Netflix bound by copyright rules, contracts with studios

If you’re like many Canucks, you haven’t let being north of the U.S. border stop you from watching your favourite TV shows and movies on Netflix. But now the service is cracking down on users who disguise their location.

Canadians won't get arrested for accessing U.S. site, but they're not in the clear

For some Canadians, the streaming party may be over. Netflix says it will crack down on users who disguise their location. (Scott Eells/Bloomberg)

So what if Canadian Netflix doesn't have 30 Rock?

If you're like many Canucks,you haven't let being north of the U.S. border stop you from watching your favourite TV shows and movies. An estimated 1.92 million Canadians reportedly use proxy services and virtual private networks to access the American version of the site.

But that might be about to change. Netflix announced Thursday that it will crack down on people who hop the virtual fence.

Why can't Netflix just chill? Here's what you need to know.

Copyright issues lead to geofencing

"Copyright gives the owner of a show or movie the right to [sell] that show or movie, and a copyright owner can divide that right up any way it wants to," says Ariel Thomas, a copyright lawyer at international business law firm Fasken Martineau.

There are all sorts of reasons why Netflix may only buy the American rights to a movie or show. A common one is likely that someone else, perhaps a competitor like Shomi or CraveTV or even a traditional TV station, already owns the Canadian rights to it, says Thomas.

Although it's possible to buy the global rights to show a piece of content, the rights tend to be divided up in order to maximize profit.

Most of Netflix's contracts with rights owners are private, so we don't know exactly how much legal pressure they're usually under to enforce geofences. But one  leaked 2014 contract between Netflix and Sony compelled the streaming service not only to geofence its site, but to frequently update its technology to stop people from jumping the fence.

Many ways to skirt the restrictions

Virtual private networks (VPNs) and proxy services thwart Netflix's country-specific restrictions by making it appear that your computer is in the location of your choice. Some websites provide access to these tools free, while others charge a subscription fee.

If you use a VPN or proxy service, you're not alone. A 2014 poll showed that a third of Canadian anglophone Netflix users have employed these sneaky tools to access the American site.

You won't be arrested

"A lot of people, when they hear the word illegal, they think of the cops showing up at their door," says Thomas.

Stealthy streamers can breathe a sigh of relief — you won't go to jail for using a VPN. (But if you're a VPN service provider who's profiting from others dodging Netflix's restrictions, you may want to watch out).

You are, however, in violation of the Copyright Act, according to Thomas.

"The copyright owner could sue you and obtain a remedy from you in court," she says. Translation: you could be forced to pay up.

The good news for those on the sketchy side of the law is that no Canadian has been sued for using a VPN to access another country's Netflix service.

Playing whack-a-mole with users

As VPN providers become more technologically sophisticated, Netflix finds itself forced to seek out geofence-hoppers who are getting better and better at hiding.

In January 2015, Netflix spokesman Cliff Edwards told CBC News that "detecting VPN usage is like playing a game of whack-a-mole. By their very nature, it's difficult to tell how many people are bypassing geofilters."

Netflix wants to go global

The company didn't immediately respond to a request from CBC News for an interview. But Netflix's chief product officer Neil Hunt recently told the Globe and Mail that "our ambition is to do global licensing and global originals, so that over maybe the next five, 10, 20 years, it'll become more and more similar until it's not that different."

In a blog post, Netflix's vice-president of content delivery, David Fullager, reiterated that the company's ultimate goal is provide the same movies and TV shows worldwide. "If all our content were globally available," he writes, "there wouldn't be a reason for members to use proxies or 'unblockers' to fool our systems into thinking they're in a different country than they're actually in."

The bottom line? Netflix wants you to be able to binge-watch all your favourite American shows, but realistically it won't be happening any time soon.

Hey, there's always DVDs.