Copyright Trolling Evolved: Okularity Accused Of DMCAing Social Media Accounts, Then Demanding MILLIONS To Reinstate

from the copyright-trolls-just-get-worse dept

A decade ago, one of the most ridiculous copyright trolling outfits was CEG TEK (which stood for "Copyright Enforcement Group... um... TEK"). It would shake down people like any other copyright troll, but it also had a "CTO", named Jon Nicolini, who CEG TEK would trot out as a questionable forensic expert in various trolling cases.

It appears that Nicolini has since set out on his own, creating a more modern form of a copyright trolling operation called "Okularity." We've talked recently about how some folks have, instead of using the courts, simply been using social media takedowns via bogus copyright claims as a form of extortion, and that's become quite popular. However, so far, it seems that this has mostly been done by stupid kids looking to make a quick buck.

Nicolini and Okularity appear to have professionalized the extortion racket.

And they may have picked on the wrong person. In a recently filed lawsuit by Enttech Media Group, the parent company of the famous (and excellent) Paper Magazine, lawyer Richard Tauler lays out in great detail the kind of scam shakedown that Nicolini runs via Okularity:

Defendants are engaged in a scheme to deprive Plaintiff and similar digital media companies of their assets by unlawfully manipulating the take-down notice provisions of the Digital Millennium Copyright Act (“DMCA”). Specifically, Defendants have created software for the express purpose of disabling valuable commercial accounts on social media platforms (in this case Instagram) so that they can then demand extortionate sums (in this case over a million dollars) from the account holders to have the accounts restored.

The scheme operates in the shadows of the Copyright Act and the DMCA. The DMCA provides a rapid procedure (referred to herein as a “DMCA Notice”) so that copyright owners can protect the widespread proliferation of their content digitally. A DMCA Notice requires a statement under penalty of perjury that the submitting party has a good faith belief that the content identified in the notice is infringing on a copyright and that the submitting party is either the copyright owner or an authorized agent of the copyright owner.

Most social media platforms, including Instagram, have policies whereby accounts are disabled once a certain amount of DMCA Notices have been submitted on a particular account. Once an account reaches this threshold, Instagram will not reinstate the account until the underlying copyright “dispute” is resolved. Because of the work associated with the identification and investigation of copyright claims, as well the DMCA’s penalties for misstatements, it is generally unlikely that owners of legitimate copyrights would abuse this system.

However, given the massive financial incentives provided to mercenary litigants by the Copyright Act, would-be claimants have leveraged advances in technology to create economies of scale in pursuing claims. Specifically, Okularity has developed software that crawls the internet for images that infringe on allegedly protected works. Through its proprietary software, Okularity automatically generates and submits DMCA Notices to any social media platform, including Instagram, containing an image in Okularity’s database. Okularity does this without any of the investigation, warning, or legal analysis required by the DMCA, let alone any demand letter to the alleged infringer.

Rather, Okularity lies in wait while DMCA Notices accumulate to the point where Instagram disables the account. Only then does Okularity begin to negotiate “settlement” for the alleged copyright claims. Okularity operates this way because Okularity knows that Instragam is the lifeblood of any digital media company, particularly one like Plaintiff Paper, which primarily is engaged in the business of reporting and commentary of popular culture news and, as such, targets a young demographic that uses Instagram as its primary source of media consumption. Okularity knows that if a business like Paper has its Instagram account disabled, it has a metaphorical gun to the head of the target company, since it also knows that Instagram will not reinstate the account without a resolution of the “dispute.” With this type of leverage, Okularity (and in turn the Clearinghouse Defendants) can demand sums that they would never be able to demand with a straight face otherwise, putting owners of even large businesses like Plaintiff in a life-or-death situation.

Pretty fucking sketchy, no? As the lawsuit notes, however, this appears to violate the terms of the DMCA regarding what you need to do in filing a notice -- making this an interesting test to see whether or not the courts might finally give Section 512(f) of the DMCA (the part that says you can't file bogus notices) some more teeth. As we've noted, courts have been reluctant to care much about 512(f), which has set up a very unbalanced system, in which tons of people and companies regularly abuse DMCA notices. Usually for censorship.

Here it appears to be for extortion.

The specifics of the Paper Mag / Okularity situation detail how this seems to be an entire business built around extortion, with a bunch of unauthorized practice of law built in as well.

Okularity, which is not a law firm, purportedly “represents” the “Clearinghouse Defendants” with respect to their Copyright “claims.” Okularity’s “CEO” Jon Nicolini, created the software Okularity deploys to file DMCA Notices, and negotiates “settlements” with victims of the scheme once they contact Okularity. Nicolini, who is not an attorney, implies that he is an attorney to victims by interpreting the application of the Copyright Act to images, engaging in damages analysis regarding “claims” of his “clients,” and by negotiating resolution of legal claims on their behalf.

Defendant Backgrid actively solicits members of the public, including persons with whom it has no relationship and about whom it has no knowledge, to upload to it photos which Backgrid will then ostensibly “license” (for payment) others to display and otherwise exploit. Backgrid then uses software to automatically generate copyright management information (“CMI”) so that it can track whenever an image is used. Since Backgrid conducts no due diligence of images uploaded to its website for exploitation, and the corollary opportunity for abuse, Backgrid itself has been sued by actual copyright holders for copyright infringement.

Defendant Splash is similarly a clearinghouse for photographs with a checkered past. In 2018, Splash was sued by soccer star David Beckham for its “predatory and distasteful” tactics, which included demanding payment from Mr. Beckham for posting a picture of himself (taken by a paparazzo) on his very own social media account. Beckham v. Splash, Case 2:18-cv-01001-JTM-JCW (E.D. La.). Counsel for David Beckham viewed the $40,000 demand as an attempt to “extort.”

Okularity’s new business model pre-empts such lawsuits by using DMCA Notices instead of demand letters. However, since the DMCA Notices are automatically generated and submitted without any attorney supervision, Okularity does not engage in any analysis prior to generating and filing DMCA take-down notices as it should.

Rather, Nicolini operates the scheme with the sole objective to disable social media accounts. Not only is no demand letter needed, the scheme makes it so that its victims come to Okularity, often in a state of desperation, once they realize their asset is being held hostage. This is precisely what occurred in the instant case.

It was only after Okularity filed forty-eight (48) DMCA take-down notices against Paper that Instagram disabled Paper’s account. The same day, July 8, Paper was provided with the contact information of Nicolini, who immediately began negotiating the “claims.”

Nicoloni suggested that Paper was facing $4.65 million in damages under the Copyright Act. Nicolini curiously added that it was not his “first rodeo.” A screenshot of the email is below:

Sixteen minutes later Nicolini responded, this time with apparent authority to communicate on behalf of his “clients” under Federal Rule of Evidence 408 to settle for $1.01 million:

However, Nicolini is not an attorney and is therefore unable to assert legal claims on behalf of his “clients,” and likewise cannot negotiate and enter into agreements on their behalf in the context of a copyright lawsuit.

Needless to say, this offer was unable to be accepted. In further effort to reach a resolution, the undersigned requested Mr. Nicolini provide the DMCA notices so that Plaintiff could assess the claims at issue. Nicoloni has refused to do in the absence of a “non-disclosure agreement.” When asked why a “non-disclosure agreement” would be needed, Nicolini had no answer

That's... pretty fucking sketchy in many different ways. The lawsuit argues that the defendants breached 512(f)... but then also throw in a RICO claim. And that always seems iffy. As we all know, the Popehat rule of "it's not RICO, dammit" tends to apply. And I'd still lean towards it not applying here, but I have to admit that this is closer to an actual civil RICO claim than you normally would see. You do have a group of individuals / companies, working together in a pattern to shake down businesses. I still don't expect that claim to last, but this sure does look like a traditional shakedown scheme, using DMCA takedowns for leverage over social media accounts.

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Filed Under: 512f, automatic takedowns, copyright, copyright troll, dmca, dmca 512, exotrition, jon nicolini, rico, shakedowns, takedowns
Companies: ceg tek, okularity, paper magazine


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  • icon
    That One Guy (profile), 17 Jul 2020 @ 1:59pm

    'Nice business you got there...'

    File claims against someone, only contacting them after they have their accounts suspended, offer to drop the issue for extortionate amounts...

    This is basically textbook extortion with copyright thrown in as a shield, and if this doesn't qualify as abuse of the law severe enough to warrant penalties nothing will.

    reply to this | link to this | view in chronology ]

    • identicon
      Bobvious, 17 Jul 2020 @ 6:13pm

      Re: 'Nice business you got there...'

      As a result of manipulating the SHAKE-down process, perhaps it's time that Nicolini the Chief TROLLING Officer was visited by the lads from the "negotation" department of Trebouchet, Catapult, Flightpath and Impact LLC

      reply to this | link to this | view in chronology ]

      • icon
        Anonymous Anonymous Coward (profile), 17 Jul 2020 @ 6:20pm

        Re: Re: 'Nice business you got there...'

        As in 'nice legs you've got there, wouldn't want anything to happen to them'?

        Nah, that kind of behavior is best left to the various law enforcement agencies who actually know how to behave like gangsters, from extensive experience. The problem is getting them interested. Is there any possibility for significant asset forfeiture?

        reply to this | link to this | view in chronology ]

  • icon
    Celyxise (profile), 17 Jul 2020 @ 2:03pm

    Bad defendants make bad precedent, but maybe worse defendants make good precedent?

    I'd love to see DMCA 512(f) actually mean something.

    reply to this | link to this | view in chronology ]

  • icon
    Stephen T. Stone (profile), 17 Jul 2020 @ 2:36pm

    I want to see a copyright maximalist defend this scheme.

    reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 17 Jul 2020 @ 4:14pm

      Re:

      You will, but how? There does not seem to be any legitimate defense, unless the DMCAers actually own the copyright on the 'errant' photograph or have a documented right to protect it, neither of which appears to be forthcoming.

      On the other hand, did the actual copyright owners do the right thing? Are their copyrights registered? Is Paper/Mag the owner of the copyrights in question or are they licensees? That might make a difference when the court gets into it. And if licensees, where are the actual copyright owners and did they register their works?

      Copyright maximalists created the rules (unfortunately) now we can only follow them, to the max, until they get changed (hopefully).

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 17 Jul 2020 @ 6:36pm

        Re: Re:

        You will, but how?

        Sadly the odds are you'll never see copyright maximalists outright defend these practices. Best case scenario they'll silently clap and shed a tear for these purveyors of copyright who use the system as intended: to deliver copyright notices and penalties unchallenged.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 17 Jul 2020 @ 9:27pm

        Re: Re:

        Copyright maximalists created the rules (unfortunately) now we can only follow them, to the max, until they get changed (hopefully).

        I wonder if it will be changed, because this is the intended function. Vultures making money from it seems to be the primary purpose and any protection of copyright holders works is just the excuse.

        reply to this | link to this | view in chronology ]

      • icon
        PaulT (profile), 18 Jul 2020 @ 12:12am

        Re: Re:

        "There does not seem to be any legitimate defense"

        That doesn't tend to stop them. Usually, they will abandon an actual defence and go for a direct personal attack on the people telling them the system is broken, but not being a real way to defend the abuses does not stop them from trying to defend the abuse.

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Jul 2020 @ 4:51pm

      Re:

      I saw copyright maximalists being gleeful when porn bittorent copyright trolls had an upper hand in courts. So, not a big stretch - although they will rather keep it to themselves this time.

      reply to this | link to this | view in chronology ]

  • icon
    Norahc (profile), 17 Jul 2020 @ 6:26pm

    I wonder if the closing of Nicolini's letters with "All rights reserved" is meant to apply to his rights to remain silent, to not answer any questions without an attorney present, and his right to a trial by a jury of his peers.

    reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 17 Jul 2020 @ 6:34pm

      Re:

      Would a jury of his peers consist of scumbags like him, or just regular people who couldn't find a way to get out of jury duty and are then subject to being overwhelmed by a masterful defense that has no basis in fact?

      reply to this | link to this | view in chronology ]

    • icon
      Madd the Sane (profile), 17 Jul 2020 @ 10:12pm

      Re:

      He's trying to say "I own the copyright of this legal letter." I don't know if it's been ruled, but you shouldn't be able to copyright legal documents.

      reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 17 Jul 2020 @ 10:28pm

    shocked face goes here

    You mean bad actors are misusing our sacred copyright laws?!!?
    Say it isn't so!!!!!!

    And yet all of the talk from the Copyright Office is about how we can implant cameras in peoples heads so we can charge them everytime they see an owned piece of content.

    Oh my younger days, when people told me it wasn't an extortion scheme & made fun of my thats a nice life you have there it would be a terrible thing if something happened to it.

    If only we had some agency that looked at facts instead of hype.
    The law is fundamentally broken.

    Courts have ruled accusations are actual proof.

    Scammers have made millions of dollars shaking down people with the help of the courts.

    Scammers have made money shutting down online accounts of actual creators (you know who the law seems to always protect as long as that creator is a corporate person).

    Assholes are suing ISPs claiming their fast speed advertising is proof they make money off pirates so the ISP needs to pay.

    They have shown there is no limit to the lies that are told in the pursuit of imaginary money & they are fully believed while actual evidence of malfeasance is ignored b/c copyright means you get different law in this country.... well unless you are just a person who thinks you can own what you make... it is yours until a corporate person claims it as their own & then you can spend more money than you earned last year in court or just accept the sandpaper condom.

    reply to this | link to this | view in chronology ]

  • icon
    Bergman (profile), 18 Jul 2020 @ 2:02am

    Why is this a lawsuit?

    Don't we supposedly have national law enforcement that are supposed to be investigating and prosecuting extortion rackets in various countries?

    Why does it take a lawsuit?

    reply to this | link to this | view in chronology ]

    • identicon
      MathFox, 18 Jul 2020 @ 7:15am

      Re: Why is this a lawsuit?

      First remark, a criminal conviction also involves a lawsuit. To get someone successfully convicted in a criminal case, law enforcement agencies have to investigate it, recommend pursuing the case to the DA or a similar office and then it's to be seen what judge and jury will eventually think.
      This criminal prosecution process takes time, but most important, this process works independently of the victim. There is little else for the victim to do than sit and wait. It is also not sure that a compensation for the victim's damages will be requested in this process.

      The victim can take matters more in his own hands by filing a civil lawsuit (what's done just now). In such a lawsuit he can ask for compensation of his damage and he can ask for an injunction, which is an order for the counter-party to do (or just not do) certain acts. It still is a judge (and jury) that eventually decide.

      reply to this | link to this | view in chronology ]

    • icon
      Scary Devil Monastery (profile), 20 Jul 2020 @ 1:12am

      Re: Why is this a lawsuit?

      "Why does it take a lawsuit?"

      In addition to the bureaucratic bottlenecks MathFox describes in response to your comment, there is also that a DA will hesitate on the case in the first place, because according to the DMCA the one who makes baseless claims is, in practice, always considered to have the benefit of doubt. You need to prove malicious intent - and that is harder than it sounds and requires fuckery as obvious as that of Prenda and ACS:Law before a court will even touch it.

      In the case described in the OP it's pretty clear that just collecting the evidence will be a nightmare involving boatloads of writs of discovery, multiple tech experts analyzing and providing judgment on the software involved, etc...and even if all bases are covered it's still touch-and-go unless prosecution manages to come up with actual correspondence describing the racket in detail.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 18 Jul 2020 @ 2:00pm

    IANAL, but if Jon Nicolini seems to be practicing as such, why hasn't he been charged with practicing law without a license?

    reply to this | link to this | view in chronology ]

    • identicon
      MathFox, 19 Jul 2020 @ 12:45am

      It's the difference between civil and criminal lawsuits. Unlicensed whatever is an issue for the state (or feds) to prosecute, not for a citizen or company.
      Also read my answer to the question above.

      reply to this | link to this | view in chronology ]


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