I wrote about the background of this case earlier in this blog (here).
A law firm, representing the rightsholders of the movie 'A Walk Among the Tombstones' and the tv-show 'Black Sails', sent a settlement letter to a person X on 20 April 2015. In that settlement letter, the rightsholders held the X liable for sharing the movie and ten episodes of the tv-show between 3 January and 29 March 2015. According to the rightsholders, the X was using BitTorrent file-sharing application while committing these infringing acts. The IP address of the internet subscriber (the X) was logged by a technology company that had monitored the BitTorrent traffic. The law firm then, acting on behalf of the rightsholders, asked the Market Court to order the relevant internet service provider (ISP) to give up the personal details of the internet subscriber (the X). In the settlement letter, the law firm asked the X to pay a settlement sum of 2 100 euros or otherwise there is a risk that the X will get sued by the rightsholders and the compensation demands will be higher.
The same law firm has been sending settlement letters for more than a year and approximately thousands of Finnish internet subscribers have received a settlement letter from the firm.
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| Unwelcome mail from a law firm. Image courtesy of OpenClipartVectors at Pixabay.com |
In October 2015, the rightsholders took three of these settlement letter cases to the Market Court as civil disputes after the letter receiver did not pay the settlement offer. Two of the cases were settled out of the court with a confidentiality clause. The case regarding the X proceeded all the way to the main hearing, which was held in the beginning of May 2016.
In the case regarding the X (the defendant), the rightsholders (the plaintiffs) requested the court to:
1. order the defendant to pay compensation of 7 500 euros plus legal interest for making ten episodes of the tv-show available to the public by using BitTorrent file-sharing application.
2. order the defendant to pay compensation of 1 000 euros plus legal interest for making the movie available to the public by using BitTorrent file-sharing application.
3. order the defendant to pay the plaintiff's legal fees, in total 31 762,16 euros plus legal interest.
It is important to mention that in this case the plaintiffs are not seeking compensation for the reproduction of the works. It was agreed by both parties that the compensation is going to be determined only in the context of making the works available to the public.
The Market Court
The court first clarified the legal basis of the dispute and gave a thorough explanation of the BitTorrent protocol and how it works.
According to section 2 paragraph 1 of the Copyright Act (404/1961), copyright shall provide the exclusive right to control a work by reproducing it and by making it available to the public, in the original form or in an altered form, in translation or in adaptation, in another literary or artistic form, or by any other technique.
According to section 2 paragraph 3 of the Act, a work is made available to the public when, inter alia, it is communicated to the public by wire or wireless means, including communication in a way which enables members of the public to access the work from a place and at a time individually chosen by them.
The defendant argued that the plaintiffs have not provided enough evidence to prove that the IP address mentioned by the plaintiffs was used by the defendant at the time of the infringing acts. And even if the IP address was used by the defendant, the defendant denied that he has downloaded or shared any of the works. According to the defendant, he can not be held liable for any infringing acts that were carried out by someone else who was using the defendant's wireless internet connection.
Therefore, the court had to assess first whether the plaintiffs have provided enough evidence that the defendant was the user of the IP address at the time of the infringing acts. If this is the case, then the court has to assess whether there is enough evidence to prove that the defendant has personally downloaded and, most importantly, communicated the works to the public.
Was the defendant the user of the IP address at the time of the infringing acts?
The plaintiffs referred to the earlier Market Court decisions 93/15, issued on 12 February 2015, and 170/15, issued on 10 March 2015. In those decisions, the court has, pursuant to the section 60 a of the Copyright Act, ordered the relevant ISP to give up the personal details of the internet subscriber who used the IP address 84.250.xx.xxx at the time of the infringing acts between 3 January 2015 and 5 February 2015. The defendant was the user of that IP address.
The defendant stated that, according to the different articles in the newspapers and on the internet, different ISPs are known to have done several mistakes when they have identified the user of an IP address.
The plaintiffs provided evidence that they had requested the ISP to check the accuracy of the details. According to the ISP, two of its workers have checked the details again and they have confirmed that it was the defendant who was the user of the IP address at the time of the infringing acts.
The court stated that, according to the evidence shown in the case, the defendant was the user of the IP address at the time of the infringing acts.
Technical monitoring of the IP address and the time period of the infringing acts
The court provided a thorough explanation on how the IP address of the defendant was logged by the technology company and how the BitTorrent traffic was monitored at the time of the infringing acts. The defendant has not contested the log information.
Interestingly enough, the plaintiffs were able to convince the court that the IP address of the defendant was used to download and share the infringed works between 3 January 2015 and 29 March 2015, even though the last court ordered identification done by the ISP was on 5 February 2015. The reason why the court was convinced is based on the following facts:
- The technology company had continued to monitor the same IP address after the last court ordered identification done by the ISP on 5 February. According to the technology company, the infringing acts continued until 29 March 2015.
- According to witness B, the file-sharing that occurred between 3 January and 29 March 2015 was carried out from the same computer, because the IP address and the used BitTorrent client remained the same during that period of time.
- According to the plaintiffs, the user of the IP address had used a BitTorrent client named qBittorrent, and its version 3.1.0, between 3 January and 29 March 2015. The plaintiffs argued that this client is rather rare. According to statistics of the technology company, the qBittorrent client covers only 3,2 percent of all the monitored BitTorrent clients in April 2016.
- The BitTorrent clients have a userhash-code that is created randomly and it changes whenever the BitTorrent client is launched. According to witness B, the userhash-code changed only four times during the several months.
- The user of the IP address downloaded the episodes in their chronological order during the time period between 3 January and 29 March 2015.
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Therefore, the court stated that the IP address has belonged to the same internet subscriber between 3 January 2015 and 29 March 2015 and the same computer has been used and the same person has done the infringing acts during that period of time [I understand that the same computer has probably been used, but in my opinion it is not clear that, according to the evidence, the same person has been using the computer...].
Has the defendant personally communicated the works to the public?
The court had to assess now whether the defendant has personally, according to the evidence provided by the plaintiffs, communicated the works to the public.
The plaintiffs showed messages posted on two separate online discussion boards on 24 April 2015. The first online discussion board is 'Muropaketti' and the second is 'Ylilauta'. According to the plaintiffs, the writer of those messages has to be the defendant because the messages included an image of a settlement letter that had many identical details as the settlement letter that the defendant had received.
The message in Muropaketti, written by a registered username, included an image of a settlement letter that had the same number of pages, the same infringed works, the same timestamps regarding the infringing acts and the same layout of the text as the settlement letter that the defendant had received.
The defendant did not deny that he was the writer of the message in Muropaketti. In the message, the defendant wrote that he had received a settlement letter and was pondering different options. In that message, the defendant did not, in my opinion, clearly confess or deny that he had downloaded or shared the infringing material. Here is a FinnIPR translation of the message:
"I received a suspicious letter from a law firm. I was curious and immediately opened the letter because I think I have heard the name of the firm before, I got a bad vibe from the name. I should have at least waited until the evening. They claimed in the letter that I had downloaded some tv-show and demanded two thousand euros within two weeks or otherwise there will be some sort of follow-up. Rationally thinking I have two options.
1. To submit and pay. With my salary it would be annoying to pay the two thousand euros. This would encourage the law firm to continue doing this. It would be annoying to give up so easily.
2. No to pay and ignore the extortion. Should I wait for the preliminary investigation - As a defense, I have an open wireless network; Should I wait that the police will come and take my computers - Are they going to take all the laptops, desktop computers and iPads; To wait what the prosecutor says - Hopefully the preliminary investigation is not going to take long, especially when I have crypted material; To wait how it goes in the court - Can I get a free lawyer just like in the USA; I think morally it would better to choose this option no.2, even though the fight would take long. The minimum requirement is a realistic chance to win the case.
Can you tell me how the second option goes and how much I can lose in the worst-case scenario? What would you do?"
In that message, the defendant has, in the plaintiffs' opinion, confessed the infringing acts.
On the same day, 24 April 2015, someone has written in the other discussion board, Ylilauta, that "It did not work to limit the seed [the sharing] to 0 kB/s...". The message included an image of a settlement letter that had the same reference number as the settlement letter that the defendant had received. According to the plaintiffs, the writer of that message has to have been the defendant. The court agreed on this issue.
The court stated that, in the messages described above, the defendant has not expressed that the settlement letter was sent to a wrong person or that he has not communicated the mentioned works to the public. The defendant has only pondered what he should do and he has mentioned the open wireless network defense. The court stated that the messages in Muropaketti and Ylilauta are suggesting that the defendant has communicated the mentioned works to the public.
The defendant stated that he had purchased a wireless router on 17 March 2014 and provided a receipt as an evidence. Incredibly enough, the plaintiffs provided evidence that the technology company had gathered log information of the defendant's IP address already since 17 March 2014 and this has continued until 14 May 2015. The monitoring report shows BitTorrent traffic (works regarding other rightsholders) from this IP address during that time period. The accuracy of the log information was not contested by the defendant. The use of BitTorrent file-sharing application has started on 17 March 2014 and continued on almost a daily basis until 22 April 2015. After that date, the 22 April 2015, there was only one log information regarding the use of BitTorrent file-sharing application and this happened on 14 May 2015. This means that the use of BitTorrent file-sharing application has stopped almost completely on 22 April 2015, only two days after the settlement letter was sent to the defendant. This is also suggesting that the defendant has communicated the mentioned works to the public. The court agreed on this issue.
After receiving the settlement letter, the defendant had some correspondence with the law firm. In that correspondence, on 4 May 2015, the defendant provided evidence that he has had an open wireless connection and that he has limited the use of the connection to only legal purposes. The defendant provided images of the settings of the wireless router. The evidence did not provide, however, any information about when the defendant has adjusted the settings of the wireless router.
The defendant also used his wireless router's traffic logs as an evidence. According to that log information, the open wireless network has had many users. However, the defendant stated that this traffic log information does not describe the time period of the allegedly infringing acts.
The defendant also referred to an expert report. According to this report, the neighbors of the defendant could have accessed the open wireless network and even someone from the yard could have accessed the network.
Interestingly enough, the plaintiffs hired a private investigator to find out whether the defendant's wireless connection was open as he had claimed. According to the investigator, the wireless connection was password-protected. However, the private investigator carried out his research on 3 December, eight months after the last infringing act logged by the technology company. The court did not place any significance on this evidence.
The court stated that the defendant has provided, per se, a completely plausible description of events. According to that description, an unidentified person, or many of them, could have accessed the open wireless network belonging to the defendant and has/have then used it for downloading and sharing copyrighted material. However, this description of events is only hypothetical, albeit technically plausible. On the other hand, the plaintiffs have provided technical evidence based on the monitored traffic and log information mentioned above. The plaintiffs have provided also other evidence, in the form of the messages in the online discussion boards, that suggests that the defendant is the infringer. According to chapter 17 section 2 paragraph 2 of the Code of Judicial Procedure (4/1734, as amended in 2016), a circumstance may be taken as grounds for the judgment only on the condition
that a party has presented credible evidence regarding it. The court concluded that the plaintiffs have presented credible evidence that the defendant has communicated the mentioned works to the public.
The amount of reasonable compensation
Now when the court was convinced that the defendant had done the infringing acts, it was time to determine the reasonable amount of compensation under section 57 of the Copyright Act.
The court stated that the purpose of the reasonable compensation is to restore an injured party to his former position. The court stated that willfulness or negligence is not required. Furthermore, it is not required that the infringer has financially profited from the infringement.
The court also referred to a Finnish Supreme Court decision 2010:47 where the Supreme Court stated that the purpose of the reasonable compensation is also to effectively prevent copyright infringements. The Supreme Court has stated also, in that same decision, that the basis of the reasonable compensation should be the price of the work in a distribution channel that is the most similar to the infringing conduct. If no evidence is provided of those prices, it is appropriate to determine the reasonable compensation based on an overall consideration of the case. The overall consideration has to take into account the characteristics of the case, such as the purpose of making profit.
The plaintiffs and the defendant both provided their versions of the basis of reasonable compensation.
According to the plaintiffs, the basis of reasonable compensation in this case is a license fee that a distributor has to pay in order to distribute the work in a restricted geographical area. These license fees are usually based on the production costs of a tv-show or a movie. The plaintiffs suggested that a reasonable amount is 1 000 euros for the movie and 7 500 euros for the ten episodes of the tv-show, 750 euros per episode. The court rejected the suggestion and stated that the conduct of the infringer cannot be compared to this.
The defendant argued that the mentioned tv-show is available on HBO Nordic, the video-on-demand service. The monthly subscription cost of that service is 9,95 euros. The defendant argued that a single episode would therefore cost 0,995 euros and ten episodes 9,95 euros. The price of the movie in an online store is 9,95 euros. The court rejected these compensation suggestions. According to the court, the subscriber of the video-on-demand service can watch the work on his/her own device, but it is not possible or allowed to copy the work or distribute the work forward. The same restrictions apply also to a copyright protected DVD.
Therefore, the court stated that the reasonable compensation has to be determined based on an overall consideration of the case. The compensation has to effectively prevent copyright infringements, but at the same time it has to be reasonable. The overall consideration has to take into account the characteristics of the case, such as the purpose of making profit.
- The defendant has been communicating the works to the public immediately after the works have been published. This has decreased the interest of the public to use legal distribution channels.
- The defendant has participated in an uncontrollable distribution of the works on the internet. The works have been unprotected and in high-definition.
The court considered that the following facts are increasing the amount of compensation:
- The defendant has been communicating the works to the public immediately after the works have been published. This has decreased the interest of the public to use legal distribution channels.
- The defendant has participated in an uncontrollable distribution of the works on the internet. The works have been unprotected and in high-definition.
The following facts are, according to the court, decreasing the amount of compensation:
- The defendant participated in the distribution with the other users. The defendant was a single user in a swarm and therefore he could not have an influence on how many people downloaded the works.
- The defendant has not made any profit by communicating the works to the public.
According to chapter 17 section 2 paragraph 3 of the Code of Judicial Procedure, if credible evidence is not available regarding the amount of a claim under private
law or such evidence is obtainable only with difficulty or, in view of the nature
of the case, with unreasonable cost or difficulty, the court shall assess the amount.
The court stated that, taking into account the assessment above, the reasonable amount of compensation is 100 euros for the movie and 50 euros per shared tv-show episode.
The court ordered the defendant to pay 600 euros in compensation plus legal interest.
In addition to that, the court ordered the defendant to pay the plaintiff's legal fees, in total 31 762,16 euros plus legal interest. The defendant's own legal fees were in total 21 714,32 euros plus legal interest.
Further comments
It remains to be seen what effects this decision will have. The sending of the settlement letters will probably continue. In my opinion, the most important part of the case is the assessment whether the defendant has personally done the infringing acts. I wonder if the outcome would have been different without the messages that the defendant had, according to the court, posted online. As I mentioned in my earlier post, the rightsholders have sued more alleged file-sharers to the Market Court during the year 2016. One would think that they have carefully picked the defendants based on the strength of their evidence i.e. how they can prove that the internet subscriber was in fact the infringer.
It was important that the court defined the amount of reasonable compensation. It is hard to say whether this will affect the amount of the sums demanded in the settlement letters. The letter receivers and alleged infringers have now the possibility to refer, when negotiating with the rightsholders, to the compensation sums ruled by the court. However, one has to take into account that the settlement sums include some other costs too, not only the compensation to the rightsholders. The identification of the internet subscriber (court ordering the ISP to give up details) can be costly for the rightsholders.
The rightsholders have an important leverage in the form of the legal fees. In this case the amount is more than 30 000 euros plus the defendant's own costs. Even if the compensation is lowered by the court, the legal fees are big enough to make the alleged infringers think twice whether a fight against the rightsholders is worth it. One option is to only deny the requested amount of compensation, if it is bigger than it would be according to the compensation guideline ruled in this decision. If the case still goes to the court, the legal fees should be far less than in this case because the identity of the infringer is not contested.
Finally, the defendant of this case may still wish to pursue an appeal to the Supreme Court.
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Another topic of discussion are the requirements to order the ISP to give up the personal details of the internet subscriber. According to section 60 a of the Copyright Act, an author or his representative shall be entitled, by the order of the court of justice, to obtain contact information from the maintainer of a transmitter, server or a similar device or other service provider acting as an intermediary about a tele-subscriber who, unauthorised by the author, makes material protected by copyright available to the public to a significant extent in terms of the protection of the author's rights. In this case, the court had earlier ordered the relevant ISP to give up the personal details of the X. It is not perfectly clear, in my opinion, whether the sharing of ten episodes of a tv-show and a movie can meet the threshold of "makes material protected by copyright available to the public to a significant extent". But as said, this discussion is probably outside the scope of this post.
It remains to be seen what effects this decision will have. The sending of the settlement letters will probably continue. In my opinion, the most important part of the case is the assessment whether the defendant has personally done the infringing acts. I wonder if the outcome would have been different without the messages that the defendant had, according to the court, posted online. As I mentioned in my earlier post, the rightsholders have sued more alleged file-sharers to the Market Court during the year 2016. One would think that they have carefully picked the defendants based on the strength of their evidence i.e. how they can prove that the internet subscriber was in fact the infringer.
It was important that the court defined the amount of reasonable compensation. It is hard to say whether this will affect the amount of the sums demanded in the settlement letters. The letter receivers and alleged infringers have now the possibility to refer, when negotiating with the rightsholders, to the compensation sums ruled by the court. However, one has to take into account that the settlement sums include some other costs too, not only the compensation to the rightsholders. The identification of the internet subscriber (court ordering the ISP to give up details) can be costly for the rightsholders.
The rightsholders have an important leverage in the form of the legal fees. In this case the amount is more than 30 000 euros plus the defendant's own costs. Even if the compensation is lowered by the court, the legal fees are big enough to make the alleged infringers think twice whether a fight against the rightsholders is worth it. One option is to only deny the requested amount of compensation, if it is bigger than it would be according to the compensation guideline ruled in this decision. If the case still goes to the court, the legal fees should be far less than in this case because the identity of the infringer is not contested.
Finally, the defendant of this case may still wish to pursue an appeal to the Supreme Court.
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Another topic of discussion are the requirements to order the ISP to give up the personal details of the internet subscriber. According to section 60 a of the Copyright Act, an author or his representative shall be entitled, by the order of the court of justice, to obtain contact information from the maintainer of a transmitter, server or a similar device or other service provider acting as an intermediary about a tele-subscriber who, unauthorised by the author, makes material protected by copyright available to the public to a significant extent in terms of the protection of the author's rights. In this case, the court had earlier ordered the relevant ISP to give up the personal details of the X. It is not perfectly clear, in my opinion, whether the sharing of ten episodes of a tv-show and a movie can meet the threshold of "makes material protected by copyright available to the public to a significant extent". But as said, this discussion is probably outside the scope of this post.
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