Every month Google receives dozens of millions of DMCA takedown requests from copyright holders, most of which are directed at its search engine.
However, with Google Fiber being rolled out in more cities, notices targeting allegedly pirating Internet subscribers are becoming more common as well.
These include regular takedown notices but also the more controversial settlement demands sent by companies such as Rightscorp and CEG TEK.
Instead of merely alerting subscribers that their connections have been used to share copyright infringing material, these notices serve as automated fines, offering subscribers settlements ranging from $20 to $300.
The scheme uses the standard DMCA takedown process which means that the copyright holder doesn’t have to go to court or even know who the recipient is. In fact, the affected subscriber is often not the person who shared the pirated file.
To protect customers against these practices many ISPs including Comcast, Verizon and AT&T have chosen not to forward settlement demands. However, information received by TF shows that Google does take part.
Over the past week we have seen settlement demands from Rightscorp and CEG TEK which were sent to Google Fiber customers. In an email, Google forwards the notice with an additional warning that repeated violations may result in a permanent disconnection.
“Repeated violations of our Terms of Service may result in remedial action being taken against your Google Fiber account, up to and including possible termination of your service,” Google Fiber writes.
Tag: Rightscorp
Warner Bros. And Rightscorp Argue That Copyright Trolling Is Protected By The First Amendment
Is the process of copyright trolling protected by the First Amendment? That appears to be the claim that both Rightscorp and Warner Bros. are making in response to a class action lawsuit filed against them.
Back in November, we wrote about a class action lawsuit filed against Rightscorp, by lawyer Morgan Pietz. Rightscorp, of course, is a company trying (and mostly failing) to make copyright trolling slightly more respectable by shaking down accused infringers (based on a questionable methodology) for somewhat lower amounts than traditional copyright trolls. Morgan Pietz, if you don’t know, is one of the key lawyers who helped take down infamous copyright troll Prenda Law — so his involvement was noteworthy.
Since November, when the lawsuit was initially filed, there’s been some back and forth in the lawsuit (and even the main named plaintiff has changed). In the first amended complaint that was filed last month with new lead plaintiff, John Blaha, the claims about violations of the Fair Debt Collection Practices Act have been removed, to focus mainly on violations of the Telephone Consumer Protection Act and abuse of process. The TCPA bans autodialing telemarketers, and Pietz is trying to argue that Rightscorp’s autodialers fall under this law. The abuse of process claims focus on how Rightscorp got access to various people to shakedown, using DMCA 512(h) subpoenas. This is the process — which courts have clearly rejected — by which copyright trolls think they can issue subpoenas to ISPs about potential infringers, without first filing a lawsuit. Every few years, copyright trolls think they’ve newly discovered this loophole even though the courts have rejected it. The lawsuit has also added key Rightscorp clients, Warner Bros. and BMG, as defendants as well.
Last week, Rightscorp responded [pdf] by arguing that the case should be dismissed under California’s anti-SLAPP law. Now, we’ve been huge supporters of California’s anti-SLAPP law and believe that we need a similar federal anti-SLAPP law. Anti-SLAPP laws allow defendants to quickly get lawsuits dismissed when it’s clear those lawsuits are nothing more than attempts to silence their public speech (SLAPP standing for “Strategic Lawsuit Against Public Participation.”) However, I’m hard pressed to see how robocalling someone demanding they pay up or get sued is “public participation” in any way.
Cox Refuses to Reveal Financials in “Repeat Infringer” Piracy Case
Every month copyright holders and anti-piracy groups send hundreds of thousands of takedown notices to Internet providers.
These notifications have to be forwarded to individual account holders under the DMCA law, to alert them that their connection is being used to share copyrighted works without permission.
Cox Communications is one of the ISPs that forwards these notices. The ISP also implemented a strict set of rules of its own accord to ensure that its customers understand the severity of the allegations.
According to some copyright holders, however, Cox’s efforts are falling short. Last December BMG Rights Management and Round Hill Music sued the ISP because it fails to terminate the accounts of repeat infringers.
The companies, which control the publishing rights to songs by Katy Perry, The Beatles and David Bowie among others, claim that Cox has given up its DMCA safe harbor protections due to this inaction.
The case is a critical test for the repeat infringer clause of the DMCA and the safe harbor protections ISPs enjoy. In recent weeks both parties have started the discovery process to gather as many details as they can for the upcoming trial.
Cox, for example, is looking into the ownership of the 1,000 works for which they received seven million DMCA takedown notices. In addition, the ISP also wants an expert opinion on the source code of the Rightscorp’s crawler that was used to spot the alleged infringements.
For their part, BMG Rights Management and Round Hill Music have asked for details on Cox’s policy towards repeat copyright infringers and extensive details on the company’s financials. The ISP believes the latter request is too broad and as a result is refusing to produce the requested documents.
In a response the music companies have filed a motion asking the federal court to force the ISP to comply. Among other things, they argue that the financial details are needed to calculate damages and show that Cox has a financial motive to keep persistent pirates on board.
“The financial information that Cox refused to produce is directly relevant to Cox’s strong motivation for ignoring rampant infringement on its network because ignoring this infringement results in a financial benefit to Cox,” they argue.
“Moreover, Cox’s financial motivation for refusing to take meaningful actions against its repeat infringing customers is important to both the knowledge element of contributory infringement and the financial benefit element of vicarious liability,” the music groups add.
In its response Cox states that the rightsholders’ demands are too broad since the documents requested include those related to the ISP’s market share, capital expenditures, profits per customer for each service, and so forth. According to Cox most of the information is irrelevant to this case.
“Plaintiffs’ document requests seek virtually every financial record that Cox maintains about its internet Customers and its provision of internet services,” Cox notes.
The ISP says it’s willing to share some financial detail but with a far more limited scope than demanded by the rightsholders.
“To be clear, Cox has been and remains willing to produce high-level, aggregate financial data of the kind that courts permit in cases involving statutory copyright damages, for example corporate tax returns. But Plaintiffs have never offered to entertain even minor limitations to the scope of their discovery requests, making any compromise effectively impossible,” the ISP notes.
The court has yet to decide how many of its financial secrets Cox must reveal but judging from the demands being made from both sides, it’s clear that we can expect more fireworks during the months to come.
Rightscorp Hemorrhages Cash, Profit from Piracy Remains Elusive
In copyright enforcement circles the terms ‘piracy’ and ‘profit’ are often cited in close proximity. Entertainment companies bemoan the alleged profits made by ‘pirate’ sites at the expense of creators, while the same entities claim that piracy is killing their business, even while making billions.
Somewhere in the middle ground lie the groups that seek to turn piracy into profit by punishing the infringements of others. Traditional ‘trolls’ seek thousands from alleged Internet pirates via the courts, but companies such as Rightscorp Inc chase individuals for relatively tiny sums – $20 per shot – for unauthorized content downloads.
It’s a strategy the company insists will eventually pay off but if the latest set of results filed by the Los Angeles-based outfit are anything to go by, investors should be wary of holding their collective breaths.
In a call with investors yesterday things appeared to start reasonably well. Rightscorp President, COO, CTO, and CFO Robert Steele began by reporting how well the company had performed in the final quarter of 2014. Total revenues were almost $242,000, up 56% from the $155,300 achieved in the same period of 2013.
For the full year, things looked even better. From January 1 to December 31, 2014, Rightscorp pulled in close to $931,000 in revenues, that’s 187% up on 2013 when the company generated just $324,000. Steele said the growth in the company’s revenues can be attributed to two key areas.
Firstly, the growing number of copyrights for which the company has contracts to extract settlements from customers. On December 31, 2013, Rightscorp were detecting infringement on approximately 30,000 titles but by the same date in 2014 that had skyrocketed to around 230,000.
Secondly the company says it is getting more and more ISPs on board. It now claims to deal with 233 and has received settlements from customers of five of the top 10 US ISPs including Comcast, Charter, CenturyLink, Mediacom and Suddenlink. The idea is that more ISPs participating should mean more notices being forwarded and a more healthy bottom line for the company. But that’s only the theory.
The problem for Rightscorp is that when compared to the revenue being generated from infringements, its costs are astronomical. It pays out around half of its revenues to its rightsholder clients, which in 2014 amounted to $465,364. But when one looks at the bigger picture that’s much, much less than half of the company’s problems.
In 2014 the company spent around $139,000 on sales and marketing. Its wages bill increased from $637,000 in 2013 to almost $1.15 million in 2014. And last year its lawyers earned more too.
In 2014 the company’s legal bills neared $481,000, that’s up from $355,500 in 2013. The increase is attributed to legal action being taken against the company, including harassment cases currently in the pipeline.
All told, Rightscorp incurred operating expenses of $4,329,602 during the twelve months ended December 31, 2014, versus $2,134,843 for the twelve months ended December 31, 2013.
So, with revenues of approximately $931,000, that’s a loss of around $3.4 million for 2014. The company lost ‘just’ $1.81 million in 2013. Nevertheless, Rightscorp still see their situation as positive.
“We recorded our strongest year yet with an astounding 187% year-over-year growth,” Steele said. “We are confident that by focusing on these growth metrics, we will be able to capture significant growth ahead.”
The company’s latest 10-K filing paints a more gloomy picture, however.
“The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern,” the filing reads.
“The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. If the Company is unable to obtain adequate capital it could be forced to cease operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.”
While the company’s accounts give cause for concern, the precarious situation is only amplified when one examines Rightscorp’s over-exposure to a limited number of copyright-holder clients. In 2014 a total of 76% of Rightscorp sales came from one client, BMG Rights Management. The company’s contract with Warner Bros. accounted for a further 13% of sales.
If the former pulled the plug (and after a one year contract BMG only needs to give 30 days notice to do so) it could be game over for Rightscorp.
Rightscorp is hit with another TCPA lawsuit
This week Rightscorp, which has been hopelessly struggling to save its floor-hitting stock from being delisted from NASDAQ, was hit with yet another lawsuit, this time in Georgia (Melissa Brown and Ben Jenkins v. Righscorp, Inc. et al, GAMD 15-cv-00012).
The complaint is short and concentrates on a single deliberate violation of the Telephone Consumer Protection Act — harassing robocalling and messaging without the recipients’ consent. This is not a class action, and the plaintiffs seek an award of trebled statutory damages ($1,500 per each call). Depending on how many violations the court will find actionable, it may result in a hefty sum. In any case, if the plaintiffs prevail (which is most likely going to happen), this precedent has a potential of opening a floodgate of similar actions: in its latest press release (1/22/2015) the troll claimed that it “closed over 170,000” cases of copyright infringement.” How many of these “closures” are the result of unlawful telephone harassment? Just imagine if every robocall recipient decides that he/she wants a small piece of the Rightscorp’s flesh!
The plaintiffs are represented by Sergei Lemberg.