Guardaley | X-Art

An unusual default judgement in Illinois: the good, the bad and the ugly

On Friday 4/24/2014, ILND Judge Robert M. Dow Jr granted the plaintiff’s motion for default judgement¹ in Malibu Media v. Jack Funderburg (ILND 13-cv-02614). While default judgments are (sadly) not really big news these days (such outcomes are an integral part of XArt’s secondary revenue stream), this order stood out for a couple of reasons.

The good
Robert M. Dow Jr.US Federal Judge
Robert M. Dow Jr.

In addition to the attorney fees ($2,525), the judge awarded the minimum statutory damages possible: $750 per work ($9,000 total), despite the fact that the plaintiff asked for three times more. The explanation of why the plaintiff doesn’t deserve more is heartwarming (citations omitted, emphasis is mine):

Plaintiff requests $27,000 in statutory damages, which amounts to $2,250 per film. It argues that this request is reasonable, as Defendant’s alleged willful infringement permits the Court to impose statutory damages as great as $150,000. See 17 U.S.C. § 504(c)(2). In addressing Plaintiff’s request, the Court notes growing judicial concern with “the rise of so called ‘copyright trolls’ in the adult film industry, meaning copyright holders who seek copyright infringement damages not to be made whole, but rather as a primary or secondary revenue stream and file mass lawsuits against anonymous Doe defendants with the hopes of coercing settlements.” As an actual producer of pornographic films, Malibu Media is unlikely a non-producing troll that purchases the right to bring lawsuits against alleged infringers. As an enforcer of pornographic copyrights, however, Plaintiff is among the entities that courts are concerned may be “inappropriately using the judicial system to extract quick and quiet settlements from possibly innocent defendants paying only to avoid embarrassment.” The Court is aware of Plaintiff’s extensive history of litigation in the last three years alone. Without drawing any conclusions as to this Plaintiff’s business model, the Court considers the concerns that other courts have expressed in evaluating requests to enter large damage awards with no relationship to actual damages sustained by a plaintiff. To the extent that these concerns reflect industry-wide trends, they counsel against awards that are triple the statutory minimum, as a default judgment imposing significant statutory damages may overcompensate plaintiffs in these circumstances.

The first good thing is that the judge clearly articulated a concern regarding Malibu Media’s abuse of the court system — the abuse that another judge called much less politely: “essentially an extortion scheme.” Judge Dow specifically called Malibu Media / XArt a “troll” (albeit not a “non-producing troll”), a title Lipscomb & Co and their “clients” so comically claim doesn’t apply to them.

The second good thing is that given his concern about “overcompensation,” the judge seemingly remembers that the rationale behind the statutory damages is to approximate real losses (when it is difficult to assess them) — the fact that many judges forget about.

The bad

There are two bad things I want to mention, and both are not related to this particular ruling, but to every default judgement in Malibu Media cases.

The first is the default judgement per se. Judgements like this make me sad because defaults are easily avoidable. While in this particular case the judgement is approximately equal to a typical Malibu’s ransom demand, playing this lottery is dangerous for defendants: default judgements around the country lack consistency, and there were cases when some judges awarded more than $100,000.

The second bad is that Lipscomb found a bonanza in the fact that for the purpose of the statutory award the law doesn’t differentiate between a multi-million full-budget movie and a cheap, plotless porno flick illegally filmed at the pornographers’ home in a course of hours. Thus, the judge couldn’t award less even if he wanted. This loophole guarantees that the shakedown business stays profitable no matter what.

The ugly

Now, the worst part of this order. For some unexplainable reason Judge Dow decided to resurrect the zombie of contributory infringement (citations omitted, emphasis is mine):

Lastly, Plaintiff also asks the Court to (a) permanently enjoin Defendant from directly or contributorily infringing Plaintiff’s copyrights under federal or state law […]

[…]

Plaintiff also states a plausible claim for contributory copyright infringement. “A defendant is liable for contributory copyright infringement when it with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another.” Plaintiff alleges that Defendant contributed to the infringing conduct of other BitTorrent users by participating in the BitTorrent swarm—a group of users uploading and downloading bits from each other simultaneously. Plaintiff contends that Defendant’s knowledge can be inferred from his use of the platform, as it is frequently used to share unlicensed content, and the fact that the film was free. Based on these allegations, Plaintiff alleges a plausible claim of contributory copyright infringement.

The eye-popping fact here is that the plaintiff never pled contributory infringement (here is the amended complaint).

The only explanation I can think about is that Judge Dow’s clerk, while preparing this order, dropped all his papers, and the pages from different complaints by different plaintiffs ended up shuffled.

Interestingly (while not surprisingly), the blog LiveTrollLive, supposedly run by Libscomb’s associate, couldn’t miss this opportunity:

Once again the courts continue to extend liability for BitTorrent infringement to the account holders and subscribers. The lesson: If you pay the bill, make sure no one is using BitTorrent.

[…]

The Judge appears to have brought an alternative finding of contributory infringement to this opinion on their own based on the evidence.

I have no idea what evidence the author is talking about, and the card sharping here is astonishing: it’s an impossible stretch from “contributing” by actively participating in a swarm as the judge said (essentially directly infringing) to an Orwellian notion that those who pay the bill have a duty toward porn purveyors and may be held liable.

I understand that Lipscomb would be happy to be able to shake down account holders without a need to prove anything… However, I think that this strange paragraph in the judge’s order is an isolated hiccup, most likely an error, and not a trend: any defense attorney will be able to kill the contributory infringement zombie for good in adversarial proceedings… which brings us to the same conclusion over and over again:

If a lawsuit is filed against you, ignoring it won’t make it go away, and you may end up dealing with collection agencies, which have much sharper teeth than our petty extortionists.

 


¹ This motion was submitted by Lipscomb’s local Mary K. Schulz, and the signature block indicated a non-existent “Schulz Law, P.C.,” a law firm involuntarily dissolved half a year prior to this filing. That’s OK because the law is obviously written only for defendants while trolls can lie to the court and get away with it.

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Discussion

9 responses to ‘An unusual default judgement in Illinois: the good, the bad and the ugly

  1. Excellent post.

    Jeffrey Antonelli

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  2. As always, given the sad history, one is left to question if the Defendant failed to answer or was never actually served. Several times in various cases we have seen defaults, only sometimes later a defendant comes forward and moves for it to be set aside with a common refrain of no one ever served me, how was I supposed to know I needed to answer a lawsuit I was never made a party to?

    Even when they can show service, it often is just the tip of a poorly managed case… defendant doesn’t live here… yet we served him elsewhere but will still proceed with a case alleging he infringed in a location where he did not reside nor could be served in because he wasn’t there. My favorite service at an address that did not exist for if it had it would have been underwater. All of these cases ended up in default, some where clawed back, some were not. Given the often HUGE amount of time between being told they can serve and then 5-6 extensions later when they might decide to finally serve, despite having had the contact information for months, one might think that defendants are aware but as no court has demanded that all contact be cc’d to the court no one can get a feel for perhaps a defendant getting tired of a flood of calls and letters and pitching one in the trash that actually had the suit unopened because they assume incorrectly it is yet another poison pen letter threatening their good name with claims that can’t be proven.

    The “non-practicing” comes right from patent trolls, which recently got media attention but only semi-applies to copyright trolls. Some entities that are suing do not actually exist, some exist only for the right to sue (which the law precludes), and some of that is accurate for many of the D rated & pron we see being sued for. The same damages are on the table for a 30 second blowjob as a major motion picture. This highlight the true need for reform in the law, because removing huge windfalls for anyone willing to file a copyright on even 2 minutes of “work” would alter how business is done.

    Yes dear campers, never assume all of the paperwork they send you is BS and even if its the 100th piece open it and make sure its not an actual suit. If you have been contacted by a troll, figure out what the case is and keep an eye on it. Make sure you are aware of what is happening and what they are telling the courts, IMHO not all lawyers are truthful with the courts in copyright cases.

      • I have seen cases in the past where service by mail was allowed.
        I have seen cases of certified mail being used.
        I do not know how MM is handling service, IMHO most likely poorly & cheaply spring right to mind.

        Perhaps someone more familiar with Federal Court rules could mention where we might find the rules about providing service and are those rules blanket for all Federal Courts or is it a circuit by circuit thing.

        The problem is if you have sent the defendant multiple certified letters all of which contain the same boogeyman threats, you reach a point where you assume it is yet another pay us or the kitten gets it letters and bin it. Having to stay vigilant for every letter they send, no matter how horrible sounding they make it sound (we’ve heard of the we are sending the cops to take away your computer line more than once), is a small price to avoid a default. There are Doe Defenders out there who will work with you, no longer is there a barrier to a good defense of it costs me the same to retain as to settle. Some targets might actually be guilty, lets just put that out there, but even they could benefit from a Doe Defender making sure the settlement is fair and equitable. But as many targets are merely the people who’s name appears on the bill, there is a very distinct possibility they are not guilty and these insane ideas that they are responsible for the actions of a 3rd party taken without permission only serve to chum the waters. Woe be the person who pays them to just go away, and only then to have them seek more payments from the actual guilty party in the residence. We’ve discussed at length the multiple failings in these cases, and the act of ‘throwing shit at the wall to see what sticks’ when there do not discover evidence that supports the claim that the named party is the infringer. They are willing to troll your entire life looking for anything that they can leverage to get a settlement or try to make a court ignore the total lack of evidence to support the claims made and infer from other things that they must be guilty because.

        • TAC: IANAL, but I once needed know about service in Federal court (Central District of Calirfornia,IIRC). It seems that civil service generally follows state rules per FRCvP. However, each district is allowed its own local rules, which may modify (within limits) the overall rules.

  3. This is some good insite. I’ve recently received a letter in the mail that wasn’t certified, but looked official and opened it. Glad I did, Ill subscribe to this feed and let everyone know the results. Im going for the it could have been any of my roommates ploy.” Got to be wroth a try, if you have anything better, please feel free.

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