Movie Companies Demand Over $10m in Piracy Damages from LiquidVPN

A few years ago piracy-related lawsuits were pretty straightforward. Copyright holders would either sue alleged file-sharers or the operators of pirate sites.

In recent months, we have seen a new breed of lawsuits filed on behalf of the makers of movies such as “Hunter Killer,” “Automata,” “Survivor,” and “I Feel Pretty.”

These lawsuits target VPN providers, which are generally seen as third-party intermediaries. This includes LiquidVPN. The company was taken to court in March, shortly after the former owner was sued in a separate lawsuit.

The current owner, Puerto Rico company 1701 Management, is allegedly linked to U.S. resident Mr. Muszynski, who continued operating the service. While running a VPN is not copyright infringing, the movie companies accuse the service of encouraging and facilitating piracy.

VPN-related Copyright Infringement

The complaint mentions a variety of other examples where the defendants directly or indirectly referenced copyright infringing activity. This includes a screenshot of Popcorn Time which shows the Millennium film Survivor. The movie companies argue that, through various public statements, LiquidVPN ‘encouraged’ users to use its service to pirate movies.

“The LiquidVPN Defendants describe their VPN service as a tool to ‘Watch Popcorn Time without being detected by your ISP and P2P tracking software’ and promote it as a tool that can be used to pirate copyright protected content ‘without the risk of getting caught by your ISP or anyone else’,” they wrote.

Default Judgment

Despite the serious allegations, 1701 Management and its alleged owner failed to respond in court. As such, the film companies are now requesting a default judgment in their favor.

The movie companies claim that Mr. Muszynski, a Florida resident, is the driving force behind the shelf company 1701 Management, which bought LiquidVPN from its former operator two years ago. According to the legal paperwork, there are still claims on outstanding payments for this deal, which the movie companies have taken over from the former owner.

The main allegations relate to copyright infringement, however. According to the plaintiffs, it is clear that LiquidVPN crossed a line and should be held liable for direct and contributory copyright infringement, among other things.

No Safe Harbor

The motion for default judgment argues that LiquidVPN isn’t entitled to a safe harbor defense because it failed to implement a repeat infringer policy. In addition, the company didn’t have a registered DMCA agent.

“The LiquidVPN Defendants have no safe harbor from liability because they fail to implement a policy for terminating repeat infringers and have not even registered a DMCA agent with the Copyright Office,” the movie companies write.

The repeat infringer angle is noteworthy because many other VPN services don’t take action against repeat infringers either. VPNs generally don’t log IP-address allocations, which makes it pretty much impossible to track repeat offenders.

No Logs, No Excuse

The movie companies argue that this isn’t a valid excuse, as LiquidVPN willingly chose not to keep logs.

“[T]he LiquidVPN Defendants cannot use their policy of not logging their subscribers’ access to provide anonymous IP addresses as an excuse for not terminating repeat infringers. A defendant who disables itself from doing anything to prevent infringement does not reasonably implement a repeat infringer policy.”

These and other claims are novel issues and there is little VPN-related jurisprudence. However, without a defense in court from LiquidVPN, these arguments won’t be actively contested in court.

Millions in Damages

All in all, the movie companies demand compensation on various grounds. This includes the maximum statutory damages of $150,000 for each of the 66 works included in the complaint. This amounts to $9,900,000. In addition, the movie companies request $1,650,000 for DMCA violations.

The case comes with a trademark twist as well. The Hawaiian company 42 Ventures, which is operated by anti-piracy lawyer Kerry Culpepper, owns the “Popcorn Time” trademark and requests $100,000 for unauthorized use by LiquidVPN.

In addition to the damages, the movie companies also request an injunction that requires LiquidVPN to terminate the accounts of repeat infringers. In addition, the service should block access to the pirate sites YTS.MX, Piratebay.org, rarbg.to, 1337x.tw, and popcorn-time.tw.

Interestingly, the mentioned Pirate Bay domain doesn’t point to the official site, but a Pirate Bay proxy. That said, it’s unsure whether any blocking action is actually needed at this point.

At the time of writing, the LiquidVPN website appears to have disappeared, as it’s currently returning a Cloudflare connection error. The client area of the website is still online.

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A copy of the motion for a default judgment, filed at the US District Court for the Southern District of California, is available here (pdf)