Back in September we broke the news that Voltage Holdings LLC, a company well known for tracking down pirates worldwide, had obtained a High Court order compelling Virgin Media to hand over subscriber data.
That resulted in a then-unknown number of Virgin Media customers receiving letters accusing them of pirating the less-than-successful movie 'Ava' and warning of a copyright infringement lawsuit, should they choose not to settle the case.
In line with previous High Court guidance, the letter did not specify a settlement amount. However, people who have responded to the initial letters are now receiving additional clarification, including a precise demand for damages and interesting justifications for that amount.
Why Voltage Lost Money on Ava
As reviews on various sites reveal, Ava is not a particularly well-liked movie. From 50K votes on the iMDb portal, the site received an average score of just 5.4/10. On Rotten Tomatoes, the audience score is 29%, a figure that plummets to 16% on the site's Tomatometer.
Perceptions of quality, however, are not something that Voltage Pictures believes led to the movie's commercial problems. Instead, a combination of COVID-19 and piracy is cited.
"In terms of our client's loss, our client's film was originally planned to be released in cinemas in the first quarter of 2020. This was subsequently delayed due to Covid-19," the letters note.
"In August 2020, our client started to receive emails from distributors explaining that the film was available via BitTorrent. Our client explains that since the film had become so easily accessible, distributors in unsold territories became wary of purchasing the film. Their reasoning was that they were unlikely to recoup the cost of advertising the film and renting theatres when the film was available for free online and, therefore, would lose money."
According to Voltage, distributors in the United Kingdom subsequently decided to forego a theatrical release altogether, as well as those in Australia, Canada, China and Turkey.
"As a result, our client estimates that it will make a loss of no less than £3 million in the United Kingdom, representing the difference between its now anticipated revenue and the revenue which it would have received between 2020 and 2023 (the term of the license with the UK distributor) but for the infringement."
Loss Recovery: Cost of Film
From the copies of letters we've seen thus far, Voltage now appears to be prepared to settle cases against Virgin subscribers for a little over £800. The movie company reaches this figure by listing several elements in its claim, starting with the profit lost due to each illegal download.
"Had you downloaded a copy of the film from an authorized distributor, it would have had to pay the purchase price. The profit for this is, therefore, payable."
Element 1: Cost of film @ £11.19
Contribution to Third Party Infringement
The letters further reveal that Voltage is targeting 314 Virgin Media subscribers who are said to have been detected as part of a BitTorrent swarm with 14,565 hosts (or peers). This is where the calculation starts to get interesting.
Recovering £11.19 from each of the 14,565 alleged infringers is a reasonable and simple start but Voltage's claim soon becomes more complex. Since Voltage was only able to identify 314 Virgin Media subscribers, it appears to want those people to also pick up the tab for the people it could not track down, claiming that any member of the swarm contributes to third-party infringement.
"Our client has identified approx. 314 potential defendants within the swarm of 14,565, of which you are one. Assuming our client is able to recover from all other 313 potential defendants (which is unlikely), your liability is therefore a minimum of £162,982.23 / 313 or £520.71," the letters we have seen read.
Taking this to an extreme to illustrate a point, if Voltage had only managed to track down one Virgin subscriber, by its own reasoning it would be demanding almost £163K from that single person. To put that amount into perspective, Ava played in 222 North American theaters in August 2020, where it grossed $170,000 (£127,694). And there are more issues of interest too.
Most BitTorrent clients are by default restricted in the number of peers they will connect to. Certainly, none are configured to connect to 314, and definitely not 14,565. It is much more likely that any single client will connect to less than 50 other sharers while in a swarm, meaning that claims in excess of that are at best highly speculative.
Indeed, Voltage cannot prove that any single Virgin Media subscriber actually connected to any torrent client other than its own. It might be reasonable to conclude that a user connected to one other in order to obtain the movie but if the client was restricted to two peers, that would be the extent of the infringement.
Another angle to this is how Voltage seeks to attribute damages equally across peers, despite the actual level of infringement which, incidentally, it cannot prove beyond a single copy of the film on a per-user basis. This means that someone who uploaded 20, 30 or 100 full copies of the film to third parties, is being held liable for the same level of infringement as someone who downloaded and shared only a couple of minutes' worth.
All of that being said, in UK law there is something called "common design", a term referenced in the Voltage letter. This suggests a conspiracy between two or more people who cooperate to commit a tort, in this case via a BitTorrent swarm.
As a result, Voltage asserts that letter recipients are "jointly and severally liable for any loss" but that raises the question of whether the 314 Virgin Media subscribers are the co-conspirators or the entire swarm. A swarm size of 14,565 peers would have a global reach and it is extremely unlikely that all participants would be from England and Wales, or indeed sharing with each other on the exact same time.
These would be interesting issues to explore in court, as would the veracity of the BitTorrent monitoring system and the structure of the shadowy GuardaLey copyright trolling operation that reportedly provided it. However, this is not a US court and there is absolutely no guarantee that the Intellectual Property Enterprise Court's Small Claims Track (pdf) would be interested in any of it.
Element 2: Contribution to Third Party Infringement @ £520.71
Flagrancy and Costs
The two final components of Voltage's claim, if such a claim is directed at an actual infringer, are more straightforward. The company argues that by intentionally downloading BitTorrent software for the purposes of downloading and distributing infringing copies of its movie, the user acted flagrantly.
"The court has discretion to award additional damages for such flagrancy of up to 100%, but for which our client only seeks 20%. This is (£520.71 + £11.19) x 20% or £106.38," the letters read.
Arguments over the validity of the £520.71 amount aside, this offer appears to be reasonable. The legal costs element raises questions though.
"To obtain the court order enclosed in our letter of claim, the cost was £50,649.50. When divided between the potential defendants, this gives a figure of £101.30," it reads.
£50,649.50 divided by 314 does not equal £101.30, it's more like £161.30. Of course, that's in favor of the letter recipients but what this tends to suggest is that the original claim involved 500 IP addresses of which only 314 were of use or are yet to be tied to a Virgin customer. Either way, Voltage is demanding £101.30 plus a letter-writing fee.
Flagrancy and Costs @ £106.38 + £200
Final Demand and Warning
In requesting £838.28 in total, Voltage concludes by admitting that its calculations are estimates, albeit ones that have been reviewed by an "independent Queen's Counsel" who viewed them as "reasonable".
"Should you disagree with the above, we invite you to submit to a judgment on liability, with the court to assess damages," the letter adds.
"For the avoidance of doubt, however, should our client be forced to issue and pursue proceedings, it reserves its right to seek a higher sum by way of damages, on the basis of (i) our client's lost profits flowing from the lack of theatrical release and related lost profits and (ii) your joint and several liability for the acts of infringement of the entire swarm in which you have participated."
Voltage's Additional Demands to Identify Infringers
Finally, we are aware that bill payers that have denied knowledge of any infringement being carried out on their connections are being pressed by Voltage's lawyers for additional information. This includes the names and ages of people who live at the address in question.
The age element is interesting since the High Court order appears to prevent Voltage from filing claims against alleged infringers of pension age or those aged under 18.
In the event that outsiders visited the address and used the internet connection there, Voltage is seeking their names and ages too. Whether letter recipients should give up this information is a matter for them and/or their lawyers, as mentioned in our earlier article.
Conclusion
While the chances of being held to account in the UK are vanishingly small, downloading and sharing a pirated movie in the UK is illegal and punishable under civil law. Those targeted by Voltage who did carry out this type of infringement have a case to answer but the settlement offer on the table may be open to interpretation.
That being said, those who wish to find out what a court would say on the matter will be taking a considerable gamble.
The letters and claims we've seen thus far are much more aware than those we've seen in the past and if a case is taken to court, rest assured the company and its many allies will pick the targets most likely to result in a win. Any win will be taken on the balance of probabilities too, i.e if the court is 51% convinced that Voltage's claims are correct.
These movie companies have the money to take a case all the way and will probably need to do so at some point to show strength, especially if this case concerning Ava is the first of many. This seems more than likely considering the number of companies involved in this operation that are not currently active in court.
The last thing they want is a loss at this stage though, so if anyone puts up a particularly determined and well-resourced fight in a case that is not already a lost cause, expect their claim to be withdrawn and the matter forgotten.
From: TF, for the latest news on copyright battles, piracy and more.
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