Number 900 in this tower is an exceptionally busy place these days as the home office of Media Copyright Group, LLC (MCG).

MCG is the technology company behind Steele Hansmeier, PLLC, and the affidavit of this firm’s “technicians” have formed the basis of countless motions seeking the identity of IP address owners. It wasn’t the contents of the technician’s affidavit that interested me initially, however, it was his identity – Peter Hansmeier. Hansmeier? Hmm. That name rings a bell.

A look at the LLC filings available from the Minnesota Secretary of State reveals that Media Copyright Group is managed by Peter Hansmeier from #900 IDS tower. Notably, Paul Hansmeier (attorney for Steele Hansmeier) is the registered agent for the LLC. In a way, then, the sole evidence submitted in favor of many of Steele Hansmeier’s subpoenas is a statement by one brother that his other brother really should be able to get this information. And the fact that the websites of the two companies are hosted on the same server doesn’t add to the claimed objectivity either.

But wait, it only gets worse from here. Media Copyright Group proudly proclaims on their website:

“The cost of our services is paid out of the damages that are collected on your behalf. In other words, you do not pay us any money up front, and we are paid only out of the damages that are collected…”

Peter Hansmeier appears then to be more than merely a witness, and more than just a witness and the brother of an involved attorney, but appears to be an interested party to the lawsuit himself. As the website makes clear, the witness against a John Doe defendant does not get paid unless damages are collected. If this alarms you then it’s time to buckle up, because we’re about to take a trip way down the rabbit hole.

At the bottom of the hole is MCGIP, LLC, a company which hired Steele Hansmeier to file multiple lawsuits against hundreds of Doe defendants in the last year. As another peek at Minnesota’s Secretary of State website reveals, MCGIP’s registered office address is #900 in the IDS, the same bustling office as Hansmeiers’ Media Copyright Group. It also lists its c/o as Alpha Law Firm, yet another business registered to #900 in the IDS tower.

Notably, Paul Hansmeier’s LinkedIn Profile lists him as “Partner” at Alpha Law Firm. This tangled web has several potential implications and leaves me wondering if MCGIP is Steele Hansmeier’s baby Righthaven, with all of Righthaven’s fatal flaws.

1. “Exclusive Licenses” and Potentially Defective Standing

As noted above, MCGIP does not own the copyrights to the allegedly infringed works, but instead acquires an “exclusive license” for the rights at issue. MCGIP says in its complaints that the work is publicly available, but only to “bone fide purchasers.” In a way MCGIP is right – the works are publicly available. Unfortunately for MCGIP, the works aren’t being offered by MCGIP. MCGIP does not have any web address where its purportedly licensed works are available, nor does it have any website at all.

Take the heartwarming coming-of-age tale, “Blacks on Blondes – Mariah Madysinn,” for example. This movie is the title at the center of MCGIP, LLC v. John Does 1 – 55 in the Northern District of California (3:11 – cv – 03312). This film is registered to Directech, Inc. d/b/a Dog Fart Productions (keepin’ it classy), but copyright.gov makes no mention of MCGIP, LLC. The video is presently available only from the original owner’s website.

Another blush-worthy example is “Well Hung Amateurs 5,” the movie at issue in MCGIP v. John Does 1-18. This situation is even more interesting, and the “exlusive” license even more questionable. This film is registered to Xplor Media Group and again the registration info makes no mention of MCGIP. It appears that this movie was created in 2006, has been consistently distributed by multiple online outlets in the time since, and continues to be available through multiple (apparently) legitimate adult vendors including Spice and Homegrown Video.

Copyright.gov notes that the registration date for this movie was in April 2011, and MCGIP’s lawsuit based on it’s “exclusive” license alleges infringements in Mid-March of 2011. All of this made the Righthaven alarm bells start ringing in my head, and they haven’t stopped since.

For those who are unfamiliar, Righthaven appears to be doomed by its business model, which relied on purportedly exclusive licenses from the copyright owners that allowed Righthaven to do little more than sue. Sound familiar?

In Righthaven’s case, suit after suit was dismissed for lack of standing. You see, copyright law only allows the owner or exclusive licensee of a protected right to bring suit to enforce that right. Righthaven repeatedly failed to convince courts that they had the requisite exclusivity, and the cases were dismissed. Righthaven was sunk. This doesn’t seem like an ideal business model to copycat, but it appears that Steele Hansmeier might have done just that.

The case for MCGIP’s standing doesn’t seem any stronger than Righthaven’s and the status of these purportedly exclusive licenses needs to be scrutinized. It seems unlikely that the actual owners of these movies gave MCGIP the exclusive right to distribute the works, especially in light of the fact that the actual owners and/or numerous internet distributors continue to offer the works themselves. This makes the license seem, by definition, non-exclusive.

Some of MCGIP’s filings seem to indicate that they are only the exclusive licensee of the right to distribute the movie on BitTorrent. This would be astounding, if true, and highlights the highly illusory nature of these licenses. A large section of Steele Hansmeier’s filings are devoted to explaining how a single user only exchanges bits of information through BitTorrent, and the entire structure of the network makes an exclusive BitTorrent license ridiculous and potentially impossible.

It is a disguised license to sue, and little more. And if MCGIP’s licenses don’t support standing, all of the MCGIP cases should be dismissed and all of their collection efforts should cease.

2. Potential Failure to Disclose Interested Parties

You might be asking yourself, “didn’t Righthaven get in trouble for its litigation practices?” Indeed they did. Specifically (and most pertinent to this discussion), Righthaven was fined $5,000 for failing to disclose that the actual owner of the copyrighted work was entitled to 50% of settlement proceeds from its suits.

I have not seen the purported assignments from the owners to MCGIP, but I find it hard to believe that they would give their reproduction rights to a company that does not appear to be in the movie business (but is certainly in the lawsuit business), and failed to retain at least some interest in the outcome of the litigation. What incentive would they have to participate? The Northern District of California Local Rule 3-16 (b)(1) explicitly requires disclosure of:

“Any persons, associations of persons, firms, partnerships, corporations (including parent corporations), or other entities other than the parties themselves known by the party to have either: (i) a financial interest (of any kind) in the subject matter in controversy or in a party to the proceeding; or (ii) any other kind of interest that could be substantially affected by the outcome of the proceeding.”

Beyond the interest of the actual copyright owner, Media Copyright Group is fairly explicit in its own claims to an interest in the lawsuit. If they collect their fees only out of damages (as the website claims), aren’t they BY DEFINITION a firm with a financial interest in the litigation? Peter Hansmeier’s sworn declarations (which are publicly available from a number of sources online) and the MCG website lead me to believe that they are heavily involved in the Steele Hansmeier suits, yet to my knowledge this interest has never been disclosed in any of Steele Hansmeier’s filings.

The Takeaway

MCGIP has received little to no discussion in the ongoing debate about mass copyright practices. This needs to change. Their entire business model seems to be built on shifting sands, and I’m not sure if ANYONE has brought this to a court’s attention. Steele Hansmeier has declined to comment on this article.

If you are a defendant, make sure that your attorney is following up on all of the potential angles for your defense. If you don’t have an attorney and you or your case is in California, call me, or visit my website. If you are a defense attorney or anyone else with something to add to this discussion, I’d love to hear from you too.

In the words of former Supreme Court Justice Louis Brandeis, sunlight is the best disinfectant, and I’m happy to add a bit of light to this debate. This article now qualifies as attorney advertising.

^{(Disclaimer: The legal analysis and opinion expressed herein are solely those of the author. Nothing herein is to be construed as legal advice and is not meant to replace the advice of an attorney with knowledge of the specific facts of your case. No attorney-client relationship is created, and you should not send me confidential information. Please just don’t try to sue me for offering my thoughts. Thank you.)}

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

The settlement proposals are the core of every single case, and none of the copyright holders intends to proceed with the full jury trial they asked for in court. Today we take a closer look at such a settlement letter to see what tens of thousands of alleged copyright infringers are being offered.

The settlement letter in question comes from the notorious anti-piracy lawyer John Steele. The divorce attorney turned “pirate slayer” is going after thousands of pirates and ostensibly protecting the rights of adult entertainment companies. And he’s a committed man.

In an interview with the Chicago Tribune, Steele claimed that he and a partner spent as much as $250,000 to develop their own BitTorrent tracking tool, a figure that seems unrealistic to say the least. But in return he got the best of the best. Apparently, Steele’s software is error-free.

Steele claims that the thousands of IP-addressed he has gathered thus far contain no “false positives.” An interesting conclusion, especially since it’s impossible to verify. Not only for us, but also for Steele himself.

Unfortunately for Steele and his client, not everyone agrees that his practices are that solid. Last month District Court Judge Harold Baker denied them the right to subpoena the ISPs of alleged copyright infringers, arguing that an IP-address does not equal a person.

However, other judges were less thoughtful and allowed Steele to unfold his masterplan. In those cases where he was allowed to subpoena ISPs, the alleged file-sharers were soon sent a settlement offer, asking them to pay up or face a fine up to $150,000 through a jury trial.

Below we have an example of such a settlement letter, which comes from the case First Time Videos LLC against Does 1-500. The defendant in question is accused of sharing the video “Madeline 3000kbps” for which the copyrights are interestingly enough not registered at the U.S. Copyright Office.

Copyrighted or not, Steele claims the defendant infringed on the rights of his client, and demands $2,900 in compensation.

“While it is too late to undo the illegal file sharing associated with your IP address, we have prepared an offer to enable our client to recover damages for the harm caused by the illegal downloading and to allow both parties to avoid the expense of a lawsuit,” Steele writes in the settlement letter.

What follows is a carefully constructed mix of threats and psychological pressure to convince the defendant that a settlement is the best way out.

“In it [sic] least one case where the Copyright Law has been applied to digital piracy ans statutory damages were applicable, juries have awarded over $20,000 per pirated file. During the RIAA’s well-publicized campaign against music piracy, over 30,000 people nationwide settled their cases ranging from an average $3,000 to $12,000,” the lawyer writes.

“More recently, on December 22, 2010, a case in which a defendant was accused of illegally downloading 6 works via BitTorrent, a settlement was reached for $250,000,” Steele adds.

TorrentFreak covered this particular case and it was not a $250,000 settlement at all, something that Steele should be very well aware of. As we originally reported and predicted, this case is the perfect propaganda tool for scaring people into settling.

Nevertheless, to avoid becoming completely bankrupt, Steele and his client are kind enough to offer a ‘reasonable settlement.’

“In light with these factors, we believe that providing you with an opportunity to avoid litigation by working out a settlement with us, versus the costs of attorneys’ fees and the uncertainty with jury verdicts, is very reasonable and in good faith.”

Attached to the settlement proposal is a frequently asked questions section which again stresses that settling the case is the wise choice.

Q: How do I make this go away?

A: Paying the settlement fee will release you from all liability and close the case.

Aside from the straightforward answer below there is also plenty of confusion, especially when it comes to hiring an attorney. While the letter states that consulting with an attorney is advisable, it also stresses that this may be more expensive that the settlement itself.

“The decision to hire an attorney is completely up to you. We cannot give you legal advise, but speaking with an attorney is generally highly advisable. In some cases the settlement offered by us is significantly lower than the costs associated with hiring an attorney,” the letter reads.

Tough choice.

We can only wonder what the judges who handle the dozens of mass-lawsuits think of these practices. They never get to see this part of the case, and many may very well believe that the copyright holders are actually planning to pursue a full trial.

The reality is, however, that no court has ever looked thoroughly at what evidence there actually is, which is a waste of the supposed $250,000 Steele invested in his tracking software. But with the dollars rolling in, we have no doubt that Steele will be comfortable with that.

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

In January we reported that the studio wanted file-sharers to hand themselves in and pay $1000, an ‘amnesty’ scheme that mysteriously appeared to work. In addition, the company has started over a dozen (mass) lawsuits against thousands of BitTorrent users who allegedly shared their content without permission.

In a recent case filed on Monday, Liberty Media and their lawyer tried something new. Instead of simply joining the various defendants in one suit, the company is actually suing a BitTorrent swarm in the case tiled: “Liberty Media Holdings, LLC v. Swarm of November 16, 2010 et al.”

In the complaint they explain:

“The defendants are a group of BitTorrent users or peers whose computers are collectively interconnected for the sharing of a unique file, otherwise known as a ‘swarm’. The particular file a BitTorrent swarm is associated with has a unique hash,” Liberty Media’s lawyer writes.

“The torrent swarm in this case is not an actual entity, but is rather made up of at least 95 individuals, acting in concert with each other, to achieve the common goal of infringing upon the Plaintiff’s copyright both by illegally duplicating the Plaintiff’s Motion Picture and illegally distributing the Plaintiff’s Motion Picture.”

The lawyers then continue with a very detailed reconstruction of how the swarm came about. For every defendant they list the IP-address and the exact time when they joined the swarm. As the title of the case already suggests, all infringements took place on the same day – November 16, 2010.

Liberty Media’s lawyer then continues the complaint by describing how BitTorrent works, and how the alleged defendants worked together to distribute the files. Not only for their own pleasure, but also to the benefit of the entire swarm.

“In the BitTorrent world, there is honor among thieves. Those who merely download files, without publishing and sharing files, are derisively called ‘leechers’,” Liberty Media’s lawyer writes. “Being a leecher is not only negative due to the pejorative terminology, but leechers are also punished by the torrent swarm.”

According to the complaint the swarm and the 95 ‘does’ are, aside from copyright infringement, also believed to be guilty of a civil conspiracy. “The center of this conspiracy is the scheme to traffic in infringing content,” the complain reads, adding that the role of the torrent swarm is essential in this process.

Although it’s not explicitly stated, we assume that the emphasis on the swarm and the conspiracy are an attempt to circumvent the jurisdiction and improper joinder issues that led to the dismissal of previous suits.

By arguing that all defendants shared bits and pieces in the Southern District of California, even those who live elsewhere, the plaintiffs claim that the Court has jurisdiction. Similarly, it is argued that, since all defendants were part of the same swarm on the same day, joining them in one case should be justified.

Despite this innovative “sue a swarm” approach, the end-game of Liberty Media is the same. They want to know who the people behind the IP-addresses are, to kindly ask them for a few hundred or thousand dollars to settle the dispute. Pay up or else…

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

Among other things, they had argued that many of the defendants fall outside the Washington DC Court’s jurisdiction as they live in other states. In addition, they argued that joining thousands of defendants in one lawsuit is improper procedure, and that the lawsuits violate the defendants’ right to anonymity as protected by the First Amendment.

However, the District Court judge disagreed and allowed Call of the Wild Movie LLC, Maverick Entertainment Group, and Donkeyball Movie LLC to continue their cases.

Texas lawyer Robert Cashman, who represents several defendants, is blown away by the decision of Judge Beryl Howell, who has basically turned the U.S. legal system into a tool which allows the copyright holders to acquire all the info they need to send out “extortionist” settlement claims.

“In layman terms, the decision means that the plaintiff attorneys can continue harassing defendants and trying to elicit multi-thousand dollar settlements from defendants. This, while the plaintiff attorneys continue to tell the judge they are conducting ‘discovery,’ that is, trying to figure out which of the thousands they have sued live in DC,” Cashman told TorrentFreak.

“It is my opinion that the judge is completely siding with the plaintiff attorneys on all accounts, for whatever his personal or political motivations. On almost every argument, he states that he is siding with the plaintiff attorneys because it is ‘too early’ to decide any of the issues brought to the court until defendants are named,” he added.

This is a big concern because the copyright holders are not planning to bring a full-trial against the defendants, they simply want their names so they can send out their demands for cash. And since Judge Beryl Howell has now ruled that potential issues of jurisdiction and joinder are not relevant until the defendants are named, the copyright holders now have carte blanche.

“In short, he is giving the plaintiff attorneys a very loose leash to run around and do whatever they want to do to whomever they please, and he is completely ignoring the fact that the plaintiffs are not running a lawsuit, but instead are running a settlement scheme disguised as ‘discovery’,” Cashman said.

“I believe the judge is giving the plaintiff attorneys the benefit of the doubt on all accounts, which is unfortunate because he is turning a blind eye to the abuses defendants are suffering with threats and harassment while plaintiff attorneys attempt to scare them into a settlement,” Cashman added.

Interestingly, just last week thousands of defendants were dropped from these same cases by the copyright holders, at least for the time being. For these people nothing will change. However, the most recent decision is certainly a step in the wrong direction, which may lead to even more U.S.-based cases than the 100,000+ that have been filed against BitTorrent users since last year.

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

Their decision to prevent BitTorrent users from sharing content over their network has sparked the Net Neutrality debate, resulting in an FCC investigation and various lawsuits. One of these suits was settled last month.

Comcast agreed to put $16m into a fund to pay BitTorrent users that were affected by the ‘network management’ which made it impossible for them to share files after their downloads had completed.

Each of the affected users can now claim their $16 in damages, but those who do are required to state to the Court, under penalty of perjury, that their use of BitTorrent “was for lawful purpose consistent with applicable copyright and other laws.” This required statement came as an unpleasant surprise to many affected Comcast users.

“Am I supposed to be able to remember everything I downloaded during that period, and be cognizant of the copyright status of those items not only then, but now?” one worried Comcast user told TorrentFreak. “I certainly do not think that sixteen dollars is enough incentive to possibly suffer the penalties of committing unwitting federal perjury.”

Other Comcast users will have to agree with this assessment, simply because it is often not clear when one is violating copyright law. For example, there is still a large portion of BitTorrent users who think that downloading a TV-show that they could have watched for free on TV, is not a crime.

It wouldn’t surprise us if a large portion of the $16 million fund is left unclaimed because of this required statement, saving Comcast a significant amount of money.

That leads us to the question why was included in the first place. It somehow suggests that Comcast was attempting to stop copyright infringement with their throttling practices, aside from the network management purpose it served. Maybe they just want to hang on to their money.

Whatever the motivation to include this option, it is completely irrelevant to the case itself. Comcast has never used copyright infringement as a justification for stopping BitTorrent traffic, so the lawfulness of the traffic should not be an issue.

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

In one of the class action suits that were brought about from the long-running incident, Comcast has now agreed to settle, meaning those affected may be eligible for compensation.

About two and a half years ago, reports surfaced on what appeared to be the throttling of BitTorrent connections by Comcast. The throttling, first discovered by Rob Toplowski, was confirmed by TorrentFreak, and was first reported in August 2007. Other news agencies picked it up later, especially after tests by the EFF and Associated Press confirmed events and included reports that other network based activity was also affected.

Comcast long-denied any wrongdoing, but a leaked memo revealed that the company went as far as instructing its front-line staff to lie about the issue. Then the FCC got involved and things deteriorated. At a hearing at Harvard, Comcast packed the venue with people they bussed in, but it didn’t stop the BitTorrent throttling practice being termed a ‘hacker technique’.

Eventually, some assurances were made, and the FCC ordered Comcast to stop using Sandvine. Meanwhile lawsuits had been filed. One of these, Hart vs Comcast of Alameda, attained class action status, and there is now a proposed settlement.

Comcast has agreed to put $16M into a fund to pay BitTorrent users that were inconvenienced by the ‘network management’.

The downside is the size of the settlement. If you qualify, you can receive a maximum of $16, yet still Comcast refuses to accept it did anything wrong. The administrators of the settlement have set up a website to deal with questions about the case which can be found at www.p2pcongestionsettlement.com

It’s not hard to imagine that some customers will feel this doesn’t go far enough, and undoubtedly the discussion on this topic will continue. For the affected Comcast users there is still time to decide how to proceed – the deadline for claims is August 14th 2010. Meanwhile, network neutrality remains a pipe dream for most people.

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

The official press release states that the MPAA targeted Isohunt, Torrentspy, Torrentbox, BThub and Niteshdw.

Niteshdw decided that settling was the best option:

I’ve now official retained a lawyer from Madson & Austin here in Salt Lake City. The goal is to settle the case with the most favorable outcome for both parties.

While some of you may be disappointed, or just plain angry, at my decision to settle, I hope you can at least appreciate my reasons.

First, I do not have the funds necessary to fight a prolonged legal battle. NiteShdw.com was never about making money. I wanted a place where science fiction fans could come together and enjoy their favorite shows together by discussing them together. If I am unable to obtain a satisfactory settlement, I always have the option to continue with litigation, even if I have to do so pro se

Second, my first priority is to my family and especially my 8 month old daughter. As a father my priority is to provide for her before anyone else.

In my negociations, I am trying to propose a business plan to the MPAA and/or its members. I want to take this lawsuit as an opportunity to share with them what we as consumers want and how they can actually make money from it rather than push us away. People have freely donated to help NiteShdw.com pay for its server costs. That proves that people are willing to pay to get the TV shows they want when and how they want them.

Gary from Isohunt on the other hand is not willing to settle and fights back. I asked him some questions about the pending case:

TorrentFreak: What is the exact nature of the accusation?

Isohunt: That the sole purpose of isohunt.com and torrentbox.com is to infringe on MPAA’s copyrights.

TorrentFreak: What are your counterarguments, why is the mpaa wrong according to you?

Isohunt: Because we process copyright takedown requests daily, and have done so for hundreds of requests in the past, if not thousands. We work with all copyright owners, and even the RIAA email us routinely. The MPAA is the only organization unwilling to cooperate with us. It’s unfortunate, because we respect copyrights.

TorrentFreak: Who are you teaming up with to fight the MPAA

Isohunt: The EFF, other sites being sued, and a top-notch lawyer specialized in internet copyrights.

TorrentFreak: You say you’re opening a legal defense fund, is this going to be a fund for this case only, or a torrent search engine fund in general. Monitored by the EFF for example. (think lokitorrent)

Isohunt: Only for us at this point, possibly another fund that extends to other parties. We’ll look into whether the EFF can help in acting as a sort of Escrow for trust assurance. But what’s different already between us and Lokitorrent is that a lawsuit has already been filed against us. Lokitorrent didn’t.

TorrentFreak: Is there anything we can do to help apart from donating money?

Isohunt: Bad publicity against the MPAA. It’s one thing we can really use against them in our negotiation. We need people to know our stance, and that it is the MPAA who is wrong here. And we can because it’s true. So spread the word!

TorrentFreak: Ok, the MPAA sucks, spread the word people…

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