The War against ISDs – A New Hope

Kok Eu Jin discusses the recent decisions by the Malaysian courts pertaining to the sale of illicit streaming devices (ISDs).

20 September 2021

The Covid-19 pandemic has brought about a marked shift in the way media and entertainment are being consumed by the masses. This challenging season has seen the number of subscriptions for streaming services such as Netflix and Disney+ soaring to new heights as production studios transition from theatrical releases of their blockbusters to the online medium.

Parallel to this, the use of ISDs, or colloquially referred to as TV boxes by Malaysians, has gained traction among members of the public. Briefly, ISDs are usually preloaded with illegal applications that enable consumers to access pirated content. A survey conducted by YouGov on behalf of the Asia Video Industry Association’s Coalition Against Privacy back in 2019 found that 23% of Malaysians use ISDs to stream pirated content.

While users of ISDs may be unaware of the adverse effect and damage these devices may potentially cause to Malaysia’s entertainment and media industry, it is estimated that the industry stands to lose RM3 billion (approx. US$723 million) annually due to digital piracy thereby putting thousands of legitimate jobs at risk. The government is further expected to lose RM500 million (approx. US$121 million) in taxes. Assuming this worrying trend persists, the continued use of ISDs in the long run would disincentivise creators from producing further creative works.

In view of the detrimental impact ISDs have on the industry and the country’s economy, the Malaysian Communications and Multimedia Commission (MCMC) and the National Film Development Corporation (FINAS) have taken proactive steps to address the issue of digital piracy, particularly in relation to the sale of ISDs to the public. Their efforts have led to several successful enforcement actions against sellers of ISDs and their subsequent conviction by the courts.

In August 2020, FINAS investigated the sale of pirated local films on the popular e-commerce platform, Shopee, which led to the removal of the infringing listings. A spokesperson for FINAS commented that it would be taking stern action against parties involved in the illegal distribution of pirated films in violation of sections 22(1) and 25(1) of the National Film Development Corporation Act 1981, which imposes a fine of up to RM50,000 (approx. US$12,500) or a maximum imprisonment term of two years or both.

On 8 February 2021, an IT company was charged in court under section 41(1)(ha) read with section 36A(3) of the Copyright Act 1987 (“CA 1987”) for selling technology or equipment for the purpose of the circumvention of technological protection measures on copyrighted broadcast works.

Separately, a 46-year-old woman pleaded guilty to a charge of possessing six ISDs which enabled users to illegally stream copyrighted content. The offender was fined RM30,000 (approx. US$7,500) under section 232(2) of the Communications and Multimedia Act 1998 for the fraudulent use of network facilities, network services, application service and content application.

In a recent landmark decision by the Kuala Lumpur Intellectual Property High Court, Measat Broadcast Networks Sdn. Bhd. (“Measat”), the service provider of the local satellite television and IPTV ‘Astro’, had instituted an action against a seller of ISDs. It was declared by the court that the sale, offer for sale, distribution and/or supply of ISDs which are able to provide unauthorised access to copyrighted works constitute copyright infringement under the CA 1987. The trial judge observed that if the ISD contains a software or application that is able to provide unauthorised access to copyrighted works, then the sale of such ISDs would be deemed to have infringed copyright under the provisions of the CA 1987. The court’s decision was much welcomed by rights holders and other stakeholders in the entertainment industry as it paved the way for them to bring civil action and seek relief against sellers of ISDs.

With the sale of ISDs continuing to be rampant, the Enforcement Division of the Ministry of Domestic Trade and Consumer Affairs (“ED”) remains as the authority for conducting investigations into enforcement actions in respect of such sale of unauthorised or uncertified ISDs. Rights holders who intend to carry out any administrative action against sellers of ISDs are advised to conduct prior investigations on targets which are selling ISDs to secure any useful evidence which may include the identification of their premises or storage facilities prior to lodging a complaint to the ED for a raid action to be conducted.  

 

Eu Jin is an Associate at Wong Jin Nee & Teo. His practice focuses on enforcement, brand protection, as well as commercial and compliance matters including data protection issues.