Is Netflix password-sharing "illegal"?

It is estimated that 4 million people in the UK share the same Netflix password, including Nadine Dorries, the former Culture Secretary, who has said that she shared her Netflix account with 4 people in several households.

In December 2022 the Government’s copyright, design, patent and trade mark department, the Intellectual Property Office, said that login and password-sharing might break copyright law as well as a streamer’s terms and conditions. The IPO said that it could be a criminal matter for the Crown Prosecution Service or the streamer to pursue. So far however neither the streamers nor the CPS has taken any legal action against subscribers.

Netflix has said it will start rolling out new features in 2023 making it easy for people currently “borrowing” someone’s account to transfer their profile to their own new account, as well as enabling other customers to create "sub-accounts", paying a little extra for family or friends to “share”.

Netflix and other streamers have so far been wary of alienating a large section of their users if they started turning off all shared subscriptions or even suing their subscribers and/or the “imposters” for lost revenue. Netflix’s approach seems to be one of gentle persuasion rather than all-out legal action.

Is it illegal to password-share?

The Copyright Designs and Patents Act 1988 is the principal piece of legislation dealing with copyright in the UK, and it reflects international copyright treaties and law. Copyright exists in the films and television series that Netflix and other streamers provide. Each of these films and television series carries a copyright statement at the end, for example The Hunger Games might state “© Lionsgate 2012, All Rights reserved” at the very end of the film.

Lionsgate is the studio which financed and distributed this film and is its copyright owner. Lionsgate can choose to whom it licenses the film. Netflix pays a licence fee to Lionsgate for the right to screen Lionsgate’s copyright content on its platform. Netflix has a licensing agreement with each of its content providers such as Lionsgate.

It also has terms of use between itself and the users of its streaming service. In Netflix’s user terms for viewers (updated 1^st November 2022) it states in clauses 4.2 and 5:

“4.2. The Netflix service and any content accessed through the service are for your personal and non-commercial use only and may not be shared with individuals beyond your household.”

and

“5. Passwords and Account Access. The member who created the Netflix account and whose Payment Method is charged (the "Account Owner") is responsible for any activity that occurs through the Netflix account….We can terminate your account or place your account on hold in order to protect you, Netflix or our partners from…fraudulent activity.”

Netflix seems to be allowing a “household” to share but does not define what a household means. The normal meaning is probably all the people living together in one house, flat or other dwelling. Meanings change, however: a household used to include a family and also their servants, but that meaning is not used much nowadays.

A household would surely include parents and their children, but would it still include a daughter when she went to university or travelled on a gap year?

Netflix already sends out automated messages when someone logs into an account from a new device and/or in a new part of the world, so they clearly do not expect the members of a “household” to view content only when they are in the registered “house”.

This lack of clarity in Netflix’s terms and conditions would make “sharing” difficult for them to police in some situations.

The terms of the licence from say Lionsgate to Netflix are likely to impose a duty on Netflix to do all it can to stop copyright in that film being infringed. Netflix might be in breach of its licence with a film’s copyright owner if it did not take all reasonable steps to avoid people simply watching copyright content for free or otherwise abusing the Netflix platform.

A CPS spokesperson told the BBC in 2022 that:

"Any decision to charge someone for sharing passwords for streaming services would be looked at on a case-by-case basis, with due consideration of the individual context and facts of each case. As with all cases, if they are referred to the CPS by an investigator for a charging decision, our duty is to bring prosecutions where there is sufficient evidence to do so and when a prosecution is required in the public interest."

It is probably a question of degree. The specific facts of each case of “sharing” will determine whether someone is acting inside the rules or not and whether the streamer or the CPS does anything about it. The courts may have to consider a teenage child who views Netflix content on the train while travelling to the start of their next term at college; the subscriber’s spouse who watches a film when on holiday abroad with a friend; or a grown-up child of the family who now has a separate home, a partner and children of their own.

Why would there be a prosecution?

There are reasons to think that a prosecution might be possible in some scenarios:

• Using someone else’s streaming account in the knowledge that it was outside the terms of the customer’s contract might be breach of copyright as well as theft;
• It would be hard in some situations to argue that the use of the account was accidental or innocent;
• A defence of ‘everyone does it’ is not a strong one.

Why would there not be a prosecution?

• The streaming businesses are aware that this is happening but have done very little to stop it;
• They could easily use technical measures to prevent it, such as facial recognition software, if they wanted to;
• The streamers are in a war for customers, and no doubt their bean-counters have judged that giving their subscribers the ability to add people works for the streamer better than trying to stamp it out;
• The Police and CPS are very unlikely to do anything about all this, given all the other crimes such as burglary and assault which they are already unable to cover.

The future

Netflix and other streamers know that they have to tread a fine line between keeping their existing user-base happy, not losing out to people abusing the system, and not acting in breach of their licences with the copyright holders.

There is a grey area on the definition of “household” which may need to be cleared up.

At some point, streaming services may introduce technical measures to make it harder for its customers to abuse the system. It is unlikely though that that will happen as long as streamers are trying so hard to win and keep customers, and not to drive them away.

For more information contact Brian Levine Head of Media, Entertainment and Intellectual Property email brian.levine@battens.co.uk 01935 846258.

Update 27 January 2023

Netflix has announced this week that it intends to stop password sharing across different "household" locations from March 2023. However, it will still allow the primary password-holder/subscriber to view Netflix on their smartphone, tablet or laptop when away from home. Netflix seeks to define "household" as one unique place and will no doubt update its terms and conditions to reflect this. Users will, Netflix says, be given the ability to allow someone else in their "household" to share their password for the payment of an additional monthly fee. So Netflix is trying to regularise the current ambiguous situation affecting the estimated 4 million Netflix password-sharers in the UK.

This step could mean that Netflix might be more willing to take action against anyone deliberately subverting their new policy, although time will tell. It will still need to define "household" unambiguously in its terms and conditions, as passwords currently might be shared outside of the normal meaning of "household", such as between a group of friends.