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Porn litigation: Studios settle with Internet users

The Palm Beach County grandmother whose 14-year-old grandson set up her Wi-Fi system didn't have sophisticated online pornography downloads in mind.

"She says she doesn't know Wi-Fi from hi-fi," said Bradford Patrick, the Tampa lawyer who represents her.

But that didn't stop her from being named in a lawsuit filed by an adult film studio, one that could cost her up to $150,000.

Porn producers have a new way to make money from their Internet-friendly fans: Sue them. Sue them all.

Mass lawsuits naming tens of thousands of viewers are winding their way through courts as adult film studios go after those who downloaded blue movies without paying. Freshly filed Broward County and Miami-Dade County circuit court cases alone name more than 1,300 viewers, including those in Palm Beach Gardens, Boynton Beach, West Palm Beach, Lake Worth, Jupiter, Delray Beach and Boca Raton.

Critics say it's a business model masquerading as law - a quick buck for producers who can make much more money through the courts than from selling individual copies of skin flicks. Faced with the threat of a $150,000 copyright infringement judgment - and the embarrassment of being publicly identified with a sketchy film - viewers are coughing up four-figure settlements for what might be a $20 movie.

"It's done with the express intention of shaking down individuals," Patrick said. "Send out the demand letters, sit back and count the money."

"What would you do if so much of your property was being stolen?" responded Miami lawyer M. Keith Lipscomb, who filed suits on behalf of studios operating in Amsterdam, California and Dominica . "You have to fight."

Who's actually watching?

Of course, these huge lawsuits would not be possible unless someone had downloaded a movie without paying for it. But who? The Internet addresses being used to identify viewers are linked to a computer or other equipment, not a person.

Anyone with access to the computer, even a neighbor tapping into another home's Internet service, could have downloaded the movie, not just the person on the receiving end of the lawsuit.

There's the Palm Beach County grandmother, whom Patrick refused to identify. And Colorado attorney David Kerr cited the case of a condo association that offered free wireless Internet access to its members. Someone downloaded a film. The association secretary, whose name was on the monthly Internet bill, was slapped with a letter demanding $3,000.

In another instance, the Internet address didn't link to a computer at all, but to a printer, which Patrick says illustrates the scattershot approach being taken by the film distributors.

Not every movie involved is pornographic. The Expendables, a 2010 action flick starring Sylvester Stallone, is the subject of a lawsuit naming thousands of viewers. Indie filmmakers have banded together to sue in some instances. But much of the current crop of lawsuits focuses on low-rent fare such as Stripper Academy and others - another reason viewers are likely to settle before a lawsuit makes their film preferences public.

"What's the alternative? The risk of money damages if you lose is very substantial," said Corynne McSherry, intellectual-property director of the Electronic Frontier Foundation, a San Francisco-based legal advocacy group. "In the meantime, your name is being connected with pornography."

"A perfectly designed extortion scheme," summed up Lory Lybeck, a Washington attorney who has represented defendants from Pensacola to Miami.

Compiling customers' names

Here's how it works: Cyber-­detectives link downloaded movies to a type of numerical Internet address known as an IP address. A copyright infringement lawsuit is filed, naming thousands of IP addresses.

Internet service providers such as Comcast are expected to identify the names and street addresses of customers linked to the Internet addresses. They may give customers a month to fight the release of personal information. Once the film distributor gets the names, it typically mails letters seeking settlements, some threatening legal penalties of up to $150,000.

Others are getting more than letters. Kerr said certain defendants in the Florida cases have received harassing phone calls, even threats of criminal prosecution if they don't pony up. Out of embarrassment or fear, many pay. Settlements range from $1,000 to $6,000, he said.

Multiply that figure by the hundreds, even thousands of viewers, and the potential for profit swiftly balloons - even without the filing of additional court papers.

Take Imperial Enterprise's recently filed suit in Washington. The company names 3,545 anonymous downloaders of two adult films . By one lawyer's estimate, roughly half the people notified pay something. At that rate, and averaging $1,500 per settlement, the suit could reel in $2.3 million.

And that's just one case. According to estimates by the Electronic Frontier Foundation, 136,000 viewers had been sued as of eight months ago. Today, the EFF estimate tops 150,000. In contrast, by the time the Recording Industry Association of America abandoned its own Napster­-inspired mass lawsuit strategy in 2008, it had sued an estimated 35,000 downloaders in six years.

Studios point to piracy problem

There's no choice, Lipscomb said. Studios he represents are losing an estimated $1 million a month to online piracy. Pirate downloads for those studios alone average 75,000 a month. Middlemen Web operations that enable downloads are virtually untouchable.

One, for instance, is headquartered on a boat in the Red Sea, Lipscomb said. "They laugh when we send demand letters," he said.

That leaves viewers. But Lipscomb dismisses the idea that out-of-court settlements are a cash cow for studios. "This campaign generates such a small part of what is lost," Lipscomb said. "My clients do not want (the suits) to go on. They want this to stop."

People are entitled to sue for copyright infringement, critics counter, but these lawsuits have two legal flaws. First, the suit is frequently filed hundreds or even thousands of miles from where the viewer lives, meaning he or she could have to travel to another state to make a case for innocence. The Miami-Dade County action lists IP addresses from the Catskills in New York state to Hawaii.

Second, it lumps thousands of people together as defendants, when they have nothing in common other than to have allegedly downloaded the same film. If movie producers want to sue, defense attorneys say, they should do it the old-fashioned way: one case at a time.

Judges take up the issue

Certain federal judges have sided with viewers. U.S. District Judge Dean Pregerson in Los Angeles recently asked the producer of a B-movie flick to explain its mass defendant strategy. The producer dropped the suit, though it's not clear whether the judge's skepticism prompted the action.

But the argument against mass lawsuits has found favor with other federal judges. Lipscomb's clients opted to file in state court. Their Broward and Miami-Dade cases add a new twist: They ask the court to make providers reveal names behind IP addresses before a copyright lawsuit has even been filed.

Letters demanding money damages for copyright infringement can then go out - despite the fact that there's no actual copyright infringement suit. That will change if viewers don't pay up, Lipscomb warned: "We will sue, that's our intention."