Memo to Legal Group reSlysoft follow-up.DOC

Proskauer Rose LLP
Eleven Times Square New York, NY 10036-8299
American and International Lawyers
t 212.969.3000
f 212.969.2900
Re:
Slysoft – Next Steps
To:
Bruce Turnbull, Co-Manager, AACS LA
From:
Alexander Kaplan
Date:
April 2, 2014
Memorandum
PRIVLEGED AND CONFIDENTIAL – ATTORNEY CLIENT COMMUNICATION
Outlined below are certain follow-up steps that AACS LA could take following the judgment
against Slysoft rendered by the Antiguan Magistrate Court.
I.
Return to IPEC (Office of U.S. Intellectual Property Enforcement Coordinator)
•
Where we left off:
o Met with IPEC Chief of Staff Alex Niejelow on 12/7/12. He had indicated
surprise that the credit card companies were only able to cut off individual
acquiring banks versus the merchants themselves, though noted he did not have a
complete understanding of the process. We provided Niejelow congressional
testimony by VISA describing the credit card process generally and how VISA
acts on complaints by content owners. We also sent Niejelow our correspondence
with MasterCard and VISA (see Section II, below). Niejelow expressed interest
in determining how intellectual property owners could take advantage of using the
credit card companies to cut off sellers of circumvention products and, it seemed,
how IPEC could assist AACS LA in working with the credit card companies to
accomplish that.
•
Next Steps:
o Seek a follow-up meeting with Niejelow to determine if IPEC can be of any
assistance to AACS LA in using the Slysoft judgment to cut off Slysoft’s access
to credit card companies or the Internet. Ask if there are any other ways in which
IPEC can assist AACS LA in its pursuit of Slysoft.
II.
Re-engage Credit Card Companies
•
Where we left off:
o Met with Master Card in October 2011. MasterCard agreed to stop processing
transactions for Slysoft and to look at other circumvention products we had
Beijing | Boca Raton | Boston | Chicago | Hong Kong | London | Los Angeles | New Orleans | New York | Newark | Paris | São Paulo | Washington, DC
identified. We (Proskauer and Dean Marks) followed up with MasterCard
multiple times over the course of 2011-2012 after Slysoft changed acquiring
banks and began accepting MasterCard again. MasterCard never responded to
any of our communications and has taken no further action against Slysoft or its
acquiring banks.
o Met with VISA in February 2012. VISA agreed to stop processing transactions
for Slysoft and did so 2-3 times again after Slysoft changed acquiring banks,
including cutting off Avangate at one point. It appears our last request to VISA to
cut off Slysoft’s new acquiring bank was in November 2012 but it was not met
with action.
•
Developments Since 2012:
o Discussion of Slysoft and Antigua in the 2013 Special 301 Report
(http://www.ustr.gov/sites/default/files/05012013%202013%20Special
%20301%20Report.pdf);
o Slysoft placed on the 2013 (Out of Cycle Review of) Notorious Markets List,
released on 2/12/14;
o Decision rendered finding Slysoft and Bettini guilty under Antiguan Copyright
Act.
•
Next Steps:
o Reach out to MasterCard and VISA letting them know about the above
developments that have occurred since the last time AACS LA contacted them
and ask for them to again disable Slysoft’s payment processing network,
specifically asking if they can do more than just cut off the acquiring bank.
o Determine if Slysoft accepts American Express as advertised on Slysoft.com. If
so, send letter to American Express requesting they terminate Slysoft and its
acquiring bank(s).
o Send letter to PaySafe Card, a debit-type card mainly used by Europeans based in
Austria, and request they stop supporting Slysoft.
III.
Consider approaching IPR Center
•
Where we left off:
o AACS met with representatives of the IPR Center in the spring of 2013 to
determine if the government could use the Civil Forfeiture statute (18 U.S.C. §
2323) to seize Slysoft’s Internet domain name. AACS was told that with respect
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to criminal violations of the Copyright Act, only acts of infringement, rather acts
of circumvention or trafficking in circumvention devices, could serve as the
predicate act under Section 2323. AACS was also told that the open (though
stalled) investigation of Slysoft by the Los Angeles U.S. Attorney’s office
(initiated by Fox) could interfere with or delay the IPR Center taking action.
o We then considered and prepared an approach under which we would use a
violation of the Economic Espionage Act (18 U.S.C. §§ 1831-1839), i.e., Slysoft’s
theft of AACS’s trade secrets in the form of (certain of its keys) to request that the
government seize Slysoft’s Internet domain name under Section 2323. (See
attached Memorandum of 5/22/13)
•
Next Steps:
o Proskauer partner Sigal Mandelkar (who formerly oversaw the Computer Crime
and Intellectual Property section of DOJ) can reach out to Tom Dougherty, with
whom AACS met at the IPR Center (or the person above Dougherty), to get
reaction to our proposed approach under the Economic Espionage Act and to
determine if the government would be willing to pursue it. We would also seek to
overcome any effect of the U.S. Attorney’s open investigation of Slysoft on action
to be potentially taken by the IPR Center.
o If the government is receptive to our approach, we would then work to set up a
meeting to present the proposal in person to the IPR Center with representatives
of AACS LA.
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