Netflix Inc. has sent a cease and desist letter to a paid service that allows users to bypass Netflix’s geographic restrictions and access movies and television shows they wouldn’t normally be allowed to see.
The service, Turboflix.com, is being run by Turbo VPN Inc. and is the new venture of Ontario-based entrepreneurs that are in the process of shutting down crypto-currency exchange Vault of Satoshi. Vault of Satoshi co-founder Mike Curry told crypto-currency news site Coindesk in early January that he and his business partner were closing the exchange to focus on Turboflix full-time, because of the rapid growth of the service.
But Netflix may want to throw a wrench into those plans. The Los Gatos, Calif.-based company has sent a cease and desist letter to Turboflix “both for mimicking our logo and for promoting ways to circumvent content protections,” Netflix’s director of corporate communications and technology Cliff Edwards tells ITBusiness.ca in an email.
Edwards declined to comment further on the issue, saying Netflix doesn’t discuss legal matters.
ITBusiness.ca attempted to contact Curry for comment on this story, but he didn’t respond. According to his interview with Coindesk, Curry launched Turboflix about six months ago and attracted 10,000 users to the beta program. Currently, the Turboflix Facebook page has more than 20,700 likes.
The service charges users $3.99 per month to access a virtual private network (VPN). By connecting to the VPN, users can trick Netflix into showing them content that would normally only be available in other countries. Because movie and television distributors sell licenses for content by country, Netflix has to restrict what content its users can access accordingly. For example, Canadians can access about half the number of movies and TV shows compared to American Netflix users.
Using either a free or paid-for VPN to access the U.S. catalogue is popular in Canada. A July 2014 poll of 2,002 Canadians by Media Technology Monitor found that 32 per cent of respondents were Netflix users, and that one in three of those Netflix users said they had figured out how to access content meant for U.S. subscribers.
Sign up for a free trial on Turboflix and you’ll receive instructions on how to change the domain name service (DNS) settings on your PC, video game console, tablet or smartphone.
Netflix has recently gone on the record saying that users who bypass geographical blocks are violating the site’s terms of service. But it denied that it was making a new effort to crack down on users who were doing so.
Despite the cease and desist letter, Turboflix could continue to operate its business as usual, according to technology lawyer Monica Goyal, founder of Aluvion Law. While there is nothing illegal about offering a VPN service, the basis for Netflix’s legal argument may be focused on the marketing language used on Turboflix.com.
“Just by using the word Netflix on the website, they are using that trademark to sell a service,” she says. That would also be a violation of Netflix’s terms of service agreement.
Netflix’s claim of the similarity of Turboflix’s logo to their own could also be tenuous, she says. While a company can trademark both the words and design around its logo, there may be enough differences with the Turboflix logo to set it apart.
“It’s not a clear cut case,” she says. “You’d think there might be something more they could grab onto.”
While the Turboflix founders are based in the area south-west of Toronto, Turbo VPN Inc. is incorporated in Barbados, according to its terms of service. Barbados allows Canadian-owned enterprises to operate there at a lower tax rate by incorporating under its International Business legislation.
In an email to Vault of Satoshi users, the exchange stated it would be closing on Feb. 5 and all cash must be withdrawn before then. New deposits will not be accepted, and cash funds held after March 15 will be unobtainable.
Beginning March 15, cryptocurrency funds still deposited with the Vault of Satoshi will be subject to a monthly penalty of $250 or 25 per cent of the total balance, whichever is higher.
Vault of Satoshi’s servers will be shut off July 31 and “the company will absorb any balances left behind as of this date to cover any outstanding debt incurred from holding the funds.”