IBCAP: Virtual Systems hit with $41M lawsuit after ignoring hundreds of takedown requests

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Ukraine-based Virtual Systems, LLC, had been providing hosting services from data centers on multiple continents, leading to a complaint filed by the International Broadcaster Coalition Against Piracy (IBCAP) on October 15, in the US District Court for the Western District of Washington (Seattle). The complaint asserts claims against Virtual Systems and its owner and CEO, Vyacheslav Smyrnov, for contributory and vicarious copyright infringement.

The complaint alleged that Virtual Systems implemented a “DMCA Ignored” policy under which it advertised that “we ignore DMCA takedown notices,” that Virtual Systems ignored more than 500 separate notices of infringement from IBCAP.

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Such a statement is like catnip to illegal distributors and it reflected the practice of Virtual Systems to offer its servers and network by numerous pirate services.  In fact, an exhibit to the complaint identified eight pirate domains and their virtual IP addresses and alleged that the IP addresses were masked by Cloudflare.  These were mtsiptv.com, sharkytv.com, dominoiptv.com, mohdtv.com, pro-ott.com, xviptv.com, viponetv.com and sansat.net

It’s not the first time IBCAP has flagged Virtual Systems, which made an example of it in its submission to the US Trade Representative’s Notorious Markets Report for 2022.

As of October 16, 2024, when this article was published, Virtual Systems was operational and was still promoting “DMCA Ignored” services on its live Web site.

Global coverage

Virtual Systems’ network. Source: IBCAP complaint, October 2024

In addition to the Amsterdam, Seattle and Kyiv locations identified in the above diagram, Virtual Systems recently opened a site in Singapore.  In addition to hosting and streaming infrastructure services cited in IBCAP’s complaint, Virtual Systems also offers managed private cloud, DDOS protection and crypto payment processing services.

Infringement alleged intentional

The pirate services directly infringe IBCAP member copyrights by transmitting more than 20 television channels and programs which air on those channels over the internet to users in the United States.  All of the channels listed in the complaint have legitimate distribution agreements with the pay TV provider DISH Network; some of which are exclusive.

The complaint also alleges that Virtual Systems was notified about but did not comply with orders from United States courts in separate lawsuits involving three pirate services, which permanently enjoined Virtual Systems from providing its servers and network to those pirate services.

Damages sought

The complaint seeks statutory damages of up to the established legal limit of $150,000 per-infringement, for the willful infringement of 279 registered works — up to $41,850,000 total.  It also seeks the profits attributable to the infringement of thousands of unregistered works; an injunction prohibiting Virtual Systems from providing access to copyrighted works owned by IBCAP members; and recovery of attorneys’ fees and costs plus pre-and post-judgment interest.

CEO also implicated

Virtual Systems CEO Smyrnov was also sued in his personal capacity because he authorized, directed and participated in Virtual Systems’ infringement and failed to exercise his ability to stop that infringement.

Not the first by IBCAP against a transport provider

This is the second lawsuit coordinated by IBCAP against a non-U.S.-based CDN or hosting provider. The first, a $32 million suit against Datacamp, ultimately resulted in Datacamp paying $3 million and agreeing to implement takedown and repeat infringer policies.

The lawsuit was coordinated by IBCAP and filed by IBCAP member DISH Network. Evidence for the case was obtained and provided by the IBCAP lab.

Further reading

IBCAP announces $41 million lawsuit against Virtual Systems. Press release (includes links to the complaint and its exhibits). October 16, 2024. International Broadcaster Coalition Against Piracy, Inc. (IBCAP)

DISH Network LLC, Plaintiff, v Virtual Systems LLC and Vyacheslav Smyrnov.  Case 2:24-cv-01683, Document 1. Filed October 15, 2024. United States District Court for the Western District of Washington at Seattle (via Courtlistener.com)

USTR Notorious Markets 2022 submissions reveal pirate sophistication.  Article. October 12, 2022. by Steven Hawley. Piracy Monitor

Why it matters

Commenting on the Virtual Systems case, IBCAP Executive Director Chris Kuelling said that “This case against Virtual Systems represents the culmination of IBCAP’s strategy to identify non-compliant CDNs and hosting providers and make them not only cease their illicit activities, but also pay for ignoring IBCAP takedown notices.

“As we have made clear through other legal actions, CDNs and hosting providers who support pirate services by delivering infringing content over their networks will be held accountable. The Datacamp case’s favorable outcome and the filing of this lawsuit should send a clear message to non-compliant CDNs and hosting providers that supporting pirate services is not worth the risk.”

About IBCAP

The International Broadcaster Coalition Against Piracy, Inc. (IBCAP) is a coalition of leading international and U.S. content owners, broadcasters, and distributors representing more than 200 television channels from the U.S. and around the world. As the largest anti-piracy organization focused on illicit services offering multicultural content, the nonprofit organization proactively monitors and identifies unauthorized video services, collects evidence, and assists with legal actions and criminal investigations against organizations and individuals engaging in pirate activities. IBCAP coordinates with government agencies and law enforcement both in the U.S. and abroad, reports suspected infringers to the appropriate authorities, initiates investigations, and promotes the prosecution of persons or companies that participate in the illegal distribution of its members’ video content.

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