Copyright Holders Sue US ISP for Subscribers File-sharing Activities Drew Wilson | December 5, 2014 One of the latest copyright related lawsuits being filed in the US is currently catching a fair amount of interest. While users and developers have been the targets of litigation, it’s not often that an ISP becomes the target of such litigation. There have been countless lawsuits filed against individuals for file-sharing, there have been lawsuits of developers of file-sharing clients and networks, there have even been lawsuits against ISPs demanding to hand over subscriber information, but there have been substantially fewer lawsuits against the ISPs themselves (none that we are aware of) for the activities of their users. According to Arstechnica, that is precisely what is happening now. Rightscorp, on behalf of two clients, is suing US ISP Cox Communications because subscribers of that ISP have allegedly been engaging in acts of copyright infringement. We decided to take a look at the complaint as well and found some interesting comments in the complaint. The first thing that stuck out is this: The distribution of perfect copies of digital content has moved from an Internet user downloading an entire file from a host server, to Napster-like peer-to-peer [P2P] services where an Internet user can obtain a file from another Internet user, and now to BitTorrent systems that distribute the copies in pieces using many users’ computers working together. This assessment of how file-sharing evolved and is today doesn’t seem all that accurate. If one were to consider the MP3, for instance, an MP3 isn’t actually a perfect copy of an original. It is a lossy format and some quality is lost during the compression process. So, the quality is reduced specifically to aid in the process of transferring from one computer system to another. The same can be said for lossy formats in pictures and video as well. Another point can be raised on this excerpt in that it isn’t entirely accurate to characterize the evolution of file-sharing as merely content from transferred from server to user to user to user transfers to BitTorrent. In fact, one can easily make the point that one click hosters are quite prominent in the world of file-sharing today. While it may be possible that whoever wrote this was thinking of BBS boards in the past while writing this, this is an oversimplification of what file-sharing is like today. In addition to one click hosting, Usenet is also a server to user file-sharing ecosystem and is in use by a number of users to this day. Another comment worth noting is this: Moreover, the BitTorrent systems are designed so that the more files a user shares, the faster the user’s downloads are. This actually isn’t how BitTorrent works. The more users that are in a particular swarm, the faster overall download speeds can become. The actual number of files being uploaded either makes no difference or can actually degrade a users ability to upload if that user is uploading files from numerous swarms at the same time. If there is an allotted bandwidth for an individual, and there are more users trying to download files than can be served within that amount of bandwidth, then, depending on configuration settings, upload speeds per user can diminish from that one particular uploader. In other words, BitTorrent systems reward the users who make the most copyrighted works available for download. Technically speaking, BitTorrent actually does not discriminate between content that is copyrighted and content that is, say, in the public domain. So, again, not exactly an accurate assessment of how BitTorrent works. If one were to comment that, thanks to the somewhat vague wording of this, that private sites operate in this fashion, then a counterpoint can be made that it still technically doesn’t matter whether a work is copyrighted or not so far as BitTorrent is concerned. Users, in fact, create the reward system/environment, not necessarily BitTorrent itself. ISPs are required under the Digital Millennium Copyright Act (“DMCA”) to implement and maintain a policy that provides for the termination of subscribers and account holders that are repeat copyright infnngers in order to maintain the safe harbor protection afforded by the DMCA from copyright infringement claims that the ISPs otherwise would enjoy. This requirement is designed to effectuate one of the purposes ofthe DMCA that “those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access.” H.R. Rep. No. 105-551, pt. 2, at 61. This excerpt is interesting as it appears to site content found on page 61 of this (PDF). What is worth noting that this same section also states “the service provider is expected to adopt and reasonably implement a policy for the termination in appropriate circumstances of the accounts of subscribers” So, a valid question can be made, who is expected to put forth and administer such a policy? Who decides what is and isn’t reasonable action? The rightsholders/plaintiffs or the ISPs/defendants? By filing the complaint, it’s almost as if the rightsholders are trying to decide how to administer such a policy, but the language of the cited section would suggest that the ISP has the power to decide if it’s necessary to issue a strike against one of its own subscribers. Cox’s actual policy is to refuse to suspend, terminate, or otherwise penalize subscriber accounts that repeatedly commit copyright infringement through its network in any meaningful numbers. This point could easily countered by Cox by citing examples of notices actually being sent out. In fact, examples of Cox sending out notices can be found around the web. One example can be found from a comment on Techdirt which reads, “I’ve only ever gotten one notice from my cable provider (Cox) and it was for “pirating” a show I’d never even seen.” Another example can be found in a posting on Reddit: The other day I came home from work and found my roommate watching game of thrones on our living room tv. Now at first glance, considering we pay for HBO, have directv’s on demand access, and have HBO GO AND a chromecast, I assumed he was watching it off of any of those 3 very viable options. But, no. He was watching a torrented version from his computer plugged into the tv (what is he a caveman?) Anyways I pointed out how stupid that was and he being the ignorant person he was didn’t care. Go forward 2 days. Cox sends us a letter in the mail warning us about torrenting and specifically pointing out my roommates download of GoT. It wouldn’t be outside the realm of possibility that other examples can be found for the purpose of mounting a counter-suit arguing that the statement in the complaint is defamatory. Going further into the complaint: Cox’s policy of refusing to terminate repeat infringers protects a large revenue stream that Cox receives every month from the many repeat infringers who are its subscribers and account holders It is also true that many subscribers do not actually use their Internet subscription for copyright infringement. How many people out there simply use their access to simply use Facebook, go on Twitter, or check e-mail? It may be possible to point to how many subscribers there are and point out what percentage of subscribers do not, in fact, use BitTorrent. Upon purchasing high speed internet access from Cox, its subscribers and account holders can then access BitTorrent systems and upload and download copyrighted works from those sites with ease and increasing speed – depending upon the level of Cox service that the subscribers select. In other words. Cox provides its subscribers and account holders with a fully functioning system that allows them to engage in copyright infringement using BitTorrent systems on a massive scale. These comments seem quite meaningless. To put it another way, upon purchasing a knife, knife owners can commit crimes on the streets. If they want to be more efficient at thee crimes, knife manufacturers can oblige them by selling larger and sharper knives for a larger price. It is all based on the faulty premise that knives are used for the sole purpose of committing crimes. Same can be said for the above. The above argument is based on the faulty premise that there is a single use for high speed Internet (as suggested in these allegations, uploading and downloading of copyrighted material on BitTorrent). It is false because there are other uses for high speed Internet. A very good example would be streaming through Netflix or other over-the-top services. It also uses a lot of bandwidth. A lot of people access Netflix through their Internet connection and stream high quality content. In fact, ISPs have been decrying Netflix for high bandwidth usage for some time now. There are two portions of the filing that are quite far a part, but worth examining together. The first is this: Through Plaintiffs’ efforts, Cox has been informed and has knowledge of over seven million repeat infringements and that over 200,000 subscriber accounts have been engaged in repeated acts of copyright infringement—some of which have involved tens of thousands of repeat infringements over a significant period of time. By way of example only, Cox has received 54,489 individual notifications for each act of copyright infringement committed by its subscriber having IP address 22.214.171.124. Those 54,489 infringements occurred over a 64 day period. Cox subscriber having IP address 126.96.36.199 engaged in 39,432 acts of copyright infringement over 189 days. Cox subscriber having IP address 188.8.131.52 engaged in 20,182 acts of copyright infringement over 407 days. And, Cox has been notified of each of these acts of infringement. Then this portion: Alternatively, Plaintiffs are entitled to the maximum statutory damages, pursuant to 17 U.S.C. § 504(c), in the amount of $150,000 with respect to each work infringed So, some simple math ca be applied for just these examples alone, we can calculate that the first example costing $8,173,350,000 if plaintiffs demands are met. The second example would cost $5,914,800,000. The third example would cost, again, as demanded, $3,027,300,000. Totaling up these examples, plaintiffs are effectively demanding $17,115,450,000. Then, to add 200,000 users doing repeated acts of alleged infringement, we can multiply this number by 2 and multiply $150,000 to get an additional $60,000,000,000 minimum. So, at minimum, plaintiffs are seeking $77,115,450,000. How much is ultimately being sought seems to be unclear, but damages can easily venture into levels that exceed all the money on earth. To put this number into perspective, according to Wikipedia, Cox’s revenue was 15.3 billion. So, the plaintiffs are asking for 5 times what Cox communications earned in 2012. Given that the filing says that the plaintiffs are merely demanding revenue from what Cox allegedly gained from allowing the infringement takes place, this number far exceeds what would simply be what Cox gained from the alleged infringers by seemingly orders of magnitude. Conversely, according to Wikipedia, Sony has a total operating income of ¥26.49 billion or approximately $220,302,043.02. So, the money being demanded, at minimum, is about 350 times the operating income of Sony in 2014. This would certainly make the damages claim appear that much more unrealistic. One thing to keep in mind, though, is that the only people this lawsuit has to convince is the jury that is being demanded here (if this case even gets that far), not necessarily what we think of this filing. It doesn’t strike us as very convincing in the least bit, but that’s simply a layman’s opinion here. Drew Wilson on Twitter: @icecube85 and Google+.