Defense: Unlicensed German investigator Guardaley is steering US copyright trolling operations

It is heartwarming to observe that what we have been talking about for years finds its way to court dockets. Defense attorneys articulate this long overdue fact much better than me, a non-native English speaker and a layperson. I am talking about the elephant in the room — one of the biggest lies that have been keeping US courts under the spell over the recent years: a fable that poor piracy victims hire attorneys and forensic experts to “legitimately” go after Bittorent users in order to deter piracy and compensate for the perceived losses.

The reality is the exact opposite: a recently leaked Gurdaley’s presentation does not leave any room for doubt. Disgraced German outfit Guardaley, presenting itself via multiple shells as a mere “forensic expert,” is in fact a very well organized business of monetizing illegal file-sharing: it recruits attorneys and plaintiffs, and actually steers the industrial-scale litigation campaign.

You can get much farther with a kind word and a threat of a teen pornography lawsuit than you can with a kind word alone.

Al Capone, paraphrased

Many compare this business model to Mafia’s, and indeed there are obvious parallels: any Mafia parasitizes on illegal activity, whether it is prostitution, illicit drug usage, or, as in our case, online copyright infringement; any Mafia invests in, or at very least, protects the said activity; any Mafia keeps low profile, obfuscating the facts about the bosses: those on the surface (plaintiffs) are usually the least relevant.

There is a few copyright Bittorent infringement cases, in which defense tries to get to the bottom of the murky pool, which is the relationship between German “investigators,” troll lawyers and formal plaintiffs:

I wrote about the latter case(s) twice:

On 5/31/2014 Morgan Pietz filed yet another bunker buster motion, this time a “reply on merits,” a must read to any defense attorney fighting against copyright trolls, not only Malibu Media: the same foreign power is behind the majority of the US Bittorent lawsuits, whether it is XArt, Voltage Pictures’ multiple shells, Copyright Defenders, and so on.

What is champerty?

Pietz begins with labeling the Malibu/Lipscomb/Guardaley troll operation as champerty:

Malibu’s position is that “[p]aying a service provider to record a computer transaction” is not grounds to exclude evidence or dismiss a case. But that is not a fair description of what appears to be going on in these cases. Rather, here, the “service provider,” is in the business of recording computer transactions, and, together with plaintiff’s lawyers, they solicit clients to stir up litigation, in exchange for a piece of the settlement action, in contravention of Maryland’s strong public policy against champerty.


The computer network traffic Guardaley/IPP/Excipio is in the business of monitoring, on a massive scale, is only inherently valuable to the extent that it could serve as the basis for copyright infringement lawsuits for statutory damages. Malibu again admits that the lawyers, not the “client,” choose who to sue in these cases.


In short, these circumstances suggest that when it comes to this “systematically opportunistic” new business model of using the federal court’s subpoena power, the threat of high statutory damages, and the stigma associated with pornography to leverage infringement settlements, the tail is wagging the dog.

The legal definition of champerty is

Legal arrangement in which an entity which is not a party to a lawsuit, finances and/or otherwise pursues a litigant’s claim in exchange for receiving a portion of the judgment award.

I.e., this is seemingly exactly what is going on in the 2,000 Malibu Media cases around the country.

Although third-party litigation funding is perceived differently in different states/circuits, at least some states, like Ohio or Maine have explicit laws against champerty (a hint to defense attorneys who will be fighting Malibu in Ohio). Recent decision by the New York Supreme court made it clear that champerty is not tolerated in the Empire State either. Even if there are no explicit laws against third-party lawsuit funding, I doubt that any court finds such a business model ethically sound: courts are state-funded, i.e. champertors that use the court system as an indispensable part of their business plan are essentially thieves who, in addition to money shaken down from Does, also pocket my and your taxes.

In his reply, Pietz thoroughly debunks arguments presented by Lipscomb/Hoppe in their opposition. He pays special attention to lame attempts at brushing off extensive evidence of the shell game:

Confronted with suggestions that the key witness, being paid on contingency, is merely a front for the discredited German company Guardaley, Malibu argues that since Guardaley also continued to exist as a separate entity, it would be wrong to consider IPP to be merely a front for Guardaley. Of course, there is absolutely no reason that Guardaley cannot continue to exist on paper, and even in practice, while at the same time clandestinely orchestrating everything done by its subsidiary or affiliate IPP. Notably, Malibu does not actually go so far as to deny any of the facts linking IPP to Guardaley.

The fact that Lipscomb stonewalls all the discovery efforts and slithers around uncomfortable questions was also brought to the light:

[…]If the payment arrangements Malibu’s counsel made with IPP were all above board, why has Malibu spent the last six months fighting tooth and nail all attempts by defendants to inquire into these arrangements? If there was and still is nothing to hide, why not fully explain how the German computer guys are compensated, and who they really work for, in the opposition to this motion? Such questions are routine for any expert who actually plans to testify. The fact that it was an “oral” contingency agreement suggests counsel knew the arrangement was suspect, and that the decision to omit mention of the contingent fee compensation paid to the declarants in the ex parte papers filed across the country seeking leave to issue subpoenas was knowing and intentional.[…]

There are many more nuances I have not explicitly noted, so please read the document:


Morgan mentions, but does not attach in full (referencing only the ArsTechnica/Wired article), a damning email from Guardaley (leaked by Anonymous who hacked infamous UK troll Andrew Crossley’s email as a part of the Operation Payback). In this email a Guardaley employee Terence Tsang admits that creating shell companies (IPP International, Logistep, Baseprotect, Excipio, Anti-Piracy Management Company… you name it) is this troll’s MO:


In the last section of the reply Morgan Pietz argues that the appropriate remedy to the instant champertous lawsuits is dismissal:

If what appears to be true so far is confirmed on the factual record here in Maryland, namely that what Malibu calls the “suit formation” process for Movant’s case occurred during the term of the oral contingency agreement Malibu had in place with IPP, then IPP, Fieser, Patzer, and everyone else connected to IPP should be per se excluded, and the case should be dismissed with prejudice because there is no foundation for any of it.

I’d take it farther. Although it is beyond the lawsuits in question, it is obvious that if “what appears to be true so far is confirmed,” a huge floodgate of class action lawsuits will be open. Lipscomb oinks here and there: “We are not Prenda! Malibu Media is a real plaintiff!” Well, that’s what you’ve said. Unlike with Prenda, it will be far easier to go after the “real plaintiff’s” assets. I don’t think that Brigham and Colette Fields contemplated this grim possibility when they agreed for a small cut for “doing nothing — just collecting the checks.”



Yesterday Lipscomb/Hoppe filed an opposition to Pietz’s reply. What can I say? “Weak” is an overstatement: all it discusses is procedural gimmicks aimed at striking defense’s evidence as hearsay, the evidence that is orders of magnitude more believable than the “facts” used to harass thousands of purported file-sharers and wrestle them into paying up.

Some lies are simply impossible to say with a straight face, yet the trolls manage to do it:


Lipscomb and the gang are scared. I can feel it.

Read Anon E. Mous’s nice analysis of this piece of panic in the comment section below.

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