Amazon’s Kodi Box Ban and Copyright Liability for Device Distributors

Amazon’s latest effort to mitigate IP infringement in its third-party seller program is a ban on the sale of streaming media devices (“Kodi boxes”) that promote piracy. In addition to banning sales of the devices, Amazon reserves the right to destroy any offending physical inventory in its warehouses. The new policy raises not-so-new questions about the ability of copyright holders to control the distribution of dual-use technologies that can (but needn’t necessarily) be used to infringe copyrights. 

What, you may be wondering, is a Kodi box? According to Wikipedia,   

Kodi (formerly XBMC) is a free and open-source media player software application developed by the XBMC Foundation, a non-profit technology consortium. Kodi is available for multiple operating systems and hardware platforms, with a software 10-foot user interface for use with televisions and remote controls. It allows users to play and view most streaming media, such as videos, music, podcasts, and videos from the internet, as well as all common digital media files from local and network storage media.

It is a multi-platform home-theater PC (HTPC) application. Kodi is highly customizable: a variety of skins can change its appearance, and various plug-ins allow users to access streaming media content via online services such as Amazon Prime Instant Video, Crackle, Pandora Internet Radio, Rhapsody, Spotify, and YouTube. The later versions also have a personal video-recorder (PVR) graphical front end for receiving live television with electronic program guide (EPG) and high-definition digital video recorder (DVR) support.

In the UK, both copyright holders and the police have been cracking down hard on sellers of Kodi boxes, which are being widely used to pirate streams of live sporting events and just about everything else. As the Birmingham Mail recently reported, “the boxes themselves are, effectively, legal. But realistically, the only reason you would ever want one is it if was bought either pre-loaded or altered in order to watch PPV content.”

On this side of the pond, right holders have a long history of leveraging copyright law and its secondary liability doctrines to try to control the distribution of dual-use technologies like Kodi boxes. The leading case in this area is of course Sony v. Universal, in which Universal sought to ban the distribution of VHS recorders in the early 1980s. In the early 2000s, the major record labels targeted distributors of peer-to-peer file-sharing software, successfully forcing services like Grokster and LimeWire out of business, even as the P2P file-sharing protocols underlying those services have remained legal.   

In Sony, the Supreme Court invoked the staple article of commerce doctrine from patent law and declined to impute to Sony culpable knowledge of VHS users’ infringements. The court reasoned that the machines were capable of substantial non-infringing uses, and Sony had no post-sale relationship to either the machines or their users that could give rise to any knowledge on Sony’s part of particular infringing uses. Accordingly, the Court denied the preliminary injunction Universal sought, and Sony continued to market and sell VHS players to US consumers.

In MGM v. Grokster, by contrast, the Court held that Grokster could be held liable for its users’ infringements, even though the P2P software Grokster distributed could be used for non-infringing purposes. Grokster was found liable because its employees actively encouraged users to infringe copyrights. This has come to be known as the inducement standard for secondary copyright infringement by device distributors.

Streaming media boxes, like their VHS and P2P ancestors, are dual-use articles of commerce. Amazon’s newly announced policy for regulating their sale appears to have been derived from Grokster’s inducement standard:

Products offered for sale on Amazon should not promote, suggest the facilitation of, or actively enable the infringement of or unauthorized access to digital media or other protected content. Any streaming media player or other device that violates this policy is prohibited from sale on Amazon.

It is your responsibility to source and sell products that do not promote, promise the facilitation of, or actively enable the infringement of or unauthorized access to digital media or other protected content. If you sell these products, we may immediately suspend or terminate your selling privileges and destroy inventory in our fulfillment centers without reimbursement. In addition, if we determine that your account has been used to engage in fraud or other illegal activity, remittances and payments may be withheld or forfeited.

The Amazon standard is technology protective insofar as it doesn’t ban the sale of Kodi boxes outright. That’s a good thing. I do worry a little, however, about the clarity of the language that defines the scope of prohibited activity. Specifically, the phrases “suggesting facilitation of infringement” and “actively enabling infringement” depart from the case law in ways that make their meaning hard to pin down. Distinguishing "active" from "passive" behavior can be especially tricky in copyright cases involving intermediaries and new technologies. I hope that Amazon has some clear internal guidance for the employees who will be implementing this new policy.

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