A controversial internet security law that some have called “the worst law in technology,” may now turn millions of password sharing consumers for services like Netflix and Hulu into “unwitting federal criminals,” according to the dissenting opinion on the case. On July 5th, the United States Court of Appeals for the Ninth Circuit issued an opinion which found, in part, that sharing passwords is a crime prosecutable under the Computer Fraud and Abuse Act (CFAA). This decision came out of the case of David Nosal, a former employee at the “headhunter” firm Korn/Ferry International. In 2004, Nosal left the firm after being denied a promotion; however, he stayed on working as a contractor, while simultaneously preparing to launch a competing search firm. Although his own computer access had been revoked, Nosal continued to access Korn/Ferry’s candidate database, using the login credentials of his former assistant. Nosal was ultimately charged and convicted of conspiracy, theft of trade secrets, and three counts under CFAA.

Nosal was convicted under the CFFA for violating a clause that criminalizes anyone who “knowingly and with intent to defraud, accesses a protected computer without authorization.” Although CFAA is understood to be an anti-hacking law, this clause has been applied to numerous cases that don’t quite amount to actual “hacking.”

Judge Reinhardt, delivering the dissenting opinion, argued that the new decision also makes “consensual password sharing” a prosecutable offense. Reinhardt further argued that the decision “loses sight of the anti-hacking purpose of the CFAA, and … threatens to criminalize all sorts of innocuous conduct engaged in daily by ordinary citizens.” Many commentators believe that this “innocuous conduct” may include the sharing of passwords for such services as Netflix, Hulu, and HBO Go.

While sharing passwords is, technically, a violation of the terms of service for most streaming services, companies like Netflix and HBO have been outspoken in saying that they don’t view password sharing as a major cause for concern for the companies. HBO’s CEO stated that password sharing “has no impact on the business,” adding that he believes it is a “terrific marketing vehicle for the next generation of viewers.” Although the companies seemingly don’t view the practice as an issue, some reports have shown that the practice cost the sector nearly $500 million dollars in 2015.

At the moment it seems unlikely that this decision will be used to prosecute college students sharing their Netflix passwords so they can stream the newest season of “Orange Is the New Black.” However, if streaming companies decide they want to get a piece of that $500 million, some Netflix users may get to experience “Orange Is the New Black” firsthand.

Sources:

http://fortune.com/2016/07/10/sharing-netflix-password-crime/

https://www.theguardian.com/tv-and-radio/2016/jul/08/sharing-netflix-spotify-hbo-passwords-federal-crime

http://variety.com/2015/digital/news/netflix-hbo-password-sharing-illegal-1201538908/

For more information on this topic, please visit our Data Breaches & Hacking service page, which is part of our Technology & Data practice.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX. The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights. The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. Additional information about the Data Breaches and Hacking law firm and its technology and data attorneys may be found at www.klemchuk.com.

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