Massive Copyright Infringement Suit Could Collapse Cyberlocker, Studio Warns

The plaintiffs in a massive copyright infringement lawsuit against a cyberlocker service are warning users of the site to back up their files. Corbin Fisher, the movie studio currently suing Oron for $34.8m, say that the file-hoster could collapse after a judge denied it access to additional funds to pay for their hosting. Is this another Megaupload-style data loss debacle in the making?

Less than two weeks ago, adult studio Corbin Fisher sued the operators of file-hosting service Oron for a cool $34.8 million, claiming that they induce the sharing of copyright infringing via their service.

“Oron is cognizant of its role as the vehicle in which infringers act in concert with one another to copy and distribute huge amounts of infringing material,” Corbin Fisher’s lawyers wrote, adding that since Oron only registered a DMCA agent in June 2011, it could not seek ‘safe harbor’ immunity for infringements made before that date.

The immediate effects of the suit were highly damaging for Oron. All company assets in the U.S. and Hong Kong were frozen and payment processors such as PayPal were ordered to stand down. Additionally, the file-hoster’s domain registrar was told to forbid any transfer of the Oron.com domain.

Of course, having no cash is a serious issue for any business, so Oron went back to court to ask for funds to be released to pay for legal expenses and operating costs. The file-hoster asked for roughly $375,000, but Judge Gloria M. Navarro couldn’t see her way clear to granting the full amount.

“Defendants do not provide any itemization or accounting for the Court to consider in making its determination if the amount requested is reasonable. Therefore, the Court authorizes $100,000 U.S. dollars to be released from Defendant’s PayPal account,” Navarro said.

But quickly Oron were back again asking for more money – $355,000 in total. The company said that it needed to pay its hosting company, Netherlands-based LeaseWeb, $75,000 by last evening plus an additional payment of $280,000 by next Monday.

While Corbin Fisher’s language towards Oron has been predictably aggressive, comments and accusations leveled at LeaseWeb are bound to raise eyebrows. Challenging Oron’s need to make such large payments to LeaseWeb, Corbin Fisher’s lawyers directly accused LeaseWeb of conspiracy and/or extortion.

“The evidence put forth by [Oron] shows that these expenses fall far outside of the norm for the industry. Something is amiss. Either Oron is fabricating this newfound need for hundreds of thousands of dollars or LeaseWeb is conspiring with Oron,” XBIZ reports.

“Logic suggests that LeaseWeb is either colluding with Oron to assist Oron in removing hundreds of thousands of dollars from this court’s jurisdiction; extorting Oron; or Oron is not being entirely forthcoming with the court,” Corbin’s lawyers said.

And the criticism of LeaseWeb didn’t stop there. An investigator for the studio said that LeaseWeb is known to “…ignore DMCA notices or at the very least, minimize their impact.”

But Friday brought more bad news for Oron. Judge Gloria Navarro denied the request for extra funds, despite Oron’s warnings that without them their business would not be able to continue.

“If Oron’s servers are shut down for non-payment of those monthly hosting fees its users – 99.9 percent of whom have no connection to this litigation – will lose access to their data,” the company’s lawyers wrote.

Liberty Media, the owners of Corbin Fisher, were quick to pile on the pressure.

“This leads us to believe that Oron neither maintains nor is instituting any backup of user data. Therefore, if there are any legitimate users of Oron out there, Liberty Media Holdings advises them to back up any important files for which they are the proper owner or licensee,” the company wrote in a press release.

So while the lawyers fight, what we appear to be witnessing here is another Megaupload data-loss debacle in the making, in which completely innocent individuals could lose access to their cloud-stored data due to someone else’s legal problems.

But perhaps what is of most concern to Joe Public right now is that despite warning the court that without funds the site could close, Oron have zero warnings on their site or information on the issues the company faces.

Of course, there’s a fine line between causing panic and keeping people informed, and indeed the company may be quietly confident that it will ride out the storm, but people should have the option to take precautionary backups, However, they won’t do that if they don’t think anything is amiss.

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