Introduction

Last weekend streaming company Netflix again tried to ramp up its blocking of users accessing its content (from locations other than that of the user) via Virtual Private Networks (VPNs). It is part of a Netflix approach which has now been ongoing for some time. Each effort by Netflix to reign in the use of VPNs, seems to be met by a similar effort by content users to simply find a work around, or solution to, the new blocking regime. We look below at some of the key issues and state of play in this current stand off, (which looks a lot like the famous "whack a mole" game).

Background

Online streaming services are a rapidly growing form of content delivery, particularly in the film and television industry. Generally these service providers hold licensing agreements with content owners (such as film production companies) to allow them to provide material without infringing copyright. With multiple providers offering streaming services in the same area, the content available with each provider will vary according to their licensing agreements.

When Netflix began offering services to Australian customers in 2015, the catalogue available was significantly smaller than the content available to customers located in the US, for example. Netflix separates these markets using geo-blocking technology, aiming to ensure that customers can only access material made available in the region they are located. Despite Netflix's asserted intentions to offer greater and more consistent content globally, unless either Netflix acquires global licensing for all of their content, or copyright laws do away with these licensing requirements, Netflix must continue to abide by the apparently "historic practice" of geographic licensing. This discrepancy in content availability has led many Australians to use VPNs to access the US versions of Netflix and other similar services, rerouting their IP addresses to appear as though they are located in the US.

Netflix Reaction

In recent times Netflix's objections to this circumvention of their geo-blocking technology have grown louder, with the company announcing a ban on VPN access to their services and labelling the practice illegal. According to a post on the Netflix  company blog by Vice President of Content Delivery Architecture David Fullagar, Netflix is in the process of disabling access to Netflix services using proxies and unblockers.This is intended to ensure users are only able to access content available, and which Netflix is licensed to provide, in the country in which they are located. Some consumer groups, on the other hand, argue that this access does not infringe the rights of content owners, as customers are merely choosing a different location for an otherwise legitimate purchase.2

VPN providers have continued to make the most of this legal ambiguity, with many announcing within days of Netflix attempting to bolster VPN blocking, that they had circumvented these latest restrictions.Netflix's chief product officer Niel Hunt has admitted to the practical difficulties of blocking VPN access with any permanence, particularly as a simple change of IP address can restore a VPN's access.4

This action has been labelled in the media an "attempt to placate rights holders"5; however with no greater content provided and no effective restriction to overseas access, neither consumers nor rights holders are likely to be happy with the current state of play.

Clearly this issue remains unresolved and fraught with difficulties for both content providers and consumers; so what are the key legal issues at play?

Circumvention of Technological Protection Measures

Section 116AP of the Copyright Act 1968 (The Act) creates an offence to provide a person or the public with a service to circumvent a technological protection measure (TPM) where copyright content is protected by the TPM.

Technological protection measure is defined in the Act as a   device,   product,   technology   or   component   (which relevantly includes a computer program) which "inhibits or restricts the doing of an act comprised in the copyright”.In the context of online video streaming services, the relevant act is likely to be that of "communication to the public".However, a specific exception is made where the device, product, technology or component "controls geographic market segmentation by preventing the playback in Australia of a non- infringing copy" of a film. This will not fall within the definition of a TPM, and therefore its circumvention will not be an offence under the Act.

The hot topic of the moment is whether geo-blocking technologies used by Netflix and other similar streaming services are TPMs within the meaning of the Act. This will determine the legality of their circumvention using VPNs.

This issue was discussed at length in the Standing Committee on Infrastructure and Communications' 2013 report on IT  Pricing and the "Australia Tax" (The Report).The Report noted that Choice's submission argued that this circumvention should not be caught by the Act, as "consumers are merely accessing  products and services which are being provided knowingly and willingly by the copyright holder".Further, Malcolm Turnbull clarified in his FAQs relating to online copyright infringement that “the Copyright Act does not make it illegal to use a VPN to access overseas content".10 On the other hand, the Copyright Council suggested that using a VPN to bypass geo-blocking and stream content from an overseas site like Netflix US, was likely to infringe copyright in Australia, as the exclusive right to use that content in Australia may lie with the copyright holder or a different licensee.11

Given these ambiguities, the Report recommended that the Act be amended to clarify what rights consumers did have with regard to TPM circumvention in the context of geo-blocking. However, any rights of this nature remain unclear, as no such amendment has been made and the issue has not come directly before the courts.12

Website Blocking

A further concern which has been raised is whether VPNs could be subject to site-blocking under the Copyright Amendment (Online Infringement) Act. Under s115A of the Act, copyright owners may apply for an injunction requiring internet service providers (ISPs) to disable access to online locations that facilitate copyright infringement. If streaming content from overseas was to be considered an infringement of copyright, site-blocking provisions could see access to VPNs prevented, where their primary purpose is considered to be to facilitate copyright infringement.13

New Zealand Proceedings

In New Zealand, media companies Sky TV, TVNZ, MediaWorks and Spark commenced legal action against several ISPs offering a "global mode" service which would reroute   consumers'   location   similarly   to   VPNs.   The

proceedings settled out of court in mid-2015, with those ISPs dropping the service.14 Reasons for  settling, however, do not appear to have been disclosed, and without a decision from the New Zealand courts, these proceedings give no clearer indication of the direction Australian Courts might take.

Terms of Use

Looking outside the scope of copyright law,  users  may also be restricted from using VPNs to bypass geo-blocking protections by the content distributor's terms of use. Netflix US, for example, stipulates in its terms of use that:

"You may view a movie or TV show through the Netflix service primarily within the country in which you have established your account and only in geographic locations where we offer our service and have licensed such movie of TV show. The content that may be available to watch will vary by geographic location and will change from time to time".

Conclusion

Netflix's recent crackdowns on VPN access do not seem to have effectively curbed this activity. Neither has it apparently dampened the enthusiasm for the practice, with many VPN users simply finding ways to circumvent the more stringent blocking mechanisms within days.15 However, although Australian Netflix customers may remain able to access US content using VPNs, customers accessing Netflix (and possibly other providers) services in this way, may risk having their accounts suspended for non-compliance with these terms.

The legality of VPN circumvention of geo-blocking in the context of Netflix content (and similar) is a contentious issue and has sparked much debate between rights holders, content service providers and consumer groups. However it appears unlikely to be resolved satisfactorily unless there is a change to legislation or a relevant case before an Australian Court.

In the meantime, Netflix seems intent for now on attempting to stamp out use of VPNs by ramping up its own systems and technology. Users of VPNs seem equally up for the challenge of finding ways to override such measures as quickly as they are deployed. One cannot help but be reminded of the classic Road Runner  and Wild E Coyote cartoons. We will watch with interest to see whether Netflix (… Wild E Coyote) will ever catch and stop those pesky VPN users (… Road Runners). Addisons will be monitoring progress in this area and will provide updates as they arise.