Understanding Copyright Trolls: Transforming Online Piracy into a Sue-to-Settle Business Model or Zealously Defending Authors’ Digital Rights?

Log on to your personal laptop while at your residence, place of business, on a non-password protected wireless connection, or even at local coffee shop that provides complimentary Wi-Fi ancillary to their main business.  Subsequently, perform a basic Internet search for your favorite movie or television program and include the phase “watch online free.”  Almost instantly, online users are able to practice the most rudimentary form of online copyright infringement originating from various wireless routers as access points.  Further, countless cybernauts regularly practice such infringing activities on a daily basis in order to circumvent paying a noncommercial use levy.  This can theoretically transform today’s average Internet user into a “grand larcenist” due to the fact that on an average day “even the most law-abiding American engages in thousands of actions that likely constitute copyright infringement.”[1]  Additionally, Internet users are able to download copyrighted material online with ease through various peer-to-peer file-sharing services such as PirateBay and BitTorrent.[2]  However, the growing possibility exists that the account holder for the wireless service used to download the copyrighted material- whether it be a parent, roommate, or even you- could find a settlement letter in the mail in the near future.

Taking a page directly from the patent trolls, “copyright trolls” seek to transform copyright infringement suits into a revenue model by employing the threat of statutory damages to extract rapid settlements from Internet users accused of online copyright infringement.[3]  It is important to note that these trolling firms are generally not the original owners of the copyrighted work.  Instead, they acquire the exclusive bundle of rights afforded to the content creators by the Copyright Act of 1976 (“ Copyright Act”) in order to pursue copyright infringement actions against alleged infringers.  These settlement letters disbursed on behalf of the rights holders or the trolling firms typically request several thousand dollars to settle the matter out-of-court regardless of whether you personally downloaded the protected work in question.  Strategically, these settlement amounts are less than the cost of hiring an attorney to defend against the claim in court.  Within a boilerplate settlement letter, the account holder to the wireless router or alleged downloader will be accused of willful copyright infringement, which is subject to $150,000 in statutory damages under 17 USCS § 504(c)(2) Remedies for Copyright Infringement.[4]  Simply put, “copyright trolls” seek to file muddy infringement claims that still lead to the discovery phase in litigation.  Many of these firms employ forensic companies to monitor and harvest vast amounts of Internet Protocol (“IP”) addresses associated with downloading the rights holder’s copyrighted work from websites such as BitTorrent.[5]  Ultimately, once an IP address has been associated with infringement of a protected work, trolling firms will be able to send a subpoena to the account holder’s Internet Service Provider.  These subpoenas will request the release of personal information relating to the identities and addresses of countless alleged infringers who have been associated with copyright infringement through their IP addresses.[6]

Conversely, this business model of sending settlement letters to alleged infringers on a large scale embodies the substantial risk of “false positives.”  This is a contention that an IP address registered to an individual is not sufficient to support a claim that the individual is guilty of copyright infringement.[7]  The US District Court for the Central District of California Judge Otis Wright stated, “[an] IP address alone may yield subscriber information. . . But that will only lead to the person paying for the Internet service and not necessarily the actual infringer, who may be a family member, roommate, employee, customer, guest, or even a complete stranger.”[8]  As a result, the vexatious practices of firms branded as copyright trolls create the unjustified possibility of ensnaring countless innocent Internet users into costly litigation.  Fortunately, the growing trend adopted by judges in multiple jurisdictions is to recognize that an IP address alone does not identify an individual.

In June 2013, President Obama personally condemned this predatory practice used by patent and copyright trolls inundating the courts with infringement claims by stating that these companies “don’t actually produce anything themselves,” and instead create a business model “to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”[9]  Clearly, this extortionate sue-to-settle business model subverts the constitutional Framers’ original underlying purpose instilled within the Copyright Act, which intended copyright itself to be the “engine of free expression” in creating a “marketable right to the use of one’s expression, copyright supplies the economic incentive to create and disseminate ideas.”[10]

The Copyright Act grants rights holders two options for remedies in the event there is an infringement on any of the owner’s exclusive rights.[11]  The owner may elect to recover either actual damages or lost profits resulting from the infringement, which are accompanied by any profits gained by the violator that are attributable to the infringement.[12]  In the alternative, the copyright owner may elect statutory damages, which are typically within the continuum of $750 to $30,000 as the court considers just.[13]  Moreover, in the event the rights owner establishes the burden of showing that the infringer acted willfully, the court in its discretion may increase the damages award up to $150,000.[14]  This explains why alleged infringers are threatened with the possibility of paying such large and seemingly disproportionate figures.

FirmEquity, in its efforts to restore the original policy-backed intentions instilled within the Copyright Act, seeks to represent those who have been unfortunately targeted by trolling firms’ efforts to extract quick settlements regardless of the alleged infringer’s culpability.  Furthermore, we strive to provide several cost-effective solutions when defending alleged infringers against these claims based on tenuous evidence.  Although an IP address is not a person, evidence that an infringement occurred through that IP address is sufficient file an infringement claim in Federal Court.  Furthermore, even one firm that employs this business model of suing large groups of John Doe alleged infringers in efforts to secure rapid settlements boldly admitted, “It is possible that someone other than the subscriber is the infringer.”[15]  We are ardent proponents of this league of thought: substantial ethical implications arise from this sue-to-settle business model adopted by many non-author plaintiffs filing countless claims because even if an IP address has been associated with an alleged infringement, that does not mean the account holder is liable to a reasonable degree of certainty.  Consequently, we feel that this unethical behavior, which poses a substantial risk of entangling numerous innocent Internet users into costly litigation or settling without warrant, is reprehensible and demands the public’s attention.

 


[1] John Tehranian, Copyright Reform and the Law/Norm Gap, 2007 Utah L. Rev. 537, 538 (2007) (emphasizing that the “ease of digital reproduction” has generated piracy on a level never before seen in human history while stressing the “fundamental disconnect between our copyright laws and our copyright norms [that] has grown increasingly apparent and has highlighted the need for reform.”).

[2] AF Holdings v. Does, 286 F.R.D. 39, 54 (D.D.C. 2012).  BitTorrent is an online peer-to-peer file-sharing protocol that enables the ability to download files through a “piecemeal system with multiple pieces of data coming from peer members [] usually referred to as a ‘swarm’. . . [and] any seed peer that has downloaded a file prior to the time a subsequent peer downloads the same file is automatically a source for the subsequent peer so long as that first seed peer is online at the time the subsequent peer downloads a file.”

[3] Kashmir Hill, How Porn Copyright Lawyer John Steele Has Made ‘A Few Million Dollars’ Pursuing (Sometimes Innocent) ‘Porn Pirates,’ Forbes (Oct. 15, 2012, 2:09 PM), http://www.forbes.com.  John Steele, Prenda Law attorney, “proudly” stated in an interview with Forbes Magazine that he is “considered the original copyright troll” and has sent settlement letters to over 20,000 Internet users.  Id.  Even if the person isn’t the downloader, Steele believes that the person still plays a role in the infringement and requests that they settle the case for around $3,000.  Id.  Steele stated, “Don’t let people commit criminal acts on your network… If you lend your gun to someone who commits a crime, you’re responsible.”  Id.

[4] Letter from Paul Duffy, Attorney & Counselor at Law, Duffy Law Grp., (Apr. 18, 2013), available at http://fightcopyrighttrolls.com/2013/04/23/lw-system-v-hubbard-from-adam-urbanczyks-signed-agreed-order-to-the-new-breed-of-demand-letters/comment-page-1/  (identifying that a specific copyright troll’s settlement letter employed threats claiming similar cases also involve over $100,000 in legal fees and defendants’ names will be “forever associated” with the lawsuit regardless of the outcome).

[5] Robert Z. Cashman, Malibu Media, LLC- Friend or Foe? Foe., TorrentLawyer (Apr. 3, 2012),  http://torrentlawyer.wordpress.com/tag/malibu-media-subpoena/ (explaining that Malibu Media utilizes a software forensic company that gathers IP addresses from Bittorent trackers and monitors IP addresses that download large numbers of pornographic films).

[6] See, e.g., Kurt Opsahl, EFF Moves to Quash Subpoena in Copyright Troll’s Retaliatory Lawsuit, Elec. Frontier Found. (Apr. 18, 2013), https://www.eff.org/deeplinks/2013/04/eff-moves-quash-subpoena-copyright-trolls-retaliatory-lawsuit (stating that Prenda Law has successfully subpoenaed ISPs for the identities of tens of thousands of alleged online infringers at the discovery stage in order to mass-mail settlement letters).

[7] See Discount Video Center, Inc., v. Does 1-29, 285 F.R.D. 161, 166 (D. Mass. Aug. 10, 2012) (“the improper assertion. . . that subscribers are Defendants is significant in that it might well cause innocent subscribers . . . to accede to unreasonable settlement demands.”); See also Digital Sin, Inc. v. Does 1-176, 279 F.R.D. 239, 242 (S.D.N.Y. 2012) (explaining that the “risk of false positives” creates the opportunity for potentially unjust settlements extracted from innocent defendants who simply seek to avoid having their identities publicly associated with downloading pornography).

[8] Order Vacating Prior Early Discover Orders and Order to Show Cause at 2-3, Ingenuity 13, LLC, v. John Doe, No. 2:12-cv-8333-ODW(JCx), available at http://fightcopyrighttrolls.com/2013/02/08/judge-otis-write-is-fed-up-with-brett-gibbss-and-prendas-frauds-hints-at-incarceration/ (emphasizing that the Court has an inherent “duty to protect the innocent citizens of this district from this sort of legal shakedown, even though a copyright holder’s rights may be infringed by a few deviants.”).

[9] See White House, Fact Sheet: White House Task Force on High-Tech Patent Issues (2013), available at http://www.whitehouse.gov/the-press-office/2013/06/04/fact-sheet-white-house-task-force-high-tech-patent-issues

[10] U.S. CONST. art. I, § 8, cl. 8; see also, Eldred v. Ashcroft, 537 U.S. 186, 219 (2003)

[11] 17 USCS § 504(c)(2) (2013) (remedies for infringement: damages and profits).

[12] Id.

[13] Id.

[14] Id.

[15] Plaintiff’s Written Response to the Court’s Memorandum/Order [CM/ECF 9] at 7, Malibu Media, LLC v. John Doe subscriber assigned IP address 68.50.250.243, (No. 8:13-cv-00360-RWT), available at http://dietrolldie.files.wordpress.com/2013/03/mm_response_00360md.pdf

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