Oron Denies $30M 'War Chest of Funds' to Fight Infringement Claims

Feb 13, 2013 12:00 PM PST

SAN FRANCISCO — Oron attorneys in pretrial motions last week denied allegations that the defunct file-locker site has a "war chest of funds" that exceed $30 million to fight copyright infringement claims.

The allegations, made against Oron in a suit filed by Raging Stallion/Falcon's corporate parent DataTech, comes in the midst of a continuing court battle over frozen funds imposed by the court.

DataTech sued the file-locker site for unspecified damages in August after it found at least 400 titles on the site that were involved in 42,356 separate acts of alleged infringement.

After stating its case last year, DataTech was able to convince U.S. District Judge Charles Breyer to freeze Oron' s U.S. assets in its PayPal, CCBill, AlertPay accounts, as well as other U.S. financial institution accounts.

For months, Oron has requested the court to unfreeze some of the funds to pay attorneys fees and business expenses in the third copyright infringement case against it.

The DataTech suit comes on the heels of gay content distributor Corbin Fisher's legal battle over similar infringement charges against Oron, as well as another by Flava Works.

But Oron attorney Val Gurvitz, fending off allegations that the file locker has available cash, said in a pretrial motion that "Oron does not have any war chest of funds, and it never made anywhere near $30 million over the course of its entire existence."

"This can be proved even without referencing the bank records which DataTech has (either recklessly or intentionally) misread," the motion said.

Gurvitz, who did not immediately respond for XBIZ comment for this story, also denied a contention that Oron was a $2 million-a-month business.

"DataTech has provided the court the 1,000 percent inflated number as part of its continuing attempt to paint Oron as a criminal enterprise," he said. "This allegation, too, is absurd. Oron has never engaged in criminal behavior."

Industry attorney Gill Sperlein, who represents DataTech, told the court in an earlier motion that Oron set up the "war chest of funds" to transfer the "comparatively small amount of frozen funds beyond the reach" of DataTech.

"Until Oron is more forthcoming about all of its assets and until it has produced copies of all of its banking records from August 2011 forward, the court should not consider releasing additional funds from the limited amount available to satisfy what is likely to be a multimillion-dollar judgment in plaintiff’s favor, including a judgment of a substantial equitable disgorgement of illicit profits," Sperlein told the court.

Sperlein said that Oron has not presented any evidence of expenses to the court, and that it has had "sufficient time and motivation" in the case's five months to organize its records and present the necessary documentary evidence, including revenue for its affiliates — the main, perhaps only, generator of income.

"In order to calculate the amounts due to each affiliate, Oron necessarily would have employed robust affiliate sales tracking software," he said. "This type of affiliate sales tracking software is standard in online content distribution. Unless Oron has purged records, it should be able to compile and present evidence showing the proportion of sales.

"Oron is not like Apple, or Google, or any other legitimate cloud storage company, because Oron encouraged its affiliates to upload popular and infringing content by paying its affiliates cash rewards each time a customer purchased a subscription in order to efficiently access the uploaded content. Thus, Oron is not a legitimate cloud-based storage system and the infringing content was not placed on its servers by unrelated third persons but rather by its paid affiliates."

In a separate motion for partial summary judgment, Sperlein told the court that Oron never delivered designated agent information to the Copyright Office prior to June 15, 2011. As a result, he said, Oron isn't entirely eligible for immunity under 17 U.S.C. §512.

"[I]t is not eligible for immunity for any act of infringement that occurred prior to June 15, 2011," he told the court. "Of 42,356 alleged known infringements, DataTech discovered and requested  12,417 removed prior to June 15, 2011."

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