RightsCorp Inc. | Digital Rights Corp | DMCA Settlement Letters

Rightscorp business model of sending DMCA settlement demand letters just succeeded.

Rightscorp‘s business model just took an unexpected positive turn, as the BMG v. Cox lawsuit just had a surprising outcome — Cox just settled with BMG, paving the way for the DMCA settlement demand notices to gain some teeth.

Years ago, I wrote articles about companies like Rightscorp (Digital Rights Corp), CEG-TEK, and Rights Enforcement who were changing the “playing field” (in a bad way) by allowing copyright owners to track and sue downloaders who downloaded their copyrighted videos, films, movies, adult films, or music using bittorrent.

The account holders (often the parents of the downloaders themselves) would receive a notice either in the mail or in their ISP’s e-mail inbox informing them:

  1. that they have been implicated as having downloaded one or more copyrighted materials,
  2. that using bittorrent to download copyrighted materials was a violation of that ISP’s terms of service, and
  3. that the account holder could forego a potential copyright infringement lawsuit in a federal court by vising the website of the Rightscorp (Digital Rights Corp) copyright enforcement entity, paying a small fee (from $20-$30/title [or with other copyright enforcement entities, from $300-$750/title]), thus settling the claims before a copyright infringement lawsuit was filed.

The obvious problem is that by the time the account subscriber received the settlement demand notice, the Rightscorp or CEG-TEK or Rights Enforcement entity racked up tens, or sometimes hundreds of violations. Then there were class action lawsuits against the copyright enforcement entities (e.g., for robocalling) and other “bad things” that these companies did to maximize their per-title settlement.

However, for years, these entities have been quiet, and I know why. BMG v. Cox Communications.

I was told years ago that the success of the “copyright trolling” settlement demand notice business model would be based on whether a copyright holder could force an ISP to 1) forward their DMCA copyright infringement notice (a.k.a. “settlement demand letter”) to their subscribers, and 2) whether a copyright holder could force an ISP to shut down a repeat infringer’s account (something Rightscorp was accused of doing in 2014). At the time, there was the “Six Strikes” system in place (now, I understand it to be defunct), and under it, Comcast stopped forwarding the “settlement demand letter” portion of the infringement notices; rather, they forwarded just a snippet of the infringement notice telling the account holder to stop downloading illegal content.

However, there were also ISPs who stopped forwarding the notices altogether. To the dismay of various copyright enforcement entities, I understand that Cox Communications was one such ISP, although the BMG lawsuit appeared to stem from Cox refusing to shut down the internet accounts of repeat infringers.

The funny thing about COX Communications was that Cox was supposed to be the “golden goose” to the copyright holders, simply because of the large subscriber base it could reach. “If only 1% of infringing users pay a settlement fee… imagine the money that could be made…”

Further, COX Communications provided their subscribers ONE STATIC IP ADDRESS, which meant that whatever the downloaded did in the past (whether the downloader was caught, tracked, or not), could be later attributed to the accused account holder to multiply the list of infringements. This love-hate relationship between the copyright holders, the ISP, and their customers was only temporary, and as a result, COX Communications found itself at the center of a lawsuit for protecting its customers against copyright enforcement entities such as the RIAA and Rightscorp.

Fast forward a few years to today. The “new” news is that the BMG v. Cox Communications lawsuit has been going on and on, but it appears that in the past few days, it has come to an end. Apparently Cox settled with BMG, awarding a “win” for the copyright holders.  The question is… was the settlement only a MONEY settlement?  Or did Cox agree to shut down the accounts of repeat infringers?

What this means moving forward (and I am still hashing this out with the limited time that I have to devote to this topic) is that copyright enforcement / copyright “monetization” copyright holders such as Rightscorp (and perhaps now CEG-TEK again, Rights Enforcement, the RIAA, and other new companies join the “copyright monetization” bandwagon) will now start sending DMCA notices once again to accused downloaders. The difference is that their requests to the ISPs to forward their settlement demand letters will now have some “teeth,” as I understand that ISPs might start shutting down internet accounts of those subscribers who are “repeat infringers.”

Obviously this topic is still evolving. However, whereas we at the Cashman Law Firm PLLC thought that the days of the “DMCA settlement demand letter” notices were numbered, I suspect what happened from 2010-2016 was just a first wave of what is to be an even larger wave of infringement notices to be sent to account holders for the unlawful downloading of copyrighted content.  Couple this with the resistance I have received in the past from companies such as Rightscorp, this is likely going to cause some trouble.


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