Rightscorp, Inc.

Rightscorp, Inc.
Public
Traded as RIHT
Industry Digital media
Founded Nevada, September 16, 2009
Founder Christopher Sabec,[1] Robert Steele, Greg Boswell
Headquarters Santa Monica, California, United States
Area served
Key people
Services Copyright infringement detection and remediation
Website www.rightscorp.com

Rightscorp, Inc. (formerly DigitalRights) is a Los Angeles-based copyright enforcement company which locates alleged copyright violators and collects money from legal damages and out of court settlements on behalf of the copyright holder.[1] Rightscorp manages copyrights of videos, music, and video games.[2]

Services

Clients

Rightscorp represents music, movie and print publishers. In May 2014, Rightscorp reached 1.5 million copyrights being managed,[3] including those held by Warner Bros.[4][5] The company manages copyrights for over 800 feature films,[6] including 14 movie titles with gross sales over $3.5 billion.[7]

Rightscorp works with music interests such as BMG Rights Management, which represents such musicians as David Bowie, Kings of Leon, and Will.i.am and is a member of the American Association of Independent Music[8][9][10] The company represents more than 13,000 copyrights held by Blue Pie Productions[11] and metal/hardcore label Rotten Records.[12] During the week of 24 February 2013, the company was also monitoring 13 songs on the Billboard Hot 100.[13]

Monitoring

Rightcorp utilizes crawlers, which according to Steele and CEO Christopher Sabec, crawls Bittorrent file-sharing sites and finds seeders and their IP addresses over time. Though the company has the seeders’ IP addresses, it requires the ISPs to connect their notices to the seeders.[5] Sabec also says the company can discriminate between actual piracy and unauthorized internet access.[14]

In response to mobile streaming apps such as Meerkat, Periscope and Popcorn Time, the company has also announced a "Streaming Rights Monitoring" service in May 2015, which the Rightscorp claims will be able to continuously monitor for streaming of copyrighted material on mobile streaming networks.[15]

Notice forwarding

After determining the target IP address, Rightscorp requests that the Internet service provider for that address forward a notice of infringement to the user.[16] The subscribers of more than American 70 ISPs have paid settlements to the company, including Charter Communications, CenturyLink and others.[3][4] Rightscorp COO Robert Steele told Ars Technica that more ISPs are forwarding their notices each month.[5][17] According to the company, over 200 ISPs are participating with Rightscorp as of November 2014.[18]

However, ISPs do not always choose to comply with the request to forward notices. As of November 2014, music publishers BMG and Round Hill are suing Cox Communications for not terminating the accounts of users identified by Rightscorp as being allegedly repeat downloaders.[19] In May 2015, Rightscorp filed suit against two Comcast users for downloading two albums, including Acid Bath's When the Kite String Pops and D.R.I.'s Definition. The company claims one of the downloaders ignored 11 notices, the other, 288. Rotten Records, through Rightscorp, is demanding an injunction against further infringement, deletion of the files and a fine of $150,000 per work.[20][21][22]

Settlements and disconnections

In the notice of infringement, the Rightscorp offers a choice between paying a small settlement fee (around $10 to $20 USD per violation) or facing a possible lawsuit for damages of around $150,000 USD under the Digital Millennium Copyright Act (DMCA), the current law.[5][9][23] After collection, Rightscorp’s settlements are split 50/50 with its clients.[5]

The company compares its settlement option of $20 per alleged infringement to a traffic ticket, calling it a "socially fair way to create a deterrent."[5] Even though the notice works as a settlement offer, the notice is not in itself enforceable by law and the liability of the infringed offender has to be determined by a civil court.

If the user chooses not to pay and is repeatedly alleged of violated copyright infringements, the ISP may suspend or terminate the subscriber account until a settlement is reached.[8] TorrentFreak claimed in 2011 that more than 200,000 Bittorrent users were in some stage of a lawsuit for alleged copyright infringement.[24] The company also announced that it has closed more than 75,000 cases of online copyright infringement.[17][25]

Lawsuits

Class Action Lawsuit

On November 21, 2014 Morgan Pietz of The Pietz Law Firm, together with Drew Pomerance of Roxborough, Pomerance, Nye & Adreani filed a Class Action Lawsuit against Rightscorp Inc, various John Does, and its owners, Christopher Sabec, Robert Steele, and outside legal counsel, Craig Harmon.[26] The complaint seeks class certification against Rightscorp for violations of the Telephone Consumer Protection Act, the Fair Debt Collection Practices Act, California’s Rosenthal Act, and Abuse of process for the willful misuse of subpoena power by issuing special DMCA subpoenas, under 17 U.S.C. § 512(h).[27] Mr. Pietz's original plaintiff withdrew from the case. After locating replacement plaintiffs, he refiled the suit, but dropped half of the claims originally contained in it. Subsequently, one of Mr Pietz's two surviving claims was stricken by the Court, and in the process, legal fees were awarded against Mr Pietz's client. At approximately the same time, over Mr Pietz's objections, the Court dismissed Mr Harmon (whom Mr Pietz had incorrectly identified as an employee or officer of Rightscorp) from the case.

On May 12, 2015, a federal court ordered John Blaha, represented by Pietz, to pay attorney’s fees in John Blaha v. Rightscorp. Pietz filed the lawsuit as a class action; he asserted Rightscorp, on behalf of Warner Bros and BMG Rights Management, abused the judicial system by issuing 142 DMCA subpoenas. Rightscorp countered that suing on those grounds were a violation of the first amendment and subject to California’s anti-SLAPP laws. The judge sided with Rightscorp (though it still faces an allegation that it violated the Telephone Consumer Protection Act by making automated calls in to demand settlements.)[28][29]

Telephone Consumer Protection Act Lawsuit

On February 17, 2015 Plaintiffs Melissa Brown and Ben Jenkins represented by Attorney Sergei Lemberg of Lemberg Law LLC filed a Lawsuit against Rightscorp Inc and its Clients named as John Does 1-10 in the United States District Court for the Middle District of Georgia for Telephone Consumer Protection Act abuses and other violations.[30]

Brown and Jenkins claim that Rightscorp Inc and its Clients violated America’s Telephone Consumer Protection Act by sending automated calls and text messages in their general direction without permission. Evidence shows that Jenkins sent Rightscorp Inc numerous emails instructing Rightscorp Inc to cease their calls, text messages, emails and letter solicitations to him and Brown. Regardless, Rightscorp Inc continued to place calls and text messages to the Plaintiffs’ cellular and home phones. Brown and Jenkins are seeking damages for each alleged violation of the Telephone Consumer Protection Act.[31]

BMG Rights Management vs. Cox Communications

On behalf of BMG Rights Management, Rightscorp won a ruling in a jury trial against Cox on December 17, 2015 for $25 million. US District Judge Liam O'Grady, found that Cox failed to "reasonably implement" a method to terminate repeated infringers and that the Digital Millennium Copyright Act's "safe harbor" provision did not apply.[32][33][34][35]

In addition, Lloyd's of London took legal action to remove their liability obligations to Cox, based on, according their filings, negligence and disregard for copyright infringement violations.[36] The total amount Cox could be liable for, with Lloyd's underwriting, is estimated to be in the tens of billions of dollars.[37]

Finances

In October 2013 the company went public, trading on the OTCQB under the ticker RIHT.[8] In May 2014 the company announced that it is expanding into Canada[38] and was in Europe investigating expansion in Europe.[39] On November 14, 2014 Rightscorp filed a Form 10-Q with the Securities and Exchange Commission reporting its Q3 2014 earnings.[40] The company reported a total loss of $2.2 million for the first three quarters of 2014 along with a total loss of $6.5 million since 2011.[40]

In 2015, Rightscorp had a net loss of $3.5 million and in the first three months of 2016 it had a net loss of $784,000.[41]

Security Breach

Security issues with Rightscorp's online payment system surfaced in October 2014.[42] Due to security gaps with hidden form elements, a Secure Sockets Layer Certificate, and Rightscorp permitting search engine indexing of secure pages; names and address of alleged infringers were publicly exposed including individuals that settled cases with Warner Bros and Miramax Films.[42]

Criticism

Issues have been raised with regard to Rightscorp's practices. Several court cases have ruled that Digital Millennium Copyright Act (DMCA) subpoenas do not require internet service providers (ISPs) to identify their users to the issuer of the subpoena; indeed, an ISP that does provide that information can face sanctions, as can the issuer of the subpoena.[43] The notice sent by Rightscorp prevents a lawsuit for the specific download in the notice; however, because of the language in the notice, paying the settlement is an admission of guilt. Although Rightscorp is then unable to sue for that infringement, not only can they sue and press charges for subsequent downloads, but they have the original settlement as admission of guilt of previous infringement.

Comcast, the largest internet provider in the United States,[44] has continually refused to forward Rightscorp's DMCA settlement notices in the form in which Rightscorp sends them.[12] Comcast removes the threatening language and the settlement offer and instead simply forwards a letter to their customer that basically reads as an incident report.[45]

References

  1. 1 2 Kevin Collier (30 Jul 2014). "Meet RightsCorp, the anti-piracy company that can kick you off the Internet". The Daily Dot. Retrieved 11 May 2015.
  2. ↑ Poe, Michael (23 Apr 2014). "Wireless Internet Router Exposes Provo Woman To Threats, Lawsuit". KUTV.com. Archived from the original on July 6, 2014.
  3. 1 2 Rightscorp (20 May 2014). "Rightscorp Increases Representation to Surpass 1.5 Million Copyrights". PR Newswire. Retrieved 12 May 2015.
  4. 1 2 Eriq Gardner (7 Jun 2013). "Warner Bros. Ramps Up War on Piracy". The Hollywood Reporter. Retrieved June 15, 2014.
  5. 1 2 3 4 5 6 Joe Mullin (4 Jun 2014). "You could be liable for $150k in penalties—settle instead for $20 per song". ArsTechnica.com. Retrieved June 15, 2014.
  6. ↑ Rightscorp (3 Apr 2014). "Rightscorp Expands Representation in Film and Video Market". PR Newswire. Retrieved 12 May 2015.
  7. ↑ Rightscrop (27 Mar 2014). "Rightscorp Begins Monitoring 14 Film Titles That Grossed Over $3.5 Billion in Sales". Global News Wire. Retrieved 12 May 2015.
  8. 1 2 3 Ernesto Van der Sa (28 Oct 2013). "Piracy Monitoring and Settlement Firm Goes Public". TorrentFreak. Retrieved 12 May 2015.
  9. 1 2 Gardner, Eriq (June 7, 2013). "Warner Bros. Ramps Up War on Piracy". The Hollywood Reporter.
  10. ↑ Rightscorp (21 Apr 2014). "Rightscorp Joins American Association of Independent Music (A2IM)". PR Newswire. Retrieved 12 May 2015.
  11. ↑ Rightscorp (31 Mar 2014). "Rightscorp Receives Approval to Represent More Than 13,000 Copyrights from Blue Pie Records". PR Newswire. Retrieved 12 May 2015.
  12. 1 2 "BT Copyright Troll Rotten Records Inc., & RightsCorp. – A Match Made In…". Die Troll Die. 15 May 2015. Retrieved 16 May 2015.
  13. ↑ Rightscorp (26 Feb 2014). "Rightscorp Monitoring Songs on the Billboard Hot 100 for Infringement". PR Newswire. Retrieved 12 May 2015.
  14. ↑ "Rightscorp: A Different Approach to Infringement (CDSA)". CDSA. Retrieved March 16, 2015.
  15. ↑ Mullin, Joe (8 May 2015). "Rightscorp loses more cash than ever, tells investors all is well". The ras Technica. Retrieved 16 May 2015.
  16. ↑ Andy (7 Jun 2013). "Warner Bros: We're Fining File-Sharers Who Use Non Six-Strike ISPs". Torrent Freak. Retrieved 12 May 2015.
  17. 1 2 Sabec, Christopher (May 1, 2014). "An Interview with Christopher Sabec". Squawk Box Europe (Interview). Interview with Karen Tso Geoff Cutmore Steve Sedgwick. London: CNBC.
  18. ↑ Rightscorp (24 Nov 2014). "Rightscorp Increases Number of Participating Internet Service Providers by Over 33%". PR Newswire. Retrieved 12 May 2015.
  19. ↑ Ashby Jones (27 Nov 2014). "Two Music Publishers Suing Cox Over Piracy". The Wall Street Journall. Retrieved November 28, 2014.
  20. ↑ Karl Bode (18 May 2015). "RightsCorp Sues Two Comcast Users For Ignoring Piracy Notices". DSL Reports. Retrieved September 1, 2015.
  21. ↑ Andy (16 May 2015). "COMCAST USERS SUED AFTER IGNORING PIRACY NOTICES". TorrentFreak. Retrieved September 1, 2015.
  22. ↑ Kathianne Boniello (5 July 2015). "Record label wants injunction against New Yorker who posted thrash-metal album online". New York Post. Retrieved September 1, 2015.
  23. ↑ Roberts, Jeff John (September 23, 2011). "$10 Settlement Offers: The Entertainment Industry's New Copyright Tactic". PaidContent.org.
  24. ↑ Kiss, Jemima (9 Aug 2011). "BitTorrent: Copyright lawyers' favourite target reaches 200,000 lawsuits". The Guardian. Retrieved 12 May 2015.
  25. ↑ Rightscorp (28 May 2014). "Rightscorp Closes Over 75,000 Cases of Copyright Infringement to Date". PR Newswire. Retrieved 12 May 2015.
  26. ↑ Pietz, Morgan (November 21, 2014). "Rightscorp Class Action – Robo-Calls and DMCA Subpoenas". The Pietz Law Firm. The Pietz Law Firm. Archived from the original on November 24, 2014. Retrieved November 24, 2014.
  27. ↑ Mullin, Joe (November 23, 2014). "Class-action suit says Rightscorp makes illegal, harassing phone calls". ArsTechnica. ArsTechnica. Archived from the original on November 24, 2014. Retrieved November 24, 2014.
  28. ↑ Gardner, Eriq (12 May 2015). "Rightscorp and Clients Avoid Abuse Claims". Billboard. Retrieved 16 May 2015.
  29. ↑ Gardner, Eriq (6 April 2015). "Warner Bros. Asserts First Amendment Right to Hunt Copyright Pirates". The Hollywood Reporter. Retrieved 16 May 2015.
  30. ↑ Van Der Sar, Ernesto (2015-02-20). "Piracy Settlement Firm Sued Over Intimidating Robocalls and Text Messages". TorrentFreak. Archived from the original on 2015-02-23. Retrieved 2015-02-23.
  31. ↑ Chris Cooke (2015-02-23). "Rightscorp accused of breaching American communications law with anti-piracy messages". Complete Music Update. Archived from the original on 2015-02-23. Retrieved 2015-02-23.
  32. ↑ Mullin, Joe (17 December 2015). "Rightscorp wins landmark ruling, Cox hit with $25M verdict in copyright case". Ars Technica. Retrieved 24 December 2015.
  33. ↑ Arbel, Tai (17 December 2015). "Rightscorp wins landmark ruling, Cox hit with $25M verdict in copyright case". ABC. Retrieved 24 December 2015.
  34. ↑ Resnikoff, Paul (17 December 2015). "Federal Jury Finds Cox Communications Guilty of Willful Copyright Infringement". Digital Music News. Retrieved 24 December 2015.
  35. ↑ Jones, Ashby (17 December 2015). "Cox Communications Found Liable for Users' Downloading". Wall Street Journal. Retrieved 24 December 2015.
  36. ↑ Resnikoff, Paul (17 December 2015). "Federal Jury Finds Cox Communications Guilty of Willful Copyright Infringement". Digital Music News. Retrieved 1 February 2016.
  37. ↑ Resnikoff, Paul (24 November 2015). "Lloyds Refuses to Insure Tens of Billions In Potential Cox Copyright Liabilities". Wall Street Journal. Retrieved 24 December 2015.
  38. ↑ Rightscorp (11 Mar 2014). "Rightscorp Retains Canadian Law Firm to Expand Services Internationally". Global News Wire. Retrieved 12 May 2015.
  39. ↑ Max Smolaks (May 6, 2014). "RightsCorp Wants To Bring Its Copyright Protection Methods To The UK". Tech Week Europe. Retrieved 12 May 2015.
  40. 1 2 Ernesto, Ernesto (November 14, 2014). "Anti-Piracy Firm Rightscorp On The Brink of Bankruptcy?". TorrentFreak. TorrentFreak. Archived from the original on November 18, 2014. Retrieved November 24, 2014.
  41. ↑ Rightscorp Revenues Collapse, Pirates Too Hard to Track TorrentFreak, May 17, 2016
  42. 1 2 Cushing, Tim (October 8, 2014). "Rightscorp's 'Secure' Payment System Exposes Names And Addresses Of Alleged Infringers". TechDirt. TechDirt. Archived from the original on October 15, 2014. Retrieved October 15, 2014.
  43. ↑ Masnick, Mike (April 7, 2014). "Yet Another Copyright Troll Thinks It's Found the DMCA Subpoena Loophole that Slammed Shut Years Ago". techdirt. Archived from the original on April 7, 2014. Retrieved June 3, 2014.
  44. ↑ Cassidy, John (February 13, 2014). "We Need Real Competition, Not a Cable-Internet Monopoly". The New Yorker. Condé Nast. Archived from the original on February 14, 2014. Retrieved June 3, 2014.
  45. ↑ Krawczyk, Konrad (December 6, 2013). "Rightscorp is trying to punish pirates, but Comcast isn't cooperating". digitaltrends.com. Designtechnica Corporation. Archived from the original on January 23, 2014. Retrieved June 3, 2014.

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