 630; 20 L.A. News Serv. v. Tullo, 973 F.2d 791, 798 (9th Cir. 1992); Arista Records LLC v. 21 Myxer Inc., 2011 U.S. Dist. LEXIS 109668 (C.D. Cal. Apr. 1, 2011)). 22 4. Factor 4: Even if VidAngel could show a fact issue regarding market harm—and it cannot—a dispute on this factor cannot 23 defeat summary judgment. 24 The fourth factor (market harm) asks, if the challenged use becomes 25 “unrestricted and widespread,” would it “result in a substantially adverse impact on 26 the potential market for the original.” Ninth Cir. Op. at 23 (quoting Campbell, 510 27 U.S. at 590). The Ninth Circuit held that this factor did not give VidAngel a 28 meritorious fair use defense. See Ninth Cir. Op. at 23-24. VidAngel argues that -8- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 with further discovery and under the summary judgment (or trial) standard, the 2 result could be different. VidAngel is wrong. Additional discovery would not 3 change the outcome. 4 First, as the Ninth Circuit held, because VidAngel’s use is commercial and 5 non-transformative “the likelihood of market harm ‘may be presumed.’” 6 Leadsinger, 512 F.3d at 531 (citing Sony Corp. of Am. v. Universal City Studios, 7 Inc., 464 U.S. 417, 451 (1984)); see also Ninth Cir. Op. at 23. That presumption is 8 well justified in this case, given VidAngel’s admittedly unauthorized and intentional 9 exploitation of the Works in the Internet streaming market. 10 Second, there are only two legally cognizable showings that VidAngel 11 conceivably could make with further discovery. None would be sufficient for 12 VidAngel’s fair use defense to overcome its clear liability. 13 (1) The evidence could show that VidAngel’s unauthorized use of the 14 Works threatens harm to either actual or prospective markets. In that case, this 15 factor, like the other three factors, would weigh decisively against VidAngel. 16 (2) The evidence could show that VidAngel’s use is neutral, i.e., that it 17 does not harm actual or potential markets. In that case, VidAngel’s fair use defense 18 would still fail because (a) VidAngel has the burden of showing that fair use 19 affirmatively excuses its infringement, and (b) all three of the other factors all weigh 20 against fair use. See Ninth Cir. Op. at 24 (citing Leadsinger, 512 F.3d at 532) 21 (where defendant clearly loses on first three factors, the “market factor is less 22 important”). 23 The Ninth Circuit faced this very issue in Worldwide Church of God. There, 24 reviewing the defense of fair use on summary judgment, the court held that “[t]he 25 first three factors weigh[ed] in [plaintiff’s] favor and the fourth factor [was], at 26 worst, neutral.” The court held that, “[o]n balance, the defense of fair use . . . 27 fail[ed]” and that the plaintiff was entitled to summary judgment on liability. 227 28 F.3d at 1120. See also Morris v. Guetta, No. LA CV12-00684 JAK, 2013 WL -9- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 440127, at *12-13 (C.D. Cal. 2013) (“any dispute over the market effect is 2 immaterial because a lack of harm would not change the determination of an 3 unjustified use”). The fair use defense simply will not excuse VidAngel’s non- 4 transformative, commercial, wholesale appropriation of creative works at the core of 5 copyright protection, regardless of the market effect of VidAngel’s taking. 6 VidAngel asserted that its violation of Plaintiffs’ rights actually benefitted 7 Plaintiffs because VidAngel allegedly bought more Discs than Plaintiffs otherwise 8 would have sold. 9 The Ninth Circuit has made clear that VidAngel cannot use this argument to 10 prevail on the fourth fair use factor or the overall defense: “VidAngel’s purchases 11 of [D]iscs . . . do not excuse its infringement.” Ninth Circuit Op. at 23. This 12 conclusion followed from longstanding Ninth Circuit precedent: “Any allegedly 13 positive impact of defendant’s activities on plaintiffs’ prior market in no way frees 14 defendant to usurp a further market that directly derives from reproduction of the 15 plaintiffs’ copyrighted works.” A&M Records, 239 F.3d at 1017; see also UMG 16 Recordings, 92 F. Supp. 2d at 352 (same). 17 As a matter of law, it would not matter if VidAngel introduced a survey or 18 other evidence showing that no user (or very few) would watch Plaintiffs’ works 19 without VidAngel’s filtering service.4 The Internet streaming market —i.e., the 20 market that VidAngel wanted to exploit—is for Plaintiffs, not VidAngel, to 21 authorize. 22 In sum, under no circumstances can VidAngel avoid liability based on the fair 23 use defense. 24 25 26 27 4 At the preliminary injunction stage, VidAngel claimed that a user survey supported this argument. In fact, the actual survey results showed that 49% of its users would 28 have watched the movies VidAngel streamed to them without filters. SUMF ¶ 11. -10- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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1 B. VidAngel’s Remaining Defenses Cannot Preclude Summary Judgment 2 The Ninth Circuit also rejected VidAngel’s defense under the Family Movie 3 Act of 2005 (“FMA”). The FMA does not excuse VidAngel’s circumvention or 4 copying. Ninth Cir. Op. at 17 (“[T]he FMA exempts compliant filtered 5 performances, rather than the processes that make such performances possible.”). 6 Likewise, because VidAngel streams from a “master file” it creates by 7 circumventing the TPMs on Discs containing the Works, SUMF ¶ 8, it streams from 8 an unauthorized copy, and therefore is not protected by the FMA, Ninth Cir. Op. at 9 15. 10 The Ninth Circuit also found that VidAngel had abandoned any argument 11 under the First Sale Doctrine, and that even if it had not, the argument failed on the 12 merits. Id. at 14 n.7; id. at 14 (citing 17 U.S.C. § 109(a)). 13 Finally, this Court has stricken VidAngel’s copyright misuse defense with 14 prejudice. Order Granting Pls.’ Mot. to Dismiss (Dkt. 199) at 19 (citing Triad Sys. 15 Corp. v. Se. Express Co., 64 F.3d 1330, 1337 (9th Cir. 1995); Practice Mgmt. Info. 16 Corp. v. AMA, 121 F.3d 516 (9th Cir. 1997)). 17 CONCLUSION 18 The Court should grant Plaintiffs’ Motion for Partial Summary Judgment on 19 VidAngel’s liability. 20

21

22 DATED: September 29, 2017 MUNGER, TOLLES & OLSON LLP 23

24 By: 25 /s/ Kelly M. Klaus KELLY M. KLAUS 26 Attorneys for Plaintiffs 27 28 -11- MOTION FOR PARTIAL SUMMARY JUDGMENT 16-CV-04109-AB (PLAX)

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EXHIBIT J Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 229 of 306 Case 2:16-cv-04109-AB-PLA Document 212 Filed 09/20/17 Page 1 of 9 Page ID #:6372

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON R. BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, Fiftieth Floor 6 Los Angeles, California 90071 Telephone: (213) 683-9100 7 Facsimile: (213) 687-3702

8 Attorneys for Plaintiffs

9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12 DISNEY ENTERPRISES, INC., Case No. 16-cv-04109-AB (PLAx) 13 LUCASFILM LTD. LLC, TWENTIETH CENTURY FOX FILM STIPULATION REGARDING 14 CORPORATION and WARNER REQUEST TO SET PRETRIAL BROS. ENTERTAINMENT INC., AND TRIAL SCHEDULE 15 Plaintiffs, 16 Judge: Hon. André Birotte Jr. vs. Crtrm.: 7B 17 VIDANGEL, INC., 18 Trial Date: None Set Defendant. 19 20 21 22 23 24 25 26 27 28

STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 Plaintiffs and Defendant VidAngel, Inc. (jointly, “Parties”) respectfully 2 request that the Court hold a status conference and/or enter a case management 3 schedule setting pretrial and trial dates. The Parties submitted their Joint Rule 26(f) 4 Report on December 5, 2016 (Dkt. 139). There have been a number of 5 developments since that date, including the Ninth Circuit’s decision on August 24, 6 2017. 7 The Parties have met and conferred but have been unable to reach agreement 8 on a schedule. In the sections that follow, the Parties submit their respective 9 proposed schedules and reasons for the same. 10 If the Court has questions about the Parties’ respective schedules or 11 submissions, Plaintiffs believe the Parties could address those questions either 12 during a conference at the Court’s convenience (including, if convenient for the 13 Court, in a short telephonic status conference), or at one of the two hearings 14 currently on calendar on noticed motions (the September 29th hearing on Plaintiffs’ 15 Motion for Sanctions (Dkt. 205) or the October 6th hearing on VidAngel’s Motion 16 for Entry of Final Judgment on its Antitrust Counterclaim (Dkt. 203)). 17 If the Court believes a hearing is unnecessary, the Parties are filing 18 concurrently a [Proposed] Order that includes their respective schedules. 19 20 Plaintiffs’ Proposed Schedule:1 21  Hearing on Last Motions to Amend to Add Parties: October 27, 2017 22  Fact Discovery Cutoff: December 22, 2017 23  Expert Initial Disclosures: January 12, 2018 24  Expert Rebuttal Disclosures: January 26, 2018 25  Expert Discovery Cutoff: February 9, 2018 26

27 1 Plaintiffs have also attached these dates within the Court’s Schedule of Pretrial and 28 Trial Dates Worksheet. -1- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1  Last Date to Hear Motions: February 9, 2018 2  Settlement Conference: January 5, 2018 3  Trial Filings (first round): February 23, 2018 4  Trial Filings (second round): March 2, 2018 5  Final Pretrial Conference: March 16, 2018 6  Trial April 3, 2018 (5 trial days) 7 8 Plaintiffs’ Statement in Support of Proposed Schedule: 9 This case has been pending since June 2016 and the Court has a preference 10 for trials to be scheduled within 18 months of the filing of a complaint. See 11 Schedule of Pretrial and Trial Dates Worksheet (scheduling of trial should be a 12 “Tuesday at 8:30 a.m., within 18 months after Complaint filed”). Plaintiffs propose 13 a schedule that allows all Parties ample time to conduct discovery on the very 14 limited issues that remain—damages issues—and still gets this case to trial within 15 20 months of its filing. 16 Since the Parties submitted their last case management statement, in 17 December 2016 (Dkt. 139), the case has narrowed considerably. The Ninth Circuit 18 affirmed the Preliminary Injunction in a comprehensive opinion that establishes 19 VidAngel’s liability for violating the Digital Millennium Copyright Act’s 20 (“DMCA”) anti-circumvention prohibitions and illegally copying Plaintiffs’ 21 copyrighted works as a matter of law. (Dkt. 201.) This Court has dismissed with 22 prejudice VidAngel’s antitrust counterclaim and VidAngel’s copyright misuse 23 defense. (Dkt. 199.) The only remaining issues to explore are damages issues, 24 namely, what VidAngel will have to pay Plaintiffs for its DMCA violations and 25 infringement. 26 Plaintiffs, within the next two weeks, will file a motion for partial summary 27 judgment on the question of VidAngel’s liability. During pre-motion meet-and- 28 confer discussions, Plaintiffs asked VidAngel to stipulate to liability on the basis of -2- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 the Ninth Circuit’s opinion. VidAngel takes the position that the Ninth Circuit’s 2 opinion leaves open whether VidAngel can prevail on its fair use defense. 17 3 U.S.C. § 107. VidAngel agrees, however, that following the Ninth Circuit opinion, 4 VidAngel has no basis to argue there are any disputed issues of material fact on any 5 other issue regarding Plaintiffs’ showing of liability and VidAngel’s defenses 6 thereto. Plaintiffs will show in their motion that the Ninth Circuit’s opinion 7 regarding fair use (like many of the Ninth Circuit’s other rulings) sets forth binding 8 principles of law that will not change with additional discovery, and that VidAngel’s 9 reliance on the fair use defense is irrelevant or insufficient as a matter of law. 10 Regardless of how the Court rules on Plaintiffs’ summary judgment motion, 11 the scope of discovery will be very narrow. Plaintiffs are entitled to either statutory 12 or actual damages (Plaintiffs’ lost profits and VidAngel’s profits), at Plaintiffs’ 13 election. The Parties have served discovery requests and interrogatories. 14 During the Parties’ meet-and-confer, VidAngel took the position that 15 Plaintiffs have not limited their discovery to damages issues. VidAngel is wrong. 16 When pressed to cite an example, VidAngel pointed only to Plaintiffs’ completely 17 unsurprising request for all documents related to any of VidAngel’s affirmative 18 defenses. If VidAngel believes that none of its affirmative defenses (apart from fair 19 use) relate to damages, VidAngel can say that. If VidAngel maintains its fair use 20 defense and its affirmative defenses insofar as they concern damages, VidAngel can 21 produce whatever documents it has that it believes support these defenses. In all 22 events, the Parties can and should complete discovery that is proportional to the 23 issues that remain within the next three months.2 In light of the limited issues that 24 25 2 VidAngel predicts there will be discovery disputes requiring the Court’s intervention. Plaintiffs believe the Parties can and should be incentivized to work 26 out their disputes. The extended schedule that VidAngel proposes will provide 27 incentives for disputes and motions. Likewise, the three months that VidAngel proposes between the cut-off for expert discovery and trial is unnecessary in light of 28 the early motion for summary judgment that Plaintiffs will file; VidAngel will use -3- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 remain and the amount of time this case has been pending, Plaintiffs’ proposed 2 schedule is more than reasonable. 3 4 VidAngel’s Proposed Schedule:3 5  Hearing on Last Motions to Amend to Add Parties: October 27, 2017 6  Fact Discovery Cutoff: January 19, 2018 7  Expert Initial Disclosures: February 9, 2018 8  Expert Rebuttal Disclosures: February 23, 2018 9  Expert Discovery Cutoff: March 9, 2018 10  Last Date to Hear Motions: March 9, 2018 11  ADR/Settlement Conference Completion Date: March 23, 2018 12  Trial Filings (first round): May 11, 2018 13  Trial Filings (second round): May 18, 2018 14  Final Pretrial Conference: June 1, 2018 15  Trial: June 18, 2018 (7 trial days) 16 17 VidAngel’s Statement in Support of Proposed Schedule: 18 Even though VidAngel’s proposed schedule allows somewhat more time for 19 discovery than Plaintiffs’ proposal does, it is still an ambitious schedule and may 20 well prove to be unduly conservative. The parties commenced discovery only on 21 September 11, 2017.4 VidAngel’s schedule contemplates a fact discovery cut-off 22 date approximately four months thereafter. 23 24 this window to attempt to push back the discovery deadlines without impacting the trial date—a contingency that VidAngel, in the very first paragraph of its statement 25 below, suggests will come to pass. 26 3 VidAngel also attached these dates within the Court’s Schedule of Pretrial and Trial Dates Worksheet. 27 4 The parties did engage in very limited discovery during July 2016 related to the 28 preliminary injunction application. At that time, VidAngel had not conducted its -4- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 This Court should allow sufficient time in the fact discovery schedule to 2 permit the parties to complete discovery and motion to compel practice. To date, in 3 granting Plaintiffs’ motion for a preliminary injunction, this Court has only assessed 4 whether Plaintiffs are likely to succeed on the merits of their claims and VidAngel’s 5 defenses. Neither this Court nor the Ninth Circuit has rendered an actual and final 6 determination on the merits of the parties’ respective claims or defenses. In 7 particular, VidAngel contends that all four factors relevant to its fair use defense are 8 subject to discovery before any final determination is rendered as to liability or a 9 permanent injunction. For example, VidAngel contends that discovery is especially 10 appropriate with respect to both the first and fourth factors for fair use – that is, the 11 transformative purpose and character of VidAngel’s original filtering technology 12 and the effect of that service on the potential market for or value of Plaintiffs’ 13 copyrighted works. Plaintiffs have propounded discovery on these factors, as well 14 as on overlapping damages issues. 15 The parties commenced discovery September 11, 2017, with the mutual 16 exchange of document requests and interrogatories and the service by VidAngel of a 17 subpoena duces tecum on a third party. It already appears there are likely to be 18 significant discovery disputes. Among others, Plaintiffs have designated numerous 19 communications with third parties as attorney-client privileged, raised the specter of 20 a motion to quash the subpoena served by VidAngel, and demanded extensive 21 discovery from VidAngel, including discovery unrelated either to liability or 22 damages including, for example, detailed information concerning how VidAngel has 23 attempted to research the copyright ownership of each motion picture it has offered 24 to consumers using its new technology and business method. VidAngel has been 25 forced to laboriously research who owns which motion picture copyright because

26 27 Regulation A+ financing and lacked the financing to compel Plaintiffs to provide discovery. It therefore received only what Plaintiffs chose to provide, as opposed to 28 what it wanted and needed. -5- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 Plaintiffs have refused to tell VidAngel what motion picture copyrights they own 2 and what motion pictures they exclusively license. And, inasmuch as the new 3 technology and business model are not even in issue in this case, the discovery is 4 obviously and improperly sought only in aid of an anticipated contempt proceeding 5 in the future. 6 Plaintiffs plan to seek partial summary judgment as to liability immediately, 7 without allowing VidAngel an opportunity to conduct discovery to support its fair 8 use defense before opposing their motion. (Notwithstanding that tactic, Plaintiffs 9 are themselves demanding fair use discovery of VidAngel.) Plaintiffs’ goal is to get 10 the current preliminary injunction entered as a permanent injunction so that they can 11 seek contempt should VidAngel use its new business model and new technology to 12 offer Plaintiffs’ films to its subscribers without ever affording VidAngel the 13 opportunity to show that its new business model and technology merit fair use 14 protection. Plaintiffs plan to follow their partial summary judgment motion with a 15 motion for leave to amend their complaint to add their subsidiaries as plaintiffs, 16 thereby increasing the scope of the relief they seek while minimizing the time 17 available to VidAngel to take discovery of the new plaintiffs’ damages claims and 18 the new plaintiffs from fair use discovery entirely. 19 20 DATED: September 20, 2017 MUNGER, TOLLES & OLSON LLP 21 22

23 By: /s/ Kelly M. Klaus 24 KELLY M. KLAUS Attorneys for Plaintiffs 25 26 27 28 -6- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 DATED: September 20, 2017 BAKER MARQUART LLP DAVID QUINTO, VIDANGEL, INC. 2

3

4 By: /s/ David Quinto 5 DAVID QUINTO Attorneys for Defendant 6

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1 FILER’S ATTESTATION 2 I, Kelly M. Klaus, am the ECF user whose identification and password are 3 being used to file this REQUEST TO SET PRETRIAL AND TRIAL 4 SCHEDULE AND PROPOSED ORDER. Pursuant to Civil Local Rule 5- 5 4.3.4(a)(2)(i), I hereby attest that the other above-named signatories concur in this 6 filing. 7 8 DATED: September 20, 2017 9

10

11 /s/ Kelly M. Klaus KELLY M. KLAUS 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -8- STIPULATION REGARDING CASE SCHEDULE 16-CV-04109-AB (PLAX)

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1

2

3

4

5

6

7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 WESTERN DIVISION 10

11 DISNEY ENTERPRISES, INC.; Case No. 16-cv-04109-AB (PLAx) 12 LUCASFILM LTD. LLC; TWENTIETH CENTURY FOX FILM [PROPOSED] ORDER 13 CORPORATION and WARNER REGARDING BRIEFING BROS. ENTERTAINMENT INC., SCHEDULE FOR PLAINTIFFS’ 14 PARTIAL MOTION FOR Plaintiffs, SUMMARY JUDGMENT 15 vs. 16 VIDANGEL, INC., 17 Defendant. 18

19 20 Upon consideration of the Parties’ Stipulation to Set Briefing Schedule for 21 Plaintiffs’ Partial Motion for Summary Judgement, and good cause appearing 22 therefrom 23 IT IS HEREBY ORDERED THAT, 24 1. Plaintiffs’ Motion for Partial Summary Judgment will be filed and 25 served on September 29, 2017; 26 2. Defendant’s Opposition to Plaintiffs’ Motion for Partial Summary 27 Judgment will be filed and served on October 20, 2017; 28

[PROPOSED] ORDER REGARDING STIPULATION TO SET BRIEFING SCHEDULE 16-CV-04109-AB (PLAX)

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1 3. Plaintiffs’ Reply will be filed and served on November 3, 2017; 2 4. Unless this Court grants a continuance of the hearing date under 3 Federal Rule of Civil Procedure 56(d), the Motion for Partial Summary Judgment 4 shall be noticed for hearing November 17, 2017, at 10:00 am. 5 IT IS SO ORDERED. 6

7 DATED: October 02, 2017 8 9 THE HONORABLE ANDRÉ BIROTTE JR. 10

11

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- [PROPOSED] ORDER REGARDING STIPULATION TO SET BRIEFING SCHEDULE 16-CV-04109-AB (PLAX)

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EXHIBIT L Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 242 of 306 Case 2:16-cv-04109-AB-PLA Document 231 Filed 10/31/17 Page 1 of 1 Page ID #:6554 STAY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No.: CV 16-04109-AB (PLAx) Date October 31, 2017

Title: Disney Enterprises, Inc., et al. v. Vidangel, Inc.

Present: The Honorable ANDRÉ BIROTTE JR., United States District Judge

Carla Badirian N/A

Deputy Clerk Court Reporter

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

None Appearing None Appearing

Proceedings: [In Chambers] Order Staying Case Pending Bankruptcy

In light of Vidangel, Inc.’s bankruptcy filing (Dkt. No. 229), this case has been automatically stayed. All dates set in this case are therefore VACATED. The parties are to file a status report every 120 days updating the Court of the status of the bankruptcy case. The parties must also file a status report within ten days after the bankruptcy case concludes.

CV-90 (12/02) CIVIL MINUTES - GENERAL Initials of Deputy Clerk CB

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EXHIBIT M Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 244 of 306 Case 2:16-cv-04109-AB-PLA Document 236 Filed 02/28/18 Page 1 of 5 Page ID #:6602

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON R. BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor 6 Los Angeles, California 90071-1560 Telephone: (213) 683-9100 7 Facsimile: (213) 687-3702

8 Attorneys for Plaintiffs

9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12

13 DISNEY ENTERPRISES, INC. et al., Case No. 16-cv-04109-AB (PLAx) 14 Plaintiffs, STATUS REPORT PURSUANT TO 15 IN CHAMBERS ORDER [DKT. 231] vs. REGARDING STATUS OF 16 PROCEEDINGS FOLLOWING VIDANGEL, INC., VIDANGEL’S FILING OF 17 CHAPTER 11 BANKRUPTCY Defendant. PETITION [DKT. 229] 18

19 Judge: Hon. André Birotte Jr. Crtrm.: 7B

20 Trial Date: None Set 21 22 23 24 25 26 27 28

16-cv-04109-AB (PLAx) STATUS REPORT

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1 Pursuant to the Court’s October 31, 2017 Order (Dkt. 231), the parties 2 respectfully submit the following report regarding the status of proceedings 3 following Defendant VidAngel, Inc.’s (“VidAngel”) filing of its Chapter 11 4 bankruptcy petition on October 18, 2017. See In re VidAngel, Inc., Bankruptcy No. 5 17-29073 (Bankr. D. Utah) (the “Utah Bankruptcy Action”). 6 7 UTAH DISTRICT COURT PROCEEDINGS: 8 9 On August 31, 2017, VidAngel filed a declaratory judgment action in the 10 District of Utah naming multiple defendants, including three who were later named 11 as Plaintiffs in this Court (MVL Film Finance, LLC, New Line Productions, Inc. 12 and Turner Entertainment Co.), various of Plaintiffs’ corporate affiliates and 13 distribution partners, and one unrelated entity.1 See VidAngel, Inc. v. Sullivan 14 Entm’t Grp., et al., No. 17-cv-00989 DN (D. Utah.) (the “Utah District Court 15 Action.”). 16 On October 26, 2017, all but one of the defendants in the Utah District Court 17 Action (the “Moving Defendants”) moved to dismiss, transfer (to this Court), or stay 18 the Utah District Court Action. (Utah Dkt. 58). That motion was fully briefed on 19 December 11, 2017. (Utah Dkts. 91, 99). The Utah District Court has not yet 20 scheduled oral argument or ruled on that motion. Moving Defendants have asked 21 the Utah Court to hold a status conference on that motion. (Utah Dkt. 111). 22 23 UTAH BANKRUPTCY COURT PROCEEDINGS: 24 25 On November 8, 2017, the Plaintiffs herein (the “California Plaintiffs”) 26 moved the Utah Bankruptcy Court to dismiss VidAngel’s bankruptcy petition as

27 1 One of the distribution partners is MGM. VidAngel asserts that it did not sue 28 MGM because it is one of Plaintiffs’ distribution partners. -1- 16-cv-04109-AB (PLAx) STATUS REPORT

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1 having been filed or, in the alternative, to lift the automatic stay with respect to this 2 Action. (Bankr. Dkt. 69). The Bankruptcy Court is holding that motion in abeyance 3 pending the Utah District Court’s decision on the Moving Defendants’ motion to 4 dismiss, transfer, or stay the Utah District Court Action. (Bankr. Dkt. 119). 5 On February 14, 2018, the California Plaintiffs filed proofs of claim in the 6 Bankruptcy Court based on the “damages, as alleged in the California Action, in an 7 amount to be determined by the California District Court.” See, e.g., Disney 8 Enterprises Inc. Proof of Claim at 2 (Bankr. Dkts. Claim 7). 9 On February 15, 2018, VidAngel filed in the Bankruptcy Court an adversary 10 complaint against the California Plaintiffs, seeking declaratory relief and the 11 disallowance of those Plaintiffs’ claims. VidAngel’s adversary complaint also 12 asserted against the California Plaintiffs the same claims for declaratory relief that 13 VidAngel asserted in this Court, and that this Court dismissed without leave to 14 amend. See Dkt. 199 at 18; No. 18-cv-00145-TS, Dkt. 2, at Ex. A (D. Utah). 15 Also on February 15, 2018, VidAngel filed with the Utah District Court a 16 motion to withdraw VidAngel’s adversary complaint from the reference to the 17 Bankruptcy Court. See VidAngel, Inc. v. Disney Enters., Inc., No. 18-cv-00145-TS, 18 Dkt. 2 (D. Utah). The California Plaintiffs will file their response to VidAngel’s 19 motion to withdraw the reference on March 1, 2018. 20 21 PROCEEDINGS IN THIS MATTER: 22 23 Plaintiffs’ motion for summary judgment on liability (Dkt. 222) is currently 24 stayed. 25 On November 2, 2017, VidAngel filed its notice of appeal of this Court’s 26 partial final judgment dismissing VidAngel’s second and third counterclaims (Dkt. 27 232). On February 12, 2018, VidAngel filed its opening brief in the Ninth Circuit. 28 Plaintiffs’ answer brief in the Ninth Circuit is due April 11, 2018.

-2- 16-cv-04109-AB (PLAx) STATUS REPORT

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1 DATED: February 28, 2018 MUNGER, TOLLES & OLSON LLP

2

3

By: /s/ Kelly M. Klaus ______4 KELLY M. KLAUS Attorneys for Plaintiffs 5

6 DATED: February 28, 2018 BAKER MARQUART LLP DAVID QUINTO, VIDANGEL, INC. 7

8 9 By: /s/ David Quinto ______10 DAVID QUINTO Attorneys for Defendant 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

-3- 16-cv-04109-AB (PLAx) STATUS REPORT

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1 FILER’S ATTESTATION 2 I, Kelly M. Klaus, am the ECF user whose identification and password are 3 being used to file this STATUS REPORT PURSUANT TO IN CHAMBERS 4 ORDER [DKT. 231] REGARDING STATUS OF PROCEEDINGS 5 FOLLOWING VIDANGEL’S FILING OF CHAPTER 11 BANKRUPTCY 6 PETITION [DKT. 229]. Pursuant to Civil Local Rule 5-4.3.4(a)(2)(i), I hereby 7 attest that the other above-named signatories concur in this filing. 8

9 DATED: February 28, 2018 10 11

12 /s/ Kelly M. Klaus 13 KELLY M. KLAUS

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

-4- 16-cv-04109-AB (PLAx) STATUS REPORT

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EXHIBIT N Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 250 of 306 Case 2:16-cv-04109-AB-PLA Document 237 Filed 06/28/18 Page 1 of 5 Page ID #:6607

1 GLENN D. POMERANTZ (SBN 112503) [email protected] 2 KELLY M. KLAUS (SBN 161091) [email protected] 3 ROSE LEDA EHLER (SBN 296523) [email protected] 4 ALLYSON R. BENNETT (SBN 302090) [email protected] 5 MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor 6 Los Angeles, California 90071-1560 Telephone: (213) 683-9100 7 Facsimile: (213) 687-3702

8 Attorneys for Plaintiffs

9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 WESTERN DIVISION 12

13 DISNEY ENTERPRISES, INC. et al., Case No. 16-cv-04109-AB (PLAx) 14 Plaintiffs, STATUS REPORT PURSUANT TO 15 IN CHAMBERS ORDER [DKT. 231] vs. REGARDING STATUS OF 16 PROCEEDINGS FOLLOWING VIDANGEL, INC., VIDANGEL’S FILING OF 17 CHAPTER 11 BANKRUPTCY Defendant. PETITION [DKT. 229] 18

19 Judge: Hon. André Birotte Jr. Crtrm.: 7B

20 Trial Date: None Set 21 22 23 24 25 26 27 28

39132820.1 16-cv-04109-AB (PLAx) STATUS REPORT

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1 Pursuant to the Court’s October 31, 2017 Order (Dkt. 231), the parties 2 respectfully submit the following report regarding the status of proceedings 3 following Defendant VidAngel, Inc.’s (“VidAngel”) filing of its Chapter 11 4 bankruptcy petition on October 18, 2017. See In re VidAngel, Inc., Bankruptcy No. 5 17-29073 (Bankr. D. Utah) (the “Utah Bankruptcy Action”). This report 6 supplements the parties’ previous status report, filed on February 28, 2018 7 8 UTAH DISTRICT COURT PROCEEDINGS: 9 10 As the parties’ noted in their previous status report, on August 31, 2017, 11 VidAngel filed a declaratory judgment action in the District of Utah naming 12 multiple defendants, including three who were later named as Plaintiffs in this Court 13 (MVL Film Finance, LLC, New Line Productions, Inc. and Turner Entertainment 14 Co.), various of Plaintiffs’ corporate affiliates and distribution partners, and one 15 unrelated entity.1 See VidAngel, Inc. v. Sullivan Entm’t Grp., et al., No. 17-cv- 16 00989 DN (D. Utah.) (the “Utah District Court Action.”). 17 On October 26, 2017, all but one of the defendants in the Utah District Court 18 Action (the “Moving Defendants”) moved to dismiss, transfer (to this Court), or stay 19 the Utah District Court Action. (Utah Dkt. 58). That motion was fully briefed on 20 December 11, 2017. (Utah Dkts. 91, 99). The Utah District Court has not yet 21 scheduled oral argument or ruled on that motion. Both Moving Defendants and 22 VidAngel have asked the Utah Court to hold a status conference, but no conference 23 has been scheduled. (Utah Dkt. 111, 119). 24 25 26

27 1 One of the distribution partners is MGM. VidAngel asserts that it did not sue 28 MGM because it is one of Plaintiffs’ distribution partners. 39132820.1 -1- 16-cv-04109-AB (PLAx) STATUS REPORT

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1 UTAH BANKRUPTCY COURT PROCEEDINGS: 2 3 On November 8, 2017, the Plaintiffs herein (the “California Plaintiffs”) 4 moved the Utah Bankruptcy Court to dismiss VidAngel’s bankruptcy petition or, in 5 the alternative, to lift the automatic stay with respect to this Action. (Bankr. Dkt. 6 69). The Bankruptcy Court is holding that motion in abeyance pending the Utah 7 District Court’s decision on the Moving Defendants’ motion to dismiss, transfer, or 8 stay the Utah District Court Action. (Bankr. Dkt. 119). 9 On February 14, 2018, the California Plaintiffs filed proofs of claim in the 10 Bankruptcy Court based on the “damages, as alleged in the California Action, in an 11 amount to be determined by the California District Court.” See, e.g., Disney 12 Enterprises Inc. Proof of Claim at 2 (Bankr. Dkts. Claim 7). 13 On February 15, 2018, VidAngel filed in the Bankruptcy Court an adversary 14 complaint against the California Plaintiffs, seeking declaratory relief and the 15 disallowance of those Plaintiffs’ claims. VidAngel’s adversary complaint also 16 asserted against the California Plaintiffs the same claims for declaratory relief that 17 VidAngel asserted in this Court, and that this Court dismissed without leave to 18 amend. See Dkt. 199 at 18; No. 18-cv-00145-TS, Dkt. 2, at Ex. A (D. Utah). 19 Also on February 15, 2018, VidAngel filed with the Utah District Court a 20 motion to withdraw VidAngel’s adversary complaint from the reference to the 21 Bankruptcy Court. See VidAngel, Inc. v. Disney Enters., Inc., No. 18-cv-00145-TS, 22 Dkt. 2 (D. Utah). The California Plaintiffs opposed, and the motion is now fully 23 briefed. See No. 18-cv-00145-TS, Dkt. 3. 24 On March 5, 2018, VidAngel moved for the motion to withdraw to be 25 transferred to Chief Judge Nuffer. The California Plaintiffs agreed with that request. 26 See No. 18-cv-00145-TS, Dkt. 6. The Utah District Court has not ruled on the 27 motion to transfer or the motion to withdraw the reference. 28

39132820.1 -2- 16-cv-04109-AB (PLAx) STATUS REPORT

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1 PROCEEDINGS IN THIS MATTER: 2 3 Plaintiffs’ motion for summary judgment on liability (Dkt. 222) is currently 4 stayed. 5 On November 2, 2017, VidAngel filed its notice of appeal of this Court’s 6 partial final judgment dismissing VidAngel’s second and third counterclaims (Dkt. 7 232). The appeal is now fully briefed, and oral argument is scheduled for August 9, 8 2018. 9 10 DATED: June 28, 2018 MUNGER, TOLLES & OLSON LLP

11

12

By: /s/ Kelly M. Klaus 13 KELLY M. KLAUS Attorneys for Plaintiffs 14

15 DATED: June 28, 2018 BAKER MARQUART LLP DAVID QUINTO, VIDANGEL, INC. 16

17

18 By: /s/ Scott M. Malzahn ______SCOTT M. MALZAHN 19 Attorneys for Defendant 20 21 22 23 24 25 26 27 28

39132820.1 -3- 16-cv-04109-AB (PLAx) STATUS REPORT

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1 FILER’S ATTESTATION 2 I, Kelly M. Klaus, am the ECF user whose identification and password are 3 being used to file this STATUS REPORT PURSUANT TO IN CHAMBERS 4 ORDER [DKT. 231] REGARDING STATUS OF PROCEEDINGS 5 FOLLOWING VIDANGEL’S FILING OF CHAPTER 11 BANKRUPTCY 6 PETITION [DKT. 229]. Pursuant to Civil Local Rule 5-4.3.4(a)(2)(i), I hereby 7 attest that the other above-named signatories concur in this filing. 8

9 DATED: June 28, 2018

10

11

12 /s/ Kelly M. Klaus KELLY M. KLAUS 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

39132820.1 -4- 16-cv-04109-AB (PLAx) STATUS REPORT

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EXHIBIT O Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 256 of 306

Case 2:17-cv-00989-EJF Document 58 Filed 10/26/17 Page 1 of 31

Brent O. Hatch (5715) Kelly M. Klaus (pro hac vice) [email protected] [email protected] Hatch, James & Dodge, PC Munger, Tolles & Olson LLP 10 West Broadway 350 South Grand Avenue Suite 400 Fiftieth Floor Salt Lake City, Utah 84101 Los Angeles, California 90071-3426 Telephone: (801) 363-6363 Telephone: (213) 683-9100 Facsimile: (801) 363-6666 Facsimile: (213) 687-3702

Attorneys for Moving Defendants

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

VIDANGEL, INC., MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO TRANSFER OR Plaintiff, STAY

vs. Case No. 2:17cv00989 SULLIVAN ENTERTAINMENT GROUP, INC., et al., Magistrate Judge Evelyn J. Furse

Defendants. ORAL ARGUMENT REQUESTED

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TABLE OF CONTENTS

Page

INTRODUCTION ...... 1 BACKGROUND ...... 3 A. The District Court In California Enjoins VidAngel’s Unauthorized Streaming Service And The Ninth Circuit Affirms ...... 3 B. VidAngel Schemes To Get Out From Under The Injunction ...... 4 1. VidAngel Claims To Modify Its Unauthorized Streaming Service ...... 4 2. The California Court Twice Rejected VidAngel’s Attempt To Have The Stream-Based Service Declared Outside The Scope of The Preliminary Injunction ...... 5 3. The California Plaintiffs, Based On VidAngel’s Representation, Refrained From Amending Their Complaint To Add Subsidiaries VidAngel Later Sued In Utah ...... 6 C. VidAngel’s Utah Complaint ...... 7 D. VidAngel’s Bankruptcy Filing ...... 8 ARGUMENT ...... 9 I. MOVING DEFENDANTS ARE NOT SUBJECT TO PERSONAL JURISDICTION IN THIS DISTRICT ...... 9 A. There Is No General Jurisdiction Over Any Moving Defendant ...... 9 B. There Is No Specific Jurisdiction Over Any Moving Defendant ...... 10 1. VidAngel Does Not Allege Any Purposeful Direction...... 10 2. VidAngel’s Declaratory Judgment Claims Do Not Arise Out Of Any Contacts Between The Moving Defendants And Utah ...... 10 3. Exercising Personal Jurisdiction Over The Moving Defendants Would Be Unreasonable, Particularly In Light Of VidAngel’s Gamesmanship ...... 12 II. THIS ACTION IS AN IMPROPER USE OF THE DECLARATORY JUDGMENT ACT AND SHOULD BE DISMISSED ...... 14 A. VidAngel’s Lawsuit Violates The First-To-File Rule ...... 15 1. The Parties In The Two Actions Are Substantially Similar ...... 16 2. The Issues In The Two Actions Are Substantially Similar ...... 17

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TABLE OF CONTENTS (continued) Page

B. VidAngel Filed This Lawsuit In Anticipation Of New Plaintiffs Being Added To The California Action ...... 20 III. ALTERNATIVELY, THE COURT SHOULD TRANSFER OR STAY THIS ACTION ...... 20 A. The Court Has Discretion To Transfer This Case ...... 20 B. At A Minimum, This Action Should Be Stayed Pending Resolution Of The California Action ...... 24 CONCLUSION ...... 24

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TABLE OF AUTHORITIES

Page(s)

FEDERAL CASES

American Brodacasting Cos. v. Aereo, Inc., 134 S. Ct. 2498 (2014) ...... 2

Animal Health Int’l, Inc. v. Livingston Enters., Inc., No. 12-Cv-00369-LTB, 2012 WL 1439243 (D. Colo. Apr. 26, 2012) ...... 17, 20

Benton v. Cameco Corp., 375 F.3d 1070 (10th Cir. 2004) ...... 12

Breckenridge Pharm., Inc. v. KV Pharm. Co., No. 08-80963-CIV, 2009 WL 1404698 (S.D. Fla. May 19, 2009) ...... 23

Buzas Baseball, Inc. v. Bd. of Regents of Univ. Sys. of Ga., No. 98–4098, 1999 WL 682883 (10th Cir. Sept. 2, 1999) ...... 15, 18, 20

The Cherokee Nation v. Nash, 724 F. Supp. 2d 1159 (N.D. Okla. 2010) ...... 16, 20, 24

Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509 (10th Cir. 1991) ...... 21

Coastal Video Commc’ns, Corp. v. Staywell Corp., 59 F. Supp. 2d 562 (E.D. Va. 1999) ...... 12

ConocoPhillips Co. v. Jump Oil Co., 948 F. Supp. 2d 1272 (N.D. Okla. 2013) ...... 21

Cont’l Grain Co. v. The FBL-585, 364 U.S. 19 (1960) ...... 21

Daimler AG v. Bauman, 134 S Ct. 746 (2014) ...... 9

Disney Enters., Inc. v. VidAngel, Inc., 224 F. Supp. 3d 957 (C.D. Cal. 2016) ...... 1, passim

Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 848 (9th Cir. 2017) ...... 1, 4, 19

Glob. Tech Sys., Inc. v. Beco Dairy Automation, Inc., No. CIV 13-1006 JAP/KBM, 2014 WL 12596721 (D.N.M. June 6, 2014) ...... 22, 23

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TABLE OF AUTHORITIES (continued) Page(s)

Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) ...... 9

Ham v. La Cienega Music Co., 4 F.3d 413 (5th Cir. 1993) ...... 11

Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161 (10th Cir. 1982) ...... 14

Jenkins v. Miller, 983 F. Supp. 2d 423 (D. Vt. 2013)...... 14

Lacebark, Inc. v. Sakata Seed Am., Inc., No. CIV-12-746-D, 2013 WL 12086778 (W.D. Okla. Jan. 16, 2013) ...... 11

Layne Christensen Co. v. Levelland/Hockley Cty. Ethanol, LLC, No. 08–2203–CM, 2009 WL 352832 (D. Kan. Feb. 12, 2009) ...... 14, 15

Letbetter v. Local 514, Transp. Workers Union of Am., No. 14-CV-00125-TCK-FHM, 2014 WL 4403521 (N.D. Okla. Sept. 5, 2014) ...... 20

Manko Window Sys., Inc. v. Prestik, No. 16-2818-JAR-JPO, 2017 WL 4355580 (D. Kan. Sept. 29, 2017) ...... 12, 13

Mojave Oil & Gas, L.L.C. v. EnerVest Operating, L.L.C., No. 16-CV-582-JHP-FHM, 2017 WL 2876469 (N.D. Okla. July 6, 2017) ...... 23

Nacogdoches Oil & Gas, L.L.C. v. Leading Sols, Inc., No. 06-2551-CVM, 2007 WL 2402723 (D. Kan. Aug. 17, 2007) ...... 20

Nambe, LLC v. Lenox Corp., No. 16-CV-241 SCY/KBM, 2016 WL 9408555 (D.N.M. Dec. 7, 2016) ...... 23

Newsome v. Gallacher, 722 F.3d 1257 (10th Cir. 2013) ...... 10, 12

O’Hare Int’l Bank v. Lambert, 459 F.2d 328 (10th Cir. 1972) ...... 15

Photographic Illustrators Corporation v. A.W. Graham Lumber, LLC, 196 F. Supp.3d 123, 132 (D. Mass. 2016) ...... 13

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TABLE OF AUTHORITIES (continued) Page(s)

Sandoz, Inc. v. Pfizer, Inc., No. 09-CV-02457-CMA-MJW, 2010 WL 502727 (D. Colo. Feb. 8, 2010) ...... 18, 22

Shannon’s Rainbow, LLC v. Supernova Media, Inc., 683 F. Supp. 2d 1261 (D. Utah 2010) ...... 17

SNMP Research, Inc. v. Avaya, Inc., No. 3:12-CV-117, 2013 WL 474846 (E.D. Tenn. Feb. 7, 2013) ...... 16

State Farm and Cas. Co. v. Mhoon, 31 F.3d 979 (10th Cir. 1994) ...... 14, 15

TH Agric. & Nutrition, LLC v. Ace European Grp. Ltd., 488 F.3d 1292 (10th Cir. 2007) ...... 12, 13

United States v. City of Las Cruces, 289 F.3d 1170 (10th Cir. 2002) ...... 1, 14

W. World Ins. Co. v. Nonprofits’ Ins. All. of California, 2014 WL 1282254 (E.D. Okla. Mar. 27, 2014) ...... 13

Walden v. Fiore, 134 S. Ct. 1115 (2014) ...... 10, 11

Youngevity Int’l, Inc. v. Renew Life Formulas, Inc., 42 F. Supp. 3d 1377, 1382 (S.D. Cal. 2014) ...... 16

Younique, L.L.C. v. Youssef, No. 215CV00783JNPDBP, 2016 WL 6998659 (D. Utah Nov. 30, 2016) ...... 11

FEDERAL STATUTES

17 U.S.C. § 106(1) ...... 3, 5

17 U.S.C. § 106(4) ...... 3, 5

28 U.S.C. § 1404(a) ...... 20, 21, 22

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STATEMENT OF RELIEF SOUGHT Pursuant to Federal Rule of Civil Procedure 12(b)(2) and 28 U.S.C. §§ 2201 and 1404(a),

the Moving Defendants1 respectfully request that this Court:

(1) dismiss VidAngel, Inc.’s (“VidAngel”) First Amended Complaint (“FAC”)

because (a) no Moving Defendant is subject to personal jurisdiction in this District, or (b) the

FAC is improper under the Declaratory Judgment Act; or

(2) transfer this action to the United States District Court for the Central District of

California, where VidAngel is the defendant in a substantially overlapping case that has been

pending for more than a year (the “California Action”); or

(3) stay this action pending resolution of the California Action.

This Motion is supported by the contemporaneously filed Declarations of Kelly M.

Klaus, Jonathan S. Headley, Gregory Belzer, Daniel Weinberger, Noel Zoeller, Joan Wallace,

Mary Basich, Janene Bassett, Lesley Freeman, David Freidman and Kevin Berg, and all Exhibits

thereto; all documents on file in this action and the California Action; and such further or

additional evidence or argument as may be presented before or at the time of the hearing on this

Motion.

1 The “Moving Defendants” are: MVL Film Finance, LLC (“Marvel”) and Marvel Characters, Inc. (“MCI”), jointly, the “Marvel Defendants”; Twentieth Century Fox Home Entertainment, LLC, Fox Digital Entertainment, Inc., Fox Broadcasting Company and New World Pictures, Ltd., collectively, the “Fox Defendants”; Castle Rock Entertainment, Inc. (“Castle Rock”), New Line Productions, Inc., (“New Line”) and Turner Entertainment Co. (“Turner”), collectively, the “Warner Defendants”; Village Roadshow Pictures Entertainment Inc. (“Village Roadshow”); Regency Entertainment (USA), Inc. (“Regency”); and Metro-Goldwyn-Mayer Studios Inc. (“MGM”). The remaining defendant named in the FAC, Sullivan Entertainment Group Inc. (“Sullivan”), is separately represented.

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INTRODUCTION This lawsuit is a tactical maneuver in VidAngel’s ongoing effort to escape the adverse

rulings against it in the Central District of California and Ninth Circuit. VidAngel hopes to get a

“do over” on issues it has litigated and lost in those courts—and to avoid a summary judgment

ruling (which VidAngel stands likely to lose imminently) and a damages trial. Just over a week

ago, VidAngel filed a Chapter 11 bankruptcy petition in Utah. VidAngel brazenly acknowledges

the bankruptcy filing is just another move in its strategy to get away from the courts in

California. Incredibly, VidAngel issued public statements boasting that it filed for Chapter 11

“to [p]ause [the] Los Angeles [l]awsuit” while VidAngel “continue[s] our new lawsuit in Utah”

against a dozen corporate affiliates and business partners of the plaintiffs in the California

Action. Klaus Decl. Ex. M.2 VidAngel is abusing the legal process and the jurisdiction of the

federal courts. The Court should dismiss this action against the Moving Defendants because

(1) none of them is subject to personal jurisdiction in this District, and (2) this action is

“procedural fencing,” which is an improper use of the Declaratory Judgment Act. See United

States v. City of Las Cruces, 289 F.3d 1170, 1189-90 (10th Cir. 2002).

VidAngel’s game-playing has been relentless. More than a year ago, Disney, Lucasfilm,

Fox and Warner Bros. sued VidAngel in California for running an illegal DVD-ripping and

movie-streaming service, in violation of the Digital Millennium Copyright Act (“DMCA”) and

the plaintiffs’ exclusive rights under the Copyright Act. The district court preliminarily enjoined

VidAngel, Disney Enters., Inc. v. VidAngel, Inc., 224 F. Supp. 3d 957 (C.D. Cal. 2016), and the

Ninth Circuit affirmed, Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 848 (9th Cir. 2017).

2 VidAngel’s CEO repeated the statements in a YouTube posting released the same day. www.youtube.com/watch?v=raBNLZWfzVM&feature=youtu.be. (last visited Oct. 25, 2017).

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While its appeal to the Ninth Circuit was pending, VidAngel claimed it had changed its

service to what it now calls a “Stream-Based Service.”3 VidAngel filed two separate “motions to

clarify” the preliminary injunction, asking the California court to hold that the injunction does

not apply to the Stream-Based Service. The court denied both motions, holding that the

injunction clearly bars VidAngel from violating plaintiffs’ rights under the DMCA or infringing

their copyrights, and that VidAngel’s request that the court “clarify” the injunction was a

disguised (and improper) request for declaratory relief. VidAngel responded by filing its

declaratory relief action in this District for the express purposes, in VidAngel’s own words, of

“avoid[ing] the prospect of again litigating in an unfavorable forum” and “protect[ing] [itself]

from claims by the [California] Plaintiffs that the preliminary injunction entered therein applies

to [new] business models.” Klaus Decl. Ex. A at 5. In other words, VidAngel wants this Court

to interpret the California court’s injunction and hold the Stream-Based Service completely

lawful.4

As intended by VidAngel, the Chapter 11 filing has temporarily stayed the California

Action. That fact has no bearing on the Moving Defendants’ arguments for dismissal.

3 The FAC refers to the two versions of VidAngel’s streaming service as the “Disc Ownership Model” and the “Stream-Based Service.” FAC ¶¶ 27, 29. For ease of reference, this motion uses the FAC’s terminology, even though the claimed differences have no legal significance and both are infringing. 4 In the California Action, VidAngel recently tried to justify its filing of this declaratory judgment action by claiming it simply “copied (lawfully) from Plaintiffs’ playbook used during the litigation culminating in … American Broadcasting Cos. v. Aereo, Inc., 134 S. Ct. 2498 (2014).” Cal. Dkt. 206 at 19. There is no basis for such a comparison. The Aereo litigation (and related litigation involving an Aereo-copycat) involved proceedings in multiple districts for reasons that were unique to those cases. None of those cases raised any of the issues involved in this motion: there was no defect in personal jurisdiction; there was no improper declaratory judgment action; and there was no tactical bankruptcy filing in which a party was using the provisions of the Bankruptcy Code to engage in forum shopping.

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Moreover, the California plaintiffs are taking steps to lift the stay. The automatic stay exists to

preserve an orderly disposition and reorganization of a debtor’s assets; it is not intended to be a

tool for litigants to forum-shop, which is how VidAngel is using it. The California plaintiffs—

whose members now include three Moving Defendants (Marvel, New Line and Turner)—will be

filing a motion with the Bankruptcy Court to lift the stay and allow the California Action to

proceed.

BACKGROUND A. The District Court In California Enjoins VidAngel’s Unauthorized Streaming Service And The Ninth Circuit Affirms In December 2016, Judge André Birotte Jr. of the Central District of California granted

plaintiffs’ motion for a preliminary injunction. Judge Birotte held that plaintiffs likely would

succeed on their claims that (1) VidAngel removed or bypassed the technological protection

measures (“TPMs”) that control access to plaintiffs’ movies and television shows on DVDs and

Blu-ray discs (“discs”)—i.e., VidAngel “ripped” those discs; and (2) that VidAngel infringed the

plaintiffs’ exclusive rights under the Copyright Act by creating digital master copies of

plaintiffs’ works (violating the reproduction right, 17 U.S.C. § 106(1)) and then streaming

performances of those works over the internet to VidAngel’s customers (violating the public

performance right, id. § 106(4)). Disney Enters., 224 F. Supp. 3d at 979.

The preliminary injunction bars VidAngel from circumventing the TPMs protecting the

plaintiffs’ works (whether on discs “or any other medium”) or infringing the plaintiffs’

copyrights in any way (including through unauthorized copying and streaming). Id. The

preliminary injunction is not limited geographically or tied to any particular implementation of

VidAngel’s technology. The injunction was effective immediately, but VidAngel failed to

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comply with it for 17 days. The district court held VidAngel in contempt and imposed sanctions

for its failure to obey the injunction. Klaus Decl. Ex. G (C.D. Cal. Jan. 6 Order). VidAngel took

down its service on December 29, 2016. See Cal. Dkt. 169.5

VidAngel appealed the preliminary injunction order to the Ninth Circuit. On August 24,

2017, that court rejected VidAngel’s efforts to “create a giant loophole in copyright law” and

unanimously affirmed the injunction. Disney Enters., 869 F.3d at 859. It found plaintiffs likely

would prevail on their DMCA and infringement claims (although it did not reach the plaintiffs’

public performance claims); that VidAngel’s Family Movie Act (“FMA”) and fair use defenses

did not excuse VidAngel’s legal violations; and that all other equitable factors supported the

preliminary injunction. Id. at 856-65.

In light of the Ninth Circuit’s rulings, Plaintiffs moved for partial summary judgment on

VidAngel’s liability on September 29, 2017. VidAngel’s opposition was supposed to be due on

October 20 (two days after VidAngel filed its bankruptcy petition), and the trial in the California

Action is set for June 5, 2018. Klaus Decl. ¶ 17, Ex. L.

B. VidAngel Schemes To Get Out From Under The Injunction

1. VidAngel Claims To Modify Its Unauthorized Streaming Service On June 13, 2017, VidAngel announced that it was modifying its service. Rather than

obtaining unauthorized copies by ripping discs, VidAngel claims it now obtains unauthorized

copies from the streams (or other digital copies) of licensed streaming services such as Amazon.

In accessing this content, VidAngel may be circumventing in violation of the DMCA and the

preliminary injunction; the California plaintiffs have not yet had discovery into how VidAngel

5 References to Cal. Dkt. are to Case No. 2:16-cv-04109-AB-PLA (C.D. Cal.).

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captures the motion picture content. Setting the DMCA issue aside, VidAngel’s service is

unchanged in all other legally significant respects and remains infringing.

First, VidAngel makes numerous master server copies of the content it acquires from the

licensed streaming service. See Klaus Decl. Ex. C ¶ 6. That copying violates § 106(1) and,

when done with the California plaintiffs’ works (including Marvel, New Line and Turner) also

violates the preliminary injunction. See Disney Enters., 224 F. Supp. 3d at 979.

Second, VidAngel streams performances of those movies and television shows to the

public from its infringing master server copies. Klaus Decl. Ex. C ¶ 6. Streaming to members of

the public violates the public performance right under § 106(4) and, when done with respect to

the California plaintiffs’ works, also violates the preliminary injunction. See Disney Enters., 224

F. Supp. 3d at 979.

2. The California Court Twice Rejected VidAngel’s Attempt To Have The Stream-Based Service Declared Outside The Scope of The Preliminary Injunction VidAngel has twice asked the California court to grant the same relief VidAngel seeks in

its second cause of action here—namely, a ruling that its Stream-Based Service is not infringing,

and thereby also is not violating the preliminary injunction. VidAngel filed its first “motion to

clarify” on June 19, 2017, asking the California court to declare that the preliminary injunction

does not apply to the “Stream-Based Service.” See Cal. Dkt. 182. The California court denied

VidAngel’s motion, finding that the injunction was clear and the motion was not a motion to

clarify anything, but a procedurally improper motion for a declaratory judgment. Klaus Decl.

Ex. D (C.D. Cal. August 2 Order) at 4.

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Thereafter, during an August 9, 2017 meet and confer, the California plaintiffs offered to

stipulate to VidAngel amending its counterclaim to seek a declaration regarding the Stream-

Based Service and to engage in expedited discovery on that service so that VidAngel could

obtain a merits decision. Klaus Decl. ¶ 15. VidAngel rejected this offer, advising the California

plaintiffs that it was not interested in a declaratory judgment. Id. The filing of this lawsuit

shows that this was a false representation.

On August 18, 2017, VidAngel filed another motion to clarify, this time asking the

California court to rule that the preliminary injunction does not apply to technologies or business

models that are “colorably” different from the Disc Ownership Model. See Cal. Dkt. 200. The

court denied this motion too, holding that the preliminary injunction enjoins VidAngel “from

using Plaintiffs’ works in any way that infringes [their] exclusive rights,” and is not tied to any

particular technology or business model. Klaus Decl. Ex. E at 4 (emphasis added). The court

said that granting VidAngel’s motion “would defeat the purpose of the injunction by giving

VidAngel the virtually unfettered ability to make use of the Plaintiffs[’] copyrighted works

without penalty,” simply by creating a version of its service that is “more than colorably

different” from the Disc Ownership Model. Id.

3. The California Plaintiffs, Based On VidAngel’s Representation, Refrained From Amending Their Complaint To Add Subsidiaries VidAngel Later Sued In Utah During the August 9 meet and confer, VidAngel told the California plaintiffs it was

contemplating another motion to clarify that the injunction did not apply to works for which

plaintiffs’ subsidiaries held the copyright. Klaus Decl. ¶ 13. Plaintiffs told VidAngel they

disagreed, but to obviate a dispute, they would move to amend the complaint to add Marvel,

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Turner and New Line—the specific subsidiaries whose titles VidAngel wanted to stream. Id.

VidAngel, however, told the California plaintiffs that doing so might be unnecessary because

VidAngel would “forbear” from pressing the issue of streaming the subsidiaries’ works until the

California court ruled on VidAngel’s “colorably different” motion to clarify. Id. ¶ 14. At the

time, VidAngel told its customers in social media postings that it could not stream Marvel titles

because Marvel is a Disney company and covered by the preliminary injunction. See Klaus

Decl. Ex. I. Accordingly, the California plaintiffs held off amending their complaint to add

Marvel, New Line and Turner.

While VidAngel’s motion regarding “colorably” different services was pending, and

without any further discussion, VidAngel filed this action. VidAngel included as defendants the

affiliates the parties had previously discussed, Marvel, New Line and Turner, and VidAngel

started streaming their works on the Stream-Based Service.

The California plaintiffs have added Marvel, New Line and Turner as plaintiffs in the

California Action. Cal. Dkt. 228. VidAngel therefore is violating the preliminary injunction,

which covers all of “Plaintiffs’ copyrighted works.” The need for the California plaintiffs to be

able to enforce the injunction against VidAngel will be a basis for the motion to lift the

bankruptcy stay.

C. VidAngel’s Utah Complaint On August 31, 2017, VidAngel filed this action for a declaratory judgment. VidAngel’s

original complaint sought declarations that the Disc Ownership Model, the Stream-Based

Service, and a third (as-yet undeployed) “Hybrid Service” do not violate the DMCA’s anti-

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circumvention provisions or infringe copyright. On September 22, 2017, VidAngel filed the

FAC, which dropped the claim for declaratory relief regarding the Disc Ownership Model.

Moving Defendants are a dozen corporate affiliates or business partners (through co-

production, co-financing, licensing or distribution arrangements) of the California plaintiffs. It is

no accident that VidAngel named parties with close corporate affiliations or business

relationships with the California plaintiffs. As VidAngel has said in its SEC filing, it intends to

use this case to obtain the relief the California court denied in response to VidAngel’s motions to

clarify the injunction. Klaus Decl. Ex. A at 5. VidAngel confirmed its intentions as recently as

several days ago, announcing that it will “seek an early adjudication of the legality of its

technology and business model in the declaratory judgment action pending against certain of [the

California plaintiffs’] affiliates.” Klaus Decl. ¶ 22, Ex. O. Any such motion would require this

Court to interpret the scope of the injunction that the California court issued, the Ninth Circuit

affirmed, and the California court twice refused to “clarify” on VidAngel’s improper motions.

D. VidAngel’s Bankruptcy Filing On October 18, just two days before VidAngel’s opposition to the California Plaintiffs’

summary judgment motion was due, VidAngel filed a Chapter 11 bankruptcy petition in this

District. Dkt. 170. VidAngel filed the Chapter 11 petition as a litigation tactic, not because it is

insolvent or needs protection from creditors. Immediately after filing the petition, VidAngel

announced that it has “millions of dollars in the bank,” is “generating millions in revenue,” and

“is not going away.” Klaus Decl. Ex. M. VidAngel has admitted that its purpose in making that

filing is to stay the California Action and have this action proceed in its place. See id. Ex. N at

¶ 9. VidAngel also made clear at the Bankruptcy Court last week that it intends to use the

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bankruptcy filing to try to get out of the Central District of California for good, by asking that

Court to transfer the entire action to this district. Klaus Decl. ¶ 22.

ARGUMENT I. MOVING DEFENDANTS ARE NOT SUBJECT TO PERSONAL JURISDICTION IN THIS DISTRICT VidAngel’s scheme to get out from under the adverse rulings in the California Action

conflicts with the constitutional limitations on personal jurisdiction. None of the Moving

Defendants is subject to jurisdiction in this District. VidAngel cannot meet its burden of

showing that sufficient “minimum contacts” exist with Utah, under either general or specific

jurisdiction. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011).

A. There Is No General Jurisdiction Over Any Moving Defendant A court has general jurisdiction over a defendant whose contacts with the forum state are

“so ‘continuous and systematic’ as to render [it] essentially at home” there. Goodyear, 564 U.S.

at 919. A corporation generally is “at home” for the purposes of general jurisdiction (1) in its

state of incorporation or (2) in the state of its principal place of business. See Daimler AG v.

Bauman, 134 S Ct. 746, 760, 761 n.19 (2014). No Moving Defendant is incorporated (or

formed) in Utah; none has its principal place of business here.6 Additionally, no Moving

Defendant has any other contacts with Utah that could be considered “continuous and

6 See Belzer Decl. ¶ 3; Headley Decl. ¶ 3; Weinberger Decl. ¶¶ 2, 12, 21; Zoeller Decl. ¶ 3; Wallace Decl. ¶ 2; Basich Decl. ¶ 2; Bassett Decl. ¶ 2; Freeman Decl. ¶ 8; Friedman Decl. ¶ 2; Berg Decl. ¶ 3.

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systematic.” None of them has any offices, employees, bank accounts, or property in Utah.7

There is no general jurisdiction.

B. There Is No Specific Jurisdiction Over Any Moving Defendant To determine whether specific jurisdiction exists, courts ask: (1) whether the defendant

purposefully directed its activities at residents of the forum state; (2) whether the plaintiff’s

injury arose from those purposefully directed activities; and (3) whether exercising jurisdiction

would offend traditional notions of fair play and substantial justice. Newsome v. Gallacher, 722

F.3d 1257, 1264 (10th Cir. 2013). Applying these factors, no Moving Defendant is subject to

personal jurisdiction in Utah.

1. VidAngel Does Not Allege Any Purposeful Direction VidAngel has not alleged—nor can it establish—that any Moving Defendant

purposefully directed any of its activities at Utah residents. The only connection between this

action and Utah is that VidAngel resides here. For personal jurisdiction to exist, however, “the

plaintiff cannot be the only link between the defendant and the forum.” Walden v. Fiore, 134 S.

Ct. 1115, 1122-23 (2014).

2. VidAngel’s Declaratory Judgment Claims Do Not Arise Out Of Any Contacts Between The Moving Defendants And Utah For there to be specific jurisdiction, the relationship between the forum state and the

defendant “must arise out of contacts that the ‘defendant himself’ creates.” Id. Here, VidAngel

does not allege that any Moving Defendant has any contact with Utah, much less contacts out of

which its claims arise.

7See Belzer Decl. ¶¶ 4-10; Headley Decl. ¶¶ 4-10; Weinberger Decl. ¶ ¶ 3-9, 13-19, 22-28; Zoeller Decl. ¶¶ 6-12; Wallace Decl. ¶¶ 4-10; Basich Decl. ¶¶ 5-9; Bassett Decl. ¶¶ 5-11; Freeman Decl. ¶¶ 9-14; Friedman Decl. ¶¶ 4-10; Berg Decl. ¶¶ 5-11.

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VidAngel’s omissions are unsurprising. None of the Moving Defendants has had any

contacts with VidAngel’s Stream-Based Service. To be sure, VidAngel has appropriated the

titles of several Moving Defendants for use in its service, but that “contact”—i.e., infringement,

is something VidAngel created.

Nor does the fact that some Moving Defendants (or their affiliates) distribute motion

picture and television content that ends up in all 50 states, including Utah, create personal

jurisdiction in this State.8 See, e.g., Lacebark, Inc. v. Sakata Seed Am., Inc., No. CIV-12-746-D,

2013 WL 12086778, at *3 (W.D. Okla. Jan. 16, 2013) (that the defendant had “a distribution

channel that permits nationwide sales of its products and the allegedly infringing products are

sold by retailers in Oklahoma” did not create personal jurisdiction in Oklahoma). And, even if

such distribution could qualify as a “minimum contact,” VidAngel’s declaratory relief claim

does not “arise from” that distribution. See, e.g., Ham v. La Cienega Music Co., 4 F.3d 413, 416

(5th Cir. 1993) (defendant’s sale of music in the forum state was irrelevant to specific personal

jurisdiction in a declaratory judgment action); Younique, L.L.C. v. Youssef, No.

215CV00783JNPDBP, 2016 WL 6998659, at *3-8 (D. Utah Nov. 30, 2016) (no personal

jurisdiction over the defendant in an action seeking a declaration of noninfringement of the

defendant’s trademark); Coastal Video Commc'ns, Corp. v. Staywell Corp., 59 F. Supp. 2d 562,

566 (E.D. Va. 1999) (no specific personal jurisdiction in copyright declaratory judgment action

even if the defendant sold its publication in the forum state).

8 At least eight of the Moving Defendants do not distribute motion pictures or television content at all, let alone in Utah. Weinberger Decl. ¶¶ 11, 20, 29; Zoeller Decl. ¶ 13; Bassett Decl. ¶ 12; Belzer Decl. ¶ 11; Headley Decl. ¶ 11; Berg Decl. ¶ 14.

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3. Exercising Personal Jurisdiction Over The Moving Defendants Would Be Unreasonable, Particularly In Light Of VidAngel’s Gamesmanship Even if Moving Defendants had the requisite contacts with Utah—which they do not—

the Court could still only exercise jurisdiction if it would be reasonable, i.e., if it would not

“offend traditional notions of fair play and substantial justice.” Newsome, 722 F.3d at 1264.

Courts consider several factors in assessing fair play and substantial justice: (1) the burden on

the defendant; (2) the forum state’s interest in resolving the dispute; (3) the plaintiff’s interest in

receiving convenient and effective relief; (4) the interstate judicial system’s interest in obtaining

the most efficient resolution of controversies; and (5) the states’ shared interest in furthering

fundamental social policies. Benton v. Cameco Corp., 375 F.3d 1070, 1079 (10th Cir. 2004). In

analyzing these factors, the court must “take into account the strength of a defendant’s minimum

contacts.” TH Agric. & Nutrition, LLC v. Ace European Grp. Ltd., 488 F.3d 1292, 1292 (10th

Cir. 2007). Where the only contacts a party has with the forum state are “limited,” the party

“need not make a strong showing on the reasonableness factors to defeat personal jurisdiction.”

Manko Window Sys., Inc. v. Prestik, No. 16-2818-JAR-JPO, 2017 WL 4355580, at *9 (D. Kan.

Sept. 29, 2017).

Here, Moving Defendants have little or no contact with Utah, and the relevant factors

weigh against the exercise of jurisdiction.

First, resolving the issues in a court that has spent more than a year addressing them

would be far more efficient for the judicial system and convenient for the parties than having this

Court start from scratch. A summary judgment motion is currently pending in the California

Action, a trial date has been set for June 2018, and the Ninth Circuit has addressed and resolved

the key legal issues in the case. Requiring the Moving Defendants to litigate these issues again

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in this forum will create “piecemeal litigation,” not prevent it. TH Agric. & Nutrition, LLC, 488

F.3d at 1296-97. Moreover, any consideration of the efficiencies of the federal court system

must take account of VidAngel’s blatant forum-shopping, which makes the exercise of

jurisdiction here unreasonable.

Second, there is indisputable burden to the Moving Defendants from having to litigate in

Utah, since their “offices, records, employees and witnesses” relevant to this case are located

outside of this State. See W. World Ins. Co. v. Nonprofits’ Ins. All. of California, 2014 WL

1282254, *4 (E.D. Okla. Mar. 27, 2014) (burdensome for a California company to litigate in

Oklahoma, despite the existence of “modern technology and transportation”); see also Section

III.A, infra.

Third, while VidAngel’s residency in Utah gives this State some interest in this action,

this factor is not entitled to great weight, particularly where California also has an interest in

protecting corporations domiciled there and the issues arise under federal, not state, law. See

Photographic Illustrators Corp. v. A.W. Graham Lumber, LLC, 196 F. Supp. 3d 123, 132 (D.

Mass. 2016) (“Yet, when “the main claims against [the defendant] are under the federal

copyright statute, there are no compelling state interests for keeping the action” against the

defendant in [any particular state].”)(quotation and citations omitted); see also Prestik, 2017 WL

4355580, at *8 (state had only a “small” interest in litigating the dispute where the plaintiff was a

resident but the dispute was not governed by state law).

Fourth, and finally, to the extent this action involves any “substantive social policies”

shared by California and Utah, they can be vindicated in California, and so this factor is neutral.

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See Jenkins v. Miller, 983 F. Supp. 2d 423, 450 (D. Vt. 2013) (“Both fora undoubtedly share an

interest in hindering violations of federal law. This factor . . . favors neither forum.”).

In sum, because it will be much more efficient and convenient for the parties to litigate in

California, and the other factors are neutral or only slightly favor VidAngel, exercising personal

jurisdiction here would be unreasonable.

II. THIS ACTION IS AN IMPROPER USE OF THE DECLARATORY JUDGMENT ACT AND SHOULD BE DISMISSED Jurisdiction under the Declaratory Judgment Act is discretionary. See City of Las Cruces,

289 F.3d at 1179-80. In exercising that discretion and deciding whether to hear declaratory

judgment claims, courts in this Circuit consider the factors set forth in State Farm and Cas. Co.

v. Mhoon, 31 F.3d 979, 983 (10th Cir. 1994). One of those factors is the most salient here:

where an action is filed “merely for the purpose of ‘procedural fencing,’” courts will decline to

hear the action, even if the other factors are neutral. See Layne Christensen Co. v.

Levelland/Hockley Cty. Ethanol, LLC, No. 08–2203–CM, 2009 WL 352832, at *2 (D. Kan. Feb.

12, 2009). As the Tenth Circuit has made clear, the Act is not to “be used as yet another weapon

in a game of procedural warfare.” Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161, 1164-

65 (10th Cir. 1982).

Here, all of the Mhoon factors weigh against exercising jurisdiction.9 But even if they

were neutral, this action is “procedural fencing.” It violates the first-to-file rule and also is an

9 The other Mhoon factors favor dismissal because (1) this action will not “settle the controversy” alone because the California Action must also be concluded; (2) this action serves no “useful purpose” other than fulfilling VidAngel’s tactical aims, which do not count; and (3) the clear “alternative remedy which is better or more effective” is to require VidAngel to litigate its claims in the California Action. See Mhoon, 31 F.3d 979 at 983.

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improper anticipatory lawsuit.10 The law therefore weighs sharply in favor of this Court

declining to hear the action.

A. VidAngel’s Lawsuit Violates The First-To-File Rule Plaintiffs in California filed their complaint on June 9, 2016, more than 15 months before

VidAngel filed its Utah complaint, and most substantive issues concerning VidAngel’s service

already have been litigated and resolved in that action. “The rule is that the first federal district

court which obtains jurisdiction of parties and issues should have priority and the second court

should decline consideration of the action until the proceedings before the first court are

terminated.” O’Hare Int’l Bank v. Lambert, 459 F.2d 328, 331 (10th Cir. 1972) (citation

omitted). Thus, where an earlier action is pending in federal district court and a second lawsuit

involving substantially similar parties and issues is filed in a different federal district court, “the

entire action should be decided by the court in which the action was first filed.” Layne

Christensen, 2009 WL 352832, at *2. That is because “as courts of coordinate jurisdiction and

equal rank,” federal courts “must be careful to avoid interfering with each other’s affairs in order

to avoid the waste of duplication, to avoid rulings which may trench upon the authority of sister

courts, and to avoid piecemeal resolution of issues that call for a uniform result.” Buzas

Baseball, Inc. v. Bd. of Regents of Univ. Sys. of Ga., No. 98–4098, 1999 WL 682883, at *2 (10th

Cir. Sept. 2, 1999) (unpublished).

When presented with a motion under the first-to-file rule, the “second-filed court plays a

limited role,” namely, to determine whether there is a “substantial overlap” between the two

10 For the reasons set forth in Section III, infra, the Court may also transfer or stay the case based on either of the grounds discussed in this Section II.

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suits. The Cherokee Nation v. Nash, 724 F. Supp. 2d 1159, 1166 (N.D. Okla. 2010). This Court

need only find a “similarity of the parties” and “similarity of issues” to dismiss. Id. at 1168.

1. The Parties In The Two Actions Are Substantially Similar The first-to-file rule does not require a complete identity among all parties. Courts

instead require only substantial similarity among the parties, which includes “privity or

affiliation between/among” parties. SNMP Research, Inc. v. Avaya, Inc., No. 3:12-CV-117,

2013 WL 474846, at *4 (E.D. Tenn. Feb. 7, 2013) (citing cases); see also Nash, 724 F. Supp. 2d

at 1167-70 (parties were substantially similar where, inter alia, they were represented by the

same counsel, and the defendants in one case could be “readily substituted” for the defendants in

the other without effecting any “substantive change” in the action). If the first-to-file rule

applied only where the parties were perfectly identical, a creative litigant wishing to flout the

jurisdiction of the first federal court could almost always add a party to evade application of the

rule. Indeed, that is exactly what VidAngel has attempted to do in this case.

The overlap among the parties here is substantial. VidAngel is the defendant in

California and the plaintiff here. Three of the named defendants—Marvel, New Line and

Turner—are plaintiffs in the California Action. All but one of the remaining defendants are

corporate affiliates or business partners of the California plaintiffs, and the California plaintiffs

distribute several of the Moving Defendants’ works.11 These close corporate and contractual

relationships make the parties in this action substantially similar to those in the first-filed

California Action. See Youngevity Int'l, Inc. v. Renew Life Formulas, Inc., 42 F. Supp. 3d 1377,

1382 (S.D. Cal. 2014) (parties were substantially similar where the non-overlapping defendants

11 See Headley Decl. ¶ 2; Weinberger Decl. ¶ 30; Zoeller Decl. ¶ 4; Wallace Decl. ¶ 3; Basich Decl. ¶ 3; Bassett Decl. ¶ 3; Freeman Decl. ¶ 2; Friedman Decl. ¶ 3; Berg Decl. ¶ 4.

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were “affiliated” with a party in the other action, or sold “or distribute[d]” the products of a party

in the other action).

The only named defendant with no relationship with the California plaintiffs is Sullivan.

VidAngel’s inclusion of this company does not destroy the substantial overlap among the parties

in this action and the California Action. See, e.g., Shannon’s Rainbow, LLC v. Supernova

Media, Inc., 683 F. Supp. 2d 1261, 1278–79 (D. Utah 2010) (“Although these suits do not name

identical parties, they name similar parties with enough overlap to satisfy this element.”); see

also Animal Health Int’l, Inc. v. Livingston Enters., Inc., No. 12-Cv-00369-LTB, 2012 WL

1439243 at *3 (D. Colo. Apr. 26, 2012) (“It is true that Livingston also names another defendant

in the Nebraska Action, but the parties only need be substantially similar for the rule to apply.”)

(quotations omitted).

2. The Issues In The Two Actions Are Substantially Similar The first-to-file rule likewise does not require perfect identity of claims and legal issues.

The issues across the two cases need only be “substantially similar,” see Animal Health Int’l,

2012 WL 1439243, at *3, which the issues in these cases clearly are.

Given that Marvel, New Line, and Turner are plaintiffs in California and defendants here

in a dispute over the same works on the same streaming service, this Court necessarily will have

to determine the scope of the preliminary injunction issued by the California district court and

affirmed by the Ninth Circuit. VidAngel filed two “motions to clarify” to seek essentially the

same relief it seeks here. Those motions were denied because the injunction is clear, and yet

VidAngel hopes this action will nevertheless prevent the California plaintiffs from applying the

injunction to the current iteration of its service. VidAngel has stated, for example, that it filed

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this action to “protect [itself] from claims by the Disney Litigation Plaintiffs that the preliminary

injunction entered therein applies to business models [that VidAngel contends were] never

contemplated by the court.” Klaus Decl. Ex. A at 5. But in denying VidAngel’s second motion

to clarify, the California court made clear the injunction was not limited to one particular version

of VidAngel’s unauthorized streaming service. To the contrary; it held that exempting VidAngel

from “contempt penalties” for “violating the clear terms of the preliminary injunction, as long as

the violation occurs in conjunction with a technology that is ‘more than colorably different’ from

[VidAngel’s] initial [disc-based] technology” would “defeat the purpose of the injunction.”

Klaus Decl. Ex. E (C.D. Cal. Sept. 13 Order) at 4.

VidAngel is therefore trying to create exactly the type of conflict between coordinate

courts—“interfering with each other’s affairs”—that the first-to-file rule aims to prevent. Buzas

Baseball, 1999 WL 682883, at *2; see also Sandoz, Inc. v. Pfizer, Inc., No. 09-CV-02457-CMA-

MJW, 2010 WL 502727, at *5 (D. Colo. Feb. 8, 2010) (issues were “substantially similar” even

though the second-filed case included new claims where such claims were “nothing other than a

tactical maneuver to gain a foothold in its preferred forum”). If (as VidAngel hopes) this Court

were to rule that VidAngel’s unauthorized streaming service does not infringe Moving

Defendants’ copyrights, that decision would conflict with the rulings of the California district

court and interfere with that court’s injunction.

VidAngel tries to obscure this core fact by putting different labels on the iterations of its

service—“Disc Ownership Model,” “Stream-Based Service,” “Hybrid Service”—but VidAngel’s

terminology is irrelevant. As VidAngel told the California court, the Stream-Based Service

“maintained virtually all the core functionality of” the Disc Ownership Model, and the two

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services use “the same” technology “in most respects.” Cal. Dkt. 184 at 4. And VidAngel’s

FAC makes clear that it will ask this Court to revisit many of the rulings that the California

district court and Ninth Circuit have already issued. For example:

Claims In Utah Action Rulings In California Action

VidAngel seeks a declaration that it does not The Ninth Circuit held that making violate copyright owners’ exclusive “intermediate” copies of a movie or television reproduction rights when it makes show infringes copyright owners’ rights and is “intermediate” copies of movies and television not a fair use, Disney Enters., 869 F.3d at 856- shows because making “intermediate” copies is 57, 862 n.12. a fair use, FAC ¶ 65(i).

VidAngel seeks a declaration that it does not The district court held that VidAngel violates violate copyright owners’ exclusive public copyright owners’ exclusive public performance rights when it streams from the performance rights when it streams from the master copy it has created to users who master copy it has created to users who supposedly “own” a different copy of the work, supposedly “own[]” a different copy of the FAC ¶¶ 66(f), 70. work, Disney Enters., 224 F. Supp. 3d at 970- 71.

VidAngel seeks a declaration that the FMA The Ninth Circuit held that the FMA does not authorizes VidAngel to create a master copy of authorize VidAngel to create a master copy of a copyrighted work and stream from that copy a copyrighted work and stream from that copy to VidAngel users, FAC ¶¶ 36, 60. to VidAngel users, Disney Enters., 869 F.3d at 857-60.

VidAngel seeks a declaration that fair use The Ninth Circuit held that VidAngel’s shields VidAngel from liability because its filtering is not transformative and that any filtering is transformative and provides supposed “benefit” to copyright owners is defendants the benefits of an expanded irrelevant to the fair use analysis, Disney audience for their movies and television shows, Enters., 869 F.3d at 860-62. FAC ¶ 59.

In sum, VidAngel is using this action to re-litigate issues that are the same or

substantially similar to the issues litigated (and, in many cases decided against VidAngel) in the

California Action. A number of the parties in the two cases are the same; and all but one other

party are related. This action should be dismissed in favor of the first-filed action.

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B. VidAngel Filed This Lawsuit In Anticipation Of New Plaintiffs Being Added To The California Action Irrespective of the first-to-file issue, a declaratory judgment action is an improper

anticipatory filing when it is “filed for the purpose of anticipating [litigation] on the same issues”

in a different court. Buzas Baseball, 1999 WL 682883 at *3; see also Nacogdoches Oil & Gas,

L.L.C. v. Leading Sols, Inc., No. 06-2551-CVM, 2007 WL 2402723, at *2 (D. Kan. Aug. 17,

2007) (dismissing anticipatory declaratory judgment action).

The timeline of events makes clear that this action is anticipatory. On August 9, 2017,

the California plaintiffs told VidAngel that they would amend the California complaint to add

Marvel, New Line and Turner as plaintiffs. Klaus Decl. ¶ 13. VidAngel told plaintiffs that

amendment was not necessary, at least until after the California court ruled on its soon-to-be-

filed motion to clarify. Id. ¶ 14. Plaintiffs relied on VidAngel’s representations in refraining

from adding those parties as plaintiffs. VidAngel then filed this action against those entities in

order to “avoid the prospect of again litigating in an unfavorable forum.” Id. Ex. A at 5. This is

clearly an anticipatory suit, which provides another basis for dismissing the case. See, e.g.,

Buzas Baseball, 1999 WL 682883 at *3.

III. ALTERNATIVELY, THE COURT SHOULD TRANSFER OR STAY THIS ACTION A. The Court Has Discretion To Transfer This Case Where, as here, a suit is improper—either because it violates the first-to-file rule or is an

anticipatory suit—courts may transfer the action to the other forum. See, e.g., Nash, 724 F.

Supp. 2d at 1172 (transferring action to district where first-filed case was pending); Animal

Health Intern., Inc., 2012 WL 1439243 at *5 (same). In effectuating such a transfer, the court

need not “consider the factors under 28 U.S.C. § 1404.” Letbetter v. Local 514, Transp. Workers

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Union of Am., No. 14-CV-00125-TCK-FHM, 2014 WL 4403521, at *4 n.4 (N.D. Okla. Sept. 5,

2014).12

However, “[t]o permit a situation in which two cases involving precisely the same issues

are simultaneously pending in different District Courts leads to the wastefulness of time, energy

and money that § 1404(a) was designed to prevent.” See Cont’l Grain Co. v. The FBL-585, 364

U.S. 19, 26 (1960). Accordingly, when the § 1404(a) factors are applied, the result is the same.

If it is not dismissed, this case should be transferred to the Central District of California.

Section 1404(a) provides that, “[f]or the convenience of the parties and witnesses, in the

interest of justice, a district court may transfer any civil action to any other district or division

where it might have been brought.” In deciding whether to transfer, courts consider:

the plaintiff’s choice of forum; the accessibility of witnesses and other sources of proof, including the availability of compulsory process to ensure attendance of witnesses; the cost of making the necessary proof; questions as to the enforceability of a judgment if one is obtained; relative advantages and obstacles to a fair trial; difficulties that may arise from congested dockets; the possibility of the existence of questions arising in the area of conflict of laws; the advantage of having a local court determine questions of local law; and [ ] all other considerations of a practical nature that make a trial easy, expeditious and economical.

See Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir. 1991)

(quotations omitted). Here, VidAngel obviously could have filed its declaratory judgment claims

against the Moving Defendants in the Central District of California, which would have

unquestionably resulted in the most expeditious and efficient resolution of the parties’ dispute.

12 If the Court determines that it lacks personal jurisdiction over Moving Defendants, it may not transfer the case under § 1404(a), although it can transfer if appropriate under other provisions. See ConocoPhillips Co. v. Jump Oil Co., 948 F. Supp. 2d 1272, 1283-84 (N.D. Okla. 2013).

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And, since the Moving Defendants all reside in California with little or no presence in Utah, the

balance of other factors under § 1404(a) decidedly favors transfer.

First, the customary deference to the plaintiff’s choice of forum “loses its significance”

because the California Action “was filed first and both cases are substantially similar and arise

out of the same or similar operative facts.” Glob. Tech Sys., Inc. v. Beco Dairy Automation, Inc.,

No. CIV 13-1006 JAP/KBM, 2014 WL 12596721, at *7–8 (D.N.M. June 6, 2014) (citing cases).

If anything, this factor favors Moving Defendants, as they and their affiliates were the “first

plaintiffs.” See Sandoz, Inc., 2010 WL 502727, at *5 (giving deference to the forum chosen by

the plaintiffs in the first-filed action, rather than the later-filed action).

Second, the convenience of witnesses weighs in favor of transfer. None of the Moving

Defendants’ witnesses who likely would testify about issues of copyright ownership,

relationships with licensed streaming services, and irreparable harm are located in Utah; rather,

most if not all are located in California.13 Many of these same witnesses will testify in the

California Action. Although VidAngel’s principals are located in Utah, they too will be required

to testify in California and one has already provided deposition testimony in California. Hence,

if VidAngel’s action moves forward, witnesses from both sides “could be required to attend legal

proceedings in both states,” which would “greatly increase the parties’ costs and expenses and

needlessly expend judicial resources.” Glob. Tech Sys., Inc., 2014 WL 12596721, at *9. This

factor therefore favors the Moving Defendants.

13 See Belzer Decl. ¶¶ 13-16; Headley Decl. ¶¶ 13-15; Weinberger Decl. ¶ 33-36; Zoeller Decl. ¶¶ 15-17; Wallace Decl. ¶¶ 12-15; Basich Decl. ¶¶ 11-13; Bassett Decl. ¶¶ 14-16; Freeman Decl. ¶¶ 16-18; Friedman Decl. ¶¶ 13-15; Berg Decl. ¶¶ 16-18.

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The California Action is set for trial in June 2018, and the district court and Ninth Circuit

have already ruled on the key legal issues. Additionally, the docket in the Central District of

California is less congested than the docket in this Court.14

In all events, “the interest of justice” requires transfer. “The interest of justice may be

determinative, warranting transfer or its denial even where the convenience of the parties and

witnesses points toward the opposite result.” Nambe, LLC v. Lenox Corp., No. 16-CV-241

SCY/KBM, 2016 WL 9408555, at *6 (D.N.M. Dec. 7, 2016). Courts therefore “consistently

recognize that the existence of a related action in the transferee district is a strong factor to be

weighed with regard to judicial economy.” Id. (citing cases); see, e.g. Mojave Oil & Gas, L.L.C.

v. EnerVest Operating, L.L.C., No. 16-CV-582-JHP-FHM, 2017 WL 2876469, at *2–3 (N.D.

Okla. July 6, 2017) (transferring case to the Western District, where the Court was already

familiar with a related case). Maintaining the two cases in separate forums risks inconsistent

judgments, the interpretation by this Court of another court’s preliminary innjnction, and will

require the “duplicative use of judicial resources.” Mojave Oil & Gas, 2017 WL 2876469, at

*2–3; see also Breckenridge Pharm., Inc. v. KV Pharm. Co., No. 08-80963-CIV, 2009 WL

1404698, at *3–6 (S.D. Fla. May 19, 2009) (transferring the case to state where a related case

was pending because, “[e]ven if the ‘first to file rule’ [was] not completely applicable . . . both

actions involve[d] the same parties and the same patent”).

14 In the Central District of California, the average time a civil case was pending from filing to trial for the twelve months ending on March 31, 2017 was 20.4 months, while only 5.4 percent of civil cases were more than 3 years old. Klaus Dec. Ex. F (“Federal Court Management Statistics”) at 68. In the district of Utah, the average time a civil case was pending from filing to trial for that same time period was 34.2 months, while 9.6 percent of cases were more than three years old. Id. at 85.

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B. At A Minimum, This Action Should Be Stayed Pending Resolution Of The California Action If the Court believes that both dismissal and transfer are inappropriate, it should stay this

action until proceedings in California are resolved. See Nash, 724 F. Supp. 2d at 1171 (“After

determining whether the first to file rule generally applies, courts within the Tenth Circuit have

the option of staying the second-filed action pending the outcome of the first-filed action, rather

than immediately transferring the case to the first-filed court.”). The California plaintiffs will

seek to lift the bankruptcy action’s automatic stay and the resolution of the California Action, set

for trial in June 2018, has the potential to make this action unnecessary.

CONCLUSION

For the foregoing reasons, the Moving Defendants respectfully request that this Court

grant their motion to dismiss or, in the alternative, transfer or stay this action.

RESPECTFULLY SUBMITTED this 26th day of October 2017.

HATCH, JAMES & DODGE, PC

By: /s/ Brent O. Hatch Brent O. Hatch

Attorneys for Moving Defendants

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EXHIBIT P Case 17-29073Case 2:17-cv-00989-DN Doc 213-1 Filed Document 09/14/18 129 Entered Filed 09/14/18 07/27/18 16:35:29 Page 1 of Desc 16 Exhibit Page 288 of 306

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

VIDANGEL, INC., MEMORANDUM DECISION AND ORDER GRANTING Plaintiff, MOTION TO DISMISS v. Case No. 2:17-cv-00989-DN SULLIVAN ENTERTAINMENT GROUP, INC., et al., District Judge David Nuffer Defendant.

Plaintiff VidAngel, Inc. (“VidAngel”) provides services that allow consumers to filter the

content of motion pictures, including certain television programs, to their individual

specifications and have that filtered content streamed for private viewing.1 Defendants are copyright owners of motion pictures who have demanded that VidAngel to stop filtering and streaming their copyrighted works.2 VidAngel initiated this case seeking declaratory relief

regarding the legality of its filtering and streaming services under copyright law.3

The Moving Defendants4 seek dismissal of VidAngel’s First Amended Complaint arguing that personal jurisdiction is lacking, and that this case is an improper attempt at procedural fencing, which violates the federal first-to-file rule.5 Alternatively, the Moving

1 First Amended Complaint ¶¶ 26, 50-58, docket no. 40, filed Sept. 22, 2017. 2 Id. ¶¶ 33, 35. 3 Id. ¶¶ 61-71. 4 The “Moving Defendants” are: MVL Film Finance, LLC; Marvel Characters, Inc.; Twentieth Century Fox Home Entertainment, LLC; Fox Digital Entertainment, Inc.; Fox Broadcasting Company; New World Pictures, Ltd.; Castle Rock Entertainment, Inc.; New Line Productions, Inc.; Turner Entertainment Co.; Village Roadshow Pictures Entertainment Inc.; Regency Entertainment (USA), Inc.; and Metro-Goldwyn-Mayer Studios Inc. Defendant Sullivan Entertainment Group Inc. is the only named defendant that is not a Moving Defendant. 5 Motion to Dismiss or, in the Alternative, to Transfer or Stay (“Motion to Dismiss”) at 9-20, docket no. 58, filed Oct. 26, 2017. Case 17-29073Case 2:17-cv-00989-DN Doc 213-1 Filed Document 09/14/18 129 Entered Filed 09/14/18 07/27/18 16:35:29 Page 2 of Desc 16 Exhibit Page 289 of 306

Defendants request that the case be transferred to the United States District Court for the Central

District of California where VidAngel is the defendant in similar proceeding involving some of the Moving Defendants (the “California Action”), or that the case be stayed pending resolution of the California Action.6

Because VidAngel has failed to make a prima facie showing of personal jurisdiction, the

Moving Defendants’ Motion to Dismiss7 is GRANTED. Additionally, VidAngel is ordered to

show cause as to why its First Amended Complaint should not be dismissed as to the remaining

defendant, Sullivan Entertainment Group, Inc., for lack of personal jurisdiction. VidAngel is also

directed to file a notice stating whether in lieu of dismissal it requests the case be transferred

pursuant to 28 U.S.C. § 1631.

Contents DISCUSSION ...... 3 General personal jurisdiction is lacking ...... 5 Specific personal jurisdiction is lacking ...... 8 VidAngel’s claims do not arise out of the Moving Defendants’ business activities in Utah ...... 9 The Moving Defendants efforts to protect their intellectual property rights are insufficient to establish specific personal jurisdiction ...... 11 VidAngel’s request for jurisdictional discovery is futile ...... 14 Personal jurisdiction over Defendant Sullivan Entertainment Group, Inc. appears to be lacking ...... 15 VidAngel is given leave to request transfer of the case in lieu of dismissal ...... 15 ORDER ...... 16

6 Id. at 20-24. 7 Docket no. 58, filed Oct. 26, 2017.

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DISCUSSION

The Moving Defendants seek dismissal of VidAngel’s First Amended Complaint arguing

that personal jurisdiction is lacking, and that this case is an improper attempt at procedural

fencing, which violates the federal first-to-file rule.8 Alternatively, the Moving Defendants

request that the case be transferred or stayed pending resolution of the California Action.9

Because the personal jurisdiction issue is dispositive, the Moving Defendants’ other arguments

are not addressed.

“The [p]laintiff bears the burden of establishing personal jurisdiction over the

defendant.”10 “When a district court rules on a Fed. R. Civ. P. 12(b)(2) motion to dismiss for

lack of personal jurisdiction without holding an evidentiary hearing, as in this case, the plaintiff

need only make a prima facie showing of personal jurisdiction to defeat the motion.”11 Thus,

“[i]n the preliminary stages of litigation . . . the plaintiff’s burden is light.”12 “The allegations in

the complaint must be taken as true to the extent they are uncontroverted by the defendant’s

affidavits.”13 And all conflicting affidavits and factual disputes are resolved in the plaintiff’s

favor.14

Additionally, “[a] court may consider material outside of the pleadings in ruling on a

motion to dismiss for lack of venue or personal jurisdiction.”15 “By considering documents

8 Motion to Dismiss at 9-20. 9 Id. at 20-24. 10 OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998) (internal quotations omitted). 11 Id. 12 Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). 13 Id. (internal quotations omitted). 14 Id. 15 1-800-Contacts, Inc. v. Memorial Eye, PA, No. 2:08-cv-00983-TS, 2009 WL 1586654, *1 n.1 (D. Utah June 4, 2009).

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outside the pleadings . . . the Court does not convert the motion into one for summary

judgment.”16

When considering personal jurisdiction in a federal question case, a court must first

determine whether the “applicable statute authorizes the service of process on defendants,” and

second, decide whether the exercise of personal jurisdiction “comports with constitutional due

process demands.”17 VidAngel asserts federal subject-matter jurisdiction under the federal

Copyright Act and the Declaratory Judgment Act.18 Neither of these statutes provides for nationwide service of process, so Fed. R. Civ. P. 4(k)(1)(A) commands [application] of the law

of the state in which the district court sits.19 Therefore, VidAngel must show that jurisdiction is

authorized under Utah’s long-arm statute, and that the exercise of jurisdiction will not offend the

due process clause of the Fourteenth Amendment.20

However, the Utah Supreme Court has expressly stated that “any set of circumstances

that satisfies due process will also satisfy [Utah’s] long-arm statute.”21 As a consequence, the

Utah personal jurisdiction standard is collapsed into the federal due process standard.22

“[T]o exercise [personal] jurisdiction in harmony with due process, defendants must have

‘minimum contacts’ with the forum state, such that having to defend a lawsuit there would not

‘offend traditional notions of fair play and substantial justice.’”23 There are two recognized types

16 Id. 17 Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). 18 First Amended Complaint ¶¶ 24, 36, 67, 71. 19 Dudnikov, 514 F.3d at 1070. 20 Zing Bros., LLC v. Bevstar, LLC, No. 2:11-cv-00337-DN, 2011 WL 4901321, *1 (D. Utah Oct. 14, 2011). 21 SII MegaDiamond, Inc. v. Am. Superabrasives Corp., 969 P.2d 430, 433 (Utah 1998). 22 Rusakiewicz v. Lowe, 556 F.3d 1095, 1100 (10th Cir. 2009). 23 Dudnikov, 514 F. 3d at 1070 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

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of personal jurisdiction that may allow this case to proceed in this district—specific and general

jurisdiction. VidAngel has failed to demonstrate that either apply to permit the exercise of

personal jurisdiction in this case.

General personal jurisdiction is lacking

“[A] court may assert general jurisdiction over foreign (sister-state or foreign-country)

corporations to hear any and all claims against them when their affiliations with the State are so

‘continuous and systematic’ as to render them essentially at home in the forum State.”24 “[O]nly

a limited set of affiliations with a forum will render a defendant amenable to all-purpose

[general] jurisdiction there.”25 For a corporation, “the place of incorporation and the principal

place of business are paradigm bases for general jurisdiction.”26 “Those affiliation have the

virtue of being unique—that is, each ordinarily indicates only one place—as well as easily

ascertainable.”27 There is no dispute that none of the Moving Defendants’ place of incorporation

is Utah, and none of the Moving Defendants’ principal place of business is located in Utah.28

However, the exercise of general jurisdiction is not completely limited to the paradigm

forums.29 In exceptional cases, a corporate defendant's operations in another forum may be so

substantial and of such a nature as to render the corporation at home in that state.30 But this is not

an exceptional case.

24 Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (internal quotations omitted). 25 Id. at 137. 26 Id. (internal quotations and punctuation omitted). 27 Id. 28 First Amended Complaint ¶¶ 8-19. 29 Daimler AG, 571 U.S. at 137-38. 30 Id.

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VidAngel asserts the Moving Defendants and their affiliates have customers in Utah and

do business in Utah.31 They film, finance, and promote motion pictures in Utah; they own

copyrights in motions pictures that are distributed for viewing in Utah; they participate in annual

film festivals held in Utah; they have applied for and received tax credits in Utah; and they have

lobbied Utah’s federal representative regarding federal copyright laws.32 Essentially, VidAngel’s

argument is that Utah has general personal jurisdiction over the Moving Defendants because the

Moving Defendants engage in substantial, continuous, and systematic business in Utah. But the

Supreme Court has held that such arguments confuse the requirements for general jurisdiction

and are “unacceptably grasping.”33

General all-purpose jurisdiction pertains to “instances in which the continuous corporate

operations within a state are so substantial and of such a nature as to justify suit on causes of

action arising from dealings entirely distinct from those activities.”34 “[T]he inquiry . . . is not

whether a foreign corporation’s in-forum contracts can be said to be in some sense ‘continuous

and systematic,’ it is whether that corporation’s affiliations with the State are so ‘continuous and

systematic’ as to render it essentially at home in the forum State.”35

If the Moving Defendants’ business activities in Utah sufficed to allow adjudication of

this case in Utah, the same reach would presumably be available in every other state their motion

pictures are filmed, distributed, and viewed by consumers. This is a far reach indeed, as

31 VidAngel’s Motion for Leave to Conduct Jurisdictional Discovery and to file Supplemental Brief in Opposition to Defendants’ Motion to Dismiss (“Motion for Discovery”) at 3-4, 6-8, docket no. 91, filed Nov. 27, 2017; VidAngel’s Opposition to Motion to Dismiss or, in the Alternative, to Transfer or Stay (“Response”) at 8-9, docket no. 93, filed Nov. 27, 2017. 32 Motion for Discovery at 3-4, 6-8; Response at 8-9. 33 Daimler AG, 571 U.S. at 138. 34 Id. (internal quotations and punctuation omitted; emphasis in original). 35 Id. at 138-39 (internal quotations and punctuation omitted).

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VidAngel has acknowledged that the Moving Defendants conduct business in all 50 states, and

their motion pictures are distributed across the globe.36 “Such exorbitant exercises of all-purpose

jurisdiction would scarcely permit out-of-state defendants to structure their primary conduct with

some minimum assurance as to where that conduct will and will not render them liable to suit.”37

Moreover, VidAngel’s reliance on the Moving Defendants’ lobbying activities is

misplaced. “[T]here is a fundamental difference between undertaking lobbying activities before

the federal government . . . and undertaking lobbying activities before a state government.”38 “It

makes sense to exclude a defendant’s lobbying contacts with the federal government from a local

court’s personal jurisdiction analysis because when a defendant [lobbies] the federal government,

it intends to impact the federal government but not necessarily the forum itself.”39 Therefore, the

Moving Defendants’ federal lobbying activities do not play into the personal jurisdiction

analysis.

The Moving Defendants’ business activities in Utah are not so substantial or of such a nature as to render them at home in Utah. The Moving Defendants are no more at home in Utah than any other state in which they film and distribute their motion pictures that is not a place of incorporation or principle place of business. Therefore, VidAngel has failed to make a prima facie showing of general personal jurisdiction.

36 Response at 15. 37 Daimler AG, 571 U.S. at 139 (internal quotations omitted). 38 Shepherd Invs. Int’l, Ltd. v. Verizon Commc’ns, Inc., 373 F.Supp.2d 853 (E.D. Wis. 2005). 39 Id.

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Specific personal jurisdiction is lacking

“Specific [personal] jurisdiction . . . depends on an affiliation between the forum and the

underlying controversy[.]”40 For specific jurisdiction, the “minimum contacts” standard requires,

“first, that the out-of-state defendant must have ‘purposefully directed’ its activities at residents

of the forum state, and second, that the plaintiff’s injuries must ‘arise out of’ defendant’s forum-

related activities.”41

The “purposeful direction” doctrine is to ensure that an out-of-state defendant is not

required to defend in a forum state on the basis of “random, fortuitous, or attenuated

contacts[.]”42 The Supreme Court has reasoned that a defendant has “purposefully directed” actions at a forum state when the defendant’s (1) intentional actions, (2) were expressly aimed at the forum state, with (3) the knowledge that the “brunt of the harm” would be felt in the forum state.43 This analysis is commonly referred to as the “effects test.”44

The focus of this analysis is on “the relationship among the defendant, the forum, and the

litigation,” not the relationship between the defendant and the plaintiff or other third parties

within the forum.45 In other words, while “a defendant’s contacts with the forum State may be

intertwined with his transactions or interactions with the plaintiff or other parties . . . a

defendant’s relationship with a plaintiff or third party, standing alone, is an insufficient basis for

[specific personal] jurisdiction.”46 “In order for a court to exercise specific jurisdiction over a

40 Goodyear Dunlop Tires Ops., SA v. Brown, 564 U.S. 915, 919 (2011) (internal quotations omitted). 41 Dudnikov, 514 F.3d at 1071. 42 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). 43 Calder v. Jones, 465 U.S. 783, 789-90 (1984). 44 Younique, LLC v. Youssef, No. 2:15-cv-00783-JNP, 2016 WL 6998659, *7 (D. Utah Nov. 30, 2016). 45 Walden v. Fiore, 134 S.Ct. 1115, 1121-22 (2014) (internal quotations omitted). 46 Id. at 1123.

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claim, there must be an affiliation between the forum and the underlying controversy,

principally, an activity or an occurrence that takes place in the forum.”47 “When there is no such

connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected

activities in the States.”48

VidAngel’s claims do not arise out of the Moving Defendants’ business activities in Utah

VidAngel argues that Utah has specific jurisdiction in this case based on the Moving

Defendants’ business activities in Utah, including: filming, financing, promoting, and

distributing motion pictures in Utah; participating in annual film festivals held in Utah; and

applying for and receiving tax credits in Utah.49 But even assuming that these activities show

purposeful direction on the part of the Moving Defendants, they cannot meet specific

jurisdiction’s second requirement—that VidAngel’s claims “arise out of” these activities.

“The Tenth Circuit has not conclusively established a method to determine whether a

claim ‘arise[s] out of’ a non-resident defendant’s forum-related conduct, but has identified two

possible tests that courts may employ.”50 “The first is a ‘but-for’ causation test and the second is

characterized as a ‘proximate cause’ test.”51

Under the former approach, any event in the causal chain leading to the plaintiff’s injury is sufficiently related to the claim to support the exercise of specific jurisdiction. The latter approach, by contrast, is considerably more restrictive and calls for courts to examine[] whether any of the defendant’s contacts with the forum are relevant to the merits of the plaintiff’s claim.52

47 Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S.Ct. 1773, 1781 (2017) (internal quotations and punctuation omitted). 48 Id. 49 Response at 8-9, 11-14. 50 Younique, LLC, 2016 WL 6998659, *4 (citing Dudnikov, 514 F.3d at 1078). 51 Id. (citing Dudnikov, 514 F.3d at 1078). 52 Dudnikov, 514 F.3d at 1078 (internal quotations omitted).

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But “both tests require a ‘true causal element’ between defendants’ forum contacts and the litigation.”53

Under either test, VidAngel’s claims for declaratory relief do not arise out of the Moving

Defendants’ business activities in Utah. VidAngel seeks declaration of non-infringement

regarding its filtering and streaming services.

[T]he nature of the claim in a declaratory judgment action is ‘to clear the air of infringement charges.’ Such a claim neither directly arises out of nor relates to the [plaintiff or defendant] making, using, offering to sell, selling, or importing . . . products in the forum[.]54

“[O]nly enforcement or defense efforts related to the [intellectual property] rather than the

[intellectual property owner’s] commercialization efforts are to be considered for establishing

specific personal jurisdiction in a declaratory judgment action against the [intellectual property

owner].”55 This is because the declaratory judgment action:

arises out of or relates to the activities of the defendant in enforcing [its intellectual property rights]. The relevant inquiry for specific personal jurisdiction purposes [is] to what extent has the defendant purposefully directed such enforcement activities at residents of the forum, and the extent to which the declaratory judgment claim arises out of or relates to those activities.56

That the Moving Defendants have filmed, financed, promoted, and distributed motion

pictures in Utah does not relate to the enforcement of their intellectual property rights. These

business activities do not contribute to or give rise to VidAngel’s claims for declaratory relief,

and they are not relevant to this case. Therefore, the Moving Defendants’ business activities in

Utah cannot support the exercise of specific personal jurisdiction in this case.

53 Express Servs., Inc. v. King, No. CIV-15-1181-R, 2016 WL 3172911, *9 (W.D. Okla. June 6, 2016) (quoting Newsome v. Gallacher, 722 F.3d 1257, 1269 (10th Cir. 2013)). 54 New Belgium Brewing Co., Inc. v. Travis Cty. Brweing Co., LLC, No. 15-cv-00272-MEH, 2015 WL 2106329, *7 (D. Colo. May 1, 2015) (quoting Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1332 (Fed. Cir. 2008)). 55 Id. (quoting Autogenomics, Inc. v. Oxford Gene Tech., Ltd., 566 F.3d 1012, 1020 (Fed. Cir. 2009)). 56 Id. (quoting Avocent Huntsville Corp., 552 F.3d at 1332) (internal punctuation omitted).

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The Moving Defendants efforts to protect their intellectual property rights are insufficient to establish specific personal jurisdiction

VidAngel also argues that specific personal jurisdiction may be exercised in this case

based on the Moving Defendants’ attempts to protect their intellectual property rights.57

VidAngel asserts that the Moving Defendants have demanded that VidAngel cease and desist its

filtering and streaming services; have lobbied Utah’s federal officials regarding federal copyright

laws, including the Family Movie Act of 2005 (“FMA”); and have asserted claims for copyright infringement against VidAngel in the California Action.58 VidAngel further argues that Utah is

the appropriate forum to determine whether its services are infringing the Moving Defendants’

copyrights because Utah is where VidAngel and a substantial number of its customers will feel

the injury if its services are discontinued.59

VidAngel’s arguments lack merit. “As a general rule . . . a defendant’s reasonable, good faith actions to protect its alleged rights, including transmittal of cease and desist letters and

litigation efforts against a forum resident, do not constitute ‘express aiming’ at the forum

sufficient to establish the constitutionally required minimum contracts with the forum.”60

Principles of fair play and substantial justice afford [intellectual property owners] sufficient latitude to inform others of [their intellectual property] rights without subjecting [themselves] to jurisdiction in a foreign forum. [An intellectual property owner] should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement. Grounding personal jurisdiction on such contacts alone would not comport with principles of fairness.61

57 Response at 11-14, 16-17. 58 Id. 59 Id. 60 SIBU, LLC v. Bubbles, Inc., No. 2:11-cv-00477-DN, 2011 WL 6028835, *4 (D. Utah Dec. 5, 2011) (citing Impact Prods., Inc. v. Impact Prods., LLC, 341 F.Supp.2d 1186, 1190 (D. Colo. 2004)). 61 Autogenomics, Inc., 566 F.3d at 1020 (quoting Avocent Huntsville Corp., 552 F.3d at 1360-61) (emphasis added).

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The Tenth Circuit Court of Appeals acknowledged these principles when distinguishing

circumstances where a defendant sends a “mere cease-and-desist letter,” which warns or

threatens a plaintiff in a forum, from circumstance where the defendant takes “affirmative steps

with third parties that suspended plaintiffs’ ongoing business operations.”62 The court assumed without deciding that the former would be unreasonable to found specific jurisdiction upon, while holding that the later is sufficient to comport with due process.63

The Moving Defendants’ communications with VidAngel and their demands that

VidAngel cease and desist its filtering and steaming services are, alone, insufficient to permit the

exercise of specific personal jurisdiction in this case. And neither the Moving Defendants’ federal lobbying activities nor the California Action constitute additional affirmative steps that would support the exercise of specific jurisdiction.

As discussed, lobbying contacts with federal representative for changes in federal law do not play into the personal jurisdiction analysis for a local forum.64 Additionally, though a

preliminary injunction has issued in the California Action,65 VidAngel has gone to great lengths

to assert and argue that its claims in this case involve new technology and services that were not

before the court in the California Action and are not subject to the preliminary injunction.66

Accepting these assertions and arguments as true (which cannot now be determined), the

California Action and the preliminary injunction should not interfere with VidAngel’s ongoing

62 Dudnikov, 514 F.3d at 1082. 63 Id. 64 Supra at 7. 65 Disney Enters., Inc. v. VidAngel, Inc., No. 2:16-cv-04109-AB, Order Granting Plaintiffs’ Motion for Preliminary Injunction, docket no. 94-2, filed Nov. 27, 2017. 66 First Amended Complaint ¶¶ 29-32, 50-60, 63-66, 70; Response at 3-8, 21-24.

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business operations relating to its new technology and services.67 Therefore, VidAngel has failed

to make a prima facie showing of any conduct on the part of the Moving Defendants that goes

beyond mere cease-and-desist demands to support the exercise of specific jurisdiction.

Finally, VidAngel’s reliance on its offices and a significant portion of its customer base

being located in Utah are unhelpful in establishing specific jurisdiction. The specific jurisdiction

analysis “focuses on the relationship among the defendant, the forum, and the litigation.”68

“[H]owever significant the plaintiff’s contacts with the forum may be, those contacts cannot be

decisive in determining whether the defendant’s due process rights are violated.”69 And “mere

injury to a forum resident is not a sufficient connection to the forum.”70 “The proper question is

not where the plaintiff experienced a particular injury or effect but whether the defendant’s

conduct connects him to the forum in a meaningful way.” In this case, the Moving Defendants’

conduct does not.

VidAngel has failed to make a prima facie showing of a sufficient relationship among the

Moving Defendants, Utah, and its claims for declaratory relief to support the exercise of specific

personal jurisdiction in this case. Therefore, because both general and specific personal

jurisdiction are lacking, the Moving Defendants’ Motion to Dismiss71 is GRANTED.

67 On the other hand, if VidAngel’s new technology and services were subject to the California Action and preliminary injunction, then VidAngel would have a better case for establishing specific personal jurisdiction in Utah. C.f. Dudnikov, 514 F.3d at 1082. But such an argument would necessarily concede that VidAngel’s claims in this case violate the federal first-to-file rule and are appropriately raised as counterclaims in the California Action. Buzas Baseball, Inc. v. Bd. of Regents of Univ. Sys. of Georgia, 189 F.3d 477, *2 (10th Cir. 1999). Ultimately, either way the California Action and preliminary injunction are viewed, they do not support the exercise of jurisdiction in this case. 68 Walden, 134 S.Ct. at 1122 (internal quotations omitted). 69 Id. 70 Id. at 290. 71 Docket no. 58, filed Oct. 26, 2017.

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VidAngel’s request for jurisdictional discovery is futile

In conjunction with its Response to the Moving Defendant’s Motion to Dismiss,

VidAngel requested leave to conduct jurisdictional discovery.72 Specifically, VidAngel proposes

discovery regarding the Moving Defendants’ cease-and-desist demands to VidAngel and the extent to which the Moving Defendants have negotiated licenses with Utah-based entities or distributed, bought, filmed, or produced movies in Utah.73 The facts sought in this proposed

discovery, however, will not lead to the exercise of personal jurisdiction in this case.

Discovery relating to the Moving Defendant’s communications with VidAngel has no

bearing on general personal jurisdiction. And, as discussed, mere demands that VidAngel cease

and desist its filtering and streaming services are insufficient to establish the minimum contacts

necessary for the exercise of specific personal jurisdiction.74

Additionally, the Moving Defendants’ business activities that VidAngel has proffered,

and which it proposes to target in discovery, are not the type of contacts that would be so

substantial or of such a nature as to render the Moving Defendants at home in Utah for purposes

of general jurisdiction.75 And VidAngel’s claims for declaratory relief do not arise out of these

business activities for purposes of specific jurisdiction.76

Therefore, the discovery VidAngel seeks is futile and its Motion for Discovery77 is

DENIED.

72 Response at 17; Motion for Discovery. 73 Response at 17; Motion for Discovery at 5-8. 74 Supra at 11-12. 75 Supra at 6-7. 76 Supra at 9-10. 77 Docket no. 91, filed Nov. 27, 2017.

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Personal jurisdiction over Defendant Sullivan Entertainment Group, Inc. appears to be lacking

A Default Certificate has entered against Defendant Sullivan Entertainment Group, Inc.

(“Sullivan”) for its failure to timely appear or otherwise respond to VidAngel’s First Amended

Complaint.78 However, it appears that VidAngel’s grounds for the exercise of personal

jurisdiction over Sullivan are is the same as it has argued regarding the Moving Defendants.79 If

so, for the same reasons discussed above,80 personal jurisdiction over Sullivan is lacking.

Therefore, VidAngel is directed to file a brief showing cause as to why the Default

Certificate entered against Sullivan should not be set aside and VidAngel’s First Amended

Complaint dismissed as to Sullivan for lack of personal jurisdiction.

VidAngel is given leave to request transfer of the case in lieu of dismissal

Although personal jurisdiction over the Moving Defendants is lacking, 28 U.S.C. § 1631

provides that “[w]henever a civil action is filed . . . and [the] court finds that there is a want of

jurisdiction, the court shall, if it is in the interest of justice, transfer such action . . . to any other

such court in which the action . . . could have been brought at the time it was filed . . . .”81

The Moving Defendants have argued that if this case is not dismissed, it should be

transferred to the United States District Court for the Central District of California.82 VidAngel

opposed such a transfer when responding to the Moving Defendants’ Motion to Dismiss.83

However, in light of the determination that personal jurisdiction is lacking, it is appropriate to

78 Default Certificate, docket no. 118, filed Mar. 19, 2018. 79 First Amended Complaint ¶¶ 7, 33-34. 80 Supra at 5-13. 81 28 U.S.C. § 1631. 82 Motion to Dismiss at 20-23. 83 Response at 23-24.

15 Case 17-29073Case 2:17-cv-00989-DN Doc 213-1 Filed Document 09/14/18 129 Entered Filed 09/14/1807/27/18 16:35:29 Page 16 of Desc 16 Exhibit Page 303 of 306

afford VidAngel the opportunity to request the case be transferred to the United States District

Court for the Central District of California pursuant to 28 U.S.C. § 1631 in lieu of dismissal.

ORDER

IT IS HEREBY ORDERED that the Moving Defendant’s Motion to Dismiss84 is

GRANTED effective August 6, 2018, if this case is not transferred as provided below.

IT IS FURTHER HEREBY ORDERED that VidAngel’s Motion for Discovery85 is

DENIED.

IT IS FURTHER HEREBY ORDERED that by no later than Friday August 3, 2018,

VidAngel shall file a brief, not exceeding ten pages in length, showing cause as to why the

Default Certificate against Defendant Sullivan Entertainment Group, Inc. should not be set aside

and VidAngel’s First Amended Complaint dismissed as to Sullivan for lack of personal jurisdiction.

IT IS FURTHER HEREBY ORDERED that by no later than Friday August 3, 2018,

VidAngel shall file a notice stating whether in lieu of dismissal it requests the case be transferred pursuant to 28 U.S.C. § 1631 to the United States District Court for the Central District of

California.

Signed July 27, 2018.

BY THE COURT

______District Judge David Nuffer

84 Docket no. 58, filed Oct. 26, 2017. 85 Docket no. 91, filed Nov. 27, 2017.

16 Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 304 of 306

EXHIBIT Q Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 305 of 306

Case 2:17-cv-00989-DN Document 130 Filed 08/03/18 Page 1 of 2

Douglas B. Thayer (Bar No. 8109) Ryan G. Baker (Cal. Bar No. 214036) Andy V. Wright (Bar No. 11071) [email protected] (pro hac vice) Cole L. Bingham (Bar No. 14131) Jaime Marquart (Cal. Bar No. 200344) DURHAM JONES & PINEGAR, P.C. [email protected] (pro hac vice) 3301 N. Thanksgiving Way, Suite 400 Scott M. Malzahn (Cal. Bar No. 229204) Lehi, Utah 84043 [email protected] (pro hac vice) Telephone: (801) 375-6600 Brian T. Grace (Cal. Bar No. 307826) Facsimile: (801) 375.3865 [email protected] (pro hac vice) BAKER MARQUART LLP Email: [email protected] 2029 Century Park East, Sixteenth Fl. [email protected] Los Angeles, California 90067 [email protected] Telephone: (424) 652-7800 Facsimile: (424) 652-7850 David Quinto (Bar No. 106232) VIDANGEL, Inc. 3007 Franklin Canyon Dr. Beverly Hills, CA 90210-1633 Telephone: (213) 604-1777 Email: [email protected] (pro hac vice)

Attorneys for Plaintiff VidAngel, Inc.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

VIDANGEL, INC., Case No. 2:17cv00989 DN

Plaintiff, VIDANGEL’S NOTICE CONSENTING TO DISMISSAL WITHOUT PREJUDICE vs. The Hon. David Nuffer SULLIVAN ENTERTAINMENT GROUP, INC., et al.,

Defendants. Trial Date: None Set

Case 17-29073 Doc 213-1 Filed 09/14/18 Entered 09/14/18 16:35:29 Desc Exhibit Page 306 of 306 Case 2:17-cv-00989-DN Document 130 Filed 08/03/18 Page 2 of 2

Pursuant to the Court’s July 27, 2018 order (Dkt 129), Plaintiff VidAngel, Inc. provides

this notice consenting to the dismissal of this action without prejudice. In it July 27, 2018 Order

Granting Motion to Dismiss, the Court generously afforded VidAngel the opportunity to request

that this case be transferred to the United States District Court for the Central District California

pursuant to 28 U.S.C. § 1631. While VidAngel appreciates this opportunity, it is not currently in

a financial position to fund this litigation elsewhere. VidAngel, therefore, hereby consents to the

dismissal of this action with respect to all defendants and respectfully requests that this dismissal

be without prejudice should VidAngel be able to bring its claims against the defendants in the

United States District Court for the Central District California in the future. For the same

reasons, VidAngel respectfully declines to submit further briefing regarding Default Certificate

against Defendant Sullivan Entertainment Group, Inc., and hereby consents to the dismissal

without prejudice of the action as to that defendant.

DATED this 3rd day of August, 2018.

BAKER MARQUART LLP

/s/ Jamie W. Marquart Jaime W. Marquart Attorneys for Plaintiff VidAngel, Inc.

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