On August 10, 2016 Magistrate Judge Stacie F. Beckerman handed down an Opinion and Order that denied a copyright troll attorney attorney’s fees because such an award would not advance the purposes of The Copyright Act under the “totality of the circumstances.” This post will briefly outline the underlying lawsuit and each of the circumstances that the judge found warranted a denial of attorney’s fees as being counterproductive to the purposes of The Copyright Act.

Background

It should be noted as a preliminary matter that the copyright troll attorney, Carl Crowell, has met several setbacks in Judge Beckerman’s courtroom recently including a sua sponte dismissal of a direct copyright infringement claim.

The lawsuit that is the subject of this post is Glacier Films (USA) Inc. v. Turchin (ORD 15-cv-01817-SB), and was filed on September 25, 2015.The lawsuit involves the alleged copyright infringement of the cinematic masterpiece American Heist. Later on February 17, 2015 plaintiff filed its amended complaint naming the defendant and the defendant was served approximately one month later. The defendant neglected to answer and the plaintiff moved for a default judgement and the judge appointed David Madden as pro bono counsel for the defendant to fight the lawsuit. After some back and forth on July 8, 2016 the parties agreed to settle the case with a stipulated consent judgment whereby the defendant agreed to pay the statutory minimum of $750 and also agreed that the Court should award “reasonable attorney’s fees and costs,” in accordance with 17 U.S.C. § 505 and pursuant to Rule 54. Afterwards on July 20, 2019 Crowell moved for attorney’s fees and costs which defendant opposed to a degree. On August 10, 2016 Judge Beckerman handed down an Opinion and Order declining to award attorney’s fees (despite the July 8, 2016 stipulation) because under the “totality of the circumstances” such an award “… would render an inequitable outcome that is inconsistent with the policies served by the Copyright Act.”

The judge notes that such an award is not unprecedented in her district:

Recently, another court in this district denied a motion for attorney fees in a similar BitTorrent copyright case, in part because “[l]itigation conduct that needlessly increases the expense of resolving copyright disputes neither encourages innovation nor appropriately rewards an author’s creation.” See Countryman Nevada, LLC v. Doe-73.164.181.226,—F. Supp. 3d—,No. 3:15-cv-433-SI, 2016 WL 3437598, at *8 (D. Or. June 17, 2016) (“[U]nder the totality of the circumstances presented, the Court exercises its discretion to deny Plaintiff any attorney’s fees, notwithstanding the fact that Plaintiff has prevailed on the merits of its copyright claim.”).

Let us take a look at each of these three circumstances with the last weighing most heavily that influenced the judge’s Opinion and Order.

CIRCUMSTANCE 1: THE COPYRIGHT TROLL’S “WIN” IS LARGELY MEANINGLESS

While a copyright holder’s action against an individual BitTorrent copyright infringer is not frivolous under the Copyright Act, the degree of success in each of these BitTorrent copyright cases is minimal, in two respects. First, the $750 statutory damage award Defendant has agreed to pay is low in relation to the amount of attorney fees Plaintiffs have accrued ($4,833.45), to achieve that result. See Milton H. Greene Archives, Inc. v. Julien’s Auction House LLC, 345 F. App’x 244, 249 (9th Cir. 2009) (noting that limited success, such as nominal damages, may support the denial of an attorney fee award, and observing that “an award of attorneys’ fees that is ten times the amount recovered in damages seems unreasonable under the circumstances”). Second, Plaintiffs acknowledge that their movie, American Heist, has been illegally downloaded over 100,000 times. (Am. Compl. ¶ 6.) Although this case resulted in an injunction against one infringer, that result is de minimis in relation to the serious online piracy problem Plaintiffs seek to combat. On balance, the degree of success Plaintiffs have achieved as the prevailing parties in this litigation does not warrant requiring Defendant to fund in toto Plaintiffs’ enforcement of their copyright.

CIRCUMSTANCE 2: A $750 JUDGMENT PLUS COSTS IS ENOUGH OF A PENALTY TO DETER PIRACY

For downloading a single movie, the Court is already requiring Defendant to pay $750 in statutory damages, as well as $791.70 to reimburse Plaintiffs for their costs, for a total financial penalty of almost $1,550. As this Court has noted in other cases, a financial penalty of that magnitude is sufficient to deter Defendant, as well as others, from illegally downloading movies in the future.

CIRCUMSTANCE 3 (THE BOMBSHELL): AWARDING ATTORNEYS FEES IN A COPYRIGHT TROLL LAWSUIT DOES NOT FURTHER THE PURPOSES OF THE COPYRIGHT ACT

Rather than try to paraphrase the judge’s eloquent dissection of why copyright troll lawsuits are abusive and counter to the purposes of The Copyright Act, I will let the judge’s words speak the truth (emphasis supplied):

The Supreme Court and the Ninth Circuit have also recognized that a district court should award attorney fees only if doing so will further the purposes of the Copyright Act. In these BitTorrent copyright cases, the threat of fee-shifting has emboldened Plaintiffs’ counsel to demand thousands of dollars to settle a claim, even where the infringing defendant admits early in the case that they illegally downloaded the movie. See, e.g., Countryman Nevada, LLC, 2016 WL 3437598, at *2 (noting that plaintiff demanded $8,500 to settle the case after the defendant acknowledged liability early in the case); Cobbler Nevada, LLC v. Reardon, No. 3:15-cv-01077-ST, 2015 WL 9239773, at *2 (D. Or. Dec. 16, 2015) (noting that unrepresented defendant agreed to consent judgment in the amount of $8,500); see also Malibu Media, LLC v. Doe IP Address 66.108.67.10, No. 15 Civ. 4369 (AKH), 2015 WL 4092417, at *2 (S.D.N.Y. July 6, 2015) (“Recent empirical studies show that the field of copyright litigation is increasingly being overtaken by ‘copyright trolls,’ roughly defined as plaintiffs who are ‘more focused on the business of litigation than on selling a product or service or licensing their [copyrights] to third parties to sell a product or service. The paradigmatic troll plays a numbers game in which it targets hundreds or thousands of defendants, seeking quick settlements priced just low enough that it is less expensive for the defendant to pay the troll rather than defend the claim.’”) (citation omitted). In several of these BitTorrent copyright cases, defendants have agreed to pay the plaintiffs’ settlement demands without the benefit of counsel, see, e.g., Reardon, 2015 WL 9239773, at *2, and in almost every case, the settlement agreements are confidential and not subject to court approval.⁴ The Copyright Act, as it is being enforced in these BitTorrent cases, has created results inconsistent with the goals of the Act. When an individual who has illegally downloaded a movie is contacted by Plaintiffs’ counsel, and faces the threat of a statutory damage award that could theoretically reach $150,000 (see 17 U.S.C. § 504(c)(2)), as well as the threat of a substantial attorney fee award, the resulting bargaining process is unequal, and unfair. For this Court to award Plaintiffs their attorney fees in this case would only contribute to the continued overaggressive assertion and negotiation of these Copyright Act claims.

It is in footnote 4 that we learn that this particular copyright troll attorney is an overreaching douchebag:

⁴ In some cases, Plaintiffs’ counsel has pursued particularly vulnerable individuals. See, e.g., Cobbler Nevada, LLC v. Gonzales, No. 3:15-cv–00866-SB (targeting an adult group foster care home); Cobbler Nevada, LLC v. Snapp, No. 3:15-cv-01768-SB (targeting a woman living on Social Security disability benefits).

In conclusion the judge holds that:

However, exercising the Court’s discretion to require Defendant to pay thousands of dollars in attorney fees, for illegally downloading a single movie, would render an inequitable outcome that is inconsistent with the policies served by the Copyright Act.

So while it might be legitimate in the judge’s view to allow minimum statutory damages plus costs in a copyright troll lawsuit; to reward the bringing of such a lawsuit with an additional award of attorney’s fees is not legitimate under The Copyright Act.

Update

12/30/2016 (SJD)

This order is on appeal: Glacier Films (USA) v. Andrey Turchin (CA9 16-35688). Yesterday Crowell filed his opening brief. Defendant’s reply is due 1/27/2017. The defendant retained attorney Klaus Hamm of Klakquist.

Remember Prenda’s appeal crusade and its utter failure? Given the similarity between Prenda’s and Guardaley’s ways to plunder US citizens, this case will be fun to watch.