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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. It may surprise

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Speaker 1: you to learn that pornography producers and sellers account for

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Speaker 1: the lion's share of copyright infringement lawsuits in the country.

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Speaker 1: In fact, judges may have seen enough. The courts are

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Speaker 1: cracking down on porn sellers that file thousands of lawsuits

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Speaker 1: against people for downloading and trading racy films on home computers.

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Speaker 1: Joining me is Susan Dekker, Bloomberg News patent reporter. So

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Speaker 1: so described the scheme that one judge called a high

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Speaker 1: tech shakedown. Well, it's a common scheme that's used actually

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Speaker 1: by a lot of movie makers, but nobody does at

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Speaker 1: quite the level of these two porn producers. What they

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Speaker 1: do is they file what's known as a John Doe

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Speaker 1: lawsuit against a protocol address, and then they asked the

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Speaker 1: judge give us an order that we can go to

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Speaker 1: the I s P providers and say give us the

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Speaker 1: identity of this person who's using this I P address.

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Speaker 1: They then go to the person and they say, well,

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Speaker 1: you know, it's a hundred and fifty thousand dollars per

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Speaker 1: infringement of a movie you downloaded X number. How about

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Speaker 1: you give us two thousand dollars three thousand dollars and

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Speaker 1: we won't change the lawsuit to put your name on

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Speaker 1: it and publicly let everyone know in the world that

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Speaker 1: you were downloading porn. So their business model is actually

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Speaker 1: litigation rather than the films. No, they all have legitimate websites,

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Speaker 1: and their argument is that this is the only way

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Speaker 1: that they can see under the current scheme to deal

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Speaker 1: with piracy. But it's interesting that the other porn companies,

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Speaker 1: who are also having the same problem of people swapping movies,

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Speaker 1: aren't going through this rather extreme method of of kind

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Speaker 1: of shaming their customers. Some judges, as you mentioned in

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Speaker 1: your story, are finding that tactics are object sationable. A

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Speaker 1: DC federal judge Royce Lambert says, one of the companies

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Speaker 1: Strike three quote treats this court not as a citadel

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Speaker 1: of justice but as an a t M. What was

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Speaker 1: his specific problem with them? His His problem is that

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Speaker 1: there's a concern about the idea that even though a

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Speaker 1: vast majority of Americans watch porn, there's still a stigma

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Speaker 1: to it, and that they're capitalizing on it. They're filing

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Speaker 1: literally thousands upon thousands of lawsuits with the idea that

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Speaker 1: they're going to shame people into a settlement, and the

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Speaker 1: judges like, well, there's other ways of doing this. I'm

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Speaker 1: not sure that linking an I P addressed to an

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Speaker 1: individual is enough to say this is the person who

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Speaker 1: is engaged in this piracy. I think you need to

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Speaker 1: do more than that, and I'm not going to let

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Speaker 1: you take part in this. Have other judges done that

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Speaker 1: as well? We're starting to see signs. You know, this

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Speaker 1: has been going on for a few years and and

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Speaker 1: most of the judges will just routinely sign off on

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Speaker 1: it because it's actually a procedure that was blessed by

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Speaker 1: the Supreme Court more than a decade ago. But you're

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Speaker 1: starting to see, especially with Judge Lambert's ruling, that people

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Speaker 1: are starting to say, I think this judge is right

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Speaker 1: and I'm not gonna I'm not going to go along

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Speaker 1: with it either. The question is how far how many

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Speaker 1: judges are going to do that? Some of the shakedowns,

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Speaker 1: I can use that term almost sound like extortion. Have

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Speaker 1: there been any criminal charges filed. There were some cases,

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Speaker 1: and these were gentlemen who were doing it actually before

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Speaker 1: Malibo Media and Strike Through the two most recent, and

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Speaker 1: they were kind of unique because they were uploading the

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Speaker 1: movies themselves to these file sharing sites with you know, basically, hey,

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Speaker 1: here's a movie, and anybody who would take the bait,

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Speaker 1: they would go after them. And they collected over six

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Speaker 1: million dollars doing this, and they would set up all

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Speaker 1: sorts of shell companies and and do it all sorts

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Speaker 1: of things to kind of escape the judicial scrutiny, and

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Speaker 1: prosecutors finally went after him. One man who cooperated was

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Speaker 1: sentenced to five years in prison in June. His partner,

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Speaker 1: who did not cooperate, was sentenced to fourteen years in

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Speaker 1: federal prison. And he's a healing right now. Tell us

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Speaker 1: a little bit about what the companies and their attorneys

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Speaker 1: say about this criticism. Well, they say they are copyright owners.

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Speaker 1: Pornography is entitled to copyright protection just like every other movie,

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Speaker 1: and they have to do something to deal with the

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Speaker 1: piracy because they're losing business on it. The copyright Association

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Speaker 1: has said, you know, there would be nice if the

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Speaker 1: I s P providers would do more to help stop piracy.

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Speaker 1: They're not, so this is the only option that they have,

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Speaker 1: so tell us about the legislation that's being considered in Congress.

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Speaker 1: There is an idea of creating what's known as it's

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Speaker 1: kind of a small claims court, and so if you

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Speaker 1: feel that there's a copyright violation, instead of going to

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Speaker 1: federal court spending all that money, you go to a tribunal,

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Speaker 1: specialized tribunal before the Copyright Office, and there's a limit

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Speaker 1: on damages. Instead of a hundred and fifty thousand dollars

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Speaker 1: per infringement, it would be five thousand dollars. And they say, well,

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Speaker 1: this way, you know, if you think there's some infringement,

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Speaker 1: then you can go and do it. The Copyright Association says, well,

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Speaker 1: that's really more towards independent authors and photographers and things

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Speaker 1: like that who couldn't afford courts, and that there are

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Speaker 1: provisions to ensure that that board is not overwhelmed by

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Speaker 1: these these two particular companies or anyone like it. The

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Speaker 1: Electronic Frontier Foundation, on the other hand, says, no, there's

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Speaker 1: some concern that that this could just exacerbate, that it

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Speaker 1: would spread beyond these two companies. I remember quite some

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Speaker 1: time ago that the music industry was cracking down on

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Speaker 1: people who downloaded music. Is this an outgrowth of that, Yeah,

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Speaker 1: it's it's actually when I mentioned earlier that it was

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Speaker 1: blessed by the Supreme Court, that was the that was

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Speaker 1: what happened. It used to be that the recording industry

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Speaker 1: would go to say Verizon, and they would have a

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Speaker 1: list of IP addresses and they would say, give me

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Speaker 1: the names who owns this IP addresses and we'll go

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Speaker 1: after them. And Verizon actually had suit and said, no,

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Speaker 1: we want some judicial oversight to make sure that this

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Speaker 1: process isn't being abused, And so the John Doe loss

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Speaker 1: it's we're actually created as a way to protect people

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Speaker 1: against unfair claims of copyright infringement, and the argument has

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Speaker 1: been made that these two particular companies have weaponized it.

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Speaker 1: So they're filing It's amazing two companies. They're filed almost

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Speaker 1: half of the thirty copyright lawsuits filed in the country

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Speaker 1: in the first seven months of this year, according to

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Speaker 1: analysis by Bloomberg Law. So do they have stats of lawyers?

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Speaker 1: How does it work. It's actually kind of technological, and

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Speaker 1: that's actually part of the question that the judge wants

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Speaker 1: to is how are you identifying these people you're linking.

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Speaker 1: You say that you're able to link a transferred file

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Speaker 1: to an Internet Protocol address. How do we know that

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Speaker 1: there's not some spoofing that's involved, And how do we

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Speaker 1: know that this i P addresses is actually the one

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Speaker 1: that's transferring it and then taking it one step further?

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Speaker 1: How do we know that the person who's on the

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Speaker 1: other side of that computer is the one. So there's

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Speaker 1: a lot of a lot of technological questions that are

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Speaker 1: that they will have to answer. Strike three, who was

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Speaker 1: involved in the Royce Lambert case, has actually appealed to

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Speaker 1: the Court of Appeals for the d C Circuit here

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Speaker 1: in Washington, and they specifically say, we want the court

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Speaker 1: to say what we're doing is appropriate and is what

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Speaker 1: is allowed and we really don't appreciate the judge calling

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Speaker 1: us a copyright troll. Wow, well that will be an

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Speaker 1: interesting appalate argument. Thanks so much, and get back to

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Speaker 1: us when we know what happens there. That's Susan Decker,

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Speaker 1: Bloomberg News patent reporter. Thanks for listening to the Bloomberg

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Speaker 1: Law podcast. You can subscribe and listen to the show

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Speaker 1: on Apple podcast, SoundCloud, and on bloomberg dot com slash podcast.

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Speaker 1: I'm June Grasso. This is Bloomberg. Yeah, yea