Russians crack down on BitTorrent piracy

April 28, 2011

By J. DeVoy

Russian authorities have shut down, one of the largest adult BitTorrent websites in the world.  The full story is available at XBIZ.

New federal web laws will confiscate wealth from adult, other industries

April 6, 2011

By J. DeVoy

Pat Leahy seems to actually know a bit about intellectual property law, if you listen to him speak long enough.  Based on the failed introduction of COICA in the fall, he’s clearly aware of the ravages piracy has caused on the broader recording and entertainment industries, as well as the harm of fraudulent goods being sold over the internet.  Leahy is now renewing his call for tough new internet laws to rein in “rogue websites” that sell counterfeit goods and are at the heart of the piracy epidemic that has sent adult entertainment revenues tumbling.

On the surface, government intervention is a good thing – an entity with tremendous resources and power is stepping in to preserve the market for IP holders’ goods.  If you think the government is doing this for the benefit of the adult market – or that these efforts will in any way aid adult – think again.  As always, the beneficiaries of these policies are the groups that weren’t hurting too badly in the first place.  For example, the RIAA and MPAA spend tons of money pursuing infringers just to preserve the markets for their respective works, as they have the resources to do so, and simply meting out high-profile punishments without regard for what recovery they can actually obtain is sufficient to serve their ends.  For example, the movie industry posted massive profits for 2010.  Then there are brands like Gucci and Louis Vuitton that love government intervention so that the market for their overpriced products is kept free from cut-rate counterfeiters.

The adult entertainment industry lacks this kind of centralized, well-funded activism apparatus.  While the sums at stake for the industry as a whole may rival those sought – and spent – by the RIAA and MPAA, a patchwork approach to litigation, including undisclosed settlements, keeps outsiders from seeing the full scope of piracy’s damages.  In just one case, Evil Angel and Jules Jordan won a $17.5 million award against various defendants for DVD piracy – an activity that seems almost quaint in the current climate of BitTorrent litigation.  While that’s a huge award, too, it still pales in comparison to the amount of money the RIAA will spend to fight pirates in a single year.  Especially after Citizens United, money talks, and its the mainstream recording industries that are spending more of it to influence legislative activity.

So, evidently, this legislative push is not made with the intent of making life easier for adult content producers.  In practice, it will not behoove them either.  Here’s why:

Destruction of evidence

When the government shuts down a site, it doesn’t preserve and disable it – it throws its logos up and tells the world that it has been taken over by the Feds.  For those in the process of building a case, or considering one, the information needed for that prosecution is gone, certainly as far as you’re concerned, if not from the potential defendant’s servers.  Some of these sites will reemerge on alternate domains, but then the facts underlying a producer’s case may have changed.  A view count on a pirated video, which has probative worth with respect to damages, may reset from hundreds of thousands of views to zero.

Confiscation of assets

Shutting down sites like isn’t enough.   The government is now pursuing those sites’ operators, such as Bryan McCarthy, for criminal copyright infringement.  “Hang ’em high!” May be the rallying cry of some producers, but the funds used for criminal legal defense and assets forfeited to the government in a plea deal or upon conviction are all things that copyright holders won’t get in civil damages.  Servers, real property, and anything else used in running a site that the government confiscates under its ill-defined conception of rogue websites all go to the government – and there are a lot of ways the government ensures it receives this property.

In essence, these actions become a hidden tax on adult content producers who are robbed of a means to pursue litigation and the damages to which they may be entitled for copyright infringement.  While keeping one’s business afloat on copyright infringement lawsuits is a poor model, recouping lost sales by going after pirates makes a hell of a lot of sense, and can be pretty damn moral, too.  But if Congress gets its way, any potential gains studios may realize become government property.

This doesn’t even begin to address the free speech concerns of what would constitute a too-infringing website, and where that line would be drawn.  The threats to collaboration and innovation should be obvious.  And while many believe something should be done to aid in the fight against piracy, this probably isn’t the answer, as government intervention is money out of studios’ and producers’ pockets.

Market regulation is something the government should have some hand in, due to its reach and resources.  If all antitrust and market enforcement action were private, no group or groups would have the resources to find and police every instance of market abuse and cure them in an even-handed way free of self-interest.  It’s a good thing that the FTC and DOJ exist to fight antitrust violations (to the extent they can in the wake of Iqbal and Twombly), but for ICE to get involved by unilaterally shuttering websites goes far beyond the market-policing role and delves into something much more sinister.

Crackdown on Live Streaming of Sporting Events

February 3, 2011

by Jason Fischer

This week, U.S. Immigration and Customs Enforcement shut down a number of websites that were offering live streams of professional sporting events (source).  The central claim was that the video delivered through those websites is protected by copyrights.

While I’m sure there are some hippies those out there who would take the position that a sporting event can’t be copyrighted (I’ve read some off-the-wall legal articles that take such a position), I am firmly in the camp that believes the recorded video is absolutely the kind of thing that Article I, Section 8, Clause 8, was drafted to cover.  My main problem here is that, rather than developing an effective way to reach every viewer who wants to enjoy their broadcasts, professional sports associations go crying to their congressman or the U.S. attorney about how their shitty business model is not making as much money as it used to.

Wake the fuck up, asssholes.  We live in a world where on-demand, high-definition video is a viable option.  I watch crap on my iPad while taking a crap — and I couldn’t be happier that this has become technologically possible.  I should be able to watch whatever I want, whenever I want, and wherever I want to watch it.  If I wanna watch “The Leap Home” at 3:45am on Tuesday, then there’s no reason why I shouldn’t be able to.  Charge me a fee for it; I’m okay with that — but quit complaining about piracy, when you are actively blocking viewers from consuming your product.

Breaking: Sony to file TRO against notable hacker

January 11, 2011

By J. DeVoy

Known in hacker circles as “geohot,” George Hotz, along with Hector Martin Cantero, Sven Peter and the heretofore unnamed John Does 1-100, is facing an ex parte motion for a temporary restraining order by Sony Computer Entertainment America LLC (“Sony”) tomorrow, January 12.  Here’s the filing (A Legal Satyricon Exclusive(?)).

Working together, the defendants allegedly devised a way to circumvent Sony’s technological protection measures.  The defendants have been distributing this information across the internet, instructing others how to circumvent Sony’s protective measures and use counterfeit games on their Playstation 3 devices, according to the motion.

Saliently, Sony alleges that this use of technology – described as “hacking” on page 2 – is in violation of the Digital Millennium Copyright Act (“DMCA”).  The last notable time this issue was addressed came when people were frequently jailbreaking their iPhones in order to add third-party applications not supported by Apple.  During that controversy, the U.S. Librarian of Congress found that jailbreaking the iPhone was a fair use of the technology and exempt from 17 U.S.C. § 1201.  The Librarian of Congress additionally found that the following use was not prohibited by § 1201:

Video games accessible on personal computers and protected by technological protection measures that control access to lawfully obtained works, when circumvention is accomplished solely for the purpose of good faith testing for, investigating, or correcting security flaws or vulnerabilities, if:

(i)  The information derived from the security testing is used primarily to promote the security of the owner or operator of a computer, computer system, or computer network; and
(ii) The information derived from the security testing is used or maintained in a manner that does not facilitate copyright infringement or a violation of applicable law.

But a little about the law, first.  17 U.S.C. § 1201(a)(1)(A) sets forth a comparatively straightforward prohibition:

No person shall circumvent a technological measure that effectively controls access to a work protected under this title.

Fair enough, but most people lack the capacity to do that.  Given the sophistication of Sony’s digital rights management software, this problem would be too small to warrant mention without the internet.  Thus, § 1201(a)(2)(A)-(C) broadens the scope of prohibited behaviors (with similar measures found under § 1201(b)):

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—

(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;

(B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or

(C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.

And if any ambiguity remained, § 1201(a)(3) is there to sop it up:

As used in this subsection—

(A) to “circumvent a technological measure” means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner; and

(B) a technological measure “effectively controls access to a work” if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work.

There are factors that determine the exemption of certain technologies and processes from § 1201, found in § 1201(g)(3).

Factors in determining exemption.— In determining whether a person qualifies for the exemption under paragraph (2), the factors to be considered shall include–

(A) whether the information derived from the encryption research was disseminated, and if so, whether it was disseminated in a manner reasonably calculated to advance the state of knowledge or development of encryption technology, versus whether it was disseminated in a manner that facilitates infringement under this title or a violation of applicable law other than this section, including a violation of privacy or breach of security;

(B) whether the person is engaged in a legitimate course of study, is employed, or is appropriately trained or experienced, in the field of encryption technology; and

(C) whether the person provides the copyright owner of the work to which the technological measure is applied with notice of the findings and documentation of the research, and the time when such notice is provided.

Problematically for Hotz, and others may disagree, but this case is distinguishable from the iPhone situation at first glance.  While the jailbreaking of the iPhone allowed for the phone to operate on different networks and use applications available from third parties who did not wish to play the Apple Store’s games.  Allowing the phone to operate on other networks furthered the Congressional goal of interoperability, while allowing users to install third party applications on the phone was not a copyright violation.  Pirating the applications would have been, but properly purchasing or licensing the rights to the software, even if used on a jailbroken phone, is not the same as full blown copyright infringement.

In contrast, this situation finds Playstation 3 users with a device to let them play games for which they possess neither copyright rights or licenses.  This dispute may appear to be about accessibility like the iPhone situation was, but there are no networks to be accessed here, or new applications to be run on the Playstation 3.  From the looks of Sony’s pleading and the surrounding media attention, the primary use of this development is for piracy and use of counterfeit games.  While producers of video games (or “vidjea games,” as my grandmother would say) may be an unscrupulous lot for trying to kill the first purchase doctrine, piracy is still unlawful.  As this situation appears to be wildly different from the iPhone disputes of yesteryear, geohot et al‘s workaround is not likely to be exempt from 17 U.S.C. § 1201.

Being a douche nozzle is no way to keep clients

December 29, 2010

by Jason Fischer

Of course the headline here seems like common sense, but what’s surprising is that many attorneys have trouble with this bit of wisdom.  As surprising as it may be, understanding why practicing attorneys have trouble controlling their aggressive tendencies is not difficult when you think about it.  The problem is, when you have to spend 80% of your time dealing with deadbeats and scam artists, you end up in a near-permanent state of cynicism.  Hell — in a lot of instances, it helps to be a bit of a dick.  This, of course, is the motto of any self-respecting alpha.

Good attorneys, however, know how and when to turn off the bloodlust.  The best attorneys manage to avoid it altogether.  The moment you start to get emotional about going after that one defendant, the moment it becomes personal for you, there is a real danger that you’re going to accidentally misdirect that energy.  If you lose the big picture in a haze of red, bad things can start to happen.  Recent events in the heated debate over copyright enforcement serve as proof.

Larry Flynt Publications (LFP) just parted ways with Evan Stone, an attorney that was hired to pursue the hundreds of BitTorrent users who are illegally trading copies of one of the company’s recent video titles, This Ain’t Avatar XXX.  When Stone wanted to press harder than his client, not surprisingly he got the boot.  It turns out that when LFP was unwilling to bite the hand of Time Warner Cable, an ISP dragging its heels on turning over customer information tied to IP addresses used to share the movie, Stone became unhappy with LFP’s intestinal fortitude.

According to LFP President Michael Klein . . . the shifting focus from the alleged pirates to putting pressure on the cable companies was not a strategy that appealed to the iconic adult company, which has a television division and continuing global ambitions that require it to be a partner rather than an antagonist with companies like Time Warner.  . . .  Klein said that as much as LFP is determined to maintain a professional relationship with cable operators, it was ultimately their frustration with Stone’s aggressive PR tactics that led them to the decision to end the contract with him.

“He wanted us to put pressure on the cable operators, but it’s not our goal to go after them,” Klein told AVN.  “We want to look at ways to go after pirates, and we thought this strategy might work out, but the reason why we terminated with Stone was because of what we considered to be his unprofessional tactics.”  (source)

Even though the company was happy to quietly let him go, Stone took the more douchey path of announcing his break with LFP to the press.

Plenty of attorneys argue — and they’re not necessarily wrong — that being successful requires adopting the client’s problems as if they were the attorney’s own.  However, very few businesses become successful by playing hardball with everyone the way an attorney would.  (Similarly, any company that is always as cautious as their attorney advises will likely fail to excel.)  The problem comes when your level of tenacity goes beyond the client’s, and fighting the problem becomes for your benefit rather than theirs.  This is almost always a recipe for disaster, especially considering it can require superhuman empathic skills to know where the line is sometimes.  Unfortunately, there’s no law school course that will give you the paracortex of a Betazoid, so you’ll have to rely on your own douchetastic meter to figure out when you’ve gone too far.  There’s no surefire way to navigate this conundrum, but staying away from brash and overly aggressive tactics will help, and that’s a good practice in any endeavor.

Spain rejects US-authored copyright laws

December 22, 2010

By J. DeVoy

Julian Assange may have dealt a blow to the international fight against content piracy.  Cables released by Wikileaks reveal that a copyright bill pending before the Spanish house of representatives was authored by the United States, with significant influence from Hollywood studios.  The proposed legislation would have outlawed the operation of file-sharing sites and services within the country.  But, alas, it is no more.

From BoingBoing:

While they might have been willing to vote for the new copyright law if they could at least pretend to have written it, Spain’s legislators balked at enacting legislation that had been incontrovertibly conjured up by powerful foreign corporations against the interest of Spain’s own citizens.

It is unsurprising that US interests are trying to affect the laws of smaller, less wealthy and less powerful nations.  It’s what we’ve always done, more or less, though the last 50 years of private sector tampering in foreign affairs have focused more on Latin America than continental Europe.  While the entertainment industry is American-dominated at this point, maybe in a few years Bollywood will be able to add some fuel to the fight and give America’s companies a less suspicious pass-through for these efforts.

Making the first purchase doctrine work for porn

December 13, 2010

By J. DeVoy

Wouldn’t it be a pleasant surprise if you got $100 in the mail any time someone bought that bookshelf you made in 1995 and sold at a furniture show?  If the porn business plays its cards right, content producers may be able to reap the financial rewards of a similar situation.  But, it likely will come at the cost of an intra-industry lovers’ spat as content producers who focus on traditional media have goals that conflict with streaming-only content and leaner production companies.  Nevertheless, there is an opportunity for everyone to profit if they adapt their models to incorporate new processes.

The first purchase doctrine, previously discussed on this blog here and found in 17 U.S.C. § 109, cuts off a copyright owner’s financial interest in a particular copy once it’s been purchased, allowing it to be resold by subsequent owners.  The relevant statutory language is thus:

[T]he owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

See also Bobbs-Merrill Company v. Straus, 210 U.S. 339 (1908).  This has been the foundation for the secondary market of VHS tapes, video games, DVD’s, cassettes and CD’s for as long as anyone living can recall.  Historically, this has been good for consumers and allowed them to absorb more material than they necessarily would be able or financially inclined to sample.

But then came computers and, more recently, video games that required software installations to be run.  The clear copyright status of a NES cartridge or CD was obfuscated by copies that had to be made when software was loaded from a hard drive into RAM and accessed by the user.   The nature of this changed use led many producers to switch from making purchasers copyright owners and instead giving them only a license in the software, limiting their ability to dispose of it and effectively killing the lawful secondary market.

In the past, whether a user is a licensee or owner of copyrighted material hinged on a two-step inquiry: 1) whether the agreement was labeled a license, and 2) whether the copyright owner retained title to the copy, required its return or destruction, forbade its duplication, or required the transferee to maintain possession of the copy for the agreement’s duration. United States v. Wise, 550 F.2d 1180, 1190-92 (9th Cir. 1977).  The Ninth Circuit refined this position in its recent Vernor v. Autodesk, Inc. decision, finding that a software user is a licensee rather than the owner of a copy where the copyright owner 1) specifies that the user is granted a license, 2) significantly restricts the user’s ability to transfer the software, and 3) imposes notable use restrictions. No. 09-35969, 2010 U.S. App. LEXIS 18957 at *1 (9th Cir. 2010).

This won’t work for studios releasing material on DVD and read-only blu-ray format.  The doctrine is also of minor consequence for video-on-demand and streaming video websites.  But, with some tweaks to meet the standard set forth in Vernor, the adult film business can reap profits off its content’s sales into eternity.

Step one: Start structuring content releases as licenses, rather than sales.  Don’t give the content away, sell the right to use it.  Because there may be back-end income from future sales, the initial sale price could be lowered.  Even if the back-end sales are illusory, it will be easier for the public to swallow this pill if the potential of lower costs is held out to them.  After all, 1) it is a recession, still, and 2) the perceived high price of porn releases is a motivator for pirates’ actions.

Step two: Use technology to restrict the user’s ability to transfer the software.  This has two components within one requirement, the first being to turn porn into “software,” and the second being to restrict transferability through the way the content is accessed, and not merely through harsh words in the licensing agreement.

Turning porn into software can be easily done with computers and gaming systems.  Unless DVD and Blu-ray players are equipped with even nominal processors and hard drive space, more vital technology will be needed to implement this plan.  Some computers now have Blu-ray drives, while almost all have DVD drives; similarly, almost all gaming systems can play DVD’s while Sony’s PlayStation 3 can run Blu-ray films.  The easiest way to reach “software” status is on a computer, where some kind of program must be installed and run in order to access the content on the DVD, even if it is being written to a hard drive cache and processed by the included software for only a second.  For downloaded content, bundling a program by which the video data must be accessed is an easier task.  For gaming systems, this is similarly feasible.  Video game producers have taken the lead in changing their products from items where copyright rights are cut off at the first sale to licensed goods.  Prior discussion of this development is available here.  A similar process of requiring the content to be accessed as part of a program – rather than being reproduced from a storage device like a DVD or Blu-ray disc – will be needed to be software.  As porn has moved into the point-of-view and “experience” film realms,  an extension into gaming systems seems like a natural progression.

Restricting the user’s ability to transfer the software is also what will make this proposition profitable.  The general proposition of licensing is thus: Only a set number of people (in this case, one) can use the license at a time.  The cost of the initial license is built into the initial purchase, and the software – because under this idea, the content is more than a mere DVD or Blu-ray – is automatically registered online as a prerequisite for consumer access.  Once that registration is complete, any future registration on a different machine, by a different owner, or so forth, will require a separate license fee of $2 – $8 for the content to be displayed.  These numbers were not reached as the result of any particular study; they just reflected a reasonable percentage of a DVD’s resale value.  In today’s blasé environment regarding piracy, any money is better than no money.  The licensing agreement is then drafted to reflect this crucial limitation – only the initial purchaser has a license to watch the video on the machine he or she first registers it with, and any subsequent machine, user or owner must receive an individual license.

The third requirement, that the license impose notable use restrictions, is related to the discussion immediately preceding this paragraph.  What constitutes “notable” use restrictions requires further legal research and an opinion tailored to a specific inquiry.  In general, though, restricting the scope of the license to a specific use and machine is a significant limitation on how the consumer can use the product.  Requiring others to pay for future use can also be construed as a limitation.  Any range of circumstances in which the content may be used can be curtailed by the license’s language.  In short, the sky practically is the limit for “notable restrictions,” but a full legal opinion would be needed to determine how restrictive a particular studio’s restrictions would have to be to fulfill this “notable” requirement.

There are technical and administrative issues with this approach, and they are better addressed by database administrators, e-commerce experts, programmers and people better versed in this area than someone so utterly talentless that he had to go to law school.  If, however, enough people do this and the price points for subsequent licenses are carefully chosen, it can be done profitably.  While hackers will no doubt find a way around this with time, such an advance by studios can get ahead of the piracy wave and recover lost sales, and profit from secondary market sales that previously could not be converted into revenues.  At first, it will be only the most dedicated pirates who will find a way around this technology, while everyone else waits for it to be dumbed down to the point-and-click level of torrent ease that they enjoy today.  As a result, more people – even casual viewers – will be paying for porn, possibly for the first times in their lives.

To the extent this may be unpopular with consumers, I doubt people who validly purchase porn now will see any difference.  Legitimate buyers will do what they’ve always done: Buy a copy for personal use and not be burdened by buying supplemental licenses.  The price of future licenses will be priced into the secondary market and may reduce the upfront cost of content, allowing people to focus on the immediate cost of their purchase, driving increased secondary sales – and the inevitable purchase of studio licenses (otherwise, they’ve bought a brick).

This is a bold idea, and not one that can be adopted overnight.  I hope it is a controversial one.  Where some see studios holding viewers hostage for fees, I see a realistic approach to combating piracy, even if it cannot be entirely effective.  The question is, as always, making it work.