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Here's how it works: a law firm drums up business, signing on copyright holders - mostly movie producers - as clients. The clients are charged nothing, instead getting a percentage of whatever revenue the law firm can collect by going after those sharing the film online.
The law firm hires a P2P detection company - which are also multiplying like especially fertile rabbits - to troll P2P networks, looking for people sharing the works in question. The detection company passes a list of IP addresses back to the law firm, which then goes to court and files a "Doe" lawsuit against the unknown infringers. The court then grants a subpoena that forces Internet providers to convert the IP addresses to names and physical locations. Once the lawyers have addresses in hand, it's just a matter of mailing out letters to the accused, asking them to pay up or risk massive statutory damages of up to $150,000 per infringement in court. In the UK, 15-20 percent of people pay up without a fight.
If done at scale, this has the potential to be a lucrative gig. The Recording Industry Association of America (RIAA) showed us the way, but they never made money suing people - and indeed "only" managed to file against 18,000 people in five years.
By contrast, the new breed of entrepreneurial lawyers got started in early 2010. Together, they have managed to handily eclipse the RIAA's 18,000 lawsuits in the space of nine months. It's not just the US Copyright Group, best known of the lot; over the summer, several new lawyers have anted up for a spot in the game, even if they specialize in family law and divorce settlements. With this much money at stake - US Copyright Group often asks for $1,500 or more - it's not hard to see why lawyers might want a spot at the poker table.
Given that most of the new entrants only began filing cases late this summer, we expect many more lawyers to get in the game before the year is out. Watching US Copyright Group send out all those $1,500+ settlement letters has proved irresistible - and with no one in Congress standing up to publicly denounce the tactics (and the amounts) involved, the number of cases will surely continue to grow.
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