the court needs to consider the impact of the letter of claim upon ordinary consumers who may not have access to specialised legal advice, who may be innocent of what is alleged against them and who may be embarrassed and/or distressed by being alleged to have been involved in filesharing involving pornography.

This comes quite close to an admission that the figure of £700 has been selected so as to maximise the revenue obtained from the letters of claim, rather than as a realistic estimate of the damages recoverable by the relevant Claimant from each Intended Defendant.

First, the reference to the Code of Practice is inappropriate both for the reasons given by HHJ Birss QC and because it was not designed for letters to ordinary consumers.

Secondly, the draft letter does not make it clear that the fact that an order for disclosure has been made does not mean that the court has considered the merits of allegation of infringement against the Intended Defendant.

Thirdly, the draft letter asserts under the heading "Infringing Acts" that the Intended Defendant is liable for infringement. Although the last paragraph under that heading implicitly acknowledges the possibility that the Intended Defendant may not be the person who was responsible for the infringing acts, this acknowledgement is not sufficiently explicit. Furthermore, the reference under the heading "Proposed Settlement" to "inaction, by permitting a third party to use your internet connection" undermines the effect of the implicit acknowledgement. As HHJ Birss QC has explained, nothing less than authorisation suffices for infringement, at least in the context of a claim for damages.

Fourthly, the second paragraph under the heading "Legal Consequences" is too one-sided in that it sets out the consequences to the Intended Defendant of a successful claim without acknowledging the consequences to the relevant Claimant of an unsuccessful one. Fifthly, the reference to "other intellectual property" under the heading "Proposed Settlement" is unjustified. There is no evidence that any other intellectual property rights of the Claimants have been infringed.

Sixthly, I consider that requiring a response within 14 days is unreasonable given that the Intended Defendants are consumers and that there is no urgency in the matter. 28 days would be reasonable.

Lastly, the threat to make "an application to your ISP to slow down or terminate your internet connection" is unjustified. Counsel for the Claimants accepted that the word "application" was inappropriate, and said that "request" would better convey what was intended. I do not agree that a threat even of that nature is justified in a letter of this kind, however.

Ruling in the Patents County Court in London on Monday, Judge Birss QC described ACS:Law's pursuit of illegal filesharers as "amateurish and slipshod" and said it had "brought the legal profession into disrepute".

Birss said Crossley had breached the solicitors code of conduct because he was responsible for the licence agreement between Media CAT and the original copyright holders, and stood to profit from it. The code of conduct states that "you must not enter into an arrangement to receive a contingency fee for work done in prosecuting or defending any contentious proceedings" before the court.

The judge said: "I am quite satisfied to the standard necessary for this stage of a wasted costs application that Mr Crossley is responsible for the basic agreements [the licence agreements between Media CAT and original copyright holders] and has thereby acted in breach of the solicitors rule 2.04.

"In my judgment, the combination of Mr Crossley's revenue sharing arrangements and his service of the notices of discontinuance serves to illustrate the dangers of such a revenue sharing arrangement and has, prima facie, brought the legal profession into disrepute. It may be better placed under the revenue sharing heading in this judgment but it is, prima facie, improper conduct in any event."

I cannot imagine a system better designed to create disincentives to test the issues in court.... Why take cases to court and test the assertions when one can just write more letters and collect payments from a proportion of the recipients?

"If true, it is extraordinary," said the ruling. "A party who keeps key documents which are cited in the particulars of claim in storage is not a party anxious to progress their claim in court."

"I have ceased my work...I have been subject to criminal attack. My e-mails have been hacked. I have had death threats and bomb threats," he said in the statement, read to the court by MediaCAT's barrister Tim Ludbrook.

"It has caused immense hassle to me and my family," he added.

When PC Pro spoke to McLean Reid partner John Champion, he told us that GCB had been registered at that address on behalf of one his clients, David Fisher.

Champion said that Fisher had lent his dormant company to an associate, who had been collecting the file-sharing money without his knowledge. "He just decided to help a friend out," Champion said. "He wanted a dormant company, and he said 'Oh I've got one that's not doing anything, you can have that'."

"I know Dave Fisher is put down as a director [of GCB], [but] this activity was done without him knowing what activity was happening," Champion added. "I think he's taking steps to make sure all that money's been repaid."

"If you have received a letter from GCB Ltd please disregard this letter as GCB is no longer pursuing the matter stated in the letter."

Late last week, ACS:Law business partner MediaCAT, the middle-man company who claim to have rights over dozens of movies, tried to pull the rug from under yesterday's proceedings. Last Thursday, with only a single working day left to go, it wrote to the 27 file-sharing defendants informing them it would discontinue the cases against them.

The defendants, some of them prepared to head off to court on Monday, reasonably thought their case was now over and that they did not have to attend. However, thanks again to ACS:Law's apparent misreading of the law, MediaCAT were actually not authorized to drop the claims without the court’s permission.

The problem lies in the strange fact that MediaCAT aren't the copyright holders of the works they are using to extract payments out of file-sharers. Another company, the David Sullivan-owned Sheptonhurst Ltd is believed to be, but even that is yet to be proven.

[...]

Another allegation was levelled at Crossley in court by defense lawyers, one which raised eyebrows with Judge Birss QC. With reference to the earlier Solicitors Regulatory Authority investigation into his affairs, it was alleged that Andrew Crossley is "involved in a champertous agreement" in breach of the solicitors’ code of conduct.

The actual agreement between MediaCAT and Sheptonhurst was produced which showed, to the apparent surprise of the Judge, that ACS:Law is contracted to take 65% of the revenue and that rights to the movies in question had been allocated purely to prosecute and that no exploitable rights had been transferred.

"The plea that 'allowing' others to infringe is itself an act restricted by s16 (1)(a) and 17 of the 1988 Act is simply wrong," noted Judge Birss. "The term used by those sections of the Act is 'authorising' and the difference may be very important if the allegation is about unauthorised use of an internet router by third parties."

Judge Birss later noted: "A key part of the plea of infringement rests on an assertion [by ACS:Law] that 'allowing' others to infringe is itself an infringing act, when it is not."

We are also working in cooperation with a newly-formed organisation, the United Copyright Group, that provides an holistic solution to illegal file sharing and provides a comprehensive set of tools designed to deter and prevent illegal file sharing. More will be written about this new phase of tackling illegal file sharing in due course.

A new joint working relationship with US-based attorneys has opened up the North American region to our clients for identification and pursuit of illegal file sharing of their products.

"Neither we nor our clients threaten or bully anyone. We send out letters of claim to account holders of internet connections where those internet connections have been identified as being utilised for illegal file-sharing of our clients' copyrighted works.... Our letter makes an enquiry in that regard and invites the recipient of our letter to respond to this evidence. In addition they are invited to enter into a compromise to avoid litigation,"

"I think the BPI is letting its members down. I think they are scared of alienating their customers. My clients don't have the same fear. They take the view that the people they target aren't their customers because they are stealing from them."

"After my expenses the copyright owner is the largest single beneficiary."

The document states that "the whole project is kind of a joint venture where no party charges the other party with any costs." The problem with such a set-up is that the pre-settlement offers are usually based on costs incurred by retaining a law office to pursue the claim. File sharers are asked to pay 450 bucks for a porn movie because it costs money to investigate their IP address and send them the cease and desist letter.

However, German law specifically states that these costs can't be based on the success of the claim. In other words: In order to invoice file sharers for lawyer fees, these fees have to occur and be paid by someone no matter whether a file sharer pays up or not. Invoicing someone for costs that haven't actually occurred could be seen as fraud.