Nearly all of these cases end up dismissed or settled, but one involving Kywan Fisher from Hampton, Virginia, has turned into a financial disaster.

In 2011 Fisher and several other defendants were sued by adult entertainment company Flava Works. The case in question differs from the so-called “John Doe” lawsuits as the copyright holder had detailed information on the defendants who had paid accounts on the company’s movie portal.

For Fisher the trouble started when instead of just viewing the films for personal entertainment, he allegedly went on to share copies on BitTorrent. These illicit copies were traced directly back to his account through a code embedded in the videos.

“Plaintiff has proprietary software that assigns a unique encrypted code to each member of Plaintiff’s paid websites. In this case, every time the Defendant downloaded a copy of a copyrighted video from Plaintiff’s website, it inserts an encrypted code that is only assigned to Defendant. In this case, the encrypted code for Defendant is: ‘xvyynuxl’,” Flava informed the court.

Copying films was expressly forbidden in the user agreement Fisher signed with the video portal, allowing Flava to claim willful copyright infringement for 10 titles.

According to Flava the copies uploaded to BitTorrent by Fisher went on to be downloaded thousands of times.

“Defendant’s conduct was willful to the extent that he copied or distributed Flava Works, Inc.’ intellectual property at least 10 times and caused the videos to be infringed or downloaded at least 3,449 times.”

Because Fisher failed to defend himself Judge John Lee had little choice but to find Fisher guilty.

This week the Judge handed down the largest ever damages award in a BitTorrent case, 10 times the maximum statutory damages for willful infringement, totaling $1,500,000.

“Given the materials submitted by Plaintiff in support of its motion and in light of the absence of any objection by Defendant, Plaintiff’s motion for entry of default against defendant 11 is granted. Judgment is entered in favor of the Plaintiff Flava Works, Inc., and against the Defendant Kywan Fisher in the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00),” the judgment reads.

The verdict will be welcomed by Flava and the many other copyright holders involved in BitTorrent lawsuits in the United States. DieTrollDie, a close follower and critic of these cases, points out that it will be widely cited in settlement letters to other defendants, but that the case itself is notably different.

“This was not the normal Copyright Troll case – there was some actual evidence beyond a public IP address. Not a smoking gun by far, but certainly enough to show a preponderance of evidence,” DTD writes.

Fisher has a few options to respond according to attorney Blair Chintella.

“The most common way is the “collaterally” attack the judgment by arguing that there was some jurisdictional defect in the lawsuit. For example, that service of process was improper or that the Court lacked personal jurisdiction,” Chintella told TorrentFreak.

While the guilty verdict is no surprise considering the failure of Fisher to appear before court, the $150,000 in damages per movie, which translates to $435 per alleged download, definitely raises eyebrows.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

It has become so important that some of the world’s leading Internet companies such as Google and Facebook, rights groups such as the EFF and Public Knowledge, and the biggest entertainment companies through the MPAA, have all become involved in the case.

First a little background. Marques Gunter owns a site called myVidster, a site designed for users to upload links and embed videos hosted on 3rd party sites. In 2010, adult studio Flava Works filed a copyright complaint against myVidster and 26 Doe users of its service.

Flava Works alleged that Gunter had failed to correctly police his site for infringement. Although Flava did not deny that Gunter had responded to specific takedown requests, the company said that despite being made aware of them, Gunter had done nothing to stop a sample of 26 repeat infringers who continually reposted links to infringing material on the myVidster site.

In July 2011, a contributory infringement claim was upheld and a preliminary injunction awarded against myVidster. The company was denied a DMCA safe harbor defense after it was said to have not done enough to deal with repeat infringement.

“[Gunter] removes videos from myVidster that are listed in DMCA notices, but goes no further. Beyond his mechanical response to the notices, Gunter refuses to concern himself with copyright protection,” Judge John F. Grady wrote.

“It is true that service providers are not required to police their sites for infringement, but they are required to investigate and respond to notices of infringement—with respect to content and repeat infringers,” Grady added.

Noting the importance of the case, late November 2011 the EFF and Public Knowledge filed an amicus brief. The pair said that Grady had gone too far with his interpretation of the DMCA and noted that the law “….does not say when and how service providers must terminate the accounts of ‘repeat infringers,’ nor does it define ‘repeat infringer’.’”

Also in November, Internet giants Google and Facebook signaled their interest in the case and their desire to have the original decision overruled. Their submission is complex, but boils down to a common theme.

“Lack of certainty not only harms established businesses like Google and Facebook, but may prevent investment in and development of the next Google or the next Facebook. A [recent study] found that imposing greater liability on Internet intermediaries for the actions of their users would have a devastating effect on investment in early-stage Internet companies,” the pair wrote in a joint amicus brief.

With such important issues at stake, and with their interests leaning more towards holding service providers liable wherever they can, on April 4th the MPAA added their amicus brief to the mix. The MPAA wants Judge Grady’s 2011 ruling upheld.

“Contrary to the assertions of myVidster and amici Google and Facebook, search engines and social networking sites are not the only businesses that desire certainty in a challenging online marketplace,” MPAA wrote. “MPAA member companies and other producers of creative works also need a predictable legal landscape in which to operate.”

“By advertising infringing material, refusing to terminate any of its users’ accounts, and failing to identify and stop infringers who repeatedly embedded links to unauthorized video streams and displays, myVidster did not qualify for safe-harbor protection,” the MPAA continued.

Again, the brief submitted by the MPAA is highly complex, but it too can be boiled down to a simple interest.

“Given the massive and often anonymous infringement on the internet, the ability of copyright holders to hold gateways like myVidster liable for secondary infringement is crucial in preventing piracy,” the MPAA states.

In keeping with that theme and according to a statement from Flava Works CEO Phillip Bleicher seen by AVN, Flava Works are also suing the web hosts of myVidster.

US-based Voxel.net and Netherlands-based LeaseWeb.com are said to be on the hook “…for failing to remove MyVidster.com from its servers despite dozens of DMCA notices alerting Voxel.net and LeaseWeb.com that Gunter was a repeat infringer. Under DMCA, safe harbor no longer applies to sites that fail to remove repeat infringers.”

Flava Works, Inc v. Gunter, currently up before the 7th Circuit Court of Appeals, is one of the most important copyright-related cases around and definitely one to keep an eye on.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.