100 million households worldwide are sharing passwords, according to figures shared by Netflix in 2022. The UK’s Intellectual Property Office (UK IPO) has now suggested that sharing passwords for streaming sites such as Netflix is both a civil and a criminal offence. We examine the legalities surrounding this practice to determine whether the UK IPO is correct.
The UK IPO argues sharing passwords for streaming sites is copyright infringement.
Copyright gives the owner an exclusive right to copy, distribute, adapt and display the works. In this instance, the ‘owner’ is Netflix Inc. and the ‘works’ is the streaming site Netflix.
Under copyright law, the owner is the only body which has the right to grant others access to and use of the site. By subscribing to Netflix (or any other streaming site), you are granted a licence to use the site only. No additional rights are granted, including the right to allow others to access the site. Therefore, if you share your password with another, this would constitute copyright infringement as suggested.
Breach of Contract?
In addition to copyright infringement, sharing your Netflix password is a breach of Netflix’s Terms of Service which explicitly states you must not share your password.
On this basis, if you were to share your password, Netflix could, in theory, sue for damages for the lost profit it has suffered.
Is it a criminal offence?
Breach of contract is a civil offence only, however, copyright infringement is both a civil and a criminal offence. This includes infringement which is done without monetary gain, which means you do not need to have made a profit from sharing your password to be found guilty of criminal copyright infringement.
Importantly, both the person who shared their password and the person who accesses the site with that shared password are guilty of criminal copyright infringement.
These all point to the suggestion the UK IPO’s statement was accurate, which is concerning for any individuals involved in the sharing of passwords.
Why is this important?
For businesses and individuals which licence goods or services, this is a useful reminder that the terms and conditions of the licence should be clear and drafted to seek to prevent any infringement, whether accidental or otherwise. As the UK IPO warns, those who breach copyright or other laws, risk both civil and criminal sanctions.
At Hamlins, we have the expertise to advise on the protection of intellectual property and other commercial rights. We advise on the formation of contracts and drafting of digital terms and conditions to assist with the licensing of goods and services. If you would like a conversation about how we can help you, please get in touch with Matthew Pryke.