Last year several major record labels, represented by the RIAA, filed a lawsuit against ISP Grande Communications accusing it of turning a blind eye to pirating subscribers.

According to the RIAA, the Internet provider knew that some of its subscribers were frequently distributing copyrighted material, but failed to take any meaningful action in response.

Grande refuted the accusations and filed a motion to dismiss the case. The ISP partially succeeded as the claims against its management company Patriot were dropped. The same was true for the vicarious infringement allegations.

The labels were not willing to let go so easily. They pushed on with several new filings, including a motion for summary judgment, arguing that Grande has no safe harbor defense.

In order to enjoy safe harbor protection, the DMCA requires ISPs to adopt and reasonably implement a policy for terminating the accounts of repeat copyright infringers. According to the labels, it is clear that Grande failed to do so. As such, the company should be held directly liable.

Yesterday, US Magistrate Judge Andrew Austin issued his “report and recommendation” on the matter, which delivers a significant setback for the Internet provider.

According to the Judge, the undisputed evidence shows Grande had a policy that allowed it to terminate repeat infringers, but that the ISP failed to act on this for years. As such, the policy was not adopted and reasonably implemented.

“Grande affirmatively decided in 2010 that it would not enforce the policy at all, and that it would not terminate any customer’s account regardless of how many notices of infringement that customer accumulated, regardless of the source of the notices, and regardless of the content of a notice,” Judge Austin writes.

The evidence shows that Grande did not terminate a single repeat infringer between October 2010 and June 2017. This was effectively confirmed by the ISP’s own corporate representative.

“A ‘reasonably implemented’ termination policy requires that the policy be enforced, and not just adopted. Because the evidence is undisputed that Grande never enforced its policy during the relevant time period, it is precluded from raising the DMCA safe harbor defense in this case.

“It is hard to imagine a case in which it is more clear that the DMCA safe harbor is not available,” the recommendation reads.

In its defense, Grande argued that it did enforce a repeat infringer policy after the lawsuit was filed but, according to the Judge, this was “too little too late.”

The Internet provider also argued that terminating customers wasn’t appropriate because the copyright infringement notices sent by Rightscorp were flawed. However, Judge Austin concludes that this is no defense, as there is no evidence that Grande ever considered terminating a user.

On top of that, the concerns regarding Rightscorp’s notices don’t explain why similar complaints from other sources were also disregarded.

“Yet another failure with Grande’s argument about the Rightscorp notices is that it does not address the several hundred thousand copyright infringement notices it received from companies other than Rightscorp,” Judge Austin writes.

In weighing the arguments the Judge looked closely at the BMG v. Cox case, which was very similar. In that matter, the court concluded that Cox didn’t have a safe harbor defense and Judge Austin argues that that same should apply to Grande.

If the U.S. District Court Judge adopts this recommendation, it will be a major win for the labels of the RIAA. Without a safe harbor defense, ISPs are not shielded from contributory liability for the actions of pirating subscribers.

And there is more bad news for the ISP as well.

Grande requested summary judgment in its favor on a variety of liability issues, including direct infringement, willfulness, damages, and ownership of copyright. These are all under recommendation to be denied, except for two limited issues regarding the alleged violation of reproduction or public performance rights.

The RIAA labels also submitted a cross-motion on these liability issues, requesting a ruling in their favor, but that was denied as well. This means that the matters will be decided at trial.

While Judge Austin’s recommendations have yet to be adopted, both reports and recommendations have definitely not improved the outlook for Grande.

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A copy of the safe harbor recommendations is available here (pdf), and the recommendations on Grande’s motions for summary judgment and the labels’ cross motions can be found here (pdf).

Update: we clarified that without a safe harbor ISPs aren’t shielded from contributory liability for the actions of pirating subscribers.

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In several countries around the world, notably the United States, Canada, and the UK, rightsholders and their agents send copyright notices to alleged infringers.

In most cases, recipients are accused of downloading and sharing copyright-infringing content using BitTorrent. The notices contain details of the alleged offense along with instructions to cease-and-desist.

These notices, sent to Internet users’ ISPs, are regularly passed on to the subscriber. However, some companies targeting US and Canadian citizens augment their notices with text indicating that a cash settlement is required, ranging from just a few dollars to several hundred.

Many users who see these demands pay up but these notices are unusual in that the original sender has no idea who the subscriber is. This means that some recipients ignore them, with no further consequences.

While the practice operates largely unhindered in the US, over in Canada (where there is a so-called notice-and-notice regime) there has been considerable opposition since its inception in 2015.

ISPs, who have to bear the brunt of the administrative burden, have also cried foul, with TekSavvy recently describing the content of some notices as akin to “scams and spam“, with Bell noting that it would like to see an end to the copyright-notice settlement model.

Back in October, it became clear that the ISPs and other opponents had strong government backing with the publication of a new bill that would prevent the activity from continuing.

Bill C-86, the Budget Implementation Act, has now received royal assent, so there will be some big changes in the Great White North. Section 41.‍25 of the Copyright Act is now amended with the addition of the following;

(3) A notice of claimed infringement shall not contain:

(a) an offer to settle the claimed infringement;
(b) a request or demand, made in relation to the claimed infringement, for payment or for personal information;
(c) a reference, including by way of hyperlink, to such an offer, request or demand; and
(d) any other information that may be prescribed by regulation.

The text is pretty straightforward, in that it prohibits demands for settlement in the notices themselves or on a third-party site where such a demand may also be available. This is important since some notices contain hyperlinks that not only lead to demands for cash but also undermine subscriber privacy with the use of tracking code.

The news was welcomed by Canadian law professor Michael Geist, who notes that notices that do not meet the new standards can be withheld by local ISPs without them facing penalties.

However, Geist also cautions that the new amendments contain no punishments for anti-piracy companies that fail to follow the rules.

“The key remaining question is whether ISPs will crackdown on non-compliant notices. Since there is no penalty associated with sending non-compliant notices, subscribers are dependent upon ISPs carefully reviewing notices to ensure that they only forward those that fully comply with the law,” Geist notes.

Considering their earlier opposition, however, it seems unlikely that TekSavvy, Shaw, Rogers, and Bell will have many problems with withholding non-compliant notices.

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It’s safe to say that Swedish ISP Bahnhof is one of the most aggressive companies when it comes to defending its customers from interference initiated by outside parties.

The ISP is an outspoken critic of copyright trolls and has taken a number of measures to ensure that it’s extremely difficult for them to identify Bahnhof subscribers. It also believes in the open Internet and by extension is against site-blocking efforts on copyright grounds.

In November, however, it became clear that Bahnhof would be joining the ranks of other blocking ISPs after a court ordered it to block a series of domain names following a complaint from academic publisher Elsevier.

At the time, CEO Jon Karlung told TorrentFreak that the “horrifying” decision, which targets Sci-Hub domains including sci-hub.tw, sci-hub.mu, sci-hub.se, libgen.io, “goes against the soul of the Internet.”

A clearly incensed Karlung then did something that has never been done before. In a retaliatory move, he prevented his subscribers from accessing the official Elsevier.com website directly, sending them instead to a landing page containing an advisory notice about blocking and an option to click through. This was done to give the publisher a taste of its own medicine.

The maverick businessman didn’t stop there though. On top, he ordered his team to ensure that users of the court’s network could no longer access Bahnhof’s website. These protests were designed to provoke a debate about net neutrality and that, it now transpires, is something that will come to pass.

An announcement by the Swedish Post and Telecom Authority (PTS), which acts as the national watchdog for the electronic communications and postal sectors, reveals that it has launched an investigation into Bahnhof’s actions.

“The Post and Telecom Agency (PTS) is investigating whether the internet service provider Bahnhof has taken measures to influence access to websites,” PTS says.

“A key rule in EU regulations in this area is that all traffic on the Internet should be treated equally by providers of internet connection services. PTS’s task is to monitor and ensure that the provisions on an open internet, also called network neutrality, are complied with.”

Noting that Bahnof has implemented measures that have restricted access to websites, PTS says it is now investigating whether Bahnhof breached net neutrality rules.

After being adopted on November 25, 2015 and coming into force on April 30, 2016, Regulation (EU) 2015/2120 enshrined net neutrality provisions into EU law, including non-discriminatory traffic management.

PTS says it will seek to detemine if Bahnhof’s actions are in line with the Telecoms Single Market Regulation, noting that ISPs may not block, alter, or discriminate against specific content.

ISPs in the EU are, however, able to implement traffic management measures beyond those that are normally considered “reasonable” in order to comply with legal requirements, such as blocking sites in response to a court order.

Speaking with TorrentFreak, Karlung says the situation can be interpreted as “the essence” of irony.

“Bahnhof gets a legal threat to block sites out there somewhere on this huge computer network called the Internet. We block the sites because in reality there is no legal chance to win cases against the copyright mob, since the judge and court are corrupt, and it also comes with a package of astronomic fines,” he explains.

Karlung says that the PTS appears most interested in the ‘counter-blocking’ of Elsevier, which he characterizes as a “fine opportunity” to tell people about the dangers of site-blocking which targets “the soul and core” of the Internet.

“[Blocking] also jeopardizes the principle for ISP’s to be able to operate services. The ISP can never be responsible for content, or what people are doing somewhere out there on the Internet.”

Bahnhof’s CEO says he hasn’t yet seen any formal questions or demands from PTS about his company’s “counter-blocking” but it’s clear he’ll relish the chance to bring this issue to the attention of a wider audience.

“We will of course not let this go unnoticed, and I heartfully thank PTS for this fine opportunity,” Karlung concludes.

PTS says it will be sending questions to Bahnhof which will require a response by January 17, 2018.

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Following the example of the United States, the EU now has its very own piracy watch list.

The plan was first announced in January by the European Commission, which asked various stakeholders for input.

This eventually resulted in a 40-page report in which various pirate sites and third-party intermediaries are identified. There’s a fair bit of overlap with the US report, as both highlight familiar brands such as The Pirate Bay and Rapidgator.

The goal of the report is similar as well.

“The aim is to encourage the operators and owners as well as the responsible local enforcement authorities and governments to take the necessary actions and measures to reduce the availability of IPR infringing goods or services on these markets,” it reads.

Initially, we saw the EU watchlist as yet another pirate site overview, but on closer inspection, something stood out. The list mentions 1channel.ch as a pirate site.

“1channel.ch (previously Primewire.ag) is one of the most visited linking or referrer sites globally offering links to allegedly illicit copies of blockbuster films and television programmes,” it reads.

1channel.ch

According to the report, the notorious pirate site has an Alexa rank of 1,238, with more than 531.8 million visits during an undefined period. Certainly not something to sniff at.

This mention stands out because 1channel.ch hasn’t been a “pirate” site since late 2017, when the domain was bought by Marshall Domains LTD. The company in question specializes in buying domain names in auction that the previous owner has allowed to expire and are expected to generate a decent amount of traffic, which is monetized in various ways.

TorrentFreak spoke to the owner, David Marshall, who also happens to own the Primewire.ag domain that was mentioned in the EU’s watchlist. Both domains were bought in an auction and now link to 123movies.com.

“I noticed that 1channel.ch was expiring and backordered it at various places such as park.io and realtime.at, as I knew they would still be receiving valuable type-in traffic that could be monetised legally,” Mr. Marshall says.

While 123movies is a pirate brand as well, Mr. Marshall’s version tries to do the opposite. It’s a movie information portal with Amazon Prime affiliate links in some locations, hoping to turn lost pirates into paying customers.

123movies.com

To be fair, this redirect was not in place when the research for the watchlist report was conducted. This took place between 18 June and 20 July 2018. However, 1channel.ch already linked to a parked page or an advertising feed at the time and was no longer a pirate site.

In addition, the EU Commission notes that their watchlist includes “examples of reported marketplaces or service providers whose operators or owners are allegedly resident outside the EU.” However, a simple Whois search would have shown that Mr. Marshall’s business is in the UK.

As for the Primewire.ag domain, that was not serving any pirated content during the stated research period either, although that domain wasn’t bought at an auction until August 2018.

It’s unclear how both domains ended up in the report. They were both linked to pirate sites in the past but it’s likely that the commission put too much focus on outdated info.

Mr. Marshall says tells TorrentFreak that the legal 1channel.ch certainly doesn’t have more than a quarter billion visits, nor is it hosted in Switzerland, or masked behind a reverse proxy service, as the EU watchlist claims.

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Over the past two decades, the Software Alliance (BSA) has represented major software companies including Adobe, Apple, Microsoft and Oracle, in their fight against under-licensed businesses.

This has resulted in audits at thousands of companies worldwide, whose computers are carefully inspected to see if the business owner has failed to pay his or her dues.

Some of these audits have been controversial and the evidence collection process has raised eyebrows as well. Especially BSA’s explicit attempts to convince people to report companies in exchange for hard cash.

In recent years, the industry group has actively solicited such tips from the public. Legitimate leads are then followed up with a thorough investigation or audit, something many companies are contractually obliged to agree to.

If unlicensed software is found during an audit, BSA tries to negotiate a settlement. This is what happened with an unnamed Australian manufacturing company, CRN reports.

It’s not clear what type of software was used improperly. What we do know is that the ‘tip’ came from an anonymous informant who presumably works or worked at the company in question.

“We work in a competitive industry and while we’re all trying to get ahead, it didn’t feel right using infringing copies of software to give the business an unfair competitive advantage,” the informant reportedly told BSA.

“The decision to report the business ultimately came down to my personal morals and ethics. I don’t believe it’s right to use software without paying for it.”

It’s unclear whether the informant also raised the issue internally, but that doesn’t matter anymore. The BSA followed up the lead which eventually led to a significant AU$160,000 settlement.

The whistleblower, tipster, or rat, depending on which side you’re on, fared well too.

BSA says that the information it receives from informants is invaluable. It plays a critical role in identifying misbehaving companies and holding them accountable, so it’s worth a reward.

“BSA is grateful to the informant for doing the right thing, and have provided the informant with a reward of AU$10,000 for his assistance in this matter,” BSA told CRN.

This is not the first reward BSA has given out, there have been many others in the past. The scale of the award usually depends on the settlement amount. It’s usually good enough for a nice vacation though, as this old BSA ad also suggests.

BSA’s old Facebook campaign.

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