Irony: Sony Pictures Sued For Failing To Stop Piracy

from the shoes-on-the-other-foot dept

For many years now, the MPAA and the various studios that make it up have filed various lawsuits against various internet platforms for not waving a magic wand and making piracy disappear. This also appears to be their big complaint against Google, which has bent over backwards trying to appease the industry and it’s still not enough (of course, that may be because what the industry really wants from Google is money, not stopping piracy). But now the shoe is somewhat on the other foot as Sony Pictures is being sued for failing to stop piracy. Really.

The case stems from the infamous Sony hack from a year and a half ago, where all of Sony Pictures’ emails were released onto the internet. Possibility Pictures is suing Sony claiming the hack created a breach of contract in its failure to stop piracy of its film, To Write Love On Her Arms (TWLOHA), a 2012 movie starring Kat Dennings, based on the true story of the struggles a woman went through leading to the founding of her charity (which goes by the same name as the movie). While most people focus on the emails from the hack, it should be noted that before those emails were released, the hackers released some pre-release films… including TWLOHA. And that, Possibility claims, is a breach of Sony’s contract.

Reading through the full filing, the key breach appears to be of Section 16.7 of the contract, which includes an “anti-piracy authorization” stating:

So that’s kind of amusing, since the clause is clearly designed to give Sony the power to send out threat letters and takedowns and use DRM and other such stuff — but Possibility is basically turning it around on Sony and arguing that its failure to stop piracy shows that it did not use “appropriate technical measures.” I’m not sure a court will go for this kind of judo move in flipping the anti-piracy authorization clause around to suggest that it puts certain contractual requirements on Sony Pictures, rather than simply authorizing it to do certain things as the language is clearly designed to do.

The lawsuit goes on and on about all of the great marketing plans Possibility had for the film (Justin Bieber’s mother was going to tweet about it!), but apparently that was all ruined when the hackers, whoever they were, leaked the film. It also highlights Sony’s earlier security problems, focused on the famed PSN hack, even though that’s an entirely separate subsidiary from Sony Pictures. And then it spends a lot of time pointing to reporters who pointed out that Sony Pictures’ computer security was abysmal. That’s true… but it’s not clear that’s against the law. Basically, this lawsuit is mostly “Sony incompetent” and then “because of that our contract was breached.”

Possibility then tries to show damages from the leak of the film.

The direct and proximate result of the foreseeable and avoidable Data Breach just four months prior SPWA’s planned release of the Picture was an extreme dilution of the otherwise viable market for Plaintiff’s Picture. The November 2014 Data Breach resulted in the unauthorized release of the Picture on multiple sites worldwide and destroyed the audience demand for the Picture. Following the Data Breach and worldwide pirated release of the Picture, SPWA abandoned the social marketing plans and lost all interest in promoting and marketing the Picture since it was otherwise available for free as a result of its failure to maintain adequate security of the Network. As an isolated sample of the damage caused the anticipated video-on-demand (“VOD”) revenue stream of the Picture, note that in the first six days alone following the Data Breach, the stolen Picture master was downloaded-for-free a reported 19,949 times (an average rate of over 3300 illegal, revenue-free downloads per day).

So… a few things on this. First, downloads don’t equate to lost sales, generally speaking, so the attempt to suggest that here without further evidence is pretty silly. Second, less than 20,000 downloads is… kinda weak. It certainly suggests there wasn’t much interest in the film in the first place. Third, the idea that there’s no market for a movie that’s available for free online is easily debunked by the numerous movies that do quite well at the box office and in the home video market despite also being pirated online.

However, the more interesting bit is that this puts Sony Pictures in the fairly awkward position of potentially having to argue that piracy isn’t really that damaging to a picture. I’m guessing that Sony Pictures and the MPAA want no part of that argument ever being filed in a court, because it will boomerang back to hurt them.

Either way, the filmmakers are demanding almost $9 million:

The amount of that revenue for which we seek payment, less amounts paid to date, is $8,738,331…

For a movie that not that many people seemed interested in?

Separately, Possibility notes that Sony pointed out that there’s a binding arbitration clause in their contract, and Sony has already said that if there’s a dispute it must be handled by such an arbitration setup. Possibility tries to get around this, but (unfortunately!) courts have tended to accept these binding arbitration clauses as valid.

If I had to put odds on it, I wouldn’t give this lawsuit much of a chance of surviving. The attempt to turn an anti-piracy authorization clause into some sort of requirement to block piracy is a massive stretch. The mandatory arbitration clause is also a problem. Plus, the overall lawsuit is pretty weak. The claim itself is not very well backed up. Chances are Sony can get this tossed out quickly — but it will be amusing to see if it has to argue that piracy isn’t really that damaging. That would be fun.

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Companies: possibility pictures, sony, sony pictures

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Comments on “Irony: Sony Pictures Sued For Failing To Stop Piracy”

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36 Comments
Anonymous Coward says:

On the one hand...

It’s kind of bullshit for Possibility to pull this stunt, but on the other hand, the publishers keep demanding that they need all these laws and tools in order to do precisely this – and no matter how many tools they’re given, they still can’t stop it.

So fuck them for insisting that it *will* work, when it obviously doesn’t. Maybe they’ll finally realize all the money they dump into lobbying for the laws they want and the creation of new DRM technology is wasted… but I doubt it.

That Anonymous Coward (profile) says:

“Furthermore, in the wake of the leak, Sony allegedly “lost all interest” in promoting and marketing the movie and paid no further distribution revenues to Possibility beyond an initial $800,000 advance. As a result, Possibility claims that it is almost $2.6m out of pocket versus production costs.”
https://torrentfreak.com/sony-sued-for-not-protecting-leaked-movie-from-pirates-160729/

Heh Amazon ad offering the rental for 2.99 and to purchase for 9.99

I think part of the problem is that Sony has no problem once the movie is out there complaining piracy hurt the bottom line (and not hollywood accounting screwing people) but in this case since it got out there early they just sorta gave up on it.

https://en.wikipedia.org/wiki/To_Write_Love_on_Her_Arms_(film)

It looks like they decided against a regular release and then dumped it direct to DVD. This means there was probably little to no advertising to promote the move and in turn raise awareness of the non-profit & its message. The other 4 movies still got pushed, and had many more DLs…

I give them points for trying something, if it’ll stick remains to be seen.

DannyB (profile) says:

Re: Considering that this is the company that installed rootkits on CD's

Sony installed the rootkits into innocent people’s PCs.

Costing each victim probably at least $100 or more to have their PC repaired.

And then Sony justified it as okay with “most people don’t even know what a rootkit is”.

That’s like saying: most people don’t even know what ${X} is.
Where ${X} is one of:
* salmonella
* radiation
* (insert favorite heavy metal poison most people have never heard of)
* (insert name of little known RIAA musician)

We Are Infinite says:

0xDEADB0DEE

The lawsuit will go through. Whatever the final result will be, Sony Pictures will admit that piracy is not bad and is perhaps even beneficial. They have to admit this, it’s important.

Admitting you have a problem is the first step towards fixing it.

Currently this is about Sony, but other studios will soon follow and the whole copyright monopoly will be, if not dismantled, severely crippled. We are infinite. This message has been sent using a puppet machine.

Anonymous Coward says:

Appropriate technical measures or other techniques

known now or hereafter devised.

“Your honor, the fact that it happened obviously means that the Defendant has never and will never devise a perfect means of protecting the Picture. Had they devised such a method or technology, they would have had to devise a method of time travel to provide it to themselves prior to the Picture being lost.”

G Thompson (profile) says:

You all realise that this is about Contract law and rests on an alleged breach of contract by Sony and is NOT about copyright or about specifically blocking all piracy.

In this instance it is about a clause that is stating that Sony has exclusive rights to protect the work with all means necessary, and therefore under equity and consideration elements Sony therefore bears ALL reasonable responsibility on this as well.

Possibility (love the name), is alleging that not only did Sony not adequately, reasonably and using “industry standards” protect the work from the hack but also then did not meet further implied conditions of the contract due to the hack. ie: Advertising, promotion, distribution in cinema’s etc.

As for the binding Arbitration clause (which is a USA only contract law bullshit thing – but i digress) this might be moot due to Sony allegedly having discussions in July 2016 with Possibility Pictures, where they [Sony] insisted that they had “no obligation….to take any anti-piracy measures whatsoever”. This shows that they were not going to abide by any agreement. This could all come down to estoppel also.

Kal Zekdor (profile) says:

Arbitration

I get how arbitration clauses are a bad thing when shoved into consumer agreements. In those cases, consumers have little to no ability to renegotiate the contract, and either accept or walk. Forcing consumers into arbitration is often done to prevent any major lawsuits from cutting into the company’s profit margins.

However, arbitration clauses in business to business contracts are a completely different beast. A court battle is not only costly, it’s also inherently adversarial. You take another business to court and your relationship with them is done, whether you win or lose. Yet, disputes happen, and they need a way to be resolved. Arbitration provides a low-cost method that will hopefully allow both companies to move forward, and not sever ties. We have arbitration clauses in our contracts for those reasons. We discuss the reasoning over with the other parties, and they have always agreed readily, or even stated that they would have put in such a clause themselves.

Most companies want to avoid costly legal battles, especially those without a team of lawyers on retainer. Arbitration provides a fair, unbiased way to resolve disputes without bankrupting the corporation with legal fees.

(A lot of companies have liability insurance anyway, the major cost of a suit is not the judgment, but the cost of defense.)

G Thompson (profile) says:

> Arbitration provides a fair, unbiased way to resolve disputes without bankrupting the corporation with legal fees.

Yes it does, though it’s also totally dependent on the perceived and actual non bias of the arbitrator chosen. Yes you can show that arbitrators should be unbiased due not wanting reputational problems, them wanting to be paid again and also not wanting to be taken to court themselves (though a company without funds is still in a precarious position – catch 22).

Also are legal representatives allowed to represent because in this situation I can guarantee that Sony would have a representative appearing that though maybe not a practising lawyer, would at the least have a law degree (most probably a JD) and a LOT of experience dealing with arbitration, placing them at an advantage over a smaller company that probably wouldn’t have this expertise in house..

Another concern is how binding any non court arbitration actually is and does it interfere or appear ultra vires with legislated triers of facts ie: does it overrule any black letter law or future court decisions ?

PaulT (profile) says:

“The lawsuit goes on and on about all of the great marketing plans Possibility had for the film (Justin Bieber’s mother was going to tweet about it!), but apparently that was all ruined when the hackers, whoever they were, leaked the film.”

I’d love to know the reasoning behind this, other than the “we can’t sell something that’s available illegally for free” lie. I mean, how much actual crossover can there be between people who follow the Sony hack and people who could be convinced to buy something by a person tweeting who is only known because her demon spawn got famous via a YouTube video? No marketing potential has been lost, but they have essentially rejected sales potential if they gave up on marketing plans because of the leak. The lack of name recognition for that (frankly terrible) title was almost certainly worse than the leak, especially if they decided not to market it.

As ever with these things, I suspect they realise they either made a terrible film or marketed it badly, so now they’re trying to blame the failure of piracy and the nearest scapegoat. It’s nice that one of the usual liars were the target this time, even if it’s just another case of an innocent 3rd party being attacked because they’re the largest/most convenient target. (The actual hackers, of course, would be the real target, but they don’t have Sony money…)

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