New American business model: demand a settlement to prevent copyright infringement lawsuit

While the American entertainment industry is no longer suing individual downloaders, but rather going for the uploaders, an American law firm seems to have turned settling lawsuits against individual downloaders into a lucrative business model.

Wired and ArsTechnica have done some interesting research into the number of lawsuits on copyright infringement in the United States between 1993 and May 2010. This shows some interesting developments in the enforcement of copyright.

Between 1993 and 2003 on average 2500 lawsuits concerning copyright infringement served in the U.S.

The period 2004-2008 however, shows a remarkable increase in lawsuits, climbing up from 3000 infringement cases per year in 2004 to 6000, 5000, 4500 and 4000 in 2008. Wired calls this the "RIAA bump".

Wired claims this bump is due to changes in the RIAA’s enforcement policy. The focus shifted from addressing file sharing services only, to the prosecution of individual downloaders. According to Wired, the RIAA aimed to scare would-be downloaders. Most of these cases were supposedly settled for a few thousand dollars, to avoid lawsuits with statutory damages going up to $ 150,000 per infringement. Of the 18.0000 cases 11.000 were settled, according to ArsTechnica. Seven thousand either refused to settle or never responded to the settlement letter, but after the RIAA subpoenaed their identities and filed "named" lawsuits against them, nearly every one settled. (Note: In the Netherlands, it is not possible to initiate a so-called 'John Doe' procedure: suing an anonymous internet user via his ISP.)

After five years and 18.000 individual lawsuits, the RIAA announced to stop prosecuting individual downloaders in December 2008. Instead, they would focus on getting copyright infringers barred from the internet. American major ISP’s, however, have declined to adopt the so-called “graduated response” or “three strikes” strategies.

Perhaps as a result of this, it seems as if the enforcement strategies in 2010 are more than ever focussed on the individual downloader again. ArsTechnica researched all copyright infringement cases in this year up to May, adding up to a staggering 15 000 (!) cases. According ArsTechnica this rise is not so much due to the RIAA but rather a result of the work of the U.S. Copyright Group, an initiative of law firm Dunlap, Grubb & Weaver.

The business plan of U.S. Copyright Group is fairly simple, according to ArsTechnica: "Find an indie filmmaker; convince the production company to let you sue individual "John Does" for no charge; send out subpoenas to reveal each Doe's identity; demand that each person pay $1,500 to $2,500 to make the lawsuit go away; set up a website to accept checks and credit cards; split the revenue with the filmmaker.”

In the Netherlands, John Doe-procedures are not provided for by law, although privacy advocates have praised it. Given the above, there might also be some disadvantages to this kind of procedure.

02 June 2010