Is selling streaming devices legal?

August 18, 2017 by
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Is selling streaming devices legal?

The European Court of Justice (ECJ) had to decide whether selling Kodi streaming devices is legal. 

The question at the heart of this case was whether the sale of the media players with the pre-installed apps constitutes a copyright infringement. For a copyright infringement to occur, copyright protected material must be communicated to the public without the consent of the owner of the copyright protected work.

The case

Mr Wullems sold streaming devices (so-called media players) with pre-installed software such as Kodi (formerly XBMC). Kodi is an open-source home theatre software that can be installed on any Mac, PC, tablet,Is selling streaming devices legal? cellphone, or a as in this case on media player.

While the Kodi software platform itself is legal, it has gained an unfortunate reputation because of the way some third-party developers use the Kodi platform. They create add-ons for Kodi which enable access to premium channels and copyrighted content for free.

These third-party add-ons provide users with unrestricted access to copyright protected material such as TV shows, movies, and live sports events – sometimes with and sometimes without the permission of the right holder.

Mr Wullems had no influence over the pre-installed apps and he did not alter them either. He just on-sold the streaming devices, which came pre-installed.

Users can connect the box to the Internet and delete the pre-installed apps or download new apps onto the media player.

Mr Wullems advertised the media players as follows:

Never again pay for films, series, sport, directly available without advertisements and waiting time. (no subscription fees, plug and play)

Netflix is now past tense!

Want to watch free films, series, sport without having to pay? Who doesn’t?! Never have to go to the cinema again thanks to our optimised XBMC software.

Free HD films and series, including films recently shown in cinemas, thanks to XBMC.

The Problem

The interesting twist in this case is that streaming devices themselves do not host or store any copyright protected work. It is simply a platform containing apps. By opening these apps users can select from a library of hyperlinks to access legal as well as illegal content online.

The media player device operates like a search engine by providing a directory with links to secondary websites that stream online content.

Should vendors of the media players be held responsible even though the mediaplayer can be used for legal as well as illegal content streaming?  

Streaming as communication to the public

Authors have the exclusive right to authorise or prohibit any communication to the public of their copyrighted works. In other words every act of communication of a work to the public has to be authorised by the copyright holder. Say for instance, if Netflix releases a new TV series to its subscribers, then it authorises its lawful users to view the respective TV program.  

The vendor of the streaming device argued that a hyperlink cannot in itself be an act of communication to the public within the meaning of Article 3(1) of the Copyright Directive 2001/29/EC.

He also said that his actions were ‘not crucial’ because he merely ‘enabled’ the public to have access to content that can be downloaded from other websites anyway. The streaming device itself does not host any copyright protected content. As a result, the box itself it not communication copyright protected material to the public.

The ECJ did not follow the arguments of the vendor of the Kodi boxes. Instead, the ECJ held that selling streaming devices  with pre-installed software that enables the illegal streaming of copyrighted content is a primary copyright infringement.  

The court reasoned that there is no significant difference between posting hyperlinks to protected works on a website and installing hyperlinks on a multimedia device designed specifically for use with the Internet.

Whatever the method or technical process by which they are installed, hyperlinks serve to enable third parties to access digital content which has already been uploaded — in this case, unlawfully — to the Internet.

The significant aspect of the communication to the public, which takes place through those hyperlinks, is the fact that it increases the range of potential users who are provided with the functionality involving the prior selection of websites that allow digital content to be viewed free of charge.

Temporary copies exception

The vendor also argued that streaming copyright protected content is a temporary act,  which is transient or incidental in nature and can therefore not constitute a copyright infringement.

Temporary acts of reproduction of copyright works, which are transient or incidental and an integral and essential part of a technological process, for various purposes, including for the sole purpose of enabling a lawful use of a copyright work do not constitute a copyright infringement (Article 5(1) of the Copyright Directive (2001/29/EC)). The scope of the exception is very limited.

For that exception to apply, five conditions must be met:

  • the reproduction must be temporary;
  • it must be transient or incidental;
  • it must be an integral and essential part of a technological process;
  • the sole purpose of the reproduction must be to enable a transmission in a network between third parties by an intermediary, or a lawful use of protected work; and
  • the reproduction must have no independent economic significance.

The ECJ held that:

“as a rule, temporary acts of reproduction, on a multimedia player such as that at issue in the main proceedings, of copyright-protected works obtained from streaming websites belonging to third parties offering those works without the consent of the copyright holders are such as to adversely affect the normal exploitation of those works and causes unreasonable prejudice to the legitimate interests of the right holder”.

“Furthermore, acts of temporary reproduction, on the multimedia player in question, of copyright-protected works adversely affects the normal exploitation of those works and causes unreasonable prejudice to the legitimate interests of the copyright holders because it usually results in a diminution of the lawful transactions relating to those protected works.”

The court therefore concluded that the sale of a streaming devices with pre- installed hyperlinks to websites that (without permission) offer unrestricted access to copyright-protected works, such as films, series and live programmes breached copyright.

Discussion

It is settled case-law that two cumulative criteria have to be met for a copyright infringement through “communication to the public” to occur. Namely an ‘act of communication’ of a work and the work must be communicated to a ‘public’. 

In Svensson and Others (C‑466/12, EU:C:2014:76) and BestWater International (C‑348/13, EU:C:2014:2315) the Court ruled that, although the publication on a website of hyperlinks to a work freely available on another website is an ‘act of communication’ within the meaning of Article 3(1) of Directive 2001/29, it is not a communication to a new public within the meaning of that provision.

In paragraph 24 of the judgment in Svensson the Court ruled that:

“in order to be covered by the concept of “communication to the public”, within the meaning of Article 3(1) of Directive 2001/29, a communication … concerning the same works as those covered by the initial communication and made … by the same technical means [as the initial communication] must also be directed at a new public, that is to say, at a public that was not taken into account by the copyright holders when they authorised the initial communication to the public”.

In GS Media, the ECJ expanded on the meaning of a communication to the public, by ruling that:

(i) the provision of clickable links to protected works must be considered to be “making available” and, therefore, such conduct is an “act of communication”;

(ii) an act of communication refers to any transmission of the protected works, irrespective of the technical means or process used; and

(iii) there is a rebuttable presumption that the posting of a hyperlink to a work unlawfully published (without the authorisation of the right holders) on the internet amounts to a “communication to the public” if it is done in pursuit of profit.

A point that the ECJ did not address at all is that the media player can be used for watching legal as well as illegal content online. Much like a photocopier or a video recorder.

The example of Sony Corporation of America v Universal City Studios comes to mind. In that case the movie studios sought to ban the Betamax video recorder. The case was eventually decided by the US Supreme Court which held that the recorder had significant non-infringing uses.

The ECJ did not even deal with the fact that the Kodi software can be used for perfectly legitimate purposes.

I would also like to point out that in the judgment in Football Association Premier League and Others (C‑403/08 and C‑429/08, EU:C:2011:631) the Court stressed the fact that without the intervention, for example, of a hotel to offer a television signal in its rooms via television sets, the work would not have been accessible to the hotel’s customers.

This is exactly not the case with streaming devices. Everyone can use the add-ons and watch streamed content online. The Internet already provides these opportunities. The streaming devices can be compared to a search engine or a indexing service. The streaming device is not indispensable for enabling the copyright infringement. The infringing content already is freely available on the internet. The Kodi boxes simply link to it – just like websites and search engines do. The streaming device facilitates the discovery of streaming websites, but are not ‘making them available’ to the public when they are already freely accessible on such other websites. 

In my view, hyperlinks hosted on a media player which direct to works protected by copyright that are freely accessible on another website cannot be classified as an ‘act of communication’ within the meaning of Article 3(1) of Directive 2001/29 since the intervention of the vendor of the media players is not indispensable to the making available of the copyrighted content.

The court’s reasoning would have been much more convincing had it looked at this case as secondary copyright infringement, rather than a primary infringement.

The original decision can be found here.

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