Guardaley | Voltage

Magistrate judge declines to award copyright troll attorney fees because copyright trolling fees does not advance the purposes of The Copyright Act

Lawyer — One skilled in the circumvention of the law.
Ambrose Bierce

On August 10, 2016 Magistrate Judge Stacie F. Beckerman handed down an Opinion and Order that denied a copyright troll attorney attorney’s fees because such an award would not advance the purposes of The Copyright Act under the “totality of the circumstances.” This post will briefly outline the underlying lawsuit and each of the circumstances that the judge found warranted a denial of attorney’s fees as being counterproductive to the purposes of The Copyright Act.

Background

It should be noted as a preliminary matter that the copyright troll attorney, Carl Crowell, has met several setbacks in Judge Beckerman’s courtroom recently including a sua sponte dismissal of a direct copyright infringement claim.

Stacie BeckermanUS Magistrate Judge
Stacie Beckerman

The lawsuit that is the subject of this post is Glacier Films (USA) Inc. v. Turchin (ORD 15-cv-01817-SB), and was filed on September 25, 2015.The lawsuit involves the alleged copyright infringement of the cinematic masterpiece American Heist. Later on February 17, 2015 plaintiff filed its amended complaint naming the defendant and the defendant was served approximately one month later. The defendant neglected to answer and the plaintiff moved for a default judgement and the judge appointed David Madden as pro bono counsel for the defendant to fight the lawsuit. After some back and forth on July 8, 2016 the parties agreed to settle the case with a stipulated consent judgment whereby the defendant agreed to pay the statutory minimum of $750 and also agreed that the Court should award “reasonable attorney’s fees and costs,” in accordance with 17 U.S.C. § 505 and pursuant to Rule 54. Afterwards on July 20, 2019 Crowell moved for attorney’s fees and costs which defendant opposed to a degree. On August 10, 2016 Judge Beckerman handed down an Opinion and Order declining to award attorney’s fees (despite the July 8, 2016 stipulation) because under the “totality of the circumstances” such an award “… would render an inequitable outcome that is inconsistent with the policies served by the Copyright Act.”

The judge notes that such an award is not unprecedented in her district:

Recently, another court in this district denied a motion for attorney fees in a similar BitTorrent copyright case, in part because “[l]itigation conduct that needlessly increases the expense of resolving copyright disputes neither encourages innovation nor appropriately rewards an author’s creation.” See Countryman Nevada, LLC v. Doe-73.164.181.226,—F. Supp. 3d—,No. 3:15-cv-433-SI, 2016 WL 3437598, at *8 (D. Or. June 17, 2016) (“[U]nder the totality of the circumstances presented, the Court exercises its discretion to deny Plaintiff any attorney’s fees, notwithstanding the fact that Plaintiff has prevailed on the merits of its copyright claim.”).

Let us take a look at each of these three circumstances with the last weighing most heavily that influenced the judge’s Opinion and Order.
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Guardaley | Lipscomb | X-Art

Malpractice insurer alleges that Lipscomb lied on the application, sues to rescind the coverage

Keith Lipscomb/Malibu Media breakup brings more and more interesting tidbits. Yesterday it came to my attention that Markel Insurance Company (MIC), a malpractice insurer for Lipscomb, Eisenberg and Baker (LEB), asked the federal court to rescind Lipscomb’s firm’s current professional liability insurance policy (Markel Insurance Company v LEB, M. Keith Lipscomb, and Malibu Media, FLSD 16-cv-23234).

The insurer, represented by a Miami firm Kaplan Zeena LLP, accused M. Keith Lipscomb of knowingly entering false information in the policy renewal application, which he signed on May 10, 2016.

According to the complaint, this assertion was false because

LEB did not disclose on the Application that LEB and Lipscomb had knowledge of circumstances that would likely result in a professional liability claim or suit by Malibu Media.

Numerous emails were exchanged between Lipscomb and Pillar Law prior to May 10, 2016 that show that LEB and Lipscomb had knowledge of circumstances that could result in a professional liability claim or suit by Malibu Media.

[…]

Indeed, by no later than April 18, 2016 LEB and/or Lipscomb prepared documents that specifically acknowledged their awareness of Malibu Media’s threat to pursue legal action against LEB and/or Lipscomb.

And, as a result,

MIC relied on LEB’s misrepresentation in the Application in issuing the Policy.

The misrepresentation in the Application was material to the risk assumed by MIC and increased the risk of loss.

If these facts, as recited above, were known to MIC, it would not have issued the Policy and/or would not have offered coverage on the same terms and conditions and/or for the same premium.

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Guardaley | Lipscomb | X-Art

Defendant moves for sanctions against Malibu Media and its attorneys Brenna Erlbaum and Brian Heit

Yesterday a California defendant in Malibu Media v John Doe (CAND 16-cv-01005), via attorneys Nicholas Ranallo and Bruce May, filed a powerful motion for sanctions against Malibu Media and its attorneys Brenna Erlbaum and Brian Heit. The defendant alleged that filing an amended complaint without any evidence to back up its claims is frivolous and runs afoul of the F.R.C.P. Rule 11:

This Motion is made on the following grounds: On June 1, 2016, Plaintiff MALIBU MEDIA filed a First Amended Complaint alleging violations of the Copyright Act of 1976 against Defendant, knowing that Plaintiff did not have evidentiary support for its claims against Defendant, and despite having been advised by defense counsel of the following exculpatory evidence: Defendant denied ever downloading any of Plaintiffs films; a forensic examination of Defendant’s computers found no evidence of illegal downloading; Defendant was out of town on one of the dates in question; and dozens of other people had equal access to the Defendant’s Comcast internet account allegedly used to download Plaintiffs films.

Moreover, the defendant claimed that Malibu’s attorney Brian Heit deceived the defendant’s counsel by continuing to negotiate a possible dismissal while the amended complaint was already filed by Heit’s partner Brenna Erlbaum, which the plaintiff’s attorneys allegedly kept concealing from the defense for more than a week:

Plaintiff and its counsel acted in bad faith by engaging in litigation misconduct. While pretending to consider the exculpatory evidence offered by defense counsel, Plaintiff’s attorneys Brian Heit and Brenna Erlbaum affirmatively concealed the fact that they had already filed the First Amended Complaint, without evidentiary support. The motivation of Plaintiff and its attorneys was to extort a settlement from Defendant for a baseless claim by filing the First Amended Complaint and forcing Defendant to incur the expense and embarrassment of defending a claim of illegally downloading pornography.

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Guardaley | Lipscomb | Voltage

With surgical skill judge McNulty removes 96% from a demanded $100+K default judgement and discovers a terminal case of possible Malibu Media’s fraud on the federal judiciary

Another such victory and I come back to Epirus alone.
King Pyrrhus

A short while ago I wrote about how Judge Kevin McNulty denied a Malibu Media motion for a default judgement finding that that the defendant could mount meritorious defenses, including the fact that he was being sued for invalid copyright claims. Today I want to take a look at the exploratory surgery that Judge McNulty performed on removing $96,478.50 from a demanded $100,657 default judgement and the astonishing potential fraud by Malibu Media on the federal judiciary, which was uncovered during the exploratory surgery.

Preoperative
Kevin McNultyUS District Judge
Kevin McNulty

The lawsuit (Malibu Media v Zenon Nowobilski, NJD 15-cv-02250) that was prepped for surgery was filed on March 31, 2015 and alleged that the defendant had infringed the copyrights of 132 of Malibu Media’s pornographic works. Of these 132 works, 127 were an alleged siterip or, I believe, the notorious “X-Art Unauthorized Pack #89.”

The defendant was served with a summons and complaint and failed to answer, so on December 14, 2015 Malibu Media motioned for a default judgement seeking the statutory minimum of $750 per each 132 allegedly infringed works or $99,000 plus attorney’s fees and costs in the amount of $1,675 for a grand total of $100,657. The motion laid dormant for a period until the Malibu Media local counsel (Patrick Cerillo) begged for the operation on June 15, 2016.

On July 26, 2016 the judge handed down an opinion explaining the necessary surgery.
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Copyright trolls

Advertisement: help to put a human face on the copyright trolling problem

If you are a copyright troll’s victim, current or former, you can help to end the trolling plague.

Copyright Troll

With Prenda’s demise, copyright trolling disease may not be in its acute phase any longer. But the virus has mutated and adapted, and the infection is now chronic. Granted, fewer people are victimized these days compared to wild times of lawsuits that lumped together hundreds and even thousands of defendants. But for individual victims, the illness is no less damaging.

Thanks to outdated laws and opportunistic parasites who abuse them, careers and families are still being steamrolled over minor copyright violations (or even when there are no violations), and money continues to flow from the pockets of productive US citizens to lawyers’ bank accounts, and to foreign “investors.”

Today’s problem is less visible, but some are still working to cure the judicial system of this sickness forever. There are forces out there that are not happy with the status quo and that want to make a change.

For that, troll victims, former or current, need to come forward.

While the number of copyright shakedown victims is estimated to be half a million, it is difficult to find motivated public speakers. I understand that the majority just want to leave their nightmarish experiences behind them. Many are concerned about their future employment and personal relationships, especially if their stories involve pornography. Some just don’t believe in justice any longer — after the state, instead of protecting them, helped crooks with law diplomas to “legally” deplete their kids’ college funds.

However, I’m sure that some victims are not afraid to come forward to help end this plague.

If you want to share your story with wider audience and are not afraid to do it under your real name, please contact me. I’m talking about the mainstream media coverage and even lobbying the Congress. You can make a difference.

All the rest: stay intrigued.

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Guardaley | Voltage

How copyright trolls plunder both US citizens and… rights holders

German extortion outfit Guardaley, together with its US collaborators — Voltage Pictures and a network of ethically handicapped attorneys — has been filing frivolous, evidence-free lawsuits across the US for years, extracting millions from alleged pirates and innocents alike. To maintain the fog of legitimacy and to shield Voltage from bad publicity, dozens of shell corporations were created — one per film — to serve as (sometimes bogus) plaintiffs in thousands of copyright infringement lawsuits filed either against individual defendants or about a dozen of John Does lumped together.


Dallas Buyer’s Club LLC is one of the most prolific troll plaintiffs who filed more than 300 lawsuits across the country in the past few years.

Unlike the majority of films exploited by copyright trolls, Dallas Buyer’s Club is a decent movie. Ironically, the film’s protagonist, who procures an unapproved anti-AIDS drug in Mexico and then sells it to save lives, acts illegally, yet ethically. On the contrary, the movie’s secondary revenue stream — from litigation — is technically legal (well, mostly), but grossly unethical.

“Grossly” is not an overstatement: as you read below, it appears that Guardaley/Voltage not only plunders the US population, but robs the very people who made the film and who likely own the copyright to it.
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Prenda

Prenda’s Hansmeier stipulates to suspension of his law license

In a previous post I suggested that the next event in the long running Prenda saga was likely to be a ruling by the referee in Hansmeier’s Minnesota lawyer discipline case. Well, I was close. There was in fact a major development in this case, but rather than wait for the referee to issue his decision, Hansmeier decided to go ahead and end the suspense by entering a stipulation (read “plea bargain”) where he admitted to every allegation save one ¹.

Paul HansmeierPaul Hansmeier

According to the Minnesota Appellate Court’s “Case Management System” data for case A15-1855, on Friday, 07/1/2016 at 14:28 CDT the MN Office of Lawyer Professional Responsibility (OLPR) asked the Clerk of that Court to file two documents: Hansmeier’s “Stipulation for discipline“, and a proposed order for the Court. In the stipulation, Hansmeier “unconditionally admits” (almost) all of the allegations in the original and supplemental petitions. In exchange, the MN OLPR agrees to recommend that Hansmeier be

[…] indefinitely suspended from the practice of law, effective 14 days from the order of the MN Supreme Court, with no right to petition for reinstatement for four years.

Like in the vast majority of “plea bargains” in criminal cases, the MN Supreme Court is not bound to accept the recommendations of the OLPR. In fact, there appears to be some conclusion as the “proposed order” mentioned in the previous paragraph is exactly that: a proposed order. As of 07/02/2016, the court has not made any ruling in this case, and Hansmeier’s “law license” has not yet been suspended. (One of the “dirty little secrets” of the US courts is that the lawyers for one or both of the parties write almost every order issued by a court. The “proposed order” is what the OLPR has agreed to recommend to the MN Supreme Court.)

At this point it is important to point out that the words “suspension” and “disbarment” as used in attorney discipline do not have their usual meanings. In professional sports, if an athlete is suspended, a time frame is given and when that time period is over, he is automatically reinstated. The public also generally believes that if a lawyer is “disbarred” (or more technically, his admission to the bar of a court is “annulled”), that such an action is permanent. In reality, in almost every jurisdiction, if an attorney is “disbarred” he has the right to petition for reinstatement at some point in the future. (While such petitions are sometimes granted, they are very rare.) In MN, if an attorney is suspended for 90 days or more, then he must still petition the MN Supreme Court for reinstatement, and such reinstatements are far from automatic.

Many readers of this site may think that Hansmeier has slithered his way through his lawyer discipline process since he was “only suspended” rather than “disbarred.” However, in terms of practical consequences, there is little difference between the two. If he was disbarred, he could still petition for reinstatement at some point in the future, and there are not dramatically better odds of being reinstated after being disbarred as opposed to a significant suspension.

That leaves us with a couple of additional questions: If Hansmeier did not get a whole lot out of the agreement, why did he go along with this? What about the timing of the announcement? Finally, what about his ADA cases?
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