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TorrentSpy intends to appeal a court decision that requires the now-defunct search engine to pay $111 million in damages to the six largest film studios, according to the company's attorney.

TorrentSpy attorney Ira Rothken

Ira Rothken has defended TorrentSpy since 2006, when it was accused in a lawsuit filed by the Motion Picture Association of America (MPAA) of encouraging copyright infringement. In an interview with CNET News.com on Wednesday night, Rothken said the judge's decision was an "abuse of discretion" and suggested that the large dollar amount was an attempt to draw attention to the case.

"What is really going on here is a Hollywood public-relations stunt," Rothken said. "The reason for the size of the judgment was so a bunch of news organizations would write that 'a $100 million judgment was issued against a bunch of pirates' when, in fact, it was declared against a company with no appreciable assets that has already declared bankruptcy."

An MPAA representative could not be reached for comment.

According to Rothken, TorrentSpy filed bankruptcy in England last week and is without the ability to pay even a fraction of the $100 million, rendering the judgment's dollar amount meaningless.

In March, when TorrentSpy executives shut down the site, they noted that the cost of defending the case was hundreds of thousands of dollars.

TorrentSpy helps users locate BitTorrent files, and since BiTorrent is a technology favored by those sharing digital files illegally, the site was known as an important tool for pirates. But the company argued that it never hosted any unauthorized content and shouldn't be held responsible for the actions of its users--just as Google isn't held accountable when people use its service to find pirated content.

The MPAA disagreed, claiming that unlike Google, TorrentSpy existed primarily to help people rip off Hollywood.

In December, TorrentSpy got into trouble with U.S. District Judge Florence-Marie Cooper, who presided over the case, when she determined that TorrentSpy operators intentionally destroyed evidence, making it impossible for the MPAA to get a fair trial. TorrentSpy had earlier been fined $30,000 for violations of discovery orders.

Cooper took the unusual step of terminating the case, which meant that she had found in the MPAA's favor and simply had to determine the damage amount.

But Rothken said the case has no precedent-setting value because TorrentSpy never got its day in court. This may come as good news to IsoHunt, one of TorrentSpy's former competitors, which has also been sued by the MPAA for allegedly violating copyright.

"The decision means absolutely nothing as it relates to other (BitTorrent cases)," Rothken said. "It issue was not decided on the merits. It's obvious we are going to appeal."

The movie industry has seen mixed results from suing individuals for file sharing but continues to clobber BitTorrent search engines.

TorrentSpy, once one of the most popular indexes of BitTorrent files, shut down on Monday following a two-year copyright battle with the Motion Picture Association of America (MPAA). TorrentSpy, accused in a lawsuit of encouraging copyright infringement, finally crumpled under the legal costs.

This can't come as good news to Gary Fung, chief executive of IsoHunt. His company was among a group of torrent-file search engines, which also included TorrentSpy, accused of copyright infringement in a 2006 lawsuit filed by the MPAA. With TorrentSpy gone, the MPAA can now set its sights on IsoHunt.

But Fung points out that TorrentSpy was never able to argue the main copyright issues in court. The presiding judge found in favor of the film studios after ruling that TorrentSpy destroyed evidence. Fung says he is determined to take up the copyright issue to the end. Unlike TorrentSpy, he doesn't care what it costs.

The courts have not yet ruled on whether search tools can be held liable for copyright infringement. Most relevant cases have been settled before going to trial, copyright experts said. It's important to note that IsoHunt and TorrentSpy don't store any unauthorized movie files on their sites but the search engines are often used to find pirated copies.

"There is no reason for us not to see this through. We've come this far," Fung told CNET News.com on Thursday. "TorrentSpy shutting down doesn't mean a victory for the MPAA. The judge declared that TorrentSpy didn't adhere to court procedures. That's different than a judge deciding against the company after hearing their arguments."

But Fung is up against an MPAA legal juggernaut that is playing on its home turf, is fresh off a series of court victories, and has plenty of money. The lobbying group for the six largest movie studios said in a statement on Thursday that it took issue with TorrentSpy's suggestion earlier this week that it lost on a technicality.

"TorrentSpy's characterization of the site's closure as a voluntary decision conveniently ignores the fact that after two years of intense litigation by the major Hollywood studios, a federal court found TorrentSpy liable for copyright infringement," the MPAA said in the statement. "Late last year the court imposed the harshest sanction against the TorrentSpy defendants and ruled in favor of the studios because of TorrentSpy's brazen, continuous, and systematic destruction of evidence and subversion of the judicial process. In short, the ruling meant that TorrentSpy would have to shut down their site sooner or later."

The MPAA's case against IsoHunt is in the U.S. District Court of Central California in Los Angeles, which is perceived by many to be extremely friendly to copyright holders.

Whether that is true, the film industry has racked up plenty of file-sharing victories. Besides TorrentSpy, the MPAA was blamed for driving LokiTorrent and SuprNova.org out of business. And more recently, the MPAA won important legal precedents in the TorrentSpy case.

In June, TorrentSpy was ordered by a federal judge to provide the film studios with user information found in the company's computer RAM. TorrentSpy filed an appeal and argued that data in a computer's RAM was too temporary to be considered "stored information," and that it was impractical for companies to produce such material as part of a civil suit.

In August, the judge denied TorrentSpy's appeal. The decision will conceivably enable the MPAA to gain access to users' personal information in similar cases, say legal experts.

"The demise of TorrentSpy is a clear victory for the content industries," the MPAA said in its statement, "and sends a clear message to operators of other illegal BitTorrent portals that they will not be allowed to operate in the United States without facing relentless litigation by copyright holders."

Fung said he's been fighting the MPAA's attempts to require him to turn over user logs on the grounds that his company is based in Canada, which has stricter privacy laws than the United States.

But the 25-year-old CEO acknowledges that the U.S. and Canadian governments have agreed to honor court decisions in each other's countries.

"IsoHunt is located in Canada and has a slightly different set of circumstances than TorrentSpy," said IsoHunt's attorney, Ira Rothken, who also represented TorrentSpy. "IsoHunt is waiting for the (judge's decision) on a motion for summary judgment. The company is looking forward to defending itself and being the first to go to trial in a search-engine case."

The U.S. House of Representatives on Thursday overwhelmingly approved a higher-education funding bill that includes controversial new antipiracy obligations for universities.

The 354-58 vote to approve the College Opportunity and Affordability Act leaves intact an entertainment industry-backed provision, which makes up just a tiny part of a bill that has ballooned to more than 800 pages.

It says higher-education institutions participating in federal financial aid programs "shall" devise plans for "alternative" offerings to unlawful downloading--such as subscription-based services--or "technology-based deterrents to prevent such illegal activity."

Leading university groups, such as the Association of American Universities and Educause, and fair-use advocates oppose those requirements, arguing they are overly burdensome, potentially expensive, and, at least by their interpretation, leave the implication that schools risk losing their financial aid for failure to comply.

"We reject the contention that campuses play a disproportionate role in the file-sharing problem," Steve Worona, Educause's director of policy and networking programs, said in a statement. "The requirements of the legislation will increase tuition costs and provide no value."

The bill's sponsors, for their part, insist that it's a "myth" that schools will lose financial aid funding if they fail to come up with the requisite plans. But university groups still say that's not the way they read the bill language, arguing that they find it unfathomable that such requirements would carry no penalty.

Major copyright holders, including the Motion Picture Association of America and the American Federation of Musicians, have applauded the provision.

"Piracy hurts ordinary, working musicians, but it also will hurt our nation's culture and its music fans if enough talented and hard working musicians cannot survive in the business," AFM President Thomas Lee said in a recent letter to the committee. "Hopefully, H.R. 4137 will become law and will help educate young Americans about the value and importance of copyright to the artists whose work they love."

It's possible that the section opposed by universities could be stripped out before the bill becomes law. The Senate passed a different higher-education funding bill last year, so the two sides will have to reconcile their differences before sending a final measure to the White House for the president's signature.

The university lobby successfully brought down a more burdensome antipiracy provision in the Senate counterpart bill last year. Senate Majority Leader Harry Reid ultimately yanked a proposal that would have required colleges and universities--in exchange for federal funding--to use technology to "prevent the illegal downloading or peer-to-peer distribution of intellectual property."

University officials don't object to all antipiracy obligations that Congress has proposed. They support a section, which shows up in both the House and Senate versions, that requires colleges merely to advise their students not to commit copyright infringement and to "report to their students annually on their policies and practices with respect to copyright infringement on campus networks."

And not all universities oppose the House bill in its current form. In a letter to the House Education and Labor Committee provided to CNET News.com, University of California Assistant Vice President A. Scott Sudduth said he believes the peer-to-peer file-sharing requirements strike "a reasonable balance between institutions' ability to educate and inform students of their responsibilities regarding copyright law, and institutions' inability to monitor content or control the ever-changing technologies associated with peer-to-peer file sharing."

Executives at Educause, which represents college network managers, argue that the additional obligations are "inappropriate" because their research shows that universities don't actually house a disproportionate part of the piracy problem. Even the MPAA had significantly overstated the damage caused by piracy at the nation's universities.

Update at 4:30 p.m. PST: "Now that the data produced by the MPAA, the lead advocate for this provision, shows that illegal file-sharing by students using university servers is a very small part of the larger file-sharing issue, this provision is the moral equivalent of using a bazooka to kill a fly," said Barry Toiv, a spokesman for the Association of American Universities.

In an attempt to respond to universities' concerns, Rep. Steve Cohen (D-Tenn.) intended to propose an amendment (PDF) to the House bill that would have said no higher-education institution "shall be denied or given reduced federal funding for student loan or other financial aid programs" because of failure to devise an antipiracy plan."

But Cohen ultimately withdrew that amendment because, according to his press secretary, he was dealing with tornado aftermath in his home district and could not be present during a key procedural vote. His press secretary said Thursday that she wasn't sure whether Cohen would attempt to offer the amendment when the House and Senate meet to reconcile differences in their competing bills. Educause, for the record, has said that amendment wouldn't do anything to change its concerns even if adopted.

As the House of Representatives presses ahead with a sweeping higher-education bill that includes new antipiracy obligations for most universities, it now appears it won't be considering an amendment designed to clarify that schools can't lose federal financial aid for failing to fulfill those requirements.

By way of background, the College Opportunity and Affordability Act, which is scheduled to be debated by the House starting as soon as Thursday, dictates that universities participating in federal financial-aid programs "shall" devise plans for "alternative" offerings to unlawful downloading--such as subscription-based services--or "technology-based deterrents to prevent such illegal activity."

University officials and fair-use advocates had balked at that requirement, arguing that by their interpretation, they ran the risk of being docked financial aid for their students if they failed to come up with the requisite plans. The bill's sponsors, for their part, have long disputed that interpretation, arguing that devising the antipiracy plans has no bearing whatsoever on a school's financial aid eligibility and that any suggestion otherwise is nothing but a "myth."

Which brings us to the amendment we reported on Wednesday morning. Rep. Steve Cohen (D-Tenn.) had revealed his intention to propose changes (PDF) to the mammoth bill saying no higher-education institution "shall be denied or given reduced federal funding for student loan or other financial-aid programs" because of "noncompliance" with the antipiracy requirements. The Rules Committee had been scheduled to consider at a Wednesday afternoon meeting whether that amendment and others would be allowed for votes on the House floor.

But since then, that amendment has been labeled "withdrawn," according to the House Rules Committee's Web site.

It wasn't immediately clear why. A Cohen spokeswoman didn't have any answers right away, reporting that her boss was currently on a plane. Representatives from both the Education and Rules committees said they had no information.

Perhaps the amendment was withdrawn because the bill's sponsors have steadfastly maintained that despite what university officials have said, the antipiracy obligations are not tied to financial aid eligibility, which would seem to make Cohen's amendment extraneous. There's lingering disagreement on that front from university officials, however, who contend that by their reading of the bill, noncompliance would, indeed, render a school ineligible for financial aid programs.

Another potential explanation is pressure from the Motion Picture Association of America, which told CNET News.com earlier on Wednesday that it saw no need for the Cohen amendment. A few weeks ago, an MPAA executive also suggested he supported linking financial aid to progress in combating piracy.

For the record, Educause, a lobby group that represents college network managers, said the amendment wouldn't have changed its opposition to the bill provision anyway. The fair-use advocacy group Public Knowledge, however, took a slightly rosier view of the proposal, saying it would have taken some of the "sting" out of the current version.

Update at 3:42 p.m. PST: Cohen spokeswoman Marilyn Dillihay said her boss's schedule was complicated by the destructive tornadoes that touched down in his district on Wednesday and suggested the amendment's withdrawal from the Rules Committee list may be related to that occurrence. She said she wasn't sure whether he would offer the same proposal again.

The U.S. House of Representatives is preparing to vote as soon as Thursday on a mammoth higher-education funding bill that contains new antipiracy obligations for most universities.

Only this time around, it appears that an attempt may be made to water down the thorny new requirements included in the College Opportunity and Affordability Act (PDF). It's not clear, however, that such changes, if adopted, would be enough to appease university officials concerned about the measure.

Here's the deal: right now, a small section of the bill, which sailed through the House Education and Labor Committee last fall, dictates that universities participating in federal financial-aid programs "shall" devise plans for "alternative" offerings to unlawful downloading--such as subscription-based services--or "technology-based deterrents to prevent such illegal activity."

That requirement raised serious alarms among some university officials and fair-use advocates, who worried that schools ran the risk of being docked financial aid for their students if they failed to come up with the requisite plans. The bill's sponsors, for their part, have long disputed that interpretation and say carrying out the antipiracy plans has no bearing on a school's financial aid eligibility.

According to the House Rules Committee, Rep. Steve Cohen (D-Tenn.), a member of a House intellectual-property panel, hopes to offer an amendment (PDF) that attempts to confront those concerns. It says no higher-education institution "shall be denied or given reduced federal funding for student loan or other financial-aid programs" because of "noncompliance" with the antipiracy requirements.

The offering of Cohen's amendment is just preliminary, and it will be up to the Rules Committee to decide at a meeting scheduled for later on Wednesday whether the proposal and dozens of other proposed amendments will be cleared for a vote on the House floor.

The amendment's introduction drew positive first impressions from the fair-use advocacy group Public Knowledge. "We're pleased that Congressman Cohen brought this to the Rules Committee," said Art Brodsky, the organization's communications director. "It would be to the benefit of the membership and the university community if the Rules Committee lets it go to the floor."

But Educause, a group that advocates for the information technology interests of schools, wasn't convinced. Vice President Mark Luker said the Cohen amendment doesn't change his organization's staunch opposition to the antipiracy requirements, which the higher-education community continues to view as "unacceptable," and Educause still wants that provision completely eliminated.

It wasn't immediately clear whether there is any connection between the new amendment and recent reports that the Motion Picture Association of America had significantly overstated the damage caused by piracy at the nation's universities. Cohen's office didn't immediately respond to requests for comment.

But MPAA spokeswoman Angela Martinez said her organization believes that there's no need for any changes to the bill text.

"The language in this provision of the bill should remain as it is because universities are accustomed to the reporting requirements of the HEA (Higher Education Act), and this provision is not unlike reporting on binge drinking or campus safety, and this new provision simply adds digital theft to that reporting list," Martinez said. "Universities will have many opportunities to meet the requirements before a loss of financial aid would occur."

If last year's action on a companion bill in the Senate is any indicator, though, universities may have a good chance of getting their way in this situation.

Under siege by universities, Senate Majority Leader Harry Reid ultimately yanked a proposal that would have required colleges and universities--in exchange for federal funding--to use technology to "prevent the illegal downloading or peer-to-peer distribution of intellectual property." The final funding bill in that chamber merely instructs colleges to advise their students not to commit copyright infringement and to inform students of what they're doing to prevent "unauthorized distribution of copyrighted material" through campus networks.

The House bill's sponsors, for their part, have also stated publicly in the past that it's a "myth" that schools will lose their financial aid if illegal file sharing occurs on their networks or will be forced into using "alternative" file-sharing programs that cost them millions of dollars.

In a fact sheet distributed last year, they wrote, "The bill does not mandate the use of any programs by colleges. Colleges and universities are simply required to report their campus policies on intellectual-property theft, including their penalties, and to develop plans for addressing illegal file sharing. For schools that want additional assistance in stopping illegal file sharing, the bill creates a voluntary grant program."

John Heidemann was skeptical about what the movie industry was saying about campus piracy.

A researcher in the Information Sciences Institute at the University of Southern California, Heidemann had heard the film studios' claim that college students downloading movies on campus were responsible for 44 percent of the industry's domestic losses to piracy.

That added up to about $572 million. So, working with a team of researchers last summer--the famous Hollywood sign on the mountain clearly visible from his workplace--Heidemann and the group came up with a way to track file-sharing use on USC's network. Following a 14-hour monitoring of the system, the team concluded that between 3 and 13 percent of those on the school's network (PDF) were using peer-sharing technology and accounted for between 21 and 33 percent of overall traffic, he said.

There was no way for Heidemann to discern whether the information being transferred was pirated. But even in a worst case scenario, 13 percent indicated that only a small minority of USC students were engaged in illegal file sharing. Heidemann's research flew in the face of the MPAA's claims.

This was an example of a university not relying on the Motion Picture Association of America (MPAA) to tell it what was happening on its network. But USC is the exception rather than the rule.

For two years, the film industry has relied on an erroneous figure to persuade the public that college students are thieves. The MPAA acknowledged Tuesday that a survey it released in 2005 overstated the damage caused by piracy at the nation's universities. The MPAA now says that instead of 44 percent, students account for 15 percent of domestic losses, or about $195 million.

But how did the error go unchallenged for so long? Why weren't network managers from UCLA to Harvard the ones to sound the alarm? Observers say that many schools were probably afraid to do their own studies.

"Look at them, the universities were running scared," said Eric Garland, CEO of BigChampagne, a company that tracks peer-to-peer traffic. "They probably didn't do the research because they were afraid about what they would find. (Colleges) have been singled out as the enclave of the most egregious piracy."

If Tuesday's revelation from the MPAA did nothing else, it should serve to teach college presidents that they shouldn't rely on the word of a third-party to say what its students are up to--especially one that has spent the past two years telling Congress that college students are responsible for almost half of all movie piracy in the U.S.

Mark Luker, vice president Educause, an organization representing college information technology departments, said plenty of people were skeptical and asked to see the data. But the schools "did not run their own surveys," Luker acknowledged. He added that college administrators should have at least "insisted that we see the study."

The MPAA has backed proposed legislation that would require universities participating in federal student financial-aid programs to consider offering "alternatives" to illegal downloading or "technology-based deterrents" to piracy.

MPAA Washington general counsel Fritz Attaway told reporters last November: "I think it's perfectly legitimate for Congress to say, 'Wait a minute. If we're giving you money, we don't want it to be used to help college kids infringe copyright.' "

Just what impact the MPAA's goof will have on the proposed legislation remains unclear. A spokeswoman for the House of Representatives Committee on Education and Labor, which has already passed the higher-education bill backed by the MPAA, said Wednesday that the committee has asked the MPAA for more information and "we plan to review it."

In the meantime, perhaps college presidents should chat with their IT chiefs to see what's going on.

Had anyone at the University of California at Berkeley ever asked Vanessa DeGuzman, a technology support manager for a 7,000-person campus dorm, about the MPAA's estimates, she would have told them, "It definitely seemed like their numbers were high."

DeGuzman acknowledges that all she has is anecdotal information, but she's noticed that the number of "takedown" notices she has received from entertainment companies has been falling significantly. The notices are legal documents that typically notify the school that someone on their network is pirating content.

She credits a greater emphasis on educating incoming students about copyright infringement. UC Berkeley has programs called "Learn Before You Burn," and "Think Before You Click." Students who receive a takedown notice are immediately booted from the network for a week. A second notice and the student must appear before a peer-review board before getting their Web privileges back.

In the future, perhaps the universities can add their own notice: learn the truth before you cower.

CNET News.com's Anne Broache contributed to this story.

According to a recent report from the Associated Press, the Motion Picture Association of America--Hollywood's antipiracy wing--admitted to releasing data that was not only factually incorrect, it grossly overstated the impact college students have on the movie industry's losses.

The MPAA claims its original figure citing a 44 percent loss due to college piracy was inflated by a whopping 29 percent. In fact, the MPAA admitted that the actual impact college students have on the industry's revenue loss is just 15 percent.

"The 44 percent figure was used to show that if college campuses could somehow solve this problem on this campus, then it would make a tremendous difference in the business of the motion picture industry," an expert covering the case said. The new figures prove "any solution on campus will have only a small impact on the industry itself."

So why do the MPAA and the Recording Industry Association of America focus so much of their time on college students? Is there something that these disgusting organizations aren't telling us? Are college students really that bad? Sadly, it's just another example of these organizations trying to vilify the easy target when the real violators are left to roam free.

Piracy, huh?

(Credit: Lionsgate)

At CES on Monday, I was invited over to the Blu-ray booth to speak with top executives at the major Hollywood studios supporting Blu-ray. And while I didn't have the chance to speak with every studio, I did get to speak with the president and chief operating officer at LionsGate, Steve Beeks.

And while Beeks seemed like he had solid command over the finer points of the movie industry, I was interested to see why his studio chose Blu-ray over the alternative.

Expecting the canned answer like, "Well, we thought it was the superior format and I'm happy to say that we were right," you could imagine my surprise when the very first reason he gave was Blu-ray's piracy controls.

For those of you who don't know, Blu-ray's piracy controls--largely based on AACS, BD+, and BD-ROM Mark--are easily the most stringent format to date and have only partially been circumvented to this point.

Regardless, I was utterly appalled at the thought that with all of its benefits--high-capacity, interesting new features to employ while playing movies, major industry backing--Beeks chose piracy as the first talking point.

Of course, I had to find out more.

NVMHCIWG--Baby, remember my name.

I've spent more than a decade reporting on the tech industry--with most of that time logged into the squirrely world of processors and memory--and come across a lot of abbreviations and acronyms. At Intel, Craig Barrett isn't known at Craig Barrett--he's CRB. Then there was the ORBA and CORBA confusion.

And who could forget the time that HANA and DLRA (formerly DHWG) were competing with each other to win the support of the UWBF, ATSC and MPAA? It took three dictionaries and a Ouija board to sort out the conflicts. (And it spells out "What a hard gum scandal, Pa" with a W, B and F left over.)

But the NVMHCIWG takes the cake. It stands for Non-Volatile Memory Host Controller Interface Working Group. It's a group of flash memory makers trying to make it easier for plugging in flash chips into other devices. I just love the idea of these guys giving out commemorative wine glasses for a job well done. "NVMHCIWG Summer Fling Standards Session 1.1" would wrap around the glass twice. Imagine impressing your house guests with that one.

Someone in the office confused it for the song Big Bird sings about the alphabet.

If you have any personal wacky acronym favorite, send them to me in an e-mail. I'll rate them and try to figure out a prize for the winner.