What first seemed to be a relatively effective and profitable way to turn piracy into a healthy revenue stream, is rapidly turning into a nightmare for the anti-piracy lawyers and their partners.

To add to the growing problems and difficulties for the US Copyright Group (USCG), a class action lawsuit has now been filed by the alleged file-sharers. The accusations put forward in the 96 page complaint are not mild, and could potentially put an end to this and similar cases in the United States.

The class action lawsuit is targeting all the parties involved in the Far Cry pay-up-or-else scheme. It was was filed on behalf of one of those accused, Dmitriy Shirokov, but includes others who were included in the Far Cry case.

“This is a class action brought by Plaintiff, on behalf of himself and 4,576 other similarly-situated victims of settlement fraud and extortion,” the lengthy complaint starts. The tables are turned this time with USCG, law firm Dunlap, Grub and Weaver (DGW) and Far Cry copyright holder Achte/Neunte in the defendant’s seats.

The complaint goes on to describe the practices of the anti-piracy lawyers as “lucrative trade in monetizing copyright infringement allegations,” and carefully dissects the operation and the numerous offenses that were allegedly committed by the lawyers and their partners.

In total, the alleged BitTorrent users are seeking relief based on 25 counts including extortion, fraudulent omissions, mail fraud, wire fraud, computer fraud and abuse, racketeering, fraud upon the court, abuse of process, fraud on the Copyright Office, copyright misuse, unjust enrichment and consumer protection violations.

One of the most prominent allegations against the law firm is that the copyright of Far Cry was registered at the Copyright Office after the movie was published, and after many of the alleged sharers were caught. It is claimed that the copyright registration was “intentionally obtained under false pretenses” and subsequently used to back up “baseless threats in the demand letters.”

“The Letters falsely claim that the law allows Achte to seek extraordinary forms of relief, namely statutory damages and attorney’s fees, for infringing Achte’s copyright for the motion picture Far Cry, despite fatal defects in its copyright registration and the express provisions of the Copyright Act,” the complaint reads.

This then leads to the following allegations of fraud, extortion and related offenses.

“The Letters sent to the proposed Class are predicated on fraud—upon Plaintiff and the proposed Class, and upon the ISPs, the United States Copyright Office, and the United States District Court for the District of Columbia.”

“DGW and its fellow Defendants are directly involved in perpetrating, conspiring to commit, and/or aiding and abetting this massive scheme of fraud, extortion, abuse of
process, fraud upon the court, copyright misuse, and misappropriation of funds.”

Another key issue is that DGW threatened to sue each and every individual they targeted, but that this would be practically impossible to achieve with the small team of attorneys they have. Also, they specifically stated to clients that cash settlement is what they are after.

“DGW does not genuinely intend to pursue most, if any, of these thousands of claims to trial. Operating through its alias USCG, DGW advertises its copyright business model to prospective clients in the film industry stating one overriding goal: to “obtain settlement”—not judgments, which would require litigating and proving its allegations,” the complaint reads.

“With only thirteen attorneys on staff, DGW has issued a volume of demand letters that far surpasses its ability to litigate this volume of claims case by case. USCG tells prospective clients that civil prosecution of copyright claims has not been “practical,” in light of the financial status of individual infringers.”

The above is just the introduction of the complaint, which then continues with dozens of pages discussing the legal background, eventually concluding that DGW’s revenue model is not based on upholding copyright law, but that it capitalizes on fear and aims to intimidate. DGW extorted thousands of infringers by perpetrating fraud on the U.S. Copyright Office, the complaint alleges.

“Fraud has infected each stage of Defendants’ actions since that false registration, tainting their complaints, subpoenas, coercive demand Letters and websites.”

The conclusions lead to numerous allegations and eventually a long list of 25 counts for relief. The plaintiffs demand a jury trial and are seeking a wide range of damages as well as restitution and reimbursement of the money plaintiffs have spent on the extortion scheme thus far.

Among other things, the plaintiffs further seek dismissal of all court actions brought on by the anti-piracy lawyers, an injunctive relief to stop the scheme, and an injunctive relief to stop the identities of the proposed plaintiffs being revealed.

The above is just a selection from a complaint that may very well crush the future of USCG’s pay-up-or-else scheme in the United States. If anything, the lawyers and the other defendants have some serious explaining to do.

In recent months, USCG’s scheme has been copied by various other law firms, protecting a wide variety of copyright holders. Just last week the German based copyright profiteers Digiprotect launched their first two cases in the United States, and many more are likely to follow, unless a court speaks out against this type of creative use of the legal system.

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

“One of the major problems that people encounter when trying to hire me on these cases, is that a settlement is approximately what an attorney would need to even begin a defense,” Syfert told TorrentFreak at the time.

The forms for pro se (self help) representation Syfert prepared include a Motion to Quash, Motion to Dismiss, Affidavit in Support and a Motion for Protective Support. All forms are fillable and are accompanied by detailed instructions of how they should be used.

“My dream would be to have 10,000-20,000 people file all three documents to the lawyers and severely cripple the entire process and show them that you shouldn’t be allowed to join so many defendants,” Syfert informed TorrentFreak.

Quite a few people have used the forms in recent months and in total 19 were submitted to the court. However, the defendants weren’t the only ones who took notice of the offer. The law firm behind the USCG lawsuits, Dunlap, Grubb and Weaver, was one of the first clients who bought a copy of the documents.

And it didn’t stop there, as Syfert informed us that the law firm was not happy with the service he offered to the defendants.

“After I put the forms up for sale, Jeff Weaver from Dunlap Grubb and Weaver gave me a call and threatened me with sanctions. This was back in September. He also purchased the form for $9.99 when it was on sale for a discount,” Syfert told TorrentFreak.

“He threatened me, and everyone who is using my forms.” According to Syfert, the anti-piracy lawyer (Weaver) threatened to double the settlement requests for those who were using his forms.

“Then he e-mails me a while later, advising me on the status of what he called my ‘clients’. They are not my clients, they are people who purchased forms. I do not provide assistance in filling any of these forms out,” Syfert explained.

Syfert then flipped out and sent a ‘tongue in cheek’ email to Weaver asking them to offer him a $200,000 per year job, or contact someone who actually gives a fuck. “Hire me or eat shit,” he ended his email. Not the gentlest way to make a point, but the calls and emails did stop.

That is, until two days ago.

This Monday, Weaver emailed Syfert a motion he had just submitted to the court (on behalf of the makers of The Hurt Locker), requesting sanctions against him under federal law. “He says that the 19 cases of forms that have been currently filed cost them $5000 and he’s seeking those sanctions against me personally,” Syfert explained to TorrentFreak.

“So I requested sanctions against them because this is completely insane,” Syfert added. “If 19 cases costs them $5000 in attorney time, I wonder how many cases it’d take before their business model crumbles. That is unless they are going to actually work for a living.”

The two documents (embedded below) filed by both parties are currently awaiting a response from the court. Although the turn of events is certainly an entertaining one, it seems to be mostly a clash of lawyer’s egos, not something that will contribute anything substantial to the thousands of sued individuals.

USCG (and thus Voltage Pictures) feels that Syfert is obstructing their money-making scheme, and ironically accuses Syfert of running his own money-making scheme with his self-help documents.

The one positive note from all of this is that USCG are upset for a reason. Although all the motions to quash and motions for protective order, whether filed by an attorney or filed by a pro se defendant, have been denied repeatedly by the judges, the motions to dismiss have not.

Defendants who filed a motion to dismiss for a lack of personal jurisdiction have been successful. This is not something USCG and their clients wanted to see because it means they potentially have to refile thousands of cases in other states. Needless to say, this is going to be an expensive endeavor, and thus a huge blow to their pay-up-or-else scheme.

And the reply…

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

Their most prominent client are the makers of the Oscar winning Hurt Locker, but that is just one of the many pending cases that have been filed in recent months.

One of the cases, that of the Far Cry makers against 4577 unnamed defendants, has had some interesting developments this week. USCG has previously sent out subpoenas to the ISPs of the defendants, but many of the alleged downloaders have countered these claiming that they fall outside of the Court’s jurisdiction.

“As of yet, none of the John Does has been named in this case. Even so, many individuals have entered the case as “Interested Parties” and have moved to dismiss all allegations against them, most protesting this Court’s jurisdiction over persons in other parts of the country,” Judge Collyer notes.

The copyright holders were instructed by the Court to name and serve all defendants before November 18, 2010, but instead asked for a massive 5 year extension. One of the reasons they cite for the extension is the fact that Internet provider “Time Warner” only has to identify the personal details of 28 IP-addresses a month.

Judge Collyer responded to the request yesterday, but did not agree in full and came out with the following order, as spotted by Slyck.

“The request is patently unfair and prejudicial to all John Does who have been identified by an ISP, and good cause is not shown as to these identified Does. Plaintiff will file a Second Amended 2 Complaint and will serve it, no later than December 6, 2010, identifying by name and address Defendants over whom it reasonably believes the Court has personal jurisdiction and whom it wants to sue.”

Of course, USCG nor the copyright holders are interested in filing a full lawsuit against individual downloaders. They simply want the names and addresses of the account holders that are linked to the IP-addresses so they can push these individuals to pay a large settlement fee outside of court.

However, Judge Collyer’s order seems to be a significant win for most of the defendants, who will fall outside of the jurisdiction of the District Court of Columbia. Although the wording of the order avoids implicitly saying that such cases should be dropped, it’s fairly certain that the copyright holders will have to file a new case for those IP-addresses that geographically fall outside of the Court’s district.

If this is indeed the case then thousands of defendants will see their cases dropped. For the USCG this will throw up another roadblock that hinders their pay-up-or-else scheme, or at least makes it more costly to execute.

This has not been a particularly good week for anti-piracy lawyers involved in this type of work. In the UK, Davenport Lyons, the pioneers of the pay-up-or-else scheme, are responsible for knowingly targeting innocent people based on unreliable evidence according to the Solicitors Regulatory Authority.

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

Through legal action the copyright holders hope to compensate for the losses they claim piracy is causing. For the lawyers involved, the quest for settlements is also a profitable one as they get to keep 70% of the recouped money.

The USCG is coordinating the scheme and has been preparing for the huge amounts of settlements they expect to come in. They’ve now set up a payment portal where ‘victims’ can conveniently pay off their debts online. All the defendants have to do is enter their Record ID and they are ready to settle.

To ensure that the defendants pay up quickly instead of considering a court case, the USCG uses a variety of threats and persuasion tactics.

In the Far Cry case the alleged downloaders were offered an initial settlement amount of ‘just’ $1,500. However, this would increase to $2,500 if they failed to pay up within three weeks. A classic persuasion tactic, which was followed by a threat that going to court could lead to a fine of up to $150,000.

Up until now around 15,000 BitTorrent users have been sued as ‘John Does’. Several of the defendants have already received settlement requests after their ISPs were ordered by the Court to give up their information. However, not all alleged file-sharers have been willing to settle immediately.

To deal with these defiant defendants, the USCG has now called in the help of 15 law firms across the United States that will act as local counsel and pursue those who refuse to pay.

The Hollywood Reporter claims that this will result in an “explosion of lawsuits around the nation” starting in August. Although it’s not impossible, we have reason to doubt that there will indeed be thousands of cases against individuals.

For one, the cost of this operation would be huge, and without doing a trial case it might turn into a financial disaster for the lawyers if their evidence doesn’t hold up. If anything, we believe that USCG is more likely to go after a handful of select individuals with poor defenses first, in order to set an example and to make clear where they stand.

Perhaps the announcement should just be seen as a threat to those who are thinking about not settling their case?

More news about the new round of lawsuits is expected to follow in the weeks to come, apparently.

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