District Court Rules Online Video Streaming Subject to VPPA Restrictions

The ruling arose in In re Hulu Privacy Litigation, a putative class action lawsuit against the online video streaming company Hulu, which is alleged to have shared consumers’ video viewing information with third parties including online ad networks, metrics companies, and social networks.  Hulu moved to dismiss the plaintiffs’ VPPA claim, arguing that it was not a "video tape service provider" because the definition of that term — "any person, engaged in the business . . . of rental, sale, or delivery of prerecorded video cassette tapes or similar audio visual materials" — means the statute only regulates businesses that sell or rent physical objects, and not companies that transmit digital content over the web. 

U.S. Magistrate Judge Laurel Beeler disagreed, finding that the term "similar audio visual materials" was a "broad phrase designed to include new technologies for pre-recorded video content."  The court also looked to legislative history to determine that Congress was concerned about protecting the confidentiality of viewing preferences regardless of the business model or format involved, and that lawmakers used the term "similar audio visual materials" to ensure that the VPPA’s protections "would retain their force even as technologies evolve."

The court also rejected Hulu’s argument that the data sharing did not violate the VPPA because it fell within the exception for disclosures "incident to the ordinary course of business," as well as the argument that the plaintiffs were not "consumers" under the VPPA because they had not paid Hulu to rent or purchase video content. Judge Beeler ruled that it was premature to determine whether the disclosures in question were made in the "ordinary course of business," which the statute defines as "debt collection activities, order fulfillment, request processing, and the transfer of ownership."  The court also found that because the term "consumer" is defined as any "renter, purchaser, or subscriber of goods and services from a video service provider," it was not necessary for the plaintiffs to have paid Hulu to rent or purchase video content to be a “subscriber,” so long as they signed up for and used the Hulu streaming service, which the plaintiffs claimed they had.

This ruling significantly expands the scope of the VPPA and could result in additional litigation against other online video streaming providers.  The case mainly turns on whether “similar audio visual materials” are limited to physical goods like cassettes and DVDs or to digital versions of these goods, as Magistrate Beeler found.

Subscribers can agree to allow a provider share viewing choices, but, it may be difficult for online providers to get consent. The VPPA requires “the informed, written consent of the consumer given at the time the disclosure is sought” – a standard that may be extremely hard to meet if every disclosure must be separately consented to. The House of Representatives recently passed an amendment to the VPPA allowing consent to be given electronically and once for all time. The Hulu case may be cited by advocates for updating the VPPA if it is to be applicable to Internet distributed video.

Authored by Michael Epshteyn.