Guardaley | Voltage

How copyright trolls plunder both US citizens and… rights holders

German extortion outfit Guardaley, together with its US collaborators — Voltage Pictures and a network of ethically handicapped attorneys — has been filing frivolous, evidence-free lawsuits across the US for years, extracting millions from alleged pirates and innocents alike. To maintain the fog of legitimacy and to shield Voltage from bad publicity, dozens of shell corporations were created — one per film — to serve as (sometimes bogus) plaintiffs in thousands of copyright infringement lawsuits filed either against individual defendants or about a dozen of John Does lumped together.


Dallas Buyer’s Club LLC is one of the most prolific troll plaintiffs who filed more than 300 lawsuits across the country in the past few years.

Unlike the majority of films exploited by copyright trolls, Dallas Buyer’s Club is a decent movie. Ironically, the film’s protagonist, who procures an unapproved anti-AIDS drug in Mexico and then sells it to save lives, acts illegally, yet ethically. On the contrary, the movie’s secondary revenue stream — from litigation — is technically legal (well, mostly), but grossly unethical.

“Grossly” is not an overstatement: as you read below, it appears that Guardaley/Voltage not only plunders the US population, but robs the very people who made the film and who likely own the copyright to it.

DBC rights holder has not seen a cent from settlement proceeds
Joe NewcombJoe Newcomb

A year ago, Dallas Buyer’s Club’s executive producer and the purported copyright owner of the film, Joe Newcomb, filed a lawsuit against Voltage Pictures and its principal Nicolas Chartier, accusing them of breach of fiduciary duty and fraud. While this lawsuit, filed in the Montgomery county court (Texas), mainly deals with Voltage/Chartier’s alleged failure to pay the rights holder’s share of the foreign sale revenue, Newcomb also claims that while he was lured to participate in “anti-piracy” efforts, he has not seen a cent from six-figure settlement proceeds (emphasis is mine):

DBC entered into an Agreement with Voltage to act as its agent to enforce Anti-piracy actions against people who have illegally downloaded or otherwise obtained the ability to watch the movie without paying for the right to watch it. The agreement provides that DBC is to receive updates and assist in enforcing these actions. DBC has received virtually no updates and has not had any input into the actions Voltage is taking around the World. The only updates DBC receives are thorough, mostly negative, media reports about the actions of Voltage around the World. DBC has not received any funds, reports, updates or any information from Voltage on the status numerous lawsuits filed around the World in the name of DBC.

 

To be clear, I don’t think that Joe Newcomb is a kind of victim who deserves sympathy: he did voluntarily subscribe to the extortion scheme.

While I’m aware of only this one grievance expressed in the lawsuit form by a copyright owner, I wonder if other rights holders who serve as plaintiffs in Guardaley/Voltage lawsuits are in a similar situation. I’m not sure that the very people who make those films — the directors — even understand the nature of the shakedown racket. When a film is a box office failure, it is easy to blame piracy; it is easy to be convinced by crooks that indiscriminately shaking down ISP subscribers is a legitimate answer to the loss.

Defendant questions standing, demands bond

Last week the defendant in Dallas Buyers Club v Underwood (CAND 15-cv-05537) filed a motion asking the court to mandate a $50,000 bond by the plaintiff, and the DBC v Voltage complaint embedded above was a critical part of the argument.

The defendant’s attorney is an anti-troll veteran Nicholas Ranallo. In addition to this case, he also defended folks accused of sharing Malibu Media /X-Art’s pornography, and his record so far is impressive: out of four cases, one was dismissed by the judge, and the other three ended in walk-away settlements (no money changed hands).

The troll attorney here is James Davis of Portland, yet it is nearly certain that he is just a marionette: Carl Crowell, one of the most odious figures in the Guardaley network, is the one who seems to pull the strings.

One of the major problems with these lawsuits is a practical absence of downside for the plaintiff: not only does current case law make it difficult for a prevailing defendant to get compensated (i.e. awarded attorney fees); it is questionable that even if the fees are awarded, money can be easily collected from an out-of-state plaintiff.

As if the legal fight in the Texas state court is not enough to complicate the things, making it unclear who will eventually pay the defendant, it is not even evident who really owns the copyright!

Various advertising and promotional materials cast further doubt about the claims that Dallas Buyers Club LLC owns the relevant copyright(s), and reveal a myriad of entities that have, at one time or another, claimed copyright in the film. As described further in the declaration of Ryan Underwood, various DVD covers found during a simple online search reveal copyright notices claiming rights in the film for Voltage Pictures and Universal Studios (Exhibit I), Focus Features & Voltage Pictures (Exhibit J), and Focus Features alone (Exhibit K).

This mess together with an inherent uncertainty of the litigation outcome hardly incentivizes DBC defendants to fight: settling is essentially cheaper even for an innocent. This is a feature of Guardaley’s racket, not a bug.

However, the defendant argues that this defect can be somewhat cured by a requirement to post a bond:

 

A nice touch: Ranallo cites three Prenda cases, where the judges did impose bond requirements. Indeed, Guardaley’s lawsuits are only marginally different from Prenda’s. The FBI’s investigation against Prenda’s principals, John Steele and Paul Hansmeier, is in its late stage, and an indictment is imminent. Given Guardaley’s increasingly arrogant abuse of the court system, which includes an outright fraud (about 200 forged declarations were filed in 2012), I won’t be surprised to learn that Guardaley and its US co-conspirators are being actively investigated as well.

Coverage

Update

7/28/2016

When the shakedown enterprise’s MO is credibly threatened (requiring a bond for each frivolous action is a silver bullet that can kill the troll), it is not surprising that the troll scrambles all its ill will to save the turf. Today DBC filed a 20-page opposition (plus numerous exhibits that I didn’t download), and the majority of it was dedicated to unsubstantiated claims that the system used by unlicensed foreign “investigators” to snoop on US citizens can produce admissible evidence.

The troll tries to make a big deal out of defendant’s alleged ownership of a business that produces specialized media and gaming computers. A cursory glance at the website does not instill any confidence in plaintiff’s assertion that the defendant is “producing and selling devices designed to illegally download and then store pirated content.” Looks like a hysterical red herring designed to deflect judge’s attention from this case’s Achilles heel: the question of the DBC standing.

Out of 20 pages, less than one was dedicated to this question, which only stresses the importance of untangling the cobweb of shell companies and ransom cash flow beneficiaries.

The troll lists nine DBC cases where the plaintiff dismissed defendants due to their purported financial hardship. Surely the plaintiff tries to impress the judge with its ostensive generosity, but really? Not only these outcomes make less than 3% of all the DBC cases, if anything, this list only proves that the shakedown campaign is not aimed at stopping piracy, but rather at extracting money from those victims who have assets.

Another facepalm is an attempt to put Guardaley’s shakedown process ethically above Prenda’s shakedown process. The plaintiff even dares to quote Judge Wright (as a matter of fact, Wright’s famous “essentially an extortion scheme” line was made not in a Prenda’s case, but in a Malibu’s, and Malibu cases have been driven by the same people as this plaintiff’s). No, Carl: the thee-prong Duck test doesn’t make your “argument” particularly strong.

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Discussion

13 responses to ‘How copyright trolls plunder both US citizens and… rights holders

  1. Gee, wouldn’t it be a shame were it to come out that all of these cases were just shams?
    That they were just renting out the right to sue, which isn’t allowed, would seriously call into question all of the cases they have filed.

    One would hope the courts will dig deeply into this and make sure it isn’t a giant extortion scam using the courts as a cog in their settlement machine. Having allowed it to go on for years unchallenged would be such a black eye to the legal system.

    • Well not like we haven’t seen the so called copyright assignment right to sue bit before with Righthaven and we all know how that worked out. So would it surprise me? Not at all.

      It is the inner workings and agreements that are not on paper that the trolls will want to stay hidden and why they dont have things on paper as it would seem with Malibu/Lipscomb I believe.

      As Raul has aid hard to call out the trolls on something when there are no written agreements .

  2. Interesting that this almost mirrors that Malibu Media blow up as to what and where did the statements and updates go on the litigation ( my opinion of course)

    I would be of the opinion that Newcomb was informed that piracy of DBC once it’s released could be a problem and one way to nip this in the bud before it becomes and issue is to go the route of copyright enforcement and that those efforts should keep the pirating of the film in the low percentages than if nothing was done and the bonus is that you would get a percentage of the settlements.

    Now I may catch some hell for what I am about to say but…one might think Newcomb thought he was doing the right thing for the film and protecting the work and of course it would help the bottom line so he signed on. After all the negativity and bad press that has come about from the DBC trolling hitting various forums of media and the internet and the bad reputation the trolling is getting , the stigma from it is attaching itself to the film and those attached to it.

    Now if you look at the lawsuit filing that Newcomb has commenced and the complaint about statement of monies garnered thru litigation and no status reports of what has transpired according to him with progression of the so called anti piracy stance taken, I would be of the opinion that Newcomb may believe he got the wool pulled over his eyes and the lawsuit is his way of hitting back ( as I said my opinion )

    One thing that this lawsuit does reflect IMHO is that the trolling collective and those involved in it are willing to step on each other toes to keep as much cash as they can for themselves and are loathe to give it up to others who are part of it.

    From the appearance of the Malibu vs Lipscomb lawsuit filing, it would look like this to an outsider looking at the docs filed so far and what has been reported. This also is what occurred with the Prenda gang where greed reigned high and giving up a cut of easy settlement cash was starting to grind those who felt they deserved more for all the work done to generate those settlements.

    It’s really like Deja-vu once again. I have said this before and will say it again that this isnt the trolls trying to enforce copyright of a work, but it is a revenue generation method under the guise of enforcement in my opinion.

    Voltage in my opinion has used enforcement as a revenue generation tool. DBC I ebleive did very well for it at the box office, but the enforcement tactics have smeared the film and those involved in it with a tainted brush and a stigma as a troll that just doesnt seem to want to go away if you ask me.

    If newcomb had the chance would he have signed on to enforce the copyright using the troll litigation tactics that have transpired into a mess that wont go away? Well judging by this lawsuit I would say no, just due to some of the contents of this filing.

    Voltage though by using the shells per film to do the trolling would be in my opinion hoping to insulate itself from getting the bad press like the DBC film is getting due to the DBC trolling collectives litigation efforts have produced, but Voltage is in no way immune from being a part of that bad press.

    Chartier in my opinion could care less if the trolling film entities get the bad press for their efforts and the movie and those associated with it painted with the tainted brush, for Chartier I believe it is all about money and that is all, of course he will say it is about enforcement, but many doubt that including myself.

    It is interesting to see the implosion that is starting to take place between the trolls, and the film work copyright owners over monies owed and the accounting of how the profits massed have been accounted for not to mention the reputation of the parties involved taking a huge beating in the media and on the internet especially with more people getting on Google and other search engines and finding out how these trolling collectives work and what they can do to help themselves if they come under attack from the trolls.

    I look forward to the details squeaking out about Newcombs lawsuit and Lipscomb and Malibu’s lawsuits against one another. The trolls will be desperate to keep this all under wraps so as not to give the public, media or Doe’s and their counsel from seeing the inner workings of the troll litigation scheme and the profits gleaned from the prolific filing of troll lawsuits.

    One thing I will say is that I hope this the start of a trend and that more and more of these suits are filed and the infighting spills out into public display, and who knows maybe some of the film owners will come to the realization that signing up to have copyright enforcement of your work and thinking it will be a good thing along with getting a percentage of the profits and your reputation trashed might not be the smartest idea for your success.

    I look at tthe Prenda gang and the Fields of X-Art/Malibu Media and how their trolling litigation has gone and from appearances it would seem things are crashing around them. Karma maybe? Time will tell.

  3. As far as Joe Newcomb is concerned, well, he brought it on himself. “Buyer beware” bit him where it counts. Hard. I have no sympathy.

    Now. this lawsuit in rem leads me to a question. Do the ‘Germans’ even exist? No one has seen them in court, supposedly due to limitations of international law/agreements/etc. But has anyone ever seen the German equivalent of incorporation papers for ‘Guardeley’ or ‘Excipio’? Does that company even exist? No? Didn’t think so.

    Given this latest twist, I would not be at all surprised to learn that whoever runs the head office in Miami – whoever’s giving the orders here – is the one who came up with the scheme and is running it front to back.

  4. I have wondered about the Germans not appearing in court. Apparently there have been some depositions, but why if they are offering technical evidence or expert testimony doesn’t a judge demand they appear or throw their “evidence” out and issue a dismissal with prejudice? Doesn’t the plaintiff have a duty to make these guy’s show up?

    • The only cases I’m aware of when the Germans appeared in a court:

      – Bellwether settlement conference, PAED, 2013 (Patzer, Fieser)
      – Malibu Media evidentiary hearing, NYSD, April 2016 (Patzer)
      – DBC hearing in Australia, 2015 (Macek)

      Out of those, I question the existence of Tobias Fieser. I may be wrong, yet there is some info that reasonably triggered my suspicion. I have made inquires, hope to get results.

      • There may be something to that, after all. I did a bit of digging on a few German web sites. Turns out that 1) all companies must be registered with the German equivalent of the Secretary of State corporation division here in the states; and 2) most but not all companies must be registered with the German equivalent of the Chamber of Commerce.

        The actual documents are behind a paywall, but I did discover that Excipio GmBH ( GmBH, by the way, means it’s an LLC with a minimum 25k euro buy-in) didn’t exist on the German systems until 2011. As near as I could tell, there was no predecessor or parent company. Just a new registration in June of that year. And isn’t it interesting that (at least if memory serves) copyright trolling really didn’t come into its own until just about that long ago. If true, well. I don’t like coincidences, let’s just leave it at that.

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