From a Belgian Point of View, Another Episode In The Cloud TV Recorders Area: M7 Group v. Right Brain

(Article published in the ABA Section of Intellectual Property Law, International Associates Action Group Newsletter, p.15). 

Innovation continues to outpace the law. Since the last six years, the convergence of cloud-based products/services with the consumption and distribution of entertainment content is producing a large number of conflicts and legal uncertainty in the television industry. Indeed, the scope and bounds of copyright law remain ill-equipped to tackle this rapid pace of technological advancement. The question remains: are we not in presence of a “loophole” in the law? 

Following the recent U.S. Supreme Court decision in favor of the TV content owners (American Broadcasting Companies, Inc., et al., Petitioners v. Aereo, Inc., 573 U.S. ___ (2014)) concluding that “Aereo performs petitioners’ copyrighted works publicly” infringing this exclusive right by selling its subscribers a technologically complex service that allows them to watch TV programs over the Internet, a Belgian Court recently ruled that Bhaalu, an Internet-based digital video recorder set-top box, was not subjected to copyright provisions (Voorz. Rechtbank van Koophandel Antwerpen, afdeling Hasselt, July 2, 2014, IEFbe 927, only in Dutch; hereafter “The Decision”). 

Right Brain Interface is a young technology company that developed a "Collaborative Video Recorder" (CVR), i.e. an internet-based digital video recorder that stores recording/TV content, in which the hardware operates in the cloud and on the client boxes of the community members who use this hardware. This system brings Right Brain Interface on the market under the name "Bhaalu". The content is available for 90 days and can only be access, most likely through a geo-blocking, in Belgium, Germany, and the Netherlands. More precisely, as explained on the company’s website, the CVR developed enables “members of the Bhaalu community to share video recording hardware without transferring content and software rights. The CVR Bhaalu delivers a natural, personalized, social television viewing experience, finally integrating the Internet with television”. The (TV) programs can only be recorded if the user is authorized to view them and had subscribed to a provider of cable broadband (e.g., TV Vlaanderen, Belgacom, Telenet, ...).

M7 Group is the European provider of satellite services for consumers and business customers that operates, among others, in Belgium, under the brand “TV Vlaanderen”. Launched in 2006, this satellite platform, targeting the Flemish speaking inhabitants of Belgium, brought the case against Right Brain Interface for unfair trade practices (Article 95 Belgian Law on market practices and the protection of consumers) on the basis that Bhaalu equipment only/mainly used the TV signal of M7 Group for third parties who are not customers of the TV signal (see The Decision, paragraph 5). This use is contrary to article 22(2) of its terms and conditions. According to M7 Group, Right Brain is also guilty of unfair competition (parasitic misappropriation) as it decreases the signal from M7 Group, without paying for any technical costs, thereby obtaining an unfair competitive advantage and distorting competition (see The Decision, paragraph 5).

According to Bhaalu, they simply provided a device allowing users to playback recordings of TV broadcaster via the regular television provider and not a television service. They also claim that the exception of private copying provided by the Belgian Copyright Act could be invoked. In this Act, private use is defined as the use within, and reserved to, the family circle. One may argue that since the content is stored on the cloud and can be access from a laptop, tablet or mobile device, it’s hard to believe that this circle still exists. 

In the Flanders region of Belgium, a Flemish decree (that has the same legal force as law) on broadcasting and television foresees a protection for the integrity of television signals of the broadcasters. TV Vlaanderen argued that, besides the Copyright Act, Bhaalu is also violating this decree. Indeed, in order to maintain the quality of an electric signal, cable lengths should not exceed the driving capability of digital signal sources, as cable capacitance and attenuation will degrade signal rise time and amplitude; and therefore to obtain the consent of channels before offering any new TV function. 

The Court followed Right Brain Interface in its presentation of the operation of the system of Bhaalu and stated that M7 Group didn’t prove that Right Brain received a satellite signal from the air and made it available to Bhaalu users. According to the Court, the product and services developed by Right Brain have an innovative and “high-tech” character (see The Decision, paragraph 16). Finally, the Court declared that M7 Group didn’t demonstrate that the shared use of its signals with Bhaalu users, who have subscribed to a different TV provider, will cause any damage (see The Decision, paragraph 18).

In the U.S., the 6 to 3 decision handed a major victory to the broadcast networks in the Aereo case. As a reminder, Aereo was selling a service that allows its subscribers to watch television programs over the Internet at about the same time as the programs are broadcast over the air.

The main legal question at stake was whether Bhaalu should be have been considered as a device (as decided by the Court) or as a television service. The legal uncertainty in this area is certainly one of the key reasons why these new services and business models have not exploded yet. New technologies will always continue to challenge the existing legal framework and create more litigation. If these offerings start to become more multi-territory, because of the territorial nature of copyright law, risks are growing that new issues will arise very soon. Except in the U.S., existing precedents around the world are still subject to appeal. The outcome of future legal disputes and the TV industry will depend on these new rulings. Although the Court stated that Bhaalu may continue to use its services in Flanders, another separate case brought by other various Flemish broadcasters is still pending, also accusing Bhaalu of violating copyright by using their signal. Stay tuned!


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