Hard Drive Productions sent one such letter to Liuxia Wong last year, claiming that her IP address had been used to share “Amateur Allure Jen” on BitTorrent.

Wong was told by the porn outfit she could be sued for $150,000, but for ‘just’ $3,400 the whole thing could be made to go away. Many might have chosen to settle at this point, but this California resident bit back and went on the offensive.

As noted by FightCopyrightTrolls, Wong hired Steven Yuen, an experienced IP litigator from the EFF’s subpoena defense list, to go after Hard Drive Productions. It could turn out to be a fascinating case.

In a lawsuit filed at the end of January, Wong says that she did not download the work in question and goes on to attack Hard Drive on a number of fronts including harassment.

Hard Drive report the alleged infringement as taking place March 28th 2011, but Wong says the movie in question wasn’t officially registered until April 22nd 2011. The letters, therefore, “were designed to coerce her into settling the case despite the absence of any facts supporting liability against her.”

The lawsuit further claims that in their letter to Wong, Hard Drive insist that the California resident would be liable for infringement even if her router was unsecured and someone else carried out the act without her knowledge. Wong’s suit dismisses that assertion as “erroneous”.

But perhaps most interestingly, Wong is challenging the notion that Hard Drive can own the copyright to its own work – indeed, that porn can be copyrighted at all.

“Article 1, Section 8, Clause 8 of the United States Constitution, known as the Copyright Clause, empowers the United States Congress: ‘To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries,” the lawsuit details, adding:

“Early Circuit law in California held that obscene works did not promote the progress of science and the useful arts, and thus cannot be protected by copyright.”

The lawsuit goes on to state that Hard Drive’s work does not fulfill the above criteria and in fact depicts obscene and criminal acts.

Wong is asking the court to issue an order declaring that not only is she not liable to Hard Drive for infringement, but that the company’s movie is not copyrightable and is illegal due to Hard Drive engaging in “solicitation, conspiracy to commit prostitution, pimping and/or pandering,” during its production.

Finally, a couple of interesting BitTorrent-related points are also raised in the suit. The first is that Hard Drive did not mitigate alleged damages since the company failed to use the DMCA to have monitored torrents taken down. The second involves the company hired by Hard Drive to do the monitoring.

“….Hard Drive…authorized its work to be distributed by its non-California licensed private investigators, who are in violation of California Business and Professions Code…while they were distributing and participating in the distribution of the work, and/or that Hard Drive is guilty of unclean hands due to its and/or its agents’ operation and use of honeypots, and/or the use of a third-party’s services as honeypots,” the suit adds.

In a sea of carbon copy BitTorrent mass-lawsuits, this case shines out as one to watch.

Gov.uscourts.cand.250725.4.0

Source: You Can’t Copyright Porn, Harassed BitTorrent Defendant Insists

As one of the older torrent sites around, The Pirate Bay has been at the forefront of this copy revolution. But according to the people behind the torrent site, copying bits is just the beginning. The next step is to download stuff you can hold in your hands.

“We believe that the next step in copying will be made from digital form into physical form. It will be physical objects. Or as we decided to call them: Physibles,” said The Pirate Bay last month when they announced a new 3D printing section of their site.

To give people something to work with, a 3D model of The Pirate Bay ship designed by Todd Blatt was one of the first items put up for download. Since then several people have printed it out and have now become the proud owner of a cute 3D printed ship.

The copy above belongs to Canadian Charles Randall. After he read the announcement on TorrentFreak he downloaded the torrent and went straight to Shapeways.com to print a copy for personal use.

“I was entertained by telling shapeways.com that I owned the copyright on the design though, something they force you to accept in order to have the model printed. But I guess, in a way, we all do,” Randall told TorrentFreak. “I debated just putting it up for sale on the site, but despite the Pirate Bay sensibilities, I didn’t want to entangle myself in any weird controversy for trying to sell it.”

Unlike regular downloads on BitTorrent, 3D objects come with a hefty price tag. Using the cheapest materials available, 3D pirates have to invest roughly $100 to get their new toy made.

“The raw price was about $80 for the material, $6.50 for the shipping, and then I had to pay $15 in Canadian duties,” Randall said

What this process has in common with copying bytes, is that it can be quite addictive.

“As for doing more 3D printing, I am tempted to learn Blender in order to start making interesting little things,” Randall told us. “The build quality is super detailed and fairly solid. You can see the patterns from where it was printed, but if I were to build small model pieces it would probably be easy enough to sand them down.”

“The whole thing is an amazing process and just knowing it’s possible has opened the floodgates of my imagination.”

The above response of one of the first 3D ‘pirates’ is just what The Pirate Bay were looking for when they launched their new category. Since the announcement the 3D printing category has grown to 26 torrents, ranging from a 3D printable MPAA Boss Chris Dodd to a Teddy Bear.

These are the first steps in discovering a new future that will one day allow people to print a perfect set of sneakers and spare car parts for a few dollars. The auto industry should be very worried.

Source: First Downloaded and 3D Printed Pirate Bay Ship Arrives

The dangers and threats of the ACTA treaty are shared by free-speech advocates and access to medicine groups alike. ACTA is seeking to deal with a number of widely differing issues, and hence does not do a good job at any of them. Additionally, there are serious concerns about the collateral damage that ACTA would cause.

Regrettably, concerns by businesses, NGO’s and politicians have not led to a better result. This is partly due to the intransparant way in which ACTA has been established and negotiated. As a democratically elected representative, I believe it is not the role of government to protect outdated business models, and I do believe it is our job to ensure democratic oversight.

Besides zooming in on the details of what ACTA will and will not do, taking a step back and looking at the broader picture is also important. As someone who advocates copyright reform, notably the harmonization of copyright laws in Europe, I do not believe stricter enforcement of outdated systems is helpful or relevant. Enforcement is not even possible in many cases, and not without violating people’s fundamental rights.

Yet there is a big push towards enforcing outdated legal structures of copyright by the entertainment industry. ACTA will lock any signatory country into a system of copyright enforcement, leaving the democratic process disadvantaged to enact necessary reform of our laws to suit the digital age.

The fast development of the information society and all the innovations we have seen in the last 15 or so years have changed the way we live. People can enforce their fundamental rights of access to information, and free speech with the help of the internet. Human rights violations are documented and shared across the world, and the way we access and share information and culture such as news, music and films has changed forever. Most copyright rules were developed for the printing press and codified internationally before radio had even been invented.

Some of the most important EU laws regulating the internet were established before social media and peer-to-peer sharing took off. The E-commerce Directive of 2000 and the Copyright Directive of 2001 were enacted without foresight of the new services which were developed over the last 10 years. Time and time again, it has been proven that the Directives and their national implementations do not suit the digital age that followed directly afterwards. The fragmentation of European copyright puts the EU, which is widely known for its wealth in culture, at a competitive disadvantage in comparison to the United States.

Copyright and E-Commerce need to suit the needs of the advanced information society we now live in. To enable a flourishing Digital Single Market in Europe, we need to analyse case-law of the last 12 years regarding the internet, hear from creators, innovators and consumers. If we want to serve consumers, artists and businesses well, we need to find a new balance in copyright. Every aspect of copyright needs to be discussed: the exclusive rights, limitations and exceptions, collective management, enforcement, etc. Only then should we discuss how to enforce the new found balance on the international arena, such as with ACTA.

ACTA must not be passed. Let’s focus on reform to allow for the opportunities of the internet to bloom, instead of allowing outdated business models to limit the free market, and to criminalize audiences. Additionally, health threats as a result of counterfeit medicine deserve a better solution than ACTA. Join me in voicing your concern with this treaty, so we can establish flexible copyright rules which are fit for the 21st century.

Source: We Need Copyright Reform, Not ACTA!

The Megaupload indictment focused on several issues including alleged payments of cash rewards to known uploaders of infringing material. This prompted some rival services to cancel their affiliate/reward programs altogether and even end 3rd party downloads (Note: Fileserve have since re-enabled sharing).

Last week, TorrentFreak noted that traffic to many rival sites had increased following Megaupload’s demise – including sites like RapidShare that have no rewards program.

Today, however, German anti-piracy outfit GVU said that sites that have removed their rewards programs are now on a downward trend, while those that have maintained them are doing better than ever before.

GVU, which carried out the investigation preceding the record-setting raids on Kino.to last year, note that some linking sites are now removing links to sites that have no rewards programs and replacing them with those that do. The existence of rewards, the group suggests, means that more content is posted, ensuring traffic – and revenue – for both the linking sites and cyberlockers.

While it is fair to say that in some instances the existence of rewards can encourage infringement, GVU are now using this background to call for a review of cyberlocker and hosting provider liability, and are calling for a “reverse burden of proof” to be applied.

“In Germany, Service Providers are (at first) not liable for copyright infringements in content which is uploaded by third persons,” Otto Freiherr Grote of the Wilde Beuger & Solmecke law firm told TorrentFreak this morning.

“But the GVU now demands a reversal of this principle, at least for those filehosters which reward uploaders for uploading very popular files,” Grote adds.

GVU Director Dr. Matthias Leonardy says that while there is authorized content being stored and delivered by hosting services, much of the mass volume consists of unauthorized movies, TV shows and games, and it is this content that draws the bulk of the traffic and generates the revenue.

“Therefore, a file hosting provider must be aware that it promotes this through commission payments to those uploading pirated copies,” Leonardy notes.

On this basis, what Leonardy wants is a review of liability for those file-hosting services offering rewards programs.

It should not be the responsibility of rightsholders and authorities to show that such programs are being abused by infringers [such as is being claimed in the Megaupload indictment], Leornardy says, but the opposite – cyberlockers should be forced to prove that their businesses aren’t based on piracy in order to avoid liability. How this can be achieved remains to be seen.

The German legal system is no stranger to these apparent reverse burdens of proof when it comes to file-sharing cases. Domestic Internet users are responsible for infringements that happened via their accounts, whether they carried them out or not.

Source: Cyberlocker Burden of Proof Should Be Reversed, Anti-Piracy Group Says

Judge David McNaughton said that the scale of the charges against the MegaUpload founder combined with his significant resources meant that there was a significant risk he could flee, possibly to his birthplace, Germany.

In a later hearing at the same location, lawyer Guy Foley argued that Dotcom’s alleged co-conspirators – Bram van der Kolk, 29, Finn Batato, 38, and Mathias Ortmann, 40 – are of good character and deserved bail.

This morning Judge McNaughton handed down his decision. He granted bail to both Dutch national Bram van der Kolk and Finn Batato from Germany, but denied bail to Ortmann due to financial concerns.

According to Stuff, the FBI’s records show that Ortmann made around $14.5 million from the company between 2005 and 2010, and an additional $3 million in 2011. His accounts, however, show $20.2 million, some $3.5 million more. Ortmann’s lawyer has until tomorrow to come up with an explanation.

Yesterday, Guy Foley described programmer and networking expert Bram van der Kolk as a family man and today his wife Asia expressed relief that he would be coming home.

“I’m just glad my husband is going to be able to play with our baby again,” she said.

Although the Judge granted the pair bail, he ordered them detained for a further week so that their homes could be assessed for surveillance equipment suitability. It’s becoming ever more clear that being monitored is nothing new for these MegaUpload employees.

The US Department of Justice’s indictment showed that the operators of MegaUpload had been subjected to monitoring over the past several years, but a piece of evidence presented in court yesterday revealed not only how far back, but just how deep that surveillance went.

Documents produced by the FBI reportedly show the details of a 2007 Skype conversation between Bram van der Kolk and Mathias Ortmann where they mulled a situation where Kim Dotcom might run off with “the money”.

Although no context was provided by the FBI, Van der Kolk allegedly described the situation with Dotcom more than 4 years ago as “a bit risky” but with Ortmann offering assurances that since Dotcom was “operationally dependent” on the pair he could not “sneak away with the money.”

“What if the shit really hits the fan? Would he take the last little bit of money and take off? He’s good at that,” Van der Kolk replied.

“True,” said Ortmann, “But with his spending nowadays he will attempt to get the shit off the fan, and that’s what he needs us for.”

Dotcom will remain in custody until at least 22nd February.

Source: Two MegaUpload Ops Bailed, But Government Wants Surveillance

Dotcom, who along with several of his employees was raided by armed police in helicopters the day before, is wanted in the United States on racketeering, copyright infringement and money laundering charges.

The hearing was adjourned until Monday this week with Judge David McNaughton delivering his decision this morning at the North Shore District Court.

Noting the scale of the charges against Dotcom and his considerable resources, Judge McNaughton said he that he had no doubt that fleeing New Zealand could be real possibility for the MegaUpload founder.

Judge McNaughton said that if Dotcom could somehow make his way to his birthplace of Germany, extradition would prove impossible since the country has no such agreement with the United States.

Essentially agreeing with prosecutor Anne Toohey, who had described Dotcom as a “significant” flight risk, Judge McNaughton denied the 38-year-old bail and remanded him in custody until 22nd February.

Dotcom’s lawyer, Paul Davison, QC, said that decision would be immediately appealed to the High Court.

“We were hopeful that the judge would accept our intentions and our arguments and see that there was no risk whatsoever of Kim Dotcom seeking to leave New Zealand.

“All of his assets have been frozen, all of his resources have been taken,” he said as he left court today.

“He’s living here with his wife and family, he has no intention whatsoever of endeavoring to leave New Zealand.”

Also appearing in Court today were Dotcom’s alleged co-conspirators Bram van der Kolk, 29, Finn Batato, 38, and Mathias Ortmann, 40.

In a hearing following Mr Dotcom’s, the lawyer representing the three men, Guy Foley, said his clients did not enjoy the same resources as the MegaUpload founder. Foley said that in the absence of a guilty verdict there should be a presumption of innocence.

He described Batato, as a “fair player” who denies involvement in the alleged conspiracy. Prosecutor Anne Toohey described Batato as a series flight risk who, in common with Dotcom, could seek to flee to Germany.

In defense of der Kolk, Foley described him as a family man who had a wife and child in New Zealand. He added that it was troubling that in evidence submitted to the court the FBI had supplied a photograph of someone else.

Ortmann, said Foley, is “decent, modest, honest and reliable” man who would not flee. Prosecutor Toohey said as a German national, fleeing there was a real possibility.

The decision on whether to grant bail to der Kolk, Batato and Ortmann will be delivered tomorrow.

Source: MegaUpload Founder Again Denied Bail, High Court Appeal Launched

Even most opponents of SOPA/PIPA maintain a common front on this issue: the foreign thief must be stopped. Chris Dodd is right about this: the only public debate is about how.

For the past few years, Kim Dotcom (nee Schmitz) has been the MPAA’s go-to example of the foreign thief. Dotcom is a flamboyant hacker/entrepreneur with a fraud conviction, a penchant for fake names, and a fortune built, like many new media fortunes, in the grey areas of IP law. Megaupload was one of the first cloud storage or ‘cyberlocker’ services, and is routinely ranked in the global top 50 in traffic. There is little doubt that it hosted a lot of infringing media. There is doubt about the extent to which Megaupload encouraged this, and how that affects their liability for infringement.

The Megaupload case has important legal implications. Mike Masnick has a very good rundown, but let’s focus on two. The case will certainly challenge the scope of the “safe harbor” from liability afforded online storage providers—a very important issue in an era of cheap, ubiquitous cloud services. It will also be a front in the government’s (and, more particularly, MPAA’s) push to shift from an ex post model of enforcement, involving notification and takedown requests when infringing content is identified, to an ex ante model based on the surveillance and filtering of user activity.

If this sounds familiar, it’s because it is also fundamentally at stake in SOPA, and raises all the same censorship and free speech issues. Holding Megaupload liable for failing to monitor and filter user activity for infringement, for example, would compel monitoring across a wide range of web services, from search to social media. And that would mark a very fundamental shift in the freedoms associated with the Internet. SOPA and the Megaupload case are part of this long game.

The Megaupload indictment is also a public effort to cast a villain in the file sharing story: to prove that someone, other than consumers, benefits from piracy. Kim Dotcom’s arrest—with all of his luxury cars on prominent display—is about making the case not only for abstract losses to industry but also theft from industry. We’ve repeatedly taken issue with the industry calculation of losses, most of which are fictional. But let’s ask the narrower question. Who is the foreign thief, and how much is he stealing?

As usual when talking about piracy, there are lots of claims but very few hard numbers. The revenue estimates that do circulate in file sharing cases are notable, however, for their miniscule size compared to the 10s or, occasionally, 100s of billions in losses claimed by industry groups. Here are a few examples…

• The Swedish trial of The Pirate Bay trial in 2009 became an occasion for all sorts of competing estimates of revenues. Record industry group IFPI estimated the site’s revenues at $3 million per year. The MPAA described $5 million in revenues. But prosecutors endorsed a much lower number: $170,000 from advertising (against what the defense characterized as $112,000/year in server/bandwidth costs and $100,000 per year in revenue). This is for a site that appears consistently among the top 100 visited sites in the world.
• NinjaVideo, a Brooklyn-based movie indexing site whose owners were arrested in 2011, was alleged by prosecutors to have made $500,000 in 2½ years. After the site began to make money, the four administrators split the revenue, netting around $33,000/year each after expenses. Hana Beshara, the site’s primary owner, was sentenced to 22 months in prison under the US No Electronic Theft (NET) Act.
• Brian McCarthy, the owner of Channelsurfing.net, a Texas-based sports streaming site, was alleged by prosecutors to have made $90,000 over five years. He also faces jail time and fines under the NET Act.
• Immigrations and Customs Enforcement (ICE) made some partial revenue estimates for targets of its 2010 domain name seizure program, Operation In Our Sites, based on information from advertising network Valueclick. According to ICE investigators, Torrentfinder, a BitTorrent site, made about $15,000 in ad revenue from Valueclick over a year in 2008-2009. Onsmash, a music link site, made around $2,500 in 2009-2010.

The ICE numbers aren’t complete accounts, but they met the traditional definition of “commercial” copyright infringement that justified the criminal charge (US District Court Case # 10-2822). What they don’t do is describe a very lucrative or, in any other respects, criminal business.

This is a point we’ve made repeatedly regarding the incentives for criminal involvement in piracy. We see little evidence that there’s much money to be made from it—especially as the costs of setting up and running such sites decline. It’s very likely that the larger sites generate significant revenues from advertising—indeed even in the torrent admin community (see below) it’s assumed that the handful of top sites generate six and even seven-figure revenues annually. But at any given time there are only a few such sites. And even accepting the IFPI estimates, it’s chickenfeed. The top 5 pirated films, for comparison made $2 billion last year. The (non-overlapping) top 5 grossing movies made nearly $5 billion. Piracy generates an overwhelmingly consumer, not criminal, surplus.

It’s easy to see how Kim Dotcom got rich by being an early entrant in the cloud storage market, in the only part of the business that required a lot of large file transfers. (Much the same is true of broadband adoption, for which piracy has always been the early killer app—especially outside the US where legal web services are still underdeveloped.)

As a subscription business selling a scarce commodity, Megaupload’s revenues were many times larger than the largest torrent or link sites. In 2010, execs at Paramount Pictures estimated (in testimony to Congress) its profits at between $41 million and $300 million per year, with the range reflecting different assumptions about its subscription rate. The Justice Department’s recent indictment put the number below the low end of the range—committing to only $175 million in total revenues since 2005–under $30 million/year–and reflecting a roughly 7-1 split between subscriptions and advertising. There are no estimates of how much of this came from legal sources.

In contrast, it’s hard to see how this model remains lucrative. Storage costs are falling rapidly, and there are no barriers to entry or significant network effects. For a comparable market, look to the highly competitive web hosting business rather than search engines or operating systems, which have more characteristics of natural monopolies. Many companies–including Megaupload–already give large amounts of storage away. Many compete for “premium” users, either with inducements or bundling with other services.

The sum of Megaupload’s activities may well satisfy a court that it encouraged large-scale copyright infringement, and therefore should be held liable. But Megaupload’s survival is not the main concern: it’s what happens when all storage is mirrored in the cloud. It’s whether we’ll monitor and police the core features of the web: storage, linking, and search.

The Torrent Admins Survey

Now that the nerds have (provisionally) won the argument that DNS blocking could break the Internet, attention will turn to “follow the money” enforcement strategies—especially those targeting advertising and payment systems. We might ask, in this context, what “follow the money” looks like in a sector where there are few barriers to entry and costs are falling toward zero?

To find out more, we prepared a short survey of torrent site administrators, which was circulated through torrent admin lists and IRC channels by some trusted intermediaries. We received 11 responses to our survey—most of them anonymous; most of them ‘vouched for’ by our partners; and most of them anonymized through various services. We neither asked for nor received identifying information. This is, in other words, a small sample with some big caveats (such as selection bias). Nonetheless, the responses tell an interesting story.

Responses came from a pretty wide spectrum of sites, including:

• 2 that receive over 10 million visits per month
• 2 that receive 2-10 million visits per month
• 2 that receive 500,000 – 2 million visits per month
• 2 that receive 25,000-100,000 visits per month
• 2 that receive less than 25,000 visits per month.
• 1 that did not specify traffic

To provide some reference points, the two current largest torrent sites—the Pirate Bay and Torrentz—receive roughly 88 million visits/month and 46 million visits/month respectively (according to Google Adwords. There are claims that this significantly undershoots traffic on those sites.) Although cyberlocker sites like Megaupload and Mediafire now outdraw torrent sites by a wide margin, the latter remain a good indicator of the cost structure—and costs of entry—of large scale file sharing. BitTorrent is now a thoroughly commoditized technology, running on low cost hardware with freely available software. Cyberlockers are slightly further behind.

How much does running a torrent site cost? The largest site in our survey, with over 10 million visits per month, was also the most expensive. It reported server and bandwidth costs of $25,000-$30,000 per year. Most of the sites operate on less than $10,000 per year. A couple of the smaller ones were under $3,000.

How much money do these sites make, and how? Of the eleven responses, only the largest site used advertising. It reported a roughly break-even operation, with costs covered in most months by advertising. The other ten do not use advertising. These are typically the smaller, private trackers that require invitations to join—a category that nonetheless reaches into the millions of visits per month.

Eight indicated that they meet the majority of their expenses through member donations. Only one indicated that it fully met expenses this way. Only one earned additional income through affiliate links. The balance typically comes out of the pockets of the site administrators.

Although we received less information on staffing, several indicated that they operated entirely with volunteer labor—in a couple cases involving communities of a dozen or more administrators. This is the norm among smaller, private sites.

The picture that emerges from the survey is one of financially fragile but low cost operations, dependent on volunteer labor, subsidized by users and founders, and characterized by a strong sense of mission to make work more widely available within fan communities. Few such sites make or seek to make money. Many are specialized communities exchanging media of particular types, genres, or languages. A site like NinjaVideo began this way, but grew into a larger, revenue-making operation.

Rights holder pressure on payment systems is not new, but it has been ad hoc. Credit card companies were enlisted in the mid 2000s, when the record industry group IFPI waged war against the (nominally legal) Russian pay-download site AllofMP3. Industry threats against safe harbor provisions for payment providers played an important role in this process. No payment provider wants to tangle with industry lawyers on behalf of an accused infringing site, even if there is no legal basis for cutting off service. Few accused sites are able to lawyer up to respond. Strict legality doesn’t make much difference in such contexts. One site administrator showed us a letter from a payment provider terminating service based on a DMCA complaint—a law that makes no such provisions.

SOPA and PIPA legalize these strategies and make them much easier to use. Under SOPA, rights holders gain a strong right of “private action” that allows them to issue cut off letters directly to advertising services and payment systems. The latter must cut off service or face secondary liability for infringement. Under SOPA, moreover, neither the payment system nor the rights holder is liable for damages from any mistaken or overly broad actions. The “safe harbor,” under these circumstances, is repurposed to empower the complainant rather than the user.

Independent of the potential for collateral damage, SOPA and PIPA are best understood as collections of harassment measures for pirate sites, rather than any sort of “solution” to piracy. A loss of advertising revenue would harm some file sharing sites—especially the larger, more public sites that have grown into advertising-dependent commercial operations. The loss of primary payment systems such as PayPal would complicate life for the smaller torrent sites, but wouldn’t cut off revenues: there are many ways to manage the modest donation systems that keep these sites in business.

Some parts of the file sharing ecology, consequently would be vulnerable to payment system attacks. But the overall impact is likely to be low. Much of the file sharing ecology already operates at very low cost, on minimal revenue. Much of the labor is volunteer—with advertising and the “professionalization” of staff a matter of choice rather than necessity. And infrastructure costs are falling.

We talk about the efficacy of enforcement at some length in our Media Piracy report. Many readers have concluded that enforcement doesn’t work. But that isn’t what we say. We say, rather, that we’ve found no evidence that it has worked. The main factors shaping piracy are price, income, and the declining cost of technology–and that will remain the case. But it seems entirely possible that some impact can be bought at a high enough price. The numerous critiques of SOPA and PIPA provide a good idea of that price—a broken, arbitrary, copyright surveillance regime and an Internet culture reorganized around the established content providers.

The Commercial Scale Standard

In most national copyright laws, criminal law applies only to copyright infringement on a “commercial” scale. Traditionally, commercial scale referred not to the number of copies made, but to financial benefit derived from it. (Infringement that doesn’t meet the criminal standard can still be addressed through civil law, as tens of thousands of file sharers in the US and Europe have learned.) In the past 15 years, digital technologies made a mess of this distinction. When copying was capital intensive and required a factory, scale and profit went together. But in an era of ever cheaper copies and storage, the two are delinked. What to do, then, with the commercial standard?

The US response in the 1997 NET Act was to expand the definition of commercial infringement to include the unauthorized digital receipt of anything of value, subject to an exemption up to $1000. Without the for-profit requirement, the door opened—in theory—to criminal prosecution of a much wider array of participants in file sharing. The exchange of a bunch of albums or a few copies of software can easily qualify. In practice, the NET Act has been applied not to consumer-level sharing, but to intermediaries—initially members of mostly non-commercial “warez” groups engaged in cracking software, and more recently to marginally commercial intermediaries like Hana Beshara and Brian McCarthy. (The expanded criminal model is also being exported abroad without the de minimis exceptions, through trade agreements and new enforcement treaties like ACTA).

In our view, this is a bad way to resolve the confusion around the commercial standard. It dramatically expands criminal liability without any corresponding intention of enforcing it. Law enforcement, under such circumstances, becomes arbitrary and easily captured by private parties. Industry lobbying secures funding for enforcement agencies and enforcement agencies return the favor, turning to stakeholders for staffing, planning, and cost sharing. Personnel flows between the two, anchored in the understanding that government service is rewarded later in the private sector.

The US Attorney leading the Megaupload case, for example, is Neil MacBride, former head of enforcement for the Business Software Alliance. The Obama transition brought at least five RIAA lawyers to the Department of Justice. The Megaupload indictment, both in its tone and its kitchen sink approach to infringement, could have been written by the MPAA. The distinction has become a formality.

So what to do? As long as we have a culture organized around copyright, there should be ways to define and police violations of it. But our current definitions needs a rethink. There is ample reason to see unauthorized copying and file-sharing as inevitable in the digital era and more–as inextricable from the core features of general computing and the Internet. The law should recognize this because doing so protects the wider set of freedoms to express and innovate that build on those features. Both individuals and companies should be accorded wide latitude in their use. That said, there is no reason to defend piracy as a profit-making activity.

So one place to start might be to ditch the NET Act and SOPA and restore a narrower commercial scale standard for criminal infringement, along with a less draconian set of penalties for the times when it is invoked. Such a standard would make profit the trigger, and make that the basis for any follow-the-money actions against payment systems or advertisers. This bar could be set high enough to exempt the marginal member-subsidized torrent sites, since these are little more than group implementations of search, store, and link–the building blocks of the web. They cost little today and less tomorrow.

But the bar could also be low enough to encompass sites that start to generate a lot of money. Drawing such distinctions could help restore a useful middle ground—retaining a threshold for enforcement while rejecting both the universal liability envisioned in the Net Act and the universal surveillance implied in SOPA. It would better align the law with the actual capabilities of law enforcement to enforce, and thereby make enforcement less arbitrary. And it would help articulate a much wider zone of personal freedom to copy, based on a recognition of the wider importance of unhindered, unmonitored use the core capacities of the web.

A reinvigorated commercial standard won’t end piracy. Nothing short of a copyright surveillance state would, to any significant degree. But the commercial standard would help drive file sharing into the non-commercial economy, leaving more room for creative, legal, low-cost commercial alternatives. That’s not a sufficient definition of copyright reform, but it may be a necessary step if we’re to bring law into line with the basic economics of our digital culture. The law can’t eliminate piracy, but it can help make it irrelevant.

—

Addendum: Regarding the monetary harm of Megaupload’s activities, the Justice Department characterized it, without explanation, as “well in excess of $500,000,000” since 2006. And although that number is probably meant to impress, it’s somewhat baffling. Even without a per annum breakdown, it comes nowhere near the annual piracy losses claimed by the major industry groups—whether the BSA’s $58 billion loss claims for software losses in 2010 or the “conservative” $26 billion estimate for movie, music, and software piracy from 2007, which lazy journalists still allow to circulate. This for the site that MPAA called “By all estimates… the largest and most active criminally operated website targeting creative content in the world.”

Since we’re using made up numbers here, let’s make up some more–and for the sake of argument, some extremely favorable ones for the Justice Department’s effort to paint Megaupload as the big bad. Posit that all $500 million in losses came in 2011. Posit the $26 billion loss number. Megaupload’s contribution to the pirate economy tops out at 2%.

Source: Meganomics: The Future of “Follow-the-Money” Copyright Enforcement

NinjaVideo, at the time one of the Internet’s most popular video portals, was one of the first targets in the now-famous and ongoing Operation in Our Sites.

Five people connected to NinjaVideo were arrested and in September 2011 they were indicted by a federal grand jury. After pleading guilty on September 23rd, yesterday one of the site’s founders was sentenced in Alexandria, Va..

Matthew David Howard Smith, known online as Dead1ne, received 14 months in prison for his activities at Ninja. U.S. District Judge Anthony J. Trenga also ordered Smith to serve two years of supervised release.

Of the total $505,000 said to have been collected by NinjaVideo in ad revenue and donations since its creation in February 2008, Smith is said to have received $172,387. The court ordered Smith to repay this amount and forfeit five financial accounts and previously-seized sundry computer equipment.

When compared to the punishment handed out to NinjaVideo co-founder Hana Beshara earlier this month, Smith was treated relatively leniently. Beshara, known online as ‘Phara’, was sentenced to 22 months in prison followed by 2 years of probation, 500 hours of community service and ordered to repay nearly $210,000.

In contrast to Beshara, 23-year-old Smith appears to have caused the authorities much less of a headache since his guilty plea. After her sentencing, the hugely outspoken 30-year-old Beshara posted comments to Facebook which suggested she had no regrets. The outburst incensed the authorities and she was rushed directly to a local prison to begin her sentence.

Three former operators of NinjaVideo are yet to be sentenced including 34-year-old Joshua David Evans (known online as Wadswerth), 33-year-old Jeremy Lynn Andrew (known online as htrdfrk), and 28-year-old Justin A. Dedemko (known online as Afr1ka). All face a maximum of five years in prison and a $250,000 fine when they are sentenced in the coming months.

Zoi Mertzanis of Greece, known online as “Tik”, is accused of being one the site’s most active uploaders. A warrant is outstanding for his arrest.

Source: Second NinjaVideo Admin Jailed For Copyright Infringement

While the timing came as a huge post-SOPA protest surprise, the fact the site was targeted was not – for many months there have been rumblings behind the scenes that something might be “done” about MegaUpload. Nevertheless, the manner in which the action was taken and the language used by the authorities in doing so was utterly unprecedented.

So the key question this morning is this – What made MegaUpload a rogue site which deserved to be completely dismantled and its key staff arrested? The answers lie in the 72-page indictment and show just how the authorities (with the massive assistance of the MPAA, no doubt) framed Mega’s activities in such a way as to strip it of any protection under the DMCA.

In the U.S., online service providers are eligible for safe harbor under the DMCA from copyright infringement suits by meeting certain criteria. However, the indictment states that member of the “Mega Conspiracy” (capital M, capital C no less) do not meet these criteria because…

…they are willfully infringing copyrights themselves on these systems; have actual knowledge that the materials on their systems are infringing (or alternatively know facts or circumstances that would make infringing material apparent); receive a financial benefit directly attributable to copyright-infringing activity where the provider can control that activity; and have not removed, or disabled access to, known copyright infringing material from servers they control.

Let’s cover the last point first – the apparent non-removal of known copyright material from MegaUpload’s servers. First, a little background on how MegaUpload’s user uploading system worked because this is absolutely crucial to the case against the site.

Mega had developed a system whereby files set to be uploaded by users were hashed in order to discover if a copy of the file already exists on the Mega servers. If a file existed, the user did not have to upload his copy and was simply given a unique URL in order to access the content in future. What this meant in practice is that there could be countless URLs ‘owned’ by various users but which all pointed to the same file.

Megaupload’s “Abuse Tool” to which major copyright holders were given access, enabled the removal of links to infringing works hosted on MegaUpload’s servers. However, the indictment claims that it “did not actually function as a DMCA compliance tool as the copyright owners were led to believe.” And here’s why.

The indictment claims that when a copyright holder issued a takedown notice for content referenced by its URL, only the URL was taken down, not the content to which it pointed. So although the URL in question would report that it had been removed and would no longer resolve to infringing material, URLs issued to others would remain operational.

Furthermore, the indictment states that although MegaUpload staff (referred to as Members of the Conspiracy) discussed how they could automatically remove child pornography from their systems given a specific hash value, the same standards weren’t applied to complained-about copyright works.

In June 2010, it appears that MegaUpload was subjected to a something of a test by the authorities. The company was informed, pursuant to a criminal search warrant from the U.S. District Court for the Eastern District of Virginia, that thirty-nine infringing movies were being stored on their servers at Carpathia Hosting in the Eastern District of Virginia.

“A member of the Mega Conspiracy informed several of his co-conspirators at that time that he located the named files using internal searches of their systems. As of November 18, 2011, more than a year later, thirty-six of the thirty-nine infringing motion pictures were still being stored on the servers controlled by the Mega Conspiracy,” the indictment reads.

The paperworks goes on to accuse MegaUpload of running a program between September 2005 and July 2011 which rewarded users for uploading infringing material.

A citation from an internal MegaUpload email from February 2007 entitled “reward payments” claims to show that at least two key staff members knew that cash payments were being paid to users who uploaded infringing material including “full popular DVD rips” and “software with keygenerators (Warez)”.

Then the indictment starts to throw up some very interesting questions, specifically how the authorities managed to get hold of not just one but many of MegaUpload’s internal company emails (dating back to 2006) to use in the case against them.

It’s certainly possible that the authorities were monitoring MegaUpload’s correspondence but there are also at least two mentions in the indictment of an unnamed person described as “an unindicted co-conspirator”. While prosecutors sometimes use this term to describe people who have been excluded from an indictment on evidentiary concerns, they also use it to describe individuals who have been granted immunity from prosecution.

In any event, these emails are being heavily relied upon since many appear to indicate a knowledge among staff that copyright works were held on the company’s servers. Here’s a sample:

An email from 2006 claims to show how MegaUpload attempted to download large amounts of content from YouTube and appeared by April that year to have obtained 30% of the site’s content. A follow up email in 2007 claimed that “Kim [MegaUpload's founder] really wants to copy Youtube one to one.”

An email from August 2006 titled “lol” contained a screenshot of a MegaUpload download page showing a cracked copy of CD burning software Alcohol 120%.

Other correspondence quoted in the indictment appears to show key staff members sending each other links to copyright works hosted on MegaUpload.

One contained 100 MegaUpload links to content by recording artist Armin Van Buuren. Another, allegedly sent in December 2006 by Kim Dotcom to another staff member, carried a link to a music file hosted on a MegaUpload server entitled “05-50_cent_feat._mobb_deep-nah-c4.mp3”. No context for the sending of these links is given in the indictment.

Other emails show staff asking each other to help locate copies of infringing content including TV series The Sopranos and Seinfeld, and music from a band called Grand Archives. Again, no context is offered in the indictment.

An email sent in July 2008 shows a key staff member reporting an earlier conversation with another entitled “funny chat-log.”

“We have a funny business . . . modern days pirates,” the exchange begins. “We’re not
pirates,” came the reply. “We’re just providing shipping services to pirates.”

But aside from exchanging links to copyright works, the indictment claims that key staff members also uploaded material themselves including a TV show from the BBC and a copy of the movie Taken.

The indictment lists several other examples which are supposed to demonstrate that the admins of MegaUpload knew that their service was being used for the storage and distribution of illegal material.

Emails from customers are cited where they complain that for various reasons they’re unable to watch named copyrighted works. Others ask how to find pirate movies on Mega and are told to go to sites that index Mega-hosted material, such as the ThePirateCity.org, a site seized as part of Operation in Our Sites.

On at least two occasions the indictment reports key MegaUpload staff discussing TorrentFreak articles on seizure operations being carried out by the US authorities.

In one email, Kim Dotcom reportedly stated: “This is a serious threat to our business. Please look into this and see how we can protect ourselfs [sic],” adding, “Should we move our domain to another country, Canada or even HK?”

The indictment separately lists several movies being distributed from MegaUpload’s servers in the United States, all of which were not yet commercially available. There is no indication, however, that MegaUpload’s operators knew they were there.

On face value it would seem that in a handful of cited instances staff at the company did indeed link each other to copyright works, but when the massive scale of the MegaUpload operation is set beside them, their significance is put into a different perspective.

The issue of not taking down content is a fascinating one. MegaUpload is not on its own when it hashes content then allows users to access already-stored versions of the same files. Nevertheless, will taking down a specific URL and not the content itself be enough to appease the courts?

Finally, and despite the assertions of the MPAA, RIAA and the authorities, MegaUpload carried a huge amount of non-infringing content, giving the service itself “substantial non-infringing users”. Nevertheless, all content has now been seized, leaving millions of people and companies without their personal data.

Cyberlocker services and potential startups all around the world will be watching this case like hawks. Seismic doesn’t really come close.

Source: MegaUpload: What Made It a Rogue Site Worthy of Destruction?

Dotcom, a 37-year-old German citizen with joint New Zealand and Hong Kong residency, appeared alongside three other MegaUpload employees – site co-founder Mathias Ortmann, 40, chief marketing officer Finn Batato, 38, and programmer and networking expert Bram van der Kolk, 29.

The hearing in an Auckland district court heard how local police had been working with US authorities since 2011 culminating in raids yesterday on ten private and business locations. Among them was Kim’s residence, Dotcom Mansion, and what happened there resembles something from a movie.

New Zealand police sent 76 officers, some armed, to raid the property which reportedly housed 15 individuals including bodyguards, security staff, women and children.

“Police arrived in two marked police helicopters. Despite our staff clearly identifying themselves, Mr Dotcom retreated into the house and activated a number of electronic locking mechanisms,” Detective Inspector Grant Wormald told the court.

“While police neutralized these locks he then further barricaded himself into a safe room within the house which officers had to cut their way into,” Wormald added.

At the hearing, the first step to being extradited to the United States, all four defendants were denied bail and are due to reappear at another hearing next Monday. Police say there are no intentions of trying the defendants under local laws.

“This particular type of action around internet copyright infringement is a first in New Zealand in terms of an overseas person being attempted to be extradited to the United States,” said Intellectual Property Lawyer Rick Shera, as quoted by TVNZ.

Three other defendants – a German, a Slovakian and an Estonian – all remain at large.

Source: MegaUpload Founder Denied Bail At Extradition Hearing

As highlighted dozens of times before, companies making these accusations rely on weak IP address-only evidence and use their legal teams to intimidate their targets into paying up – guilty or not.

CD Projekt wisely moved to protect their hard-earned image and relationships with both the gaming press and their customer base, but quite rightly noted a few weeks ago that they were not the only companies sending out these letters demanding cash.

So, addressing concerns that CD Projekt might have been unfairly singled out, TorrentFreak decided to dig deep into the archives of various resources including legal firms, campaign groups and the account holders themselves, to find out which other games companies – either directly or through local distributors – have been generating revenue from cash settlement schemes in recent years.

We discovered that not only are new games being targeted but older ones too, possibly to bring in extra cash from games well past their sell-by date when it comes to generating profit from more conventional sources.

Atari, the distributor of the original The Witcher, pulled out of chasing alleged file-sharers in the UK several years ago, but like many of their competitors simply transferred their settlement businesses to Germany. Atari has been sending settlement demands of several hundred euros for several of its titles including Alone in the Dark, Test Drive Unlimited and 2011′s Test Drive Unlimited 2.

Survival horror fans might be interested to know that distributor Koch Media has been sucking the blood from alleged sharers of the Techland game Dead Island. Tales of Monkey Island distributor DAEDALIC Entertainment are doing the same for publisher Lucas Arts.

Those who prefer a good stealthy RPG might be surprised to know that alleged sharers of Eidos/Square Enix’s Deus Ex: Human Revolution are being crept up on and told to pay-up-or-else to the tune of 800 euros by local distributor Koch Media, as are those accused of obtaining Dungeon Siege III (800 euros on this baby) and Final Fantasy games for free.

Codemasters, another company that first tried the UK and then took their settlement work elsewhere, originally pursued alleged file-sharers over their Colin McRae Dirt game.

But having gotten bored with sending out letters for F1 2010, they are currently sending cash demands of 800 euros over their latest off-road installment, DiRT 3.

Ending the racing theme, RaceOn (BitComposer) and Nail’d (Techland) complete the grid.

Holy settlement letter Batman! The Eidos/Square Enix/Warner title Batman: Arkham Asylum has been the subject of an unknown number of cash settlement letters sent out in Germany.

If you like your adventures a little more open, Eidos/Square are back again, asking for several hundred euros from ISP account holders connected to Just Cause 2 downloads. The duo come in again on the 3rd person settlement front with Kane & Lynch 2: Dog Days, closely followed by the Prison Break: The Conspiracy action/adventure from Koch Media (yet again).

Tactical shooter fans might be concerned by the scattergun approach taken by (and here they are again) Codemasters when they ask for 800 euros in connection with their game Operation Flashpoint Red River. The same goes for Ubisoft when they send out letters to claimed Tom Clancy’s Rainbow Six:Vegas downloaders.

First person shooters are always enjoyable, but being put in the crosshairs for allegedly sharing Painkiller addons Painkiller:Resurrection and Painkiller:Redemption can’t be much fun, especially when there’s a 300 euro headshot at the end of it destined for local distributor Koch Media.

Finally, if simulators are more your thing, stand by for a realism overload. Airline Tycoon 2 and Tropico 3 and 4 (Kalypso Media), Cities XL 2012 (dtp entertainment), City Bus Simulator/Simulator Gold (Aerosoft), Airbus X (Aerosoft), and Agrar Simulator 2011 (Koch Media), are all keeping it super-real with multi-hundred euro settlement demands.

The bad news is that the above sample is just the tip of the iceberg – dozens of devs and distributors of lesser known games are sending out these letters demanding anything from 300 to more than 1000 euros to make cases go away. But despite there being many games companies at the end of these settlement chains, three local names – Koch Media, dtp entertainment AG and Kalypso Media GmbH – appear more than any other.

It would be great if the companies listed above followed CD Projekt’s example and reconsidered their support for these horrible settlement letters. If any gaming publications would like to see the full list of games companies engaged in these schemes, feel free to contact us and we’ll happily send them over.

Source: Square Enix, Eidos & Other Game Giants All Demand Cash From Pirates

The case was eventually adjourned, with accusations from Richard’s lawyer Ben Cooper that US authorities were unfairly trying to gain the upper hand through unreasonable delays. Nevertheless, all parties were back in court today to hear the judge’s ruling.

“There are said to be direct consequences of criminal activity by Richard O’Dwyer in the USA albeit by him never leaving the north of England,” District Judge Quentin Purdy said in his ruling. “Such a state of affairs does not demand a trial here if the competent UK authorities decline to act and does, in my judgment, permit one in the USA.”

“I reject all challenges advanced to this request. No bars or other challenge being raised or found, I send the case to the Secretary of State,” he concluded.

Richard’s most vocal supporter, his mother Julia, voiced her despair and continued with her criticism of the UK’s extradition treaty with the US.

“If [the US authorities] want to prosecute something they will. There’s no safeguards here for British citizens,” she said.

The Judge did not have the “technical brains to know about the whole thing,” she noted, adding: “That guy just lives and breathes extradition.”

Ben Cooper described Richard as an extradition and copyright law “guinea pig”, adding that he would launch an appeal.

Source: TVShack Admin Can Be Extradited To US, Judge Rules

The case had been brought by the major labels (headed by EMI) against local ISP UPC in an attempt to force it to block Internet piracy.

“It is not surprising that the legislative response laid down in our country in the Copyright and Related Rights Act 2000, at a time when this problem was not perceived to be as threatening to the creative and retail economy as it has become in 2010, has made no proper provision for the blocking, diverting or interrupting of internet communications intent on breaching copyright,” Justice Charleton’s judgment began.

The Judge noted that by not having this legislative mechanism in place, Ireland is non-compliant with its obligations under European law.

To address this situation and to appease the labels, late 2011 the government promised to publish an order early this year that would allow rightsholders to go to court to prevent the country’s ISPs from supplying a service which could provide access to infringing sites.

But despite the promises from Ireland’s Minister of State for Enterprise, EMI – who previously threatened to sue the state if they didn’t take the action promised in the previous paragraph – seem to have run out of patience before January even completes its second week.

Yesterday, EMI Records (Ireland) filed a lawsuit against the Irish state for failure to correctly implement certain provisions of EU copyright law.

Lawyer and lecturer at University College Dublin, TJ McIntyre, believes that the labels will rely on a principle under which damages against a state are possible if three conditions are met.

“First, that the result prescribed by the directive should entail the grant of rights to individuals; secondly, that it should be possible to identify the content of those rights on the basis of the provisions of the directive,” he writes.

McIntyre adds that the third condition, that there should be a “causal link” between the breach of the State’s obligation and the losses suffered by (in this case) the labels, could prove problematic.

“Establishing a causal link between Irish law and filesharing will be difficult, particularly given the evidence from elsewhere that blocking is ineffective,” he concludes.

Site blocking could be a last resort for the record labels. Following an investigation into the legality of a 3 strikes-style regime operated by Irish ISP Eircom, in December the country’s Data Protection Commissioner ordered the practice to be brought to a halt on privacy grounds.

Source: EMI Sues Irish State For Not Implementing Piracy Blocking Provisions

Officers from the National Directorate for Combating Organized Crime said they raided a total of three locations in the western city of Pernik, the central northern city of Gabrovo and the capital Sofia. The aim: stop the illegal distribution of music and movies.

Although not directly named in yesterday’s Interior Ministry announcement, the action was targeted at P2PBG and Elit-BG, sites with combined userbases of at least 750,000 members.

P2PBG alone had more than 600K members but the exact userbase of Elit-Bg is unclear since a database issue last year caused them to ‘lose’ 200K members. Nevertheless, their popularity placed them in the country’s top 5 most popular torrent sites.

The authorities say that they have arrested two individuals, allegedly the sites’ owners. According to the Interior Ministry, one of them is “a minor”. TorrentFreak is informed that he is a teenager, just 17-years-old.

While computer equipment and other hardware is said to have been seized, that does not appear to include site hardware. Both sites remain up on the same host located outside the country in Germany. Access to their trackers, however, has been disabled.

A notice on P2PBG declares: “Access to the torrent section is disabled for all users. Please save your angry comments.”

The Interior Ministry described the raids as “another successful operation” in the Ministry of Culture’s overall plan to crack down on copyright infringement.

Source: Anti-Mafia Unit Raids Large Torrent Sites, Arrests 17-Year-Old Admin

Five people connected to NinjaVideo were arrested but it took until September 2011 for them to be indicted by a federal grand jury. One of those indicted was site co-founder Hana Beshara.

Later that month, Beshara – known online by her pseudonym Phara, and referred to by NinjaVideo members as their “Queen” – pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia.

Beshara admitted her role in the founding of NinjaVideo during February 2008 and confessed to negotiating agreements with online advertisers. In total the site is said to have generated revenue and donations totaling around $500,000. Of this amount, Beshara admitted personally receiving around $200,000.

Today, 30-year-old Beshara was sentenced. For crimes of conspiracy and criminal copyright infringement, she was sentenced to 22 months in prison followed by 2 years probation and 500 hours of community service. She will have to repay the money she made from the site, a total of $209,826.95, and forfeit financial accounts and computer equipment.

“Hana’s lawyer was happy with the sentence,” a source close to NinjaVideo told TorrentFreak.

“Judge Trenga rarely gives the max penalty like some judges do. He was clearly unhappy with her being unremorseful but Hana does not separate her accomplishments in building the community with the crime,” the source added.

“Beshara had several character witness letters and made a statement to the court. The judge recognized that she is a capable, intelligent woman who created a high quality site.”

Last year, NinjaVideo co-founder and coder Matthew Smith (known online as Dead1ne) also pleaded guilty to conspiracy and criminal copyright infringement and was due to be sentenced December 2011. A delay means the 23-year old will be sentenced at a later date.

Joshua David Evans (known online as Wadswerth), 34, of North Bend, Wash. previously pleaded guilty to one count of conspiracy and one count of criminal copyright infringement relating to the release of the movie Iron Man 2 before its commercial premiere.

Jeremy Lynn Andrew (known online as htrdfrk), a 33-year-old of Eugene, Ore. pleaded guilty to a single count of conspiracy.

Justin A. Dedemko (known online as Afr1ka), 28, of Brooklyn, N.Y was responsible for uploading content to NinjaVideo and marketing the site. He previously admitted receiving just over $58,000 from site revenue and will pay restitution in that amount.

All face a maximum of five years in prison and a $250,000 fine when they are sentenced in the coming months. Beshara’s relatively lenient sentence (considering the maximum available) is an indication that their sentences are likely to be no more than 2 years.

A fifth defendant in the case, Zoi Mertzanis of Greece, known online as “Tik”, is accused of being one the site’s most active uploaders. A warrant is outstanding for his arrest.

Source: NinjaVideo Founder Sentenced To 22 Months in Prison

It all started in 2007 when a jury hit Thomas with a $222,000 verdict when she was found guilty of sharing 24 songs using the file-sharing client Kazaa. In 2008 Thomas appealed this verdict and a mistrial was declared, with the judge ruling that the fines were “disproportionate to the damages suffered.”

The case went up for re-trial before a new jury in 2009 where Thomas lost and was ordered to pay $1.92 million in fines. She then filed for a re-trial and in November 2010 a jury again found her guilty and awarded a total sum of $1.5 million .

Last year the case moved in another direction. Describing the massive damages as “monstrous and shocking” U.S. District Judge Michael Davis significantly reduced the earlier fine. Instead of $1.5 million, the judge ruled that $2,250 per song, for a total award of $54,000, is the maximum consistent with due process.

“The Court concludes that an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable,” Judge Davis wrote.

The RIAA was disappointed by the verdict of the federal court, and is now hoping to reinstate the initial $222,000 damages award through an appeal. This week the music lobby group filed a brief in which they claim that this amount is not “monstrous and shocking,” and neither was the $1.5 million fine.

“Neither the first jury’s $9,250-per-work award nor the third jury’s $62,500-per-work award is more substantial than the Constitution allows,” the RIAA concludes.

The RIAA further criticizes Judge Davis’ ruling that any fine higher than $2,250 per infringed song requires some proof of actual damages. In other words, the RIAA would have to show that there is “some” relation with actual damages suffered by the copyright holder. According to the RIAA, neither the copyright act nor the due process clause requires this.

“Neither its legal analysis nor its factual analysis supports the court’s holding that the relationship between actual and statutory damages renders any award greater than $2,250 per work unconstitutional,” writes the RIAA.

The RIAA is not alone in their assessment, as they are now joined by the MPAA who this week filed an amicus brief in the case.

“That ruling improperly would require copyright owners who elect statutory damages to present proof of actual damages. Requiring such proof would significantly alter well-established ground rules for copyright litigation, add substantial practical burdens and unreasonably increase the costs of pursuing such litigation,” the MPAA writes.

In addition, the RIAA argues that Judge Davis made a mistake by ruling that “making a work available” is not part of the distribution right protected by the Copyright Act.

“The District Court erred in rejecting the first jury’s verdict on the mistaken ground that the Copyright Act does not protect the copyright holder’s long-established exclusive right to control the terms on which a work is ‘made available’ to the public,” the RIAA writes.

Again, the MPAA sides with the RIAA in its writing to the court.

“That right is, in fact, an international copyright norm. The right has particular importance in a digital age where unauthorized third parties routinely make available valuable copyrighted works for instantaneous dissemination to millions of Internet users around the globe,” they write.

It is now up to the court to decide if the arguments provided by the billion dollar entertainment companies hold any ground.

To be continued, indefinitely.

Source: MPAA Joins RIAA in “Monstrous” Jammie Thomas Appeal

More than 100 leaked cables showed that the US had helped draft new Spanish copyright legislation and had heavily influenced the decisions of both the government and opposition.

Now, another diplomatic leak has revealed how the US voiced its anger towards outgoing President Jose Luis Rodriguez Zapatero last month upon realizing that his government was unlikely to pass the US-drafted Sinde (site blocking) Law before leaving office.

In a letter dated December 12th and sent by US Ambassador Alan D. Solomont to the Spanish Prime Minister’s office, the US expressed “deep concern” over the failure to implement the SOPA-style censorship law.

“The government has unfortunately failed to finish the job for political reasons, to the detriment of the reputation and economy of Spain,” read the letter obtained by El Pais.

Racing against the clock in the final days of the government, Solomont had one last push.

“I encourage the Government of Spain to implement the Sinde Law immediately to safeguard the reputation of Spain as an innovative country that does what it says it will, and as a country that breeds confidence,” he wrote.

But along with the pleas came the stick.

In the letter, which was also sent to Minister of Culture Ángeles González-Sinde after whom the law is named, Solomont noted that Spain is already on the Special 301, the annual report prepared by the Office of the United States Trade Representative (USTR) detailing ‘trade barriers’ based on intellectual property issues.

Solomont’s threat was that should Spain not pass the Sinde Law (described by some as the Spanish SOPA) then the country would be degraded further and placed on the Priority Watch List. This serious step would mean that Spain was in breach of trade agreements and could be subjected to a range of “retaliatory actions”.

In the event Zapatero’s government left office without passing the law, but the incoming Partido Popular (People’s Party) were quickly pressured by the US to take the necessary action.

In another media leak it’s now been revealed that American Chamber of Commerce in Spain chief Jaime Malet wrote a cautionary letter to incoming Spanish Prime Minister, Mariano Rajoy. He warned of the potential flight of foreign investment from Spain and urged him to take action on the protection of intellectual property once in office.

“[The law's] lack of approval before the elections has been a blow to the country’s seriousness in this matter of such importance,” said Malet, while urging Rajoy to “to retrieve the consensus reached.”

Rajoy’s government quickly responded and fully implemented the legislation within 10 days of taking office.

Source: US Threatened To Blacklist Spain For Not Implementing Site Blocking Law

Today, Purewal published another on the same subject in the online edition of Edge, which in my opinion is the most intelligent games publication ever committed to paper. As a fanatical gamer, former 8bit games coder, and proud owner of the publication’s issue 1 from 1993, I felt compelled to respond.

“By far the most emotive argument that is often proffered is that CD Projekt are blackmailing people by saying ‘Pay up… OR ELSE!’ and thereby are removing access to justice and denying due process and so forth. Sadly, from a legal perspective, the case seems to be slightly different,” wrote Wrigley in the initial piece.

“…if you haven’t downloaded The Witcher 2 illegally and CD Projekt cannot prove that you have then actually the entire process won’t cost you a single penny,” he added.

What we have here is someone who writes clearly with an undoubted understanding of the mechanics, but also seems to lack specific experience in a practical boots-on-the-ground sense.

Here at TorrentFreak we aren’t lawyers, but we have spoken intimately with dozens of people targeted in similar actions and for them to deal with court-bound accusations effectively they need lawyers, and they cost lots of money. It is not enough to say “oh, well, you’ll get the money back when you win”, because many of these people don’t have the money in the first instance.

In any event, why should innocent people be dragged through hell for months on the word of a faceless and largely unaccountable anti-piracy company? Well let’s not worry right now, since Gamer/Law seems to think that proving innocence is easy.

“It should first be noted that if CD Projekt do take you to court, they have to prove that you downloaded the game [TF note: It's uploading, not downloading], the only thing that you will ever have to try to prove is that their proof is wrong. This could actually be easier than anticipated, as IP tracing is far from a reliable source of evidence,” writes Wrigley.

However, proving innocence in the legal arena chosen by CD Projekt is not easy at all. After first hiring a UK law firm where the lawyers carrying out their pay-up-or-else scheme were later severely disciplined for their activities, CD Projekt shifted their enterprise to Germany to claim money from alleged file-sharers there.

And getting convictions in Germany is like shooting fish in a barrel.

Just recently a Retired, Computerless Woman was fined there for pirating a ‘hooligan’ movie. Her lawyer, Christian Solmecke, with law firm Wilde Beuger Solmecke, outlined her desperate situation to TorrentFreak.

“Normally the copyright holder has to prove who did the copyright infringement. As this is hard for him – because he has no chance to look into a thousand houses – the courts in Germany alleviate this burden of proof,” he explained.

Proving a negative was ultimately impossible for the woman and she had to pay 650 euros to the claimant. This is the environment CD Projekt know they are working in and they will be making nice profits from settlements because after hiring a lawyer at their own expense, people learn that they cannot win in court.

The rest of the initial Gamer/Law post had many other issues, but we don’t have all day and there is a more pressing issue – a fresh ‘open letter’ just published in the online edition of my beloved Edge.

“In case you hadn’t guessed, this is a letter to those folks who oppose developers taking legal action against people who download and play their games without paying. Hello,” begins Jas Purewal.

I’m going to ignore the exclusive nature of this invite and consider it directed at me, since as the title of this piece points out, you don’t have to support piracy to detest these hateful schemes.

Purewal lists several reasons people put forward as to why game devs shouldn’t chase down alleged pirates. His first two points – Technological Reasons and Evidential Reasons – are shown separately but in reality they are utterly intertwined. Here are some observations of our own on the same points:

1. CD Projekt refuse point-blank to reveal who their anti-piracy company is (let alone allow anyone a look at their systems) and as we can see from the ‘hooligan’ case listed above, in their chosen territory, Germany, conveniently there is a reverse burden of proof. In that case the court didn’t even examine the technical evidence. But for a moment, let’s pretend that CD Projekt’s impossible claim of 100% accuracy is real….

2. In previous UK cases, after initial harvesting IP address ‘evidence’ was shifted from company to company, from format to format, with no safeguards and no checks. IP addresses were even copied/transposed by hand (often incorrectly), and the wrong account names were attached to outgoing letters. Trust us, in these case humans can screw anything up, and they have done so in the past, royally.

3. CD Projekt’s ‘perfect’ anti-piracy contractor sends an IP address and a timestamp to the ISP of the alleged pirate and they match it to the correct subscriber – well, sometimes they do. There were several proven cases in the UK where ISPs identified the wrong subscriber and in a huge number of cases couldn’t identify the subscriber at all, which is hardly confidence inspiring.

Only last year, Irish ISP Eircom incorrectly identified 300 account holders as Internet pirates, despite them allegedly receiving the correct information from an anti-piracy company. CD Projekt can not claim to have a complete chain of accurate evidence because they are quite simply not in control of all of it.

Worryingly, Purewal (a UK lawyer) also rolls out the tired notion that it is an account holder’s responsibility to protect his own Internet connection, along with the implication that the person is then responsible for the actions of others. In previous UK cases that didn’t wash with the courts but wait – that is the case in Germany where CD Projekt is looking for settlements. Rest assured, they know that – why do you think they gave up on the UK?

Purewal goes on to give a 5/10 credibility mark to “The ‘little old lady’ reason”, that sending scary letters only scares people. Well, of course they do. The claimants have to give the impression that the end result of not settling is legal action or no-one will hand over their money, but as we know, these companies rarely go to court unless it’s an open and shut case. Like they all are in Germany.

Since CD Projekt’s actions are Purewal’s cited reason for his open letter, let’s end with them.

The company says they’re taking this action to reduce piracy, but the only reason the wider world knew about their lawsuits is because TorrentFreak wrote about them. If we had written something else that day, people would still not know, and if they don’t know they can’t ever be deterred from piracy.

But if people do know, they won’t get caught, and if they don’t get caught they can’t get a $1,000 invoice. Without one of those, CD Projekt don’t get paid.

What we have here is a business model – a complaint filing machine that generates around $1000 a time, split between a law firm, the anti-piracy company and CD Projekt, and the more letters sent out, the better it is for everyone. There are no outward checks, there’s no accountability and absolutely no compassion or understanding for those wrongfully accused through hidden incompetence.

This is why I, a prolific games player and games buyer of more than three decades standing, say that you don’t have to support piracy to hate bullying, intimidation, and abuse of position.

But, most importantly, the reason why games companies shouldn’t embark on these schemes is a lot more simple. They will ruin their hard-earned image and do nothing – NOTHING – to reduce piracy.

Source: You Don’t Have To Support Piracy To Hate Bullying & Extortion

This state of affairs led to huge pressure on Spain from the United States, and behind closed doors the two countries drafted new laws in preparation for a time when Spain was ready to clamp down on file-sharing. That time has come.

After taking power in mid-December, Spain’s incoming Partido Popular (People’s Party) government has now fully approved their pending Sustainable Economy Law (LES), legislation designed to stop Spanish Internet users from accessing file-sharing sites.

Deputy Prime Minister Maria Soraya Saenz de Santamaria announced at a press conference that the so-called Sinde Law, named after outgoing Minister of Culture Ángeles González-Sinde, will now be fully implemented.

The legislation, which will give the authorities the power to swiftly close file-sharing sites or have them blocked at the ISP level, was actually passed by the Spanish Parliament in February 2011, but the former government failed to enact a supporting regulatory framework and it has laid dormant since.

In her speech, Santamaria said that the new law’s objective was “to protect against the plundering of intellectual property rights” and to ensure that Spain “joined the international standard in the fight against online piracy.”

The decision on whether to shutter or block file-sharing sites will sit with the Intellectual Property Committee. This panel will have the power to take action against those providing illegal content and entities providing infrastructure, all within 10 days of a complaint by rightsholders.

Source: Website Blocking Law Implemented By New Spanish Government

Inspired by the principles behind the Freenet network, the Winny application attempted to make its users anonymous and although this was largely achieved, flaws were later exploited by police and copyright holders.

Kaneko always insisted that his software was not designed with copyright infringement in mind, but that did not stop him being targeted by the police. During May 2004, Kaneko was arrested by the High-tech Crime Taskforce of the Kyoto Prefectural Police on suspicion of conspiracy to commit copyright infringement.

After being released on bail the next month, the case against him started in September 2004 at the Kyoto District Court. During December 2006 he was found guilty of assisting in the copyright violations of Winny users and sentenced to pay a fine equivalent to $19,200.

Kaneko went on to appeal the decision and in October 2009 the Osaka High Court overturned the decision on the basis that Kaneko had never promoted Winny for illegal uses. This time the prosecution lodged an appeal, which took the case to the highest court in the land.

This week, Japan’s Supreme Court delivered its ruling on the case. The decision of the Osaka High Court was upheld and after 7 long years Kaneko was finally cleared of all charges.

Although there was one dissenting voice, the majority of a panel of five judges agreed that it could not be proven that Kaneko, now 41, had ever intended to promote violations of copyright law by the use of Winny. The decision on whether to break the law lay with users of the software, the judges noted.

Under current law prosecutors can still appeal the decision on technical grounds but assessments in the Japanese media suggest the ruling will stand.

The case has been closely watched by technology advocates who feared that a decision against Kaneko could have resulted in a chilling effect on software innovation. Such was the concern, a domain set up by the development community days after Kaneko’s 2004 arrest received a million hits and raised $100,000 for his defense in just 24 hours.

In the end the Supreme Court’s ruling was in tune with similar decisions around the world. As long as products aren’t marketed for infringing uses, their creators stay within the law.

Source: File-Sharing App Creator Not Guilty of Copyright Infringement

At 09:10 during a cold January morning in 2010, the defendant in the case says she was tucked up in bed. A movie copyright holder, however, insists the retired single woman was illegally sharing files on the Internet.

The settlement letter sent to the woman by the copyright holder stated clearly that on January 4th she’d been using the eDonkey network to share a violent film about hooligans. For this offense she must pay compensation of around 650 euros or face court, they said.

Like so many claims of this nature, the accusation was problematic. Although she previously subscribed to a 2-year Internet and telephone package, six months earlier the woman had sold her computer and didn’t even maintain an email address. After refuting the allegations of the rightsholder, the case went to court.

The Munich District Court handled the case, and heard evidence that not only is the woman computerless, she lives alone and doesn’t possess a wireless router either. How the alleged offense could have been carried out even by a third party remains a mystery.

Nevertheless, none of the above protestations were of interest to the court. Despite the fact that the copyright holder and/or their tracking company could have made errors, or that the woman’s ISP could have identified her account incorrectly, none of these avenues were examined.

“Normally the copyright holder has to prove who did the copyright infringement. As this is hard for him – because he has no chance to look into thousand houses – the courts in Germany alleviate this burden of proof,” explains Christian Solmecke, a lawyer with Wilde Beuger Solmecke, the law firm that defended the woman.

Solmecke told TorrentFreak that initially all a copyright holder has to do is show that a protected work has been traded via a specific IP-address, then the accused has to prove their innocence.

“In the next step the defendant has to prove, that neither he nor anyone else who had access to his internet account did the copyright infringement. In my opinion our client has proved that fact. If you have no computer and no W-LAN, there has to be a failure in the backtracking of the IP-address,” he added.

The bottom line in Germany is that account holders are responsible for everything that happens on their account and if they can’t prove their innocence, they are found guilty. The woman must now pay just over 650 euros in damages to the copyright holder.

There can be little doubt that German law is tipped heavily in the favor of rightsholders. Little surprise then that Germany is without doubt the worst place in the world for pay-up-or-else-schemes. So how often are people wrongly accused?

“Every second person tells me, that he or she appears to be wrongfully accused,” says Solmecke. “Some of them lie even to their lawyer but most of them tell the truth. From my point of view, there has to be a big mistake in some of the different backtracking-systems.”

So for now the formula for rightsholders seems incredibly simple.

IP address. Accusation. Profit.

Source: Retired, Computerless Woman Fined For Pirating ‘Hooligan’ Movie

One Year Later: Google’s Report Card on Making Copyright Work Better Online is the embarrassingly patronizing title of a new report from the IFPI detailing Google’s progress on copyright infringement issues over the past 12 months. Unsurprisingly the whole thing reads like a school report, with the IFPI setting out what Google should have achieved and then noting what ‘grade’ the search engine actually achieved in each task.

“While Google has taken some modest steps to deal with copyright infringement online, the promises made by Google remain unfulfilled,” the report begins.

“Despite its steps, the simple fact is that Google continues to both (i) receive financial benefits from sites and applications that engage in piracy and (ii) place artificial road blocks in rights holder efforts to protect their content online, contrary to the DMCA.”

The report notes that Google made a promise to act on reliable copyright takedown requests within 24 hours and is commended for exceeding that. Nevertheless, a company capable of returning search results “in nanoseconds” should be doing better, IFPI suggests. Furthermore, the music group states that Google has put a limit on the number of infringement reports that can be filed each day that “do not scale to the scope of piracy online.”

Google is also criticized for not adequately screening apps for compatibility with the music industry’s interests before allowing them onto the Android Marketplace, and then profiting from them in the period before they are taken down.

Surprisingly, given the recent and wrongful Mega Song takedown, IFPI criticizes Google for giving users the right to issue copyright claim counter notices without them “having a clear understanding” of the rights issues involved.

“We find it disturbing that Google admonishes rights holders to ensure their claim is valid and warns them about penalties for false claims, but fails to hold the average user to similar standards. Is that neutral, or is that tipping the scales in a manner that benefits Googles bottom line?” the report asks.

On the issue of censorship of its AutoComplete feature it’s noted that some progress has been made but, no surprise, Google needs to do better. “For example, when “lady gaga mp3″ is typed into the search bar, Autocomplete directs a user to choose “lady gaga mp3 free” or “lady gaga mp3 download,” results that lead to illegal sites,” IFPI complains.

Referencing Google’s AdSense program, IFPI says that Google should proactively screen all sites to which it serves ads to ensure they aren’t “pirate sites,” a truly massive and almost impossible task given that music licensing is IFPI members’ responsibility and area of specialty, not Google’s.

The search engine is also criticized for not prioritizing “authorized” over “unauthorized” sites in its search results. Google’s YouTube doesn’t avoid criticism either.

“Increasingly, music-oriented videos posted on YouTube include links to download the sound recording associated with the video illegally. This is in violation of YouTube’s own policies. In addition, YouTube hosts videos explaining how to game the Content ID system and how to rip the audio content to create an MP3 file from a music video,” the report notes.

Overall, Google is told that it must do better if it is to meet the standards required by the music industry. However, what is also clear from the language in the report is that improved results will only lead to demands for even greater “grades” next year.

The school report ends with Google getting admonished for its negative attitude in class.

“While professing to agree that copyright infringement is a serious problem that needs to be addressed, Google raises alarmist, self-serving criticism to any legislative proposal to deter or thwart rampant copyright infringement,” notes the report (pdf).

“Google should stop engaging in destructive rhetoric and come to the table with constructive proposals to address this problem,” it concludes.

There’s no doubt that Google has its faults, but treating the company as if it is the one engaging in rampant copyright infringement can’t be a sustainable tactic. Admonishing and patronizing it in public won’t help either.

Source: IFPI and RIAA Patronize Google With Anti-Piracy “Report Card”

“We urge Government to ensure that in future, policy on Intellectual Property issues is constructed on the basis of evidence, rather than weight of lobbying,” was the damning indictment on past copyright consultations and legislation efforts, and has clearly prodded Her Majesty’s Government into action.

Last week, the UK’s Intellectual Property Office opened a consultation into the topic, covering several proposals. Minister for Intellectual Property, Baroness Wilcox stated:

“The Government is focused on boosting growth and some freeing up of existing copyright legislation can deliver real value to the UK economy without risking our excellent creative industries. We are encouraging businesses to come forward with thoughts and evidence on our proposals to help us achieve this.”

Along with the 171-page consultation document comes a handy little 5 page document (pdf) on data and evidence which is going to leave people at the British Phonographic Institute, the Federation Against Copyright Theft, and other similar industry lobby groups feeling a little sick.

Claims will now have to be backed with numbers, and those numbers will have to be attributed, and where possible, peer-reviewed. Graphs should be accompanied with the raw data in an electronic appendix (to avoid visual manipulation of data) and studies cited will have to include the name of the group that funded it.

Of course, tech-heads also put on notice.

“Documents to be written in clear language: a summary to be given, where possible without the use of technical language”. This is a clear warning for those of us who talk of technical issues beyond general knowledge, since as a rule, politicians don’t understand the Internet.

Yet it’s in the footnotes that the barbs really dig deep into the sides of Big Copyright’s lobby groups, with a demonstration of how figures can be manipulated. In the example given, they show how an actual loss of £55 can be turned into an estimated loss of £451. The press have started to doubt some of the claims by the copyright industry, but now it seems governments are too.

It’s almost as if someone’s been reading our articles…. (such as 1, 2, 3, 4, 5, 6, 7, 8 etc.)

The consultation closes March 21st 2012, and can be found here.

Source: UK Copyright Consultation Wants Facts Not Fiction

His solo, label-less productions have amassed nearly 6 million views and in the last month alone (on the gaming topics of Assassins Creed, Skyrim and the upcoming Grand Theft Auto V) have been viewed more than 2 million times.

Following on from his 2010 track “Death of ACTA“, today Dan releases his second track targeting copyright legislation, this time homing in on the pending SOPA bill in the United States.

“As an internet geek, a musician, and a non-evil person, SOPA is abhorrent on several fronts,” Dan told TorrentFreak. “It threatens the future of the internet, which is something far more valuable both commercially and socially than the entertainment industry ever has been, or ever will be.”

Dan recognizes that everything we do is influenced by something else, and richer cultural landscapes can be achieved through remixes, mashups and sharing.

“Creativity is all about interpreting and re-imagining what you see and hear around you. The idea that creativity exists in some kind of vacuum, and that you’re not a real artist unless you can make something ‘completely original’ is not only stupid, it contradicts the most fundamental axioms of how the universe works,” he adds.

“Thirdly, the internet is an amazing new forum for free speech and holding those in power to account. The idea that governments and even private corporations can police the internet and decide what people on a global scale are allowed to say and hear is tyrannical.”

In his new track (titled ‘SOPA Cabana’) the story is told from the perspective of an old man in a post-SOPA future, looking back fondly at the days when the internet was free. The song comes complete with a crowd-sourced video and input from Dan’s fans who join with him in opposing SOPA.

“After I finished writing the song, I put a post on my Facebook wall asking people to take photographs of themselves presenting lines from the song. The response was phenomenal, and I ended up with far more volunteers than I could include in the video,” Dan told TorrentFreak.

“People from all around the world wanted to share in the creative process, for free, and to me that demonstrates the best of what the Internet is about. I hope it comes across as a great example of precisely what SOPA will destroy – free speech, free culture and a free internet,” Dan concludes.

Enjoy the track.

Source: File-Sharing Darling Dan Bull Publishes Anti-SOPA Rap

Born in 1979, Soto had been in the computer business since he was 16 years old and had created several file-sharing applications including Blubster (the so-called “Spanish Napster”) Piolet and Manolito.

But the record companies claimed that Soto designed the software with the express intent of providing a platform for Internet users to download and share music for free, a situation they describe as “unfair competition.” Pablo was also accused of creating file-sharing applications in order to profit from infringements of the plaintiffs’ copyrights.

Following a 2009 trial and several years of litigation, Madrid Commercial Court No. 4 has now delivered its verdict. It rejected the compensation demands of the labels and ruled in favor of the developer, declaring that his technology is “totally neutral.”

“An analogy would be like if we created a private group of friends to share some information, photographs for example,” the judge wrote in his ruling. “But you can not then blame the developer [if people chose to share copyright material], since the only thing he has done is connect the friends.”

The court also rejected the claims of unfair competition, noting that Soto isn’t in the business of making and marketing records, and the plaintiffs aren’t in the file-sharing business.

“We are extremely grateful to the court for finding not only in our favor, but in favor of justice, innovation and in equal access to digital distribution,” said Pablo Soto, founder and CEO of MP2P Technologies. “The copyright conglomerates would like to stifle innovation but today’s significant ruling against this tactic echoes around the globe.”

In an interview with 20minutos.es, Soto extended thanks to his lawyers Javier de la Cueva and David Bravo and noted that although delighted with the outcome (“I feel like i’ve crossed the Gobi desert with no water”), both he and his company have been deeply affected by the litigation.

“I had a company with eight years of work behind it but following the lawsuit I had to reduce staff by more than a half,” said Soto. “The funding was reduced to zero, no-one wanted to invest in a company being sued for 13 million euros.”

Aside from the generalities of the complaint, the case has been controversial since the start. In preparation for filing suit the labels went as far as to hire a private detective who turned up at Pablo’s offices masquerading as a customer. Using a hidden camera the detective took photographic ‘evidence’ which later turned up in court filings.

Promusicae president Antonio Guisasola said the decision will be appealed and expressed hope that in future the new Spanish government would take “resolute action” against people like Soto.

Source: “Spanish Napster” Victorious As Court Rejects Major Label Copyright Case

Eircom announced in December 2010 that it would be “proceeding with implementation of the protocol which could result in the suspension and ultimately disconnection of broadband service for those customers who deliberately and persistently infringe copyright,” but by October 2010 things we already going wrong. Due to a mix up, Eircom sent out around 300 warning letters to completely innocent subscribers.

This huge error ushered in the involvement of Ireland’s Data Protection Commissioner (DPC) and a wider investigation into the legality of the entire three strikes system. Now, according to a report, that decision is in and for the music industry it’s the worst possible news. The DPC has ordered a complete halt to the practice on privacy grounds.

“Now both the courts and the official DPC are beginning to realize the fundamental right of people to access the Internet, and not to be monitored while they do so,” says lawyer TJ McIntyre of Digital Rights Ireland.

But before free-flow-of-information proponents get too excited, the news is countered this morning by a sobering report which says that if file-sharers can’t be cut off from the Internet, then file-sharing websites shall be made forcibly unavailable to them.

According to The Irish Times, Minister of State for Enterprise Seán Sherlock will publish an order early 2012 that will allow rightsholders to go to court to prevent the country’s ISPs from supplying their subscribers’ access to infringing site. What actually defines an infringing site remains to be seen.

The action comes in response to threats from recording label EMI, which said it would take legal action against the country if the government there failed to take action. In response the Department of Enterprise, Innovation and Jobs wrote back to EMI confirming the order would be published and entered into law next month.

The move follows legal action by IRMA against ISP UPC, which ended in 2010 with Mr Justice Peter Charleton acknowledging that recording companies were being harmed by Internet piracy but that current law did not provide for blocking injunctions.

Source: File-Sharing 3 Strikes Killed in Ireland, Government Promises Site Blocking

On Wednesday, Megaupload filed for an ex parte restraining order against UMG, in an effort to restrain the label from:

(1) attempting to bar the distribution, hosting, linking, or display of the MegaUpload Video at issue in this case; (2) submitting or advancing any “takedown notices” under the Digital Millennium Copyright Act; or (3) declining any request by MegaUpload to withdraw any takedown notices with respect to the MegaUpload video.

The judge in the case, Claudia Wilken of the US District Court for Northern California, deferred judgment until today (December 16th) to allow UMG a chance to respond.

The company did that last evening and its contents are set to take this controversy to a whole new level. First, a little background.

In an attempt to reduce instances of copyright infringement, YouTube created the Content ID system (further analysis in respect of this case from Ben Jones) which gives copyright owners the opportunity to take a number of actions should their content be uploaded by other users.

Rights owners can choose to ‘monetize’ videos through adverts, restrict access to them on a regional basis, or initiate a worldwide block. In its action against Mega Song, Universal chose the latter.

But while one might naturally expect that UMG made a legitimate DMCA takedown complaint (and one that has legal implications should it be wrongfully made) Universal insists that was never necessary.

“The UMG-YouTube agreement grants UMG rights to effect the removal of user-posted videos through YouTube’s Content Management System (‘CMS’), based on a number of contractually specified criteria that are not limited to the infringements of copyrights owned or controlled by UMG,” the record label states in its filing.

What that means, in case the preceding paragraph wasn’t clear enough, is that UMG has a private outside-the-DMCA agreement with YouTube that it can take down other people’s content from YouTube even when it doesn’t infringe their copyrights.

Indeed, in UMG’s 18-page filing not once does the company give any reason or even a hint why it had Megaupload’s Mega Song taken down from YouTube. At no point does UMG claim that the video infringed its copyrights and the previous claim, that the video featured one of its artists, is completely absent.

Nevertheless, as the legal battle continues in the background, Megaupload is today celebrating a significant interim success.

“Victory,” said Megaupload founder Kim Dotcom in an email to TorrentFreak this morning. “Our video has been restored on Youtube!”

It appears that Google-owned YouTube gave UMG an ultimatum – show us you have the right to stop us displaying Mega Song or it’s going back up. UMG deliberately missed their deadline to respond (UMG say it treated YouTube’s statements as “self-effectuating”) and now the video is back online and showing 286,000+ hits.

Of course, if Universal hadn’t deliberately censored Megaupload’s content the hits would have been substantially higher and the spread even more significant. Nevertheless, for opponents of overreaching and in this instance somewhat arrogant copyright holders abusing their position for their own ends, the Mega Song takedown is a gift that will live on.

“Our legal battle with UMG is ongoing and we are going to reveal the whole truth about this censorship and the illegal take down,” adds Kim. “Lets join together against Internet dictatorship by corporations.”

So once again, courtesy of YouTube, here is the Mega Song in all its glory. Will the viral campaign regain its momentum? Embed the video and let the readers decide.

Source: Megaupload Video Reinstated, Universal Says “You Can’t Touch Us”

Last week the major publisher picked up the pace by filing another mass-lawsuit, yet again targeting those sharing the “For Dummies” series online. The complaint lists 36 IP-addresses through which the defendants downloaded and shared titles including “Hacking for Dummies,” “Vegetable Gardening for Dummies” and “Cooking Basics for Dummies.”

In nearly all BitTorrent lawsuits that have been filed in the US, the copyright holders do not intend to file individual cases. Instead, they want to obtain the identities of account holders behind IP addresses so they can send a settlement claim ranging from a few hundred to a few thousand dollars.

TorrentFreak got in touch with the book publisher to find out if their end game is any different. It appears not.

“Our intention is to stop the infringement and let individuals know that they are violating the law and depriving the creators of the works of rightful compensation. Our preference is to educate, settle, and prevent further infringement,” Wiley’s attorney William Dunnegan told us.

Aside from a settlement, Wiley also hopes the legal action will deter others from engaging in the same behavior. This is the same approach the RIAA took when it got involved in mass-lawsuits years ago.

Although the strategy works in theory, the problem is that the evidence the company holds against file-sharers will never be tested in court. This is an issue, because due to faulty evidence many people have been wrongfully accused of sharing copyrighted works on BitTorrent. When tested, the evidence can turn out to be untrustworthy.

In a past RIAA court case experts described the evidence gathering techniques “as factually erroneous”, “unprofessional” and “borderline incompetent.” In addition, academics have shown that due to shoddy technique even a network printer can be accused of sharing copyrighted files on BitTorrent.

Wiley’s attorney is aware of the critique, but says they do everything they can to prevent screw-ups.

“We understand that the ISP account holder may not be the actual downloader. That’s why we will do due diligence after we receive the information from the ISP,” Dunnegan told us. The lawyer didn’t want to elaborate on what steps are taken but said that they “have a flexible approach depending on the situation.”

Thus far things are going smoothly for the book publisher in court. In their first case District Court Judge William Pauley recently ordered that Wiley can send subpoenas to the ISPs of the defendants, which means that the first settlement letters should go out soon.

Source: ‘For Dummies’ Publisher Sues BitTorrent Users to “Educate and Settle”

Those provisions include Internet disconnections for persistent pirates, and as of October this year 60 French Internet subscribers were on their third and final strike.

This morning, however, we’re left wondering if Sarkozy, his family and French ministers will be able to answer any emails in the months to come.

As reported to TorrentFreak this morning by Nicolas Perrier of Nikopik, people using IP addresses allocated to the Élysée Palace (62.160.71.0 – 62.160.71.255) have been very naughty indeed.

According to data from YouHaveDownloaded.com, a range of downloads have been actioned from the Palace including a cam copy of Tower Heist, a telesync copy of Arthur Christmas, and music from The Beach Boys. The latter was actually a lossless FLAC rip, but as one might expect, only the best quality will do for the Palace.

In total six infringing downloads were tracked back to Sarkozy’s residence, double the country’s three-strike limit.

It’s been an embarrassing few days for some not-so-secret users of BitTorrent. The IP addresses of several entertainment companies were reported as connected to allegedly infringing activity earlier this week using the same methods.

But while the reports from YouHaveDownloaded certainly have discussion value, it is worth noting that their data collection methods are just as untested as those employed by many private anti-piracy companies and their notoriously secretive ‘proprietary software’. The difference is, however, YHD aren’t using their data for the filing of lawsuits and getting people cut off from the Internet.

BitTorrent users are increasingly aware that their activities are public – those that monitor them for the purposes of punitive responses should experience the same standard. Finally, on the subject of equality, any predictions on odds for the Palace being disconnected for piracy? Save your money folks, some bets are a lost cause.

Source: French President’s Residence ‘Busted’ For BitTorrent Piracy

After being launched Friday last week, Mega Song disappeared from YouTube and a whole host of other video services as a result of Universal-issued DMCA takedown requests. Papers filed in federal court today provide additional details on Megaupload’s complaint.

At the heart of Universal’s takedown is their assertion that Mega Song contained an unauthorized performance by New Zealand artist Gin Wigmore. Last week TorrentFreak learned that Wigmore’s vocals had been considered for the Mega Song, but in the end the decision was made to hire Macy Gray instead.

Wigmore has been described as having a vocal quality “somewhere between Amy Winehouse and Macy Gray”, which begs the question whether there is a case of mistaken identity at play here. In any event, Megaupload are absolutely clear – “Ms. Wigmore did not even appear in, much less author the Megaupload Video,” today’s filing declares.

Earlier this week, an article appeared in Hollywood Reporter titled, “Will.i.am Sends Takedown Notice Over Megaupload ‘Endorsement’ Video” in which it was claimed that Ken Hertz, attorney for Will.I.Am, filed a takedown request last week with YouTube.

But a statement from Megaupload founder Kim Dotcom today raises serious questions.

“On December 12, 2011, I spoke directly with will.i.am about this issue, and he personally advised me that he absolutely had not authorized the submission of any takedown notice on his behalf,” Dotcom explains.

THR also reported Hertz as saying that Will.i.am had never consented to appearing in the Mega Song, but considering documents filed today, that seems in doubt.

“Plaintiff obtained licenses from each of the persons who appeared in the Megaupload Video, including will.i.am,” the filing reads.

“In the agreement he signed, will.i.am explicitly waived any interest he may have in and to the copyright in connection therewith, agreeing that Plaintiff is its sole owner.”

Indeed, the agreement with Megaupload (signed under Will.i.am’s real name of Will Adams) seems particularly broad, granting the file-hoster the right to:

..copyright, record, reproduce, broadcast, distribute, edit, publish, exhibit, disseminate, couple and use in any way throughout the universe and in perpetuity the audio and/or visual portions of any videotape, film, pictures, negatives, prints, photographs, stills or other recordings of the Appearance, and any reproduction thereof.

While it’s clear that Megaupload had invested a substantial amount of money in creating the Mega Song and video, exactly how much remained unclear. Today it was revealed that the cost of production was in excess of $3 million, hardly surprising considering the huge names involved.

Megaupload say that Universal knowingly made false claims in order to sabotage the momentum of a viral campaign designed to boost the file-hoster’s image. Universal are yet to file an official response.

Source: Will.i.am: I Did Not Authorize Megaupload Video Takedown

Needless to say, the spectacle of P Diddy, Will.i.am, Alicia Keys, Kanye West, Snoop Dogg, Macy Gray, Chris Brown, The Game and Mary J Blige all declaring their love for Megaupload was too much for the IFPI and RIAA.

As the story began to spread and the Mega Song trended on Twitter, it was suddenly blocked by YouTube, a victim of Universal Music Group (UMG) and IFPI copyright takedowns.

What followed late Friday were demands from Mega founder Kim Dotcom for YouTube to reinstate the video (full details in our earlier article), and counters from Universal to take it down again. With the weekend over, the controversy is alive again.

“Let us be clear: Nothing in our song or the video belongs to Universal Music Group. We have signed agreements with all artists endorsing Megaupload,” Megaupload CEO David Robb told TorrentFreak this morning.

“Efforts to reach out to UMG and open a dialog about this abuse of the DMCA process were answered with unfounded and baseless legal threats and demands for an apology.”

Threats against Megaupload from the mainstream entertainment industries are nothing new, yet thus far the movie and music groups have refrained from legal action. Nevertheless, the name-calling persists.

“Regrettably, we are being attacked and labeled as a ‘rogue operator’ by organizations like the RIAA and the MPAA, which represent some of the music and movie industry. They are wrong,” says Robb.

“Our record of closing accounts of repeat infringers and taking down illegal files proves we stand against piracy and care about the rights of content owners.”

But while Mega insists it always complies with legitimate takedown requests as required by law, the RIAA and their member labels want much more, as their championing of the Stop Online Piracy Act illustrates.

“UMG is currently lobbying lawmakers in Washington for legislation that would allow them to not only delete specific content from a website, but to delete entire websites from the Internet. After this demonstration of the abuse of power by UMG, we are certain that such an instrument of Internet censorship should not be put into the hands of corporations,” says Robb.

Those corporations, Robb suggests, may have already abused their existing powers to censor the Mega Song campaign on YouTube for commercial ends. Mega will shortly relaunch Megabox, a label-worrying iTunes competitor that will give artists 90% of all sales, a far bigger share than many currently enjoy.

But whatever Universal’s motivations for the takedowns were, according to Megaupload founder Kim Dotcom the label will now have to justify their actions in court. TorrentFreak can confirm that Mega’s legal team have already been instructed to sue Universal over the illegitimate copyright takedown of the Mega Song, an act which Kim says was an attempt to sabotage their viral campaign.

Furthermore, having previously been restrained on the issue of SOPA, it now appears the Mega Song takedown has prompted a change of course by Megaupload.

“We thank everyone for the massive support. Let’s join forces and fight for an Internet without censorship. Stand up and oppose new laws like SOPA and PIPA, which are being written this month in Washington,” says Mega CEO David Robb.

“Let your local representatives in Congress know what you think. Join organizations that are promoting free speech and innovation. Let’s not allow corporations to create an Internet dictatorship with the massive censorship firewall they are lobbying for in Washington.”

A TorrentFreak request for comment from an RIAA spokesperson remains unanswered.

Update: The lawsuit has been filed today at the United States District Court, Northern District of California.

Update: Megaupload statement

Source: Megaupload to Sue Universal, Joins Fight Against SOPA

Last week, 33-year-old web designer Marcus V. was handed 2.5 years in prison by a Leipzig court for his role in the site. Today we bring news of another sentencing.

The defendant, named as 27-year-old Martin S., confessed to being Kino.to’s “main admin”. He stood accused of being jointly responsible for 1.1 million instances of commercial copyright infringement that allegedly took place via the site.

Reportedly the brother-in-law of former Kino.to owner Dirk B., Martin S. was also said to run a file-hosting site that contained more than 16,700 movies used as a source by Kino.to’s index.

The trained car mechanic from Leipzig allegedly brought in nearly 400,000 euros via site advertising and what were described in court as “subscription traps”, services that suck unsuspecting users into expensive recurring payments for otherwise free products.

Once site costs had been taken into consideration, it was claimed that between August 2009 and the closure of Kino.to in June 2011, Martin S. made around 230,000 euros for himself .

In his ruling Judge Mathias Winderlich said that the defendant was primarily motivated by the possibility of making “quick and easy money” and that his income “exceeded by far that of the general population.”

The District Court in Leipzig found Martin S. guilty of criminal copyright infringement and sentenced him to 3 years in jail, four months less than the time demanded by the prosecution. According to Bild, the state also confiscated his house, Audi A6 and bank accounts. There will be no appeal.

At least 5 other Kino.to suspects remain in custody, and another 20 people remain under investigation. The trial of another site admin will be heard next week.

Source: Kino.to “Main Admin” Sentenced to 3 Years in Jail

The aim of these cases is to get suspected copyright infringers to settle for a few thousand dollars, in what we’ve dubbed a “pay-up-or-else” scheme. These settlement proposals are the core of every single case, and none of the copyright holders intends to proceed against the accused file-sharers in court.

Although we’ve mostly covered US and UK cases here at TorrentFreak, Germany is really the home turf of these practices. This year alone millions of people have been targeted for allegedly downloading and sharing copyrighted material in Germany, and all were asked to settle their debt with cash.

Unfortunately for the copyright holders, not all of the people targeted are willing to pay up immediately, not least because they haven’t shared the file in question.

To address this problem of unpaid settlements, German law firm Urmann has decided to find a creative way to get paid. Representing an adult entertainment company, they are selling the outstanding settlement demands of 70,000 accused file-sharers to the highest bidder. The ‘lucky’ buyer can then do whatever they think is needed to extract as much money as possible from those on their newly-purchased list.

The amount the 70,000 people are in ‘debt’ for is 1286.80 euros each, so the total in outstanding settlements up for auction amounts to €90 million ($120 million).

The target audience for this unusual purchase are debt collection agencies, who will undoubtedly introduce all sorts of harassing tactics and subtle threats to get as many people as possible to pay up. Needless to say, this turns these “pay-up-or-else” practices into an even darker scheme than they already are.

One of the companies currently going after BitTorrent users in Germany is CD Projekt, the makers of The Witcher 2: Assassins of Kings. Although there is no indication that they will go as far as selling their debt to collecting agencies, being involved in the settlement business doesn’t help their image.

It will be interesting to see whether the same debt collecting practices will also be tried in other countries such as the US.

Source: Copyright Trolls Auction Off €90 Million in File-Sharing Settlements

In common with many of the groups tied to the music industry, SAC has a strong opinion about file-sharing. But unlike most of the others, they don’t want to shutter sites that allow people to share copyrighted music. Quite the opposite.

SAC believes that consumers should have access to all the music in the world, something that only file-sharing sites provide today. So instead of shutting these sites down the songwriters association wants to legalize file-sharing, while compensating the artists whose works are shared.

“People have always shared music and always will. The music we share defines who we are, and who our friends and peers are. The importance of music in the fabric of our own culture, as well as those around the world, is inextricably bound to the experience of sharing,” SAC writes in a detailed proposal.

According to the association, file-sharing should be framed as an opportunity rather than a threat to the music industry. To prove this point, SAC is trying to convince other stakeholders that it’s a good idea to monetize file-sharing through some sort of licensing system for consumers.

“Music file-sharing is a vibrant, open, global distribution system for music of all kinds, and presents a tremendous opportunity to both creators and rights-holders. Additionally, once a fair and reasonable monetization system is in place, all stakeholders including consumers and Internet service providers will benefit substantially.”

“By monetizing behavior rather than any specific technology, music creators and rights-holders will lay the foundations for a business model that can continue for decades rather than attempting the almost impossible task of trying to monetize the ever shortening cycle of changing technology,” SAC writes.

With the above, the Association indirectly criticizes the rigid stance of the major labels and the RIAA when it comes to technical innovation. Whether it’s the invention of radio, the cassette tape or file-sharing, they continuously view new technology as a threat instead of something that could help to expand the popularity of music.

To learn more about the ambitious proposal TorrentFreak got in touch with SAC vice president Jean-Robert Bisaillon, who told us that he hopes to make other key players in the music industry aware of the power and value of sharing.

“We think the practice [of file-sharing] is great and unstoppable. This is why we want to establish a regime that allows everyone to keep on doing it without stigmatizing the public and, instead, find a way for artists and rights holders to be fairly compensated for the music files that are being shared,” Bisaillon told us.

“Other positive aspects include being able to find music that is not available in the commercial realm offer, finding a higher quality of digital files, being able to afford music even if you are poor and being able to discover new artists or recommend them to friends.”

SAC’s vice president further notes that not everything the big labels do is in the best interest of musicians and artists. While Bisaillon recognizes that many artists still depend on these companies, he and other songwriters don’t necessarily agree with all their practices.

“The big labels will try to control the market as long as they can and as long as they think the market will generate revenue even if the revenue is the result of legal action. They will try to hook up with whichever commercial endeavor they think might help maintain their control in the marketplace even if this means unfair remuneration for content providers,” Bisaillon says.

“In parallel they will try to discourage any option that may diminish their control even if this means using threats or disinformation. They have the money and contacts to lobby governments in support for their vision. We see our role as developing and providing alternate means of access to music that are good for consumers and creators alike.”

According to Bisaillon the Internet is a blessing, perhaps not for the big music labels, but certainly for musicians and consumers.

“Music is much better off with the Web. The internet network allows for musical discovery despite distance and time of the day. It has sparked collaborations between musicians unimaginable before. It has helped artists to book international tours without expensive long-distances charges and postal delays we knew before,” he told us.

“The Internet has dramatically increased the private non-commercial sharing of music, which we support. All that is missing a means to compensate music creators for this massive use of their work.”

To make this final step SAC is actively talking to all the stakeholders involved, including consumer groups, rights holders and content providers to make their file-sharing license reality.

Although this final step may turn out to be a giant leap for most of the parties involved, it is essential that a prominent association of artists sees the upside to file-sharing. This is a welcome contrast to the repressive stance we are used to hearing from the RIAA and CRIA.

While the “monetize file-sharing” proposal is not necessarily ideal as it has many challenges of its own, SAC’s stance does touch the essence of the ‘problem’. Instead of adding restrictions, the music industry should find ways to give consumers unlimited access to all the music in the world for a fair price.

Source: Canadian Songwriters Want to Legalize File-Sharing

All of these companies were named in the lawsuit because of their connections to Pharmatext.org, a site that offered links to pirated e-books. The plaintiffs asked the court to find the operator of Pharmatext guilty of direct copyright infringement and the ad networks guilty of contributory copyright infringement for serving ads to Pharmatext, an arrangement which generated just $510.93 between August 2008 and December 2010.

Since the defendants weren’t initially present to mount a defense, the court issued a preliminary injunction which ordered Whois Privacy Protection Service to reveal the previously hidden identity of the Pharmatext owner (revealed as Kapil Dev Saggi of India), and site’s domain registrar to disable the website. The advertising networks, Clicksor and Chitika, were ordered to stop doing business with Pharmatext.

On June 3rd, 2011, in their defense Chitika argued that the plaintiffs had failed to present a viable claim for direct infringement against Pharmatext. Not only is Saggi in India (offenses need to be carried out in the US), but the location of the cyberlocker services where the allegedly infringing material was hosted was never revealed. Without a valid claim for direct infringement, Chitika argued, a claim for contributory infringement could not go ahead.

Nevertheless, even if direct infringement could be proven, Chitika argued that as a mere provider of a technology that allows a website operator to embed adverts in his site, the company “has no mechanism by which it can determine whether a publisher’s site contains allegedly infringing materials.”

The ad network added that London-based Elsevier and New Jersey-based John Wiley & Sons had not produced any evidence which showed that Chitika had knowledge of any infringing activity, or that it knowingly caused or substantially contributed to any infringing activity. The court has just delivered its verdict and essentially agreed with Chitika.

“Plaintiffs do not allege facts showing that Chitika was familiar with the content of the Pharmatext website, or knew (or had reason to know) that such content was infringing,” wrote United States District Judge Richard G. Stearns in his ruling.

“Thus, plaintiffs fail to support with plausible facts their conclusory allegations that Chitika ‘must have had knowledge’ of the alleged infringement of plaintiffs’ books,” and that “Chitika “plac[ed] ads on the Pharmatext site because [it] believe[d] that Pharmatext users – in other words, people seeking to obtain pirated copies of copyrighted books – are a target audience for particular advertisers.”

But while Chitika came out of this battle on top, law professor Eric Goldman says that if the plaintiffs had approached this particular infringement issue in a different way – by sending an early complaint to Chitika about Pharmatext’s infringing activities before going ahead with a lawsuit – the outcome could have tipped in the plaintiffs’ favor.

“I would expect this opinion to look very different if Elsevier sent a cutoff notice and Chitika didn’t promptly drop Pharmatext,” Goldman writes.

But the points of interest don’t stop there, particularly in respect of the advertising-blocking sanctions of the pending SOPA legislation. As previously noted, Chitika made hardly anything from its business with Pharmatext. In the face of a shutdown request from the book publishers, would it really have carried on doing business with the linking site? Goldman thinks not.

“Assuming Chitika does 50/50 splits with its publishers, Chitika will not expend an ounce of effort to preserve its $17/month revenue stream from Saggi. Thus, Elsevier’s cutoff notice would be dispositive–even if Chitika could win a ruling like this (which would be more uncertain after Chitika gets a cutoff notice), it’s not worth the fight,” Goldman continues.

“So after Elsevier’s cutoff notice to Chitika, Chitika instantly tosses Pharmatext overboard like a piece of garbage, due process be damned. SOPA isn’t required to get that result.”

As previously reported, online piracy of its products has recently become a focus issue for Wiley. In late October the publisher filed a lawsuit to obtain the identities of 27 individuals it accuses of illegally sharing its “For Dummies” books on Demonoid, a request that has now been granted by the court.

On November 23rd it filed another lawsuit, this time against 46 John Does. It is not yet clear if Wiley intends to take cases to court or obtain settlement from its targets.

Source: Ad Network Not Guilty of Copyright Infringement For Serving Pirate Site

The BSA – which counts giants such as Microsoft, Apple, Adobe and Intel among its ranks – declared in their headline that SOPA Needs Work to Address Innovation Considerations.

Nevertheless, for BSA member and security vendor Kaspersky, it’s too little, too late.

In a clear protest against SOPA, Kaspersky has announced that on January 1st 2012 it will withdraw its membership of the BSA.

“Kaspersky has not participated in drafting the bill, nor participated in the debate on SOPA, and does not support this initiative,” the company said in a statement.

Kaspersky, one of the top anti-virus vendors in the world with a turnover in excess of half a billion dollars, is one of Russia’s leading technology groups. The 14-year-old company feels that the provisions of SOPA go too far, will hinder innovation, and hit end-users.

“We believe that such measures will be used contrary to the modern advances in technology and the needs of consumers,” the company added.

One of the other local companies that could be immediately hit by the introduction of SOPA is Russia’s own Facebook equivalent, VKontakte. The company is listed prominently in both the MPAA’s and RIAA’s lists of so-called “rogue sites”, with the latter describing the social networking site as a “reprehensible actor“.

But VKontakte spokesman Vladislav Tsypluhin says the company’s copyright problems are in the past.

“[The MPAA/RIAA letters] to the office of the U.S. Trade Representative were sent six months ago. After that we worked the system to work with copyright owners on the site,” Tsypluhin told Russia’s Izvestia.

“We have an arrangement with the U.S. Trade Representative’s office, they will check our copyright compliance, and then we will be excluded from the list of pirate sites.”

But despite Tsypluhin’s assertions that the US music and movie industry complaints against it are now outdated, the MPAA’s latest submission to the USTR is dated October 26th 2011 (the RIAA’s a little later) and VKontakte are still right there on the “rogue site” list.

Tsypluhin says that VKontakte now has a facility for copyright holders to inform the company that their rights are being violated on the site. These notices will be forwarded to the user who uploaded the unauthorized material and illegal content will be replaced by legal. Exactly how this last feat is performed is unclear. What is clear is that both the RIAA and MPAA remain unimpressed.

Kaspersky’s departure from the BSA will put more pressure on the trade group to further soften its support for SOPA, but whether it can do that while appeasing its existing members remains to be seen.

Source: Kaspersky Dumps Anti-Piracy Group in SOPA Protest

Some of the most sought after publications are those hunted by students since the paper-based textbooks they are forced to buy in order to conduct their education are notoriously (some would say artificially) costly.

Inevitably, though, where there’s a cost to be cut, pirates have a cutlass, and in March 2008 a new website called Student Bay appeared, aimed at making students’ lives less expensive.

“In Sweden, education is claimed to be free of charge. Despite this students are forced every term to spend thousands of kronor on books necessary for their education,” the site owners said in their launch press release.

“Student Bay does not publish the course books as a whole, rather we divide them up in chapters, so that one can download them for personal use,” they continued.

While having reservations about the site’s legal status, the Swedish National Union of Students said they thought Student Bay had every chance of becoming successful, adding that the fact that the site exists should be a signal to publishers that they need to do more in the digital domain.

The Swedish Association of Educational Publishers, FSL, were less enthusiastic and said that the development of a market place should not be driven by criminal activity.

Since the site had things in common with another very famous file-sharing site – not least its name and logo – it wasn’t long before Student Bay attracted the wrong sort of attention. Within days of the site appearing online people began making connections to The Pirate Bay’s Gottfrid Svartholm (aka Anakata). He publicly denied having anything to do with running of the site.

During December 2008 the Swedish Association for Educational Writers (SLFF) finally reported Student Bay to the police but despite his denial, prosecutors confirmed that Svartholm remained a target in the investigation along with another individual.

“The funny part is that [SLFF] also decided to press charges against Anakata because they claim he is part of this site,” Pirate Bay said in a statement. “We don’t really know why. Our suspicion is that this is because Anakata used to run the ISP which hosts The Student Bay.” Student Bay had indeed been hosted at PRQ, a so-called “bullet-proof” host previously owned by Svartholm.

But while Pirate Bay is free for anyone to use, Student Bay was not. Users not uploading material to the site were required to subscribe via a $3.00 premium SMS to access content, much of which was stored on file-hosting sites such as RapidShare. Pirate Bay openly disapproved of the approach and said that they hoped Student Bay would remove the requirement as it was against Pirate Bay “ideals”.

It isn’t clear if Student Bay fulfilled the request to go completely free but under pressure the site closed in May 2009.

Yesterday, nearly 3 years after the initial complaint, prosecutor Frederick Ingblad confirmed that a 23-year-old man has been prosecuted for founding and running Student Bay. He is charged with violating and assisting in breaches of copyright law between August 2008 and May 2009, and charged with “regularly receiving and assimilating payments” from site users, which appear to total around $8,000.

Gottfrid Svartholm is mentioned nowhere in the complaint and earlier requests from The Pirate Bay for a formal apology for the wrongful accusations appear to have gone unanswered. Meanwhile, attempts at breaking the textbook monopoly continue.

Source: Student Bay Admin Prosecuted in Sweden

In a response, the Swiss government has been conducting a study into the impact downloading has on society, and this week their findings were presented.

The overall conclusion of the study is that the current copyright law, under which downloading copyrighted material for personal use is permitted, doesn’t have to change.

Their report begins with noting that when it comes to copying files, the Internet has proven a game-changer. While the photocopier, audio cassette tape and VCR allowed users to make good quality copies of various media, these devices lacked a in-built distribution method. The world-wide web changed all that.

Distribution method or not, the entertainment industries have opposed all these technological inventions out of fear that their businesses would be crushed. This is not the right response according to the Swiss government, which favors the option of putting technology to good use instead of taking the repressive approach.

“Every time a new media technology has been made available, it has always been ‘abused’. This is the price we pay for progress. Winners will be those who are able to use the new technology to their advantages and losers those who missed this development and continue to follow old business models,” the report notes.

The government report further concludes that even in the current situation where piracy is rampant, the entertainment industries are not necessarily losing money. To reach this conclusion, the researchers extrapolated the findings of a study conducted by the Dutch government last year, since the countries are considered to be similar in many aspects.

The report states that around a third of Swiss citizens over 15 years old download pirated music, movies and games from the Internet. However, these people don’t spend less money as a result because the budgets they reserve for entertainment are fairly constant. This means that downloading is mostly complementary.

The other side of piracy, based on the Dutch study, is that downloaders are reported to be more frequent visitors to concerts, and game downloaders actually bought more games than those who didn’t. And in the music industry, lesser-know bands profit most from the sampling effect of file-sharing.

The Swiss report then goes on to review several of the repressive anti-piracy laws and regulations that have been implemented in other countries recently, such as the three-strikes Hadopi law in France. According to the report 12 million was spent on Hadopi in France this year, a figure the Swiss deem too high.

The report further states that it is questionable whether a three-strikes law would be legal in the first place, as the UN’s Human Rights Council labeled Internet access a human right. The Council specifically argued that Hadopi is a disproportionate law that should be repealed.

Other measures such as filtering or blocking content and websites are also rejected, because these would hurt freedom of speech and violate privacy protection laws. The report notes that even if these measures were implemented, there would be several ways to circumvent them.

The overall suggestion the Swiss government communicates to the entertainment industries is that they should adapt to the change in consumer behavior, or die. They see absolutely no need to change the law because downloading has no proven negative impact on the production of national culture.

Aside from downloading, it is also practically impossible for companies in Switzerland to go after casual uploaders. In 2010 the Supreme Court ruled that tracking companies are not allowed to log IP-addresses of file-sharers, making it impossible for rightsholders to gather evidence.

Source: Swiss Govt: Downloading Movies and Music Will Stay Legal

It all started back in 2006, when the Hollywood-funded anti-piracy group BREIN reportedly asked musician Melchior Rietveldt to compose music for an anti-piracy video. The video in question was to be shown at a local film festival, and under these strict conditions the composer accepted the job.

However, according to a report from Pownews the anti-piracy ad was recycled for various other purposes without the composer’s permission. When Rietveldt bought a Harry Potter DVD early 2007, he noticed that the campaign video with his music was on it. And this was no isolated incident.

The composer now claims that his work has been used on tens of millions of Dutch DVDs, without him receiving any compensation for it. According to Rietveldt’s financial advisor, the total sum in missed revenue amounts to at least a million euros ($1,300,000).

The existence of excellent copyright laws and royalty collecting agencies in the Netherlands should mean that the composer received help and support with this problems, but this couldn’t be further from what actually happened.

Soon after he discovered the unauthorized distribution of his music Rietveldt alerted the local music royalty collecting agency Buma/Stemra. The composer demanded compensation, but to his frustration he heard very little from Buma/Stemra and he certainly didn’t receive any royalties.

Earlier this year, however, a breakthrough seemed to loom on the horizon when Buma/Stemra board member Jochem Gerrits contacted the composer with an interesting proposal. Gerrits offered to help out the composer in his efforts to get paid for his hard work, but the music boss had a few demands of his own.

In order for the deal to work out the composer had to assign the track in question to the music publishing catalogue of the Gerrits, who owns High Fashion Music. In addition to this, the music boss demanded 33% of all the money set to be recouped as a result of his efforts.

The conversation between Gerrits and the composer’s financial advisor was recorded by Pownews, and during the conversation the financial advisor confronts Gerrits with his unconventional proposal.

“Why do you have to earn money?” he asks, as usually all of the money goes directly to the artists.

“It could be because a lot of people in the industry know that they are in trouble when I get involved,” Gerrits responds, adding that he can bring up the topic immediately in a board meeting next week.

Once again trying to find confirmation for the proposal, the composer’s advisor later asks if the music boss indeed wants one-third of the money.

“Yes, that’s the case, but then [the composer] would make 660,000 euros and now he has nothing,” Gerrits responds calmly.

The seemingly corrupt practices of Gerrits resulted in mass disbelief among many Dutch viewers and today the news is being reported by several mainstream outlets in the Netherlands. As a result of the controversy, Gerrits quickly decided to temporarily resign as Buma/Stemra board member to focus on his defense.

Responding to the press, Gerrits further claims that he was somehow “misinterpreted,” but unfortunately for him the recordings leave little room for that.

BREIN director Tim Kuik, whose organization is accused of distributing the unauthorized copies, noted to TorrentFreak that this is a contractual issue in which BREIN is not involved. Kuik further said that BREIN is not the distributer nor the client in this case.

Whatever BREIN’s role in this case, there is little doubt that someone in the movie industry failed to pay the composer. And instead of standing up for the rights of a musician, a board member of the music royalty collection agency tried to exploit the situation for financial gain.

Sickening.

Update: Pownews’ written report no longer references BREIN’s involvement in the case. Although BREIN is responsible for many anti-piracy warnings on DVDs in The Netherlands, the video described in this article was made for another party related to the movie industry. This confirms the statement of BREIN director Tim Kuik.

Update: Dutch politicians, musicians and a Buma/Stemra board member are shocked by the revelations and describe Gerrits’ actions as “corrupt,” a “money grab” and “mafia-like.” Politicians want more transparency from the royalty collecting agency, and will debate the issue in parliament.

Source: Copyright Corruption Scandal Surrounds Anti-Piracy Campaign

Three umbrella organizations representing the rights of more than 100 movie and TV-related companies have gone to court in order to have video streaming sites blocked on the Internet.

L’Association des Producteurs de Cinéma (APC), a group which in itself represents more than 120 companies including Paramount and Sony, have teamed up with La Fédération Nationale des Distributeurs de Films (FNDF) and Syndicat de l’Edition Vidéo Numérique (SEVN) for the ground-breaking legal action.

Their complaint, which if successful could spread to dozens of other sites, targets locally popular AlloStreaming, AlloShare, AlloMovies and AlloShowTV. Speaking with TorrentFreak earlier today, PC INpact journalist Marc Rees told us that after speaking with the movie companies he could confirm that an initial report which indicated that MegaUpload and MegaVideo are also listed in the 100-page complaint are unfounded.

With this action APC, FNDF and SEVN are taking on some of the biggest names on the Internet. Google, Microsoft and Yahoo all face demands to delist the streaming sites and services from their search engine results. A range of ISPs including France Telecom, Orange and Free are all being asked to block their subscribers from accessing the sites.

The rightsholders’ claims are rooted in Article 336-2 of the Intellectual Property code, a provision which allows the High Court to take almost any emergency measure to protect rightsholders. With this in mind, proceedings for interim relief will be heard before the High Court on December 15th.

Interestingly, it appears that Google has already received and responded to a DMCA takedown notice (here on Chilling Effects) from the groups listed above concerning Allostreaming.com, AlloshowTV.com, Alloshare.com and Allomovies.com.

Typing any of the domains into Google’s search engine is now fruitless – all of them have been completely delisted, so at this stage it’s unclear why Google remains in the complaint.

Earlier this week a US judge ordered Facebook, Twitter, Google+, Bing, Yahoo, and Google to delist several pages referring to counterfeit goods. This case was started and won by the fashion house Chanel, who were also allowed to seize the domain names. Whether Hollywood studios will follow the French example and file a similar suit in the US has yet to be seen.

Source: Google, Microsoft, Yahoo, ISPs, All Served With Streaming Site Blocking Demand

In his or her comment the individual claimed to be a somewhat disgruntled Grooveshark employee, outlining claims of copyright infringement at the company which if true would destroy any safe harbor protection Grooveshark might have enjoyed.

The claims were picked up by Universal Music and referenced heavily in their recently filed lawsuit against Grooveshark, one which the company says it will fight.

Of course, everyone wants to know who the anonymous commenter is, if only to assess their credibility. Surprisingly, though, the first indication that there could soon be a subpoena to find out hasn’t come from plaintiffs Universal.

“While [Grooveshark parent] Escape [Media Group] certainly denies those allegations, and believes that Universal’s lawsuit has no merit, the anonymous comment in your publication, and related information, may be important to the lawsuit,” wrote Grooveshark’s legal counsel Marshall Custer in correspondence with Digital Music News this week.

“As a result, I must request that you preserve all electronic information and any other records related to that comment, as it can be reasonably anticipated that either Grooveshark or Universal may find it necessary to subpoena such information as the case progresses,” he concludes.

The big question now is what information Digital Music News keeps on its commenters. In order to stop spam and abuse many sites carry IP address information, and if these can be paired with a usable timestamp Grooveshark could then move to the next stage – sending a subpoena to the individual’s ISP in order to obtain their identity – or at least the identity of the person paying the bill.

To date only Grooveshark has indicated they would seek information from DMN.

“Oddly, Universal Music Group has never contacted us regarding this comment, either before or after the legal filing,” says DMN founder Paul Resnikoff.

One can only speculate on the reasons for Universal’s apparent lack of interest in obtaining the individual’s identity, but sometimes the fog of war needs to lift before a precise strategy and what people already know is truly revealed.

So until then the question remains: Is the currently anonymous commenter a genuine whistleblower or simply malicious? The legal difference may yet prove interesting.

Source: Grooveshark Prepares To Unmask Anonymous ‘Whistleblower’

As witnessed through the recent media storms surrounding SOPA and PROTECT IP in the United States, proposed measures are becoming ever more drastic, often targeting the financial and business infrastructures of so-called rogue sites, the exact definition of which remains unclear.

According to their Hadopi anti-piracy agency, France will be the latest country to travel down a similar controversial route.

“The knowledge gained through the successful deployment of the flexible [3 strikes] response and technical, legal and economic experiments carried out by the Hadopi, today allow us to initiate a new stage in the protection of copyright on the Internet,” the agency said in an announcement.

Hadopi says that many sites have used the natural evolution of technologies to offer direct download (DDL) and streaming portals which “specialize in the massive exploitation of illegal content” from which huge profits are generated.

“It is now time to enter an active phase of struggle against this behavior,” says Hadopi.

What will now follow is a consultation period involving those likely to be affected by the strategy. These will include the cyberlocker and DDL sites themselves, Internet service providers, banking and payment providers, plus advertising networks.

The discussions will also investigate the limits of existing legislative tools and propose amendments should they be found lacking.

Guillaume Champeau of Numerama, a news site at the forefront of French online issues, informs TorrentFreak that Hadopi’s plans are currently unclear, but have serious potential. An existing provision in the so-called Hadopi law says that rights holders can get a judge to pass a ruling on emergency measures that can help to fight piracy.

“It is an extremely broad provision – the broadest I know in French law – which could lead to an infinity of measures: filtering, domain names foreclosures, payments prohibition, etc,” says Champeau.

“It has no limit but the imagination of rights holders, and does not require that the impacted websites defend themselves. So I guess it is very close to the Protect-IP Act. The Hadopi will probably push a slight rewriting of the law, so that it can go before the court to use this provision itself, when today it is only available only to rights holders.”

At this stage Hadopi are promising that the upcoming discussions will be “conducted in a transparent and open manner” and hopes to report significant progress on all matters by the end of the first quarter 2012.

Source: France Attacks Finances of Cyberlocker and Streaming Sites

IFPI, the International Federation of the Phonographic Industry, with support from Finnish anti-piracy group Copyright Information and Anti-Piracy Center (CIAPC), filed a lawsuit yesterday in the Helsinki District Court against the administrators of The Pirate Bay.

The admins, whoever and wherever they may be, are ordered to stop facilitating the unauthorized distribution of music and pay compensation to IFPI and CIAPC-affiliated rightsholders for the damages they have allegedly caused through their website.

This latest action follows an October decision from the Helsinki District Court which ordered Finnish ISP Elisa to block subscriber access to The Pirate Bay or face fines. But while Elisa takes that decision to the Court of Appeal, IFPI is piling the pressure onto other Internet service providers.

Yesterday the music industry group filed applications in Helsinki and Vantaa to force two further ISPs, Sonera and DNA, to block their customers from accessing TPB. According to IFPI, when combined the subscribers of all three ISPs make up 80% of the total broadband market in Finland.

“This type of inhibition has yielded good results, eg in Italy, where the The Pirate Bay’s popularity has decreased significantly,” said CIAPC’s Executive Director, Antti Kotilainen.

Lauri Rechardt, chief executive of IFPI Finland, said the purpose of this latest action is to hit the “underground economy” and support the increasing uptake of authorized services.

Source: IFPI Sues Pirate Bay Admins in Finland, Demands Further ISP Blocks

But now a joint proposal from the Communications Alliance and ISPs including Telstra Bigpond, iiNet, Optus, iPrimus and Internode, with collaboration from telecoms company AAPT, Ericsson Australia and the Internet Industry Association (IIA), lays out what the contributing parties believe is a workable middle-ground.

The 14-page proposal, titled ‘A Scheme to Address Online Copyright Infringement’, puts forth the framework for a “Notice Scheme” which aims to educate Internet subscribers when their connections are flagged as engaging in copyright infringement.

Unlike schemes elsewhere, particularly in neighboring New Zealand, there is no ‘graduated response’ being proposed by the ISPs for dealing with persistent infringers – that means no throttling, suspensions or disconnections. Instead, a warning notice scheme “with a strong emphasis on educating consumers” would be put in place, operating as follows:

The responsibility for monitoring file-sharing networks would fall at the feet of rightsholders who would only be able to do so using pre-approved and tested systems. Notices would have to be sent to ISPs within 14 days of an infringement being logged and ISPs would then have another 14 days to match the provided IP address with a customer account and send out an infringement notice.

Subscribers being contacted about a first instance of illicit file-sharing would receive an ‘Education Notice’ noting that an infringement had taken place on the account, but would not mention the content of the material that was shared. It is not clear why this omission was put in place, but one might imagine that those sharing pornography would be pleased at the inclusion of such a safeguard. The notice would also include information on where to obtain legal content.

After receiving an Education Notice, a 12 month period would then follow where if a subscriber was caught infringing again they would receive a ‘Copyright Infringement Notice’ (CIN). This time the content shared would be detailed in the notice.

When an account holder has been sent an Education Notice and three CINs, their ISP would then send a new notice called a ‘Discovery Notice’. These would note that the account holder has been unresponsive to previous notices, that rightsholders have been informed of this fact, and that further action could follow. It is at this point that the rightsholders would have to decide whether to get a court order to obtain the identity of the account holder in order to sue them under existing legislation.

At every step of the way, from Education, to Infringement to Discovery Notices, subscribers would be given opportunity to appeal.

“We believe the Notice Scheme can greatly reduce online copyright infringement in Australia, while protecting consumer rights, educating consumers about how to access legal online content and helping rights holders to protect their rights,” said Communications Alliance CEO, John Stanton.

“Equally important is the need for rights holders to ensure that consumers have access to legal and affordable content online, to reduce the motivation to source content in ways that might be illegal.”

Stanton notes that Australians have turned to illicit file-sharing because accessing material through official channels often means a wait of months compared with the release schedules of the rest of the world

“This difficulty, combined with a proliferation of access technologies, such as file-sharing software, has reportedly seen a growth in the frequency of unauthorised access to online content and breaches of copyright laws,” he notes.

The ISPs propose that the scheme runs for an 18 month trial to be followed by an independent evaluation on whether it has successfully influenced consumer behavior and if any changes should be made.

At this point some readers might be thinking that the proposals appear much more reasonable than those seen elsewhere, but it should be noted that while the ISPs may have thrown their ideas into the ring, they are just that – their ideas.

The other side of the debate – the rightsholders – aren’t mentioned as being party to these proposals even though the Communications Alliance statement says that the education-based Notice Scheme “flows” from discussions held during 2011 between ISPs, the government, and rightsholders.

And there are always problems. When one looks at the number of warnings the ISPs are offering to send out they are fairly limited. No ISP party to this proposal will be required to send out any more than 100 in a month, and all ISPs combined aren’t offering to send out any more than 10,000 total throughout the entire 18 month trial. Further, the thorny issue of apportioning costs is yet to be hammered out and they will be substantial.

It will be interesting to see what the likes of AFACT have to say about the proposal. On track record they will want any agreement balanced more in their favor and the above will be just the starting point for their negotiations.

Full details of the proposed scheme can be obtained here (pdf)

Source: Aussie ISPs Propose Anti-FileSharing Warning Notice Scheme

In 2007 SABAM enjoyed a brief victory when a decision went their way, but when the mandated Audible Magic fingerprinting system did not perform to expectations, Scarlet was unable to comply with the court order. That order was subsequently reversed and the case went to the Brussels Court of Appeal and then to the European Court Of Justice for a definitive decision.

That ruling is now in and it’s bad news for SABAM but great news for Scarlet, its customers, and privacy advocates everywhere.

The Court ruled that issuing an order mandating the use of a filtering system where all subscriber communications are routinely monitored for infringements, not only on currently protected works but also those in the future, would be disproportionate and fraught with difficulty.

Scarlet would be required to install an expensive and complex computer system, which would run contrary to an EU Directive stating that measures to protect copyright may not be unnecessarily complicated or costly, the Court notes.

The implementation of such a filter would also be contrary to the requirement that an appropriate balance be found between the protection of intellectual property rights and the entrepreneurial freedom Scarlet is entitled to enjoy.

For privacy advocates the rights of Scarlet’s subscribers are of paramount importance in the case, and the Court did not disappoint in protecting them. The ruling clearly states that a proactive filter would violate their fundamental rights, “….namely their right to protection of personal information and their freedom to receive and impart information.”

Perhaps most fundamentally, though, the censoring system proposed by SABAM simply would not work.

The Court states that the filter would restrict freedom of information since it would be incapable of adequately distinguishing between legal and illegal content. The filter would be ineffective when trying to deal with geographic variations on exceptions to copyright, fair use, works residing in the public domain or indeed their creators simply authorizing distribution.

The unacceptable end result: blocking perfectly legal communications in error.

The ruling from the European Court of Justice arrives at many of the same conclusions first drawn by Advocate General Cruz Villalón, and then Prof. Cedric Manara in his paper investigating the potential negative consequences of proactive filtering.

Source: European Court: ISPs Can’t Spy on Pirating Customers

It further claims that Grooveshark employees, from the CEO down, personally uploaded more than 113,700 tracks including those from Bob Marley, Eminem, Guns N’ Roses, Jay-Z and Black Eyed Peas.

Universal provided the court with “a non-exhaustive” list of 1809 songs which they claim are from the company’s library. Based on allegations of willful infringement the label is claiming $150,000 for each, a cool $271,350,000 – minimum.

Now Grooveshark is biting back through their General Counsel Marshall Custer.

“We have reviewed the Complaint that Universal Music Group filed last Friday against Grooveshark in U.S. District Court in Manhattan,” said Custer. “Universal’s claims rest almost entirely on an anonymous, blatantly false internet blog comment.”

The “blatantly false” comment is reference to a reader post on Digital Music News in which the author claimed that Grooveshark employees were given quotas by the company to upload copyright works, and even given bonuses for doing so.

So effective was the system, the apparently disgruntled employee claimed, that there was “not much need” for Grooveshark users to upload any major album. In their complaint Universal seem to believe the claims.

“Accordingly, to ensure that all recordings are available, Escape’s senior officers personally have uploaded thousands of infringing sound recordings to the Grooveshark website and have instructed their employees to do the same,” the complaint reads. Universal says the table embedded below shows the extent of infringement at the company, and who carried it out.

But Grooveshark’s Marshall goes on to reject “..Universal’s gross mischaracterization of information that Grooveshark itself provided to Universal,” an apparent reference to a database Escape Media handed to Universal last year as part of another lawsuit which complained that Grooveshark provided “free access to UMG’s pre-1972 recordings.”

Documents referenced in the new lawsuit include email correspondence from Escape Media director Sina Simantob. In one, Simantob said that Grooveshark’s business was bet “on the fact that it is easier to ask for forgiveness [from the labels]than it is to ask for permission,” and in another that Grooveshark’s growth was achieved “without paying a dime to any of the labels.”

News and detail from the lawsuit was originally broken by CNET late last Friday, but a copy of the complaint has only recently been made available from official sources. Marshall’s statement indicates that Universal chose to tip off the press about the lawsuit, even before they told Grooveshark.

“While Universal has deliberately engaged the media prior to serving a copy of the complaint on Grooveshark, Grooveshark intends to fight this battle before the Court, not in the press.

“Grooveshark welcomes the opportunity to present the facts to the Court and has full confidence that it will prevail in the litigation,” he concludes.

Source: Grooveshark Bites Back: We’ll Fight Universal in Court, Not The Press

Last year at the Forum d’Avignon she noted that if media companies want to tackle piracy, they should look beyond “corporatist self-interest.”

During this year’s speech titled Who Feeds the Artists, Kroes went even further by admitting that the current path copyright is taking is the wrong one.

Kroes started by saying that it is essential that creativity is recognized and stimulated in Europe. She agreed that artists have to be rewarded financially for their efforts, but doubts whether the current copyright system is the right tool for that.

“Let’s ask ourselves, is the current copyright system the right and only tool to achieve our objectives? Not really, I’m afraid. We need to keep on fighting against piracy, but legal enforceability is becoming increasingly difficult; the millions of dollars invested trying to enforce copyright have not stemmed piracy,” Kroes said.

“Meanwhile citizens increasingly hear the word copyright and hate what is behind it. Sadly, many see the current system as a tool to punish and withhold, not a tool to recognize and reward.

“Speaking of economic reward: if that is the aim of our current copyright system, we’re failing here too.”

Kroes explained that most artists in Europe can’t make a decent living from what they do, and gave the example that 97.5 percent of German musicians earn less than 1000 euros a month. Implicitly, she hereby argues that the restrictive copyright system we have now is benefiting multi-million euro companies, but not necessarily the artists at large as recent examples illustrate.

The commissioner wants that to change.

“We need to go back to basics and put the artist at the centre, not only of copyright law, but of our whole policy on culture and growth. In times of change, we need creativity, out-of-the-box thinking: creative art to overcome this difficult period and creative business models to monetise the art,” she said.

“And for this we need flexibility in the system, not the straitjacket of a single model. The platforms, channels and business models by which content is produced, distributed and used can be as varied and innovative as the content itself.”

Being the Digital Chief of Europe, Kroes sees an important role for the technology sector in helping out artists to get the most out of their careers.

“ICT can help here. In all sorts of sectors, ICT can help artists connect with their audience, directly and cheaply. And it can help audiences find and enjoy material that suits their specific needs, interests and tastes,” she said.

“Look at Cloud computing: it presents a totally new way of purchasing, delivering and consuming cultural works – music, books, films – which will certainly raise new questions about how licensing should function in an optimal way.”

Aside from using technology to benefit, instead of repress, Kroes says the industry has to reconsider whether their old business models are still in tune with the present days and age. Licensing issues in the music industry and delaying the distribution of movies and TV-shows through windowing are two examples she highlights in this regard.

“A system of rewarding art, in all its dimensions, must be flexible and adaptable enough to cope with these new environments. Or else we will kill innovation and damage artists’ interests,” Kroes noted.

As a take-home message, Kroes says that the key issue is to provide all the tools to make sure that artists can flourish. In other words, do what is necessary to ensure that artists make a decent income, instead of protecting the revenues of major companies.

“So that’s my answer: it’s not all about copyright. It is certainly important, but we need to stop obsessing about that. The life of an artist is tough: the crisis has made it tougher. Let’s get back to basics, and deliver a system of recognition and reward that puts artists and creators at its heart.”

Source: Copyright is Failing, Who Feeds the Artists? Asks EU Commissioner

The treaty eventually passed a few months later, but due to the slow bureaucratic process it would take another two years before this seat could be filled. All this time Amelia Andersdotter had to wait patiently to enter parliament and represent the people who voted her in.

However, now that all member states have signed off on it, Andersdotter and 17 other new members are expected to take their seats next month.

Representing one of the youngest parties in Europe, the second Pirate MEP is about to set a fitting record. When elected Andersdotter was only 21, but the now 24-year-old will still be the youngest member to hold a seat in the current parliament.

“Not having to answer more questions about when I will finally get to fill my seat is what I’m looking forward to most,” Andersdotter tells TorrentFreak. “It feels really good that the when-question is over.”

Andersdotter is a supporter of a united Europe, and hopes that the Pirate Party can help to shape policy in which culture, creativity and innovation will flourish.

“I kind of buy into this idea that the European Union is a good thing, and that closer connections between European nations both political and social are advantageous not only on the level of the prices of groceries, but perhaps even more, culturally.”

“It’s nice to be able to say democratisation of EU governance is moving forward, that individual member states aren’t stalling that democratisation for their own nationalist purposes any more,” Andersdotter tells us.

The unitedness is also one of the downsides. As her delayed appointment illustrates, it can be very hard sometimes to actually get things done in Europe.

“What I’m not looking forward to as much is perhaps the fear that I will realise most of EU governance is actually a battle between various national interests, rather than one interest in having a good, strong European Union. But it’s difficult of course. ”

“The EU is a big place, and one reason people feel closest to ‘their’ member state is because they know most things about it. I remember the first time I was in Belgium a few years ago and the prime minister resigned and I thought ‘oh no!’ but another Belgian just said to me ‘again?’ with a deep sigh.”

For the remainder of her term as MEP, which end in 2014, Andersdotter will focus on issues like competition in the telecommunication area.

“European approaches to competition law need to be changed, at least a bit. Better sector adaptation, for instance. The lack of real control over vertical integration creates the situation where telcos (or media enterprises) own everything from the backbone cables to the music streaming service – that’s not good. One would at least expect some obligation to keep the different tiers apart,” Andersdotter says.

“Currently this type of bundling is, more worryingly, encouraged rather than regulated and it creates a very unfair balance between the infrastructure owners (in this case) and users. Competition law just now deals mostly with horizontal integration, which would be say, if one company owns all of the cable in northern Belgium (Telenet).”

Andersdotter points out that the telecommunications sector has some good sector specific laws already, the net neutrality law in the Netherlands being a prime example. The problem is, however, to get all member stats to adopt these regulations.

“Maybe European Parliament or the European institutions need better tools to make sure member states follow their community obligations,” Andersdotter notes.

Aside from defending the public from unfair competition, the future Member of Parliament will also tackle the various rights issues that are so dear to the Pirate Party.

“I’m also very interested in industrial rights, like, patent rights or design rights, trademarks. There’s an abundance of kind of side-initiatives, data exclusivity in the pharmaceutical industry being a good example, that also reinforce the ‘non-material’ economic position of companies in a way that is not always good for society,” she says.

“One issue that I know the EU deals with a lot in all areas, and that we don’t really think much about at all in terms of industrial property, is certification – what is a certification worth, how are they generated (produced) and traded, by whom? Between whom?”

Andersdotter further hopes that the Pirate Party presence in the European Parliament will be followed by strong representation in national parliaments.

“It’s important for the PP to be represented everywhere, I guess. One of my hopes for the future is that the PP will be represented in all the national parliaments of member states so that we can hold member states kind of accountable more for what happens in the EU.”

“I find it antagonizing that member states and their politicians try to avoid responsibility for their own failures by blaming the EU, but mostly how successful they are in doing so,” Andersdotter tells us.

“When national parliaments have been saying that they can’t do anything about ACTA, activists and media just kind of happily accept. What national parliaments could do, and should do, is obviously tell their national governments not to sign the agreements. That is and would be within their power,” she adds.

Thus far none of the Pirate parties has managed to score a seat in the national parliament through elections, but the recent outcome of the German State elections shows that the possibilities are there. Political change is slow, but things are moving in the right direction for the Pirate Party.

In the European Parliament the seat of Amelia Andersdotter will double the representation of the Pirate Party in Europe’s highest political arena, something the 5-years-young party can be proud of.

Source: Pirate To Join European Parliament As Youngest Member

This first test of IPRED was designed to get the personal identifying details of a subscriber who allegedly stored more than 2000 audio books on his server, 27 of which breached the publishers’ copyrights.

In June 2009 the court ordered ISP ePhone to hand over the personal details of the individual. However, ePhone protested and took the case to the court of appeal which overturned the decision and sent the case to the Supreme Court.

So could IPRED, the law created to enable copyright holders to more easily chase down copyright infringers, be used for its intended purpose? Sweden’s Supreme Court said that only the European Court of Justice could decide. Yesterday, Advocate General Niilo Jääskinen gave his advice on the matter and it was a victory for privacy which could deliver a fatal blow to IPRED, but one to which Internet service providers hold the key.

Jääskinen’s statement concluded that while no EU Directive ­ exists which prevents copyright owners requesting personal information on file-sharers from ISPs under IPRED, the data being stored by ISPs must have originally been stored for the purpose in order to be subsequently released.

“It is a victory for freedom. Although it is difficult to interpret, it is very good news,” says Christian Engstrom, MEP for the Pirate Party. “Internet service providers collect customer data to manage their operations, not to bust suspected file sharers as the copyright mafia want them to do.”

But speaking with Expressen, pro-copyright advocate Per Strömbäck says that the Supreme Court asked the ECJ only one question – Is there any conflict between the EU data retention directive and the Swedish IPRED-law? – and the response to that was a clear “no”. Further discussion on the reasons why data was originally stored was an error by the Advocate General, he believes.

Pirate Party’s Engstrom says the advice by the Advocate will mean that it will still be OK for the ISPs to disclose information to police and prosecutors in criminal cases, just not to private companies, adding that “the justice system has more important ­ things to do than to track down teenagers who listen to music.”

Indeed, ePhone’s original objection to IPRED was that it would give surveillance powers to private companies where that should be an issue for the police, so they will be pleased with the advice. Needless to say, ePhone did not store customer information for the purposes of handing it over to Antipiratbyrån.

But for now, as the advice from the Advocate General is digested by the ECJ before heading back to Sweden’s Supreme Court, increasingly Antipiratbyrån are doing just fine without help from IPRED. By conducting their activities alongside the police – who already have the necessary powers to get information from ISPs – they are getting the information they want anyway, just in other ways.

Source: EU Advocate General Anti-Piracy Advice “A Victory For Freedom”

The studio claimed that P.J not only “uploaded and made available to others via the Internet a script of Deadpool, the copyright to which is owned by Fox, and which is a script for a project still in development,” but also the scripts of 79 more movies and TV shows.

The infringements allegedly took place during 2009 and 2010, and Fox demanded statutory damages for each and every one. That all mounted up to a cool $12 million, a considerable sum for someone described as “a struggling screenwriter” who makes ends meet selling flowers.

When the news broke there was sympathy for P.J., not least because she was not the originator of the leaked scripts and allegedly only reposted material already available online. But now, just short of 12 months later, the whole $12 million drama is over.

“Well, it took almost a year to resolve–as the Fox investigators showed up on my doorstep the Friday before Thanksgiving last year,” P.J. told TorrentFreak, clearly relieved at the news.

“To say this turned my life upside down would be putting it mildly. It affected me on every level and some days it was hard to keep going. But I always tried to keep an upbeat, positive attitude. My family and friends supported me every step of the way, and my lawyers were beyond fantastic. To have this dismissed is a huge weight off my shoulders.”

And when P.J. describes the ordeal as “a rough time” one can’t help but agree – a look at the 27 documents filed in the case shows how seriously Fox were taking the issue. But thankfully the final document in that long list shows that the case is now dismissed without prejudice.

“Honestly, as to why Fox decided to dismiss the lawsuit now and why—that would be pure speculation and conjecture on my part, and I really don’t want to get into that,” P.J. told us.

While the decision is great news for P.J., it will also presumably spell good news for the mysterious John Does 1-10, who were allegedly responsible for supplying P.J. with the scripts. They have never been identified which leads one to question who they were, or indeed whether they ever existed.

The lawsuit itself, however, was very real indeed and clearly had a significant affect on P.J’s life. Will others take the risk of posting scripts in future when they see how far the studios are prepared to go in defending them? It seems less likely now than it did 12 months ago.

For Fox then, despite this dismissal, maybe it’s mission accomplished.

Source: 20th Century Fox Abandons $12 million Pre-Release Movie Script Lawsuit