educational

Bittorrent Legal Mania

Gregory A. Piccionelli
There have been a lot of news stories in the adult industry press lately about adult content producers filing lawsuits against large numbers of unnamed defendants allegedly infringing their content via peer-to-peer file sharing systems.

This is understandable since most adult content producers believe that theft of their content via the BitTorrents and other peer-to-peer systems is a significant cause of declining revenues.

It is also understandable that frustration over the difficulty and cost of traditional methods of copyright enforcement, i.e., suing peer-to-peer infringers individually, has motivated a number of producers to engage the services of new companies and associated law firms that offer the possibility of revenue generation through such mass copyright enforcement procedures.

But as a number of these adult entertainment companies are quickly learning, success is not just about size, at least when it comes to the number of defendants sued in a lawsuit. In fact, a large proportion of these cases have already run into serious procedural roadblocks, in part, because they involve suing a large number of unnamed defendants.

For example, a federal judge in West Virginia recently quashed thousands of subpoenas that were requested to identify alleged infringers of adult content using BitTorrent sites.

Ruling that adult producer plaintiffs improperly attempted to join over 5,400 unnamed defendants in seven cases, U.S. District Judge John Preston Bailey, threw out all of the unnamed defendants in each case with the exception of a single John Doe for each action.

In defense of their mass lawsuit, the plaintiffs argued that thousands of unnamed file-sharers could be joined together in a single action under Rule 20 of the Federal Rules of Civil Procedure “based upon the Does’ use of some of the same ISPs and some of the same peer-to-peer (‘P2P’) networks to infringe the same copyright.” But the judge disagreed, ruling that simply committing the same type of copyright infringement in the same manner does not link all the defendants together for the purposes of Rule 20.

In his opinion, Judge Bailey also noted that each defendant is likely to have a different defense of the charges in question, and therefore, each should have the opportunity to argue their individual case on its own merits.

Illustrating the critical differences among parties that likely exist in massive groups of unnamed defendants, the judge quoted another court that reached a similar conclusion when confronted with similar circumstances in another peer-to-peer case: “John Doe 1 could be an innocent parent whose Internet access was abused by her minor child, while John Doe 2 might share a computer with a roommate who infringed Plaintiffs’ works. John Does 3 through 203 could be thieves, just as Plaintiffs believe, inexcusably pilfering Plaintiffs’ property and depriving them, and their artists, of the royalties they are rightly owed.”

The Electronic Frontier Foundation (“EFF”), which filed amicus briefs in the cases, lauded the Judge Bailey’s ruling, calling it a “big victory in the fight against copyright trolls.” The EFF has actively taken the position that the adult companies involved in the seven West Virginia lawsuits were “abusing the law in an attempt to pressure settlements.”

According to the EFF, “In these cases — as in many others across the country — the owners of the adult movies filed mass lawsuits based on single counts of copyright infringement stemming from the downloading of a pornographic film, and improperly lumped hundreds of defendants together regardless of where the IP addresses indicate the defendants live.”

According to EFF’s Legal Director, Cindy Cohn, Judge Bailey’s ruling “is the next nail in the coffin of the copyright trolls. Now that judges are starting to reject the shoddy and unfair tactics being used by the attorneys filing these cases and force plaintiffs to play by the rules, this type of mass litigation will no longer be a good business model.”

This opinion was echoed by EFF’s Intellectual Property Director Corynne McSherry who stated that “these lawsuits have caused massive collateral damage to the individuals targeted, due process, and the legal profession.” “Copyright owners have a right to protect their works, but not at the expense of the due process rights of thousands of Doe defendants.”

The West Virginia ruling follows a ruling by a judge in the District of Columbia dismissing hundreds of unnamed defendants due to lack of personal jurisdiction in a similar file sharing case filed in Washington, D.C.

And the West Virginia ruling follows on the heels of a federal court ruling in Illinois on Oct. 1, where Judge Ruben Castillo dismissed a similar complaint, stating that:

“After a careful review of the case docket, the Court hereby dismisses the complaint without prejudice to a proper amended complaint which names individual defendants. Plaintiff’s attorney is cautioned that there must be joint activity by similar defendants to name said defendants in one lawsuit . . . Individual lawsuits against any defendant operating individually would be appropriate.”

It should also be noted that the EFF, the American Civil Liberties Union (ACLU), and Public Citizen regularly oppose this type of litigation and have repeatedly moved to quash similar subpoenas to identify accused BitTorrent users. It is likely that these groups will continue to vigorously oppose mass copyright enforcement actions involving large numbers of unnamed Doe defendants.

But the procedural difficulties and organized opposition now being encountered by firms that have brought mass copyright actions are not the only potential problems associated with this type of litigation.

In fact, there are numerous risks to adult content producers associated with such relatively unusual litigation techniques that should be seriously considered before an adult entertainment company engages any firm to file a lawsuit against hundreds or thousands of defendants on its behalf.

To help companies recognize and evaluate some of these risks, the following is a list of 10 basic issues and action items that should be carefully considered by an adult content producer prior to signing any contract involving the possibility of litigation to enforce the producer’s copyrights against alleged infringers using peer-to-peer file sharing systems.

1. What are the firm’s credentials and experience in the area of copyright enforcement involving peer-to-peer file sharing systems?

Responses to specific inquiries regarding cases and recoveries should be provided by the firm in writing upon request. Also, if possible, references should be obtained that can confirm prior recovery amounts that have been represented.

2. Has the firm ever been sanctioned by a court or sued for abuse of process?

In certain instances, a plaintiff can be liable for the acts and omissions of the plaintiff’s attorney. Because of this, a plaintiff can also be potentially liable for monetary sanctions imposed by the court and for liability to one or more defendants for abuse of process.

Many judges react negatively to lawsuits filed against a massive number of unnamed defendants, particularly if they feel the filing is improper and/or could violate the civil rights of the defendants.

This can be especially true in cases where a judge believes that the court’s subpoena power is being used solely to obtain private information, such as the names and addresses of the unnamed defendants for the sole purpose of enabling attorneys to send letters threatening the parties with individual lawsuits that neither the attorneys nor their clients, in fact, have any real intention to file.

Because of the foregoing, it is important for an adult company considering a mass copyright lawsuit against a large group of unnamed defendants to be reasonably certain that the firm representing the company does not have history of being hit with court sanctions or an abuse of process lawsuit.

3. Does the firm have a sufficient level of expertise in the area of adult entertainment law to properly prepare an adult entertainment client for the special risks faced by adult entertainment companies and their principals in civil litigation?

Some domestic and foreign “copyright enforcement” or “copyright protection” firms tout the fact that they have represented “mainstream” companies in similar mass copyright enforcement actions.

But it is important to remember that adult entertainment companies are subject to a large number of regulations that mainstream companies are not, including a large number of very serious criminal laws.

Any material lack of compliance with applicable regulations on the part of an adult content producer plaintiff can become a serious litigation vulnerability if exploited by a knowledgeable opponent. For example, under California law, a defendant might have the ability to bring an unfair competition counter-claim against the plaintiff producer based on the plaintiff producer’s failure to fully comply with a criminal law such as the federal record keeping and labeling regulations (18 U.S.C. §§2257, 2257A and 28 CFR 75 et seq.).

Since many adult entertainment companies are simply not in compliance with all the applicable regulations (e.g, the “2257” regulations, obscenity laws, etc.), the filing of a copyright enforcement lawsuit may not always be in the best interest of an adult content producer and/or its principals.

Adult entertainment companies should always consider the fact that filing a lawsuit can trigger a defendant’s right to legal discovery, which might include, for example, the right to depose the company’s principals and employees.

It is important to always remember that litigation is a two-way street. And once started, the party initiating the litigation may not be able to control the outcome or dismiss the case.

For these and other reasons, seasoned adult entertainment attorneys will always try to make sure that their client’s commencement of any kind of lawsuit will not result in the legal equivalent of throwing stones while living in a glass house. So if an adult company elects to start a lawsuit, regardless of the subject matter, it should only do so after careful consideration, and only after it has been well-prepared by experienced adult entertainment counsel.

4. Will the firm or any associated company be uploading or downloading any of the production company’s content into a Bit-Torrent or any other peer-to-peer system?

It is a very bad idea to “seed” a peer-to-peer system with the intent of catching infringers sharing the seeded content. This is especially true if it is done by a firm or another party who could be deemed to be a “producer” under the 2257 regulations, but who does not have all the required records regarding the subject content.

Also, remember that peerto-peer operators and participants have rights too, including rights regarding control of access to their computers, hard drives, etc., and remedies regarding abuse of their equipment or even the terms of use of the file sharing system.

Similarly, downloading content from a file sharing system can also be fraught with legal peril when the content is adult content.

Bottom line: any contemplated uploading or downloading of adult content that is a part of a “copyright protection” strategy, should be avoided or at least approved by your regular adult entertainment attorney as a part of his or her review of the proposed litigation strategy.

5. Will the firm indemnify the adult company and hold it harmless for the payment of court sanctions and any other damages that might result from liability to defendants for abuse of process, privacy violations, etc., that might result from the firm’s use of relatively unorthodox or unusual litigation techniques?

It is one thing for a firm to try new and aggressive litigation techniques to achieve a client’s desired goals. Doing so can often be a good thing. But it is another thing entirely, however, if the techniques can foreseeably boomerang on the plaintiff or trigger substantial liability resulting from the litigation methods employed.

I believe that most parties engaging a law firm to champion their rights do not expect to be legal guinea pigs that will be called upon to monetarily subsidize any liability that might result from the failure of an experimental legal procedure.

Because of this, when I review agreements with firms offering “copyright protection” via mass litigation, I generally require the firm to warrant that the conduct of the litigation will not result in court imposed monetary sanctions or any other liability as the direct result of any the firm’s unorthodox or experimental techniques that are not clearly supported by the relevant law. I further require that the firm must fully indemnify and hold the adult producer harmless from any damages resulting from a breach of the firm’s obligations in this regard.

6. Will the adult content producer be required to license or assign any rights in or to the subject adult content?

In some contracts that I have negotiated (more often where a foreign copyright enforcement firm is involved) there are sometimes provisions requiring that the adult content producer license or assign certain rights in the content to the firm.

Usually the license involves rights to make the producer’s content available in one or more file sharing systems. Occasionally, I see proposed first drafts of agreements requiring that the producer assign away certain litigation rights.

I firmly believe such licenses and grants of rights are not necessary and ill-advised unless very carefully crafted by counsel for the producer that is familiar the important intellectual property issues involved.

7. Will the firm be employing a litigation strategy that seeks to shame or intimidate defendants into settling?

I strongly suggest that adult companies seeking to enforce their intellectual property rights avoid strategies that explicitly or implicitly employ intimidation or seek to exploit negative societal views regarding adult content.

Such strategies can backfire badly and, in some cases, can produce zealous defendants, particularly if the party was erroneously named and was not in fact involved in the alleged file sharing of the subject adult content. It’s good to always remember that it isn’t just adult entrepreneurs that get pissed off and fight light hell when they are wrongly hauled into court.

8. Do the infringement location and data mining systems used by the firm, directly or through one or more third parties, infringe any patents, and, if so, will the firm indemnify and hold harmless the adult content producer from any liability for patent infringement?

Many firms offering “copyright protection” through rights enforcement utilize one or more means of discovering infringements in peer-to-peer systems. Many methods of doing this, however, are the subject of issued U.S. and foreign patents. For example, one company that has been broadly providing infringement detection for mainstream companies for over a decade, BayTSP, holds several patents in this area, including one regarding which I was a co-inventor way back in 1999 (See U.S. Patent No. 7,650,643 at http://www.freepatentsonline.com/7650643.html).

As a patent attorney, I can assure you that an adult entertainment company is well-advised not to become embroiled in patent litigation for directly or indirectly infringing a patent involving infringement detection, etc.

It is because of this, and because I know there are a number of patents issued in this area, that it is prudent to require that firms providing copyright enforcement services involving infringement detection to warrant that the detection processes used will not infringe any third-party patents or other related intellectual property rights.

9. All agreements presented by the “copyright protection” firm should be reviewed by the producer’s regular adult entertainment attorney.

Every adult entertainment business needs a good adult entertainment attorney.

Adult businesses are targets for so many parties, and there are so many applicable regulations with such draconian consequences for their violation, that operating without a trusted adult entertainment attorney is like playing Russian roulette with the company’s assets and potentially the freedom of its principals.

Because of this, and for all the issues discussed above, it is particularly important for an adult entertainment company that is contemplating engaging a firm to file copyright lawsuits on its behalf to fully discuss the entire matter with its trusted adult entertainment counsel, and to have him or her review the agreement(s) engaging the firm that will be filing the lawsuits.

10. How much professional liability coverage does the firm have? Is it sufficient to cover potential liability for class actions that might be brought on behalf of defendants?

Given the potential for substantial liability that might directly or indirectly result from a firm’s wrongful prosecution of mass enforcement cases involving adult content, it is also a good policy to inquire about how much professional liability insurance the firm carries. An adult company’s regular lawyer ought to be able to provide some guidance as to whether the amount will be sufficient to meet the indemnification obligations suggested above.

Some Final Thoughts ...

I know that adult content producers are desperate to find a solution to the hemorrhaging of revenue believed to be at least in part due to unlawful file sharing.

But while it certainly seems to be a matter of common sense that file sharing systems must be hurting the adult entertainment business badly, I am sorry to say that I have yet to see any good solid data regarding the percentage or numbers of illegal file sharers that would be, or would have been, paying customers for the content they are currently stealing. I think this is an important issue because all litigation, by nature, is costly and subjects the plaintiff bringing the lawsuit to numerous risks and uncertainties.

It is for these reasons that I think it is important for every adult company contemplating the commencement of litigation to honestly weigh the risks versus the likely benefits to be obtained from such litigation.

I also do not think that copyright litigation is likely to become a viable, much less reliable, additional or substitute revenue source for the industry any time soon.

If I thought it could be, as one of the first intellectual property attorneys to the online adult industry, and as one of the inventors and founding investors in the first and most successful online infringement detection companies (BayTSP), I would have done it myself. But ten years ago, our firm determined that mass copyright litigation against large numbers of unnamed Doe defendants to create an economically effective means of avoiding the costs of filing fees, proper service, etc., was not legally feasible without a change in the law. Perhaps that change is now upon us. But if the recent cases cited above are any indication of the direction it’s going, then I will have to say, I think not.

But if you or your company feels compelled to properly pursue individual infringers, I wholeheartedly support you. I have been an outspoken advocate of just such a strategy for over ten years as I have always believed and stated publicly and privately that it is currently the only way to slow down the rate of infringement. If you read the patent cited above or if you read this column regularly, you will know just how strongly I feel about the matter.

But two wrongs never make a right, and if one wants to sue individuals, I do not believe that suing a small city of them all at once in one complaint without knowledge of, or reasonable belief about, where they reside is the proper way to do it.

There is a way to do it however ... the right way. The way that complies with the rules of civil procedure, and respects the rights of not just the occasional innocent party that might get caught up in such enforcement actions, but the way that also respects the due process rights of the thieving SOBs

This article is not intended to be, nor should be considered to be, legal advice. I strongly urge you to seek the counsel of a qualified and experienced adult entertainment attorney familiar with the legal matters discussed in this article.

Gregory A. Piccionelli is an intellectual property and adult entertainment attorney experienced in Internet matters. He can be reached at Piccionelli & Sarno at (818) 201-3955 or greg@piccionellisarno.com.

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