Online threats from hackers seeking ransom from the movie industry has increased recently. Earlier this year, there were reports that Walt Disney’s chief executive officer, Bob Iger, had to inform employees that the latest installment of their blockbuster series, “Pirates of the Caribbean” (“Pirates”) had been hacked.  News outlets reported that the hackers demanded payment in exchange for not leaking the film online and earlier than the planned release date.  Although the threat made big news in May, it was later revealed that the threat was bogus, and hackers had not been able to procure a copy of Pirates of the Caribbean. This is not the first time that entertainment companies have been extorted for payment by hackers with online threats.  Netflix faced a similar dilemma earlier in this year when hackers gained access to unreleased episodes of Netflix’s hit original series, “Orange is the New Black.”  When Netflix refused to pay up, hackers made good on their threat.

While entertainment companies have long had to battle online piracy of their content, this marks a new trend in intellectual property issues.  Before, studios and entertainment companies worried about the illegal download and sharing of their content, looking to takedown notices or copyright law to provide some means of recourse.

Now, in the face of this threat of unauthorized release of content, many entertainment companies have chosen not to comply with the ransom demands.  Cybersecurity experts support such hardline stances.  Not only would compliance encourage the illegal behavior, but experts warn that hackers often take the money and, upon return, fail to provide the content owners with adequate means of decrypting the files they stole.

Still, other institutions, fearful of the possible ramifications of such hacks, have begun keeping a stock of virtual currency on hand as most hackers demand payment in virtual currency like Bitcoin, as such currency often makes it harder to track these hackers down.  As technology and hackers continue to evolve, only time will tell which solution better serves large institutions.

By contrast, some movie studios have also begun to complain about another online threat, although this one is not illegal.  According to industry reports, some studios have begun to complain that online movie-rating websites, specifically the website “Rotten Tomatoes,” has begun to negatively impact the business and profit of specific movies.  These insiders allege that Hollywood-friendly movies that are aimed at families, and not critics, such as Pirates of the Caribbean, serve as a prime example of movies that have begun to see dwindling audiences after receiving extremely negative ratings on online websites.

Supporters of this view point to the drastic change in revenue expectations of Pirates before and after Rotten Tomatoes released their score for the movie.  Before Rotten Tomatoes rated Pirates, expectations for the movie hovered around the $90-$100 million mark.  After the ratings were posted, estimates dropped significantly, and Pirates ended up only earning approximately $77 million in the U.S. market.

While rating websites such as Rotten Tomatoes is in no way illegal, it is another compelling example of how social media and online websites have begun to have such a significant impact on how the intellectual property of major companies may perform.

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For more information on online threats and cybersecurity protection, please visit our Copyright Protection service page, which is part of our Software and Copyrights Services.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the intellectual property law firm and its IP attorneys may be found at www.klemchuk.com.

Klemchuk LLP hosts Culture Counts, a blog devoted to the discussion of law firm culture and corporate core values with frequent topics about positive work environment, conscious capitalism, entrepreneurial management, positive workplace culture, workplace productivity, and corporate core values.

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