Techdirt. Stories filed under "extortion"

Did Paul Duffy's Wife Admit That He Was Engaged In Interstate Extortion On Facebook?

Mike Masnick — Wed, 15 May 2013 07:34:00 PDT

Paul Duffy, as many of you know, is one of the key players in the Prenda/Anti-Piracy Law Group game. In fact, he's "officially" the only named partner of Prenda -- though others have argued that it's really John Steele and Paul Hansmeier pulling Duffy's strings. Either way, Duffy might want to have a talk with his wife. As some folks noticed, late on Monday, his wife, Shari Duffy made a post on Facebook (since deleted) about her husband's activities, in which she lashes out at those who have pointed out that he's engaged in what various courts have now called a "fraud on the court" by calling them "the worst kinds of thieves imaginable." But, the key thing is the final line of her comment: If you can't read the full text, here it is:

Here's a fun fact...my husband sues people for pirating porn and the phone companies for putting it in the hands of people under 18...the men caught really hate his firm and have tried to harm him physically and financially, but they are the worst kind of thieves imaginable and shame on all the mobile carriers for allowing people to move X rated material to the hands of minors. Someone we know paid an undisclosed amount to settle a case so that we would not release his name to the public.

It's worth pointing out that the folks involved in various trolling efforts have generally bent over backwards to avoid saying that they're getting people to pay them to avoid being named, because, you know, that's illegal. As former federal prosecutor, Ken "Popehat" White notes, this "sounds like a confession of interstate extortion to me." And remember that Judge Wright, in the Southern District of California, has already claimed that Duffy's actions (along with Steele and Hansmeier) should be investigated by the US Attorneys for racketeering -- and extortion is generally a key part of many racketeering schemes.

I'm no expert on extortion law, so for those who are, please weigh in, but it seems like 18 USC 875(d) might be particularly relevant here:

Whoever, with intent to extort from any person, firm, association, or corporation, any money or other thing of value, transmits in interstate or foreign commerce any communication containing any threat to injure the property or reputation of the addressee or of another or the reputation of a deceased person or any threat to accuse the addressee or any other person of a crime, shall be fined under this title or imprisoned not more than two years, or both.

Admitting that the person paid up to avoid being named, and not because of any merit in the accusations seems to be a pretty clear admission to violating that law. We've heard of stupid criminals getting rung up for their own social networking posts, but how about their wives "bragging" about their actions and admitting to federal crimes in the process?

And, of course, not that it needs to be said, but while perhaps some of the people speaking out against Duffy and his firm were caught in his scheme to get people to pay up, many of us have never been involved or accused of infringement, and are speaking out because we think his actions are an abuse of the legal system to shake people down for money -- pretty much exactly as Shari perhaps inadvertently admitted.

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Pure Scamming Copyright Troll Implies It's A Gov't Agency And That You Will Face Jail Time If You Don't Pay Up

Mike Masnick — Fri, 22 Feb 2013 10:01:31 PST

We've seen some pretty brazen copyright trolling efforts lately, but this latest one may be the most extreme. FightCopyrightTrolls has the story of the "Internet Copyright Law Enforcement Agency," which has some features like a normal copyright troll, and some that go way, way beyond trolling to out and out fraud. I will note, however, that as I was writing this article, it appears that whoever is behind this bit of fraud has apparently decided to run away. The ICLEA website now states:

Important Notice

Effective immediately, the Internet Copyright Law Enforcement Agency has ceased operations. Please disregard any notices you received from us, and please do not send us any payments.

Here's what the website looks like as I type this: And here's what it looked like a few hours ago: But, let's explore just a bit of what they were doing before FCT exposed them. First off, by both the name and the terminology they clearly were implying to people that they were a government agency rather than a private company. The name itself -- incorporating both "law enforcement" and "agency" implied as much. They used a seal that one might incorrectly interpret to be a law enforcement shield. They also were using a virtual office space based in Washington DC, not far from many federal buildings. Originally, their website claimed that they were

... an international organization that helps to enforce copyright laws on the internet worldwide by informing potential copyright law violators regarding the serious possible criminal and/or civil liability they may face, and providing them with an opportunity to help them comply with copyright laws.

In the letters they sent out, they went even further, claiming:

We work with law enforcement agencies and strategic partners around the world to enforce copyright laws, and to help prosecute individuals and companies who violate these laws.

Also, the letter repeatedly suggests that individuals may face criminal charges for merely downloading a song. The letter (which we've reproduced below) does correctly call out the section of copyright law that highlights criminal penalties, but conveniently leaves out the part that defines what qualifies for criminal enforcement. Oh, and the fact that a private bogus company pretending to be a government agency can't bring criminal charges.

Like all trolls, they demand payment to "avoid further action from being taken against you." From a quick search online, it appears that a bunch of people started receiving these letters in the last week or so, with varying amounts being demanded (generally between $300 and $500, it appears), and with payment being required by March 1st. One hopes that no one actually paid up, though it's likely that some did.

Again, the full letter is below, and even with the company claiming that it has now "ceased operations," some questions remain. It's not at all clear who was behind this. The letters come from a "David Walsh," though it's anybody's guess as to the person's real name. The office, again, was a virtual office, so the person behind this could be anywhere. What's not clear is how they got the information about specific downloads which it could use to accuse people. There are a few different theories floating around, but until there's more proof one way or the other, it remains pure speculation.

Either way, it seems pretty clear that this has gone beyond your everyday copyright troll. While they often go pretty close to the line of "extortion," they can at least claim some marginal legitimacy by actually representing copyright holders. With the ICLEA, that doesn't appear to be true at all. They're misrepresenting who they are, and demanding cash to avoid possible incarceration (which they can't do). It seems like that likely violates all sorts of laws having to do with fraud and extortion. So, whoever is behind this, while they may have chosen to misrepresent criminal copyright law, they might want to spend some time familiarizing themselves with criminal law in other contexts.

Of course, while the DOJ and ICE keep claiming that they're so focused on "criminal" copyright issues these days, one wonders if they'll spend any time or effort to go after the folks behind this actual scam. Or, do they only go after sites that Hollywood doesn't like?

Either way, we've posted the text of one of the letters below to show just how over the top the claims were.

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Another Judge Blasts Copyright Trolls

Mike Masnick — Mon, 24 Sep 2012 09:30:56 PDT

We've been seeing more and more judges reacting negatively to copyright trolls. What's interesting is that they seem to be getting more aggressive in their statements against the trolls, and it seems clear that fewer judges are falling for their antics. The latest is from Judge Harold Baer in the Southern District of New York, who you could say is not impressed by some copyright trolling cases that have ended up in his court, coming from Media Products and Patrick Collins. He had allowed for expedited discovery, which is what copyright trolls want, but it seems quite clear that Baer regrets that decision and now seeks to reverse it. Expedited discovery basically gives the trolls what they want: it lets them subpoena ISPs to find out contact info of users based on the IP addresses they've collected. From that point on, they have no intention of ever proceeding with the actual lawsuit. They just want to start pressuring people into "settling."

Judge Baer clearly understands what's going on here. He notes early on the very serious potential problem of IP addresses not being particularly good identifiers of who has done the actual infringement:

Particularly troubling for courts is the high probability of misidentified Doe defendants (who may be the bill-payer for the IP address but not the actual infringer) settling a case for fear of the disclosure of the allegations against them or of the high costs of litigation.

He notes that he's not ready to "wade into" the question of whether or not joinder is appropriate, especially in cases where all of the IP addresses are part of the same BitTorrent swarm, but he is clearly worried about a different kind of "swarm":

Ironically, there are swarms on both sides, for copyright locusts have descended on the federal courts, exacting low-cost settlements from embarrassed John Does and then moving on to the next District

Yes, Judge Baer seems familiar with the M.O. of these trolls, and how they've effectively been "run out of" other districts after judges realized what they were up to. In fact, he quotes a ruling in the Central District of California approvingly:

... the federal courts are not flexible enough to be shaped into "cogs in a plaintiffs copyright-enforcement business model. The Court will not idly watch what is essentially an extortion scheme, for a case that [Plaintiffs have] no intention of bringing to trial."

He also worries that the plaintiffs have already pressured defendants into settling, noting "that some Doe defendants have already been voluntarily dismissed at this early stage in the litigation." For that reason, he's decided that joining all the cases together at this stage is inappropriate, and has (like many other courts) severed and dismissed all but one Doe.

He then goes back to talk about his overall concerns with how copyright trolling is a troubling development, and quotes a bunch of other cases from other district courts around the country:

The Plaintiffs' tactic, if left unchecked, could turn copyright protection on its head. Congress intended to incentivize the creation of useful arts by providing a statutory right and a means of enforcement that would reward authors for their labors, hardly the Plaintiffs' strategy here.... In the BitTorrent pornography cases, settlements are for notoriously low amounts relative to the possible statutory damages, but high relative to the low value of the work and minimal costs of mass litigation. Cases are almost never prosecuted beyond sending demand letters and threatening phone calls. Severing the Doe defendants does not destroy the incentive to prosecute infringers who use peer-to-peer protocols; it merely restores the balance that Congress intended, not to mention that it ensures that courts receive the filing fees that Plaintiffs otherwise avoid.

And one final point, since he already allowed for discovery, he wants the plaintiffs to destroy the info, and if he finds out that they pursue those people anyway, it sounds like there may be trouble:

Plaintiffs shall not contact any Doe defendant who does not remain in this or a subsequently-filed case, and any pending settlement not with John Doe 1 in each named case shall immediately cease. If after 14 days Plaintiffs have not reinstituted cases against the remaining Doe defendants, Plaintiffs shall destroy whatever personal information they presently have for those defendants and shall not use the information for any purpose. Ifany Doe defendant no longer named in a case is contacted following entry ofthis Order, I encourage them to contact the Court.

Elsewhere, he orders the plaintiffs to pass along this order to all the ISPs they've subpoenaed, and to have them distribute it to all the people in question, so (hopefully) they understand to contact the court if the plaintiffs violate the order and continue to go after them.

One really good thing here: Judge Baer clearly spent time looking into these cases, and seeing just how common they are and what's happening in them. Above, we've already noted that he cited a few such cases -- but in a footnote that takes up about half the page, he goes on to name a whole bunch of them, noting that "this is but a sample" and pointing out:

It is difficult to even imagine the extraordinary amount of time federal judges have spent on these cases.

Hopefully other judges are beginning to recognize the same thing. It seems clear that more and more judges are putting these cases into the proper context, understanding what's really happening and how the copyright trolls are abusing the court system as a part of a business model, rather than for any legitimate legal reason.

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US Copyright Group Lawyers Suggest They're Allowed To Lie To People They're Demanding Cash From

Mike Masnick — Thu, 27 Jan 2011 09:55:08 PST

Back in November, we wrote about how the lawyers behind US Copyright Group, Dunlap, Grubb & Weaver, were being sued for extortion, conspiracy and fraud. While we doubted the lawsuit would get all that far, it did seem to have a slightly stronger legal basis than similar lawsuits in the past, due mainly to the fact that the producers of Uwe Boll's Far Cry screwed up with the registration of the copyright, meaning that many of those sued could not be hit with statutory damages -- and yet DGW falsely claimed they could. While defenders of these pre-settlement "pay up or we'll sue" campaigns like to claim that it's not extortion if the party demanding the cash has a legitimate legal claim, it's a lot harder to make that case when they don't really have a legitimate legal claim, but simply say they do. That sounds a lot closer to extortion.

Ars Technica notes that DGW has filed a scathing response (though, oddly, Ars Technica does not provide the actual filing). Apparently, there are two key arguments made by DGW: First, that the guy suing, Dmitriy Shirokov, has no right to sue DGW, because they're just the lawyers "simply doing their job," and you can't sue for that:

"Although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable,"

That's quite a claim, in large part because it's misleading. DGW is playing a little game of misdirection, and assuming everyone else is stupid (a dangerous game for lawyers to play). The main problem is that the actions that DGW is being sued over here are not actually "during the course of litigation." The complaint is about the "pay up" threat letter, which is not directly a part of the litigation, but an attempt to avert litigation. To claim that demanding cash based on a factually incorrect legal claim is immune from a legal complaint seems like a stretch. If DGW's legal theories are correct here, it would mean that a lawfirm could resort to outright, blatant extortion, just so long as it somehow connected it to the threat of litigation. That's a plainly ridiculous outcome that I find hard to believe a court would buy.

Separately, DGW says that no "harm" has come to Shirokov since he hasn't actually settled. That, again, seems like a questionable tactic. If true, the only way that someone illegally or unfairly threatened could sue is if they first give in to the threat. It seems that just the threat itself, if it truly was made maliciously with false information for the purpose of getting people to pay up, should constitute clear harm in itself.

Of course, not all DGW's claims seem that crazy. On the question of racketeering and other criminal complaints, DGW points out that individuals can't bring criminal complaints, only the government can. This point goes in DGW's favor, and I'm a bit surprised that Shirokov's lawyers focused on criminal statutes in their complaint. However, the complaint covers plenty of areas that aren't criminal in nature, and there's no reason why the case shouldn't move forward on those issues.

Finally, DGW, in what appears to be becoming standard practice for the firm, is demanding sanctions against Shirokov and his lawyer for filing the lawsuit in the first place. Talk about obnoxious. DGW, in this filing, appear to be claiming both that they can effectively do whatever the hell they want to threaten someone if he doesn't pay up (so long as they can claim a loose association with ongoing litigation) -- and that anyone who then claims that this amounts to a form of fraud or extortion should be punished. In other words, it seems that DGW believes it can act beyond the law in the course of litigation, and anyone who sues them over it should be sanctioned.

Hopefully, a court sets DGW straight on all of that. I'm still not convinced this case will get very far. I'd be surprised if courts, while sympathetic to those charged in such "settle or we sue" lawsuits, went to the other extreme and claimed that the efforts behind them directly broke the law. I'd be thrilled if I'm proven wrong on this, but it just seems unlikely.

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US Copyright Group Sued For Extortion, Conspiracy & Fraud

Mike Masnick — Mon, 29 Nov 2010 11:01:25 PST

Well, the whole mass automated "pay up or we'll sue" legal business may be getting a bit more interesting as Evan Brown notes that one of the folks sued by US Copyright Group has struck back with a class action lawsuit alleging that the law firm behind USCG, Dunlap, Grubb & Weaver, is engaged in extortion, fraud and conspiracy. The lawsuit looks to include in the class the nearly 5,000 people sued by USCG for sharing the Uwe Boll film Far Cry. The lawsuit highlights -- as we pointed out earlier this year -- many of the alleged infringements happened prior to registration, meaning that there would be no statutory damages available. However, USCG didn't bother to mention that and still used the statutory damages threat in its letters:

This knowing misstatement of material information was made to maximize the damage awards that Defendants could pursue, the claims for Ineligible Remedies they could threaten in demand letters, and the volume and amount of extorted "settlements" that would result.

The lawsuit then uses DGW's own professed "copyright expertise" against it, noting that it clearly was aware of the rules concerning registration and statutory damages, even though it knew that it had no right to statutory damages, and thus, committed fraud and extortion.

Oh yeah... one part of the fraud, according to the lawsuit, is that DGW submitted the Far Cry copyright registration with a false "first date of publication" (which is a key date in whether or not they could go after statutory damages). Thus, the lawsuit claims, DGW/USCG actually committed fraud on the US Copyright Office.

To be honest, I'm guessing that the likelihood of this lawsuit getting very far is slim. Such is the nature of such charges in the past. However, it does appear that this one has a lot more going for it than other similar lawsuits, given the late copyright registration, which really does look bad for USCG. No matter what, this will be an interesting case to watch. The full lawsuit is included after the jump.

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Ripoff Report Wins Against Extortion Claim

Mike Masnick — Tue, 3 Aug 2010 18:13:52 PDT

Ripoff Report is a site that we've discussed a few times before, as it's dealt with a bunch of lawsuits -- all of which it has successfully defended itself against -- from organizations upset that users wrote negative reviews on the site. Of course, as you should know, Ripoff Reports has a strong Section 230 safe harbor defense: it's not creating the content, and thus, is not liable. But, over the past few years we've seen more and more attempts to get around Section 230 with creative lawyering. In the latest case against Ripoff Report, the workaround was to charge the company with RICO (racketeering) violations for trying to "extort" companies. Specifically, a company named the Asia Economic Institute (AEI) was upset about a series of negative complaints about its work environment, and asked for them to be removed. Ripoff Report notes that it never removes content, but did pass on information about its Corporate Advocacy Program (CAP), where, for a fee, it tries to effectively moderate between the company and the complaining individual. AEI suggested that this was presented in an extortionary manner -- as in "if you want to fix your reputation, you need to pay."

As Eric Goldman notes, this particular attack appears to have failed miserably, in large part due to the fact that Ripoff Report secretly recorded all of its phone calls. AEI fought against revealing the content of the phone calls, noting that it did not know its staff were being recorded -- and, in the end, the judge actually does deem the evidence inadmissible. But just the fact that Ripoff Reports presented the recordings made the two principles from AEI suddenly have their memories jogged, and admit that they might have been "confused" about what was actually said in the calls. From there, the judge found little evidence that the CAP program actually represented any kind of extortion.

AEI claimed that Ripoff Report's promise to defend itself against any lawsuit represented a legal threat. However, the judge points out that such an interpretation makes little sense. Claiming you will strongly defend yourself against any lawsuit is hardly a threat. On top of that, the judge notes that a "a threat to take legal action cannot constitute extortion unless the threat was made with knowledge that the threatened claim was false and without merit." Furthermore, the judge notes that the threat to defend itself from any legal action was entirely separate from the CAP program. Thus, the supposed (but non-existent) "threat" was entirely independent from any request for money.

As for the CAP program, the judge doesn't see that as a threat either, specifically noting that Ripoff Reports makes it clear that no reports on the site will be removed, so there's no demand for payment to remove a negative report. Unfortunately, the case isn't entirely over. The judge did leave open the slim possibility of a RICO charges based on wire fraud, and AEI is heading down that path now. Still, as Eric Goldman notes in his writeup, AEI may have difficulty showing any "harm" to its business due to the following:

AEI was a content publisher from 2000-2009 (it's now out of business), and during those 9 years, it had zero revenues. This could make it hard for AEI to garner much judicial sympathy over any harm to its business.

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ACS:Law Asks Those Who Deny Infringing To Incriminate Themselves

Mike Masnick — Wed, 26 May 2010 22:11:59 PDT

ACS:Law, the UK-based copyright threat letter operation that has been called a "scam" by UK politicians and condemned by ISPs alike, is apparently using a new tactic. The operation, which is apparently being investigated for potential disciplinary action (like Davenport Lyons, whose lawyers have been disciplined for initiating the "pre-settlement" mass letter campaign, and which has some sort of connection with ACS:Law), seems to know that the "evidence" it has isn't enough to actually take anyone to court, so if you reply and deny the infringement, ACS:Law sends you a questionnaire effectively asking you to incriminate yourself.

Of course, there's no legal obligation to reply, just as there's no legal obligation to pay, based on such a "pay up or we'll sue" letter. TorrentFreak notes that, despite all of this, people are still paying, even though not a single case has gone to court. No wonder we have multiple copycat operations showing up in the US. Extortion-like processes are apparently quite profitable. I'm sure that's exactly what the folks who created copyright law in the first place were thinking of in their creation: a system to send out thousands of threat letters demanding payment to avoid a lawsuit. It's all about promoting the "progress" of a few copyright lawyers, you see...

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Company That Sends Out Almost-Extortion-Like 'Pre-Settlement Letters' Sees No Problem With Almost-Extortion-Like 'Pre-Settlement Letters'

Carlo Longino — Fri, 16 Apr 2010 12:11:00 PDT

Germany-based DigiProtect has a long history of using a machine-gun approach to "fight piracy", in which it sends out tens of thousands of letters to people it says have illegally downloaded its clients' content, and demanding a "pre-settlement" payment to stop them from being sued. The big problem is that the company's net catches lots of innocent people, and it's been condemned by all sorts of people, even including the British equivalent of the RIAA. The BBC has been asking some questions of DigiProtect, and as you might expect, the firm sees absolutely nothing wrong with what it's doing, calling its method "the only proven effective proceeding" for dealing with piracy. How, exactly, is the method effective? Because as far as we can tell -- and as far as the recording industry is concerned -- the amount of illegal downloading going on really isn't slowing down much. What it's effective at is generating revenues for DigiProtect, which tells the BBC that after deducting costs, it pays rightsholders at least 50% of the remainder of the "pre-settlements", leaving it a nice commission. These answers from Digiprotect are completely unsurprising, and it's not clear if the BBC expected the company to have some sort of epiphany and shut down or what. After all, another company using a similar model in the UK called it quits last week, saying it was "surprised and disappointed by the amount of adverse publicity that our firm has attracted in relation to this work." I mean, who in their right mind would think that sending out these bully-like letters, particularly to lots of innocent people, would upset anybody?

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University Help Desk Employee Extorts Student Using Copyright

Mike Masnick — Fri, 5 Feb 2010 01:17:07 PST

With various companies around the world making a nice profit by threatening people with "pre-settlement" cash demands to avoid a copyright lawsuit, it was only a matter of time until others got in on the action, even if they didn't hold the copyrights at all. Slashdot points us to the news of a University of Georgia help desk employee who has been arrested for trying to shake down a student with a copyright infringement claim. Apparently, he accused at least one student of copyright infringement, and demanded money to "clear her name." Police are now trying to find out if the guy did this to others as well. Of course, you have to wonder if he got the idea from seeing companies that are doing this on a larger scale.

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Even The Recording Industry Is Criticizing ACS:Law/DigiProtect Pre-Settlement Letter Program

Mike Masnick — Mon, 1 Feb 2010 08:17:46 PST

With more and more attention being paid to the efforts by firms like ACS:Law and DigiProtect to profit from blasting out hundreds of thousands of letters demanding payment to avoid file sharing lawsuits (which almost never seem to actually get filed), it seems that the companies involved in such things may finally be facing some pretty serious criticism that could force them to curb the practice. First up, politicians. A few different UK officials are coming out loudly against ACS:Law, with some even suggesting that the firm's efforts are like a "scam" or "legal blackmail."

Meanwhile perhaps the most surprising of all is that BPI, the UK's version of the RIAA has also come out against the practice, saying that they don't feel it is appropriate. Perhaps it's not a huge surprise -- given that the clients of ACS:Law/DigiProtect have tended to be video game and porn producers rather than the recording industry. However, when even the recording industry finds your actions against file sharing too draconian, it suggests you've really stepped over the line. At some point, you get the feeling that ACS:Law is going to get slapped down legally.

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Extortion Is Profitable Too, Doesn't Mean That It's A Fair Way To Profit Off Piracy

Mike Masnick — Tue, 13 Oct 2009 08:30:00 PDT

We've covered in the past how companies like Digiprotect convince the entertainment and software industries to sign over copyright licenses to allow them to purposely load file sharing networks with their content -- and then send anyone who downloads the content a threat letter demanding payment. The idea here is not to actually take anyone to court or to stop file sharing. Not at all. The idea is to profit from these threat letters. And, as it turns out... it's quite a profitable scheme. TorrentFreak has some numbers from a music industry presentation discussing how these extortion-like enterprises can pay quite handsomely. Basically, this one group, DRS, sends out emails demanding €450 ($650) per offense, with the company getting to keep 80% of any proceeds. Furthermore, DRS claims that approximately 25% just pay right up, which means for every infringement letter DRS sends out, it can expect to bring in $162.50, with 20% going to the ~~artist~~ rights holder. That's $32.50 that the rightsholder can expect per infringement, on average. That sure as hell beats a few pennies per download. No wonder such programs are becoming so popular. Of course, that doesn't make them any more ethical. Purposely putting files online and then sending out threat letters isn't exactly the moral high ground here.

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Court Says Demanding Settlement To Avoid Clearly Baseless Lawsuit Is Extortion

Mike Masnick — Wed, 12 Aug 2009 14:34:00 PDT

Over the past few years, we've seen a small, but growing, number of businesses that set up lawsuit settlement factories, of sorts. The most common, of course, is the RIAA, which built a nice little business threatening to sue people for file sharing if they didn't hand over a few thousand dollars. Of course, before the RIAA, DirecTV did this for a group of folks who had purchased card readers. For many people, this whole process of demanding payment to avoid a lawsuit sounds an awful lot like "protection money," or extortion. Eric Goldman alerts me to a recent ruling by the New Hampshire Supreme Court that agrees that such settlement demands can be extortion, if the potential lawsuit is clearly baseless. Of course, this is only in New Hampshire and folks at the RIAA (I'm sure) would insist that its lawsuit threats were not "clearly baseless." That may be true in some of them, but you do have to wonder about the time they threatened a deceased woman who was 83 years old at the time of the supposed sharing, and seemed unlikely to have used Kazaa or the user named "smittenedkitten" while sharing 700 songs.

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Automated Copyright Settlement Letters Apparently A Lucrative Business

Mike Masnick — Mon, 29 Jun 2009 17:14:00 PDT

We've covered a few different stories of companies that have been involved in what certainly has a lot of similarities to extortion: sending automated letters insisting that you're violating the law, and demanding payment to prevent a lawsuit. DirecTV was one of the first companies to put a big push behind such a revenue stream, but it was eventually shot down by the courts. The RIAA, of course, has used such a program for a while. More recently, we've seen some companies in Europe experiment with similar programs. The latest is Nexicon, a former cigarette retailer that's now rebuilt itself as an automated legal threat sender, scanning BitTorrent for what it believes is infringing content, and dashing off automated legal notices, demanding payment within 10 days, and suggesting that simply paying up is a lot cheaper than even contacting a lawyer. At what point do politicians realize just how badly the system is being abused? Or do they just let this sort of activity continue?

In the meantime, it looks like ACS:Law, which is one of the organizations that's been involved in a similar settle-or-we'll-sue letter sending campaign has been outed as sending bogus letters to people who had nothing to do with the content they're alleged to have infringed upon. The most amazing thing? The companies involved seem to admit it. In a letter used by multiple firms, they note that "We do not claim that your computer was used to commit the infringing act (although we do not exclude this possibility), nor do we claim that you downloaded our client's work. Our claim is that your Internet connection was used to make our client's work available via one or more P2P networks. The file may not, therefore, be on your computer." But they still want you to pay up, of course. It's guilty until proven innocent, because that's a lot more lucrative.

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Class Action Lawsuit Against The RIAA For 'Stolen' Money?

Mike Masnick — Thu, 11 Jun 2009 07:33:00 PDT

A bunch of folks have been submitting the story about how Jammie Thomas' new lawyer, Kiwi Camara (a Charlie Nesson protege) and Nesson himself are apparently preparing to file a class action lawsuit against the RIAA in an attempt to get back the $100 million plus that they claim the industry "stole" in its settlements. This may be interesting from an academic standpoint (or from a PR/circus standpoint), but I have difficulty believing it will get very far in terms of actually succeeding. I do find the settlements distasteful, and bordering on extortion ("pay up or we sue" is really questionable), but earlier attempts at similar lawsuits haven't gone very far at all. Still, considering that the RIAA has always insisted that its entire legal campaign was part of a grossly misguided and ultimately self-damaging "PR campaign" perhaps it's okay that someone is effectively doing the same thing on the other side.

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RIAA Sued For Racketeering Yet Again

Mike Masnick — Fri, 21 Nov 2008 13:28:08 PST

A few people have filed lawsuits against the RIAA for racketeering in the past, though these charges have always been dismissed. In one such case, where the filed charges were dismissed over the summer, new claims were filed again charging the RIAA with racketeering for extortion, mail fraud and wire fraud in its ongoing efforts involving weakly supported threats against alleged file sharers demanding money to avoid being sued. The file-sharing defendants are trying to turn this into a class action lawsuit on behalf of everyone falsely accused by the RIAA. Given the (lack of) success of all previous racketeering lawsuits on this topic, I wouldn't get too optimistic of this one going anywhere just yet.

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Are Copyright Holders Purposely Putting Content On P2P In Order To Demand Money?

Mike Masnick — Wed, 19 Nov 2008 12:12:00 PST

We've discussed the highly questionable activities of UK law firm Davenport Lyons for its supposed campaigns on behalf of various copyright holders. From what we had seen, the firm wasn't particularly interested in actually protecting content from being shared online -- only in threatening as many people as possible with "pre-settlement letters" to get them to pay up to avoid being sued. This certainly feels like what's commonly called extortion, especially, as it came to light that the pre-settlement letters are being sent to many innocent bystanders. Since this is a business model issue (squeezing individuals to pay up) rather than actually being about protecting copyright, it's no surprise that the pre-settlement letters would be sent as widely as possible, even if there was no actual evidence showing guilt.

However, the situation may be even worse than originally suspected. In an article about Davenport Lyons' latest client, TorrentFreak notes that the copyright holder may be contracting with a company to purposely spreading the content on file sharing networks for the purpose of making it easier to find people to threaten with pre-settlement letters. There are a number of different players involved here, but basically, copyright holders are licensing the copyright on various movies to a firm called DigiProtect. DigiProtect, in turn, hires Davenport Lyons to send out the pre-settlement letters. But in a leaked contract between DigiProtect and one copyright holder, it's made quite clear in the contractual language, that DigiProtect is expected to upload the movies as widely as possible prior to having a law firm send out the pre-settlement letters:

To achieve the purpose outlined in clause 1, LICENSOR grants DIGIPROTECT the exclusive right to make the movies listed in Appendix 1 worldwide available to the public via remote computer networks, so-called peer-2-peer and internet file sharing networks such as e-Donkey, Kazaa, Bitorrent, etc. for the duration of this agreement

In other words, it's quite clear that this has nothing to do with preventing content from getting on file sharing networks. Instead, they're specifically putting it there themselves, apparently hoping to get it as widespread as possible, in order to send out the threat letters more widely, so they can collect on the "settlements" from people scared that they're about to get sued. It's hard to see how that's not a massive abuse of copyright law.

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Another Day, Another Big Data Breach

Mike Masnick — Fri, 7 Nov 2008 15:20:00 PST

These days, it's probably best to just assume that any private data you've ever provided to a company is public. Given the pace at which the data you've entrusted to companies is leaked, whether via malicious hackers or via company carelessness, it's almost as if the exception to the rule is a company that's actually been able to keep your data safe. So it's hardly surprising that Express Scripts, the massive medical benefits management company, has said that its records appear to have been compromised. Apparently, the company was sent a note, detailing the medical records of about 75 people, with an extortion threat telling the company to pay up or face the exposure of millions of patient records. The FBI is now investigating. Still, we're reminded once again that companies have very little incentive to really keep your records straight. It's almost reached the point where these stories are barely worth commenting on, since they're so common. There's something quite depressing when you realize that these sorts of data breaches are barely even newsworthy any more.

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Company Wants To Patent Automated Pay-Up-Or-We-Sue Pre-Settlement Letters For File Sharing

Mike Masnick — Wed, 17 Sep 2008 09:09:00 PDT

Well, well, well. The latest story about a "solution" to the "problem" of piracy has an interesting twist to it. A company named Nexicon, claims that it's about to launch an automated piracy tracker/payment collector. It says that it's able to watch various file sharing systems, tracking who's sharing and downloading unauthorized files -- and then sends them an automated letter demanding they pay up, including a "convenient" one-click payment system where you can settle up via your credit card or PayPal. Even better, the company claims that it's trying to patent this method, which is hardly new or unique (and, you have to wonder if Nexicon is paying Amazon a license for using "one-click" payments -- as the company even seems to brag that it copied Amazon's one-click solution).

There are plenty of questions raised by this. First, if it's actually put into use as described, it would be the first time we see the industry attempting to target downloaders as opposed to uploaders. All of the various lawsuits and pre-settlement letters have always targeted those who share the unauthorized content. But the article claims this will go after downloaders (though, it's not entirely clear how they'll know who actually downloads the file). Then, of course, there's the whole extortion question of demanding payment to avoid a lawsuit -- especially when the actual evidence may be rather flimsy.

As for the patent application (which a casual search did not turn up), it's hard to see how copying the same strategy that's been used for years by the recording industry, merged with the already-questionably-patented Amazon 1-click method is somehow patentable.

Oh yeah, there are also some questions about Nexicon itself. Just last week the company announced a deal with YouTube to provide some audio fingerprinting technology -- at which point Wired pointed out the rather bizarre history of Nexicon. It started out as an online cigarette seller, that got sued for taking orders from kids, falsely advertising cigarettes as being tax-free and then (not surprisingly) failing to report taxes. Then there were the problems with the SEC over not filing its tax returns on time as well as questionable activities in some sort of reverse stock swap merger. Oh, and did we mention at one point the company was going to be a portal? These are the folks who are going to be popping up automated messages demanding you pay up for downloading a Frank Zappa tune?

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Scammers Copying Big Copyright Extortion Tactics

Mike Masnick — Fri, 5 Sep 2008 10:31:49 PDT

It really was only a matter of time. For a while now, the entertainment industry has been using borderline extortion tactics with "pre-settlement" letters that promise individuals they won't get sued if only they pay a fee upfront -- ranging from a few hundred dollars to a few thousand. These letters have proven to be incredibly effective in getting people to simply pay up, so it's no surprise that other scammers have started copying the technique as well. Right now it sounds like they're simply calling people, but it's really only a matter of time until they start sending nearly identical "pre-settlement" letters on threatening letterhead, and getting folks to pay up as well. Of course, given the extremely flimsy nature of the evidence often used by the entertainment industry in sending out those letters, we'll once again note the very fine line between what these supposedly legitimate companies are doing and the out-and-out scammers are doing.

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RIAA Shakedowns Similar To Big Retailers Shaking Down Suspected Shoplifters

Mike Masnick — Fri, 22 Feb 2008 13:51:50 PST

We've talked in the past about how both DirecTV and the RIAA have used a borderline legal version of a shakedown to get people to pay them money, without them having a chance to defend themselves. The way the process works is simple. They come up with a mere slip of evidence that the person might be guilty, and then send them threatening letters offering not to sue if they merely pay up first. With DirecTV, the company used names of people who had bought smart card writing devices, even though such devices have perfectly legitimate uses beyond pirating satellite TV signals. With the RIAA, obviously, it was through a list of (often questionable) IP addresses. By using this method, many people pay rather than face a lawsuit -- even if they're innocent. They recognize that the cost of a lawsuit is much worse than just paying the settlement charge. In the organized crime world, this is generally known as a shakedown, or if you prefer, extortion. Yet, for some reason, it's legal when these businesses do it.

And, it turns out, the RIAA and DirecTV are not alone in doing so. Perhaps they even learned the practice by watching how big retailers approach shoplifters. Reader Josh sent in a Wall Street Journal article showing how many large retail chain stores are using a very similar process against suspected shoplifters. In the most egregious case, Home Depot detained a guy it thought was stealing drill bits, but dropped the effort after he showed them a receipt. A few weeks later, though, he received a letter demanding $3,000, which was later raised to $6,000. Admittedly, the amount is quite high there as the law firm that handled the case later admitted to a typo in entering the amount -- but the process seems quite similar to the RIAA/DirecTV process. It doesn't matter if the person is guilty or innocent. You just ask them to pay up or threaten them with a lawsuit. The retailers all insist this is a necessary process since shoplifting costs them so much -- but it's hard to see how forcing people to pay up without a chance to defend themselves is ever right, no matter how much shoplifting costs these retailers.

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IBM Trying To Get Patent On Patent Extortion?

Mike Masnick — Mon, 22 Oct 2007 16:25:00 PDT

Have fun with this one. As seen on Slashdot and sent in by a few different readers, it appears that IBM is trying to patent the process of using a large patent portfolio for patent extortion. Technically, the patent is for "A system and method for extracting value from a portfolio of assets." Of course, if any company can claim credit for such a thing, it's IBM. After all, there's the famous story of IBM demanding patent licensing dollars from Sun. They accused Sun of patent infringement, but when Sun engineers and lawyers pointed out how they didn't infringe on the patents in question, IBM's lawyers responded: "OK, maybe you don't infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?" Nice to see they're now patenting that process. One could hope that IBM is hoping to get this patent either to prevent others from doing the same thing or (maybe?) to show just how ridiculous the patent system has become. Either way, it's still only an application, so perhaps a patent examiner will realize that there's a bit of prior art around this particular concept.

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Appeals Court Says That Just Buying A Smart Card Reader Doesn't Mean You Pirated DirecTV Signals

Mike Masnick — Thu, 13 Sep 2007 13:08:00 PDT

While we often talk about the extortion-like tactics of the RIAA in going after file sharers, people sometimes forget that it was DirecTV that really pioneered this practice on the corporate level. Well before the RIAA started suing music fans, DirecTV sued a company that had been selling a device that would let people hack smart cards, and as part of the suit, DirecTV ended up with the company's customer list. They then set out to sue most of the folks on that list, without any evidence that those customers actually used the equipment to make smart cards for unauthorized access to DirecTV signals. The lawsuits snagged innocent folks who had plenty of legitimate reasons for wanting to program smart cards -- but DirecTV found the process so profitable that it pushed its "anti-piracy" team to do many questionable things in trying to convince people to settle -- even if they were completely innocent. Eventually, the company was accused of extortion and was told to stop threatening people if it didn't have any evidence.

However, there were still some people who were found guilty of unauthorized access, even though DirecTV's only evidence was that they had purchased these smart card devices. Reader jedipunk lets us know that an Appeals Court has now tossed out one such decision, noting that simply possessing the device is not evidence of unauthorized access. The court notes that the defendants can still be found guilty if there's proof that they were accessing DirecTV signals with unauthorized equipment -- but simply possessing the smart card hacking device is not illegal and is not proof that they were doing anything illegal with it. Slowly, but surely, it appears that judges are picking up the details on some of these tech cases.

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