At the request of three of Canada's biggest television companies, the Federal Court has issued an interim order blocking the sale of digital set-top boxes that come loaded with applications designed to deliver easy access to copyright-protected TV shows and movies.
Mainstream retailers sell numerous digital boxes, such as the Roku media player, that can be connected to television sets and come with media apps such as Netflix and YouTube installed. But a number of independent businesses have emerged in recent years selling boxes on which they have preinstalled and configured apps to let users watch copyrighted content for little or no cost.
Concerned about the loss of television subscribers due to pirated content, BCE Inc., Rogers Communications Inc. and Quebecor Inc.'s Videotron Ltd. – which all have divisions that both produce and distribute content – teamed up in mid-May to take legal action against five named defendants: iTVBox.net, My Electronics, Android Bros Inc., WatchNSaveNow Inc. and MtlFreeTV.com.
The defendants market their boxes as a "way to access free television content and avoid cable bills," Justice Danièle Tremblay-Lamer of the Federal Court of Canada in Ottawa said in a ruling on June 1 granting an interim injunction against the sale of the "preloaded" boxes pending a full trial of the issue.
"These boxes have several uses for consumers, some of which are perfectly legal and some which skirt around the fringes of copyright law. This is not the first time a new technology has been alleged to violate copyright law, nor will it be the last," Justice Tremblay-Lamer wrote.
"For the time being, I am satisfied that the plaintiffs have established a strong prima facie case of copyright infringement and that an injunction would prevent irreparable harm without unduly inconveniencing the defendants."
In-house experts on fraud and piracy at Videotron and BCE began investigating the growing trend of preloaded set-top boxes in 2015 and Rogers started looking into the issue this year.
The court ruling says the companies pointed in particular to three preinstalled applications that could be used to access content protected by copyright: an open-source media player known as KODI, Showbox, a media player software similar to the now-defunct Popcorn Time, and private IPTV Services, "which are private Internet servers that retransmit television broadcasts over the Internet, usually for a monthly fee."
BCE, Rogers and Videotron claim the preloaded boxes lead to copyright infringement and also "represent an existential threat" to their television businesses because "piracy is one of the top causes for declining subscriptions for television services in Canada and leads to annual decreases in revenue."
Only one defendant, Vincent Wesley of MtlFreeTV.com, appeared at the court hearing, arguing that the preloaded boxes are "nothing more than a conduit" and simply "a piece of hardware, operating in the same manner as a tablet or a computer, on which anyone can install applications which are freely available to the public through the Apple Store, Google Play or the Internet."
But Justice Tremblay-Leger wrote that in her view, "the only reason why many users have access to infringing content is because [preloaded] set-top boxes … make it extremely easy to do so."
"While some consumers might have the desire and technical knowledge to seek out and download such applications, many others might not," she said, adding that the defendants market their products as "plug-and-play."
She pointed to product descriptions that range from the iTVBox dubbing itself the "Original Cable Killer" to Android Bros assuring users that they can "cancel cable today" and still watch their favourite TV shows for free. Some of the defendants also include instructions on how to use the boxes and access the desired content.
Mr. Wesley's lawyer declined to comment on the case on Friday.
Representatives for BCE and Videotron both similarly said their companies invest "hundreds of millions of dollars every year" to create, acquire and distribute content. "Enabling free and illegal access to copyrighted content with these boxes negatively impacts the entire Canadian content production industry," a BCE spokeswoman said.
"This is a case of obvious piracy and the court made the right decision," a spokesman for Rogers added.
The judge also ruled that the companies could add new defendants to the case in the future (any new defendants would have two weeks to bring a motion challenging the injunction's application against them).
In another legal decision that protected the business model of conventional broadcasters, two year ago the U.S. Supreme Court ruled that the online streaming service Aereo Inc. violated U.S. copyright law. The startup company in that case used tiny antennas and allowed users to stream live television for a small monthly fee.