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Two breathtaking first-time precedents demonstrate that copyright troll lawsuits cannot withstand meaningful judicial scrutiny

“But he has nothing at all on!” at last cried out all the people. The Emperor was vexed, for he knew that the people were right; but he thought the procession must go on now! And the lords of the bedchamber took greater pains than ever, to appear holding up a train, although, in reality, there was no train to hold.
Hans Christian Anderson

Recently two federal judges handed down two determinations that are remarkable in that they are, to my knowledge, first time precedents in which a copyright troll complaint had to clear a very low hurdle, tripped, fell flat on its face and was dismissed. What both of these breathtaking precedents have in common is that they demonstrate that a copyright troll complaint cannot withstand careful judicial scrutiny.

Precedent 1: Copyright troll, Malibu, Media LLC, loses its own motion for a default judgement
“The record suggests that Defendant could mount a meritorious defense”

First off, it is important to know that in copyright troll lawsuits a plaintiff’s motions for a default judgment are always granted. This because by not answering the complaint a Doe defendant is deemed to have admitted the truthfulness of the allegations and that he/she has no affirmative defenses to withstand the lawsuit. It is true that federal judges routinely ratchet down the troll’s requested damages to the $750 per infringement statutory minimum so the troll’s victory is oftentimes Pyrrhic, but these motions are always granted. Not so in Judge Kevin McNulty’s courtroom. In Malibu Media v. Chris Fodge (NJD 14-cv-07611) the plaintiff motioned for the non-appearing defendant and on April 5, 2016 the judge handed down an opinion denying the motion.

Kevin McNultyUS District Judge
Kevin McNulty

In this opinion Judge McNulty noted that “[m]y independent review of the record suggests that Fodge could mount a meritorious defense.” Specifically the judge found that some of its copyrighted work was not enforceable against the defendant:

Malibu Media has identified 23 works that are the subject of this action and that it owns the copyrights for these works. (Compl. Ex. B) However, with respect to seven of the works, the date the investigator connected with the Defendant’s IP address preceded the copyright registration date, and thus on the face of the Amended Complaint and without the benefit of discovery, Malibu Media cannot at this juncture establish a valid copyright at the time the defendant allegedly downloaded seven of the twenty-three works. With respect to the other sixteen works, Malibu Media has pled that it owns a valid copyright.

A copyright troll trying to enforce unenforceable copyrights is rather common and harkens back when copyright troll lawsuits first emerged, but it is quite rare for a federal judge to notice it.

The second factor that the judge found weighed against granting the motion for a default judgment was that Malibu sued the defendant because he possesses a penis. OK, the judge did not specifically write that, but rather:

[…] the Defendant’s connection to the alleged infringement is based solely on an IP address. The IP address here, as the Plaintiff concedes, is actually held by the Defendant’s spouse. (Compl. ¶ 25) In the Amended Complaint, Malibu Media is not certain that the infringer is Defendant, but rather pleads “discovery will likely show that Defendant is the infringer.” (Id. ¶ 27) In fact, the infringer could be another person altogether, such as a family member or, as Malibu Media itself concedes, “sometimes, the infringer is another person who the subscriber has authorized to use the subscriber’s Internet.” (Id. ¶ 28) Or, it could be that the infringer is someone using the subscriber’s Internet via a wireless router that is not password protected. While it is possible that the infringer is Defendant, Malibu Media has not proved that Fodge actually caused or is responsible for the alleged infringement. Defendant can state a meritorious defense to the claims presented here.

Accordingly, the motion was denied and an order of the same date was issued.

Precedent 2: copyright troll, Cobbler Nevada LLC, loses defendant’s motion to dismiss count 2 of the complaint and the judge sua sponte dismisses count 1
Contributory copyright infringement claim against subscriber doesn’t fly in courts, never did

Almost since the inception of copyright troll lawsuits its lawyers have tried to hold the holder of an IP address liable under a theory of contributory copyright infringement or, as alleged in the case discussed below, the defendant

[…] failed to reasonably secure, police and protect the use of [his] Internet service and or computers against use for improper purposes such as piracy, including the downloading and sharing of the motion picture by others.

And almost since the inception of these lawsuits federal judges have routinely dismissed this overreaching theory of liability.

So it was hardly surprising that in Cobbler Nevada, LLC v. Gonzales (ORD 15-cv-00866) defense counsel David H. Madden moved to dismiss this claim, which was Count 2 of the complaint.

Troll’s complaint doesn’t pass the Twombly/Iqbal plausibility test
Stacie BeckermanUS Magistrate Judge
Stacie Beckerman

What is surprising (and I believe unprecedented) is that the judge sua sponte dismissed Count 1 of direct copyright infringement. Many defense attorneys have tried in the past to knock out direct infringement claims and they have never, to my knowledge, been successful. This is because the claim has to merely be plausible which a very, very low threshold. I think this is the first time that a federal judge took it upon herself to examine such a claim, find it not plausible and dismiss it without prejudice. In her Findings and Recommendation, dated March 18, 2016, Magistrate Judge Stacie F. Beckerman found that:

It may be possible that Defendant is the alleged infringer that subscribed to this IP address, but plausibility is still the touchstone of Iqbal and Twombly.”); AF Holdings LLC v. Rogers, No. 12cv1519 BTM (BLM), 2013 WL 358292, at *2 (S.D. Cal. Jan. 29, 2013) (“Because the subscriber of an IP address may very well be innocent of infringing activity associated with the IP address, courts take care to distinguish between subscribers and infringers.”); see also In re BitTorrent Adult Film Copyright Infringement Claims, 296 F.R.D. 80, 85 (E.D.N.Y. 2012) (“[I]t is no more likely that the subscriber to an IP address carried out a particular computer function-here the purported illegal downloading of a single pornographic film-than to say that an individual who pays the telephone bill made a specific telephone call.”)4.

It is in footnote 4 that we learn that:

Plaintiff’s counsel acknowledged at oral argument that the IP address linked to the infringing conduct serves an adult foster care home operated by Gonzales. Any resident or guest of that home could be the infringer.

(Blogger’s note: it takes a very SPECIAL kind of copyright holder and its lawyer to go after a guy who gives residents at an adult foster care free Wi-Fi.)

The magistrate goes on to point out that, as should be the case in all copyright troll lawsuits, “Twombly and Iqbal do not allow Plaintiff to guess at who is liable, and attempt to confirm liability through discovery.” Accordingly, plaintiff’s complaint was quickly shown the door and, of course, plaintiff’s counsel objected but on June 8, 2016. Notwithstanding, Judge Anna J. Brown adopted the magistrate’s Findings and Recommendation holding that:

This Court agrees with the Magistrate Judge that Plaintiff has failed to allege sufficient facts to state a plausible claim “tending to exclude the possibility that an alternative explanation is true.”

Two recent federal judicial determinations that further demonstrate that copyright troll lawsuits are solidly premised on a mere guess and nothing more.

Updates

7/15/2016

The Oregon case circus continues: DieTrollDie reports that the troll (Carl Crowell) filed his second amendment complaint… only to find himself slapped by an order to show cause:

ORDER TO SHOW CAUSE. The Court ORDERS plaintiff to show cause in writing, within 21 days, why its Second Amended Complaint 41 should not be dismissed for failure to cure the deficiencies identified in the Court’s Order of Dismissal 39 and the Court’s Findings and Recommendation 35 , or for failure to identify the Doe defendant in a timely manner, pursuant to Fed. R. Civ. P. 4(m). Ordered on 7/13/2016 by Magistrate Judge Stacie F. Beckerman. (gw) (Entered: 07/13/2016)

7/19/2016

Today the troll did what any other troll would do in this situation: he attempted to cut and run by filing a motion to dismiss without prejudice — to avoid compensating the de facto winning defendant.

The defendant didn’t wait long and filed a motion asking the court to dismiss the case with prejudice and to award the defendant $17,222.40 in fees, and $264.60 in costs.

12/5/2016

On 12/2 Magistrate Beckerman recommended to dismiss the action with prejudice and to grant defendant’s motion for fees and costs ($17,222.40 + $264.60). Significantly (unfortunately — such rulings should be routine), the magistrate found that the defendant was the prevailing party under § 505 of the Copyright Act not only on the contributory infringement claim, but also on the direct one:

The Court’s finding that Gonzales prevailed on the contributory infringement claim should end the analysis, as Gonzales is seeking attorney’s fees only in connection with his defense of that claim. However, even if the Court must adjudge the prevailing party based on the relative success of both the direct and contributory infringement claims, the Court finds that Gonzales is the prevailing party under any analysis.

Read more on the DieTrollDie’s blog.

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Discussion

16 responses to ‘Two breathtaking first-time precedents demonstrate that copyright troll lawsuits cannot withstand meaningful judicial scrutiny

  1. I don’t think these two rulings (while helpful) are in any way binding on any other judge anywhere, although they may persuade some. If confirmed on appeal they might be binding on the judges of a particular district but I doubt there will be an appeal unless the defendants apply for fees and I hope they do. Even then it might be simpler to pay up and move on. There is too much downside for the plaintiff on appeal.

    The second ruling in particular on the operator of an adult foster care home clearly means there are too many potential infringers to single out one without more information. I’m surprised that once they discovered the nature of the defendants operation they didn’t drop the case like a hot potato. That was a pretty stupid move on their part.

  2. It was VERY stupid. So stupid in fact that I believe it weighed heavily in favor of finding a reason to dismiss the direct infringement claim.

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