An estimated one million Canadian households are jumping the "geofence" to watch shows and movies that aren't available for streaming in Canada. These fence jumpers are using technical workarounds such as virtual private networks (VPNs) to access the U.S. (or other countries') versions of streaming services.

Netflix, like other streaming services providers, uses geoblocking technology. This allows it to provide different content depending on the geographical location of the user. VPN services with U.S. IP addresses can be used to make it appear to Netflix that the Canadian users are physically located in the U.S. By using such VPN services, Canadians who want to access content available only to users in the U.S. can do so. Without making use of such VPN services, subscribers with Canadian IP addresses are restricted to a different (and smaller) selection of movies and TV shows.

This raises important questions. Is it illegal to go around geoblocking technologies used by Netflix and by other video streaming websites like Hulu and BBC's iPlayer? If not, who is liable? Who does this practice harm? And what can be done to prevent it?

This article will explain the practice of using VPNs to access foreign streaming services and the possible legal implications of the practice for users, VPN service providers, and video streaming services. Finally, it will review the options that may be exercised to prevent this practice from occurring in the future.

Why do streaming services discriminate by geographical territory?

The same online streaming services offer different content to users in different countries. This tends to anger subscribers in countries where the streaming services have smaller libraries. Many Canadians, in particular, do not understand why they would pay similar prices as subscribers in the U.S., but in return, have fewer TV shows and movies available to them.

The reason why streaming websites divide their content geographically is because their rights to stream the content are geographically divided as well. Streaming services purchase the right to stream content from content owners. These content owners often divide the right to stream a service by geographical area. For example, the owner of the streaming rights in Parks and Recreation may sell Netflix the right to stream it in the U.S. and sell shomi the right to stream it in Canada. If Netflix were to offer streaming for Parks and Recreation in the Canadian territory, it would breach its contract with the owner, and it would also be infringing shomi's exclusive copyright right to stream the show to Canadian viewers.

Content owners create these territorial divisions for economic reasons; certain titles will be more or less in demand in different countries. Canadians might consider this practice to be unfair, but on the other hand, they likely benefit from the availability of films and programming to which U.S. Netflix subscribers do not have access—for example, Canadian Netflix offers the first season of the British detective series Inspector Morse, and U.S. Netflix does not.

Is it legal to jump the geofence?

Probably not. One reason why it is likely illegal to use a VPN to access content available through U.S. Netflix is because it breaches Netflix's Terms of Use, which is a contract to which all subscribers must agree. Another reason why this may be illegal is because it may infringe recently added provisions of the Copyright Act.

The Copyright Act was recently amended to prohibit the circumvention of technological protection measures that control access to copyright-protected works.[1] Geoblocking technology arguably falls within the broad definition of technological protection measures; accessing U.S. Netflix via a VPN could be considered circumventing this measure.

The question of whether bypassing a geofence is illegal, however, can't be answered conclusively until courts deal with the issue.

Not only may the Copyright Act make it illegal for users to access geo-blocked content using VPNs, VPN providers may also be guilty of copyright infringement for enabling this access. The Copyright Act now makes it an infringement to provide a service primarily for the purpose of enabling acts of copyright infringement.[2] Therefore, if it is an infringement to access geoblocked content, it is also an infringement for companies to provide VPN services primarily for the purpose of enabling consumers to access Netflix across borders.

The words "primarily for the purpose of enabling copyright infringement" in the statute are important as they preclude finding certain VPN services, such as company VPN services intended to grant employees offsite access, liable for enabling copyright infringement.

Netflix itself may also be accused of copyright infringement when a subscriber accesses its U.S. content because it does not hold the exclusive Canadian streaming rights that may belong to either the original copyright owner, such as the producer of a movie, or a competing streaming service, such as shomi. However, one could ask whether Netflix is in fact communicating to Canadians if it simply streams programming to an IP address that is located in the U.S.

Another danger for Netflix is that because the owners of some of the competing Canadian streaming services are also the owners of Canadian programming, those owners could make it more difficult for Netflix to acquire streaming rights to their own programming.

What will likely be done to prevent fence jumping?

Netflix has many options available to prevent Canadian subscribers from circumventing its geoblocking technology. It could crack down by blocking access from the IP addresses of known VPNs. It could also terminate the accounts of Canadians whom it reasonably believes are jumping the fence. Another U.S. streaming service, Hulu, is reportedly already terminating fence jumpers' accounts. However, Netflix has publicly denied reports that it will do this.

Some have suggested that Netflix could do away with geoblocking altogether and change its service infrastructure to provide services based on the national identity of a subscriber account, as opposed to providing the service matching the subscriber's apparent geographical location. This would prevent Canadian Netflix subscribers from accessing U.S. or other countries' Netflix services. It would also mean that Canadians would always receive the Canadian Netflix service wherever they were in the world.

However, it is unlikely that this would solve the problem. The nationality of the subscriber account is not relevant to a determination of whether a given transmission is infringing. It is the location that is important. So, if a Canadian accesses Netflix while in the U.S., he or she should access the U.S. catalogue, since Netflix would be in breach of its licence if it let anyone access content that is unavailable in the U.S. while they were in the U.S., because Netflix does not have the right to stream that content in the U.S.

Another option which Netflix has already exercised, is to take legal measures against VPN enablers.

Netflix recently sent a cease and desist letter to the Canadian VPN service Turboflix, alleging, among other things, copyright infringement. Presumably this is meant to demonstrate to the content owners that Netflix is taking the issue seriously. This action by Netflix suggests that individual subscribers will not be penalized. Instead, Netflix will focus on the VPN services.

This is not the first time we have seen efforts to prevent illegal access to programming focused on enablers, and not on end users. About 20 years ago, many Canadians were using grey market satellite dishes to access U.S. channels. In that case, the law was ultimately changed to target the dealers selling the equipment, not the individual consumers.

Conclusion

It remains to be seen how or if this problem will eventually be resolved. This is yet another example of how the entertainment industry has found it difficult to protect the rights of copyright owners against certain users who always appear to be ahead of the technical curve. Perhaps, eventually, the rights to stream content will no longer be divided by geographical territory. The industry has in many ways structured itself around geographical divisions and, just as in other industries, those divisions are becoming increasingly irrelevant.