Liabilities without explicit consent in contracts

Question

I have been wondering for quite a while now about the following question and have been unable to get a definitive answer. I have asked lawyers who do not know for sure (and this is their field).

My question is if a User of some Service can be held liable for a legal infringement that the Service commits. That sentence was a bit confusing, so let me explain/elaborate:

In the case of Kazaa (I think it was called), a file sharing service, some users were held liable for the illegal downloading of music from this service. The users had to pay horrendous fines for in essence using the services which facilitated these actions. I am not sure if the Users signed a contract that says that they are liable for (knowingly or unknowingly) illegally downloading music from the Service. If a contract was signed, then that would definitely justify the fines to the Users, not the Service.

Here is a theoretical example: A company sells a service which allows users to mask their IPs so that it seems that they are in the continental US. A user, "Bob Doe", is using this service. The user does not have to sign any contracts or sign their consent to anything. This user attempts to use an unaffiliated service which is only available in the continental US (and a couple other places) and prohibits its use outside of it (a service such as this one is Netflix, I think). Bob Doe uses Netflix in Uzbekistan (definitely not a place where Netflix is available) through the first mentioned service that masks his IP. Is Bob Doe held liable for any legal complications resulting from his use of Netflix through the IP masking service or is the IP masker shielding him too (is this IP masking service held liable)?

I have also heard the argument that the User is causing the Service to commit an illegal act, hence the User is responsible (even though no contract was signed by the user).

My question basically is: If a User does not sign a contract saying that they are held liable for any illegal act which they 'cause the Service to commit', then who is held liable; who has to pay the fines?

Thanks a lot for any responses! All are welcome and greatly appreciated!

Answer 1

It is unlikely that you find a commercial provider of a service such as the one you describe that does not require its users to consent to some kind of agreement.

1. The service provider, in spite of the absence of a contract, is unlikely to be held liable or named as a defendant in proceedings unless it can be shown that they ought to have been aware of the activities being undertaken.
   If it is found that the service provider reasonably ought to have been aware, and could have taken steps to prevent the activity, they could possibly be named as a defendant, in addition to or instead of the end user.
   See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (2001) for a court decision with a similar fact pattern involving copyright infringement, rather than contract breach. It is also unclear whether such a case would be tried in the US, though it is likely.
2. The end user is likely to be in breach of Netflix's Terms of Use (relevant clause extracted below); in this case, Netflix would have to sue for breach of contract, and it is quite likely that judgement would be in their favour. The possible damages awarded would vary by jurisdiction.

Essentially - yeah, the user is almost certainly going to breach contract. There generally aren't fines for it, but a court may order restitutional damages and/or an injunction.

Netflix Terms of Use

4.3. You may view a movie or TV show through the Netflix service primarily within the country in which you have established your account and only in geographic locations where we offer our service and have licensed such movie or TV show.