Tag Archives: settlement letter

Software Developers now tracking the USE of pirated software

There is a new problem that I am encountering where software developers are writing code in order to catch downloaders – not in the download of the software, but in the illegal USE of that software.  These software developers – with knowledge of the accused IP address of the so-called “pirates” are hiring attorneys to send out DMCA settlement demand letters, often requesting a hefty settlement for the piracy or use of that software without authorization.

Unlike the bittorrent cases that we have seen over the past six years — where an internet user would be caught downloading movies, music, or “scenes” using bittorrent or Popcorntime software (where the connection to other bittorrent users in a “bittorrent swarm” would reveal the IP address of the downloaders) — software developers are increasingly building in to their new software the capability to “phone home” to the developer. When the software “phones home,” it reports certain information to the software developer, including the IP address of users who are actively using the pirated software at that moment.

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When a downloader accesses a “pirate” site (e.g., The Pirate Bay), and downloads a piece of software with a “crack,” that crack alters the software code, to allow it to be used in a “registered state” (e.g., cracked software will allow a user to enter a serial code to register the software whereas in an “uncracked” state, that serial code would be rejected.  Thus, the user sees a message such as “your serial code has been accepted.  Thank you for registering your software.) This “registered” state allows the downloader to actively use the software; however, it does not stop the software from phoning home.

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Very often included in the cracked software package will be what is known as “a .NFO file,” (which is a text file, and “NFO” sounds like “info”) where the hacker, a.k.a. the “cracker,” will instruct the user to block the software from connecting to outside networks (often advising that the downloader use a software firewall, such as Comodo Firewall). Conventionally, the purpose of this instruction to the downloader is to avoid the common scenario where the software developer automatically updates the software to work around and invalidate any cracks which it discovers in the wild. As a result, the downloader would find that his once-registered software is no longer registered.

Some software developers who have become savvy to this trend will create a pop-up screen which alerts the downloader that his IP address has been flagged and gives him an opportunity to purchase the software at a discounted rate.  By using this method, the software developer attempts to turn a pirate into a paying customer in a manner that is both ethically and morally sound.  However, and pardon my jaded view of the matter, but people get greedy, and software developers get frustrated with the piracy of their software, and thus they often turn from good business judgment to using the law as a prickly weapon to sting those caught downloading their software.

And with this greed, here is the trend for which I wrote this article.  I am now seeing a trend that the software developers are contacting attorneys and asking those attorneys to use the Digital Millennium Copyright Act (“DMCA”) rules to force the ISPs to send settlement demand letters to the internet users who are suspected of illegally using that software without a license.  However, instead of trying to turn that downloader into a paying customer, the software developer decides instead to gouge the internet downloaders into paying a bloated fee for a software license. In this scenario, this internet user receives a letter demanding that the user purchase the pirated software for an amazingly high amount of money, for example, $5,000-$20,000. If that internet user does not purchase the software as the letter demands, the threat of a copyright infringement lawsuit looms.

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Now the first company you might think of when reading this article is the Siemens Product Lifecycle Management Software Inc. company, who is currently suing John Doe Defendants for the download and unlicensed use of the Siemens NX software.  However, in defense of their lawyers, the Siemens attorneys are simply trying to stop engineers and companies who are using their software in a commercial manner from profiting from the use of their software without a license.  They are not gouging (so far as I know), and my personal experience with their attorneys have been (so far) positive.

Thus, the focus of this article is on other software developers and copyright holders who have begun to mimic the Siemens model of suing (or here, sending DMCA settlement letters through the ISPs and threatening to sue) users, and attempting to force them to purchase an enterprise-level, multi-thousand-dollar software license or face a copyright infringement lawsuit in a Federal court, even if they have absolutely no legitimate use or benefit from “owning” that software.

To the internet user who receives such a letter requesting a settlement:  It is important to know that following the instructions of the software developer and purchasing a license (even an expensive one (e.g., a $5,000 license where the software itself costs only $150) does not protect you from being sued. Rather, your compliance may simply operate as an admission of guilt. Instead of simply following the instructions of the settlement demand letter, here is why it is advisable to STOP, THINK, RESEARCH THE TOPIC, and hire an attorney (me, or any other attorney competent in both copyright litigation and software licensing) to resolve the claim or claims against you.

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First, the attorney that you hire will provide a legal “buffer” between you and the copyright holder’s attorney. Your attorney will be able to speak on your behalf without admitting guilt, whereas an accused defendant speaking alone to the copyright holder’s attorney might accidentally claim that they were only using the software to test the software (an act which according to the law would be copyright infringement, and would subject the internet user to statutory damages of $150,000 or more if there are multiple instances of infringement). Thus, an attorney can stop the copyright holder’s attorney from contacting you directly by putting them “on notice” (a legal term) that the attorney is representing you and, thus, all communications must go through the attorney.

Additionally, the attorney that you hire (knowledgeable in both copyright law and in software licensing) would be able to negotiate a settlement to allow you to purchase a license at a steep discount from the “gouging” amount that the copyright holder’s attorney was initially asking for in the settlement demand letter. Moreover, your attorney could obtain a release of liability, releasing you from all liability surrounding the unlicensed use and the unlicensed copying of the pirated software – something you would not be in a position to negotiate if you were handling the matter.

Similarly, [or in the alternative,] your attorney might negotiate a software license to allow you to pay for your “experimental” use of their software.

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If you are a student, then it may be a good strategy to have your attorney negotiate in the settlement agreement to allow you to purchase that product at a student discount at your local college as your “settlement payment.”

The above are all options that an experienced copyright/software development attorney (me, or anyone else) would be able and knowledgeable to negotiate on your behalf.  Your attorney would be able to oversee the payment of the licensing fee or the purchase of the actual software [for your own future legitimate use] and to obtain for you a written release of liability from the software copyright holder’s attorney, which means that following the conclusion of the settlement or the signing of the software license, you would never be sued for copyright infringement or any sort of piracy in a Federal court.

These are the benefits of hiring an attorney for your settlement demand letter issue rather than simply going out and paying whatever fine is requested of you.  Remember: Following the copyright holders instructions to pay them a fee or to purchase a piece of software after-the-fact (after the unlicensed activity or infringement occurred) will not provide you any protection.  Paying a settlement fee alone will not provide you with a settlement agreement or a release of liability.  Without a release of liability, you could still be sued in a federal court for copyright infringement, piracy, or any other relevant law relating to the unlicensed use, piracy, and possibly the cracking of software.

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OTHER ARTICLES ON THE SIEMENS PLM SOFTWARE CASES:

How an attorney should handle a Siemens PLM Software, Inc. lawsuit, on 1/11/2017.

Siemens PLM NX-based lawsuits – converting accused engineers into loyal customers, on 1/9/2017.

Software Developers are now tracking piracy through the USE of downloaded software, on 9/9/2016.

Siemens Software Case IS a Bittorrent Case, on 6/20/2016.

What to do about the Siemens Product Lifecycle Management Software Inc. v. Does case (TX), on 1/16/2016.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

How time limits and purged records stop a copyright holder from learning the identity of an accused downloader.

It occurred to me that there is some confusion as to the effect the amount of time ISPs keep IP address logs (linking a particular IP address to a particular subscriber) have on whether those records will be available to the copyright holder if a lawsuit is filed after that time period has elapsed.

The question that sparked this post is as follows:

If CEG-TEK hasn’t subpoenaed someones identity, but the ISP only retains IP information for one year, then after a year it would essentially be impossible for CEG-TEK to obtain the identity correct?

My answer:

In order to understand what is going on, it is important to know who-is-who, and who does what.

I: CEG-TEK (a.k.a. Copyright Enforcement Group):  CEG-TEK hasn’t sued anyone in two years, and thus there are never subpoenas sent to the ISPs.  CEG-TEK is hired by the copyright holders 1) to track the IP addresses of accused downloaders, 2) to maximize the settlement payment by establishing connections between current accused downloads and other “older” downloads that happened at that same location (using IP address geolocation data), 3) to elicit payment in the form of “settlements” from the accused users via their settlement website, and 4) to provide attorney enforcement for those who choose not to settle via the website.

How they do this: CEG-TEK establishes relationships with the ISPs (internet service providers, e.g., Charter, CenturyLink, Giganews, etc.) and they arrange for the ISPs to forward the DMCA settlement demand letters to their subscribers.  CEG-TEK has a website they use to elicit payments from accused downloaders.  Lastly, they have attorneys (e.g., Marvin Cable) who follow-up with accused downloaders (sometimes asking for increasingly larger amounts of money).  Contrary to what is said by the attorneys, neither CEG-TEK nor their lawyers [at the moment] sue people.

II: COPYRIGHT HOLDERS (generally, the production companies): After failing to receive a settlement via the CEG-TEK settlement process, the copyright holders themselves hire out attorneys who enforce their copyrights against those subscribers who “ignored” CEG-TEK’s offers to settle.  Sometimes the attorneys are no-name attorneys, and other times, they are prolific copyright trolls such as from the law firm of Lipscomb and Eisenberg (best known as the attorneys for the Malibu Media lawsuits).

III: ISPs (internet service providers, including Universities and select VPN service providers): ISPs generally hold IP address data (and to which subscriber it was assigned to, and on what date) for one year — check your ISP’s “IP retention policy.” Congress and the RIAA/MPAA are pushing to increase this amount of time to 18 months.  For comparison purposes, in 2010, IP address data was kept for only 6 months. 

NOTE: After the ISP’s “IP retention policy” time limit elapses, if there are no copyright infringement claims, legal claims or requests on a particular IP address assignment record, they will purge that record from their database, meaning that lawsuits, subpoenas, or requests filed AFTER DESTRUCTION will not reveal the subscriber’s identity because that data is no longer available.

HOWEVER, most ISPs have a SECOND DATABASE — this second database holds IP address assignment records which have had claims of copyright infringement asserted against the subscriber, and these records are often kept indefinitely. Thus, if a lawsuit happens YEARS later (even after the IP retention policy date has expired), the data indicating which subscriber was assigned what IP address on what date and time IS RETAINED and will be available to the copyright holders and their attorneys when suing subscribers.

Lastly, (and I did not include this in my initial response,) it is my experience that ISPs generally forward DMCA settlement demand requests LITERALLY WITHIN DAYS of the accused download actually happening.  For example, Charter literally pumps out letters to their subscribers FOUR DAYS after the downloads happen.  Now obviously there are hiccups where a subscriber will receive a pile of infringements at one time, or an infringement notice is withheld until after the CEG-TEK due date has passed, but in my understanding, when this happens, it is either a business-related issue between CEG-TEK and the ISP, or a staffing issue in the subpoena / abuse department at the ISP.

Thus, where CEG-TEK is concerned, I have never heard of a situation where CEG-TEK demands that the ISP forward a letter to a subscriber and the ISP denies that request based on the ISP’s IP retention policy making the subscriber’s information unavailable.

As far as copyright lawsuits in general, yes, the IP retention policy does factor in to when a lawsuit is filed.  I have personally seen a handful of copyright infringement lawsuits filed against John Doe Defendants fail because the ISPs were unable to identify the identities of the accused subscribers because the plaintiff took too long to file the lawsuit (or a judge took too long to approve the subpoena to the ISP demanding the identities of the accused subscribers), and by the time the request or subpoena was received by the ISP, the IP address assignment records were already purged.

Thus, even though a plaintiff copyright holder does have three years from the alleged date of infringement to file a lawsuit against an accused subscriber, they are still bound by the ISP’s IP retention policy if they wish to ever identify the accused subscriber.  That being said, it is the “SECOND DATABASE” which trips up most individuals, as many individuals accused of copyright infringement are not aware that ISPs keep certain IP address assignment records indefinitely (or for a prolonged period of time), and these IP address assignment records are those which have been flagged by a copyright holder, attorney, or other law enforcement agency prior to the expiration of the ISP’s IP retention policy.


UPDATED COPYRIGHT ENFORCEMENT GROUP (CEG-TEK) ARTICLES (from this blog):
Canada begins receiving CEG-TEK DMCA settlement letters. (3/12/2015)
How time limits / purged records stop a copyright holder from learning a downloader’s identity. (12/18/2014)
CEG-TEK’s growing list of participating ISPs, and their NEW alliance with COX Communications. (11/12/2014)
The Giganews VPN Problem (11/12/2014)
CEG-TEK is now your friendly “photo” copyright troll. (6/13/2013)
CEG-TEK’s new “you didn’t settle” letters sent from Marvin Cable. (3/22/2013)
CEG-TEK’s DMCA Settlement Letters – What are my chances of being sued if I ignore? (2/22/2013)
Why CEG-TEK’s DMCA settlement system will FAIL. (2/22/2013)

[2017 UPDATE: Carl Crowell has created a new entity called RIGHTS ENFORCEMENT which has reverse-engineered CEG-TEK’s proprietary DMCA copyright infringement notice system.  Many of you have visited CEG-TEK links thinking that RIGHTS ENFORCEMENT was CEG-TEK, but really they are an ‘evil twin’ competitor.  Since the two entities operate almost the same way, and since Crowell appears to have taken most of CEG-TEK’s client list, this article is relevant.]


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

The Giganews VPN Problem

The first rule of Usenet is “you do not speak about usenet.”  While writing something like this can upset those I would not want to upset, there is a bigger problem — what happens when the Usenet service provider (or more accurately, newsgroup service provider) fingers you as the internet user who is accused of committing a crime you did not do?

My mind can swirl with the possible implications of the above inquiry (oh what crimes can one commit), but in the context of this TorrentLawyer blog, there is a Usenet provider which is causing problems for their subscribers by identifying them as being the users who downloaded one or more copyrighted videos.

Many privacy-minded individuals flock to a service called Giganews because the content they provide is parallel to none.  The problem is that Giganews providers their subscribers with a Virtual Private Network (“VPN”) called VyprVPN (in conjunction with their Golden Frog service), where their VPN is supposed to hide the identity and the activities of the users while they are logged into the Giganews service.  This is effective for privacy-minded individuals who wish to communicate with others privately (e.g., stream a VoIP phone conversation over an encrypted connection) or mask their IP address from websites they visit.  Similarly, a VPN is useful when your ISP monitors your connection for the purposes of what is known as “traffic shaping” — making certain activities happen faster, and slowing down less-favored activities.

[To those that have been paying attention, VPN providers are not created equally.  Notoriously, some (e.g., HideMyAss) have turned over the identities of their subscribers causing their arrest and incarceration.  Giganews has also been implicated as being infiltrated by the FBI, and they are known to track and log all of their subscribers’ activities, even those activities apparently masked through their VyprVPN service.]

To the chagrin of those who have placed their trust in the VyprVPN service, many have received notices from Giganews implicating them as being the downloaders of copyrighted materials.  They are sent one or more DMCA settlement demand letters from companies (such as CEG-TEK), even when they have not done any downloading at all.

While in this case I cannot fault any of the parties (accused subscriber, CEG-TEK) who are now enmeshed in a “yes you did,” “no I didn’t” fight, I can fault Giganews / Golden Frog / VyprVPN for mistakenly pointing the finger at one of their users for activities that user did not partake in.

Now obviously as an attorney, I represent many accused internet users, many of whom “have always been downloaders, and will always be downloaders,” but specifically with Giganews, too often there is an inaccuracy where the wrong user is accused of downloading copyrighted media when that user was not even logged into the Giganews service at the time the downloads allegedly happened.

This is a problem with timekeeping and recordkeeping, something Giganews (or Golden Frog) should remedy ASAP.


UPDATED COPYRIGHT ENFORCEMENT GROUP (CEG-TEK) ARTICLES (from this blog):
Canada begins receiving CEG-TEK DMCA settlement letters. (3/12/2015)
How time limits / purged records stop a copyright holder from learning a downloader’s identity. (12/18/2014)
CEG-TEK’s growing list of participating ISPs, and their NEW alliance with COX Communications. (11/12/2014)
The Giganews VPN Problem (11/12/2014)
CEG-TEK is now your friendly “photo” copyright troll. (6/13/2013)
CEG-TEK’s new “you didn’t settle” letters sent from Marvin Cable. (3/22/2013)
CEG-TEK’s DMCA Settlement Letters – What are my chances of being sued if I ignore? (2/22/2013)
Why CEG-TEK’s DMCA settlement system will FAIL. (2/22/2013)

[2017 UPDATE: Carl Crowell has created a new entity called RIGHTS ENFORCEMENT which has reverse-engineered CEG-TEK’s proprietary DMCA copyright infringement notice system.  Many of you have visited CEG-TEK links thinking that RIGHTS ENFORCEMENT was CEG-TEK, but really they are an ‘evil twin’ competitor.  Since the two entities operate almost the same way, and since they will likely be having the same issues as CEG-TEK did with VPN providers, this article is relevant.]


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.