Movie studios are suing LiquidVPN for $ 10 million, but is it fair?

Your home entertainment studio.
Enlarge / Your home entertainment studio.

Dozens of movie producers sued LiquidVPN this year over the VPN provider’s marketing efforts that could be perceived as promoting piracy. These companies, now seeking $ 10 million in damages, claim that LiquidVPN’s “no log” policy is not a valid excuse, as the VPN provider actively chose not to keep logs.

And because LiquidVPN’s attorneys failed to appear in court, the plaintiffs are pushing a motion for a default judgment to be granted.

Fiery marketing that failed

When a netizen’s right to privacy and anonymity ceases is the crux of the lawsuit filed against LiquidVPN. LiquidVPN is a no-registration VPN provider that, in the course of its business activities, has been observed to … almost Encourage online piracy.

Many internet users who rely on technologies like no-log VPNs and Tor can do so to remain untraceable, for reasons ranging from safeguarding their privacy to protecting someone, browsing the dark web, and engaging in activities deemed questionable, legal, or ethically. As such, like Internet Service Providers (ISPs), VPN companies are considered “neutral” service agents and can benefit from the “Safe Harbor“Provisions of a US copyright law called the Digital Millennium Copyright Act, or DMCA. Online service providers can claim” safe harbor “protections under the DMCA as long as they timely block access infringing materials reported to them by copyright holders.

But LiquidVPN’s business model was fierce, thriving outside the law. On the web pages viewed by Ars, the VPN company smug itself as the “best VPN for torrenting” which would also allow you to “unblock ISP banned streams” otherwise restricted due to copyright removal requests.

Enlarge / LiquidVPN’s “Popcorn Time VPN”, among other controversial marketing slogans.

Plus, LiquidVPN customers were really in luck with “High Quality Popcorn Time Streams” included in the mix. And of course, this was all a “DMCA free zone” as, like any unregistered VPN provider, Liquid did not have the ability to forward DMCA notices to users downloading infringing content. Except Liquid listed all of these features on their website explicitly and glamorized all the possibilities:

LiquidVPN website pages displaying copyrighted images of movie titles.
Enlarge / LiquidVPN website pages displaying copyrighted images of movie titles.

And imagine doing all of these things seven days a week without the risk of being discovered by your ISP or anyone else, reassured the VPN provider with a “full refund” guarantee.

Transparency can be a good thing when presenting your product, except when your marketing claims go beyond the legal gray area.

LiquidVPN disappears, in court and online

Unsurprisingly, in March of this year, several filmmakers filed a lawsuit in Florida District Court against LiquidVPN. This month, these plaintiffs are asking the court to enter a default judgment against LiquidVPN for the fact that the defendant did not plead guilty or did not appear at the most recent court hearing.

According to the court documents, film production companies argue that LiquidVPN should not extend to “safe harbor” protections, as the defendant did not establish a repeat offender policy or designate a registered DMCA agent. The $ 9,900,000 request comprises the maximum amount of legal damages of $ 150,000 for each of the 66 works listed in the complaint. Additionally, $ 1,650,000 has been requested against LiquidVPN for “secondary liability for DMCA violations.”

TorrentFreak first reported on the development and notes that “Popcorn Time” is a trademark of one of the plaintiffs: based in Hawaii 42 Ventures LLC, which is owned and operated by intellectual property attorney Kerry Culpepper. So that intertwines trademark issues with a copyright lawsuit.

However, the questions do not stop there. The list of demands extends to LiquidVPN to permanently suspend the accounts of repeat offenders, scrapping its “no logging” policy. But the face of the LiquidVPN website is nowhere to be seen anymore. For weeks, the home page has been unreachable, even though the Clients Area remains accessible.

LiquidVPN website throws timeout errors for days.
Enlarge / LiquidVPN website throws timeout errors for days.

Previously, the plaintiffs had sued California hosting provider Quadranet for leasing its servers from LiquidVPN. As expected, Quadranet requested that the court say goodbye the lawsuit based on frivolous claims. The hosting provider believes the plaintiffs have sued them “only for tactical leverage, not because Quadranet directly infringed on the plaintiffs’ rights, the allegations.”

Incidents like these could set interesting future precedents for otherwise “neutral” online service providers. Almost all of the features marketed by LiquidVPN represent activities that, from a technical point of view, could be performed by users of virtually any VPN product. And anyone wary of privacy would go for a “no log” VPN provider over one that keeps traffic logs. In such cases, where does the supplier’s liability end? For otherwise benign VPN providers who attempt To provide services in good faith and in a fair manner, could they receive notices from the DMCA and take them to court? And more importantly, what does it mean for honest users?

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