COURT BLOCKS SALE OF SANITIZED DVDs

BY CYNTHIA LITTLETON / July 10, 2006
The Hollywood Reporter

A federal judge in Colorado has handed the industry a big win in its protracted legal battle against a handful of small companies in Utah, Arizona and Colorado that offer sanitized versions of theatrical releases on DVD.

The case encompasses two of Hollywood's biggest headaches these days: the culture wars and the disruptive influence of digital technologies.

Senior U.S. District Court Judge Richard Matsch came down squarely on the side of the DGA and the major studios in his ruling that the companies must immediately cease all production, sale and rentals of edited videos. The summary judgment issued Thursday requires the companies -- Utah-based CleanFlicks, CleanFilms and Play It Clean Video, Arizona-based Family Flix United States and the separate entity CleanFlicks of Colorado -- to turn over all existing copies of their edited movies to lawyers for the studios for destruction within five days of the ruling.

Utah-based CleanFlicks, which describes itself as the largest distributor of edited movies, through online sales and rentals and sales to video stores in Utah, Arizona and other states in the region, said it would continue its fight against the guild and the studios. CleanFlicks and the others make copies of official DVD releases and then edit them for sex, nudity, violence and profanity.

"We're disappointed," CleanFlicks chief executive Ray Lines told the The Associated Press. "This is a typical case of David vs. Goliath, but in this case, Hollywood rewrote the ending. We're going to continue to fight."

David Schachter, attorney for CleanFlicks of Colorado, said Sunday that it was unclear whether any of the video-editing companies would seek an emergency hearing this week to request a stay of the injunction pending an appeal. He said such a move was unlikely for CleanFlicks of Colorado, which operates a retail store in Colorado Springs, Colo. It was unclear Sunday whether the store was still open.

Representatives for Family Flix could not be reached for comment during the weekend. A posting on the Web site www.clean-edited-movies.com reported that the Family Flix had decided to shut its doors after five years as a result of the litigation, though the date of the posting was unclear. The site quoted Family Flix founders Richard and Sandra Teraci as making plans to establish their own production company.

CleanFlicks and the others maintained their edited DVDs were legal under fair use guidelines that allow for the use of copyrighted material in criticism, news reporting, parody and other circumstances. The slogan on the CleanFlicks Web site is "It's About Choice." An online listing for Family Flix's offerings on the Web site of the Mormon-based Meridian magazine noted that the content snipped out of its edited videos included all references to "homosexuality, perversion and co-habitation."

The mainstreaming of sophisticated digital editing technologies has fueled the cottage industry of movie sanitizers. CleanFlicks and others purchase an official DVD copy of a film on DVD for each edited version of the title they produce through the use of editing systems and software. The official release disc is included alongside the edited copy in every sale or rental transaction conducted. As such, the companies argued that they had the right on First Amendment and fair use grounds to offer consumers the alternative of an edited version for private viewing, so long as they maintained that "one-to-one" ratio to ensure that copyright holders got their due from the transactions. Matsch disagreed.

"Their business is illegitimate," the judge wrote in his 16-page ruling. "The right to control the content of the copyrighted work ... is the essence of the law of copyright."

The fight began in August 2002 with a pre-emptive legal filing by CleanFlicks against the DGA and 16 prominent directors after it got wind that the guild was preparing a legal case against the company. CleanFlicks sought a court ruling clarifying its right to market the videos on First Amendment grounds. The DGA and directors countersued the following month. After initially staying out of the fray, eight Hollywood studios joined with the directors and the guild in December 2002, filing claims of copyright infringement against CleanFlicks and other companies.

"Whether these films should be edited in a manner that would make them acceptable to more of the public playing on a DVD in a home environment is more than merely a matter of marketing; it is a question of what audience the copyright owner wants to reach," Matsch wrote. "This court is not free to determine the social value of copyrighted works. What is protected are the creator's rights to protect its creation in the form in which it was created."

The studios involved in the suit are MGM, Time Warner Inc., Sony Pictures Entertainment Inc., the The Walt Disney Company, DreamWorks Animation SKG Inc., Universal, Twentieth Century Fox Film Corporation and Paramount Pictures Corporation. The directors named in the initial August 2002 filing included Martin Scorsese, Steven Spielberg, Steven Soderbergh, Michael Mann, Robert Altman, Curtis Hanson, Betty Thomas and DGA president Michael Apted.

Apted called Matsch's ruling a vindication for the guild and its members, especially with its clear support for rights of the work's original creator to protect how their film is presented.

"No matter how many disclaimers are put on the film, it still carries the director's name," Apted said. "So we have great passion about protecting our work, which is our signature and brand identification, against unauthorized editing."

Early on the legal sparring involved Salt Lake City-based ClearPlay, which offers video filtering software that allows for home viewing of cleaned-up versions of Hollywood titles.

ClearPlay offers software programs developed for specific titles that users can run on their computer or ClearPlay's proprietary DVD player along with an official copy of the DVD. With this technology, a nude shot of an actor can be altered to show a silhouette, or profanity can be bleeped out. Because ClearPlay's technology does not involve making an altered DVD copy, it has been shielded from the copyright infringement claims. The debate over movie content filtering activities made its way into Congress, which passed the 2005 Family Movie Act that protects ClearPlay and other software-based filtering companies. Matsch noted that Congress at that time had the opportunity to also carve out legal protections for CleanFlicks and its ilk, but chose not to.

The DGA said in its statement on the ruling it "remains concerned about this exception to copyright protection."

Matsch's opinion could wind up eliminating most of ClearPlay's competition, but company Bill Aho still criticized Matsch's reasoning.

"While it may be good for ClearPlay Inc., it's bad for parents," Aho said. "Moms and dads need all the help they can get to protect their kids, and these companies were providing a valuable service."