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After prevailing-party fees were denied, Malibu Media defendant petitions the Supreme Court

Parasite organisms play an important role in the grand scheme of things — to expose their hosts’ weaknesses, thus prompting the nature to patch flaws, making hosts stronger and healthier as a result. In the legal sphere, parasite attorneys are constantly searching for loopholes in the law that can be abused to unfairly enrich few at the expense of many. Copyright troll is a kind of a parasite that explores two major historically wrong propositions of the copyright law:

This story is about the latter.

On Tuesday the most litigious copyright troll Keith Lipscomb gave an interview to the Chicago Lawyer magazine. Even though Lipscomb’s and truth are not good friends, this time he outshined his usual self: I never saw this volume of hogwash delivered in a single scoop. I don’t want to go over each and every misstatement now, maybe another day. To illustrate the subject of today’s post, I only want to direct your attention to one assertion:

“The whole focus of this is proving that the people we are alleging did the infringement actually did,” he said. “We let 35 percent of these people go right off the bat and don’t serve anybody because we’re not sure.”

And if they get it wrong, [Lipscomb] said, there are safeguards in the law: The copyright act allows wrongly named defendants to receive their attorney fees.

Well… While Mr. Lipscomb is theoretically correct, I would love to see a single Malibu Media case, in which an innocent was targeted, and, after incurring sizeable legal expenses, was compensated in any form¹. To the best of my knowledge, Mr. Lipscomb didn’t pay a dime to any prevailing defendant, while wrestling millions from alleged pirates, guilty or not.

The cases with “wrongly named defendants” either ended up in a walkaway settlement (INSD 12-cv-01117, MDD 13-cv-03438, VAED 14-cv-01544 — to name a few), or the courts declined to award prevailing-defendant fees.

In Malibu Media v. Roberto Roldan (FLMD 13-cv-03007), the troll knowingly targeted a student who didn’t live at the address where the alleged infringement took place. After it became obvious that Roberto was innocent beyond any doubt, Lipscomb managed to substitute the defendant, naming his father instead and leaving a wrongly accused young man with huge legal bills and damaged reputation.

In Malibu Media v. Shekoski (MIED 13-cv-12217), after it became clear that absolutely no proof of defendant’s guilt ever existed (even accessing protected areas of defendant’s hard drive — in a clear violation of judge’s order — didn’t help), the troll cut and run to avoid compensating the wronged party.

 

Yet the most egregious example was Malibu Media v. Pelizzo (FLSD 12-cv-22768). Not only was this case frivolous and unreasonable from the very beginning, but even after the dismissal Lipscomb threatened to ruin the innocent man financially — after the defendant’s attorney Francisco Ferreiro asked for a modest fee reimbursement:

Respectfully, you should counsel [your client] that when he loses, he will lose everything he owns and owe my clients hundreds of thousands of dollars. Mark these words, your client’s decision to reject a walk away will be the worst decision he will ever make.

This outrageous conduct, which in an ideal world should have caused an immediate disbarment, resulted in some fees: Magistrate Andrea Simonton recommended to slap Lipscomb on the wrist by sanctioning him for $6,815.50 Pursuant to 28 U.S.C. § 1927. Yet no prevailing-fees (17 U.S.C. § 505) were awarded because the judge found that

Plaintiff ’s motivation in filing and maintaining this suit was proper and the lawsuit was not frivolous or objectively unreasonable [up to a point].

Pelizzo appealed the decision, but lost: the Court of Appeals for the Eleventh Circuit affirmed the lower court ruling and declined to hear the case de novo.


So now Pelizzo and his attorney have upped the game. On 10/2/2015 Francisco Ferreiro filed a Petition for A Writ of Certiorari with the Supreme Court of the United States. This is the first SCOTUS petition in a Bittorent infringement case², and the heart of the argument is the fee shifting provision:

In Fogerty v. Fantasy, 510 U.S. 517 (1994), this Court agreed that judges could rely on several non-exhaustive factors to guide their equitable discretion in awarding prevailing party fees under the Copyright Act, 17 U.S.C. §505, including “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.”

The appellant, arguing the landmark Fogerty ruling was interpreted differently by different US circuits (and incorrectly by the Eleventh Circuit), wants the highest court to bring clarity.

I’m deliberately not trying to go into the detail of the legal argument presented in this petition. It is highly technical, and analyzing it is out of my league. I hope that law geeks will stop by and explain weaknesses and strengths of the petition.

I don’t entertain an illusion that this writ has a high probability of certification, but I do commend Pelizzo and Ferreiro for trying to do the right thing — to make copyright litigation fairer, thus tightening the loophole of unaccountability that copyright trolls have been abusing so impudently, ruining thousands of lives in the process.

Coverage

Updates

12/23/2015

Alas, on 12/15/2015 the U.S. Supreme Court denied certiorari review: it was not totally unexpected. Kudos to Francisco Ferreiro for trying.

 

Dineen Wasylik, an IP attorney from Tampa, wrote a good overview of this event.

1/29/2016

It’s not over yet! Today Pelizzo filed an emergency motion to vacate order denying petition for cenrtiorari.

The rationale for this rather unusual step is that The US Supreme Court just granted certiorari in Kirtsaeng v. John Wiley & Sons, Inc. to answer nearly exactly the same questions as the denied Pelizzo petition asked:

Petitioner, Leo Pelizzo, respectfully moves this Court for an order vacating its denial of certiorari in Pelizzo v. Malibu Media, LLC, No. 15-429, to the Eleventh Circuit Court of Appeals.’ As set forth more fully below, this relief is warranted in light of the Court’s decision to grant certiorari in Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375, to determine “What constitutes the appropriate standard for awarding attorneys’ fees to a prevailing party under section 505 of the Copyright Act.”

 


¹ The only time a Bittorent defendant was awarded prevailing-party fees was in the Elf-Man v. Lamberson (WAED 13-cv-00395). While that case was driven by the same German champertors as those who drive Malibu Media’s lawsuits, Mr. Lipscomb didn’t handle this case.

(Update: § 505 fees were also awarded in 3 Prenda/AF Holdings CAND cases. Same 9th Circuit as in Elf-Man. However, AF Holdings was proven to be a fake plaintiff, so it is unthinkable that any judge would find its cases reasonable by any standard.)

² The closest was the petition (was not granted) in Sony v. Tenenbaum, which stemmed from a non-commercial online copyright infringement case. That petition raised very different (constitutional) questions.

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Discussion

11 responses to ‘After prevailing-party fees were denied, Malibu Media defendant petitions the Supreme Court

  1. Law360, New York (October 19, 2015, 9:18 PM ET) — A Florida man who was unsuccessfully sued by litigious porn studio Malibu Media is taking his fight to recoup his legal costs to the U.S. Supreme Court, urging the high court to give lower judges broader discretion to award attorneys’ fees in copyright cases.
    Leo Pelizzo filed a petition for certiorari on Oct. 2, asking the high court to overturn a March ruling by the Eleventh Circuit that denied his request that Malibu to fully reimburse the $24,000 it cost him to defend against a lawsuit that studio eventually dropped.

    The appeals court said Malibu had acted reasonably in bringing the lawsuit, but Pelizzo says the panel did so only because it applied an overly narrow, bright-line rule for determining whether to impose fees. What the Copyright Act really calls for, Pelizzo said, is for judges to have the discretion to award fees when it’s equitable.

    “The role of a judge exercising their equitable discretion is akin to a tailor working with a large piece of fabric that must be hemmed to fit the shape and proportion of the job required,” his petition said. “Rather than letting judges exercise their discretion in tailoring this relief, the court of appeals has lopped off a small patch of fabric defining the contours of judicial discretion.”

    Keith Lipscomb of Lipscomb Eisenberg & Baker PL, Malibu’s attorney, said he didn’t plan to respond to a petition that he called “irrational and frivolous.” He noted, accurately, that it is extremely rare for the high court to take cases.

    “If it is accepted, Malibu will deal with it then,” Lipscomb told Law360.

    Malibu, which has filed thousands of infringement lawsuits against Internet downloaders over the past few years, sued Pelizzo in 2012 but offered to drop the suit after it became clear that he likely wasn’t the infringer they were looking for. Early discovery showed that the offending IP address was likely in a different unit in Pelizzo’s building, according to court documents.

    Pelizzo, however, refused to settle unless the company acknowledged his innocence and paid his $17,500 in legal fees — a request that prompted a letter in which Malibu attorney Keith Lipscomb threatened to bankrupt him for refusing the settlement offer, according to court documents.

    Malibu offered Pelizzo $13,000 in fees a few months later, but he again refused, saying the additional litigation over fees had raised his total expenses to $24,000. The porn studio then dropped the case unilaterally, and Pelizzo petitioned the court for a fee award.

    The trial court complied, but only to an extent. It awarded “vexatious litigation” fees of about $6,800 but declined to award the rest in standard “prevailing party” fees under the Copyright Act.

    The appeals court affirmed the decision in March, saying Malibu’s conduct did not meet the standard for awarding fees.

    “We find no abuse of discretion in the district court’s conclusion … that Malibu’s subjective motivation for filing suit was not improper or that the suit was not frivolous,” the court wrote. “We also find no abuse of discretion in the district court’s conclusion that Malibu, up to a point, acted in an objectively reasonable manner and in a manner that served the purposes of the Copyright Act: compensation and deterrence.”

    Pelizzo’s petition to the high court said Malibu’s case against him was the perfect vehicle to weigh in on whether the Eleventh Circuit’s standard makes it tougher for copyright defendants to win fees than Congress intended.

    “The fact that this case is one of thousands brought by the same plaintiff using tactics that will inevitably sweep up other innocent parties makes it an ideal vehicle for addressing and resolving an important question,” the petition said. “Due to these developments, [the Copyright Act’s fee-shifting provision’s] ability to function effectively as an equitable stopgap is a matter of critical importance that desperately calls for clarification.”

    Malibu Media is represented by Keith Lipscomb of Lipscomb Eisenberg & Baker PL.

    Pelizzo is represented by Francisco Ferreiro and John Cyril Malloy III of Malloy & Malloy PL.

    The case is Leo Pelizzo v. Malibu Media LLC, petition number 15-429, in the Supreme Court of the United States.

    –Editing by Brian Baresch.

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