Biggest Ever BitTorrent Piracy Settlement is Intriguing

After being tracked as the original uploader of at least six pornographic movies to various torrent sites, an East Coast man found himself in the middle of a lawsuit last month. Then, just four days later, it was all over. Without putting up any kind of a fight he agreed to pay a record settlement of $250,000. Unusual? You bet. But the devil, as they say, is in the detail.

In a lawsuit filed December 20th in the U.S. District Court for the Southern District of California, pornographic movie studio Liberty Media Holdings, owner of the Corbin Fisher trademark, claimed that a BitTorrent user had infringed their copyrights by uploading several of their movies to the Internet.

Liberty Media, who according to court papers identified torrent user Mr Schwaller through his IP address, claimed that he had uploaded six sample movies “to thousands of other individuals.” Furthermore, they also claimed that Schwaller was not a plain BitTorrent user but actually “one of the primary sources of the stolen Corbin Fisher works circulating on the Internet.”

Claiming willful and intentional infringement, Liberty Media requested an injunction against Schwaller forbidding him from sharing any further copyright works, now or in the future. They also asked for damages, costs and attorney’s fees.

A summons was issued the very next day and then, just 72 hours later and as if by magic, it was all over. According to a consent judgment filed December 24th, Liberty Media and the defendant had quickly resolved all disputes between them.

In a 19 point background summary, it was agreed that Schwaller “illegally copied and distributed many” Liberty movies to various torrent sites and by doing so he should have known that he would cause economic harm in California – the home of Liberty Media and the place where the original complaint was filed.

It was further agreed that the acts constituted “intentional and/or willful infringement of the Plaintiffís copyrights,” causing $500,000 in actual damages. That amount was halved to $250,000 for the purposes of the settlement.

So the big question is this: Why would someone agree to such a huge settlement amount – probably the biggest there’s ever been in a file-sharing case – seemingly without any kind of legal battle?

In part the answer almost certainly lies in simple math. Last year, a jury found student Joel Tenenbaum guilty of “willful infringement” and awarded damages mounting to $675,000. That was later deemed to be an excessive amount and was reduced to $67,500, still a significant amount but altogether more manageable.

But there is also another element to the settlement worthy of note. This paragraph:

Defendant has an opportunity to reduce the amount payable to Plaintiff if Defendant ceases any further content theft (whether the Plaintiffís content or anyone elses), and if he makes regular payments toward the judgment on a schedule which will be agreed upon between the parties in a separate settlement agreement.

So, one might reasonably conclude that this is a “good behavior” clause, and one which will bring the settlement down to an altogether more manageable and realistic amount. An amount painful enough to deter further infringement and enough to cover Liberty Media’s costs.

It has long been believed that in both the United States and Europe, the mere threat of a highly public court case involving pornographic material might be the greatest boost to achieving a quick financial settlement.

But this theory has nearly always been aimed at the turn-piracy-into-profit motives of so-called “copyright trolls” and it has to be said, in this case the plaintiff shows no sign of that kind of behavior with one defendant in one lawsuit.

The actions of Liberty Media show that what the company wants is the metaphorical head on a pike, the super-painful $250,000 “biggest ever” settlement headline that will deter others from uploading their material to the Internet in future.

However, one perhaps unintended side-effect is that this settlement, even though it will ultimately turn out to be substantially smaller than the quarter of a million headline grabber, will almost certainly be touted by copyright trolls to “encourage” those they target in mass litigation to pay up. They are, in fact, very different animals.

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