THE COMPUTER FRAUD AND ABUSE ACT: ARE YOU STILL WATCHING?

• Author: Samaei, Alex N.

1. Introduction

   New media-entertainment powerhouses, such as Netflix, are beginning to chip away at traditional cable's customer base. (2) In part, this is because up-and-coming technologies strategically offer cheap, convenient access to a large database of quality entertainment. (3) Consumers enjoy the ability to sit down and watch their favorite TV show or movie at their leisure. (4) As a result, more companies have invested in this industry and have created their own media-streaming services in order to capitalize on these potential profits. (5) This makes perfect sense, considering the fact that streaming is one of the "fastest-growing consumer sub-segments" and is projected to reach $10.1 billion in 2018, up from $3.3 billion in 2013. (6)

   Albeit, the video streaming industry is burdened with ever increasing expenses such as: data congestion, program updates, software, licensing, security, and advertising costs. (7) While businesses in this industry have had some success, one must wonder if the benefit will always outweigh the annual $500 million dollar cost that these businesses incur? (8) Yes, $500 million dollars is estimated dollar amount that video streaming services are losing each year due to unauthorized use of subscriber account log-in information. (9) Sharing passwords with unauthorized users is "forbidden" by many online company's user agreements, such as Facebook. (10) According to Consumer Reports in January 2015, (11) this did not stop "46% of video streaming users [from sharing] passwords with people outside of their households." (12) This phenomenon however, has not gone unnoticed as jurisdictions have voiced their concerns on the matter and have adopted criminal statutes for unauthorized distribution of more sensitive log-in information. (13) It is clear that companies are suffering from unauthorized users accessing their services for free, but the question is, whether imposing criminal consequences typically reserved for severe computer crimes are a reasonable means to ending this industry's multi-million dollar issue? (14)

   This Note will explore the various rationales for applying criminal statutes to the unauthorized use of Netflix account log-in sharing and will determine which solution is the most appropriate given the effect it might have on the market as well as individual users. Part II will discuss the evolution of video streaming services and log-in information technology. Part III will introduce the current perception of password sharing under the law and the business practices in the industry. Next, Part IV will provide support for the conclusion that given the organic development of video streaming services, along with the technology surrounding them, there must be a natural progression in the law that does not include criminal charges for this very common form of password sharing.

2. History

   1. The Technology

      Today's most popular video streaming services, Netflix, Hulu (15), and HBOGO, (16) have continued the transformation of the entertainment industry which began with cable television in 1948. (17) In the two decades following the creation of cable television, investments by large corporations such as Cox, (18) allowed for the development of new technology to import distance signals which provided users with more programing options in the form of new television stations and shows. (19) The growth in subscribers stalled for several years when the Federal Communications Commission ("FCC") placed restrictions on "importing distant television signals" (20) in metropolitan areas. (21) By the 1970s, this restriction was lifted, and after massive efforts on multiple political stages, industry growth was revived. (22)

      In 1972, the Home Box Office (23) ("HBO") became the first pay-tv (24) network and used this success to begin utilizing satellite transmissions in order to increase the reach of cable. (25) "Satellite delivery, combined with the federal government's relaxation of cable's restrictive regulatory structure, allowed the cable industry to become a major force in providing high quality video entertainment and information to consumers." (26)

      During the 1990s, cable companies invested an additional $65 billion to upgrade their systems to broadband networks (27) in order to accommodate their ever increasing client base. (28) Introducing broadband allowed cable companies to sell high-speed internet, (29) bringing the World Wide Web into the majority of American households. (30) In April 1995, these technological advancements allowed ESPN SportsZone (31) to show the world's first live-streaming event to thousands of online subscribers. (32) By this point, smaller companies like Progressive Networks (33) had caused Microsoft to work on their own video streaming platform. (34) During this time, competition increased as companies attempted to enter the market with new innovations believing that video steaming had the potential to become its own profitable business. (35) By 1997, most companies had resorted to Flash (36) for watching and streaming videos online, but Microsoft and Apple tried to innovate around this technology. (37)

      Eight years later, YouTube (38) was created, enabling users to upload, share, and view videos. (39) The following year, Google (40) purchased the relatively new YouTube platform for $1.65 billion. (41) As a result, there was a flood of interest in video streaming which was evident by Netflix's transition of their main business model from its DVD (42) delivery-service to online streaming in 2007. (43) By March 2008, Disney (44), NBCUniversal (45), and News Corp. (46) tried to "hop on the bandwagon" by creating Hulu. (47) Rapid growth in the industry became prevalent as increased projected profits and consumer internet access became standard. (48) Netflix went from making $277 million during their best quarter in 2006 to $444 million in 2009--a staggering 160% increase in profits over a three year span. (49)

      What made Netflix so appealing to consumers was the low subscription price for access to TV shows and movies when compared to what would normally be paid for standard cable subscriptions. (50) As a result of this increased popularity, profits rose and cable services experienced a steady decline in subscribers. (51) Today, more users are deciding to take "internet only" packages which theoretically allows them to use video streaming in place of traditional cable. (52) This has created a bottleneck between cable, Netflix, and YouTube because during peak usage hours, Netflix and YouTube make up 50% of total internet bandwidth in North America. (53) In order to provide high quality video with little buffering, Netflix agreed to pay fees to cable companies in order to connect directly to broadcasting "backbone net-works." (54) Netflix also incurred additional costs as it has expanded to 130 new countries in 2016 and is attempting to customize its licensed and original programing to each of those client bases. (55) Due to these high costs, it is only a matter of time before video streaming service companies decide that the additional cost of unauthorized users is not sustainable for their successful business model. (56)

   2. The Law

      In the 1980s there was an increasing demand for statutes specifically addressing computer-related crimes. (57) "Although the wire and mail fraud provisions of the federal criminal code were capable of addressing some types of computer related criminal activity, neither of these statutes provided the full range of tools necessary to combat new-age crimes." (58) In response, Congress created the Comprehensive Crime Control Act of 1984 (59) as a means of protecting federal and financial institution computers from unauthorized access by adding more inclusive sentencing guidelines. (60)

      Over the next two years, Congress continued to examine this emerging area of the law and amended 18 U.S.C. [section] 1030 to encompass modern Computer Fraud and Abuse Act (CFAA). (61) This updated bill was designed to limit federal jurisdiction "to those cases involving a compelling federal interest." (62) Over time, the CFAA was amended eight more times, each time broadening the scope of the Act's reach, with the most recent and drastic changes occuring in 2008. (63)

      Some of the most expansive changes included eliminating: the requirement in 18 U.S.C. [section] 1030(a)(2)(C) that information must have been stolen through an interstate or foreign communication,... the requirement in 18 U.S.C. [section] 1030(a)(5) that the defendant's action must result in a loss exceeding $5,000,... [and] broaden[ing] the definition of 'protected computer' in 18 U.S.C. [section] 1030(e)(2) to the full extent of Congress's commerce power by including those computers used in or affecting interstate or foreign commerce or communication. (64) With the legal expansions of the statute, along with technological advancements, there is a plethora of discussion in trying to decide how this relates to different criminal actions. (65)

      Many video streaming providers have publicly stated that they are "fine with password sharing for the time being." (66) To no surprise, studies continue to attribute the rise in subscription prices as partially part of an attempt to compensate for the additional overhead cost of millions of users who do not pay for the services. (67) One of the main reasons companies in this industry continue to have such a "relaxed policy" when it comes to password sharing, is because they do not want to risk losing potential future growth." (68) While this is fair point, without technological and business solutions being further explored, it makes little sense for the current law to be drawn so broadly. (69)

3. Premise

   Netflix subscribers must accept the companies "Terms of Use" (70) before receiving access to the service. (71) This contract incorporates the "End User License Agreement" (72) and "Privacy Statement" (73) into its terms which further...