More Copyright Trolls Rushing In To Take Advantage Of Canadian Copyright Notice System Loopholes

from the no-longer-relegated-to-underbridge-housing dept

Canada's new copyright notice system is swiftly become a playground for copyright trolls. As Michael Geist reports, Canadian legislators could have baked in a few limitations to curb abuse, but chose instead to ensure the Rightscorps of the world could twist the legislation to their advantage.

Despite more than a year of work on potential regulations – including possible costs to rights holders for sending notifications – Industry Minister James Moore abandoned the process, implementing the system with no costs, no limitations on notice content, no restrictions on settlement demands, and no sanctions for the inclusion of false or misleading information. The government’s backgrounder says that the law “sets clear rules on the content of these notices”, however, it does not restrict the ability for rights holders to include information that goes beyond the statutory minimum.

Righstcorp is called out for a reason. It was the first to seize this opportunity to shake down Canadian internet users with pre-settlement offers. To make its requests appear more "reasonable," Rightscorp lied in its letters to alleged infringers.

The notice falsely warns that the recipient could be liable for up to $150,000 per infringement when the reality is that Canadian law caps liability for non-commercial infringement at $5,000 for all infringements. The notice also warns that the user’s Internet service could be suspended, yet there is no such provision under Canadian law.

Beyond that, Rightscorp has no intention of litigating these cases -- which would be the only way for it to secure statutory damages. Even in the US, where the sky-high $150,000 applies, Rightscorp has yet to actually sue anyone for copyright infringement. It instead hopes to nickel-and-dime its way to the top of the troll heap with $20/per infringement "settlements."

Now another copyright troll is invading the same territory. CEG TEK (Copyright Enforcement Group… um… TEK) has started sending out reams of useless and misleading paper threatening alleged infringers in Canada, citing the new law in order to appear really, really serious about possibly doing something expensive to those on the receiving end.

At least this letter acknowledges the $5,000 cap on infringement awards, but it only uses that higher number to make its demands in the low-hundreds per infringement more palatable. The rest of it is standard demand letter histrionics.

In Canada, the unauthorized copying, performance, and/or distribution of Rights Owner’s Work is illegal and is subject to civil sanctions (with statutory damages of up to $5,000 or non-statutory damages that could be higher) and/or criminal sanctions, and is a violation of the Canada Copyright Act (R.S.C., 1985, c. C-42). The recent amendments to the Copyright Act, which came into force on November 2012, have confirmed Rights Owner’s right to have its copyright protected in Canada.

[...]

If you have questions about your legal rights, you should consult with your own legal counsel (i.e., barrister, solicitor, lawyer, and/or attorney).

CEG HAS BEEN AUTHORIZED BY RIGHTS OWNER TO OFFER A SETTLEMENT SOLUTION TO RESOLVE THIS MATTER AND PREVENT LEGAL ACTION.

You have until Saturday, March 28, 2015 to access the settlement offer and settle online.

Of course, the letter makes it appear as though CEG can actually offer a complete release from legal culpability for only $xxx, and the artful use of ALL CAPS around "SETTLEMENT SOLUTION" and "LEGAL ACTION" could give some recipient the sense that something dangerous lurks behind this mass-mailed "threat." But CEG, like Rightscorp, can't make much money with "LEGAL ACTION." Nope, it's all about "SETTLEMENT SOLUTIONS." Serve to thousands. Collect from tens. Call it a day.

There's no lawsuit coming. A search for CEG in the Justia database returns a single lawsuit -- and in that one, CEG was the defendant. Perhaps that's why the letter stays suitably vague about the consequences of ignoring these missives. At this point. CEG TEK's business model only allows for repeated sending of demand letters and, if needed, more use of the Caps Lock key.

Still, the shakedowns will have an effect, mostly on the wholly ignorant or easily intimidated -- which makes copyright trolling indistinguishable from any number of scams. The victims are those who don't know any better. And Canada's decision to enact a copyright notice system filled with holes only encourages entities like CEG and Rightscorp to expand their "markets."

Filed Under: canada, copyright, copyright trolling, notice

Righthaven, King Of Suing Without Notification, Whines To Judge About Motions Filed Against It Without Enough Notification

from the cry-me-a-freaking-river dept

Righthaven doesn't do irony well. While there are lots of points of criticism on which to ding Righthaven, one of the biggest (and first) criticisms of the company's strategy was its failure to issue takedowns or any notification to the hosting provider when it came across works it believed were infringing. While not necessarily required, it certainly has become standard in copyright situations to issue a DMCA takedown and/or a cease & desist letter when it comes to infringement, and then only follow through with a lawsuit if that doesn't stop the alleged infringement. But, of course, Righthaven's business strategy was all about getting people to pay up -- not about getting infringing content offline. Such prior notice would go against that strategy. So, Righthaven was very much a "sue first" company. As far as I know, it never notified any of the hundreds of sites it sued, prior to the lawsuits.

So there's a fair bit of irony in seeing Righthaven's latest skirmish, going on in Colorado, where all of Righthaven's cases are under review, as the judge covering the case was profoundly unimpressed by Righthaven's attempt to abuse the judicial system as a part of a business model.

In one of the cases, the guy that Righthaven had sued, Leland Wolf and his lawyers from the Randazza Group, had filed a motion for preliminary injunction against Righthaven. Rather than respond on the merits, Righthaven threw a hissy fit, arguing that filing such a motion without first discussing it with Righthaven was a violation of a minor local rule. Yes, you read that right. The company, whose entire business model is based on suing people without any notice whatsoever, got all upset over an opposing party filing a motion without fully discussing it. You can see the motion below, along with the back and forth between the lawyers for Randazza and Righthaven. At times, the email exchanges are pretty amusing. Righthaven lawyer Shawn Mangano, for example, complains about Randazza sending him an email at 7:30 pm, and demanding a response by the following afternoon, saying that such late night notice is unfair. To that, the lawyers respond:

First, you claimed in your lengthy September 8, 2011 email that we have not made a sufficient effort to meet and confer with you about this motion. Yet, you responded to Mr. DeVoy's e-mail within approximately 75 minutes of its transmission. Later that night, shortly before 3:00 am, you filed an application for a stay of execution of the judgment in Righthave LLC v. Hoehn.... The application was lengthy and thoroughly researched, and was likely in the works long before it was filed. I believe your accusation of us trying to sandbag you with a long-planned motion is a bit ironic when, just 6 hours later, you did what your e-mail accused us of attempting.

Additionally, reviewing numerous cm/ecf filings that I have received in cases where I am counsel of record, or those that Mr. DeVoy have forwarded to me for review, they are consistently filed after 10pm, and often after midnight. I have personally participated in calls with you near midnight. By all appearances, your practice is clearly nocturnal. In fact, if we were attempting to sandbag you, it would seem tactically prudent to do so by providing information to you at 9:00 AM.

The letter goes on to detail a history of Righthaven actions in which it had surprised Randazza and its clients with filings. In fact, it notes: "The fact is, we have never given courtesy in a Righthaven case, and not then been stunned with some act, which makes us regret doing so."

It appears that the judge was not impressed by Righthaven's tantrum in this case either, and almost immediately issued an order that the hearing "will proceed as scheduled."

Keep digging, Righthaven.

Filed Under: copyright, notice, procedure
Companies: randazza legal group, righthaven

FTC Puts Patent Trolls On Notice

from the crackdown-time... dept

While the Senate moves forward on a patent reform bill that won't solve any of the significant problems with our patent system (and will make certain aspects worse) and the Patent Office itself has apparently decided to throw in the towel on improving patent quality, it looks like the FTC has finally realized that perhaps it needs to step up and try to fix at least part of our severely broken patent system. Paul Alan Levy points us to the news that the FTC has released a massive 300 page report (pdf and embedded below) about the patent system, in which it clearly comes out against the problem of patent trolls, which it euphemistically refers to as "patent assertion entities." The report chooses this term, rather than the more common "non-practicing entities" because it notes that some non-practicing entities can be good (i.e., universities), and the real problem tends to be with operations who are focused just on using patents to sue.

The report notes that such trolls are a serious problem in the marketplace, as they appear focused on hindering innovation from companies that have actually innovated, rather than on "developing and transferring technology." Even better, the FTC actually notes the key claim we've been making for years (and which almost everyone else in government has ignored), that the "invention" stage is only one part of the ongoing process of innovation:

Increasing activity by patent assertion entities (PAEs) in the information technology (IT) industry has amplified concerns about the effects of ex post patent transactions on innovation and competition. The business model of PAEs focuses on purchasing and asserting patents against manufacturers already using the technology, rather than developing and transferring technology. Some argue that PAEs encourage innovation by compensating inventors, but this argument ignores the fact that invention is only the first step in a long process of innovation. Even if PAEs arguably encourage invention, they can deter innovation by raising costs and risks without making a technological contribution

The key point that the FTC makes is that one of the key problems here is that patents are (often on purpose) written to be quite vague, meaning that they totally fail to serve their purpose as giving notice for what they cover (and for actually teaching anything). Part of the report appears to be heavily influenced by the research of Bessen and Meurer, which went into great detail on the notice problem with patents, and just how costly it has become to various industries.

The key suggestion, then, from the FTC is for the US Patent Office to get rid of vague patents, by raising the bar on rejecting "indefinite" claims. Currently, like so much of the USPTO, the bar used to determine if a patent claim is indefinite is quite low. The FTC is hoping that the USPTO will raise the bar. Along those lines, the FTC is urging patent examiners to make sure that what a patent actually covers is really much more explicit, including establishing a clear record in the proceedings while reviewing the patent to establish what it actually covers, rather than allowing vague and indefinite language through. In fact, the report seems to suggest that the USPTO would be better off focusing on eliminating indefinite claims even more than judging nonobviousness.

On top of that, the FTC asks the courts to be much more aggressive in limiting ridiculous damages awards for patent trolls, especially condemning the widespread use of questionable "expert witnesses" who come up with unrealistic "rules" for how much a company should have to pay for infringing a patent.

I was also happy to see that the FTC clearly spent time exploring the fact that so much patent infringement has absolutely nothing to do with anyone "copying" the inventions of someone else, but rather independent invention. While it does not come down in favor of an independent invention defense yet, it does seem open to it, if some of the other recommendations in the report do not succeed in cutting down on the problems of the patent system. Its main worry appears to be that changing the liability for "inadvertent" infringers would create a dramatically different patent system, for which there's not enough economic evidence to know what will happen. Of course, we could point out in response that all of the changes put in place that massively increased the scope of the patent system were done with a similar lack of economic knowledge. However, I am pleased to see that the report at least calls for more research to see how such changes might impact the market.

On the whole, I definitely don't think the report goes far enough in its recommendations, but at this point, that's a pretty small quibble. This is one of the few times that we've seen a government agency really research and acknowledge many of the key problems with the patent system, and then suggest real changes to fix those problems. The FTC clearly spent a lot of time on this, and spoke with many of the top experts in the field, citing some fantastic research on the subject.

Of course, the big question is will it matter? There are lots of recommendations for improving the system -- with many directed at the PTO and the courts. But what if they're totally ignored (as seems likely)? Would the FTC take a stronger stand in going up against patent abusers? That would be quite a step, and would generate plenty of attention, but given where the system stands today, it seems like it might be necessary. Kudos to the FTC for actually pulling this report together, rather than going with the typical bland assertions about how patents automatically increase innovation and therefore more patents are, without question, better. There's a lot more in the report, but on the whole, it really does seem to recognize the massive problems inherent in the patent system.

Filed Under: ftc, idefiniteness, notice, obviousness, patent trolls, patents