Last month, entertainment industry-backed group Digital Citizens Alliance and content protection company NAGRA published a new study that estimated the pirate IPTV market to be worth a billion dollars each year in the US alone.
These types of piracy studies are nothing new but what is interesting about this particular market is that even the biggest ‘pirate’ US players, if they take caution in what type of content they offer and how, are unlikely to find themselves on the wrong end of an aggressive criminal prosecution.
There are caveats and exclusions but in general terms, streaming piracy is not a felony in the United States.
The ‘Streaming Loophole’
That such a loophole exists in the United States under what many believe are some of the most strict copyright laws in the world is a surprise in itself. But exist it does and here’s how it came to be.
Under existing criminal copyright laws, felony penalties are only available for infringements that breach the exclusive rights of reproduction and distribution, i.e the unlawful copying of content and distribution to others. In many cases, however, streaming is viewed as infringing public performance rights, which is considered a misdemeanor.
The end result is that, regardless of the scale of a pirate streaming operation and how much revenue is generated by it, the hands of the authorities are effectively tied in respect of offenses that would otherwise attract years in prison.
Exceptions Exist, It’s Not a Complete Free-For-All
As ongoing cases against Megaupload and Jetflicks demonstrate, streaming offenses can sometimes enter the criminal realm. While some streaming services exploit the loophole cited above, others can face criminal charges when they are deemed to have breached reproduction and distribution rights, by copying infringing content and distributing it to others.
Also, as highlighted by the Department of Justice in a letter to the Senate last year, criminal prosecutions may also follow when unlicensed streaming operations are alleged to have committed other crimes, such as money laundering and racketeering, charges also being faced by Kim Dotcom and his Megaupload co-defendants.
Pressure Building To Close The Loophole
In an opinion piece published in The Hill yesterday, Keith Kupferschmid, chief of powerful industry group Copyright Alliance, again raised the issue of the loophole.
Echoing the sentiments of law enforcement groups, entertainment companies, filmmakers and sports groups that have contributed to the debate thus far, he urged Congress to ensure that “in appropriate large-scale commercial cases”, felony penalties are available to federal prosecutors.
“Virtually every significant form of willful, commercial piracy can be prosecuted as a felony under appropriate circumstances — including copying CDs, illegal file sharing, and even ‘camripping’ movies in the theater,” he wrote.
“But unlike all of these, streaming piracy — no matter how widespread or organized, and regardless of the amount of damage done — can only be prosecuted as a misdemeanor simply because when the laws were drafted streaming video wasn’t an option.”
Indeed, the laws that currently limit felony penalties to infringements involving reproduction and distribution were put in place almost three decades ago. At that time, widespread Internet use wasn’t yet a thing and the possibility of streaming movies or TV shows to the public was a distant dream.
Congress “Working Hard” to Close the Loophole
“Fortunately, Congress is working hard to solve this problem — convening negotiations and developing a simple two-page proposal that would close this ‘streaming loophole’ and ensure that in appropriate large-scale commercial cases, felony penalties are available to federal prosecutors,” Kupferschmid wrote.
“The resulting proposal is a consensus product with broad-based support. It is narrowly tailored to address the serious problem of commercial streaming piracy ensuring ordinary internet users, legitimate businesses, and non-commercial actors have nothing to fear from this proposal.”
The mention of ordinary Internet users remaining unaffected by these proposals is of interest. The last time a bill was presented to amend the relevant sections of the law – 17 U.S.C. § 506 and 18 U.S.C. § 2319 – to render criminal breaches of public performance rights punishable as felonies, things didn’t go well for copyright holders.
The Commercial Felony Streaming Act
Back in 2011, Bill S.978 – labeled the Commercial Streaming Felony Act – was introduced to the Senate in an effort to render unauthorized streaming of copyrighted content for “commercial advantage or personal financial gain” a felony punishable by up to five years in prison.
However, despite assurances that the intent wasn’t to penalize regular Internet users, concern began to build that ‘normal’ people (such as Justin Bieber who launched his career by posting cover versions of songs to YouTube) could be considered felons under the amendments.
Ultimately, however, the contents of the proposed amendments, which later formed part of the Stop Online Piracy Act (SOPA), were never passed due to unprecedented public outcry.
Not a Done Deal, But Momentum is Building
While companies that rely on streaming and physical product sales are desperate for the “streaming loophole” to be well and truly closed, this time around they will not have to contend with the scale of the uproar that accompanied the far-reaching SOPA bill.
Indeed, there seems to be optimism that Congress will see fit to accept the proposals which, according to Kupferschmid, are being formed with the assistance of tech companies, not potentially at their expense as per last time around.
“This highly transparent and rigorous process which included participation from groups and organizations of all perspectives — including the creative community and victims of streaming piracy as well as those representing internet users, technology companies, internet service providers and civil society — has been lauded across Capitol Hill as a model way to vet and develop new proposals,” he wrote in The Hill. “It’s time for Congress to close the streaming loophole.”
Given all of the circumstances and developments of the last decade, particularly considering the rise of legal and illegal streaming, the environment today is literally and figuratively years apart from SOPA. As a result, it arguably presents the perfect opportunity for Congress to deliver.