Alerts and Updates

December 2020 COVID-19 Relief Bill Finally Closes the Streaming Loophole

February 2, 2021

The penalties under the new law include felony charges, up to 10 years of imprisonment and fines for certain digital transmission services that conduct unauthorized uses of copyrighted works for profit.

Tucked away in the over 5,000-page December 2020 COVID-19 relief bill, aimed at providing direct assistance and loans to struggling businesses and individuals, is legislation designed to increase criminal penalties for illicit streaming of copyrighted content[1]. This is known as the Protecting Lawful Streaming Act, which amends federal law related to stolen property by adding Section 2319C against illicit digital transmission services.

On one level, Section 2319C closes the streaming loophole by making it unlawful for persons to willfully, and for purposes of commercial advantage or private personal gain, offer or provide to the public a digital transmission service that: 

  1. is primarily designed for the purpose of publicly performing copyrighted works through digital transmission without the authority of the copyright owner or the law,
  2. has no commercially significant purpose to publicly perform copyrighted works through digital transmission that are protected under Title 17 of the United States Code without the authority of the copyright owner or the law; or
  3. is intentionally marketed to promote the services used in publicly performing copyrighted works that are protected by means of digital transmission without lawful authority of the copyright owner or the law.[2]

The penalties under the new law include felony charges, up to 10 years of imprisonment and fines for certain digital transmission services that conduct unauthorized uses of copyrighted works for profit[3]. While §2319C(d) addresses criminal charges, it is silent on civil copyright law, which is the typical avenue for enforcement of copyrights. As such, the Department of Justice can bring criminal felony charges for illegal streaming without impacting the ability for a copyright holder to bring a civil suit for the same actions[4]. While all of this makes sense, it leaves open questions as to what impact this will have on the current Copyright Act and the intent behind adding copyright legislation to the December relief bill.

Section 2319C and the U.S. Copyright Act

The Copyright Act of 1976 grants rights holders the exclusive right to be in charge of reproducing, distributing and controlling the public performance of the work[5]. Illegal streaming is primarily an offense against the right of public performance[6]. Under the Copyright Act of 1976, “Criminal infringement of the right of public performance, even when done willfully and for a commercial advantage, is limited to a misdemeanor.”  

Therefore, under current copyright law, criminal streaming piracy, no matter how much is illegally streamed, is treated as a lesser crime than downloading or reproducing the same content, which is treated as a felony. This is known as the streaming loophole. Section 2319C closes that loophole by enforcing the same penalty for performance rights as distribution and reproduction rights.

The wording of §2319C(c) is also construed to mean violators will face both the penalties listed in the December relief bill and the U.S. Copyright Act. Specifically, the amendment contains a “rule of construction” that states “any person who violates subsection (b) shall be, in addition to any penalties provided for under title 17 or any other law… fined under this title[.]” Those penalties include three to 10 years of imprisonment where the extent of the years of imprisonment is based on the number of copyright protected works infringed and whether this is the second or a subsequent offense[7]. Now operators of illegal streaming services will face the same penalties as operators of online piracy sites that allow downloading.

Congressional Intent

Streaming has become the main form of media intake for the public, without the current law really addressing liability. Therefore, it appears Congress’ intent in passing §2319C is to impose stricter liability for that specific type of service. This is evident by the Senate Subcommittee on Intellectual Property when they asked the U.S. Copyright Office for clear guidance on how unauthorized streaming infringes the right to control distribution of a work. The subcommittee cited advancements in technology, significant economic losses and the lack of punishment for illicit streaming as reasons for imposing stricter liability. In their inquiry to the U.S. Copyright Office the subcommittee further noted:

As technology has advanced, so has the form of digital copyright infringement… Modern streaming technology enables consumers to stream copyrighted content without authorization and without downloading the copyrighted content. … [W]ebsites and other services use streaming to distribute copyrighted content more quickly and more conveniently than providing downloads.

Director Karyn Temple of the U.S. Copyright Office responded to the subcommittee by stressing that the rise of streaming as a primary model for content distribution has coincided with a similar increase in streaming piracy. She went on to say that a recent industry report noted that digital video piracy resulted in lost revenues of between $29.2 billion and $71 billion, mostly through unauthorized streaming. The U.S. Copyright Office cites this type of copyright infringement as having “serious consequences for the growing streaming industry, undercutting revenues earned by legitimate streaming platforms and content creators.”

The U.S. Copyright Office also supported the same level of felony penalties for violations of performance rights and distribution and reproduction rights, which §2319C accomplishes. While they stated each case will depend on the applicable facts, it is important that the penalties for violating public performance rights mirror the penalties for reproducing and distributing copyrighted material:

[In the] criminal infringement situation, prosecution should not be hindered by some infringements qualifying as felonies and others not, based solely on the illicit delivery method chosen for the creative content.

In sum, the intent behind §2319C is to impose felony liability on streaming piracy to help halt the growing piracy streaming industry, to close the streaming loophole that exists, and decrease lost revenues of copyright holders.

The Bottom Line

Section 2319C is meant to target commercial, for-profit streaming services, not individuals who download streams from Instagram, Twitter, TikTok or Facebook. Senator Thom Tillis, who led the efforts to fight illegal streaming, even tweeted on December 21, 2020, that the legislation will “end commercial piracy by criminal organizations and will not apply to internet users.” Therefore, it is cause for concern if (1) you are a commercial business streaming copyrighted works without authorization for the sole reason of providing streaming services; (2) there is no commercially significant purpose for your business other than providing the illicit streaming for monetary gain; or (3) you are intentionally promoting the service’s use in publicly streaming without the authority of the copyright owner.

It is important to note that §2319C does not take effect until the end of 2021, if not later. As such, it is possible that these amendments may change or the information here may not be applicable at a later date. Stay tuned for further updates by Duane Morris.

For More Information

If you have any questions about this Alert, please contact Alain Villeneuve, Nicole McLaughlin, Victoria R. Danta, Lauren C. Matturri, any of the attorneys in our Trademark, Copyright, Entertainment and Advertising Group or the attorney in the firm with whom you are regularly in contact.

Notes

[1] H.R. 133: Section 211

[2] 18 U.S.C. §2319C(b)

[3] 18 U.S.C. §2319C(c)

[4] 18 U.S.C. §2319C(d)(1)

[5] 17 U.S.C. §101

[6] 17 U.S.C. §106

[7] 18 U.S.C. §2319C(c)

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.