As previously reported, the Megaupload shutdown sent shockwaves right around the world and prompted a huge rethink by many cyberlocker file-hosting services.

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

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In January 2010, the French authorities put in place what they believed would be the solution to the problematic issue of unauthorized online file-sharing.

Their so-called “three strikes” or “graduated response” scheme would see Internet account holders receive an official warning should their IP addresses be linked to uploads of infringing material on file-sharing networks such as BitTorrent.

Hadopi, the agency tasked with administering the system, started sending out the initial warnings in October 2010 and has periodically provided stats on how many first, second and third strike notices have been issued.

Using the latest available data, PC Inpact‘s Marc Rees has created some graphs showing the progression of the scheme since the delivery of those first warnings some 15 to 16 months ago.

The first chart above shows that as of November 2011, 736,000 “first strike” emails had been delivered to Internet subscribers. Hadopi president Marie-Françoise Marais previously reported that September had seen the agency send out its 650,000th notice.

Chart two shows the number of “second strike” notices sent to Internet subscribers. Rather than via email, these are delivered to individuals by traditional recorded delivery mail. The latest data shows that 62,000 of these notices were delivered to November 2011, up from just under 20,600 delivered by July 2011 and 44,000 by September 2011.

The third graphic shows the number of Internet account holders being held responsible for a total of three online copyright infringements. As of November 2011, 165 subscribers were on their third and final strike, up from 60 citizens two months earlier in September.

But the big question, however, is whether the warnings are causing the French to swap a file-sharing habit for one which involves spending money with official outlets. Next week the big labels will support a study which claims that is indeed happening.

According to Numerama, next Monday the IFPI will publish a study which will apparently show that during the last 18 months the Hadopi environment has led to a 22.5% increase in purchases from iTunes and an extra 13.8 million euros for the French market. We’ll certainly be taking a closer look at these figures when they become available.

In September 2011 it was revealed that Hadopi asked the French Ministry of Culture for 12 million euros to finance its operations in 2012. It was granted 11 million euros.

Source: 165 French File-Sharers Now On 3rd Strike, “iTunes Up 22.5%”

Popularity: 1% [?]

In 2010, Dutch anti-piracy group BREIN went to court to try and force Ziggo, the largest ISP in the Netherlands, to implement a DNS and IP address block of The Pirate Bay.

To help avoid a damaging legal precedent, Ziggo was joined in the case by rival ISP XS4ALL. Initially the partnership was successful. The Court of The Hague decided that blocking all customer access to The Pirate Bay was a step too far. BREIN, refusing to give in, launched a full trial.

During November last year that case was heard before the Court of The Hague. BREIN argued that it would be trivial for the ISPs to initiate a block of The Pirate Bay, while the ISPs stated that doing so could compromise the security of their networks, threaten freedom of expression, and would ultimately prove ineffective.

BREIN countered by insisting they have rights too – copyrights – and that the reason the ISPs don’t want to block TPB is because they profit by selling bandwidth to users so they can access it.

Today, the Court of the Hague delivered its verdict – and it’s victory for BREIN.

The Court noted that approximately 30% of Ziggo subscribers and 4.5% of XS4ALL subscribers use The Pirate Bay to share unauthorized media. Downloading copyright material is currently legal in the Netherlands but uploading is not, so due to the two-way nature of BitTorrent it is deemed that those customers are infringing copyright.

While the Court noted that an ISP blockade against The Pirate Bay would also prevent subscribers with legitimate business from accessing the site, it said that the legal offerings available there are not only limited, but also available from other sites. Preventing a large number of copyright infringements trumps the availability of a more limited supply of legal content, the Court noted.

Furthermore, the Court concluded that in granting an injunction to block The Pirate Bay it would only be preventing access to a site already subject to a court order which forced its operators to block access to Internet users in the Netherlands. That order was previously issued by the Amsterdam Court but was ignored by the site’s operators.

Spokesperson for XS4ALL, Niels Huijbregts, said the company is “bitterly disappointed” by the decision, noting that fundamental rights had been traded for “commercial interests”.

The ISPs have ten days in which to initiate the blockade – failure to do so will result in fines of 10,000 euros per day.

Source: Dutch ISPs Ordered To Block The Pirate Bay

Popularity: 1% [?]

A few years ago best-selling author Paulo Coelho made a Russian translation of The Alchemist available without permission from his publisher. As a result the sales in Russia skyrocketed from 1,000 books a year to over 1,000,000.

The above is just one of the many examples which show that there are many positive sides to the act of ‘copying’. Despite these nuances, piracy is often referred to as theft. This is a problem according to Stefan Larsson, lawyer and socio-legal researcher at Lund University in Sweden.

Larsson addresses the issue in his thesis “Metaphors and Norms – Understanding Copyright Law in a Digital Society,” for which he just received his doctorate. Talking to TorrentFreak, he explains why copyright infringement isn’t theft, and how this problematic metaphor keeps the gap between public norms and the law intact.

“The theft-metaphor is problematic in the sense that a key element of stealing is that the one stolen from loses the object, which is not the case in file sharing since it is copied. There is no loss when something is copied, or the loss is radically different from losing something like your bike,” Larsson explains.

One of the obvious problems is that it suggests that every “stolen copy” is a lost sale.

“Following this conception, some iPods could be valued at millions of dollars and a file sharing service could aid in copyright infringements representing more value than the Gross Domestic Product of entire countries,” Larsson says.

And indeed, if we look at the court case against The Pirate Bay in Sweden, the renumeration model of the entertainment industry would mistakenly put the “value” of the site at billions of dollars.

Piracy vs. Theft

“I think that one important aspect lies in that the legal regulation is built on fundamentally different conceptions of reality,” Larsson told TorrentFreak.

The researcher explains that the public perception of the law, or social norms, is out of line with what the law actually says. In part this is because the “theft” metaphor is built into law, while there is no such thing as theft where piracy is concerned.

“In other words, this means that legal concepts can become metaphorical if their meaning expands into new areas, and the fixed conceptions that once ensured their legitimacy may seem unjust in the eyes of a reality that has moved on. This supports the gap between legal and social norms regarding parts of copyright today.”

This gap between the law and what people see, feel and experience in real life is a problem, one that lawmakers are now trying to address with even more draconian laws based on the same nonsense metaphors.

But are tougher laws the best solution? Will these change people’s norms? Larsson is not convinced.

“There are naturally many examples of when tougher laws change behavior, and there are also even examples of when tougher laws have made a substantial contribution in changing social norms. However, there are a few possible drawbacks when law turns repressive.”

He explains that these laws “would need to make everyone think differently about reality,” something that’s easier said than done. Another problem according to Larsson is that may people will simply find ways to hide what they do, such as using VPN services or proxies when downloading via BitTorrent.

Larsson doesn’t think that the current trends of stronger copyright laws and more surveillance of Internet users is the right path to take. These measures often violate the rights of the masses to benefit the interests of a few, which can never be a good solution.

Instead of changing people’s norms and twisting reality, perhaps society might be better off when copyright law adapts to the digital age?

Source: Piracy is NOT Theft: Problems of a Nonsense Metaphor

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In early October it became clear that Australia would be the next country to be targeted with so-called pay-up-or-else file-sharing settlement schemes.

John Linton, chief of ISP Exetel, said that his company had been approached by US film distributor Lightning Entertainment who were demanding the identities of around 150 of the ISP’s subscribers who had allegedly downloaded the movie “Kill The Irishman”.

The front company carrying out this work are called Movie Rights Group (MRG), headed by New Zealand-born brothers Matthew Wade Clapham and Richard Dean Clapham. They and Lightning Entertainment are connected to a pornographic empire called New Frontier Media, which sparked speculation that Australia would soon be flooded with settlement requests on adult movies, as is currently happening in the United States.

Well, if that indeed happens, it appears that MRG won’t get much cooperation from John Linton’s Exetel.

In a post on his private blog (as reported by Delimiter), Linton doesn’t hold back on his feelings for these copyright trolls.

“The appearance of scum like the Movie Group [has] forced Exetel to have to consider the base ways we operate the core systems of our business, simply because we must now consider which is the greater of the evils our current society has forced us to confront,” Linton wrote.

Although MRG won’t be on Linton’s Christmas card list this year, he is careful not to endorse copyright infringements carried out by his subscribers. But this CEO has made his judgment about who deserves his company’s support.

“In this case, it is do we go out of our way to protect those of our customers who knowingly and willfully steal other people’s property or do we allow them to be exposed to even scummier elements of our society …who might be able, amazingly and disappointingly, to use the Australian court system to allow them to be blackmailed?”

So what options are there to scupper the plans of MRG? According to Linton, his company will “almost certainly” invest a serious amount of money in order to render their systems unfriendly to trolls.

“So by the end of this week copyright theft by some percentage of our customers will cost Exetel something over $200,000 to ensure blackmailing scum can’t target our law-breaking customers,” added the Exetel chief.

While it is extremely rare for an ISP to stand up for its customers so publicly, it is not unheard of. In opposition to the country’s IPRED legislation, two Swedish ISPs – Bahnhof and Tele2 – stopped logging IP addresses handed out to their customers, thus thwarting any rightsholder request for information.

However, while the Swedish ISPs are completely within their legal rights to take this action (local law doesn’t require logs to be kept) the situation in Australia is unclear. What Exetel is spending $200,000 on is yet to be revealed but whatever it is will be watched closely not only by trolls, but by U.S. rightsholders too.

Whatever “core business systems” change Exetel has in mind to scupper MRG also has the potential to neutralize both Hollywood and the recording industry. And they won’t like that, not one little bit.

Source: ISP Boss Brands Copyright Trolls “Scum”, Vows To Stop Them

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We see it time and time again. Copyright is a double edged sword, and those who sharpen one side often get cut by the other.

When the German politician Siegfried Kauder introduced a two-strikes model to beat online piracy a few days ago, his own actions with regard to copyright were weighed carefully.

It didn’t take long before people spotted Kauder’s first infringement on his personal website, which was quickly followed by another one.

In what has now been dubbed Kaudergate, the pro-copyright politician was hosting at least two photos on his website which were taken from a photo sharing site without permission (16, 18

When blogs and news sites picked up this ‘mistake’ the photos were quickly removed, but by then it was already too late.

Confronted with the blatant copyright infringements, Kauder tried to turn the tables in an attempt to use his failure to support his plans. He told the German news outlet Der Spiegel that this is a perfect example of how effective a two-strikes policy would be.

“I’m grateful that I got the opportunity to show how the warning model works. The use of the two copyright-protected photographs was brought to my attention. The photos were then removed, so the warning model works,” he stated.

An interesting attempt at spinning things around, if it weren’t for the fact that the copyrighted photos are still hosted on the server of Kauder’s website. So even after being outed by hundreds of blogs and the mainstream press two days ago, the politician – who is also a lawyer – continues to infringe copyrights (

34

,

36

).

Even worse, Kauder claimed in the press that he had somehow “licensed” the photos after he realized his mistake. However, the photographer who owns the rights denies this and commented that the politician hasn’t been in contact at all.

One has to wonder that when a politician who wants to introduce a two-strikes anti-piracy system doesn’t even know how to stop breaking the law, how can he demand that others should?

Needless to say, the public is now demanding that he will be disconnected from the Internet. That would probably set a good example.

Source: Politician Violates His Own Two-Strikes Anti-Piracy Plan

Popularity: unranked [?]

The MPA(A) is trying to get a tight grip on piracy in Australia, mainly through affiliate groups such as AFACT. Recently published cables by Wikileaks revealed how Hollywood is secretly pushing their agenda down under.

After the failed attempt at making ISP iiNet responsible for the copyright infringements of its file-sharing customers, the anti-piracy lobby groups are now once again calling for a three-strikes system. Today a new study surfaced which, on the surface, suggests that these warnings would be very effective as a deterrent.

“ISPs hold the key to reducing online movie and TV theft by 72%,” the headline of the press release reads.

The research in question was commissioned by AFACT’s sister outfit the Intellectual Property Awareness Foundation (IPAF), which also lists the MPAA on its board. As we’ve seen before, the “independent” company that carried out the research has no web presence and no other known clients aside from IPAF.

Suspicious? Yes. But let’s skip that part for once and look at what the actual research results are.

As the headline suggests, the majority of the 1,644 participants indeed said they would stop downloading if they were notified by their ISP, 72 percent to be exact. This figure would be even higher (74%) should the ISP also threaten to terminate the Internet connection.

These numbers are nowhere near what we’ve seen in other surveys. A recent poll in France, where Internet users can actually lose their connection, revealed that only 4% of the polled file-sharers said they stopped sourcing music from illegal services out of fear of detection. In the UK, a recent survey by an ISP revealed similar results.

So why is this percentage so high in Australia? The answer is easy, and shows how grossly manipulating the headline of the press release is.

Those who take the time to read the actual results will see that the 72 percent is based on all the people who were surveyed. This includes the people who have never even used file-sharing software, so for them this was merely a hypothetical question.

According to the report, 22 percent of the respondents said they used file-sharing software in 2011, and 16 percent of the total group used it at least once a month. This puts the effectiveness of the warnings in a totally different perspective. The numbers actually show how ineffective the warnings would be.

Question asked to ALL, but only 22% use file-sharing software

If 72 percent say they would stop sharing after a warning, then 28 percent didn’t agree with this statement. And since only 22 percent of the people said they used file-sharing software in 2011 (the only people who would be affected by a three strikes system), this means that warnings from ISPs wouldn’t even deter people who aren’t the target of this system in the first place.

Or put differently, it could very well be that none of the 22 percent file-sharers indicated that they would stop doing so when notified by their ISP.

Now that’s an entirely different conclusion isn’t it?

It is unbelievable how the anti-piracy lobby has managed to spin such a negative outcome into a story that appears to support their call for a three strikes system. Perhaps even more worrying is the fact that many news outlets picked the story up without critically reviewing the results.

Luckily, not all Aussie journalists are buying it. A reporter from a large newspaper informed TorrentFreak that he is highly skeptical of everything released by these organizations now. Also, he pointed out how the press release was conveniently sent in advance to papers owned by News Corp. (Fox), which is a partner of anti-piracy groups such as IPAF, DEAA and AFACT.

Whether IPAF and partners have made the right choice by releasing their study is doubtful though. They might fool some of the public, but the actual data shows that a three-strikes system may do nothing at all to deter people from sharing movies and music online.

Source: Anti-Piracy Lobby Misleads Aussie Press for Three-Strikes Campaign

Popularity: 1% [?]

In March 2011 the IT department of a Gothenburg school investigated the issue of a virus which apparently came from a student’s computer.

During a closer examination IT staff found that the student had 24 Hollywood movies stored on his hard drive. The 15-year-old boy in question had obtained them from two Swedish torrent sites – tankafetast.se and tankaner.se.

Ultimately the school’s head teacher learned of the IT technicians’ discovery but rather than deal with the issue in-house, she chose to drastically escalate the matter – by calling in the police. Now, five months after the alleged offenses, the boy is on trial in Sweden.

“Our policy is to always notify the police if we have suspicion of a crime,” the head teacher told GP.se. “It is not our job to investigate, it’s a matter for the police.”

The investigation was led by the International Public Prosecution Office in Stockholm and the trial began in the Gothenburg District Court yesterday. Prosecutor Fredrik Ingblad, a veteran of such cases, says this trial is a record-breaker – no-one this young has ever been prosecuted for file-sharing violations.

“If I find that I can prove a crime, I have to prosecute. I do not consider the person’s age or whether file sharing has occurred on a small or large scale,” Ingblad says. “By contrast, his young age, of course, is important in terms of what punishment he will be sentenced to.”

Although Ingblad says he will press for the teenager to be sentenced as a juvenile, the punishment for copyright infringements still run from fines to two years in jail.

“Politicians and copyright monopolists alike have been promising solemnly to never send the police after the entire younger generation,” Pirate Party founder Rick Falkvinge told TorrentFreak. “Here, we can see for ourselves how much those promises were worth. The politicians who let this happen need to be kicked out of office.”

During the hearing the boy admitted downloading movies such as The Fighter, The Mechanic, The Social Network and Scary Movie 4, but said that he had no idea he was uploading them to others at the same time.

“It’s paradoxical,” says Inglblad. “The thousands of small users who are online to download a single movie is a prerequisite for the entire system to work.”

“To prosecute one of them is of course just scratching the surface. But if you want the legal download services to work there must be at least a small chance you will get caught if you download illegally, even if you are young,” he says.

Rick Falkvinge sees the situation somewhat differently, in that sharers should not be subjected to criminal trials but rewarded, and that hopefully attitudes in the future will change.

“If the government should interfere at all with people sharing culture, it should be in the form of medals to those who share the most,” he told us.

“It is of poor comfort for a 15-year-old in a criminal court that the laws will have changed to prove him right and dignified several years later. In the meantime, he has the full moral support of pirates all over the world, from San Francisco to Sydney,” he concludes.

Source: 15-Year-Old Schoolboy On Trial After Head Teacher Tells Police About File-Sharing

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Every month thousands of people are sued for allegedly sharing copyrighted material on BitTorrent. Many of the accused claim to be innocent, and point their finger at someone else who may have used their Internet connection to share the file. But does this mean they’re off the hook? Lawyer Nicholas Ranallo believes so.

Today we publish two opinion pieces from copyright lawyers who are familiar with the mass-lawsuits against alleged BitTorrent users in the U.S.

Both lawyers discuss whether someone can be held liable for the copyright infringements committed by others on their Internet connection.

The opinion below comes from Nicholas Ranallo, who is a licensed attorney in California and New York. He currently resides in Boulder Creek, California and is building a solo practice handling emerging issues in Intellectual Property, Internet law and e-commerce.

Ranallo’s opinion focuses on the question of whether people are liable for the copyright infringements of others, which may occur when they operate an open WiFi network or when they share their internet access with roommates or employees.

The other post in this series, which argues the opposite of Ranallo (but focusing on the open WiFi angle only), can be found here. We thank both Ranallo and Randazza for their contribution.

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Liability for 3rd Party Copyright Infringement: A Lawyer’s Take on Misleading Legal Claims by Pre-Settlement Trolls

The continuing adventures of the copyright trolls have been covered widely on this blog and others, so I will limit my thoughts today to one particular aspect of the scheme: Copyright trolls’ claims regarding your responsibility for someone else’s infringement of copyrighted works.

Or in other words, are you liable for the infringements of other people when you choose to leave (parts of) your wiFi network open to friends, family or even complete strangers. In the press many of the attorneys representing copyright holders claim you are. Some even have a dedicated section on the topic included in with their settlement letters.

Lawyer John Steele for example, uses the following description, which he has ironically enough pirated from a FAQ that competitor copyrightsettlements.com hosts on its website.

“If you are unfamiliar with the copyright protected file or content, we normally find that the infringement was the result of a spouse, child, roommate, employee, or business associate uploading, downloading or otherwise sharing or displaying the copyright protected material over your Internet connection. Infringements can also result from an unsecured wireless network. In any of these scenarios the Internet Service Provider (ISP) account holder is still legally responsible for the infringement(s) and settlement(s) fees.”

This statement needs to be deconstructed and examined. There is a lot of (mis)information in there, with many startling claims about copyright liability.

As a whole, the trolls’ statement of your potential defenses reminds me a lot of the mob’s policy on similar issues in Goodfellas : Your roommate downloaded this? F__k you, pay me. Your child downloaded this? F__k you, pay me. Your ‘business associate’ or someone you’ve never met downloaded this? You get the idea.

Perhaps it’s not surprising that the flow chart at copyrightsettlements.com always ends up at “you are guilty,” however THIS IS NOT THE LAW. In fact, their claims are legally incorrect in a fun assortment of ways. I’m going to focus only on the ways that it’s incorrect under existing copyright law in this article.

Third-Party Liability for Infringement under Existing (Real) Copyright Law

It’s important to focus on the concept of third-party liability under copyright law because the copyright trolls’ entire scheme is built on one particular aspect of copyright law – statutory damages. Normally, a plaintiff’s recovery is limited to actual damages, or the monetary measure of the actual harm done. The copyright law, however, imposes statutory minimum and maximum penalties that are grossly disproportionate to the value of an actual work (i.e. one copy of a song or video), up to $150,000 for the most egregious infringements. Perhaps not surprisingly, this $150,000 figure gets cited a lot by copyright trolls as the amount to which they will be entitled if they sue you.

Courts have articulated three basic ways that a person can be held liable for infringing another’s copyright: direct liability, contributory liability, and vicarious liability. Direct liability means, quite simply, that you infringed the copyright yourself. This is first-party liability and is probably not surprising to anyone. The other two are the focus of this article, and the ultimate rebuttal to the misstatements in the FAQ.

A. Contributory Infringement

In MGM v. Grokster 545 U.S. 913, 930 (2005) the United States Supreme Court (USSC) described liability under the doctrine of contributory infringement as follows: “One infringes contributorily by intentionally inducing or encouraging direct infringement.” The USSC approvingly cites Gershwin Publishing Corp. v. Columbia Artists Mgmt., Inc., the 2nd Circuit Court of Appeals adopted the following test for contributory infringement.

“One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may also be held liable for the infringement. 443 F2d 1159, 1162 (2nd Circuit 1971).

The Gershwin test has been widely adopted by courts, including in the 9th Circuit, home to copyrightsettlements.com. As you can see, this test is far narrower than the F__k you, pay me test adopted by copyrightsettlements.com. The Gershwin test specifically requires:

1) Knowledge of the infringing activity
2) Intent
3) Inducing, causing, or materially contributing to the infringing conduct of another.

The 9th Circuit had a chance to revisit the issue of contributory infringement in the wake of the USSC ruling in Grokster, described above, and elaborated further on the requirements for contributory infringement in the digital realm in Perfect 10, Inc. v. Amazon.com, Inc., 508 F. 3d 1146(9th Circuit, 2007). Perfect 10 held that:

“a computer system operator can be held contributorily liable if it ‘has actual knowledge that specific infringing material is available using its system and can “take simple measures to prevent further damage’ to copyrighted works, yet continues to provide access to infringing works.”

Notably, the italics in this sentence were the court’s own, and emphasized ACTUAL knowledge of SPECIFIC infringing material. This is certainly not the test described by CEG.

B. Vicarious Infringement

The USSC also described vicarious infringement in MGM. The Court stated that one “infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” Grokster, 545 U.S. at 930, 125 S.Ct. 2764.

Like contributory liability, above, this definition has multiple elements, BOTH of which need to be shown to before imposing liability.

1) Profit from direct infringement
2) A right (and ability) to stop or limit the infringement

This test has two distinct elements, BOTH of which need to be shown to impose liability. I cannot think of a good faith argument that any of the parties described by the core claim actually profit from infringing activities, especially when the work that is claimed to be infringed is porn. An employer profits from an employee downloading porn? Really? You profit when someone downloads porn via your unsecured connection? Profit? This stretches all bounds of credulity.

It almost seems unnecessary to go into the second element, the right and ability to control, when the first element cannot reasonably be shown. But this prong also raises a host of issues, especially in cases involving spouses, “business associates”, or roommates. I need only recall the look of my college kitchen to conclude that we never really had sufficient right or ability to control each others’ activities in any way.

C: Inducement?

The USSC discussed a third potential avenue for third-party liability in MGM under the broader rubric of contributory liability, but this route is equally unhelpful for the core claim. In MGM the Court recognized that one could be liable if they “induced” the infringement of another. The Court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” MGM at 936-37.

Although this could conceivably apply to an unsecured router, the court is quick to extinguish this possibility for the situations described in the core claim. The court specifically states that:

“Accordingly, just as Sony did not find intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe, 464 U. S., at 439, n. 19, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability… The inducement rule, instead, premises liability on purposeful, culpable expression and conduct…”.

Notably, the FAQ page emphasizes repeatedly that purposeful, culpable expression and conduct is not at all necessary. It does emphasize, however, that you are still liable.

The Takeaway

The copyright troll’s core claim regarding third-party liability is extremely misleading regarding the present state of third-party liability under copyright law. As each misstatement works to the benefit of the trolls, I can only assume that this misrepresentation is intentional. One can only wonder whether they will face claims of fraud and misrepresentation from those who were misled by these statements.

^{(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: Are You Guilty If Pirates Use Your Internet? Lawyer Says NO

Popularity: 1% [?]

Every month thousands of people are sued for allegedly sharing copyrighted material on BitTorrent. Many of the accused claim to be innocent, and point their finger at someone else who may have used their Internet connection to share the file. But does this mean they’re off the hook? Lawyer Marc Randazza believes not.

Today we publish two opinion pieces from copyright lawyers who are familiar with the mass-lawsuits against alleged BitTorrent users in the U.S.

Both lawyers discuss whether someone can be held liable for the copyright infringements committed by others on their Internet connection.

The opinion below comes from Marc Randazza, a lawyer who has sued thousands of BitTorrent users in recent months on behalf of copyright holders. His piece focuses mainly on the question of whether people who operate open WiFi networks are liable for the copyright infringements of others.

As much as we may disagree with his cases in this field, Randazza has always been gracious with his time when we have had questions about his and other cases.

We understand that our readers may not agree with Randazza either, but we ask that comments remain civil and respectful. He has been respectful to us, and we ask that readers treat him as our guest and take the opportunity for debate.

The other post in this series, which argues the opposite of Randazza, can be found here. We thank both Ranallo and Randazza for their contribution.

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Why Negligence in Torrent Cases?

I. Introduction – Is it illegal to leave your wifi open?

For a while, I have been bringing anti-torrent cases against defendants who have been illegally distributing my client’s movies. However, we recently began adding a negligence claim to the complaints – arguing that if you leave your wifi open, and someone uses it to pirate my client’s materials, you are at least partially responsible. In the wake of a recent judgment for $10,401.00 against a defendant in one of these cases, where the $10,000 was for the negligence claim, I have gotten quite a few inquiries from people asking if it is illegal to leave your wifi open.

I am pleased to report that there are no laws on the books, which affirmatively mandate that you must lock your wifi. However, there are civil claims that can make you liable for the infringements of others. That is what civil claims are for — to privatize certain legal issues. When there is a car accident, we don’t usually bring the police into it. The parties figure out who was negligent, and the negligent party pays the other party for its damages.

What it comes down to is whether the defendant had a part in the plaintiffs damages. So the question is not: “Is it illegal to have open wifi?” The correct question is: “Can you be held liable for what others do with your connection if you leave your WiFi open?” The answer to that is “yes you can.”

II. Negligence

The law of negligence has a long history, and it morphs over time. The unchanging elements of a negligence claim are:

* Duty – did the defendant have a duty?
* Breach – did the defendant breach that duty?
* Causation – was the breach the cause of the plaintiff’s damages?
* Damages – were there damages, and if so, how much?

Whether or not there is a duty is where the most debate occurs. Whether or not there is a duty is a matter of law for the court to decide, and some courts have already endorsed the theory that there may be a duty to keep your wifi secured. In an ever-evolving legal landscape, legal duties are constantly updating with technology. In law school, we are introduced to this concept by reading the case called “The T.J. Hooper.” In that case, the plaintiffs shipped two barges full of cargo, there was a storm, the barges sank and the cargo was lost.

The defendants were the owners of the tugboats that were towing the barges. The plaintiffs claimed that since the tugboats did not have working radios that could have warned them about the storm, the tugboat operators were negligent. This was 1932, and radios were not required to be on the ships by any law. Furthermore, it was not common custom for commercial ships to have them at this point, and only one company on the whole Eastern Seaboard used them.

Judge Learned Hand wrote the opinion in this case, and he stated that it did not matter that there was no law mandating their use. It did not even matter that shipping companies generally did not have radios. Hand wrote that it is the province of the courts to decide whether a duty exists, and it is not up to the affected group to make that decision. In circumstances of evolving technology, the duty may change along with technology, even if common practice does not.

III. Application: Is leaving your wifi open “negligent”?

I believe that leaving your home wifi open is, indeed, negligent. Unlike the radios in the T.J. Hooper case, closed wifi connections are actually the norm. The vast majority of Americans recognize that leaving their wifi connection open is foolhardy and likely to lead to trouble. I have heard other lawyers compare leaving your wifi open to leaving a loaded gun lying around.  I think comparing open wifi to a loaded gun is overly melodramatic and hysterical.  However, the point is well taken – you are leaving the instrumentality of an illegal act out there for anyone to use.

While unlike leaving a gun around (nobody ever died from open wifi), I’d say leaving your home wifi open is more like leaving your keys in your car in your driveway.  Someone might just steal it, in which case the only person who gets hurt is you, right?

Wrong. 

The kind of person who would steal your car is probably the kind of person who would commit other crimes (or just do something stupid).  So if you leave your keys in your car, and someone takes it and drives it into someone’s fence, you’re at least partially responsible for the damage.  If the car thief runs off, who should pay for the damage? The fence owner or you? It would seem that between those two parties, you would be more responsible than the fence owner. You wouldn’t say that the fence owner should have built a better fence, would you?

That’s what negligence is:  It is the law saying “You really should have seen that coming.”  When you do something careless, and that carelessness costs someone else money, you pay the ”carelessness tax” – Negligence. 

And the kind of person who would steal wifi is more likely to steal something else, isn’t he?  So if you invite wifi theft by leaving your home network open, you’re more likely than not also inviting more.  

While there is no law requiring you to keep your wifi secured, the absence of a law is no refuge from the consequences of being careless. The existence of the duty is heightened by the fact that it is common knowledge that cyber criminals use open wifi networks to commit nefarious acts. Everyone has heard about the cases where purveyors of child pornography used open wifi connections to transmit their materials. Then, the poor saps who left them open are greeted by police raids.  

Is your wifi open?  I would bet it is not.  Mine certainly isn’t, and the reason why is not that I mind sharing with my neighbors.  If my neighbor needs my wifi for some reason, I have a guest network that I would share with him if he asks.  But, then if I get a subpoena for something he did, at least I know who to point the finger at.  I’m not willing to take that risk for someone who might just be cruising around in a car looking for an opportunity to commit a crime. 

IV. Other Benefits of Bringing the Negligence Claim

Bringing a negligence claim in a torrent case has some added benefits. It takes care of two classes of defendants:  The “it was some other guy” case, and the “if I lie about open wifi, you can’t get me” case.  

The Some Other Guy Case: When pressing these cases, I frequently talk to the IP account owner, and he says “It was my roommate, not me.” When someone gives me the “it was some other guy” defense, I would much rather go after the other guy. When the roommate gives up the other guy, I think that pressing a negligence claim against him is a bit mean-spirited, and I recommend dropping the negligence claim against a cooperative account holder.

However, if the account owner does not want to reveal the identity of the actual guilty party, then he is shielding the defendant and I have no qualms about making him a defendant too. In cases like that, I’m required to press the negligence claim, to get to the truth, and obtain proper compensation for my client. There is very little chance that a roommate will not know what is going on, and if they are supplying a connection to someone who is using that connection to steal from my client, then my client has a legal right to be compensated for its losses. If someone is concealing the direct infringer, then I find little wrong with holding that person responsible.  

The Open Wifi Liar: The unfortunate fact is that a common meme among the “IANAL, but I play one on torrent boards,” crowd is that any torrent suit can be won if you lie and tell the plaintiff that you had an open wifi.  I’ve caught even real licensed lawyers dispensing this “advice.”  (which is unethical)  There are even those who advocate leaving your wifi open on purpose, just so that you can have plausible deniability about anything that happens on your network.  I would say that one out of two defendants that I deal with initially claim “I had open wifi.” That winds up being a lie about 95 percent of the time   If they were all telling the truth, there would be free wifi coast to coast, and the age of wifi Aquarius would be upon us.   

So how do we move forward in these kinds of cases?  

Step 1: A relatively mild investigation and questioning of the potential defendant.  Most non-sociopaths are lousy liars and are easily tripped up. This step winds up shaking out a good percentage of the liars.  Often telling the “some other dude” account holder that we will move forward with the negligence claim gives them pause and they get the roommate on the phone. This is effective most of the time, but not 100%.  So what do we do then?  Move on to the next two options:

Option A: We engage in discovery, seize all of the computers in the house, issue subpoenas to everyone the account holder knows, and start having depositions of everyone who lives in their home and neighborhood.  By the time we’re done, we not only will likely have gotten to the bottom of things, we would have flipped the defendant’s entire life upside down.  While that might get us somewhere, I prefer not to be that heavy-handed if I can avoid it. 

Option B: Recognize that the open wifi story still leaves negligence liability on the table, so work with that. This gives us an avenue of liability with which to hold people responsible without turning their neighborhood upside down.

Ultimately, the negligence claim brings a lot of benefits. The downside is that occasionally, you catch someone who was simply merely careless. When that happens, my client is usually willing to use discretion and to settle rather lightly. Sometimes, when the defendant is particularly sympathetic, and it is clear that they are not lying, we have been willing to settle for little more than them filing a police report and agreeing to lock their wifi down.

V. Conclusion

I respect the perspective of those who don’t like the negligence claim.  They have every right to say that they disagree with the law. The owners of the T.J. Hooper didn’t think it was fair that they were held to a standard, which neither law nor custom required them to live up to. But, the court understood that sometimes, when you can take a pretty easy and cheap route to preventing harm, you may very well have a duty to do so. You can keep your wifi open if you like, and if nobody ever uses it for evil purposes, then you won’t ever be held negligent. Similarly, if the T.J. Hooper had only seen calm seas, its owners would have gotten away with not having radios.

Ultimately, it comes down to “what should you have done?” And, “if you don’t do it, and someone else loses, who should bear the cost?” It may seem unfair to some, but if you consider that my client is losing money, and the open-wifi-guy (even if he wasn’t one of the liars) contributes to that loss, who should bear the cost? Between him and my client, I think it should be him.

Furthermore, this claim really helps to shake out some of the more dishonest people, who deserve to get sued.  Therefore, I stand behind bringing the negligence claims, and I think that the good outweighs the bad.  

VI. Epilogue

Let me conclude by thanking Ernesto and the TorrentFreak community for this opportunity to share the marketplace of ideas with you all. Wide open and robust debate on matters of public concern is what the First Amendment is all about. I recognize that this is not a friendly forum for my positions, but nobody ever grew or learned anything from just shouting into an echo chamber.

I respect dissenting opinions. I think there is room for healthy disagreement on most items, and I am not unaware that this negligence claim is controversial.

The fact is, I have a job to do, and I’m going to do it for my client to the utmost of my ability.  My engagement letter with my clients does say that I will withdraw from representation if they want me to take action that will cause harm to the First Amendment.  But other than that, my client is entitled to the full menu of legal theories that I can come up with. Anything less would be unethical on my part.  

Source: Are You Guilty If Pirates Use Your Internet? Lawyer Says YES

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