Do copyright holders profit off of their lawsuits?

Yes. Some copyright holders have adopted a “pay up or else” scheme in order to profit from their litigation. There are three main steps to this scheme: Index infringing IP addresses, start a lawsuit against those IP addresses as John/Jane Does and subpoena the Does’ individual ISPs for their personal information during discovery, and then send each Doe a settlement offer threatening to sue if they do not pay up. Copyright holders are able to easily index infringing IP addresses by participating in the torrents that share their content. Most defendants would rather pay the settlement than go to court, so the copyright holders avoid excess legal fees. When defendants do not respond and refuse to pay, the copyright holders frequently ignore them and rarely bring them to court. In such a way copyright holders can maximize their profit.

This scheme has been prevalent in the U.S. since 2010. Only recently have courts started to rule in favor of the defendants (the John/Jane Does) when they realized that privately owned IP addresses do not necessarily represent the responsible party. For instance if I downloaded something illegally from my father’s Wi-Fi, he would be sent the settlement offer and taken to court. Not me. The caveat in this is the fact that public Wi-Fi is protected from such lawsuits, whereas a private ISP subscriber could still be taken to court if their private Wi-Fi was open to the public and some awful person used it to download copyrighted files.

In fact, copyright holders have been working together with ISPs to create a six strike policy. According to this policy, after your ISP catches you downloading copyrighted material on six separate occasions, your ISP will terminate your internet connection and give your personal information to the infringed copyright holders for litigation. This policy has started to go into effect all over the world and has been predicted to activate in the U.S. this year. However, unfortunately for copyright holders the ISPs and governments involved refuse to fund the policy. So in countries like New Zealand copyright holders refuse to use the six strikes policy, claiming that the “costs to send notices to infringers are too high.” In other words their profit margin is too low. They want the government and the ISPs to help foot the bill so they can more easily sue the ISPs’ subscribers and the government’s citizens. In fact the music industry (U.S.) has asked that instead of disconnecting their users’ internet access, ISPs should instead charge their users cash fines. To be paid to the copyright holders, of course.

Currently the music industry, the porn industry, the movie industry, and the video game industry are all on board with the six strikes policy (or the three strike policy in France.) In short, the video game industry (at least in France) plans to join the music, porn, and movie in their new and improved “pay up or else” scheme. Apparently this scheme has proven itself profitable. How long until ever other copyright holder joins in?

I do not condone piracy, because that would be immoral and potentially illegal. However I do condone safe internet use, so I recommend using a proxy or a VPN. The fact that these services prevent you from being identified by your IP address and consequentially prevent you from being sued by these schemes is not my problem.