EXCLUSIVE: Publishers Reach Quiet Settlement with Mygazines

A copyright lawsuit brought against a Web site launched earlier this year allowing users to share digital copies of hundreds of magazines has been settled.

Lawyers representing a large swath of consumer and b-to-b publishers—including Time Inc., Hearst, Hachette, McGraw-Hill, American Media Inc., Reed Business Information, Bonnier, Ziff Davis and Forbes, among others—settled their case against the proprietors of Mygazines.com on September 8, according to court documents obtained by FOLIO:.

Terms of the settlement were not disclosed.

Davis Wright Tremaine LLC, the law firm representing the plaintiffs, declined to comment on the terms of the settlement. Clifford Lax, a lawyer for the defendant, refused to comment.

But according to a source with knowledge of the terms, confirmed later by additional court documents, Mygazines has agreed to remove all of the publishers’ copyrighted content, review and screen uploads for any content not authorized by the publishers and open a channel to allow Mygazines to be notified when copyrighted content appears.

Legal experts had speculated that a case against Mygazines, which lists its address as a post office box on the Caribbean island of Anguilla—a British territory—would be difficult to enforce outside of the jurisdiction of U.S. copyright law. But the firm representing the publishers identified a Canadian, Darren Andrew Budd of Toronto, as the site’s founder, and filed suit against Budd, Salveo Ltd.—the company to which the site was registered—its designers and hosting companies in the U.S. Southern District Court of New York on August 21, asking the court to shut down the site in the United States. (A separate suit involving even more publishers—including Meredith, IDG, Martha Stewart, U.S. News and Wenner Media et al—was filed simultaneously in Canada.)

In the complaint [CLICK HERE for the PDF], the publishers said the “scope and audacity of the defendants infringing acts is breathtaking,” and that the site tried to avoid enforcement—switching its hosts (“variously located” in the Bahamas, Hong Kong, Russia and Sweden”) when one was served with a publisher’s cease-and-desist letter—in a “calculated effort to evade plaintiffs’ demands and detection.”

The U.S. case was settled on September 8 [PDF]; an order upholding the settlement was issued in Toronto on September 9 [PDF]. On Wednesday, the Superior Court in Toronto ordered [PDF] Mygazines to remove content belonging to all members of the Magazine Publishers of America, including those not named in the original suit. (American Business Media, the b-to-b association, says it is investigating "the best way to protect all ABM members from infringement by Mygazines.")

'Mysterious' Business Model

Mygazines is still live, although many prominent titles that were available for free download at the time of the launch—including People, Playboy, Dwell, Domino, Allure, Spin, Smithsonian, Popular Science, Martha Stewart Living, New York, Men’s Journal and Esquire—are no longer up. Currently, there are over 127,000 users registered on Mygazines.com.

The site recently introduced a program offering publishers demographic statistics, “exclusive rights and control over your titles on mygazines.com” and “revenue sharing opportunities.”

A person claiming to be the site’s founder wrote in a recent e-mail to FOLIO: that he was hoping to work with publishers to develop the site and, ultimately, share revenue. “We will reiterate we have every intention of working with the industry to fortify the future of magazines and the industry in general.”

“The publishers we represent are open to new and innovative opportunities,” said Lance Koonce, one of the lawyers representing the publishers in the U.S. case. “But the defendants started by infringing on a massive scale, then refused to cooperate when our clients found them to be infringing. Only later did they allude to a mysterious business model. That is not seen as cooperating.”

Related Documents

[EDITOR'S NOTE: The Salveo Ltd. named above should not be confused with a U.K.-based company of the same name that sells health and beauty products.]