European Union: ECJ Strengthens Position Of Media Industry In Fight Against Piracy

On April 26, 2017, the European Court of Justice (ECJ) issued a judgment on the liability of sellers of set-top boxes containing pre-installed add-ons enabling illegal access to motion pictures as well as to Pay-TV and SVoD platforms ("loaded Kodi boxes"). The legal dispute concerning the legality of such sales has thereby been decided in favor of the media industry. In consequence, it will be possible to claim injunctive relief and damages not only from the individual end user but also from companies selling loaded Kodi boxes. The decision is likely to prove a valuable tool against some of the emerging forms of piracy.

I. Facts

In the proceedings against Jack Frederik Wullems, the seller of loaded Kodi boxes under the name "filmspeler"' a request for a preliminary ruling concerning the interpretation of the Copyright Directive was referred to the ECJ.

Mr. Wullems sold his multimedia player filmspeler, a typical example of a loaded Kodi box, on his own website as well as via commercial online platforms. While the Kodi software itself is legitimate multimedia software to be used with all kinds of set-top boxes, it can easily be extended by installing illegal add-ons made available by third parties. The filmspeler media player consists of a Kodi box with pre-installed software and third party add-ons that link to websites on which protected works are made available without the copyright owner's consent. The seller expressly advertised the media player's feature enabling access to protected material free of charge with slogans such as: "Never have to go to the cinema again" and "Want to watch free films, series, sport without having to pay?"

The main questions presented to the ECJ related to:

(i) the selling of the filmspeler media player being interpreted as a (copyright infringing) "communication to the public," and

(ii) such unauthorized streaming of copyright-protected work by end users not qualifying as "lawful use," regardless of the streaming's nature as only a "temporary reproduction."

Both questions were decided in favor of the media industry.
 

II. Liability of Sellers (No Hiding Anymore)

Article 3 of the Copyright Directive provides that an act constituting a "communication to the public" of protected work requires authorization by the copyright owner. While this was originally interpreted as involving some form of actual transmission, the ECJ recently ruled in its "GS Media" decision that even the posting of a hyperlink can suffice. In that judgment, a violation of copyright was determined, not only because the link referred to works illegally placed on the Internet, but also because the infringer had knowledge of the copyright infringement. The ECJ ruled that there was a "rebuttable presumption" of knowledge if such a hyperlink was placed in a commercial context. Following this, and in consideration of the ECJ's broad definition of the term "communication to the public" in support of authors' rights, the court found that the sale of the filmspeler media player also represented an infringing act of "communication to the public":

  • Firstly, the seller was intentionally providing access to protected works his customers would otherwise not have accessed – thereby going beyond the mere "physical provision of facilities."
  • Secondly, the number of existing and potential customers was also sufficient for the communication to be considered directed towards the "public."
  • Thirdly, the marketing of the media player made it common knowledge that the seller knew about the add-ons linking to unauthorized content, thereby supporting the applicability of the GS  Media valuations to the filmspeler case.

III. Liability of End Users (A Grey Area Turning Black)

The second question concerned the legality of the act of "temporary reproduction" – an act automatically carried out by end users during the streaming of copyright-protected works. Prior to the decision, accessing protected content via online streaming services (as opposed to downloading and uploading of the content) had been considered a grey area from a legal point of view. However, in the filmspeler decision, the ECJ outlined that an act of reproduction may only be exempted from authorization requirements if it cumulatively satisfies five conditions pursuant to Article 5 of the Copyright Directive, i.e., where the act is temporary; where it is transient or incidental; where it is an integral and essential part of a technological process; where the sole purpose of that process is to enable a transmission in a network between third parties (by an intermediary, as was not the case) or the lawful use of a work or protected subject matter; and where that act does not have any independent economic significance.

The filmspeler judgment clarifies that even the mere act of temporary reproduction on a multimedia player violates copyright law because it does not satisfy all of the conditions mentioned above.

  • Considering the open promotion of the multimedia player's illegal features, the ECJ held that the purchaser of such a player deliberately and in full knowledge accesses an unauthorized offer of protected works.
  • Further, these acts of reproduction conflict with the normal exploitation of works and prejudice the legitimate interests of the right holders. In other words: if end users can access content free-of-charge, they are less likely to pay for it and copyright holders are more likely to receive less remuneration.

In the context of openly promoted fully loaded Kodi boxes, temporary reproductions are therefore neither designed as representing a lawful use nor can their economic consequence be denied.  Thus they constitute a violation of copyright law.

IV. Consequences

The judgment will have a significant effect on a business model that had sky-rocketed in past years, with loaded Kodi boxes being one of the top Christmas presents in the UK in 2016. For the media industry, the decision strengthens the right holders in the fight against piracy. Right holders can now take action against the seller of fully loaded Kodi boxes as well as against the individual end user.

However, some questions are still left open, such as whether aggressive marketing of unauthorized access is mandatory for the applicability of claims. With regard to copyright infringements of end users, it will remain to be seen in what way the "knowledge" of the end user concerning the illegality of the streamed content will be determined if the streaming has not been openly advertised as being unauthorized. In addition, not only does it remain difficult for right holders to gain access to the IP addresses of end users to evidence violations, the sellers of loaded Kodi boxes are also often situated in foreign countries, for example, China, making it close to impossible to actually execute claims against them.

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.

© Morrison & Foerster LLP. All rights reserved

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