I am writing today to mark World IP Day, April 26 and, as part of this salute to the work being done in protecting IP rights around the world, to highlight a growing global problem affecting IP stakeholders, streaming piracy. While the World Intellectual Property Organization (WIPO) does a great job of promoting an awareness of IP and in moving forward (usually slowly) with international remedies, the technological revolution has been changing the landscape for IP rights-holders at break-neck speed, in the process often benefiting those who make a business model out of free-riding. A recent study in the US indicated that streaming piracy in 2019 cost Over the Top (OTT) providers (i.e. content platforms like Netflix that deliver content through the backbone of the internet) and pay-TV companies $9.1 billion (USD) in losses from piracy and illicit account sharing. The report appears to be limited to the US and it is not clear what percentage of the losses come from piracy and what is from account sharing (if you want to pay $7,500 to acquire the report, you can get this information), but there is no question that streaming piracy is a major source of income loss for content distributors and forms a significant part of the estimated cost of overall piracy and counterfeiting.
And the situation is not getting better. A recent study by research firm Sandvine estimated that 6.5% of households in the US and Canada access subscription television piracy services, where the consumer either pays a subscription fee to an unlicensed video provider for access to illegal content or makes a one-time payment to purchase a box that comes fully loaded with software enabling access to pirated streams. This form of “subscription piracy” is estimated to cost legitimate providers over $4 billion annually. A study undertaken for the Global Innovation Policy Centre (GIPC) of the US Chamber of Commerce in 2019 estimates the cost of video piracy to the US economy alone at almost $30 billion annually (on the low end), and cost upwards of half a million jobs;
“The study shows that all of the benefits that streaming brings to our economy have been artificially capped by digital piracy. Using macroeconomic modeling of digital piracy, the study estimates that global online piracy costs the U.S. economy at least $29.2 billion in lost revenue each year.”
The high-end estimate is over double this amount!
So what is to be done about it? Since there is no international treaty that deals with streaming piracy (unlike counterfeiting where there is an Anti-Counterfeiting Trade Agreement or ACTA, signed by 31 countries although never brought into effect because of popular opposition and lack of ratification), anti-piracy remedies have been developed on an ad hoc basis country-by-country. Some governments have been much more active than others, but a common approach has been to use what is often called “site blocking” legislation to combat the distribution of pirated content streamed from offshore sites. A more accurate description of the measure in my view would be “disabling access to pirate sites”, since the term “blocking” unfortunately has unwarranted negative connotations. “Site blocking” has been criticized by advocates of total internet freedom as being an infringement of free expression on the internet and a violation of the concept of net neutrality.
This is a smokescreen. Net neutrality has been trotted out by cyber-libertarians and anti-copyright advocates as an excuse to do nothing to stop piracy. There are various definitions of “net neutrality” but one posted by the Canadian broadcast and telecoms regulator, the CRTC states that “Net neutrality is the concept that all traffic on the Internet should be given equal treatment by Internet providers with little to no manipulation, interference, prioritization, discrimination or preference given.” Unfortunately that definition, and the definition used by many, fails to differentiate between legal and illegal traffic. In fact there are many precedents for limiting certain forms of internet traffic, such as content promoting criminal activity, child pornography, terrorism, racism and so on. It is clear that the concept of net neutrality has to be interpreted sensibly. While there are already limitations on content that are widely accepted as being in the public interest, there is also wide agreement that the decision as to what restrictions to impose should not be left to internet providers to decide unilaterally.
This brings me to the remedy increasingly being adopted in many countries around the world, namely “site blocking” (I will use this term since it is the common reference, even though I have my doubts about the message that it conveys). Site blocking orders are achieved either through the courts, or through administrative means that allow due process and appeal. As I noted in my submission on international site blocking to the Parliamentary Committee reviewing Canada’s Copyright Act, more than 40 countries world-wide now employ some form of site blocking and this has proven to be highly effective. Two countries with very similar legal systems to Canada, the UK and Australia, have both implemented site blocking mechanisms through the courts. In the case of Australia, specific legislation permitting site blocking was passed by Parliament while in the UK, the courts determined that they had inherent jurisdiction to issue blocking orders. The initial experiment has proven successful in changing consumer behaviour and in both Australia and the UK, the courts have permitted blocking orders to be “dynamic”, i.e. they can be modified to defeat the tactics of pirate operators who, once a site blocking order has been issued, change their internet identifiers slightly in order to create clone sites.
In Canada a coalition of content owners, coming together in the Fair Play Canada coalition, petitioned the CRTC to establish an administrative agency to review and recommend blocking orders for pirated offshore content. After a successful adjudication of a blocking request, it was proposed that the CRTC would issue an order to ISPs requiring them to take blocking action. However, it didn’t work out that way. The Commission decided it didn’t have the jurisdiction to issue orders, and instead referred the matter to the courts and to the ongoing Parliamentary review of the Copyright Act. It was in that context that I submitted my brief urging the Committee;
“to recommend the enactment of amendments to the Act that will permit rights-holders to obtain injunctive relief against internet intermediaries (platforms and internet service providers). Specifically the Act should be amended to allow copyright owners to be able to obtain injunctions, including site blocking and de-indexing orders, against internet intermediaries whose services are used by third parties to infringe copyright.”
I did so in the belief that absent specific authorization in legislation, the Federal Court would not issue a site blocking order. I was wrong. In November of last year, the Court issued Canada’s first site blocking order against two sites (GoldTV.biz and GoldTV.ca) that were providing pirated streaming content to Canadian households from offshore servers. None of Canada’s major ISPs opposed the order, the only exception being a small internet reseller based in Ontario, Teksavvy. Teksavvy has now launched an appeal of the order. Given the current COVID-19 crisis plus the usual court backlogs, that will no doubt take some time to resolve. In the meantime Canada has joined the international consensus of using its national laws to restrict access by domestic consumers to pirate streaming sites located offshore, beyond the reach of national jurisdiction.
So if more than 40 countries are either implementing transparent site blocking, or have the mechanisms to do so, who isn’tusing it? Surprisingly, it is the US, which is fast becoming an outlier on this issue. It’s not as if the country doesn’t have a streaming piracy problem; it does. Apart from the losses to the industry I mentioned earlier, as reported by the online publication TorrentFreak the US is the leading source of visits to pirate streaming sites globally. It thus has the dubious distinction of leading Russia, China and Brazil as the home of the largest number of pirate streaming site users, with 1.2 billion pirate site visits in December 2019 alone. So why isn’t the US doing something about it? It has long been a, if not the, leading advocate for better IP protection globally. In fact the rankings produced by the US Chamber of Commerce’s annual GIPC Report consistently score the US in first place as the leading IP-friendly country. But lack of any effective site blocking mechanism in the US is an anomaly and an obvious blind spot.
It’s not as if a site blocking provision doesn’t exist in US law. It is in that seminal piece of US legislation, the Digital Millenium Copyright Act (DMCA) of 1998 as Section 512 (j). If this sounds a bit arcane, blogger David Newhoff (The Illusion of More) has a good explanation here. He also offers some background as to why this provision has seldom if ever been used. Now that the US Senate Judiciary Committee’s IP Subcommittee has launched a year-long review of how the DMCA has been actually operating in practice, there is an opportunity for a reset—and for the US to join the growing global consensus on using site blocking injunctions to combat streaming piracy. Independent filmmaker Jonathan Yunger is advocating for a change to the DMCA, pointing out that Google (owner of YouTube) receives more than a billion take-down requests each year, imposing a huge burden on the platform but also on copyright holders who have to police the system and issue takedown notices. Much of this could be avoided with an effective site-blocking regime.
Will this totally stop streaming piracy? Of course not, but it will block a significant loophole. When copyright stakeholders find ways to incentivize consumers to patronize legitimate content, everyone (except the pirates) wins. Credible academic studieshave clearly documented the impact of site blocking in not only reducing access to pirated content but increasing uptake of legitimate content when site blocking measures are applied consistently.
So on this World IP day, let’s focus on how a global problem facing copyright stakeholders—offshore streaming piracy—can be curtailed and defeated by implementing a global solution. Site blocking works in Europe, it works in Asia and Australia, it now has a foothold in North America through Canada’s first successful case. The United States should be next. The review of the DMCA is an opportunity for the US to get on board and complete the picture. Let’s make this a global effort to combat a globalproblem (just like the coronavirus).
That seems like a very worthy goal on World IP day.
© Hugh Stephens, 2020. All Rights Reserved.