On Friday 4/24/2014, ILND Judge Robert M. Dow Jr granted the plaintiff’s motion for default judgement¹ in Malibu Media v. Jack Funderburg (ILND 13-cv-02614). While default judgments are (sadly) not really big news these days (such outcomes are an integral part of XArt’s secondary revenue stream), this order stood out for a couple of reasons.
In addition to the attorney fees ($2,525), the judge awarded the minimum statutory damages possible: $750 per work ($9,000 total), despite the fact that the plaintiff asked for three times more. The explanation of why the plaintiff doesn’t deserve more is heartwarming (citations omitted, emphasis is mine):
Plaintiff requests $27,000 in statutory damages, which amounts to $2,250 per film. It argues that this request is reasonable, as Defendant’s alleged willful infringement permits the Court to impose statutory damages as great as $150,000. See 17 U.S.C. § 504(c)(2). In addressing Plaintiff’s request, the Court notes growing judicial concern with “the rise of so called ‘copyright trolls’ in the adult film industry, meaning copyright holders who seek copyright infringement damages not to be made whole, but rather as a primary or secondary revenue stream and file mass lawsuits against anonymous Doe defendants with the hopes of coercing settlements.” As an actual producer of pornographic films, Malibu Media is unlikely a non-producing troll that purchases the right to bring lawsuits against alleged infringers. As an enforcer of pornographic copyrights, however, Plaintiff is among the entities that courts are concerned may be “inappropriately using the judicial system to extract quick and quiet settlements from possibly innocent defendants paying only to avoid embarrassment.” The Court is aware of Plaintiff’s extensive history of litigation in the last three years alone. Without drawing any conclusions as to this Plaintiff’s business model, the Court considers the concerns that other courts have expressed in evaluating requests to enter large damage awards with no relationship to actual damages sustained by a plaintiff. To the extent that these concerns reflect industry-wide trends, they counsel against awards that are triple the statutory minimum, as a default judgment imposing significant statutory damages may overcompensate plaintiffs in these circumstances.
The first good thing is that the judge clearly articulated a concern regarding Malibu Media’s abuse of the court system — the abuse that another judge called much less politely: “essentially an extortion scheme.” Judge Dow specifically called Malibu Media / XArt a “troll” (albeit not a “non-producing troll”), a title Lipscomb & Co and their “clients” so comically claim doesn’t apply to them.
The second good thing is that given his concern about “overcompensation,” the judge seemingly remembers that the rationale behind the statutory damages is to approximate real losses (when it is difficult to assess them) — the fact that many judges forget about.
There are two bad things I want to mention, and both are not related to this particular ruling, but to every default judgement in Malibu Media cases.
The first is the default judgement per se. Judgements like this make me sad because defaults are easily avoidable. While in this particular case the judgement is approximately equal to a typical Malibu’s ransom demand, playing this lottery is dangerous for defendants: default judgements around the country lack consistency, and there were cases when some judges awarded more than $100,000.
The second bad is that Lipscomb found a bonanza in the fact that for the purpose of the statutory award the law doesn’t differentiate between a multi-million full-budget movie and a cheap, plotless porno flick illegally filmed at the pornographers’ home in a course of hours. Thus, the judge couldn’t award less even if he wanted. This loophole guarantees that the shakedown business stays profitable no matter what.
Now, the worst part of this order. For some unexplainable reason Judge Dow decided to resurrect the zombie of contributory infringement (citations omitted, emphasis is mine):
Lastly, Plaintiff also asks the Court to (a) permanently enjoin Defendant from directly or contributorily infringing Plaintiff’s copyrights under federal or state law […]
Plaintiff also states a plausible claim for contributory copyright infringement. “A defendant is liable for contributory copyright infringement when it with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another.” Plaintiff alleges that Defendant contributed to the infringing conduct of other BitTorrent users by participating in the BitTorrent swarm—a group of users uploading and downloading bits from each other simultaneously. Plaintiff contends that Defendant’s knowledge can be inferred from his use of the platform, as it is frequently used to share unlicensed content, and the fact that the film was free. Based on these allegations, Plaintiff alleges a plausible claim of contributory copyright infringement.
The eye-popping fact here is that the plaintiff never pled contributory infringement (here is the amended complaint).
The only explanation I can think about is that Judge Dow’s clerk, while preparing this order, dropped all his papers, and the pages from different complaints by different plaintiffs ended up shuffled.
Once again the courts continue to extend liability for BitTorrent infringement to the account holders and subscribers. The lesson: If you pay the bill, make sure no one is using BitTorrent.
The Judge appears to have brought an alternative finding of contributory infringement to this opinion on their own based on the evidence.
I have no idea what evidence the author is talking about, and the card sharping here is astonishing: it’s an impossible stretch from “contributing” by actively participating in a swarm as the judge said (essentially directly infringing) to an Orwellian notion that those who pay the bill have a duty toward porn purveyors and may be held liable.
I understand that Lipscomb would be happy to be able to shake down account holders without a need to prove anything… However, I think that this strange paragraph in the judge’s order is an isolated hiccup, most likely an error, and not a trend: any defense attorney will be able to kill the contributory infringement zombie for good in adversarial proceedings… which brings us to the same conclusion over and over again:
If a lawsuit is filed against you, ignoring it won’t make it go away, and you may end up dealing with collection agencies, which have much sharper teeth than our petty extortionists.
¹ This motion was submitted by Lipscomb’s local Mary K. Schulz, and the signature block indicated a non-existent “Schulz Law, P.C.,” a law firm involuntarily dissolved half a year prior to this filing. That’s OK because the law is obviously written only for defendants while trolls can lie to the court and get away with it.