Opinion: Is Ad blocking the next legal battleground?

Legal position on browser ad-blocking in New Zealand is likely to be influenced by what happens in the US

Consider these two facts: Fact 1: many of the world’s largest internet companies, including Google and Facebook, derive most of their revenue from serving up online advertisements.

Fact 2: one of the most popular browser add-ons is Adblock Plus, free software designed to eliminate online advertising from a user’s browser, with the Firefox version alone recording close to one million downloads per week.

You don’t need to be a financial guru to see the potential problem here. Could browser ad blocking one day become so prevalent that it jeopardises potentially billions of dollars of online ad revenue, and the primary business models of many online and new media businesses? If so, it will inevitably face legal attack.

The concept of browser ad blocking software is simple: when a user opens a web page, the software detects any advertisements included in the page and automatically removes them while leaving the rest of the page intact. The user gets to view just the content they wanted (for example, the article or page of search results) without being bothered by banner ads, sponsored links or other advertising. Other claimed benefits include faster loading pages, reduced bandwidth, and reduced tracking of surfing habits. There is little if any downside for the user, but a big potential downside for the website and its advertisers whose paid ads are silently zapped before being seen – and perhaps clicked on – by the user.

Currently, advertising-supported sites seem unperturbed. Google itself – the world’s largest online advertising provider – offers Chrome-versions of Adblock directly from its official Chrome Web Store (somewhat incongruously boasting that it can even block video ads from Google’s own YouTube site). And there seems little cause for concern at present: online advertising is thriving, which suggests that ad blocking is not, statistically, too widespread.

But what legal steps might be taken if browser ad blocking does reach a point where it is seen as a threat to bottom lines and business models?

The legal position
There does not appear to have been any court case to date involving browser ad blocking. This may be an indicator of the lack of concern or loss, or of the difficulty of such a legal challenge, however there have been some US legal battles involving other forms of ad blocking/skipping that help set the scene for future legal fights.

An early example arose in the famous US “Betamax case” proceedings of the late 1970s and early 1980s in which studios challenged the legality (under copyright law) of home video recorders. The studios claimed, in part, that “the commercial attractiveness of television broadcasts would be diminished because Betamax owners would use the pause button or fast-forward control to avoid viewing advertisements”.

The Court rejected that claim because, it said, the viewer must still receive and record the commercials and then “must fast-forward and, for the most part, guess as to when the commercial has passed”, a process which the Court said “may be too tedious”.

Fast-forward to 2002, when several US networks sued the maker of the ReplayTV DVR in part due to its commercial-skipping features, alleging that such technology “attacks the fundamental economic underpinnings of free television”. The case effectively ended after ReplayTV went into bankruptcy a short while later, so no legal precedent was set.

In a 2003 case involving file-sharing service Aimster, judge Richard Posner wrote that, based on earlier cases, commercial-skipping “amounted to creating an unauthorised derivative work … namely a commercial-free copy that would reduce the copyright owner’s income from his original programme, since ‘free’ television programmes are financed by the purchase of commercials by advertising”. However, commercial-skipping was not the focus of that case.

The issue was revived earlier this year, with CBS, Fox and NBC suing Dish Network over its commercial-skipping technology, saying they were doing so “in order to aggressively defend the future of free, over-the-air television”. The legal basis of (part of) the claim is, in essence, that commercial-skipping infringes copyright by modifying the broadcast stream presented to end users.

It is not a particularly big leap to apply those arguments to browser ad blocking.

Could a legal attack be launched on browser ad blocking?

Two areas of law that could potentially be used in efforts to attack the legality of browser ad-blocking are:

1. Copyright law: it could be claimed that ad blocking constitutes copyright infringement, by causing unauthorised modification to a web page (which in many cases will be protected by copyright) – that is, it creates an unauthorised adaptation of the page. As mentioned above, this has been the basis of television commercial-skipping lawsuits, and has received supportive comment from US courts.

2. Trade practices / commercial laws: it could be claimed that the use of third party software to remove paid advertising constitutes interference with contractual relations, eg an advertiser and a website have entered into a contract whereby the site will display an advertisement in return for a fee or commission, but this arrangement is being intentionally stymied by ad blocking software. Alternatively, it could be claimed that ad blocking software induces the breach of website terms and conditions that prohibit ad-blocking (if such a term is present, which currently is relatively rare).

Both of these scenarios have significant legal and practical challenges in the context of browser ad blocking, but are not inconceivable if the targets are the identifiable distributors of the ad blocking software or the maintainers who update “filter lists” that the blockers commonly rely on, as opposed to targeting end users. Likewise, if a browser distribution started to bundle and enable ad-blocking features by default, it could become a target for legal action.

Another possibility is specific regulation, where a law is passed that specifically bans the use or distribution of ad blocking software.

Similar precedent is found in laws banning the sale of digital rights management “circumvention devices” (ie in New Zealand, s 226A of the Copyright Act 1994 bans the sale or distribution of such devices in certain circumstances).

Notably, New Zealand’s law does not ban the private use of DRM circumvention devices. This partly reflects policy decisions about intellectual property and user rights, but also acknowledges the practical difficulty of banning private use of such devices.

It would be draconian, as well as practically impossible, to attempt to prevent users from carrying out their own ad-blocking. Attempts to prevent the creation or distribution of “filter lists” raises significant freedom of speech issues.

As with file sharing, legal and policy direction on browser ad-blocking in this country will likely be heavily influenced by what happens in the US in the coming years.

This article provides general information and does not constitute advice. Professional advice should be sought on specific matters.

Guy Burgess is a lawyer advising on commercial and IT law at Clendons barristers and solicitors, Auckland. He can be reached at guy.burgess@clendons.co.nz