Modified set-top boxes and copyright infringement – where do we stand?

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In an important decision for rights holders everywhere, on 26 April 2017, the European Court of Justice (CJEU) ruled that the sale of multimedia devices that have been modified to allow end users to stream pirated content is itself an act which can breach copyright law. Streaming of this content (as opposed to downloading) is also now a breach of copyright law according to the CJEU. The CJEU emphasised the amount of investment made by content creators, artists and producers when creating their works and, in coming to its decision, stressed the need for legal protection of these rights to ensure "satisfactory returns on this investment".

We examine the decision in Filmspeler (C-527/15) in further detail below before considering the wider issues in relation to these "pre-loaded" devices which have been attracting the attention of UK industry bodies (such as the Federation Against Copyright Theft (FACT) and the Intellectual Property Office (IPO)) for some time.

Facts

Dutch copyright association Stichting Brein brought a claim against Jack Frederik Wullums in relation to Wullums' sale of modified set-top boxes that allowed end users to access pirated content.

Wullems sold the devices in question via a number of internet sites, including his own site, Filmspeler. He would install integrated add-ins on the devices allowing end users to access content quickly and easily via a menu function. The accessible content included material which was made available without the copyright holders' consent. Wullems was well aware of the unauthorised nature of the content that could be accessed from the devices he offered for sale and indeed he marketed this to end users as a key benefit of purchasing the device.

In considering the legality of Wullems' sales of the modified devices, the Dutch courts referred four questions to the CJEU. The CJEU grouped these into two key questions, which can be summarised as follows:

  1. Is the sale of a multimedia device that has been modified to allow end users to easily access copyright protected content without the consent of the copyright owner a "communication to the public"?
  2. Is the streaming of such content by end users subject to an exemption (as a temporary copy) under Articles 5(1) and (5) of the Copyright Directive (Directive 2001/29)?

Findings

Question 1

Under EU law, the copyright owner is afforded the exclusive right to authorise any "communication to the public" of its works and therefore is in a position to prevent others from communicating such works.

In determining whether Wullems had infringed this right, the court found that the sale of the pre-loaded devices amounted to "a communication to the public" and placed particular weight on the fact that the modification of the devices by Wullems (in the full knowledge that such modification allowed ease of access to unauthorised content) meant the devices provided users with "direct access to the protected works published without the permission of the copyright owners".

This, together with the marketing of the devices on the basis of their free-to-watch streaming capability, meant the sale of the boxes was not a "mere provision of physical facilities" for enabling a communication (something that is explicitly differentiated under the Copyright Directive). The CJEU instead found the situation was more analogous to the provision on a website of links to content which would otherwise be subject to access conditions without the authorisation of the copyright owner. In Svensson (Svensson and Others, (C-466/12)) the court made clear that this would amount to provision of direct access and was a communication to the public regardless of whether the website users in fact took the opportunity to access the linked content.

Question 2

Under Article 5 of the Copyright Directive, there are certain exceptions to the exclusive rights of the copyright holder to reproduce its works. In particular, temporary acts of reproduction that: (a) are transient or incidental; and (b) are an integral part of a technological process whose sole purpose is to enable either (i) a transmission in a network between third parties by an intermediary; or (ii) a lawful use of a work to be made; and (c) do not have independent economic value, are permitted. The exception is narrow – each of these requirements (a) to (c) is cumulative and in addition any exemption must not conflict with "normal exploitation of the work" or cause "unreasonable prejudice" to the rights holder.

The court considered the second question although it did not strictly relate to the sale of the set-top boxes and in fact related to the streaming of the unauthorised works by end users of the devices. Wullems contended that such streaming was subject to the Article 5 exception as a temporary reproduction (rather than a download). However, the court found this was not the case as the reproduction was not solely for the purposes of enabling a transmission between third parties nor was it a lawful use as the rights holder had not given its consent to broadcast the content. In addition, the use interfered with the rights holder's normal exploitation since users could access the content for free through the modified set-top box, which would eat into revenues of the rights holder from lawful transactions for accessing the content.

Impact of the decision

There is likely to be a reduction in explicit listings for fully loaded boxes on online marketplaces where these devices are currently freely available. This will result from market platforms becoming aware of the infringing nature of such devices and therefore updating policies and responding to rights holders' complaints. Sellers may, however, use techniques to try to continue to sell their products, for example it is possible sellers may start providing the basic boxes without modification but with instructions that allude to websites and techniques to alter the boxes in order to access pirated content.

In relation to cases being brought against sellers of these devices, it should now be clearer and easier than it was previously to bring a copyright infringement claim in these circumstances.

Finally, the case has clarified that end users are breaching EU copyright laws when they knowingly stream infringing content as the temporary reproduction exemption does not cover such use. The user does not need to download the content for the breach to have occurred. However, policing this offence will remain challenging especially in the face of widespread streaming of unauthorised content.  

Wider context

The configured set-top box has been a hot topic in UK news for some time now. Just last month, The Premier League obtained a High Court order pursuant to section 97a of the Copyright, Designs and Patents Act (CDPA) enabling it to require certain internet service providers to block servers that stream matches without authority. In coming to its decision, the court noted the ease with which infringing content could now be accessed (in particular through "software known as Kodi together with third-party add-ons"). The High Court has the ability to grant such an order where the "provider has actual knowledge of another person using their service to infringe copyright". For these purposes, the courts have given a broad interpretation to "actual knowledge" and held such knowledge must be determined in light of all the circumstances. Essentially the provider must know its service is being used by one or more people to infringe copyright (there is no requirement that the provider knows the identity of each individual involved nor that it knows of the specific infringement of a particular copyright work) (Twentieth Century Fox Film Corporation and others v. British Telecommunications plc [2011] EWHC 1981 Ch).

The devices have also been gaining the attention of industry bodies with the IPO recently carrying out a consultation on "illicit IPTV streaming devices" (the submissions window closed in early April and we await publication of the results later in 2017). FACT also recently announced that the boxes are of high priority to it and endorsed a number of recent arrests of sellers of fully loaded set-top boxes. 

This latest CJEU decision is another clear win for the creators and producers of creative and artistic works. The industry-friendly decision recognises the legal protection required to ensure these parties receive a return on their investment. FACT released a statement following the ruling confirming it "will continue to work with The Premier League, Sky, BT Sport, Virgin Media and the film industry to crack down on these illegal devices". Additionally, Kodi (as a provider of entertainment centre software) seems to be supporting the CJEU decision from its announcement on Twitter, stating it is "frankly, quite pleased with this decision" as modified boxes are often faulty and therefore cause support issues for the company's team. 

Overall it therefore seems that the tides are turning. With big industry players and the courts battling against modified set-top boxes and now with retailers such as Amazon banning their sale, it looks as if it will become increasingly difficult for individuals to gain easy access to illegal streaming using these devices. Whether such individuals will seek their streaming through other methods remains to be seen.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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