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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75 responses to ‘Defense: Unlicensed German investigator Guardaley is steering US copyright trolling operations

  1. So Lipscomb and Malibu say the “oral contingency” agreement was in place but was terminated when it accidentally became public during a case, but yet had sued how many people when it was still in effect? Why was the “oral contingency” only terminated after it became known?

    Malibu and Lipscomb say that the “oral contingency” agreement only paid a fee for the information. If this is the case why did they race to terminate the “oral contingency” so quickly once it became known, seems a little odd doesn’t it?

    Color me a tad skeptical here, but has anyone known a lawyer to not have documents drawn up and signed by all parties in regards to transactions between a client and an entity it is doing business with? I have never seen a lawyer stand up and say “no need to get a written agreement signed spelling out payment and what the terms are and when the funds are due” “a simple handshake will suffice even though your both in different countries”. Yeah right.

    Sorry but that should raise the red flag to a judge that has heard or is hearing a Malibu case. One thing every Lawyer is taught is everything needs to be in writing when dealing with clients and those they do business with as their legal representative. What law firm would launch a suit without seeing any signed agreements that covers their ass. None.

    The mere fact that this “oral contingency” was terminated when it became known was a huge flag for the defense and it should be for the Judge as well.

    The Judge should be demanding that IPP/Guardley bring forth a senior company official and Malibu bring a senior principal to court to tell the Judge why this agreement was changed mid stream in the middle of a lawsuit brought forth with evidence provided by IPP/Guardley to initiate this lawsuit and why Malibu, the Plaintiff attorney and IPP/Guardley and it’s evidence shouldn’t be allowed and all three of the aforementioned parties shouldn’t be sanctioned. Lipscomb/Malibu can not use the Sgt. Schultz defense and say ” I see nothing, I hear nothing”

    I won’t even begin how Malibu who loves to say “we will bring anyone to court to testify in these cases to prove our findings and testify to the alleged infringement of a copyrighted work” but yet seems loathe to do that very thing.

    The fact that the Excipio hand book seem to lay out how these cases are presented and who to go after was very telling and one looks at these and other troll cases and the similarities to how the litigation starts and how it flows is quite similar to how the litigation is taking place .

    The one thing I found troubling with the Excipio handbook, is that they lay out how these cases start, what documents to file with the court, how settlement letters are to be written, how to deal with those that fight the lawsuit and how to handle the defense lawyers. That to me screams of collusion ( my opinion) between the Plaintiff and the witness and the plaintiff’s attorney. If this happened in a criminal case you would be up you know where without a paddle

    In my opinion you have the monitoring firm playing witness, playing law firm, and playing detective submitting evidence and affidavits in the course to get the legal action and directing it as it goes. There is a whole lot wrong with that in my opinion and the poor ISP subscriber is going up against what I would term is a stacked deck.

    A Judge would have to be willfully blind to not get a sense that there is some serious issues’s with these cases and and to ignore them would be a travesty not only to the defendant but to the court and the rule of law itself.

    The other issue that I have with this is that if you go by what is in the Excipio handbook is that when the Judge grants the order to allow the lawyer to get the ISP subscriber information that the information is then turned over to IPP/Guardley/Excipio and they take the ISP subscriber information, they disseminate it and choose who to pursue for settlement and it is retained in their database.

    I highly doubt that a Judge who granted an order for the ISP subscriber information to the Plaintiff’s attorney knows that this information is being turned over to a third part in another country that has provided evidence in the case at hand and is a witness in the very same case and that it was Plaintiff’s law firm that turned the information over. This fact should be making a Judge’s head spin and bring forth a little wrath in my opinion.

    I would have to believe that the Judge would have an issue with the fact that all those ISP’s subscriber’s information that was gathered from the order issued to the ISP’s by the court was turned over to a 3rd party in another country without the courts knowledge and was being retained by that same 3rd party for future use.

    Not only is that a violation of privacy laws IMHO but I would have to be of the belief that was way beyond the scope of the order the Judge issued. In essence you would have to assume the Judge would have been under the impression it was the law firm who would be dealing with the ISP subscriber information gleaned from the the courts order and the lawyer’s law firm would be going over that ISP subscriber information to see who infringed what work and in notifying the said ISP subscriber that their IP address was downloading a copy of their clients work in violation of copyright law.

    The Excipio handbook states that they will disseminate the ISP subscriber information and see who to sue and not to sue and drafting of settlement letters and dealing with the alleged infringers in regards to settlements. Once again if this doesn’t raise a brow with a Judge I would be surprised.

    As far as Lipscomb’s claim that the oral fee contingency argument isn’t their fault, I give that some serious side eye. They have a duty as a lawyer and as an officer of the court to submit documents they know are true and of fact and are pertinent to the case at hand and it is also their duty as an officer of the court to bring forthwith any concerns with their clients case where there is any affidavits, evidence and witnesses whose information may have been in conflict with the rules of court and standards of the ABA that counsel is governed by.

    In recent light of the the appellate courts decision which I see as a rebuke of the order handed down by Judge Beryl A. Howell ( and we all know what a travesty that was ) I seriously hope that it will shine more of a light of scrutiny on these copyright troll lawsuits which are nothing more than a cash grab in my opinion.

    If Lipscomb and Malibu aren’t worried about the coming storm, then they seriously misguided. Pietz and the other defense counsels fighting Mailbu and other trolls are certainly not going to just take the trolls at their word that the IPP/Guardley/Excipio is all well and good and there is nothing to see here and they should just move along.

    The Trolls are finding out what formidable defendants and their counsel can do in these case. John Steele thought he and Paul Hansmeier were too smart to have their litigation machine shut down, and look what happened to them. Even when Steele and Hansmeier have tried other forms to achieve settlement cash they have had the bright light shone upon them. Hell I am not even sure they could chase ambulances without someone fact checking anything they file concerning a lawsuit.

    We may just be witness to another copyright trolls litigation come to a much earlier death than planned and sooner than than the troll imagined.

  2. Even though my case ended with troll koetzker PO’D and red faced, I still want to be part of this class action if/when it happens….

  3. I didn’t pay Malibu Media / X-Art a single cent but their falsely accusing me created emotional distress and attorney fees I would like to see a class action lawsuit for the harm they caused.

  4. Oh dear…the typo monster is still out there, and Guardaley gets spelled Guardley in the headline!

    Excellent work, SJD!

  5. IPP/Guardaly was also the so called forensic expert that underpinned Lipscomb’s previous “clients” lawsuits such as Patrick Collins and K-Beech.

  6. If one reviews that complaints against thousands of Does in the Hurt Locker, in US and Canada, it seems IPP and Guardaley are the same, using the same software and the only difference is that IPP was used in Canada and Guardaley in the US.

    • …wonderful! Mr Pietz is alleging all the necessary elements of a class action suit. The wheels of the gods grind slowly, but they grind infinitely fine.

      OK, this troll is nearly mortally wounded. Who might be next? Getty Images?

  7. I think Troll Van Der May has been frightened by the developments of the last week or so…and started to realize it’s time to jump ship before she is steamrollered and sanctioned! Let’s see how much her future actions resemble those of Brett Gibbs….

  8. After reading Hoppe’s motion ( which to me seems like it is from Lipscomb or someone else IMHO) I sense a bit of panic to make sure Pietz’s filing doesnt see the light of day. Pietz motion could itself bring Lipscomb trolling operation a lot of hurt

    Lipscomb.Hoppe’s motion to strike is quite a read. In the motion to strike the Plaintiff states that ” Pietz could have waited till the discovery phase of the lawsuit to seek answers to issues he has raised in his filing”. Just one problem with that, when has Malibu ever sat for Discovery?

    Malibu has fought attempts to allow discovery, to my knowledge they have never let a lawsuit get to the phase where they are subject to discovery. Usually they cut litigation and dismiss the litigation before it can take place. ( I am sure they read that from the John Steele handbook on troll litigation)

    Malibu seems to be trying a strategy used by John Steele in that they are employing the Deny, Deflect, Delay tactic. One would have to believe that with such a rock solid case and client and a above board anti piracy monitoring firm with qualified experts with an infallible monitoring software method and tool that they wouldn’t be worried about Pietz’s filing.

    Apparently Malibu/Lipscomb doesn’t believe their own case is so strong in my opinion if they are worried about Pietz filing. If Malibu/Lipscomb stands behind there case, why thwart discovery? Why do they delay filing answers to questions about IPP/Guardaley/Excipio’s methodology in there results? Why do they fight attempts to bring their German experts to testify?

    After troll Vandermay’s recent bout of pulling the chute to get out of the mess before she ends up like Brent Gibbs was made a scapegoat has to make one wonder what concerned Vandermay so much that she wanted out in the middle of the case.?

    Could it be that Vandermay was just concerned because she already had a problem with her asshole comment, and didn’t want any more heat, maybe. Or was Vandermay concerned with actors behind the litigation that she may have been of the opinion that sanctions could be possible and costs awarded to the defendants and wanted out before the you know what hit the fan.

    It will be interesting to see what the Judge does with motion to strike. Lipscomb/Malibu/Hoppe must realize that this inst a criminal case and the threshold of what gets in to a lawsuit is a lot less stringent then in a criminal case or Mailbu wouldn’t be able to sue anyone with their evidence they submit in these cases.(my opinion of course)

    Must be some real worries in the Malibu camp that Pietz filing may be a lot of damage, this case is just getting interesting for the anti troll faction and defense counsel that have Malibu cases they are involved in

    • I think Van Der May read Pietz’s declaration and suddenly realized her skin, or at least her legal career, was in danger.

      All this procedural stuff…but as to abusive litigation tactics, remember Pietz was personally lied to about contacting the client, and Lipscomb’s “settlement agents” violated a court order (asking to settle for more infringments than were named in the suit) right in front of him, so he can indeed testify to personal knowledge of some of the facts. If that’s improper, he wasn’t alone in that, and can bring in others who can testify to the same.

      • Vandermay and her motion to the court asking to be granted an exit from the case signals that their could be some dissension in the ranks of how to handle the case going forward especially with some of the revelations that have been brought forth by defendants counsel in their filings with the court.

        I do not see Vandermay getting a simple exit from the case without explaining her concerns to the Judge even if under seal. I would love to see the Judge deny her motion at this point as they are quite a way into the proceedings of the case.

        Defendants counsel was seeking answers to some very pointed questions in regards t on whose behlaf it was o the monitoring firm, it’s methods and it’s personnel along with the entities and who the stakeholders are and where they are at.

        IMHO I think Vandermay had a come to Jesus moment and had an epiphany of where the defendants counsel was going with their queries and that she may have been left with few answers to give by her ” clients ” leaving her hanging precariously in the abyss in a case that has the potential for a large fallout for the plaintiff and those associated with that side of the equation.

        While I would love to be a fly on the wall when Vandermay explains her reasons to the Judge as to why she wants an exit from this litigation, sadly I don’t think we will hear her plea of how her high ethical and moral standards have caused her to take the high road.

        I must say I do feel for the poor soul who is going to sub in for Vandermay, There are times when one doesn’t see the forest for the trees and I believe this fellow is going to have one of those Deja-Vu moments once the realization set in of what is going on with this litigation on the Plaintiff side and how he is know in the untenable position of trying to answer the defendants questions put forth to the court that Vandermay was not able to do.

        Should be interesting to say the least as to how they try to get out from under in this case.

    • Anon E. Mous,

      In reference to you mention of Vandermay’s asshole comment, did she make one as well or are you confusing her with Mary Schulz?

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