The law on Netflix password sharing was in the news this week when the Intellectual Property Office published guidance which suggested that it could constitute a criminal offence. The guidance was quite hastily withdrawn but it did make people consider what the legal position might be.
Actually, it’s complicated. Netflix and other streaming services allow users to log in and access content on multiple devices, from different places just by entering a password. Many users have shared passwords with friends and family so that multiple households can watch content but only one person is paying. Nadine Dorries, the former Culture Secretary, openly admitted to doing this and Netflix themselves have issued occasional communications indicating that the practice was not of major concern. This may now have changed.
So what’s the legal position?
Well, for Netflix users, they have agreed to Terms of Use which say that Netflix content provided to users is for personal use and should not be shared with individuals beyond the user’s household. Password sharing is also expressly banned. Doing so is therefore a misuse of the Netflix service and a clear breach of contract. That would justify Netflix terminating the agreement and suing the user for damages. It will also constitute secondary copyright infringement as it effectively constitutes distributing content to someone else in a way that would be prejudicial to Netflix.
The problem is that it is not technically viable for Netflix to identify these cases of breaches of contract or copyright infringement and the damages claims in individual cases (probably based on the profit obtained from the free user's subscription) are not viable to pursue either.
Similarly, if you know a friendly Netflix user and watch Netflix content using their account, that would be a straightforward case of copyright infringement which is also civilly actionable. It would be open to Netflix to obtain an injunction (interdict) against ongoing use and also damages, but the same practical problems would exist because the value of individual cases is so small.
Importantly, breach of contract and copyright infringement are civil legal wrongs, not crimes. There are various criminal offences under UK copyright law but they generally relate to intentional copyright infringement which is done for a commercial or business purpose or on a large scale – such as communicating a work to the public either for gain or having reason to believe communicating the work to the public will cause loss or risk loss to the owner of the copyright – i.e. online file-sharing. These would not directly catch individual password sharing at a family level. It has been speculated that password sharing would be a form of conspiracy to defraud, which is a common-law crime that pre-dates the internet, but that is presently untested. As such, companies such as Netflix are reliant on various impracticable legal remedies or to making changes to their customer service models.
News coverage of this topic can often be inaccurate or misleading where it refers to things like password-sharing as ‘illegal’ in a general sense as well as talking about conduct which ‘may’ be a criminal offence when in fact it may not be at all and is extremely unlikely to result in prosecution. Some of those messages originate from rights owners who are keen for these messages to have a deterrent effect.
This may change – the scope of criminal offences in UK copyright legislation has been expanded and penalties increased over the years, recently via the Digital Economy Act 2017. For now, though, the law is not as useful to anyone wishing to clamp down on password sharing as might be expected even if the consequences sound quite scary.
