A trader who sold TV boxes which allowed viewers to watch subscription films and football for free has been given a suspended jail term.
Brian Thompson had denied breaking the law by selling the Kodi boxes, setting up the prospect of a landmark trial.
But appearing at Teesside Crown Court he changed his plea to guilty.
The 55-year-old, who runs Cut Price Tomo’s TV store in Middlesbrough, was given an 18-month prison sentence, suspended for two years.
Thompson, of Barnaby Avenue, Middlesbrough, admitted one count of selling and one count of advertising devices “designed, produced or adapted for the purpose of enabling or facilitating the circumvention of effective technological measures”.
The court heard Thompson had been selling “fully loaded” Kodi boxes – ones that had been installed with third-party add-ons that can access pirated content.
He had previously claimed the law was a “grey area” and said he wanted to know whether he was “doing anything illegal”.
Thompson had sold an estimated 400 boxes, earning him about £40,000, and losses to Sky were an estimated £200,000 in subscriptions, the court heard.
Judge Peter Armstrong said there could be no doubt now about the legality of the fully loaded boxes.
“Those who lawfully have to pay £50 a month or more on Sky or BT subscriptions, are done a disservice by people like you and those who buy these devices,” he said.
He said he was suspending Thompson’s jail sentence but others in the future may not be so fortunate.
Cameron Crowe, prosecuting, said streaming devices were not illegal if they were used to access free content.
But he added: “If they are designed, produced or adapted for gaining unauthorised access to copyright content or subscription services – such as Sky and BT Sports – they become illegal.”
What are Kodi boxes?
Some shops sell ready-to-use set-top boxes or television sticks preloaded with the Kodi software.
The developers behind Kodi say their software does not contain any content of its own and is designed to play legally owned media or content “freely available” on the internet.
However the software can be modified with third-party add-ons that provide access to illegal copies of films and TV series, or provide free access to subscription television channels.
Some traders sell Kodi boxes preloaded with third-party add-ons that can access pirated content. It is the sale of these “fully-loaded” boxes which was the subject of the case against Mr Thompson.
Trading Standards officers made a test purchase from Thompson’s Dundas shopping centre outlet in 2015 and a raid was carried out.
He moved premises after the raid and advertised on Facebook claiming to have “every film and box set ever made, even ones at the cinema”.
Paul Fleming, defending, said his client was a hard worker who had succeeded and failed in businesses over the years.
Kieron Sharp, the chief executive of Fact (formerly the Federation Against Copyright Theft), said one million illegal Kodi TV boxes had been sold in the UK in the past two years.
He said the perpetrators were not “Robin Hood characters”, but criminals.
“Selling pre-configured streaming devices that allow access to content you normally would have to pay for is illegal,” he added.