January 2016 saw the TV streaming giant Netflix ban the use of VPN’s and proxies to stream television programmes and movies that were unavailable in the UK.
We spoke to the intellectual property experts at Morningside IP to find out exactly why Netflix kicked up such a fuss when it comes to protecting their intellectual property.
Using a proxy server or similar software gave Netflix users access to a far wider selection of titles than the standard Netflix subscription. However, when you look at the fine print, this action violates the terms of service that users agree to when they set up a subscription.
VPN software works by passing your internet connection through a third party before connecting to the server. Usually, VPN’s are used to mask IP addresses, therefore hiding the physical location of a computer.
Netflix: How IP fits into the model
As part of the overall business model, Netflix is aggressive about using its patents to ensure that it keeps its advantage over competitors. For example, in 2006 Netflix filed a patent infringement lawsuit against Blockbuster seeking to halt its rival’s online rental operations.
With respect to the streaming service, Netflix draws up deals with the owners of the programs as they have the full and final rights to their shows. However, Netflix also demands the rights to reproduce the content (via streaming) which means they need a license for reproduction.
Netflix is extremely strict in terms of their patent registration history, from the mail order DVD service that started Netflix, down to their banning of VPN use.
A comment from David Fullagar, the VP of Netflix focuses on the issues Netflix as a company is having when globally licensing content.
A recent investigation in the UK revealed that the average British Netflix user pays 6% more per month and receives 86% less content (movies and television shows).
One way which Netflix could solve the problem is to harness its power as the largest streaming service to put pressure on the program creators to grant licenses globally, rather than only for specific countries or regions.
That would make it less likely that users in locations with limited content will employ underhanded tactics to access the content they want to see.