US Federal Judge
William H. Alsup
Monday was a busy day for Judge William Haskell Alsup. I already reported that on that day the judge stayed plaintiff’s subpoena pending a clarification of geolocation reliability. There was another good order issued on the same day: I will briefly touch upon it at the bottom of the post.
Those two orders were akin an appetizer and a dessert. Yet the “main course” served on Monday was the order denying plaintiff’s motion to dismiss counterclaim in Malibu Media v John Doe (CAND 15-cv-04441, defense attorney: Joseph C. Edmondson). As I will explain shortly, this order essentially destroyed one of the two main foundations of the copyright trolling.
While answering Malibu’s complaint on 4/26/2016, the defendant counterclaimed with a single count of declaratory judgment of non-infringement (basically asking the judge to formally rule that the defendant was not an infringer).
Malibu moved to dismiss the counterclaim, arguing that such counterclaim mirrors defendant’s denial of liability found in the Answer. The defendant replied, cleverly pointing to Oracle v Google (a lawsuit handled by the same judge), where Google made a similar counterclaim.
While Judge Alsup agreed that there is certain duplicity between the denial as an essence of the counterclaim and the denial as a part of the Answer, he nonetheless denied the plaintiff’s motion, leaving the defendant’s counterclaim alive.
In the past, Malibu furiously (and mostly successfully) opposed defendants’ counterclaims, and to be honest, I incorrectly thought that the sole reason of such oppositions was to delay proceedings (historically, time always worked on the troll’s side). Maybe it was a reason, but not the main one. As the judge clearly explained (emphasis is added throughout the post),
Malibu Media’s motion seems more like a gimmick designed to allow it an easy exit if discovery reveals its claims are meritless. Section 505 of Title 17 of the United States Code provides that a “prevailing party” may be awarded attorney’s fees in a copyright infringement action; however, when a copyright plaintiff voluntarily dismisses a claim without prejudice, the defendant is not a prevailing party. […] Absent defendant’s counterclaim, if events reveal that this case is meritless, Malibu Media could voluntarily dismiss its affirmative claims without prejudice under Rule 41(a)(2), seeking to avoid an award of attorney’s fees. If, however, defendant’s counterclaim remains alive, he will be able to press his counterclaim.
See? As I mentioned above, copyright trolling rests on two turtles: astronomically (and maybe unconstitutionally) high statutory fines, and the absence of downside for the troll as it can always cut and run, leaving the defendant with painful legal bills.
Judge Alsup just closed the second avenue, at least in his district. The case is now “locked,” and it is not in the plaintiff’s power to dismiss it unilaterally any longer. Thus, the troll is now exposed to possible attorney fees, and the judge has hinted (after quoting famous Judge Wright’s “essentially an extortion” line — not for the first time!) that if the case turns out to be meritless, awarding fees to the winning defendant is not a mere possibility:
The damages exposure in this case, as with Malibu Media’s many other cases, is significant, so a defendant may feel pressure to settle even a meritless case. Coupled with the taboo nature of the subject matter, there remains potential for abuse. The availability of attorney’s fees should any defendant facing a lawsuit against Malibu Media prevail protects those, such as our defendant herein, who elect to challenge Malibu Media’s case on the merits instead of accepting a nuisance-value settlement. Indeed, that may be the only factor motivating such defendants. C.f. Ingenuity 13 LLC v. Doe, Nos. 13-55859, 13-55880, slip op. at 13 (9th Cir. June 10, 2016) (“Without hope of receiving attorney’s fees for defending sanctions on appeal, Doe and other victims of abusive litigation would be left with no remedy.”).
Dismissing defendant’s counterclaim would eliminate one avenue for a fee award, and, as stated, maintaining the counterclaim would cause no prejudice to Malibu Media.