Guardaley | X-Art

Copyright trolls go mental: XArt’s lawyers demand 7.35 million dollars from a wrongly accused ISP subscriber

Roses are red, violets are blue, copyright trolls parasitize on the society because of the Kafkaesque statutory rates: $150,000 maximum for a single case of copyright infringement.

While courts rarely play along with this insanity, trolls shamelessly use this travesty of law as a boogieman. Since abandoning the train wreck of mass Doe lawsuits, Keith “Dilly no more” Lipscomb found a new bonanza: because suing hundreds at once and demanding a nuisance amount for a potential lawsuit to go away became not so lucrative, Lipscomb’s crooked mind calculated that the same result can be achieved by suing individuals, yet demanding higher settlements while applying greater pressure to extract insane amounts from average Joes.

There is a lot of ways to increase the pressure, and Lipscomb’s moneymaking machinery uses many:

  • “Extended surveillance” — infamous “Exhibit C.” For those who don’t know, this exhibit lists a ton of files purportedly shared by a defendant, sometimes the filenames are really salacious. These files have nothing to do with plaintiff’s copyrights. While Lipscomb went to great lengths defending this sleazy practice by stating that such lists prove defendants’ guilt, two courts disagreed, finding that

    […] the intent [of Exhibit C] was to harass and intimidate defendants into early settlements by use of the salacious nature of others’ materials, rather than the merit of its own copyright claims.

  • “Exculpatory evidence request”: a form that a new defendant is offered to fill, providing a load of information about himself and maybe ratting out his roommates or family members. Many people fell for this bluff and supplied information to the sharks on the platter — information that can, and most certainly will be used against the duped laymen who filled out that form. This document received much less coverage, but one of the judges (Rudolph Randa, WIED) explicitly called out this predatory tactic:

    With regard to “assistance,” Malibu Media argues that in its experience, the infringer is almost always the subscriber, but if the Doe defendant is innocent, then he or she will usually know the actual infringer. To this end, the complaint attaches a form labeled “Exculpatory Evidence Request,” which can be used in conjunction with Exhibit C to help identify the infringing party. This is simply an additional form of coercion.

  • Another boogieman that has not been covered at all is “FBI Memo,” a document ostensibly meant to support ex-parte motion for discovery, yet in reality aimed at terrifying defendants. No reasonable human being would even suggest that this grand irrelevancy serves any valid purpose (unless a depressed misanthrope chimes in arguing that extorting teens and senior citizens is a sensible goal).

While Lipscomb and his gang use all these (and more) hand-twisting tactics, the main avenue to apply pressure remains unconstitutionally high statutory rates. But here is the catch: in a recent couple of years copyright trolls managed to devalue this fear factor: with rare exceptions (mainly default judgments), judges tend to be reasonable and issue judgments close to the low end of the range, which is $750 per work.

Per work? Per work! “Eureka!” thought Lipscomb and cut the ties with his previous plaintiffs, including terrorist Kevin Beechum (K-Beech), sticking with XArt/Malibu Media, whose conveyer produces short (6-10 minutes) flicks depicting 18-20 old children’s genitals. It is inevitable that these short clips would be bundled together and seeded as one torrent. And since copyright law does not distinguish between a 6-minute hardcore porn flick and “Seven Samurai,” a potential maximum fine for sharing such a bundle is $150,000 times the number of episodes.

So, do Lipscomb and his goons really demand this bizarre amount? The answer is yes. Look at the Malibu Media v. John Doe (INSD 13-cv-01525) complaint (all the emphasis in this post is mine):

Award Plaintiff statutory damages in the amount of $150,000 per infringed Work pursuant to 17 U.S.C. § 504-(a) and (c);

…and the exhibit that lists the clips in the bundle:

Total Malibu Media, LLC Copyrights Infringed: 49

If you are not convinced, look what Lipscomb (via his marionette Mary K. Schulz) wrote in a response to request to admissions in another X-Art shakedown case:

10. Admit that you are seeking a judgment, in this case, in the amount of $3.6 million dollars.

Response to Request No. 10: Plaintiff admits that the maximum amount of statutory damages which could be awarded is $150,000 per infringed work. Plaintiff has not yet ascertained the specific amount it will ask the jury to award. However, in the Bellwether trial, Judge Baylson found that $2250 per work was appropriate unless the Defendant commits perjury or attempted to commit fraud. Generally, Plaintiff agrees.

So, in the abovementioned Indiana case, the crooks demand $7,350,000 ($150,000 • 49) from an average citizen, who, unlike the jaded, soulless pornographer, likely doesn’t accumulate even a fraction of this amount over his lifespan. This pornographer whines to the judge about how piracy almost turned poor small business owners into panhandlers, yet just in a week from that mock trial she closes on a $16,000,000 house, which has an ocean-facing swimming pool filled with tears of thousands, whose lives had been turned upside down.

But that’s not all.

Wrongly accused. Once again

In this case, despite all the declared diligence in identifying the actual infringer, Lipscomb/Nicoletti time and again tried to shake down a wrong person. I already mentioned suing an 80 year old, but there are many more: a disturbing story of an assault on a clearly innocent immigrant, the refusals to consider innocents’ offers to examine their hard drives… I can go on and on. I also have many stories that I can’t publicize because innocents settled to avoid damage to families and careers, and making their letters full of tears and helpless anger public would put them in the crosshairs of the NDA breach. I hope to tell those stories on the witness stand when criminal RICO charges will be brought against Keith Lipscomb, Mary Schulz, Paul Nicoletti, Christopher Fiore, Jason Kotzker, Patrick Cerillo, Jon Hoppe, Colette and Brigham Field.

So, look at the email sent by Paul Nicoletti to a defendant’s attorney. In this email the troll casually admitted that the initial Doe was not the one who was supposed to receive all the harassment:

I planned to analyze this case in depth, but I’m exhausted. I urge you to read an excellent motion to dismiss for the failure to state a claim: Paul Overhauser attacked the extortion enterprise from an interesting angle — alleging that the trolls dance around direct claims of infringement, mixing up technical terms — all to avoid Rule 11(b) sanctions.

Plaintiff’s counsel is walking a thin line to avoid a possible Rule 11 violation. He is careful not to allege copying of any movies, because there is no such evidence. Instead, he carefully obfuscates the facts surrounding who is doing what, and exactly what is being copied. While Plaintiff’s counsel might be lauded for not over-pleading, his restraint comes at the expense the Complaint being subject to dismissal for failure to state a claim. If Plaintiff wishes to accuse Doe of copying something that is copyrighted by Plaintiff, it should do so in a way that puts its counsel at risk for a Rule 11 violation if he has not performed a reasonable pre-suit investigation.

Here, the only thing alleged to have been copied are “one or more bits” of uncopyrighted “hash files” that “correlate to” movie files. That alleged copying was incomplete, and did not result in a copy of any movie copyrighted by Plaintiff. Moreover, in any event, the copying was done by Plaintiff’s investigator, not Defendant. The only facts alleged are that Defendant had an Internet account, that some computer associated with that Internet account held some uncopyrighted “hash files”, and that Plaintiff’s investigator copied “one or more bits” of one of those hash files. These allegations do not plausibly allege copyright infringement by Defendant, so the Complaint should be dismissed for failure to state a claim.

On 12/23/2013 Plaintiff replied in the familiar Lipscomb’s style: he slithers around facts, repeating old BS in circles, weaving words to prove unprovable, and not addressing the lint of Overhauser’s arguments.

On 1/2/2014 Overhauser filed a great reply saying just that: sophism and old crap don’t constitute a good argument.

A big if

To conclude on a brighter note, I want you to enjoy a sharp Paul Overhauser’s Reply in Support of Motion:

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6 responses to ‘Copyright trolls go mental: XArt’s lawyers demand 7.35 million dollars from a wrongly accused ISP subscriber

  1. Are they still including Exhibit C’s? One would think two sanctions would be sufficient deterrence….

    On another note, I think Overhauser has hit the issue upon the head. I think it is time to reconsider Wright’s “old-fashioned stakeout” remark. That is, I do not think any BitTorrent-based information (especially the vague, technical detail-less info given by IPP) should be considered sufficient “evidentiary support” under Rule 11(b)(3). The evidence ought to have to be offline.

    Of course trolls are not going to like that (just as they mocked Wright’s remark), because it blows apart the entire business strategy.

  2. Perhaps you should state that Plaintiff’s attorney alleges that all porn models are 18-20 yrs old because there is no evidence from discovery that this is true. Lipscomb apparently has reasons for settling for chump change instead of pursuing these cases through trial.

    $ 7.35 million for what no one would pay 25 cents at a Peep Show to see. Apparently the clown show in the Federal Court of Eastern PA has emboldened Malibu/X-Art.

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