Copyright Trolling Evolved: Okularity Accused Of DMCAing Social Media Accounts, Then Demanding MILLIONS To Reinstate

A decade ago, one of the most ridiculous copyright trolling outfits was CEG TEK (which stood for "Copyright Enforcement Group... um... TEK"). It would shake down people like any other copyright troll, but it also had a "CTO", named Jon Nicolini, who CEG TEK would trot out as a questionable forensic expert in various trolling cases.

It appears that Nicolini has since set out on his own, creating a more modern form of a copyright trolling operation called "Okularity." We've talked recently about how some folks have, instead of using the courts, simply been using social media takedowns via bogus copyright claims as a form of extortion, and that's become quite popular. However, so far, it seems that this has mostly been done by stupid kids looking to make a quick buck.

Nicolini and Okularity appear to have professionalized the extortion racket.

And they may have picked on the wrong person. In a recently filed lawsuit by Enttech Media Group, the parent company of the famous (and excellent) Paper Magazine, lawyer Richard Tauler lays out in great detail the kind of scam shakedown that Nicolini runs via Okularity:

Defendants are engaged in a scheme to deprive Plaintiff and similar digitalmedia companies of their assets by unlawfully manipulating the take-down noticeprovisions of the Digital Millennium Copyright Act (DMCA"). Specifically,Defendants have created software for the express purpose of disabling valuablecommercial accounts on social media platforms (in this case Instagram) so that they canthen demand extortionate sums (in this case over a million dollars) from the accountholders to have the accounts restored.

The scheme operates in the shadows of the Copyright Act and the DMCA.The DMCA provides a rapid procedure (referred to herein as a DMCA Notice") so thatcopyright owners can protect the widespread proliferation of their content digitally. ADMCA Notice requires a statement under penalty of perjury that the submitting partyhas a good faith belief that the content identified in the notice is infringing on acopyright and that the submitting party is either the copyright owner or an authorizedagent of the copyright owner.

Most social media platforms, including Instagram, have policies wherebyaccounts are disabled once a certain amount of DMCA Notices have been submitted ona particular account. Once an account reaches this threshold, Instagram will notreinstate the account until the underlying copyright dispute" is resolved. Because ofthe work associated with the identification and investigation of copyright claims, as wellthe DMCA's penalties for misstatements, it is generally unlikely that owners oflegitimate copyrights would abuse this system.

However, given the massive financial incentives provided to mercenarylitigants by the Copyright Act, would-be claimants have leveraged advances intechnology to create economies of scale in pursuing claims. Specifically, Okularity hasdeveloped software that crawls the internet for images that infringe on allegedlyprotected works. Through its proprietary software, Okularity automatically generatesand submits DMCA Notices to any social media platform, including Instagram,containing an image in Okularity's database. Okularity does this without any of theinvestigation, warning, or legal analysis required by the DMCA, let alone any demandletter to the alleged infringer.

Rather, Okularity lies in wait while DMCA Notices accumulate to the pointwhere Instagram disables the account. Only then does Okularity begin to negotiatesettlement" for the alleged copyright claims. Okularity operates this way becauseOkularity knows that Instragam is the lifeblood of any digital media company,particularly one like Plaintiff Paper, which primarily is engaged in the business ofreporting and commentary of popular culture news and, as such, targets a youngdemographic that uses Instagram as its primary source of media consumption.Okularity knows that if a business like Paper has its Instagram account disabled, it has ametaphorical gun to the head of the target company, since it also knows that Instagramwill not reinstate the account without a resolution of the dispute." With this type ofleverage, Okularity (and in turn the Clearinghouse Defendants) can demand sums thatthey would never be able to demand with a straight face otherwise, putting owners ofeven large businesses like Plaintiff in a life-or-death situation.

Pretty fucking sketchy, no? As the lawsuit notes, however, this appears to violate the terms of the DMCA regarding what you need to do in filing a notice -- making this an interesting test to see whether or not the courts might finally give Section 512(f) of the DMCA (the part that says you can't file bogus notices) some more teeth. As we've noted, courts have been reluctant to care much about 512(f), which has set up a very unbalanced system, in which tons of people and companies regularly abuse DMCA notices. Usually for censorship.

Here it appears to be for extortion.

The specifics of the Paper Mag / Okularity situation detail how this seems to be an entire business built around extortion, with a bunch of unauthorized practice of law built in as well.

Okularity, which is not a law firm, purportedly represents" theClearinghouse Defendants" with respect to their Copyright claims." Okularity'sCEO" Jon Nicolini, created the software Okularity deploys to file DMCA Notices, andnegotiates settlements" with victims of the scheme once they contact Okularity.Nicolini, who is not an attorney, implies that he is an attorney to victims by interpretingthe application of the Copyright Act to images, engaging in damages analysis regardingclaims" of his clients," and by negotiating resolution of legal claims on their behalf.

Defendant Backgrid actively solicits members of the public, includingpersons with whom it has no relationship and about whom it has no knowledge, toupload to it photos which Backgrid will then ostensibly license" (for payment) othersto display and otherwise exploit. Backgrid then uses software to automatically generatecopyright management information (CMI") so that it can track whenever an image isused. Since Backgrid conducts no due diligence of images uploaded to its website forexploitation, and the corollary opportunity for abuse, Backgrid itself has been sued byactual copyright holders for copyright infringement.

Defendant Splash is similarly a clearinghouse for photographs with acheckered past. In 2018, Splash was sued by soccer star David Beckham for itspredatory and distasteful" tactics, which included demanding payment from Mr.Beckham for posting a picture of himself (taken by a paparazzo) on his very own socialmedia account. Beckham v. Splash, Case 2:18-cv-01001-JTM-JCW (E.D. La.).Counsel for David Beckham viewed the $40,000 demand as an attempt to extort."

Okularity's new business model pre-empts such lawsuits by using DMCANotices instead of demand letters. However, since the DMCA Notices are automaticallygenerated and submitted without any attorney supervision, Okularity does not engage inany analysis prior to generating and filing DMCA take-down notices as it should.

Rather, Nicolini operates the scheme with the sole objective to disablesocial media accounts. Not only is no demand letter needed, the scheme makes it so thatits victims come to Okularity, often in a state of desperation, once they realize their assetis being held hostage. This is precisely what occurred in the instant case.

It was only after Okularity filed forty-eight (48) DMCA take-down noticesagainst Paper that Instagram disabled Paper's account. The same day, July 8, Paper wasprovided with the contact information of Nicolini, who immediately began negotiatingthe claims."

Nicoloni suggested that Paper was facing $4.65 million in damages underthe Copyright Act. Nicolini curiously added that it was not his first rodeo." Ascreenshot of the email is below:

Sixteen minutes later Nicolini responded, this time with apparent authorityto communicate on behalf of his clients" under Federal Rule of Evidence 408 to settlefor $1.01 million:

However, Nicolini is not an attorney and is therefore unable to assert legalclaims on behalf of his clients," and likewise cannot negotiate and enter intoagreements on their behalf in the context of a copyright lawsuit.

Needless to say, this offer was unable to be accepted. In further effort toreach a resolution, the undersigned requested Mr. Nicolini provide the DMCA noticesso that Plaintiff could assess the claims at issue. Nicoloni has refused to do in theabsence of a non-disclosure agreement." When asked why a non-disclosureagreement" would be needed, Nicolini had no answer

That's... pretty fucking sketchy in many different ways. The lawsuit argues that the defendants breached 512(f)... but then also throw in a RICO claim. And that always seems iffy. As we all know, the Popehat rule of "it's not RICO, dammit" tends to apply. And I'd still lean towards it not applying here, but I have to admit that this is closer to an actual civil RICO claim than you normally would see. You do have a group of individuals / companies, working together in a pattern to shake down businesses. I still don't expect that claim to last, but this sure does look like a traditional shakedown scheme, using DMCA takedowns for leverage over social media accounts.