Address; Stationsparken 25, 2600 Glostrup, Denmark

European Commission,
DG Internal Market and services,
Unit E2 - Services II,
SPA2 6/49,
B-1049 Brussels,
Belgium

Friday, April 04, 2008

Re: review on CAD 98/84

Scandinavian Tv Organisation against Piracy (STOP) have worked with CAD piracy since 1998. STOP represents almost all of the pay-TV distributors in Finland, Denmark, Norway and Sweden. STOP has been involved in more than 300 civil lawsuit/verdicts and STOP has continuelsly worked to make the national legislation stronger and better suited to combat CA piracy.

Address; Stationsparken 25, 2600 Glostrup, Denmark.

E-mail;

QUESTION 1.1.

EU citizens whom have moved to living in another EU country might still like to receive programs and news in the native tongue. Pubs & clubs are trying to save money by using a private subscription from abroad instead of a public subscription, which is a lot more expensive. These are the main reasons to the size of the market for Grey program cards.

The problem with this situation is that it is difficult to make the competition fair. Rights are bought by distributors for a specific territory and only that. There are more often than not, fierce local competitions for the rights. The way the market for television rights are formed today, makes it impossible to buy rights for a territory were the company is not based. If cards from one distributor should be allow in other markets, it will be necessary to make a complete overhaul of the structure of the selling of rights for the television market. Before that has happened, any move towards the possibility of selling subscriptions cross boarder is impossible.

The whole grey market also includes a lot of program cards from outside the EU, which are very popular due to the fact that they are a lot cheaper.

Last year it was possible to buy a one year subscription to ART, which showed all Premier League games, for less than 300 Euros.

QUESTION 1.2:

Recently STOP has shut down two companies selling Canal Digital subscriptions outside the Nordic region, in the last month alone. One company had in a short time sold more than 90 subscriptions, primarily to be used in Spain. Another had at least sold 45 subscriptions. These are just two examples of a very large business and there are a lot of other companies involved. It has been very costly for Canal Digital to shut down all these cards and most distributors looks like they are turning the blind eye to the issue. A simple look up on Google will name many companies and private persons that are selling subscriptions to other countries. This is done in violation of the customer’s terms and with false registration of the customers, We have seen examples of more than 90 customers on the same address.

QUESTION 1.3:

STOP has no comments on this subject.

QUESTION 1.4:

A common EU anti piracy body that collects and distribute information on CA piracy would be very beneficial.

The national implementations are very different and that is a problem, since it makes it possible for pirates to forum shop.

QUESTION 2.1:

The directive needs to be less specific and more technology neutral. What is important is to stop unauthorized access to protected services, therefore there needs to be less focus on specific technology and more focus on the purpose of the violator. A good example was the problems with the blank smart cards. The way the directive was implemented in Sweden forced the industry to prove that the empty smart cards did not have any other practical use and that was very difficult and complicated.

There also needs to be focus on the fact that the more simple and easy to understand the directive is, the easier it is to make the authorities understand the problems and take action.

It would be a good idea if EU made funds available to help the police and authorities to learn more about CA piracy.

The first and foremost undermining factor is the lack of know-how and interest from the authorities. If the police in i.e. Sweden showed more interest in these types of cases, the problem would never have grown to the monstrous proportions it did in before the introduction of a better technology by the distributors.

The reason the lack of interest is a major problem, is not only that it stops the authorities from dealing with the problems, but also because it is virtually impossible for the right holders and distributors to stop the CA piracy with the legal tools available to them. And if they are stopped, the lack of surrounding evidence makes it impossible to claim damages (this is mainly true for Sweden).

Technology based legislation and lack of police know how results in lack of interest in investigating new pirate solutions.

QUESTION 2.2:

Apart from the answers already given under Q 2.2, the fact that there is no focus on private distribution of CA piracy in the directive has been a major problem. As an example it is still legal to distribute encryption keys and codes in Sweden, as long as you are not making money doing so.

QUESTION 2.3:

Fines and imprisonment (Denmark and Sweden 2 years, Finland 1 year).

QUESTION 2.4:

No

QUESTION 2.5:

The lack of a ban against private use and possession has created a demand for pirated services; creating a huge market and therefore the possibility to make a lot of money. That combined with low interest from the police and authorities and relatively low penalties has made CA-piracy a lucrative and relatively safe business.

The level of penalties must be equivalent to the damages and potential income to be deterrent. As an absolutely minimum the penalties must the same for all infringements or exploitation on copyrighted material, and there must be a balance within the EU as well, as for not creating safe havens. A total harmonization on penalties within the EU qua the CAD is therefore preferable.

QUESTION 2.6:

Yes. There are several examples of pirates moving away from the EU. There are 2 main reasons for this. Firstly most other countries, especially in Asia don’t have any legal framework to cover this kind of piracy. Secondly the pirate solutions will not work far away from the footprint of the satellites or the cable networks, and it will therefore be very difficult to prove that it is indeed CA piracy goods they are dealing with.

One of the major, if not the biggest ring of CA pirates had members from Cuba, Hungary, Sweden and UK. The set up their business from Thailand and distributed pirate cards to the whole of Europe from there. They sold pirate cards to major systems such as Conax, Irdeto and Viaccess and on average charged more 200 Euro pr. card. STOP estimates that this ring sold more than 20.000 cards alone to the Nordic region. The cost of producing the cards was maximum 20 Euros a card, netting them at least 3.600.000 Euro.

QUESTION 2.7:

Absolutely and if that is not possible set aside funds to help stop the illicit goods at the borders.

QUESTION 2.8:

Legislation can never be efficient on it own. To fight piracy it is necessary to have a combination of strong technology, good legislation and efficient enforcement. The issue of private use is very helpful towards creating a good legislation and it helps remove the demands for CA piracy products in the market. That kind of legislation has therefore shown to be very efficient and Sweden is a good example of this, since Sweden still allow private use and distribution of CD pirate products, it has made Sweden the most pirate country in the Nordic region.

QUESTION 2.9:

In Denmark there have been several cases against private users. More than 50 cases have been reported to the police and there have been a quite a few convictions. The penalty normally around 1500 DKK. The cases have mostly been people admitting on Internet forums to having a pirate card.

QUESTION 2.10:

We have never heard of an example of this, mainly because in the absence of CAD, there have been other laws that could be used.

QUESTION 2.11:

Very since pirates operate on a cross boarder platform and often try to hide in other countries than the one in which they are involved in CAD piracy.

QUESTION 2.12.

Please see the answer for Q 2.1

QUESTION 3.1:

No.

QUESTION 3.2:

Yes, but it is also possible to think of situations were there will be an overlap between directives and that only highlights the need for a harmonization between among others CAD and the infosoc directive.

QUESTION 3.3:

No.

QUESTION 3.4:

They don’t use it, since they have better protection in other laws.

QUESTION 4.1:

No, but it is not good for any right holder that the CAD leaves a weakened spot in the protection of the windows in the copyright business.

QUESTION 4.2:

Not really since the CAD is much too weak compared to the rest of the legal framework protecting copyright. It is also our opinion that CAD is often seen as something of an orphan compared to “real” copyright legislation and as such gets little or no attention. As said before a general harmonization between the legal frameworks is needed.

QUESTION 4.3:

Yes. Sports rights are the corner stone of the Pay-TV business and therefore needs as much protection as possible.

QUESTION 5.1:

Any protection will be useful. If the pay-TV business in the future move to DRM based protection it will only be naturally that they would continue to use the CAD, but if the infosoc directive still at that time offers a better protection, the CAD will not be used.

QUESTION 5.2:

The CAD must in any case be on level with the infosoc directive and the general copyright protection, so this is just another example that highlights this need.

QUESTION 6.1:

No comment.

QUESTION 6.2:

No comment.

FINAL QUESTION:

Piracy on CA is a big business. For many years this problem has been more or less left to the pay-TV business to solve. The lack of interest from authorities has left the pay-TV business with no choice than to fight the problem themselves. Organisations such as STOP have tried and have been left alone in this combat without much support from the authorities. That has created an unhealthy atmosphere, were STOP and the likes are consider by the pirates to be on an unholy crusade and the “debate” can at some points be very unpleasant. There have been several incidents of threats and personal abuse. This situation could be helped a lot by a more direct involvement by the police and authorities.

David Würgler

Managing director