Court orders PayPal & Alipay to freeze VPN’s funds in piracy lawsuit

Teddy Sagi
Reading time: 4 minutes

A federal court in Virginia has given a temporary restraining order. The restraining order tells PayPal and Alipay to freeze the assets of VPN provider “VeePN.” Several filmmakers asked for the order because they think the VPN promotes the piracy app Popcorn Time and advertising on the notorious torrent site YTS.mx.

VPN services are generally seen as neutral middlemen. Technically, all they do is route traffic through their servers, which adds an extra layer of protection for their users.

But some VPN providers have gone further by advertising their services directly to people who steal things online. A group of filmmakers says that the Panamanian company “VeePN” did the same thing.

Filmmakers sue VeePN

Earlier this month, numerous movie firms, including Voltage Holdings and Screen Media Ventures, sued VeePN in a Virginia federal court. Hawaiian company 42 Ventures backed the filmmakers. Those are owned by anti-piracy lawyer Kerry Culpepper, who registered trademarks for Popcorn Time, YTS, and RARBG.

In their lawsuit, the plaintiffs say that VeePN “encourages” people to use pirate sites and Popcorn Time by advertising its services on the popular torrent site YTS.mx. The film companies say that this is a violation of both their copyright and their trademark.

Even though VeePN hasn’t answered in court yet, the company is already dealing with its first problem. The filmmakers asked for a temporary restraining order (TRO) to stop the infringement and protect VeePN’s assets. The restraining order was granted last week.

Court Freezes VeePN’s Funds

The order tells different companies to hold any funds related to VeePN while the lawsuit continues. This is true for PayPal and Alipay, two ways the VPN takes payments.

VeePN is also told to stop using “Popcorn Time VPN” immediately. The VPN provider can no longer discuss the app in its marketing materials. The people who own the rights must put up a $25,000 bond.

In his order, District Court Judge Anthony Trenga says that the rightsholders met all four requirements for a restraining order to be issued. This includes how likely their first claims could lead to a win at trial if the case goes forward.

Bad PR

The judge uses several parts of the complaint to back up the claims of trademark and copyright infringement. These have nothing to do with VPN technology and more to do with how the service advertised itself.

“The Copyright Plaintiffs are likely to succeed on their contributory infringement claim because they have shown that VeePN promotes and distributes Popcorn Time VPN,” Judge Trenga writes. Noting that this suggests that the VPN service causes or encourages direct infringement.

“Additionally, at the website https://veepn.com/blog/popcorn-time-vpn, Defendant VeePN promotes itself as ‘Popcorn Time VPN,’ explicitly stating that: ‘Downloading and sharing files via torrent is a violation of copyright law. It means that you may be punished by law. That’s why you need a Popcorn Time VPN’,” Judge Trenga added.

All other requirements are also met, such as the likelihood that the rightsholders will suffer irreparable harm if nothing is done.

Ex Parte

Judge Trenga made the order without hearing from VeePN. The court says this is right because the people who own the rights are afraid that the VPN service would try to move the money, like other defendants in movie piracy cases have done.

In a strange twist, the decision to grant the ex parte motion was influenced by claims that VeePN and the people who worked for it took steps to hide their identities. If the defendants had known in advance, they might have tried to move the money elsewhere.

Even though VeePN hasn’t given an official answer yet, the “Popcorn Time VPN” blog post has been taken down from the company’s site over the past few days. But when this was written, PayPal and Alipay were still listed as ways to pay.

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