Cloud TV Service Boss Sentenced to 3 Years Prison Plus $505,000 Damages

Given the ongoing shift in the TV market away from terrestrial and satellite delivery in favor of IP-based services, cloud recording services are no longer the big deal they once were.

When TVkaista launched in Finland way back in 2007, storing video in the cloud certainly wasn’t taken for granted as it is now. The service came with a program guide and allowed users to record and store TV shows from 15 local channels. TVkaista said video would be retained for a month, allowing users to watch their recordings at a time of their choosing.

At the time, similar services were also being offered by several of Finland’s internet service providers but for the members of the Copyright Information and Anti-Piracy Center (CIAPC, also known as TTVK), this was a serious breach of copyright law. In letters sent to around 20 companies, TTVK warned that without proper licensing, these services were illegal and must be shut down.

TVkaista Faces Legal Action

In advance of TTVK’s letters being sent out, TVkaista’s CEO, technical director, and legal advisor, faced legal action for criminal copyright infringement and aggravated fraud. Claims that recording amounted to fair use were brushed aside, not least since the service actually recorded everything behind the scenes, contrary to customers’ belief that any recordings played back via the service were unique to them.

TVkaista said that since its service was similar to a VCR or a DVR, that would be legal under Finnish law since private copying is permitted for personal use. The TV companies whose content was being recorded and fed back to subscribers of TVkaista disagreed, arguing that no permission was granted for this type of use.

The broadcasters claimed that the TVkaista service effectively rebroadcast their content without a license. Copyright holders weren’t being paid for the use of their content and TVkaista wasn’t offering to share any revenue.

Service Deemed Illegal

The TV companies took TVkaista to court in 2012 and, in 2015, the Helsinki District Court deemed the service illegal, a decision confirmed by the Court of Appeal in 2017.

The CEO of TVkaista was convicted of criminal copyright infringement and embezzlement, and together with the service’s technical director and the company itself, was found jointly and severally liable for damages suffered by rightsholders. Financial issues would soon complicate the case, however.

In a statement issued by TTVK this week, the anti-piracy group says that after TVkaista was declared bankrupt in February 2014, the service actually continued, first through its Finnish .fi domain and later through a .com variant. The platform eventually shut down in 2015, but the bankruptcy estate had no funds available to pay the compensation owed.

“The trustee made a request to the police for an investigation into the ambiguities related to the bankruptcy estate. The suspect was the CEO of TVkaista Oy, who, however, could not be reached for prosecution before November 2023,” TTVK reveals.

Finally Held to Account

After the matter returned to court, it was determined that since 2011, customer payments to TVkaista totaling 1.8 million euros, including 380,000 euros after bankruptcy proceedings began, had been “diverted past” TVkaista’s accounting.

“The money had been transferred to the account of a company called Charm Noble Ltd in Hong Kong. However, since the contact person for all payment arrangements was the accused CEO, the court did not find credible his claim that the company’s business had actually been sold to a foreign person already in 2011,” TTVK reports.

“In support of its argument, the defense presented a deed of sale dated 2011, which had not been presented in previous TVkaista trials; however, they claimed that the business was sold already in 2009.”

On February 12, the district court of Länsi-Uusimaa found the former CEO guilty of all charges and sentenced him to serve three years in prison for gross accounting crime, gross dishonesty, and gross fraud as a debtor. He was also ordered to pay 409,600 euros (plus interest) to rights holders, plus 59,554 euros (plus interest) to other parties.

“The verdict confirms that copyright piracy is a planned and ruthless economic crime, the sole purpose of which is to collect as much money as possible for its creators,” says Jaana Pihkala, executive director of TTVK.

“Ever since the copyright infringement process started, the users of the TVkaista service paid large sums of money for the maintenance of content, while the authors, producers or legal intermediaries of which, have not been paid a single cent. This kind of activity weakens the opportunities to develop legal services and invest in new content, which is harmful not only to the rights holders but also to society as a whole.”