'Expendables 3' Leak Triggers Lawsuit

As Hollywood salvages its lackluster summer with the huge box-office performance of “Guardians of the Galaxy,” another film that is slated to be released soon is triggering a debate between two powerful sectors of the Golden State.

“The Expendables 3,” a film that movie studio Lionsgate had hoped would be a summer smash, has been hit with a pre-release leak, the occurrence of which resulted in millions of illegal downloads.

The sequel features Sylvester Stallone, Jason Statham, and Arnold Schwarzenegger from the previous installments, plus the addition of some new franchise faces that include Mel Gibson, Kelsey Grammer, Harrison Ford, Wesley Snipes, Antonio Banderas, and MMA star Ronda Rousey.

Lionsgate has filed a copyright infringement lawsuit against websites that are offering “The Expendables 3.” The filing took place on the day Lionsgate released the official trailer for the movie, which is set to debut on August 15.

According to the lawsuit, which was filed in U.S. district court in central California, the studio became aware of the theft of a digital copy of the film. The documents filed with the court named the following websites reputed to offer file-sharing: Limetorrents.com, Played.to, Dotsemper.com, Swantshare.com, Hulkfile.eu, and Billionuploads.com.

The lawsuit also named several John Does (unknown parties) as defendants. When entertainment firms or organizations bring lawsuits and do not know the identities of the alleged wrongdoers, they typically use the unique numbers assigned to devices on an Internet network, i.e., IP addresses.

The companies request the court’s permission to issue subpoenas to the Internet service providers in order to get the names of the individuals associated with the IP addresses.

When this is accomplished, the companies are able to go after hard drives and force those parties who are sued to settle the cases.

The websites that have been named are a different matter. The pleadings allege that Lionsgate sent letters to each of the websites involved, demanding the removal of the film. Responses were not forthcoming.

The lawsuit now seeks a temporary restraining order, leading to a preliminary injunction and a permanent injunction to be obtained later, plus actual and statutory damages.

The first two installments of the franchise purportedly brought in more than $575 million. According to Excipio, a firm that tracks illegal downloading, more than 2 million downloads of the film have taken place.

According to Torrent Freak, a similar piracy-tracking site, “Expendables 3” is currently the number one download in the world.

In addition to the civil suit, a federal investigation has commenced to determine the source of the leak that resulted in the illegal downloads. U.S. Customs Enforcement, which has been absorbed into the Department of Homeland Security, is handling the case.

The agency has seized domain names of websites in the past that were used to illegally distribute media content.

In the lawsuit, a key question with which the federal court will have to wrestle is how much Lionsgate will lose at the box office due to the leak and subsequent illegal downloads.

This query brings to light the contrary perspectives that exist between Silicon Valley and Hollywood.

Although there is little doubt that Lionsgate will suffer loss at the box office, the tech firms and their organizations argue that the losses will not be as large as the media content producers are claiming.

The studio can cite a 2011 study conducted by Carnegie Mellon University, which found that movies lose more than 19 percent of the potential box office in the event pirated copies are available prior to a film's release date.

However, the tech community does not buy the study’s findings, as illustrated by a recent article in the tech site TheVerge, which repeated the Silicon Valley view that illegal downloads can have an upside in that a leak occurring weeks before the release, “might just be the best thing that ever happened to ‘The Expendables 3.’”

The contention is that the film will be boosted by the positive buzz that is generated by those who see it early.

Another argument made by techies is that a percentage of the people pirating “The Expendables 3” would never have gone to see the film at a movie theater due to cost, geographic location, health issues, etc., and therefore the pirated portion should not be counted as lost revenue.

The Northern California contingent points out that HBO’s show “Game of Thrones” was the most pirated television show of the year in 2013 for the second time in a row, yet the show has at the same time maintained strong ratings on the premium cable network.

Despite the differing views, it is clear that a generation has grown up with an Internet, which offers a plethora of free content and services.

It is therefore likely that entertainment businesses will have to contend with an even greater number of illegal downloads as technology makes the practice more available to an even greater number of people.