The Dark Side of the Startup Universe

RedtubeUpdated 1/7/2014 Yesterday I came across this article in the German government news channel Tagesschau about tens of thousands of people receiving extortion letters to pay up for a porn flick they allegedly watched online on Redtube. The DA of Cologne is now investigating.

This remembered me very much of the recent case of Kevin Bollaert’s ugotposted.com.

Apparently a Swiss company called The Archive AG purchased the rights for three porn movies, which for some reason are hosted on Redtube who believes it owns the rights to stream those movies.

Those Swiss guys now apparently developed a sophisticated proxy called retdube.net (notice the misspelling) which points to those movies hosted on redtube.com, and injects code which logs the IP of the browser as well as timestamps of hitting start, stop, and pause on the Flash player. But not just that, they also apparently lured people to their proxy via click-through ads, thought to have been disguised as thumbnails, which they heavily promoted via traffic generator Trafficholder.com.

Here is Jan Broer’s nice chart which shows the effects of that traffic generation.

Then The Archive AG involved the famous Internet trolling law firm Urmann + Collegen to go after tens of thousands of people who watched those three porn flicks, asking for €250 cease & desists. Notice some familiarities to the Takedown Hammer? Urmann + Collegen previously tried running a scheme where they published personal information of people who downloaded pirated porn, and for a fee of €650 could be removed. That site was struck down by Bavaria’s department for data protection.

The case gets even weirder, a court in Cologne forced Deutsche Telecom to translate IP addresses into postal addresses, even though in German law streaming any content is not a copyright violation, just the upload, download, or storage might be if the rights are not owned to do so. And the dubious Munich based patent firm Diehl & Partner “certified” a mystery software, which universally could track any user streaming any content without having access to the user’s host or the server, without actually explaining how it works. That miraculous software GLADII 1.1.3 was developed by the Delaware mailbox firm itGuards, Inc, which appears to be identical to the Swiss company The Archive AG.

It appears that the court in Cologne was not particularly tech savvy to understand the difference between streaming and downloading, or how IP addresses could be collected without having access to the server, besides having the means of the NSA.

The fascinating part here is, that this is quiet a bit of effort, not so much different from starting a company, likely involving an investment in the mid to high six figures. In particular considering that the transfer of the rights to the flicks and the registration of the retdube.net domain just happened this July, going into “revenue”, and profits for that matter, already in December. Unlike in the ugotposted.com case, it is not even clear whether any serious laws were violated. Crime might pay in the end.

In an update to this story, it turns out that The Archive AG does not even own the rights to those flicks. The rights were retained by the producer Combat Zone. Undisturbed by that discovery, Urmann + Collegen announced that they will send out a second wave of cease & desists anyway, apparently hoping that people pay up to keep their porn habit confidential. Such boldness makes you wonder – the DA of Hamburg is now going after Thomas Urmann, the CEO of the trolling law firm, for felony fraud and felony extortion, punishable with a minimum sentence of one year.

Update from 1/7/2014

In an update to this story, it turns out that The Archive AG does not even own the rights to those flicks. The rights were retained by the producer Combat Zone. Undisturbed by that discovery, Urmann + Collegen announced that they will send out a second wave of cease & desists anyway, apparently hoping that people pay up to keep their porn habit confidential. Such boldness makes you wonder – the DA of Hamburg is now going after Thomas Urmann, the CEO of the trolling law firm, for felony fraud and felony extortion, punishable with a minimum sentence of one year.

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