Hollywood studios won legal victory against file sharing today, as a judge awarded a $111 million judgment against BitTorrent site TorrentSpy for copyright infringement. But the MPAA, which represented the studios, shouldn’t spend that money yet. Valence Media, which operated TorrentSpy shut the site down in March and is seeking bankruptcy protection in UK courts.

Valence was fined $30,000 for each violation for the approximately 3,700 illicit movie and TV downloads. This is the maximum fine allowed by the Copyright Act.

According to TorrentFreak, TorrentSpy was the most popular BitTorrent site in 2006. But in August of 2007, a federal judge ordered the site to monitor and record all its user activity data. TorrentSpy responded instead by blocking access to U.S. users. The MPAA kept up the legal pressure forcing TorrentSpy to shut itself down.

The Threat Level blog writes that TorrentSpy did not lose this case on merits, rather it defaulted when it failed to provide internal records. TorrentSpy has appealed the default order.

Kontiki, an early commercial peer-to-peer platform provider, formally acknowledged today that VeriSign has sold the company back to its investors at MK Capital. We wrote the news story this morning, but just got a chance to check in with the newly independent company’s president, Eric Armstrong, to talk about Kontiki’s strategy, its experience at VeriSign (which he said remains a minority investor in the company going forward), and the role of software in video delivery. A lightly edited transcript follows.

NewTeeVee: So should I be congratulating you? Are you happy with this turn of events?

Eric Armstrong: I can’t explain how happy we are. When Mike [Homer] started this company with a few other folks from Netscape, they wanted to do what Netscape did for text and images for video, that was a simple, low-cost [way] for people to publish media over the Internet and corporate intranets, that would democratize media. And I think we’ve done that. Last month Kontiki systems delivered over 3 million videos.

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Comcast SVP Rich Woundy told the audience of the DCIA’s P2P Media Summit in Los Angeles on Monday that his company is not spearheading the creation of a P2P Bill of Rights anymore. Instead, Comcast will take part in a newly formed working group of the Distributed Computing Industry Association that aims to define best practices for the P2P industry.

Comcast had proposed a set of guidelines called “Bill of Rights and Responsibilities for P2P Users and Service Providers” in cooperation with the P2P startup Pando less than three weeks ago. The proposal came just two days before an FCC hearing at Stanford University about Comcast’s ongoing practice of throttling BitTorrent traffic. The suspicious timing and the vague wording of the proposed guidelines were some of the reasons why consumer rights groups decried them as “ludicrous.” The DCIA now hopes to start a more substantial dialogue among ISPs, P2P companies and rights holders, but statements from movie industry execs made at the association’s Media Summit show that this won’t be a walk in the park either. Read more of this story

AT&T denied allegations that it hampers P2P traffic using false “reset” commands. In comments filed with the FCC, the telco dismissed claims from the BitTorrent-based video distributor Vuze, which claimed that AT&T was among eight broadband providers interrupting down P2P file transfers.

Vuze is demanding further investigation into the matter to see whether P2P traffic is being singled out. In its response to the commission, AT&T vice president of Internet and network systems research Charles Kalmanek wrote “AT&T does not use ‘false reset messages’ to manage its network.” AT&T said that P2P resets can happen for any number of reasons not relating to AT&T’s network management.

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You know those high-profile lawsuits the MPAA are bringing against the Pirate Bay and other BitTorrent sites? Well…they’re kinda helping boost BitTorrent Traffic, according to Ars Technica. All the publicity surrounding the suits may be attracting new users who had previously not known where to get BitTorrent files.

Online measurement firm Big Champagne said that average BitTorrent traffic rose to 8.2 million downloaders during the two months between mid-January and mid-March from 6.6 million downloaders in the month before Christmas. And the jump isn’t just an anomaly. Big Champagne told Ars Technica: “The baseline has been elevated.”

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Comcast said today it plans to create a “P2P Bill of Rights and Responsibilities” in cooperation with P2P companies and other ISPs. The bill proposal is being co-spearheaded by Pando Networks, a company that recently made waves with its efforts to help ISPs with the impact P2P is having on their networks without throttling traffic. Comcast is also committing to test Pando’s technology and share those test results with the ISP community.

The bill itself is supposed to be a catalog of best-practice recommendations for P2P companies and ISPs alike, but the announcement was more than vague about what those recommendations might look like. It did mention that users should be able to “control their computers’ resources when using P2P applications,” but it didn’t specify which responsibilities and especially which rights Comcast wants to include for ISPs.

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BitTorrent meta-search engine YouTorrent is going legit and will only index sites that source legal torrent files from now on, according to TorrentFreak. One of the guys running the site told TorrentFreak:

“Due to the uncertain nature of the source and accuracy of the results returned by some engines, we have decided to reduce our engine selection to ones that claim the provision of licensed, certified content.”

Not only that, YouTorrent is also exploring a sale of the site and says it has received some interest from potential purchasers.

Though it had just launched in January, YouTorrent’s clean interface and ad-free design helped it rake in more than 10 million unique visitors per month (good luck keeping those people now that the site has gotten rid of the less-than-legal stuff). Looks like we can add YouTorrent to our Ten Sites for Free and Legal Torrents, or our updated list of even more legal torrent sites.

Hollywood has been stepping up its demands for ISP-based P2P filters in recent weeks, with the MPAA suggesting that such filters would help unclog the Internet’s tubes. But how well do P2P-filtering appliances really work? The French music industry association SNEP recently teamed up with Internet Evolution to find out. The idea was to run an extensive test with products from dozens of vendors and publish the results online so that ISPs could make informed decisions.

Well that was the idea. Most of the device manufactures balked at this degree this transparency — 28 vendors were invited to take part in the six-month test; 24 of them declined. And three of the remaining five decided that they didn’t agree with the test results and refused to have them published. So what’s the filtering industry so scared of? Maybe it’s the fact that its products just don’t work that well.

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