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Companies warned to avoid German 'bounty hunter' schemes

FOCUS: Companies should neither give in to 'copyright bounty hunter' demands nor allow material they own to be used in such schemes.30 Mar 2016

Germany has seen a rash of 'bounty hunter' companies and lawyers taking advantage of a practice designed to keep copyright and competition disputes out of the courts

Under German law, claims under copyright laws are generally enforced in court only after the claimant has sent a warning letter asking the alleged copyright infringer to 'cease and desist'. These letters usually also include a request for costs, and in many cases the recipients sign the undertaking and pay the requested fee rather than have the case go any further.

This situation is obviously open to abuse, particularly in an age of easy internet downloads. We have seen several cases of organisations having their lawyers send out warning letters, hoping to earn a few hundred euros from each, while in other cases lawyers themselves set up special-purpose claimants purely to use this practice to their advantage. The more embarrassing the content downloaded, the more likely the letters are to be effective.

The practice affects businesses as well as individuals, with letters accusing companies of copyright breaches and offering a simple way out if they promise to stop the violation and pay the 'fine'.

Companies should not give in to 'cease-and-desist' letters until they have checked that the letter is genuine.

And rights owners should not to be drawn into such schemes. These 'bounty hunters' approach businesses with copyrights or similar assets, such as music and film producers, offering free services or low fees and promising to bring in money. Such offers should be accepted only if the rights owner has full control over the entire process.

One recent case has shown how bounty hunter schemes can backfire. Thomas Urmann, a lawyer from the Bavarian town of Regensburg, recently lost his licence for exactly this sort of practice.

In 2013, Urmann sent letters to between 40,000 and 70,000 people about video downloads from an adult-content web platform. The letters said that these people had breached the copyright of a company called The Archive, asked them to stop doing so, and also asked for €250 in costs. If successful, this would have netted between €10 million and €17.5 million for The Archive and Urmann.

However, in this case many respondents refused to simply pay up. Some filed civil or criminal charges against Urmann and others associated with the scheme, saying that streaming a video did not constitute a copyright violation, while others questioned how The Archive had obtained their identities.

The Archive said that it had used trawler software called Gladll to find the IP addresses of users accessing content, and had used this to obtain court orders requesting telecoms service providers to release the names and addresses of these users.

In fact, it now appears that The Archive had set up 'honeypots', using sites that looked as though they were on the platform but were in fact offering The Archive content, in order to trick users into copyright violations. It also appears that The Archive may have given false information to the courts, by claiming that users had downloaded content when, in fact, they had only streamed it and therefore had not broken copyright laws.

Urmann has now been forced to give up his licence as a lawyer, and has fled Germany for Turkey. He is, however, only one of many lawyers involved in this practice. In the meantime, German courts have determined that streaming a video does not constitute a copyright violation.

Munich-based Ulrich Lohmann is a dispute resolution expert with Pinsent Masons, the law firm behind Out-Law.com.