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South Dakota and the copyright troll industry

South Dakota’s far from the intersection of intellectual property rights and modern technology. But that doesn’t keep it from being involved with national issues on the subject, even if somewhat extraneously.

Last week a leading blog on copyright trolls urged readers to contact Secretary of State Jason Gant. The reason? Seems Crystal Bay Corporation, incorporated in South Dakota in March 2012, was delinquent in filing its annual report. The company filed it yesterday but there’s still the question of why those keeping tabs on copyright trolls would care. Turns out the company is a shelf corporation that is assisting the trolls.

Copyright trolls use several variations but the most basic is that they file a lawsuit against a number of “John Does” (thousands have been sued around the country) claiming they used BitTorrent to download material to which the troll has the copyright. Someone like Darren M. Griffin, a Crystal Bay “software consultant,” provides an affidavit detailing how the internet protocol (IP) addresses assigned to the computers allegedly used to download the material and the time of download were ascertained. (Griffin is a software consultant with other companies, which may or may not be shelf corporations.) The troll asks the court to issue subpoenas to internet service providers to identify what subscribers had the hundreds of IP addresses. If the troll gets that information, letters go out to those people telling them they can avoid a expense and danger of a lawsuit if they settle now. Many of the lawsuits involve porn films, giving rise to the implied, if not express, suggestion that unless the person settles the allegation they downloaded a porn film will become public knowledge.

Among the many problems with these efforts is that an IP address doesn’t establish who was using it. It could be anyone with access to the computer or if the subscriber has a wireless network anyone who was using it, even a neighbor or hacker taking advantage of an insecure network. There are even some claims that the trolls made some of the porn films available on BitTorrent. Fortunately, a number of ISPs, including Midcontinent, have fought these subpoenas and courts throughout the country are taking note. One prominent troll industry entity, Prenda Law, has been slammed with sanctions and referred to state and federal prosecutors for what one judge called “cottage-industry lawsuits” it brought on behalf of alleged copyright holders.

As Cory detailed shortly after Crystal Bay was formed, it is one of many shelf corporations located in Madison formed by David DeLoach, a disbarred attorney in Dana Point, Calif. Crystal Bay’s articles of incorporation show its offices at 110 E Center St., Ste. 2053 in Madison. The annual report filed this week lists the same address but adds that a “Peter Kurtz” is the company president but no other officers or directors. And where would you contact Mr. Kurtz? You guessed it — his address is 110 E Center St., Ste. 2053.

It appears most, if not all, of the other South Dakota corporations DeLoach formed share the identical address. Yet given the significant number of shelf corporations he’s formed, I doubt DeLoach himself is involved in the copyright troll business. But the building at that address appears to be a popular one for out-of-staters. It’s also the location of one of the many actual South Dakota companies that provide the services RVers and the like need to establish South Dakota residency.


…copyright locusts have descended on the federal courts, exacting low-cost settlements from embarrassed John Does and then moving on to the next [court].

U.S. District Judge Harold Baer, Jr.,
Media Products, Inc. v. John Does 1-26

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