Posts Tagged ‘Copyright Troll’

Jason Aaron Kotzker

Colorado attorney Jason Aaron Kotzker filed about 450 shakedown lawsuits on behalf of a “barely legal” pornography purveyor X-Art/Malibu Media in New York and Colorado. In October 2014 he abruptly stopped working for the Miami Troll Central (Michael Keith Lipscomb and his firm — the people who, together with the German Mafia, steer thousands of similar extortion actions across the US). No new Malibu lawsuits were filed since then in Colorado (and Lipscomb currently employs another local attorney in New York). All but two Colorado lawsuits, COD 2013-cv-02385 and 2013-cv-03358 (I wrote about the latter case recently), are currently closed.

Apparently, in addition to scamming alleged file-sharers out of money, Kotzker ran another con, mugging the most needy — desperate people who lived from paycheck to paycheck and used payday loan services as a last resort to make ends meet.

According to the complaint filed on 8/7/2015 by the Federal Trade Commission (NVD 15-cv-01512), two entities that were largely controlled by Kotzker — Sequoia One LLC and Gen X Marketing Group LLC — had been knowingly selling consumer data to criminals:

From at least 2011 to at least 2013, Defendants operated as data brokers, collecting and selling sensitive consumer information from consumer payday loan applications to non-lenders.

In particular, Defendants sold this information to at least one non-lender, Ideal Financial Solutions, Inc. and its subsidiaries (collectively, “Ideal Financial”), knowing or having reason to know that Ideal Financial used the information to make unauthorized debits from the consumers’ bank accounts.

Washington Post wrote a story about this news on 8/12/2015:

The FTC said Sequoia One and Gen X Marketing Group, which both primarily operated out of Florida, supplied Ideal Financial with account information from at least 500,000 people who applied for payday loans, leading to more than $7 million being taken from those consumers’ bank accounts without their consent.

In addition to Kotzker, three other individuals were accused, but they have recently conditionally settled, apparently throwing their former brother-in-scams under the bus. While someone should repay those seven million dollars, The Washington Post doubts that those who were robbed will ever get their money back:

The Bartholomews agreed to settle with the FTC for $7.1 million but that will be suspended after they pay $15,000. McDonnell agreed to a $3.7 million settlement, but that is suspended because of his inability to pay. Although both judgments could be due immediately if the defendants misrepresented their financial status, it seems unlikely that consumers will be getting their money back through this case.

This is certainly a disbarment grade offence, and Mr. Kotzker deserves to lose his license, to be financially ruined and even criminally prosecuted (I wonder why this is a civil case to begin with). The only thing that doesn’t let my glee reign is the fact that Kozker has three kids, who are too young and innocent to realize how badly their father failed them.

FTC Press release

 

Malibu Media v. Michael Harrison (INSD 12-cv-01117) lasted for 3 years and amassed almost 400 documents — more than any other porn copyright trolling lawsuit by a large margin. Two weeks ago this case was moving full throttle towards a first jury trial of this kind¹ (set to take place in September). The defendant, represented by Gabriel Quearry, was bombarded by clusters of motions in limine. The entire Troll Central in Miami worked hard to bury the young attorney in paperwork. Not trusting his local Paul Nicoletti, Keith Lipscomb even took the matters in his own hands by appearing in a distant jurisdiction. According to Lipscomb, the evidence of the defendant’s guilt (including perjury and spoliation of evidence) was overwhelming.

And suddenly, on 8/11/2015 the case abruptly ended with a walk-away settlement (which means that both parties are left to bear their own fees and costs).

 

Those who follow tech media are aware of some of the recent developments. Ars Technica and TechDirt ridiculed some Malibu’s motions in limine — a lame attempt to keep the yet-to-be selected jury in the dark about the public’s not-so-flattering opinion about the porn shakedown business in general, as well as about the existence of this blog in particular (Die Troll Die’s too). The troll even moved to shield the jury from hearing certain unflattering terms (“copyright troll,” “extortionist,” and even “pornographer”), which was also widely ridiculed.

Earlier this year this case was also in the news: Magistrate Dinsmore surprisingly ruled that the defendant had destroyed his failed hard drive not in bad faith, thus no sanctionable spoliation took place².

On 7/20/2015 Lipscomb moved to sanction the defendant for his “proven perjury.” The troll claimed that

The version of Internet Evidence Finder Mr. Paige used at the time of his original examination was unable to parse out certain data such as shellbags and “jump list dest. list entries”. Using an updated version of the software, Mr. Paige located six (6) network storage locations (a/k/a drives) that were not identified or produced.

In other words, Lipscomb attempted to introduce new evidence on the eve of the trial, which is regarded as “litigation by ambush” and is universally frowned upon. The claim by a disgraced forensic expert Patrick Paige was also highly questionable: the software in question started supporting shellbags and jump lists a year ago: on 8/7/2014 and 6/18/2014 respectively. There is no explanation why Paige “found” new information just recently: this motion indeed looked like an ambush.

Why?

So why did Lipscomb and Co. abandon a seemingly strong case and forfeit hundreds of thousands in attorney fees, which would be undoubtedly awarded if the troll won the case?

While the exact answer to this question will probably never be known (due to usual settlement confidentiality), we have been watching these cases long enough to make an educated guess. In my opinion, Lipscomb was too scared to lose this lawsuit: such loss would definitely slow down his well-oiled extortion machine. In other words, a win in the jury trial lottery was far less valuable than the consequences of a loss.

While I don’t possess a magic crystal ball and can’t tell how the trial would play out, the prospect of Malibu’s loss was more than real: Indiana is a rather conservative state, and it is not unthinkable that a jury would find little love for an obscenity purveyor, especially the one involved in extortionate practices aimed to pad its already filthy wealth by driving struggling fellow middle class families into huge debt. Just look at Lipscomb’s word dance in his proposed jury selection questions.

The above-mentioned attempt to ambush the defendant with new evidence could also play a role. This “newly” discovered data didn’t produce any smoking gun: the plaintiff’s motion only alleged that the defendant was not truthful in his disclosures concerning his hard drives. However, no traces of Malibu’s obscenities were ever found.

So…

This event may be considered not so newsworthy by the media: I understand that stories about copyright troll asking not to be called “copyright troll” generate more interest. However, to those people who closely follow the developments in the US copyright trolling landscape it is huge news.

Essentially, the most prolific copyright troll in the US history agreed to the critics’ accusation that it has absolutely no intention to try thousands of its shakedown cases in front of a jury, and uses (read: abuses) US courts solely as a part of the money-making machine. Not really news, but this bold confirmation is very important.

Some judges understand what’s going on, yet, alas, a critical mass is nowhere near. I’m sure it’s a matter of time. It took four years for IARDC to start the proceeds against Prenda. Guardaley trolls (including Lipscomb/Malibu Media) are more cautious, and while they are not really different from Prenda, generally they don’t resort to outright fraud, so, unfortunately, it will take much more time to eradicate this particular species of parasites.

Last but not least

In one of the status reports (can’t currently locate) Lipscomb/Nicoletti called the defense attorney Gabe Quearry “difficult” and “unreasonable.” Normally, these words have a negative connotation, but not in this case: “reasonable” in Lipscomb’s vocabulary evidently means cooperating with his racket by talking a client into settling. It is my strong belief that “difficult” people (in this sense) are those who cause the change for the better: Gabe Quearry chose to fight for his client and the cause, and made this world a better place. Not that the price was low: of course three years of unneeded stress left scars — both emotional and financial. I wish Gabe and Michael all the best.

Coverage

 


¹ Lipscomb touts so-called “Bellwether trial” as a valid precedent, “the first Bittorent case that was tried.” This is beyond laughable. I don’t know any attorney (except for the trolls) who took this de facto settlement conference seriously: all the defendants settled prior to what was formally a bench trial, no cross-examination of witnesses took place… Two years later Lipscomb threw a couple of bones to then defense attorney A. Jordan Rushie, apparently for not interfering with this miscarriage of justice. It was clearly a show directed by Lipscomb, and it was aimed at ramping up future settlement demands. Even judges have been scoffing at this travesty.

² Three months ago Magistrate Dinsmore ruled the opposite way in Malibu Media v. Tashiro (INSD 13-cv-00205), finding that spoliation did occur, which led to a default judgment — a rare remedy in an actively litigated case. Lipscomb is now asking for $630,000 in damages (no, it was not a typo). As a result, the family of a nurse and a sales manager is being driven into bankruptcy by a stone-hearted obscenity purveyor, a pathological liar and a law breaker Colette Field, who claims that “We do not want to cause anyone hardship.”

Finally…

John Steele
John Steele

Today Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois, via Counsel Wendy J. Muchman and Marita C. Sullivan, filed a seven-count, 14,000-word complaint against Prenda’s John Steele alleging massive professional misconduct and fraud on the Court (the word “fraud” is used 17 times throughout the document).

I don’t want to go over the complaint — in part because there is nothing new and revealing to anyone who follows the Prenda saga, and also because the tech media will certainly report about this development soon.

What I want to stress is that Malibu Media/X-Art and other copyright trolls who continue abusing the law and plunder US citizens are not that much better than Prenda. Yes, they do not defraud the courts as brazenly as Steele and Hansmeier did (although some scams as Crystal Bay Corporation or Good Man Productions certainly deserve attention from both professional disciplinary bodies and the DOJ). However, the common denominator of their harmful activities is immediately obvious to anyone with IQ greater than 70.

I hope to live long enough to witness similar disciplinary actions against Keith Lipscomb, Michael Hierl, Ira Siegel, and other parasites.

 

Coverage

A little more persistence, a little more effort, and what seemed hopeless failure may turn to glorious success.

Elbert Hubbard

 

Copyright trolling is not a harmless phenomenon; hence it is usually not a joking matter. However, an essential feature of the society’s immune system is people not being serious amid desperation. That’s why I simply can’t help sharing some hilarious moments that I discover while browsing mostly gravely boring dockets.

1

In one of recent single-defendant non-porn Lipscom’b cases initiated “on behalf” of a Prenda-like shell plaintiff of questionable legitimacy (Poplar Oaks v. John Doe, FLSD 15-cv-60281), the defendant decided to file a “protective motion to quash or vacate the Subpoena” on 4/1/2015:

 

As you see, not only this legally illiterate document had nearly zero chances of success, the defendant signed it with his actual name, totally defeating the purpose of such motion. Alas, it is not an exception: laypeople often don’t realize that absent proper protective order/motion to seal, everything they send to the court (including envelopes) will likely be publicly filed.

Keith Lipscomb, together with one of his minions (Jason Cooper), filed a serious 3-page memorandum in opposition. Not surprisingly, Judge William J. Zloch outright denied the defendant’s MTQ on 4/28:

 

2

The defendant didn’t like it, and on 5/11 he decided to try and convince the judge one more time using exactly the same text.

The troll was slightly annoyed:

Either Defendant’s Motion at CM/ECF 11 was filed in error or Defendant is attempting to get a second bite at the apple by re-filing the exact same Motion this Court previously denied. Defendant previously filed the exact same Motion on April 1, 2015. See CM/ECF 7. Plaintiff responded on April 24, 2015. See CM/ECF 8. On April 28, 2015, the Court denied Defendant’s Motion. See CM/ECF 10. Defendant’s re-filed identical Motion is improper and should be stricken.

On 5/27 the judge, however, rather than striking the second MTQ, simply denied it… using exactly the same language as in his previous order.

3

The defendant thought it was unfair that his thoroughly written motion was denied again and decided to give it another try on 6/15 (needless to say, the text didn’t change).

William Zloch
US Federal Judge
William J. Zloch

At this moment we must realize that Judge Zloch does possess a strong sense of humor, as in his 6/30 order denying the third MTQ, he again used exactly the same language.

4

“It must be a misunderstanding!” — thought the defendant, filing the very same text (the fourth MTQ) on 7/13.

“No,” said the judge, returning the ball with an elegant, reflexive racquet swing (7/15: the text is identical to his previous three orders).

 

Lipscomb, who is unquestionably spoiled by his victims’ predictable reactions (the majority either pay the ransom or ignore), apparently suffered from an acute cognitive dissonance, became depressed, and on 7/24 voluntarily dismissed the case without prejudice.

A mandatory cliché “which means that the plaintiff can re-file the case” is expected to accompany “without prejudice.” Well, the troll certainly can refile, but he never will, even to give everyone another chance to enjoy defendant’s outstanding persistence: Lipscomb is a man of many virtues, but sense of humor, alas, is not one of them.

5

In the meantime, the defendant already hinted that initiating a new case against him would be futile — by preemptively filing a fifth identical MTQ on 7/27, this time after this case was dismissed for good.

To sum up: it is wrong always, everywhere, and for anyone, to believe anything upon insufficient evidence.

William Kingdon Clifford

 

In myriads of Bittorent cases across the country, copyright trolls tout a couple of Bittorent transactions registered by an unlicensed German investigator Guardaley/IPP International/Excipio as a “smoking gun” kind of a proof, but Colorado Magistrate Michael E. Hegarty doesn’t think it is enough to establish liability.

Michael E. Hegarty
US Magistrate Judge
Michael E. Hegarty

A month ago Judge Hegarty recommended granting in part and denying in part plaintiff’s motion for summary judgment in Malibu Media v. Justin Winkler, COD 13-cv-03358, where the judge suggested that Malibu needed more evidence.

In my opinion, this recommendation is significant for defense attorneys and pro se defendants not only in Malibu cases, but in all the other Bittorent lawsuits, especially in numerous instances, where forensic examination of defendants’ hard drives yielded no traces of XArt’s smut. Because

Although Plaintiff appears to argue that it has demonstrated direct proof that Defendant copied its films, it is unclear whether the evidence demonstrates that the entirety of each film was copied onto Defendant’s computer. That is, Mr. Patzer (who designed, implemented, maintained and monitored the data collection system used to identify IP addresses that have allegedly committed infringement via the BitTorrent protocol) attests that

[…]

27. Only 1 PCAP per movie infringed is produced to the Plaintiff usually. 1 PCAP per movie is sufficient to prove without question that the infringement of each of the movies at issue occurred. Producing all PCAPs for each of the infringed movies would be superfluous and extremely time consuming.

Accordingly, the PCAPs at issue here contain “pieces” of the Plaintiff’s movies. Mr. Patzer does not explain why one PCAP is “sufficient to prove” Defendant copied the entire film and why producing all PCAPs would be superfluous.

In other words, to establish no genuine issue of material fact (the essence of summary judgment), Malibu needs more evidence. So, Judge Hegarty examined if there is an indirect proof of infringement:

Accordingly, the Court looks to whether Plaintiff can prove copying indirectly “by establishing that [Defendant] had access to the copyrighted work and that there are probative similarities between the copyrighted material and the allegedly copied material.”

In this particular case, the plaintiff’s expert Partick Paige examined the defendant’s hard drive and found traces of 28 of the 39 films listed in the complaint. The judge agreed that in respect to these 28 flicks, the proof of liability, albeit indirect, is strong enough, and if only those 28 were at issue, the motion for summary judgment would be certainly granted, and there would be no need to proceed to a jury trial.

However, with respect to the remaining 11 titles, there is no even indirect proof of infringement, so the judge felt he didn’t have the right to usurp a jury’s prerogative of decision.

Some attorneys already recognized the importance of this development: on 7/23/2015, Jonathan Phillips noticed this recommendation in an eventful ILND 13-cv-06312 case.

Guardaley and Keith Lipscomb (via their local Jason Kotzker), were shaking down Colorado residents rather seamlessly for years, in part because Judge Hegarty (who was de facto the only judge handling Bittorent lawsuits in Colorado) kept rubberstamping Malibu’s ex parte discovery motions and was generally pro-plaintiff. Thus, this kind of judge’s finding that Guardaley/IPP’s recorded transactions are simply not enough to proof infringement is especially noteworthy.

 

Neither plaintiff nor defendant objected, so on 7/14/2015, Judge Wiley Y. Daniel adopted the recommendation of the magistrate.

Thanks to Raul for the heads up.

Five months ago I wrote about a lawsuit against an infamous copyright troll Rightscorp, filed by two Georgia residents who were harassed with repeated robocalls and text messages to their cell phones without consent, which is a clear cut violation of the Telephone Consumer Protection Act (Melissa Brown and Ben Jenkins v. Righscorp, Inc. et al, GAMD 15-cv-00012). The Act provides a relief to victims: $500 penalty for each violation. Plaintiffs, represented by Sergei Lemberg, didn’t specify the exact number of alleged violations (presumably many), but asked a trebled penalty for each instance ($1,500).

On 5/8/2015 Rightscorp, represented by attorney Michael O. Crain, answered to the complaint, denying any wrongdoing¹. This is laughable as I can’t imagine a shortage of witnesses who can testify under oath about similar harassment.

What’s more laughable is the affirmative defenses Rightscorp threw at the wall. While the majority of its eleven defenses are questionable enough, the defenses 3-6 attack the law itself, claiming that TCPA is unconstitutional, namely it violates the First, Fifth, Fourteenth, and Eighth Amendments. Why is it so, Rightscorp doesn’t say.

Good luck with that.

 

(I bet if the Eighteenth Amendment wasn’t repealed, Rightscorp’s victims might reply in the same manner, claiming that defendant’s ridiculous claims were made under unconstitutional influence.)

Attempt to delay the comeuppance failed

One month earlier, on 4/10/2015, Rightscorp tried to stay this case pending the outcome of the anticipated motion for certification in the TCPA class action filed in California by Morgan Pietz last November (Blaha et al v. Rightscorp, Inc., et al, CACD 14-cv-09032). Rightscorp speculated that these lawsuits overlap and the plaintiffs would be a part of the class. The plaintiff responded on 5/01/2015: “no, they wouldn’t”:

Resolution of the instant motion is relatively straightforward: Plaintiffs unequivocally opt out of any class certified in Blaha. No class has been certified in Blaha. Whether one will be certified is entirely speculative. If one is certified at some later date, Plaintiffs have a due process right to opt out of any class and pursue their own claims against Rightscorp. See Fed. R. Civ. P. 23(c)(2)(v) (Rule 23(b)(3) class members must be permitted opportunity to exclude themselves); […] Plaintiffs opt out, they do not consent to have their claims against Rightscorp be decided in a class action where they would likely recover less then as individual plaintiffs and they do not wish to cede control of their claims to individuals and attorneys with whom they have no relationship. Because Plaintiffs opt-opt out of any class resolution, there is no ground to stay the case here.

It is wide known that “litigation by delay” is inherent to copyright trolling, and Rightscorp is not spared:

Rightscorp wants a stay because it, apparently, is being repeatedly sued for serial violations of the Telephone Consumer Protection Act and wants to limit its exposure by delaying cases and forcing Plaintiffs here to join a class action of which they want no part. With all due respect to Rightscorp, that it is involved in litigation in another jurisdiction for engaging in similar unlawful behavior is not this Court’s or Plaintiffs’ concern nor is it grounds to stay this case.

Yesterday Judge Charles Ashley Royal agreed with the plaintiffs (a promise to opt out of the class was fatal to the delay attempt) and thoroughly denied Rightscorp’s motion:

Coverage

 


¹ I somewhat agree with the defendant pointing to vagueness: indeed, the complaint would be way stronger if it itemized the violations, or at least specified how many times Rightscorp robocalled to its victims.

When a porn copyright shakedown factory Malibu Media / X-Art resumed its operations in New York after a two-year hiatus, it raised many brows because this state has proven to be very hostile to copyright trolls in the past: to my understanding, in 2012 New York Southern and Eastern districts amassed the largest number of court rulings scolding trolls one way or another.

Astonishingly, this time the troll lawyers (Lipscomb, Eisenberg and Baker, via a local Jacqueline M. James) managed to stay afloat and fleece New York citizens for almost a year, with very few setbacks. To date, Malibu Media filed 253 cases (NYSD: 200, NYED: 53).

Alvin K. Hellerstein
US Federal Judge
Alvin K. Hellerstein

This may change after today’s Order and Opinion issued by a district judge Alvin K. Hellerstein in Malibu Media v. John Doe (NYSD 15-cv-04369). Malibu’s motion for ex parte early discovery was denied, thus the case was effectively dismissed.

This order was built upon findings and opinions by other judges, and it is both significant and unique because of the number of citations from troll-busting New York, Wisconsin and Ohio rulings.

Citing a wide known “Copyright Trolling, An Empirical Study” by a Chicago law professor Matthew Sag, the judge started with describing the trolls’ modus operandi:

Recent empirical studies show that the field of copyright litigation is increasingly being overtaken by “copyright trolls,” roughly defined as plaintiffs who are “more focused on the business of litigation than on selling a product or service or licensing their [copyrights] to third parties to sell a product or service.”

Quoting last month’s OSC by an OHSD Judge Timothy Black, Judge Hellerstein effectively called Malibu “copyright troll,” despite Lipscomb’s comical effort to deny the obvious.

And after stating that

In 2012, judges in the Southern District and across the country began awakening to the danger of copyright trolls, especially in the context of pornography,

Judge Hellerstein continued with the most damning quotes from orders by judges Marrero, McMahon, Baer, Brown, Fox, Black, Oetken, Conley, Randa and others. Again, I never saw an order based on such a thorough research. (We covered the majority of the cases cited in this order — follow the links in the previous sentence.)

In denying Malibu’s motion for ex parte discovery, the judge analyzed the factors allowing this type of exceptional relief, and in the judge’s opinion, none of these factors were favorable to Malibu: a nice reminder that the phrases “ex parte discovery” and “rubber stamp” are spelled differently.

Citing Judges Marrero and Oetken, Judge Hellerstein time and again reiterated the simple fact that an IP address is not equal to a person, thus concluding that Malibu didn’t show a prima facie claim:

[t]he fact that a copyrighted work was illegally downloaded from a certain IP address does not necessarily mean that the owner of that IP address was the infringer. Indeed, the true infringer could just as easily be a third party who had access to the internet connection, such as a son or daughter, houseguest, neighbor, or customer of a business offering internet connection.

Moreover,

And even if Plaintiff could definitively trace the BitTorrent activity in question to the IP-registrant, Malibu conspicuously fails to present any evidence that John Doe either uploaded, downloaded, or even possessed a complete copyrighted video file.

Finally, Plaintiffs assertion that there is no alternative means of obtaining the desired information is inadequate. The only support for it comes from the declaration of Patrick Paige who, as Magistrate Judge Fox found in a different case, lacks personal knowledge of the methodology used by ISPs to match the IP address with its registrant. […] The Paige declaration that Judge Fox found deficient nearly three months ago is identical to the Paige declaration submitted in support of this motion. It fares no better this time.

The judge didn’t forget about the most egregious troll’s conduct, specifically:

When courts have attempted to place restrictions on the subpoena to prevent Malibu from abusing the process to extort defendants, Malibu has flagrantly disregarded them. For example, after one court issued “two orders unambiguously ordering [Malibu] to file [the identified IP-registrant’s name] under seal,” Malibu filed it publicly anyway. […].

And in the Eastern District of New York, Magistrate Judge Gary Brown took additional precautions to protect John Doe’s identity by explicitly instructing that “the subpoenaed information be sent directly to the Court, ex parte and under seal.” Patrick Collins, Inc. v. Doe 1 […]. Malibu instead served subpoenas that requested the identifying information be sent directly to Plaintiffs counsel.

The conclusion was devastating to the plaintiff (emphasis is mine):

In light of Malibu’s history of abuse of court process and its failure to show “good cause,” I decline to give it the benefit of an exception to the normal rules of discovery. Plaintiff’s motion for leave to serve a subpoena on Time Warner Cable is denied. The case will proceed in normal fashion.

I really hope that other New York Judges will adopt this extremely well-researched opinion and oust the abuser from their state, this time for good:

 

Coverage
Timothy Black
US Federal Judge
Timothy Black

An Ohio Judge Timothy Black clearly understands the shakedown nature of the Malibu Media/XArt pornotrolling cases, and he is irritated. Judge Black admonished the troll on more than one occasion in the past, and I find it astonishing that Malibu’s local, telephonophob Yousef Faroniya, and his puppeteers in Miami continue playing games with this judge.

Today Judge Black issued orders to show cause in two Malibu Media v. Doe cases assigned to him (OHSD 14-cv-00707 and 14-cv-00718). This is the third OSC in each case. The first one was about Malibu not serving the defendants timely. The second OSC dealt with Malibu’s delay to apply for entry of default. And the third one was issued today — to show cause why these two cases shouldn’t be dismissed for failure to timely move for default judgement — despite explicit orders to file such motions within 21 days.

Judge’s patience is surprising, borderline frustrating, but as we read past the first three pages, it becomes clear that his patience is so thin that the next violation, no matter how small, will be disastrous for Faroniya and Lipscomb. What started as a narrow, case-related stuff, developed into a holistic, damning description of the troll’s modus operandi:

The Court does not view Malibu Media’s conduct in this action in isolation. Rather, the Court views it as part of an unmistakable pattern that has emerged in other actions before this Court and in context of observations made by multiple other federal judges in cases involving Malibu Media.

This Court has observed the conduct of Malibu Media and its counsel of record in over 60 cases filed in this District in the past twelve months. This is not the first case in which Malibu Media has filed a summons return well after the date of service. Counsel appears to have made a misrepresentation in seeking an extension of time to complete service in two cases. The Court also issued an order to show cause after counsel publicly filed a defendant’s name in direct violation of two orders unambiguously ordering counsel to file that information under seal.

Judge Black outlines every questionable conduct he is aware of (and makes a note that it may be just a tip of the iceberg):

The Court is not blind to the reality that these allegations likely substantially underrepresent the amount of misconduct that goes unreported by defendants who simply pay Malibu Media’s settlement demand rather than face the prospect of expensive and extensive litigation regarding their purported interest in pornography.

The judge unapologetically calls Malibu Media ”copyright troll” amid Lipscomb’s comical protestations and his reliance on Judge Baylson’s “not a troll” indulgence issued during the shameful Bellwether Settlement Conference:

The Court is aware that Malibu Media, through separate local counsel, has filed thousands of similar cases in federal courts across the country. A copyright troll has been defined as “an owner of a valid copyright who brings an infringement action not to be made whole, but rather as a primary or supplemental revenue stream.” […] Under this definition, Malibu Media certainly qualifies. However, Malibu Media generally responds to this allegation by pointing to comments of the trial judge in the so-called bellwether trial as unassailable proof that its intentions and tactics differ from other entities that bring copyright infringement actions related to pornographic movies. […] The greater weight of experience suggests otherwise.

Judge Black calls out at length Malibu’s abusive tactics of filing inadmissible, scandalous “third party infringement evidence” — the infamous “Exhibit C,” for which Malibu and its local Mary K. Schulz were sanctioned twice in Wisconsin.

It is heartwarming to see that this judge can recognize when Lipscomb adapts his tactics ostensibly to comply with orders, but in reality — to smuggle the old sleaze under the guise of novel approaches:

Malibu Media is a sophisticated litigant, so it should not be allowed to avoid sanctions simply by adapting its tactics after being questioned by multiple federal judges.”

As an example of such “adaptation,” the judge presents his own experience of striking certain paragraphs from a complaint, having found those paragraphs to be “Exhibit C” in disguise:

Instead of attaching Exhibit C, Malibu Media adapted its practice and now made an explicit reference to a document with “additional evidence” that the defendant had distributed a large number of third-party files through BitTorrent. Malibu Media disingenuously offered to produce this document to the Court with the seemingly off-handed remark that “many of the titles to the third party works may also be relevant to proving Defendant is the infringer because they correlate to the Defendant’s hobbies, profession, or other interests.” Id. Citing the two Wisconsin district court cases that imposed sanctions for attaching Exhibit C, the Court struck the offending paragraphs from the complaint and ordered Malibu Media to file a conforming amended complaint forthwith. Two months later, Malibu Media voluntarily dismissed the action without filing an amended complaint.

In one of the cases Judge Black also threatens Rule 11 sanctions for apparent false statements about the service (this is not the first Malibu service-related lie):

The affidavit of process server Kevin Allen states that he personally served Defendant at Defendant’s home on January 26, 2015. This directly contradicts counsel’s representation in the February 10, 2015 motion that “despite the process server’s efforts, the Defendant has not been served.”

The harsh language of these orders suggests that if young Faroniya and/or his Miami curators manage to annoy this judge just a bit more, the force of his hammer descending on the troll’s head will be as large as his enormous patience.

 

 

Thanks to Raul for recapping the documents (OSC 14-cv-00707 Doc 17; OCS 14-cv-00718 Doc 15).

Remember the case where defendant’s identity was revealed in violation of the court order? On the same day Judge Black addressed three pending issues there, and while he ruled essentially in favor of the plaintiff, the tone was basically the same as in the orders discussed above (“further games won’t be tolerated”). Scroll down to the 5/27/2015 update.

Coverage
  • TechDirt: Ohio Judge Fed Up With Malibu Media: Appears To Give Copyright Troll One Last Chance
  • Reuters (paywalled): Judge says ‘copyright troll’ shoe fits porn producer Malibu Media

    Keith Lipscomb, Malibu Media’s general counsel and founder of the Miami firm Lipscomb Eisenberg & Baker, said in an interview that there have been many other judges who have “rejected the accusations” that Malibu Media used abusive tactics.

    Didn’t John Steele say something similar a couple of years ago?

    In the one case that has gone to trial so far, in which three defendants admitted liability, U.S. District Judge Michael Baylson in Pennsylvania said in 2013 that the company was not a troll. “Rather,” Baylson said, “Malibu is an actual producer of adult films.”

    This is astonishing: Judge Black specifically referred to “so-called bellwether trial” (Black’s words) as “is of little relevance to the present inquiry,” and Lipscomb continues to stubbornly pound that table. Facepalm.

  • Law360: Porn Co. Malibu Media Looks Like ‘Troll’ To Ohio Judge
Update

6/9/2015

Well, well… One day after the deadline (of course!) the troll responded to Judge Black’s scolding Orders to Show Cause.

If you have neither law nor facts on your side, and pounding the table would inevitably prompt judge’s wrath, run with your tail between the legs.

Embarrassing, to put it charitably…

 

Last month I wrote about a default judgement in a Malibu Media case: an Illinois judge expressed a concern that all these lawsuits are designed to be a secondary revenue stream for rightsholders rather than a legitimate recovery of lost sales. As a result, he awarded the minimum amount allowed by law, $750 per work, $9,000 in total (plus attorney’s fees).

Regarding the “per work” part of the law, I noted 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.

Sheri Polster Chappell
US Federal Judge
Sheri Polster Chappell

It seems that I was too pessimistic: today Judge Sheri Chappell awarded a $6,000 default judgement (plus $1,657.00 in fees and costs) for 47 “works” in Malibu Media v. Danford (FLMD 14-cv-00511). She reasonably ignored the overblown claim of multiple infringements, thus patching a loophole Keith Lipscomb has been abusing for years. In addition, the judge questioned the “lost revenue” hype copyright trolls are so accustomed to pulling out of thin air (emphasis is mine):

Malibu Media asserts in this instant case, the infringement was committed willfully. Specifically, Malibu Media seeks $1,500 per work in statutory damages. Since Malibu Media alleged Danford infringed 47 works, Malibu Media seeks a total of $70,500 in statutory damages. Malibu Media argues this amount is reasonable because Danford aided other participants through the BitTorrent system to infringe its copyright and caused the lost sales of its content which likely exceed lost sales of $70,500 or more.

The Court, however, finds a statutory award of damages of $70,500 would provide Malibu Media a windfall and therefore is not warranted here. Clever Cover s, Inc., 554 F. Supp. 2d at 1313 (“statutory damages are not intended to provide a plaintiff with a windfall recovery.”) […]. Here, Malibu Media failed to provide any evidence of its own lost sales, profits, or licensing fees as a result of the infringement to assist the Court in determining the appropriate amount of statutory damages to award.

Similarly situated courts addressing statutory damages where a defendant has downloaded copyrighted materials through a BitTorrent system have assessed damages of approximately $6,000 based on an inference of willfulness.

The judge refers to three non-porn cases where there was an award of $6,000 per a single movie, and concludes:

Nothing about this case materially distinguishes it from cases in which damages in the range of $6,000 have been awarded. In light of the facts and circumstances in this case as well as other similarity situated cases within this district, the Court finds a statutory award of $6,000 is appropriate.

I hope that this is the beginning of a pattern that will bring more or less reasonable numbers into the game, thus rendering the shakedown business model less profitable.

It is worth repeating that while in this particular case the default judgement was far less than a typical settlement demand in a Malibu Media case, relying on a favorable default is not a good idea. We saw default judgments that exceeded $100K.

 

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Updates

5/27/2015

Surprise, surprise… Lipscomb moves for reconsideration. “Your Honor, please, please don’t destroy our gravy train; I was so clever to discover that four dozens of plotless, cheap, criminally produced home clips depicting teenagers having unprotected sex should be treated separately for statutory purposes. Each of this shitty clips is equal to a blockbuster.” You think I’m exaggerating? Lipscomb indeed said this (emphasis is original):

The cases cited indeed assessed damages at $6,000.00, but each such case involved only one copyrighted work.

[…]

Since Countryman Nevada, TCYK, Thompson, and Bait Production each involved only one copyrightable work, the $6,000.00 award granted in those cases was within the permissible per work range of $750.00 and $150,000.00.

[…]

Your Honor overlooked, however, that Defendant infringed not merely one (1), but forty seven (47), of Plaintiff’s works. Adopting the $6,000.00 per work analysis utilized in Countryman Nevada, TCYK, Thompson, and Bait Production, the proper award here would be $282,000.00.

This default judgment is an existential threat to shakedown artists, so I expected this missive to be filed sooner rather than latter.

6/3/2015

The judge says “oops” and sides with Lipscomb

This order could put an end to Lipscomb’s extortion racket, but at the same time it looked too good to be true. Some attorneys I talked to were skeptical that this order would stay. Alas, they were correct: yesterday the judge reconsidered her order and increased the award to $35,250 (statutory minimum per title) from the original $6,000.

Despite the odds, I hoped that Judge Chappell would stick to her order, arguing that the copyrights-in-suit can be interpreted as “compilation” for the statutory purposes according the language of the 17 U.S. Code § 504 (c)(1):

Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

I think that the ease of the change of judge’s opinion was partially due to the fact that it was a default judgment, i. e. Lipscomb’s motion for reconsideration was uncontested. In other words, Lipscomb came for the defendant — and there was no one left to speak for the defendant.

The racket continues.

Thyself shalt see the act:
For, as thou urgest justice, be assur’d
Thou shalt have justice more than thou desir’st.

Shakespeare. The Merchant of Venice.

 

Almost exactly two years ago Prenda Law, its principals John Steele, Paul Hansmeier, Paul Duffy, Brett Gibbs¹, and two bogus plaintiffs (AF Holdings and Ingenuity 13) were epically smacked down by Judge Wright on 5/6/2013 (Ingenuity 13 v. John Doe, CACD 12-cv-08333).

This ruling was appealed shortly after². The stakes are high: Prenda and its owners were compelled to post a whopping $237,583.66 bond. If they lose, some money ($81,319.72 original judgment, subsequent fines, and possibly the costs associated with the appeal) will be released to the defendant.

Briefs:

 

It took almost exactly two years for the Court of Appeals for the Ninth Circuit to schedule the oral arguments, and here we are: 5/4/2015, 9:00 am Courtroom 2, Richard H. Chambers US Court of Appeals, Pasadena. The panel was announced a week before: Circuit Judges Harry Pregerson, Richard Tallman, and Jacqueline Nguyen.

I’m sure many would be happy to travel to Pasadena for this epic hearing. Those who can’t are not too unfortunate though because there is a live video feed from the courtroom. And it was archived for posterity (fast forward to 59:40):

 

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To say that it was an illustrious smackdownn is a gross understatement. I pass the baton to the pros:

 


¹ Gibbs’s monetary sanctions were later vacated due to his health and financial hardships, and also because he blew the whistle on Prenda’s fraudulent activities.

² Because Judge Wright’s order applied to more than one case, Prenda filed eight appeals, later consolidated: CA9 13-55859, 13-55871, 13-55880, 13-55881, 13-55882, 13-55883, 13-55884 & 13-56028.