File sharing

Template:Add This article was prompted by receipt of the anonymous upload of a legal agreement designed as the basis of an application for a court order to require ISP's to release personal information about the owners of certain IP addresses in connection with allegations of illegal sharing of copyright work - see: File:ACSAgree.pdf.

Digital Economy Act 2010

For several years to 2010 there has been ever-increasing clamour from the film and music publishing corporations for legislation to address what they allege is serious financial damage to themselves and the copyright-holders they manage or contract with. Concerted lobbying and much huffing and puffing by 'the great and the good' finally produced legislation on the matter. The 'Digital Economy Act' (DEA) was rushed through parliament in the dying days of the Labour Government and became law on 8 June 2010.

Pre-DEA attempts to make money from file-sharers

The law has always been clear: To upload copyright work for the purposes of making it available to others to download free of charge - ie 'file-sharing' of copyright work - is illegal. Proving the offence however is a different matter and it remains to be seen what effect the DEA will have. It is one thing to demonstrate that a particular IP address was used to download a file but quite another to prove that the owner of the IP address was responsible, much less that UPLOADING (ie the illegal bit) was taking place simultaneously.

The waters remain murky but, advances in the technical means of monitoring file-sharing networks and harvesting IP addresses together with the files down(up?)-loaded and times of the down(up)-loading, have enabled partnerships of enterprising (money-grubbing) legal and techie firms to come up with schemes to extract money from unsuspecting (and usually naive) file-sharers. Briefly a law firm gets a copyright holder, whose work is thought to be extensively 'shared', to agree a no-fee contract for the firm - in conjunction with a technical network monitoring company - to apply for a court order for ISP's to release details of the owners of the IP addresses used to down(up)-load the copyright-holder's work. This is usually done in cahoots with the sharers' ISPs who understandably think they have better things to do than fight court-order applications. The net result has been the relatively straightforward granting of court-orders, with derisory safeguards on exactly how the information so released is used.

The law firm then sends a letter of claim (LoC) to the alleged file UPloader demanding payment in lieu of court action for damages - and waits for the money to roll in.

The following is a topical example (Hat-tip to a TorretFreak analysis) using information that became available on or about 25 September 2010 and paraphrasing the TorrentFreak article:

The Case of ACS:Law

On 25 September 2010 the law firm ACS:Law were subject to an incident that left a large amount of confidential information visible to the public. This data included a significant amount of the law firm's corporate emails which were copied and made widely available across the Internet.

Analysis of the leaked information reveals how the company has extracted over a million dollars (£636,758.22) from alleged file-sharers since its operation started. On average, 30% of the victims who were targeted paid up, and the money was divided between the law firm, the copyright holder and the monitoring company.

The leaked information also reveals much about the effectiveness of the letters of claim (LoC) that are being sent out to thousands of BitTorrent users alleging illegal activity from their IP addresses and how money so extracted was was divided between the Law Firm, the Copyright-holder and the downloads monitoring company involved.

The table below details how many letters were sent out per client (ie copyright-holder) to alleged illegal file-sharers over the last two years together with how effective these claims were. In total, 11,367 were sent. 40% never replied and a further 30% disputed the claim. This means that on average 30% of the accused file-sharers chose to settle by paying between £350 and £700 per infringement allegation.

Client	Letters	Disputed	Non-responders
Digiprotect	6640	1992	2656
Topware	590	177	236
Techland	364	109	146
Reality Pump	236	71	94
Media C.A.T	3537	1066	1406
Total	11367	3415	4538

The recouped money is divided between three parties. The law firm, the copyright holder and the monitoring company that provided IP addresses of alleged infringers. The shares differ between the various clients, but as can be seen in the table below the law firm always gets a significant portion of the money - between 37.5% and 52.5%.

Client	Share to Client (%)	Share to Firm (%)	Share to monitoring company (%)
Digiprotect	50	37.5	12.5
Reality Pump	25	42	33
Topware	25	42	33
Techland	33	42	25
Media C.A.T	35	52.5	12.5
Yann Peifer	40	45	15

Until now we only had the word of ACS:Law on how much money has been paid to copyright-holders from this activity. In April this year its proprietor Andrew Grossley used The Law Society Gazette to announce that he had "recovered close to £1m for my clients". The leak from his Firm shows that to have somewhat 'economical with the truth'.

The leaked files show that by 28 April 2010 around $1m (£636,758.22) had been paid by recipients of the LoC's. Of that, just £202,172 had been paid to the copyright-holders.

The content of the LoC's also indicate that their motivation has been to generate as much money as possible. Documents in the leaked files show ACS:Law admitting that they asked for a settlement of £495 in order not to break the psychological £500 barrier and thus maximize revenues.

Client	Money Recovered	Paid to Client	Paid to monitoring company	Paid to Firm
Digiprotect	£346,607.90	£151,625.86	£45,060.21	£131,048.38
Topware	£68,127.47	£10,880.48	£10,881.48	£23,551.18
Techland	£22,474.85	£795.93	£590.00	£2,228.43
Reality Pump	£34,866.90	£3519.16	£4,645.28	£7,628.20
Media C.A.T	£164,681.00	£35,350.57	£15,066.06	£55,957.20
Total	£636,758.22	£202,172.00	£76,243.03	£220,413.39

To date the operation appears to have been quite profitable. In light of the practices revealed in the leaked files, whether it will remain so is moot.

Already ISP's appear to be taking a rather more cautious approach to agreeing the terms of the Client/Law Firm contract when the necessary court order is being sought. Another Law Firm acting on behalf of Ministry of sound had its application for a court order to disclose the owners of relevant IP addresses adjourned until January 2011 at the request of BT lawyers. It appears that the ISP is uneasy about the practices revealed by the ASC:Law leak and is seeking so far unspecified safeguards before agreeing to the application for a court order being heard unopposed.

Related information from external sites

• ACS:Law: When bad things happen to bad people Technolama 28 September 2010
• ACS:Law: This is what regulatory failure looks like Technollama 30 September 2010
• The Cyber Underworld Gets Its Revenge MSC 29 September 2010
• New Legal Ombudsman receives first complaints - about Gallant Macmillan - "Legal blackmail" leaves bad taste in mouth - TechEYE 6 October 2010
• ACS:Law’s Anti-Piracy Downfall Sends Hitler Crazy TorrentFreak 4 October 2010. Another of those takes on Anthony Hopkins 'last days in Hitler's bunker' - very funny.