Last year, a group of independent filmmakers obtained a multi-million default judgment against VPN service LiquidVPN, which stood accused of facilitating piracy. Since the owner of the now-defunct service has paid nothing, the movie companies are calling for his arrest. Meanwhile, a waste company has been added to the dispute.
Over the past two decades, online piracy has proven a massive challenge for the entertainment industries.
Some copyright holders have pursued legal action against individual pirates, but today it’s not uncommon for third-party intermediaries to also be considered legitimate targets.
Over the past several years, internet service providers, hosting companies, and VPN providers have faced infringement liability lawsuits. Most of the VPN companies chose to settle disputes but when LiquidVPN was sued, the provider simply ignored the lawsuit.
Filmmakers Win $15m in LiquidVPN Lawsuit
LiquidVPN was previously owned by David Cox, who was initially listed as a defendant. As the case progressed it emerged that Cox had sold the VPN provider before the lawsuit was filed, with Puerto Rico company 1701 Management identified as the buyer.
Despite facing serious allegations, 1701 Management and its alleged owner, Charles Muszynski, failed to answer the claims filed at a federal court in Florida. This prompted the film companies to request a default judgment of more than $15 million, which was eventually granted a year ago.
The default judgment marks the end of the road on the question of liability but doesn’t necessarily mean that the filmmakers automatically get the money. As it turns out, that can be quite a challenge.
Chasing The Money
Over the past several months, the filmmakers’ attorney Kerry Culpepper has submitted several writs of garnishment to the court. Through these requests, the court can order the seizure of property owned or controlled by the debtors.
In this case, those efforts targeted a yacht, docked at a Florida harbor, and various other types of properties. In addition, the filmmakers obtained a worldwide restraining order against the assets of Mr. Muszynski, 1701 Management, and the third defendant AUH2O.
This hunt for assets connected several companies to Muszynski, including the New Mexico company “WasteResources LLC.” According to the legal paperwork, there is evidence to show that the company is owned and controlled by the defendant.
In January, the filmmakers filed a request to apply the $15 million default judgment against garnishee WasteResources. Part of this judgment also includes trademark infringement damages in favor of a company owned by Kerry Culpepper, the attorney in this case.
$15m Judgment Against WasteResources
After considering the presented evidence, and without the waste company showing up at a court hearing, this week District Court Judge Beth Bloom granted the default judgment.
“At the Hearing, WasteResources did not appear. Plaintiffs presented multiple exhibits demonstrating that WasteResources is an alter ego of Defendants which the Court accepted into evidence,” Judge Bloom writes.
“Pursuant to the evidence presented […] the Court finds that Default Judgment in favor of Plaintiffs and against WasteResources is appropriate in the full amount of the unsatisfied Final Judgment against Defendants which is $15,172,403.00,” the judgment adds.
The default judgment is a big deal for the filmmakers, as it allows them to seize the company’s assets, including any payments owed by its customers.
Filmmakers Want Mr. Muszynski Arrested
The waste company isn’t alone in being targeted, there are other garnishees as well. Meanwhile, the filmmakers submitted a motion for an order to show cause why the defendants shouldn’t be held in contempt.
As part of this request, the rightsholders suggest that Mr. Muszynski should be arrested and held until he complies with the court’s orders.
In January, the court issued an order that requires the debtors to pay a fine of $500 per day, for as long as they fail to comply. The filmmakers note that this failed to move the needle.
“Neither a multi-million dollar judgment or a $500/day fine has persuaded Muszynski to comply with Court Orders. Accordingly, confinement of Muszynski will be the only means to coerce him to comply with the Court order,” the motion reads.
Two sides, Two Lawsuits
The above mostly represents the perspective of the complaining parties but in a rare move, Mr. Muszynski also made an ‘appearance’ in court, via letter (pdf) last month.
The former VPN operator noted that he doesn’t have any funds available, not even to pay for a lawyer. In addition, he maintains that the court doesn’t have jurisdiction over him, since he’s a citizen of St. Kitt’s & Nevis.
Mr. Muszynski further stressed that he isn’t, and never was, the owner of the companies held liable in the initial judgment.
“I have made this letter to avoid ‘appearing’ in the US court and to avoid lending legitimacy to any claim that I ever so appeared. I have been, since 2019, a citizen and resident of St. Kitts & Nevis, have never been served in this matter, and was not an owner of 1701 Management, LLC or AUH2O.”
The letter also mentions that the filmmakers filed a separate lawsuit in St. Kitt’s & Nevis, asking the Florida federal court to await the result of that proceeding before taking any further steps.
Tip of the Iceberg
These events represent just the tip of a legal iceberg. The U.S. case alone has hundreds of docket entries, most of them filed after the final judgment was issued.
All in all, this lawsuit shows that after an initial judgment, a case can continue for months or even years. Whatever the outcome, it’s clear that the filmmakers are willing to go to extreme lengths to collect what they’re owed.