Peter Sunde Kolmisoppi, Fredrik Neij, and Gottfrid Svartholm Warg.
(Credit: The Pirate Bay)
Media companies will struggle to grab any money owed by The Pirate Bay, as Sweden's official debt collector found that three of the four founders have "no attachable assets" in that country.
In April, a group of 13 media companies, including Warner Music Group and EMI, asked the Swedish government agency, commonly known there as the "bailiff," to collect more than 30 million Swedish Kronor, or about $4 million on their behalf.
This was the amount the media firms were awarded by a Swedish judge after finding four men associated with The Pirate Bay--Peter Sunde Kolmisoppi, Fredrik Neij, Gottfried Svartholm Warg, and Carl Lundstrom--guilty of copyright violations. The men were also sentenced to a year in prison.
But on Monday, the Swedish newspaper Di.se, reported that the bailiff can't find anything to collect for Neij, Warg, and Lundstrom. In addition and perhaps most importantly, the bailiff rejected claims made by the media companies that Reservella, the firm listed as the official owner of The Pirate Bay, is a shell company controlled by The Pirate Bay founders.
The decision by the bailiff might have more significance if the acquisition attempt by Global Gaming Factory X, the software maker and operator of Internet cafes, didn't appear doomed.
In June, Global Gaming announced it had agreed to pay about $8 million, half in cash and half in Global Gaming stock, for The Pirate Bay. Global Gaming CEO has said for weeks the deal would be completed by this Thursday. The transaction appears seriously threatened now after Swedish exchange officials halted trading in the company's stock on Friday over concerns about whether Global Gaming has adequate financing to complete the purchase. There is also a criminal investigation into possible insider trading involving the company's stock.
Questions have also been raised about the accuracy of some of the claims made by Global Gaming's CEO Hans Pandeya. One example is that he said he received a $10 million bid from Napster co-founder John Fanning, uncle of Shawn Fanning. The elder Fanning denied Pandeya's claim.
One part of the claims made by the entertainment industry is that the founders were the ones who negotiated with Pandeya and other Global Gaming leaders. Sources close to Global Gaming told CNET this weekend that Pandeya finalized the agreement with the founders.
According to Di.se, Pandeya has told the bailiff that he doesn't know who is behind Reservella. The major music labels have pressured Pandeya to turn over any money he pays for the site to them. The Pirate Bay's founders have denied owning The Pirate Bay since 2006.
The bailiff said it could not connect The Pirate Bay founders to Reservella and just because they oversaw negotiations, doesn't prove that Reservella is a dummy corporation, according to the report in Di.se.
Should Pandeya come up with the money for The Pirate Bay, it's unclear whether the music and film industries could require him to turn it over to them.
Peter Sunde
(Credit: The Pirate Bay)Peter Sunde Kolmisoppi, one of the three founders of The Pirate Bay, has stepped down as the site's spokesman and has said he is moving on to new projects.
"I have decided to not be the spokesperson for The Pirate Bay anymore," Sunde Kolmisoppi wrote in a blog post Monday. "The reasons are many, but most importantly it takes too much of my time. I want to build something new and I want to focus my energy in a different direction. I have projects waiting to be finished, a book is waiting to be finalized and many more books are waiting to be read."
For the past several years, Sunde Kolmisoppi has become the voice of the controversial BitTorrent tracking service that enabled millions to find and eventually download unauthorized copies of movies and other content. His departure follows a series of crushing legal setbacks for The Pirate Bay.
Last spring, a Swedish court found the Web site's founders: Sunde Kolmisoppi, Fredrik Neij, and Gottfrid Svartholm Warg, guilty of copyright violations. The three men were sentenced to a year in jail and ordered to pay $3.6 million in damages.
Last week, the Netherlands banned The Pirate Bay in that country and issued a threat that unless the site discontinues operation there, the operators will be fined $42,227. Also, a group representing copyright owners in Italy filed a $1 million copyright lawsuit.
Peter Sunde holds up a pretend IOU after The Pirate Bay founders were sentenced to a year in jail and fined more than $3 million.
(Credit: Mats Lewan/CNET News)In June, Global Gaming Factory said it intended to acquire The Pirate Bay. Last week, the company's CEO said the Swedish company has managed to find the funding needed to complete the sale. The transaction is supposed to go through sometime after August 27.
Should the sale go through, copyright owners say they will try to seize any of the proceeds from the sale.
Sunde Kolmisoppi has maintained the three founders haven't owned the site since 2006. They transferred ownership to Reservella. The Motion Picture Industry Association of America claimed recently that the founders control Reservella. Sunde Kolmisoppi denied the allegations.
Napster sowed the seeds of sharing unauthorized music files on the Web and The Pirate Bay harvested the hunger for free content by building a file-sharing community that extended across the globe, according to the founders. Among many young techies and hardcore Internet users, Sunde Kolmisoppi, Neij, and Warg are revered.
The music and film industries have alleged that The Pirate Bay was nothing more than a group of men who used technology to steal from artists and pocket the illegal proceeds for themselves.
Our issues have "been raised to another level and it's time for biological dispersal," Sunde Kolmisoppi wrote. "At the same time, I have a feeling of being sessile when I need to be the most motile creature ever. The regeneration will continue with me in another place.
"Today marks the end of a small era for me, but I am simply leaving a role in order to be a person instead."
Sunde Kolmisoppi suggested that he may return to the copyright/file-sharing debate one day. "It's an important cause and I will not give the fight up."
Peter Sunde Kolmisoppi, a Pirate Bay co-founder who has long been the service's spokesman, reacted to the latest lawsuit filed by the movie industry in his typically defiant way.
Peter Sunde Kolmisoppi says if Global Gaming can't find the funding, it just won't get The Pirate Bay.
(Credit: Peter Sunde Kolmisoppi)He called it "bull****."
On Tuesday, the Motion Picture Association of America filed legal papers in a Swedish court that alleged the three operators: Kolmisoppi, Fredrik Neij, and Gottfrid Svartholm Warg continue to help millions of people commit copyright infringement, even after being sentenced to jail and ordered to pay $3.6 million in damages. In their legal filing, the studios have asked authorities to stop the trio.
Also in the filing, the MPAA asserts that Reservella is just a front. Reservella is the company based in Seychelles, an island nation northeast of Madagascar, that The Pirate Bay founders say owns the site. The studios maintain Reservella is controlled by Neij, but Kolmisoppi denied this.
"Please ask (the MPAA) how they can know that since it's not true," Kolmisoppi said. "They're just saying it because they're upset that they have a faulty claim. They have essentially no idea on the ownership of the Bay."
Kolmisoppi has said in the past that the founders transferred ownership in 2006.
The question of The Pirate Bay's ownership has come up often in the past few weeks. The music industry's trade group has said that if a Pirate Bay sale is completed, it will try to seize any money that falls into the hands of the site's founders. And then there's Global Gaming Factory, a Swedish software firm, which announced plans last month to buy the service.
Hans Pandeya, Global Gaming's CEO, has said he wants to turn The Pirate Bay, a BitTorrent tracker most often used to locate unauthorized film copies, into a legal music operation.
But those plans appear to be on rocky ground. Two weeks ago, Pandeya hired Wayne Rosso, Grokster's former president, to help acquire content legally. On Tuesday, Rosso told CNET News that he had quit and that he had strong doubts about Pandeya's ability to raise enough money to acquire The Pirate Bay after talking to the CEO's investors.
Rosso said Pandeya may not have all the funding he needs. Pandeya denied there was any hold-up and said his company's investors and board will vote on whether to acquire The Pirate Bay sometime in August.
As for Global Gaming, Kolmisoppi said: "If (Pandeya) doesn't have the funding, it won't go through."
The music industry will attempt to seize money paid to acquire the Pirate Bay, according to a high-level music industry source and a spokesman for the International Federation of the Phonographic Industry (IFPI), the trade group representing the music industry worldwide.
Pirate Bay co-founder Peter Sunde shows 'I owe you' note to the music industry following a judge's order that the site's founders pay the equivalent of $3.6 million.
(Credit: Mats Lewan/CNET )Global Gaming Factory, a Swedish software company, made big news two weeks ago by announcing that it would acquire the Pirate Bay, the popular outlaw file-sharing site, for $7.8 million. Since then the company has been touting a new business model and even hiring executives, such as Wayne Rosso, the former Grokster president, to legally obtain content from film and music industries.
What remains to be seen is how that sale might be affected by attempts by the music industry to collect the $3.6 million damages that a court in Sweden awarded it in April. The court found the four operators of the Pirate Bay--Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi, and Carl Lundström--guilty of copyright violations and sentenced each to a year in jail. The court also ordered them to pay 30 million Swedish kronor ($3.6 million).
Alex Jacob, a spokesman for the IFPI, said that the group has always intended to collect the damages award, but now, should the sale go through, music execs know that the original Pirate Bay operators have access to the money.
Whether these attempts to seize part of the proceeds could hold up a sale remain unclear. The first thing to remember is that the sale isn't yet done.
According to a press release, Global Gaming's offer is to pay half of the $7.8 million in cash and the other half in the company's stock. To finance the deal, Global Gaming must issue new shares and to do that it needs the blessing of investors and board of directors. Any acquisition isn't expected to be finalized before August, the company said.
On the other side, the Pirate Bay's founders have said that they haven't owned the company for years.
"We never had any interest in earning money from the Pirate Bay," Peter Sunde told Dagens Nyheter, a Swedish newspaper. "We haven't owned TPB since the search and seizure in 2006... Those who will get the money, friends in a foreign company, have agreed as a condition to put the money in a foundation for future internet projects."
The legal adviser for Global Gaming has said that the Pirate Bay is owned by a company in the Seychelles called Reservella.
Jacob, from the IFPI, says it makes no difference who owns the Pirate Bay. He said: "The judge found the four operators guilty and ordered them to pay the damages."
That's who the IFPI will try to get the money from.
CNET News intern Mats Lewan contributed to this report.
Pirate Bay spokesperson Peter Sunde jokes: "I owe u 30,000,000 SEK" (30 million Swedish kronor, or $3.6 million) during the Pirate Bay web press conference.
(Credit: Mats Lewan/CNET)The verdict has been handed down in the Pirate Bay file-sharing case, but the legal actions are far from done.
"The prosecutor leads 1-0 after the first round, but this will of course be appealed," said Per E. Samuelsson, defense lawyer for Carl Lundström, one of the four individuals sentenced in the Pirate Bay trial, according to the Swedish newspaper Dagens Nyheter.
Samuelsson calls the verdict a scandal. He also claims that his client will have to pay the damages ruled by the court--a total of $3.6 million--because the other three sentenced lack economic resources.
Lundström has been financing a great part of Pirate Bay's operations.
In the verdict, the court regards Lundström as one member of a team. Peter Sunde, spokesman for the Pirate Bay and another of the four sentenced, found this odd.
"We barely know Lundström," he said in an interview broadcast live on the Internet shortly after the verdict on Friday morning. (The interview starts in Swedish but continues in English at about 5:00 minutes in.)
"We cannot pay and we wouldn't pay," Sunde said, then wrote on a piece of paper and showed it to the camera: "I owe u 31,000,000 SEK -- just kidding." That's 30 million Swedish kronor, or $3.6 million.
Sunde continued: "Even if I had the money, I would rather burn everything I own."
Defense lawyer Jonas Nilsson, who represents Pirate Bay's Fredrik Neij, expressed surprised over the verdict--which he, like Samuelsson, called "just the first round."
"I had expected them to be cleared. $30 million Swedish kronor is an enormous amount. It's obvious that the court has followed the policy of the prosecutor. I think this is a clear case for the Supreme Court."
Another critic of the verdict is Christian Engström, vice president in the Pirate Party political group that has a close connection to Pirate Bay.
"I recall what copyright organizations such as IFPI have said. That in case of a conviction, the verdict would be used as an argument to claim blocking of websites that deal with file sharing. That would correspond to banning books and newspapers," he said, according to the Swedish newspaper SvD.
The International Federation of the Phonographic Industry and other film and music industry groups saw the verdict as a victory for copyright holders.
Sunde seems to be the one who worries least about the court's ruling.
"You can look upon it as a movie, at the point when the heroes just have had the first real setback. But thanks Hollywood! You have taught us that in the end the good will win. And it will be a really big victory", he said.
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