How do VPNs protect identity without assuming legal blame?

Question

I understand that a VPN is basically a computer (or a collection of computers) that encrypts and proxies your internet traffic. One popular use of a VPN is to pirate software or movies. The VPN keeps you anonymous because the VPN itself is effectively downloading the content and then sending it encrypted to you (so no one can see the communication between you and the VPN). But now the VPN is downloading the illegal content! How can VPN providers do this without taking legal responsibility for having downloaded the pirated material? Is it simply because the VPN servers are in a country where the laws are different?

Answer 1

There are variants of safe harbour policy for digital copyrights laws in many countries. For example, in the US, digital copyright is ruled by the Digital Millennium Copyright Act (DMCA). DMCA Section 512 limits the liability of some entities from copyright infringement:

1. Transitory digital network communications
2. System caching
3. Information residing on systems or networks at the direction of users
4. Information location tools

VPN providers and ISPs squarely falls under transitory digital network communications limitations, so they're not considered liable for copyright infringement done by their customers.

Answer 2

You are mixing a technical and legal problem here. On a technical point of view, you are true, the VPN machine downloads illegal material and protects your anonymity. But on a legal point of view, it is just providing you an access to internet. So they have the same rights and obligations as any other Internet Service Provider, which indeed depends on the country.

For example in Western European countries, they are supposed to keep logs of all exchanges for at least 6 months and provide them to authorities in case of legal enquiry(*). So if you use a VPN that your local legal authorities can ask for logs, you should not use it for illegal activities. Anyway you should never have any illegal activities :-)

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(*) Of course, many VPN present a policy of not keeping any user statistics, so they should not be able to answer to a request from legal authorities. But in that case they could be blamed, not for downloading illegal content but for not having kept legal traces.