Is TV-kaista, The Finnish TiVo like service, In Trouble?

tvkaistaTV-kaista, a service that records all the programs from the most popular Finnish free television channels onto a web server from which you can view the programs by paying a low monthly subscription fee, seems to be in trouble.

In addition to the subscription fee, you have to have the Finnish ‘TV permission’ paid to use the service. Even then, the arrangement is not something that pleases the Finnish Broadcasting Company (YLE) who claims that the service is illegal. This time it’s not only YLE that’s unhappy, also according to Kopiosto (the common copyright organization of authors, publishers and performing artists in Finland) and the Finnish TV channels, TV-kaista is violating the Finnish laws.

The service is clearly beneficial for the end users. Regardless, YLE wants all the TV viewers buy the digital transmission box (Digiboxi) that is needed to view the programs from traditional TVs (not via computer screen).

I personally can’t see a clear reason why YLE and the Finnish copyright guardians would insist on such a policy? Do they want to control the time when the programs are viewed? If so, what good that would possible do? And after all, we all used to have VHS players before we got recording digital transmission boxes (Digiboxi), which are clearly not illegal. To make the picture even more bizarre, there is already a similar service (here in Finnish) by Saunalahti, a Finnish mobile phone operator, which is functioning well with zero lawsuits pursued against it.

TV-kaista CEO, Fredrik Husberg, does not think the Finnish Broadcastin Company has a legit case against it and asks to know what are the specific laws that have been violated. When we asked he confirmed that for some reason YLE has changed its stance that was already positive towards the new service earlier on. Other (commercial) Finnish TV channels are strongly backing YLE on this since for them, in the root of the problem is also the fact that you can effectively by pass all the ads by using TV-kaista.

According the rumors the parties in dispute are gearing up for a major battle by recruiting Finnish law firms. ArcticStartup have been told that for example the TV-kaista have recruited no less than two different Helsinki law firms.

We asked TV-Kaista’s CEO, Mr. Husberg, whether MTV3 or other players had offered to buy the startup but Mr. Husberg declined to comment. We also called MTV3 twice to get a comment and was told that a person responsible for the area of the business would contact us, but never did. An offer from MTV3 to buy TV-kaista would not be a surprise given the potential effect it can have to the commercial players ad sales. Also, MTV3 has just launched a new service called Katsomo, which effectively tries to be an online TV.

For those that have lived or followed the startup market in US, the TV-kaista case will not come as a surprise. Suing startups for IPR and other rights is not uncommon. Big and potentially very expensive law suits are an effective way to block disruptive startups to enter the lucrative markets.

We asked a Helsinki based lawyer specializing in technology and Internet startups, Jaakko Lingren of Hammarström Puhakka Partners Attorneys Ltd., about the case. He commented:

“I don’t know the TV-kaista case and thus can’t comment it. Generally speaking it is true that law suits against startups are very common in the US. The established players aim to protect the markets using lawsuits as weapons. On the other hand, by definition startup business models are novel and the legislation tends to drag behind. In Finland we have not seen such cases very often. Startups should always find out whether its business is working within the boundaries of the local legislation and in overall whether the company is conducting its business carefully. By doing this a startup can minimize the chances of getting sued by an established bigger company.”

Disclosure: Hammarström Puhakka Partners Attorneys is ArcticEvening sponsor.

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