The opinion is relatively short, and worth reading if you’re interested in copyright. The judge ruled that CleanFlicks violated the studios’ exclusive rights to make copies of the movies, and to distribute copies to the public. He said that what CleanFlicks did was not fair use.
There are at least four interesting aspects to the opinion.
First, the judge utterly rejected CleanFlicks’s public policy argument. CleanFlicks had argued that public policy should favor allowing its business, because it enables people with different moral standards to watch movies, and it lets people compare the redacted and unredacted versions to decide whether the language, sex, and violence are really necessary to the films. The judge noted that Congress, in debating and passing the Family Movie Act, during the pendency of this lawsuit, had chosen to legalize redaction technologies that didn’t make a new DVD copy, but had not legalized those like CleanFlicks that did make a copy. He said, reasonably, that he did not want to overrule Congress on this policy issue. But he went farther, saying that this public policy argument is “inconsequential to copyright law” (page 7).
Second, the judge ruled that the redacted copies of the movies are not derivative works. His reasoning here strikes me as odd. He says first that the redaction is not a transformative use, because it removes material but doesn’t add anything. He then says that because the redacted version is not transformative, it is not a derivative work (page 11). If it is true in general that redaction does not create a derivative work, this has interesting consequences for commercial-skipping technologies — my understanding is that the main copyright-law objection to commercial-skipping is that it creates an unauthorized derivative work by redacting the commercials.
Third, the judge was unimpressed with CleanFlicks’s argument that it wasn’t reducing the studios’ profits, and was possibly even increasing them by bringing the movie to people who wouldn’t have bought it otherwise. (Recall that for every redacted copy it sold, CleanFlicks bought and warehoused one ordinary studio-issued DVD; so every CleanFlicks sale generated a sale for the studio.) The judge didn’t much engage this economic argument but instead stuck to a moral-rights view that CleanFlicks was injuring the artistic integrity of the films:
The argument [that CleanFlicks has no impact or a positive impact on studio revenues] has superficial appeal but it ignores the intrinsic value of the right to control the content of the copyrighted work which is the essence of the law of copyright.
(page 11)
Finally, the judge notes that the studios did not make a DMCA claim, even though CleanFlicks was circumventing the encryption on DVDs into order to enable its editing. (The studios say they could have brought such a claim but chose not to.) Why they chose not to is an interesting question. I think Tim Lee is probably right here: the studios were feeling defensive about the overbreadth of the DMCA, so they didn’t want to generate more conservative opponents of the DMCA by winning this case on DMCA grounds.
There also seems to have been no claim that CleanFlicks fostered infringement by releasing its copies as unencrypted DVDs, when the original studio DVDs had been encrypted with CSS (the standard, laughably weak DVD encryption scheme). The judge takes care to note that CleanFlicks and its co-parties all release their edited DVDs in unencrypted form, but his ruling doesn’t seem to rely on this fact. Presumably the studios chose not to make this argument either, perhaps for reasons similar to their DMCA non-claim.
In theory CleanFlicks can appeal this decision, but my guess is that they’ll run out of money and fold before any appeal can happen. The truly funny thing here is that if you go to cleanflicks.com, they're running a "going out of business sale".
A PDF copy of the ruling is
here.
