Sinking the Satellite TV Pirates In Canada

By Christopher D. Bredt and Robert Dawkins, Borden Ladner Gervais LLP

If asked, most people would tell you they believe it is wrong to steal, and thieves should go to jail. However, for some reason, many individuals lose this moral conviction when it comes to theft of direct-to-home (DTH) satellite television programming.

As a result, a significant piracy market has emerged. The participants involved include providers of satellite piracy products and services as well as end users that cut across age, gender, social class, geographic location, ethnicity, religious affiliation, and cultural and professional backgrounds.

This article reviews the problem of satellite piracy in Canada and specific actions underway to combat it. In particular, this analysis seeks to dispel the myth Canada is a haven for satellite pirates whose activities are believed to be legal by many people in the United States. While many satellite pirates exist in Canada, their activities are contrary to Canadian law as well as subject to increased scrutiny by Canadian legislators, regulators, law enforcement and legal action by industry stakeholders.

Defining the Problem

There are two licensed providers of DTH programming in Canada — Bell ExpressVu and Star Choice. Both have been in operation since 1997. Since inception, these two providers have become significant players in the Canadian subscription television market, amassing a collective subscriber base of approximately 2.2 million. Bell ExpressVu is the clear industry frontrunner with 1.4 million, or 64 percent of Canada’s DTH market, while Star Choice has notched 800,000 subscribers to account for 36 percent of the country’s paid- satellite TV households.

None of the American DTH providers, including DirecTV and EchoStar Communications [DISH], hold the necessary regulatory approvals to offer their signals to Canada’s subscription TV market. Although there are no exact numbers, it is clear that there are a large number of households that are receiving DTH programming illegally. This includes people who are illegally accessing both Canadian and American DTH satellite signals, whether by black market or grey market services.

The black market consists of outright signal theft that generally allows free access to the full spectrum of channels offered by DTH providers. Black-market pirates sell devices, programming software and related services to their customers to facilitate the theft of DTH programming. Canadian grey marketeers do not engage in signal “theft” per se. The grey market involves Canadians arranging to illegally receive DirecTV or EchoStar signals by providing false U.S. addresses; but U.S. service providers have taken steps to detect and cut off service to these illegal subscribers. As a result, the grey market has become a less significant threat than the black market in recent years.

Many who steal satellite signals view signal theft as a victimless crime. However, it is estimated the Canadian broadcasting industry loses millions of dollars each year due to signal theft. Those hurt by the illegal distribution of signals include writers, actors, producers, broadcasters, cable providers and DTH service providers. Furthermore, Canadian regulators who control access to the Canadian market are charged with a mandate to foster a distinctly Canadian broadcasting system by encouraging:

“…the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view.”

A significant piracy market, allowing unrestricted access to encrypted American DTH programming, threatens the integrity of this policy. Indeed, many people believe the policy is crucial to the continued success of the Canadian broadcasting and entertainment industry.

Canadian Law And DTH Signal Piracy

The piracy market threatens the revenues of Canadian satellite TV service providers and the effectiveness of copyright licensing that generally allow broadcasters to distribute programming to a limited geographic market. Although many satellite pirates historically have viewed Canada as a legal haven for satellite piracy, at least with respect to American DTH signals. This was based on a misconception of Canadian law, which resulted in part from historical conflict in judicial decisions about grey-market activities. However, any doubt should have been put to rest by the Supreme Court of Canada in 2002, in Bell ExpressVu Limited Partnership v. Rex. This case confirmed that grey-market and black-market signal piracy is punishable by civil and criminal sanctions in Canada.

Specifically, Canadian legislation outlaws the following activities:

• Decoding an encrypted subscription DTH signal or encrypted network feed without authorization from the lawful distributor of the signal or feed and;
• Manufacture, importation, distribution, lease, sale, installation, modification, operation or possession — without lawful excuse — of any equipment, device, or component that has been used, or is intended to be used, to decode an encrypted subscription TV signal or network feed without proper authorization.

Offenders face criminal prosecution and penalties. For an individual, illegally decoding signals may result in a fine of up to CN$10,000 (US$7,530) and/or imprisonment for up to six months. For a corporation, a fine may not exceed CN$25,000 (US$18,830). Also for individuals, an infraction for manufacture, importation, and possession of piracy devices may result in a fine up to CN$5,000 (US$3,700) and/or imprisonment for a term not exceeding one year. As for corporations, the fine for such transgressions may not exceed CN$25,000 (US$18,830). In addition to these penalties, certain individuals, such as those with an interest in the signal or its content or who hold a Canadian broadcasting license, have a statutory right of civil action against those who commit piracy offenses to sue for damages caused by the pirate’s activities.

The civil right of action allows DTH broadcasters to pursue signal pirates directly rather than to rely exclusively on law-enforcement agencies to address the problem. Many DTH broadcasters and other industry participants have chosen to pursue such actions, and they have been successful. In particular, DTH providers have been able to obtain, without prior notice to the targeted satellite pirate, court orders, commonly referred to in Canada as Anton Piller orders, that allow their representatives to enter the business premises of a pirate and to seize evidence of his or her illegal activities. Enforcing these orders helps ensure that evidence of piracy business activities is not destroyed upon the pirate receiving notice of a legal claim, frequently provides significant evidence of piracy activity and often has the practical effect of shutting down the pirate’s illegal operations. Thus, the civil right of action has become a significant component of anti-piracy activities of both American and Canadian DTH service providers.

Looking Forward

The problem faced by DTH broadcasters after the Bell ExpressVu case is not Canada’s anti-piracy laws but in enforcing them effectively. At this time, Canadian legislators have tabled new legislation aimed at increasing the effectiveness of the regulatory regime. The proposal would: (a) require licenses for importation into Canada of devices that may be used in satellite piracy; (b) significantly increase potential fines and prison terms for satellite piracy offenses; and (c) make it easier for those who suffer harm from piracy to pursue civil actions for statutory damages of up to $100,000 per case.

Furthermore, DTH providers and such industry interest groups as the Coalition Against Satellite Signal Theft (CASST) are seeking to increase awareness about the harm of signal theft and to combat the perception that signal theft is a “victimless” crime. This educational effort about piracy is crucial. As long as signal theft is viewed as morally acceptable, the black and grey markets for satellite piracy products and services will continue to thrive. The education drive faces many challenges due to the nature of the piracy market. Satellite pirates in Canada often offer their services openly through storefronts or advertisements in reputable newspapers. Others offer their products for sale on professional looking e-commerce web sites that use trusted third-party Internet payment systems, such as PayPal. Most customers would not expect illegitimate and illegal businesses to be so open and notorious about their activities nor to be associated with reputable online organizations.

The battle against signal piracy is not likely to be resolved soon. Similar to all profitable criminal activity, where there is money to be made, the temptation is too great for some people to resist. That said, proposed amendments to Canadian legislation, combined with raising public awareness and continued pursuit of civil action against satellite pirates, no doubt will help to curb the problem.

Christopher D. Bredt is a partner at Borden Ladner Gervais LLP. He practices primarily in the areas of corporate/commercial and constitutional litigation. Robert Dawkins is an associate in the commercial litigation group at Borden Ladner Gervais LLP. They have represented a number of DTH broadcasters in numerous actions against Canadian DTH satellite pirates. For further information, call 416/367-6028 or e-mail [email protected].