Anti-Piracy Outfit Rightscorp’s Corporate Status is Void Due to Unpaid Tax Bills

Rightscorp is a key evidence provider in several multi-million dollar piracy lawsuits and a trusted anti-piracy partner of the RIAA. The evidence provided by Rightscorp is not without controversy, however. The company itself has issues too, as the state of Delaware has voided its corporate status after it failed to pay more than $450,000 in taxes.

rightscorp logoBacked by the RIAA, several major music industry companies have taken some of the largest U.S. Internet providers to court.

The music companies accuse these providers of failing to terminate the accounts of the most egregious pirates by ignoring millions of copyright infringement notices. To make them whole, the labels demand hundreds of millions of dollars in compensation.

This has already resulted in a massive windfall in the case against Cox, where a jury awarded a billion dollars in damages. The same music companies now hope to get the same outcome against and RCN, Charter, Bright House, and Grande Communications.

Rightscorp Evidence
Many of these lawsuits are centered around evidence from the anti-piracy outfit Rightscorp. The Delaware company collected settlements from U.S. Internet subscribers for several years but struggled to make a profit.

Going after alleged pirates directly wasn’t a great business model, so Rightscorp started to focus on ISPs. They encouraged the RIAA to take legal action against ISPs and offered its data as evidence, in return for a significant cash injection.

Thus far the RIAA and Rightscorp have booked quite a few successes already but there’s been plenty of pushback as well. Several Internet providers are doubting the accuracy of Rightscorp’s evidence. This includes RCN, which once again articulated its criticism in court a few days ago.

“RCN contends that Plaintiffs and Rightscorp engaged in unlawful, unfair, and fraudulent business practices by flooding RCN with illegitimate copyright complaints and destroying the evidence on which those complaints were ostensibly based,” RCN wrote.

RCN Wants Access to Rightscorp’s Database
These claims are part of RCN’s defense, which has been ongoing for a while. To back up these allegations the ISP requested access to Rightscorp’s evidence databases. This should reveal whether the evidence is reliable and accurate enough.

This request for access was submitted months ago but little progress has been made so far. After several back and forths, Rightscorp’s counsel notified the ISP in September that it won’t allow full access to the evidence database. Instead, it offered to allow access to a more limited database.

“Rightscorp refused to provide access to its databases and instead offered to create a new database, solely for purposes of this litigation and only containing data that Rightscorp deems relevant to RCN,” the ISP informed the court.

The quote above is from a recent court filing where RNC requests an order to compel Rightscorp to open up its database for inspection. This is a reasonable request, the ISP argues, especially since the RIAA is using this evidence to demand over $200 million in damages.

The court filing also questions Rightscorp’s reputation. RCN notes that in a related lawsuit, a federal court ruled that the company had intentionally destroyed the source code of its piracy tracking system.

Corporate Status Voided in Delaware
It’s not clear why Rightscorp doesn’t want to open up its database for inspection. RCN says that it has no clue either but the ISP openly speculates that there may be some internal issues.

As it turns out, the State of Delaware, where Rightscorp is incorporated, has voided the corporate status of the firm after it failed to its pay taxes.

“It may be connected to the fact that Rightscorp appears to lack any corporate powers because its corporate status is void in Delaware for failure to pay over $450,000 in franchise taxes,” RCN writes.

This is a serious issue, as it would be a criminal offense for Rightscorp to exercise its corporate powers before the issues are resolved. In addition, another company can now scoop up the Rightscorp name, if it wanted to.

License Revoked in California
The trouble is not limited to Delaware either. Rightscorp also failed to file its annual statements in California, the state where it’s operating from. As a result, its license to conduct business has been revoked.

These issues could eventually be resolved in the future but it certainly doesn’t instill confidence. The same is true for the non-www version of Rightscorp’s website, which is still broken after several months.

Whatever the reasons may be, RCN is asking the court to issue an order that will allow the ISP to take an uncensored look at the evidence database, requesting an oral hearing on the matter.