The Problem of Piracy Against Conditional Access Systems

Audiovisual piracy consists in the illegal exploitation of an audiovisual work by those who are not the holders of the rights to it. Over the years it has taken on different forms, which can be distinguished on the basis of the mode of action and the subjects involved.

The concept of "audiovisual piracy" is fairly vague. It is an ever-changing crime committed against an immaterial product whose mode of transmission is continually evolving. The strategies developed to carry out this crime change continually to enable the offenders to continue to break the law with impunity.

Limiting our study to the violations committed through the medium of television, the principal forms of piracy which began to damage the market of television broadcasters were the piracy of the titles broadcast for the first time, and back-to-back piracy. The first entailed the distribution by street peddlers of pirated cassettes containing films premiered on TV; it represented an illegal exploitation of the rights to audiovisual works. The criminal organisations make use of accomplices working in the theatrical circuit. The second form, which affects the rental circuit, consists in unauthorised duplication of videocassettes and their rental by the video-stores.

Another form is television piracy, which takes different forms depending on whether it involves transmission by user-free television channels or pay-TV. In the first case the violation consists in the unlawful transmission by local TV networks of films whose rights have been acquired by other subjects. These TV stations use recorded cassettes available on the market because they are intended for use as home videos. In the second case the crime takes place in the ambit of pay-TV stations and consists in pirating encrypted signals in digital transmissions via satellite.

This is a form of piracy that has emerged in recent years and it is acquiring increasingly alarming dimensions. It is carried out through the illegal reception of programs transmitted in coded form by counterfeiting the smart cards (cards containing a microchip for decoding the encrypted signals of the TV programs) and/or the digital decoders necessary to decipher the signals.

This kind of unlawful activity, which violates the decoding systems, is a growing form of parasitic exploitation of the rights to the material transmitted. It risks increasing exponentially in the coming years because of the strong market penetration of equipment for satellite reception.
It constitutes a notable loss in both financial terms and in damage to the image not just of the TV stations but also of the holders of broadcasting rights.

It is quite impossible to evaluate the actual size of a so pulverized and mushrooming illegal phenomenon, nonetheless it is reasonable to say that at least 1 Billion Euro are spent yearly in the EU to buy pirate cards and/or to get manipulated decoding apparatuses.

Clearly the distinctions here presented have a purely exemplary value and make no claim to be exhaustive. There are also acts of piracy committed by local networks through the re-transmission of signals, including digital signals, signals via ether or cable, decoded by using counterfeited decoders or smart cards.

The forms of piracy that concern us most closely are definitely illegal access to programs protected by encrypted systems, which can also be classified as crimes against intellectual property. It is clear that the unlawful reception of a film constitutes a violation of copyright. In fact the theft of the encrypted signal should also be considered, according to many analysts, as a violation of the exclusive prerogative of the holders of the copyrights in audiovisual works to assign the exclusive right to exploit these immaterial assets economically. For this reason this form of piracy strikes immediately at both the holder of the copyright in programs and the broadcaster who has the exclusive right to transmit them. Subsequently this action also damages the distributors of receivers and installers working legally on the market.

The gravity of the phenomenon is destined to be more widely felt, because of developments in technology which make it possible to use intellectual property in a variety of different ways. Just think of the convergence which has recently taken place between TV operators and operators in the Internet economy. Seen in this perspective, interactivity is an essential component in the supply of TV material. We have recently seen the creation of large portals capable of managing and controlling a client portfolio that is increasingly broad and diversified across different media. This has created the possibility of delivering TV programs over Internet. Different kinds of piracy take place on the Net: they range from sales of illegally duplicated audiovisual products to transmission of film premieres by subjects who lack authorisation from the film studios.

In the European ambit, the problem of safeguarding conditional access works and systems was raised for the first time by the Council of Europe in 1991. It issued a Recommendation for the Protection of Encrypted TV Services. Since then much progress has been made in terms of awareness of the seriousness of these forms of piracy and the damage they cause.

With the release in October 1998 of its Green Paper on Combating Piracy in the Single Market, the European Commission took an important step toward far-ranging Community initiatives against piracy and counterfeiting in the EU. The main aims of the Green Paper were to assess the impact of piracy, to review legislation and examine the need for action.

To protect services which use CA against pirate activities which may hamper the development and viability of such services, on 20 November 1998, the European Parliament and the Council adopted Directive 98/84/EC on the legal protection of services based on, or consisting of, conditional access services (OJE L 320, 28.11.1998, p.54), hereinafter termed CAD. It outlaws the manufacture, import, distribution, sale, rental, possession, installation, maintenance or replacement for commercial purposes of illicit decoding devices.

It is a significant step in the fight against piracy caused by illicit decoding devices and presently it is in the process of implementation in most of the Member States.

The CAD seems to be focused exclusively on conditional access devices that serve the remuneration interests of services providers. Article 2 (a), indeed, defines "protected services" as any service "which is provided in return for remuneration and on the basis of conditional access".

A general review of the CAD should take into account the complexity of the issue and take the opportunity for further, more extensive research in order to assess the impact of CA use on the general market structures, competition and the interests of the market players, particularly consumer interests. Doing so, it should be possible to check out whether the existing regulations are still adequate or if further initiatives may be needed.