IP Law Daily, COPYRIGHT—D. Colo.: Maximum statutory damages awarded for defunct service provider’s online movie piracy, (Nov 4, 2022)

By Kevin M. Finson, J.D.

The maximum statutory damages were awarded against a web services company because it took no action in response to thousands of copyright notices, preferring to preserve its subscriber revenue.

Micfo LLC, a defunct Infrastructure as a Service (IaaS) business that rented IP addresses to virtual private networks and other internet users was liable for the maximum statutory damages for copyright infringement, the U.S. District Court in Denver has held. The lost profits to the copyright holders far exceeded the statutory damages (Millennium Funding, Inc. v. Micfo LLC, October 31, 2022, Jackson, R.).

Millennium Funding, Inc. and its 18 co-plaintiffs (Millennium) were owners of 28 copyright protected motion pictures and screenplays, for a total of 48 registrations. Millennium engaged an anti-piracy service to monitor peer-to-peer network traffic and send copyright violation notices to the service providers assigned the IP addresses where such piracy was confirmed. Micfo, LLC (Micfo) was an Infrastructure as a Service company that primarily engaged in the business of renting servers and IP addresses to virtual private network providers, including NordVPN. NordVPN marketed its service as a way to "safely" pirate Millennium's films. Millennium sent thousands of copyright violation notices to Micfo reporting piracy through its IP addresses, but Micfo took no action. Millennium brought suit for contributory and vicarious infringement. The court had previously found Micfo liable, and also found that the infringement was willful, and now turned to the issue of damages.

Damages. Millennium elected statutory rather than actual damages, which could be set as high as $150,000 per infringement, for a total of $4,200,000. The court reviewed the estimated lost revenue to each plaintiff by multiplying the retail price of each film by the number of acts of piracy for that film and came to a total figure of $6,210,707.28. The court also noted that Micfo had obtained millions of dollars in revenue from allowing its services to be used for piracy. Based on statements made by Micfo's management, the court found that Micfo had deliberately ignored the thousands of copyright notices it had received in order to preserve revenue from its virtual private network clients, which advertised to consumers that they offered a safe way to pirate the protected works. In light of those facts, the court held found the statutory maximum damages of $4,200,000 were very reasonable and awarded judgment in that amount. The court also awarded $46,137.28 in attorney fees and $733.45 in costs pursuant to 17 U.S.C. § 505.

Additionally, the court waived the ordinary 30 day stay of execution in order to allow Millennium to seek reimbursement from restitution funds seized from Micfo in a related criminal case in South Carolina, and assigned any indemnification or similar claims Micfo may have against its customers, including NordVPN and Proton Technologies, A.G., to Millennium to the extent of the judgment. In the criminal case, Micfo pleaded guilty and forfeited nearly $17,000,000 in funds and assets to the U.S. government

The Case is No. 1:21-cv-01594-RBJ.

Attorneys: Kerry Steven Culpepper (Culpepper IP, LLLC) for Millennium Funding, Inc. James Bernard Hood (Hood Law Firm, LLC) for Micfo, LLC.

Companies: Millennium Funding, Inc.; Micfo, LLC

Cases: Copyright TechnologyInternet ColoradoNews