Sunday, April 29, 2018

Former Judge Accuses IP Court of Using ‘Pirate’ Microsoft Software

While piracy of movies, TV shows, and music grabs most of the headlines, software piracy is a huge issue, from both consumer and commercial perspectives.

For many years, software such as Photoshop has been pirated on a grand scale and around the world, millions of computers rely on cracked and unlicensed copies of Microsoft’s Windows software.

One of the key drivers of this kind of piracy is the relative expense of software. Open source variants are nearly always available but big brand names always seem more popular due to their market penetration and perceived ease of use.

While using pirated software very rarely gets individuals into trouble, the same cannot be said of unlicensed commercial operators. That appears to be the case in Russia where somewhat ironically the Court for Intellectual Property Rights stands accused of copyright infringement.

A complaint filed by the Paragon law firm at the Prosecutor General’s Office of the Court for Intellectual Property Rights (CIP) alleges that the Court is illegally using Microsoft software, something which has the potential to affect the outcome of court cases involving the US-based software giant.

Paragon is representing Alexander Shmuratov, who is a former Assistant Judge at the Court for Intellectual Property Rights. Shmuratov worked at the Court for several years and claims that the computers there were being operated with expired licenses.

Shmuratov himself told Kommersant that he “saw the notice of an activation failure every day when using MS Office products” in intellectual property court.

A representative of the Prosecutor General’s Office confirmed that a complaint had been received but said it had been forwarded to the Ministry of Internal Affairs.

In respect of the counterfeit software claims, CIP categorically denies the allegations. CIP says that licenses for all Russian courts were purchased back in 2008 and remained in force until 2011. In 2013, Microsoft agreed to an extension.

Only adding more intrigue to the story, CIP Assistant chairman Catherine Ulyanova said that the initator of the complaint, former judge Alexander Shmuratov, was dismissed from the CIP because he provided false information about income. He later mounted a challenge against his dismissal but was unsuccessful.

Ulyanova said that Microsoft licensed all courts from 2006 for use of Windows and MS Office. The licenses were acquired through a third-party company and more licenses than necessary were purchased, with some licenses being redistributed for use by CIP in later years with the consent of Microsoft.

Kommersant was unable to confirm how licenses were paid for beyond December 2011 but apparently an “official confirmation letter from the Irish headquarters of Microsoft, which does not object to the transfer of CIP licenses” had been sent to the Court.

Responding to Shmuratov’s allegations that software he used hadn’t been activated, Ulyanova said that technical problems had no relationship with the existence of software licenses.

The question of whether the Court is properly licensed will be determined at a later date but observers are already raising questions concerning CIP’s historical dealings with Microsoft not only in terms of licensing, but in cases it handled.

In the period 2014-2017, the Court for Intellectual Property Rights handled around 80 cases involving Microsoft and claims of between 50 thousand ($800) and several million rubles.

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Saturday, April 28, 2018

BitTorrent Piracy Lawuit Morphs into Attack on Dragon Box and Resellers

In recent years the movie industry’s enforcement efforts have switched from torrent sites to streaming devices, which are now seen as the main culprit.

While not entirely intentional, this shift is also visible in a federal lawsuit filed in a federal court in Hawai.

In the initial complaint, rightsholders of the films “Mechanic: Resurrection” (ME2) and “Once Upon a Time in Venice” (Venice) sued twenty unknown defendants who allegedly shared pirated copies via BitTorrent.

These cases are quite common in the US and are regularly referred to as “copyright trolling,” but in recent months this particular case took a drastic turn.

It all started when the sister of one of the defendants indicated that her brother used a streaming box to watch movies. This turned out to be a Dragon Box which was allegedly used to stream pirated films.

Typically these type of streaming boxes rely on external video hosting sites, but they can be configured to use torrents. It is not clear if that was the case here, but it was enough for the copyright holder to take a closer look at the device.

As the case progressed, all the original BitTorrent defendants were dismissed, and the filmmakers focused their efforts on Dragon Box and two local resellers instead. In fact, the latest version of the complaint doesn’t even mention BitTorrent anymore.

The case now targets Dragon Box and its owner Paul Christoforo, as well as the resellers Naino Bettencourt and Jason Barnhart, who run “The Dragon Box Hawaii” and “JB Dragon Box-Hawaii Kai” respectively. All are accused of contributory copyright infringement.

The complaint describes how the Dragon Box can be used to access copyrighted material, including the works of ME2 and Venice. The defendants were well aware of this, it’s argued, adding that the defendants promoted the box with terms hinting at infringing uses.

In addition, Dragon Box’s Paul Christoforo reportedly made statements such as “It is legal to stream content on the internet,” and “We can’t be held liable for the movies and TV channels online that people are watching, because all the software is doing is accessing content that is readily available online.”

“Particularly, the Dragon Box Defendants have brazenly marketed the Dragon Box as giving ‘you every movie, every tv show, every sports game and payperview all in HD with no monthly fee’, and falsely stating to the public that streaming copyright protected motion pictures such as Plaintiffs’ is legal,” the plaintiffs write.

With the lawsuit, the copyright holders hope to recoup some of the damages they claim to have suffered. To prevent any further harm, they have moved for a preliminary injunction this week, to halt Dragon Box sales as soon as possible.

“Simply put, Dragon Box is intentionally inducing infringement. Plaintiffs respectfully request that the Court enter a preliminary injunction that requires the Dragon Box Defendants to halt their flagrantly illegal conduct immediately,” ME2 and Venice write.

Interestingly, this isn’t the first lawsuit Dragon Box has been dragged into this year. The company was previously sued by the Alliance for Creativity and Entertainment (ACE), which represents several Hollywood studios, Netflix, and Amazon. This case is still ongoing.

Dragon Box has yet to respond to the allegations made by ME2 and Venice. The company initially opposed the latest complaint because the original BitTorrent claims were no longer part of it, but the court denied this request.

A copy of the request for a preliminary injunction against Dragon Box is available here (pdf).

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ISP Sued For Breaching User Privacy After Blocking Pirate Sites

After hinting at moves to curb online piracy last month, on April 13 the Japanese government announced
emergency measures to target websites hosting pirated manga, anime and other types of content.

In common with dozens of counterparts around the world, the government said it favored site-blocking as the first line of defense. However, with no specific legislation to fall back on, authorities asked local ISPs if they’d come along for the ride voluntarily. On Monday, the Nippon Telegraph and Telephone Corp. (NTT) announced that it would.

“We have taken short-term emergency measures until legal systems on site-blocking are implemented,” NTT in a statement.

NTT Communications Corp., NTT Docomo Inc. and NTT Plala Inc., said they would target three sites highlighted by the government – Mangamura, AniTube! and MioMio – which together have a huge following in Japan.

The service providers added that at least in the short-term, they would prevent access to the sites using DNS blocking and would restrict access to other sites if requested to do so by the government. But, just a few days on, NTT is already facing problems.

Lawyer Yuichi Nakazawa has now launched legal action against NTT, demanding that the corporation immediately ends its site-blocking operations.

The complaint, filed at the Tokyo District Court, notes that the lawyer uses an Internet connection provided by NTT. Crucially, it also states that in order to block access to the sites in question, NTT would need to spy on customers’ Internet connections to find out if they’re trying to access the banned sites.

The lawyer informs TorrentFreak that the ISP’s decision prompted him into action.

“NTT’s decision was made arbitrarily on the site without any legal basis. No matter how legitimate the objective of copyright infringement is, it is very dangerous,” Nakazawa explains.

“I felt that ‘freedom,’ which is an important value of the Internet, was threatened. Actually, when the interruption of communications had begun, the company thought it would be impossible to reverse the situation, so I filed a lawsuit at this stage.”

Breaches of privacy could present a significant problem under Japanese law. The Telecommunications Business Act guarantees privacy of communications and prevents censorship, as does Article 21 of the Constitution.

“The secrecy of communications being handled by a telecommunications carrier shall not be violated,” the Telecommunications Business Act states, adding that “no communications being handled by a telecommunications carrier shall be censored.”

The Constitution is also clear, stating that “no censorship shall be maintained, nor shall the secrecy of any means of communication be violated.”

For his part, lawyer Yuichi Nakazawa is also concerned that his contract with the ISP is being breached.

“There is an Internet connection agreement between me and NTT. I am a customer of NTT. There is no provision in the contract between me and NTT to allow arbitrary interruption of communications,” he explains.

Nakazawa doesn’t appear to be against site-blocking per se, he’s just concerned that relevant laws and agreements are being broken.

“It is necessary to restrict sites of pirated publications but that does not mean you can do anything,” Nakazawa said, as quoted by Mainichi. “We should have sufficient discussions for an appropriate measure, including revising the law.”

The question of whether site-blocking does indeed represent an invasion of privacy will probably come down to how the ISP implements it and how that is interpreted by the courts.

A source familiar with the situation told TF that spying on user connections is clearly a problem but the deployment of an outer network firewall rule that simply prevents traffic passing through might be viewed differently.

Such a rule would provide no secret or private information that wasn’t already available to the ISP when the customer requested a banned site through a web browser, although it still falls foul of the “no censorship” requirements of both the Constitution and Telecommunications Business Act.

NTT Communications has declined to comment on the lawsuit but says it had no plans to backtrack on plans to block the sites. Earlier this week, SoftBank Corp., another ISP considering a blockade, expressed concerns that site-blocking has the potential to infringe secrecy of communications rules.

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Friday, April 27, 2018

Pre-Release Game of Thrones Leaks Bred Pirates, Research Shows

The pre-release leak of four Game of Thrones episodes, early 2015, is one of the most prominent piracy cases in TV history.

The first copies, leaked from a review screener, quickly spread across public torrent sites and were downloaded millions of times.

HBO was understandably upset and feared that the leaks would hurt their bottom line. While that was not immediately apparent after the official premiere, new research suggests that they had a significant impact. And not just on Game of Thrones.

A new working paper published by economy researcher Wojciech Hardy of the Institute for Structural Research and the University of Warsaw carefully dissected the aftermath.

The findings show that the pre-release leaks triggered more people to pirate, and not just the four leaked episodes. This led to a decrease in expected viewers for Game of Thrones, but also for comparable TV-shows.

“The general conclusion is that the leak provided a strong incentive for some of the viewers to look for unauthorized sources for TV shows and that, in consequence, some of them started watching TV shows through unauthorised channels in general,” Hardy tells TorrentFreak.

The reasoning behind this effect is that the leaks introduced some people to these unauthorized sources for the first time. They then kept using these for subsequent episodes.

Ratings, viewership and predicted viewership.

For his research, Hardy used an extensive dataset of US TV-viewership of a variety of shows over time, as well as related Google search data. This revealed that other series, similar to Game of Thrones, were negatively impacted too, compared to a control group.

“Importantly, a negative shift in viewership was found, evidenced both by a drop in the viewership of GoT and by a decline in the viewership of TV shows that share an audience with GoT,” Hardy writes in the paper.

This makes sense, as newcomers to pirate sites are likely to use them for other content as well. That this appears to be a direct effect of the leaks is evidenced by the fact that the decrease in expected viewership wasn’t visible for unrelated TV-shows.

The findings are backed up by Google search data too. Following the pre-release leaks, Google search phrases linked to unauthorized viewing (such as ‘show_name watch online’) gradually increased for GoT-related shows, relative to a control group.

The key message of the current research, according to Hardy, is that even temporary piracy incentives such as pre-release leaks can have long-term effects. They only affect a small percentage of the total audience, but every lost viewer costs money.

This is bad news for HBO and others who have been in a similar situation. However, the data also shows that there may be a promotional effect, possibly because people discover new shows.

As searches for unauthorized sources increased, the viewership of GoT-like shows slowly recovered. This suggests that there may be a promotional piracy effect, where people start to watch shows legally after discovering them on pirate sites.

“On the one hand, this means that the content providers should pay much attention not to incentivize their audience to switch to unauthorized sources to avoid losses,” Hardy says.

“On the other hand, it’s possible that adequate promotional incentives might convince some of the ‘pirates’ to switch to the authorized distribution channels instead, he adds.”

Follow-up studies may provide more clarity on this and other effects.

A copy of the full working paper, titled Pre-release leaks as one-time incentives for switching to unauthorised sources of cultural content, is available here (pdf).

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Aussie Federal Court Orders ISPs to Block Pirate IPTV Service

After successful applying for ISP blocks against dozens of traditional torrent and streaming portals, Village Roadshow and a coalition of movie studios switched tack last year.

With the threat of pirate subscription IPTV services looming large, Roadshow, Disney, Universal, Warner Bros, Twentieth Century Fox, and Paramount targeted HDSubs+ (also known as PressPlayPlus), a fairly well-known service that provides hundreds of otherwise premium live channels, movies, and sports for a relatively small monthly fee.

The injunction, which was filed last October, targets Australia’s largest ISPs including Telstra, Optus, TPG, and Vocus, plus subsidiaries.

Unlike blocking injunctions targeting regular sites, the studios sought to have several elements of HD Subs+ infrastructure rendered inaccessible, so that its sales platform, EPG (electronic program guide), software (such as an Android and set-top box app), updates, and sundry other services would fail to operate in Australia.

After a six month wait, the Federal Court granted the application earlier today, compelling Australia’s ISPs to block “16 online locations” associated with the HD Subs+ service, rendering its TV services inaccessible Down Under.

“Each respondent must, within 15 business days of service of these orders, take reasonable steps to disable access to the target online locations,” said Justice Nicholas, as quoted by ZDNet.

A small selection of channels in the HDSubs+ package

The ISPs were given flexibility in how to implement the ban, with the Judge noting that DNS blocking, IP address blocking or rerouting, URL blocking, or “any alternative technical means for disabling access”, would be acceptable.

The rightsholders are required to pay a fee of AU$50 fee for each domain they want to block but Village Roadshow says it doesn’t mind doing so, since blocking is in “public interest”. Continuing a pattern established last year, none of the ISPs showed up to the judgment.

A similar IPTV blocking application was filed by Hong Kong-based broadcaster Television Broadcasts Limited (TVB) last year.

TVB wants ISPs including Telstra, Optus, Vocus, and TPG plus their subsidiaries to block access to seven Android-based services named as A1, BlueTV, EVPAD, FunTV, MoonBox, Unblock, and hTV5.

The application was previously heard alongside the HD Subs+ case but will now be handled separately following complications. In April it was revealed that TVB not only wants to block Internet locations related to the technical operation of the service, but also hosting sites that fulfill a role similar to that of Google Play or Apple’s App Store.

TVB wants to have these app marketplaces blocked by Australian ISPs, which would not only render the illicit apps inaccessible to the public but all of the non-infringing ones too.

Justice Nicholas will now have to decide whether the “primary purpose” of these marketplaces is to infringe or facilitate the infringement of TVB’s copyrights. However, there is also a question of whether China-focused live programming has copyright status in Australia. An additional hearing is scheduled for May 2 for these matters to be addressed.

Also on Friday, Foxtel filed yet another blocking application targeting “15 online locations” involving 27 domain names connected to traditional BitTorrent and streaming services.

According to ComputerWorld the injunction targets the same set of ISPs but this time around, Foxtel is trying to save on costs.

The company doesn’t want to have expert witnesses present in court, doesn’t want to stage live demos of websites, and would like to rely on videos and screenshots instead. Foxtel also says that if the ISPs agree, it won’t serve its evidence on them as it has done previously.

The company asked Justice Nicholas to deal with the injunction application “on paper” but he declined, setting a hearing for June 18 but accepting screenshots and videos as evidence.

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Thursday, April 26, 2018

Nike Sued for Running Pirated Software

Virtually every piece of software is cracked and made available on the Internet, through a myriad of pirate sources.

These are generally visited by regular people out to save a few bucks, but according to Quest Software, pirated license keys found their way to Nike’s office as well.

The company, known for developing a variety of database software, filed a lawsuit in an Oregon federal court this week, accusing Nike of copyright infringement. Both parties have had a software license agreement in place since 2001, but during an audit last year, Qwest noticed that not all products were properly licensed.

“That audit revealed that Nike had deployed Quest Software Products far in excess of the scope allowed by the parties’ SLA,” Quest writes in their complaint, filed at a federal court in Oregon.

Quest keeps a database of all valid keys and found that Nike used “cracked” versions, which are generally circulated on pirate sites. This is something Nike must have been aware of, it adds.

“The audit also revealed that Nike had used pirated keys to bypass the Quest License Key System and made unauthorized copies of certain Quest Software Products by breaking the technological security measures Quest had in place,” Quest writes.

“Upon information and belief, to obtain a pirated key for Quest Software Products, customers must affirmatively seek out and obtain pirated keys on download sites known to traffic in counterfeit or illegally downloaded intellectual property, such as BitTorrent.”

Pirated keys?

When the software company found out, it confronted Nike with the findings. However, according to the complaint, Nike refused to purchase the additional licenses that were required for its setup. This prompted Quest to go to court instead.

At this point, it’s not entirely clear to Quest how many pirated keys were used on Nike computers. That’s something the company would like to find out during the discovery process.

Quest is certain, however, that its customer crossed a line. It accuses Nike of copyright infringement, breach of contract, and violating the DMCA’s circumvention provisions.

The company requests an injunction restraining Nike from any infringing activity and demands compensation for the damages it suffered as a result. The exact height of these damages will have to be determined at trial.

A copy of the complaint is available here (pdf).

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Under-Fire “Kodi Box” Company “Sold to Chinese Investor” For US$8.82m

Back in 2016, an article appeared in Kiwi media discussing the rise of a new company pledging to beat media giant Sky TV at its own game.

My Box NZ owner Krish Reddy told the publication he was selling Android boxes loaded with Kodi software and augmented with third-party addons.

Without any hint of fear, he stated that these devices enabled customers to access movies, TV shows and live channels for free, after shelling out a substantial US$182 for the box first, that is.

“Why pay $80 minimum per month for Sky when for one payment you can have it free for good?” a claim on the company’s website asked.

Noting that he’d been importing the boxes from China, Reddy suggested that his lawyers hadn’t found any problem with the business plan.

“I don’t see why [Sky] would contact me but if they do contact me and … if there’s something of theirs that they feel I’ve unlawfully taken then yeah … but as it stands I don’t [have any concerns],” he said.

At this point, Reddy said he’d been selling the boxes for just six weeks and had shifted around 80 units. To get coverage from a national newspaper at this stage of the game must’ve been very much appreciated but Reddy didn’t stop there.

In a bulk advertising email sent out to 50,000 people, Reddy described his boxes as “better than Sky”. However, by design or misfortune, the email managed to land in the inboxes of 50 Sky TV staff and directors, something that didn’t go unnoticed by the TV giant.

With Reddy claiming sales of 8,000 units, Sky ran out of patience last April. In a letter from its lawyers, the pay-TV company said Reddy’s devices breached copyright law and the Fair Trading Act. Reddy responded by calling the TV giant “a playground bully”, again denying that he was breaking the law.

“From a legal perspective, what we do is completely within the law. We advertise Sky television channels being available through our website and social media platforms as these are available via streams which you can find through My Box,” he said.

“The content is already available, I’m not going out there and bringing the content so how am I infringing the copyright… the content is already there, if someone uses the box to search for the content, that’s what it is.”

The initial compensation demand from Sky against Reddy’s company My Box ran to NZD$1.4m, around US$1m. It was an amount that had the potential rise by millions if matters got drawn out and/or escalated. But despite picking a terrible opponent in a battle he was unlikely to win, Reddy refused to give up.

“[Sky’s] point of view is they own copyright and I’m destroying the market by giving people content for free. To me it is business; I have got something that is new … that’s competition,” he said.

The Auckland High Court heard the case against My Box last month with Judge Warwick Smith reserving his judgment and Reddy still maintaining that his business is entirely legal. Sales were fantastic, he said, with 20,000 devices sold to customers in 12 countries.

Then something truly amazing happened.

A company up to its eyeballs in litigation, selling a commodity product that an amateur can buy and configure at home for US$40, reportedly got a chance of a lifetime. Reddy revealed to Stuff that a Chinese investor had offered to buy his company for an eye-watering NZ$10 million (US$7.06m).

“We have to thank Sky,” he said. “If they had left us alone we would just have been selling a few boxes, but the controversy made us world famous.”

Reddy noted he’d been given 21 days to respond to the offer, but refused to name the company. Interestingly, he also acknowledged that if My Box lost its case, the company would be liable for damages. However, that wouldn’t bother the potential investor.

“It makes no difference to them whether we win or lose, because their operations won’t be in New Zealand,” Reddy said.

According to the entrepreneur, that’s how things are playing out.

The Chinese firm – which Reddy is still refusing to name – has apparently accepted a counter offer from Reddy of US$8.8m for My Box. As a result, Reddy will wrap up his New Zealand operations within the next 90 days and his six employees will be rendered unemployed.

Given that anyone with the ability to install Kodi and a few addons before putting a box in the mail could replicate Reddy’s business model, the multi-million dollar offer for My Box was never anything less than a bewildering business proposition. That someone carried through with it an even higher price is so fantastic as to be almost unbelievable.

In a sea of unhappy endings for piracy-enabled Kodi box sellers globally, this is the only big win to ever grace the headlines. Assuming this really is the end of the story (and that might not be the case) it will almost certainly be the last.

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