Guardaley | X-Art

Malibu Media claims it wants to catch the initial seeder: why this claim sounds shallow

A new “veritable orgy of lawsuits”

I predicted that the divorce between long-time sweethearts Keith Lipscomb and Malibu Media would result in the latter winding down its operations. While it would be unreasonable to expect a mass dismissal of the existing lawsuits, I didn’t think the troll would start filing new cases. I was wrong.

Contrary to my expectations, on 7/21/2016 Malibu Media/X-Art, via its new counsel Pillar Law Group, powered by former Lipscomb, Eisenberg and Baker’s employees — two attorneys and two paralegals — resumed the shakedown. At the time of this post, 136 lawsuits were filed in six jurisdictions:

Truly, greed is a powerful drug, and I should have never underestimated the corrupting power of addiction to easy cash.

In addition, from an email sent by Angela Lipscomb to Lipscomb, Eisenberg and Baker’s (LEB) insurer, we learn that

[LEB’s Malibu Media] work stopped after a new investor became involved […]

Yes, “investor.” Malibu’s attorneys (both old and new) don’t wear a mask of righteous defenders of poor porn purveyor’s copyrights any longer: it’s all business, a heartless business of monetizing people’s anxiety and misery.

Usual suspects and something new

In the past, when Lipscomb was Malibu’s general counsel, the troll always waited one month from the lawsuit inception to the discovery motion. I still don’t understand the significance of this delay. This tradition was seemingly preserved, and we had the first opportunity to review the motions and the exhibits only on 8/22/2016.

One of the “experts” who filed a declaration accompanying discovery motions was Tobias Fieser of IPP International. Two years ago, after Malibu’s Illinois local Mary K. Schulz recklessly revealed IPP’s contingency interest, IPP was “replaced” by another Guardaley’s shell, Excipio 2. Fieser and IPP are now back as if the contingency scandal never took place.

The other declarant was also from the painfully familiar past: Patrick Paige, a former police investigator who was fired from the police force five years ago — after he was caught procuring illegal drugs while using his undercover identity.

Yet it was something new in the ex-parte application bundle: a declaration of one Erin Sinclair, purportedly a COO for Malibu Media from its inception (surprisingly, we never heard this name until now). Nothing really to see there — same usual hogwash such as “piracy kills our business,” except for the following statement that caught my attention:

We want to stop the infringement of Malibu Media’s movies. To further facilitate this goal, Malibu is opening investigations with law enforcement to stop the seeding of its movies. Our goal is to stop the prolific infringer responsible for initially seeding the “Unauthorized Packs.”

Coincidentally, on 6/29/2016, Free Speech Coalition (adult industry’s trade organization) claimed the FBI approached FSC’s Board Chair Jeffrey Douglas, alleging that there was a massive hack of 25 adult sites and that the perpetrator (who was caught) uploaded the ripped websites to Bittorent:

The FBI is hoping to work with Free Speech Coalition to inform the victims, as they have in previous data breach cases. Douglas has agreed to work as a volunteer liaison between the affected sites for members, allowing them to contact the FBI without having to disclose identifying information of any entities behind the site.

While a well-known industry gossip blogger Mike South was more than skeptical about the FSC’s claims, let’s assume that the event in question indeed took place. If so, Malibu may have taken advantage of this offer, believing it has nothing to lose, especially given that it did not have “to disclose identifying information of any entities behind the site.”

The question remains: why Malibu, after four years of mass litigation, suddenly decided to add this kind of a declaration? Simply jumping at the opportunity, or something else?

As I will try to explain below, the answer may be found in recent aggressive defense by some attorneys, particularly in the assertion of deliberate pre-release leaking either by the pornographer or the unlicensed German IP addresses harvesters / investors.

Defense attorneys go for the troll’s jugular

Nick Ranallo is one of the attorneys who currently accuses X-Art of gross misconduct, and those accusations translate to affirmative defenses stemmed from the “unclean hands” doctrine. To my observation, these defenses proved to be effective. For example, out of ten cases defended by Ranallo in California, four ended in a walk-away settlement: no money changed hands 3.

Another example of an aggressive defense is Malibu Media v Neill Jacobson (ILND 15-cv-10707, attorneys: James Kelly and Patrick Rollins): the defense does not beat around the bush in their requests for production and interrogatories.

Let’s look at the first affirmative defense (“Unclean hands”) in one such Answer (CAND 16-cv-01014, Ranallo). This defense arises in part from the following allegations:

  • 18 U.S.C. §2257 violations (failure to keep records detailing performers ages);
  • Filming at X-Art owners’ home without permission and mandatory barrier protection in violation of Ventura County Ordinance No. 44 (“Safer sex in adult industry”);
  • Intentional pre-release leaking (and subsequent initial seeding on Bittorent) of X-Art porn flicks.
2257

18 US 2257 (Child Protection and Obscenity Enforcement Act)

is part of a United States Act of Congress which places stringent record-keeping requirements on the producers of actual, sexually explicit materials. The guidelines for enforcing these laws (colloquially known as 2257 Regulations (C.F.R. Part 75), part of the United States Code of Federal Regulations, require producers of sexually explicit material to obtain proof of age for every model they shoot, and retain those records. Federal inspectors may at any time launch inspections of these records and prosecute any infraction.

Malibu historically vehemently denied violations of 2257 requirements, also arguing that if the records were out-of-order, it wouldn’t matter because even child pornography enjoys copyright protection. No matter how cynical this argument sounds, Malibu may be correct: this is what the copyright law became today. Speech integral to criminal conduct wouldn’t enjoy First Amendment protection, yet it still would be copyrightable.

Some judges sided with the troll and ordered to strike affirmative defenses based on such allegations, but one judge agreed with the defense (Morgan Pietz) in 2013: this order created quite a stir in the adult industry.

Also, strictly speaking, applying the unclean hands doctrine here would be a stretch because alleged 2257 violations are hardly related to the underlying infringement:

[…] the equitable defense of unclean hands was recognized rarely, when the plaintiff’s transgression was of serious proportions and relates directly to the subject matter of the infringement action.

However, despite the case law may be on the pornographers’ side, it looks to me that X-Art is trying hard to avoid any publicity regarding this matter (and, of course, a possible discovery).

Significantly, right after the abovementioned case was settled (and it was a walk-away!), X-Art hastily removed keywords “erotic teens,” “teens,” and “barely legal” from its site’s metadata:

Filming without permission and violation of Ventura Co Ordinance

Not being protected by litigation privilege, and knowing nothing about X-Art’s 2257 record keeping, I naturally cannot make the previous section’s allegations.

Accusations in illegal filming is a different matter: evidence here is so abundant that I can explicitly allege the following as a fact: from 2013 to 2016 X-Art filmed dozens and dozens of porn flicks at their owner’s home without required permits and in violation of Ventura County Ordinance No 4452, which provides for criminal penalties:

Any person or entity who produces or films an adult film for commercial purposes in the County without a valid permit, or any person, who violates any law, ordinance or regulation governing any activity regulated by this chapter, or who, upon demand of the Director, refuses or neglects to conform to a lawful order or directive of the Director pertaining to conduct regulated by this chapter, is guilty of a misdemeanor punishable by a fine of $1,000, imprisonment in the County jail for a period not exceed six months, or both. Each such act is punishable as a separate offense.

Alas, like in the 2257 case, there is no private right of action here, and these violations do not “relate directly to the subject matter of the infringement action.”

Deliberate pre-release leaking of the films
Thomas HeinThomas Hein

In my opinion, the last bullet point is more promising. Unlike the previous two, this conduct, if proven, would clearly satisfy the unclean hands defense requirement — deliberate leaking to catalyze lawsuits is not only directly related to infringement, but can possibly constitute barratry (which is a crime in many states, including California).

As with 2257 record keeping, I don’t have enough evidence to claim that either X-Art or the Germans deliberately created honeypots. However,

  • I documented 50 X-Art’s movies that appeared on the Pirate Bay prior to their release — steadily over the period of four years, which is hard to explain by “hacking.”
  • A liaison between the troll lawyers (including Malibu’s) and the Germans, Thomas Hein (German American Services, Inc. — a shell entity created for the purpose of siphoning money from the pockets of hard working Americans to German champertors), confessed in now deleted (Internet Archive FTW!) 2008 interview:

     

    No one working for DigiProtect [one of Guardaley’s early shells] has a fixed salary,” Hein said. “If we make money, everybody makes money. If we don’t, nobody does. This means the lawyers, sales people and customers. It’s all about how much money can be recouped and then sharing it. But there is no financial risk to the customer whose content we protect. We pay for everything like court costs and legal costs. The studios give us the rights to distribute their material for free to P2P networks, which really shows a lot of trust in our company.

While, again, I’m reluctant to make direct factual allegations, all this stinks badly, and I hope that this smell will reach someone with investigative powers much greater than mine. Remember that FBI’s interest in Prenda was first sparked by the discovery that the infamous troll seeded smut itself.

Fighting off this type of accusations preemptively is a natural, expected strategy for the troll. I think this is the very reason behind the “we want to nail the initial seeder” claims, even if such claims are unsubstantiated.

Conclusion
Do not call up that which you cannot put down.
H.P. Lovecraft, The Case of Charles Dexter Ward

I think that the claim that X-Art wants to catch the initial seeder sounds shallow:

  • It sounds shallow because Malibu, to the best of my knowledge, never employed widely available and not that expensive watermarking technology to track the leaks.
  • It sounds shallow because while claiming an intention to go after the initial seeder, Malibu instead continues targeting vulnerable population without a zero intent to bring a single case to the trial (the very definition of vexatious conduct).
  • It sounds shallow, because it is a business, there is an “investor,” and it is contrary to any conceivable business model to work towards diminishing revenue.
  • It sounds shallow because a liaison for the German champertors admitted on the record that Guardaley distributed its clients’ copyrighted material on Bittorent.
  • It sounds shallow because Malibu has a colorful history of lying to the courts.
  • It sounds shallow because this claim looks like a preventive strike against powerful counterclaims.
  • It sounds shallow because the hands of X-Art’s owners and their attorneys are unclean.

However, if my skepticism is overboard, and X-Art indeed requested help from a federal agency, and if this federal agency opened an active investigation, I wonder if its agents would close their eyes and wouldn’t look at the circumstances surrounding the shakedown empire: a lack of action upon early leaks, a dirty connection with the Germans, illegal pornography production, and allegations of 2257 record keeping violations, you name it…

Time will tell. For now, if you are a defense attorney in a Malibu case, not making unclean hands defenses discussed above is akin to knowingly discarding four aces in a poker game.

 


1 TXSD Judge Lynn Hughes consolidated seven cases assigned to him on 9/13/2016. The resulting case is 16-cv-02338, and it is worth watching, given this judge’s reputation: I strongly suspect that Judge Hughes is allergic to scams and BS.

2 Malibu eventually lost the case where this revelation took place, and according to the Malibu v Lipscomb complaint, the troll ended up paying an undisclosed amount to the defendant.

3 The other Ranallo’s cases: in 15-cv-04443 (CAND) defendant’s motion to dismiss was granted due to Malibu’s service shenanigans, in 16-cv-01005 (CAND) the troll attempted to cut and run, prompting a powerful motion for sanctions; 16-cv-01014 (CAND), 15-cv-02926 (CASD), and 16-cv-00786 (CASD) are currently pending; 15-cv-04176 (CAND) and 16-cv-01622 (CAND) settled pursuant to undisclosed terms.

Discussion

13 responses to ‘Malibu Media claims it wants to catch the initial seeder: why this claim sounds shallow

  1. Supposing, for the sake of argument, they actually woke up and decided to stop the leaks, there’s this problem of laches…they have been going on for years with *no* discernable action.

    In the same vein, well, I’ve been trying to sell this bridge in Brooklyn for years and years…noone seems to be buying for reasons I just can’t fathom! (grin)

    I wonder why Ranallo didn’t pull up “multiple satisfaction” in his affirmative defenses? I’d really like to see him start serving up bar licenses; maybe that’s already in the works.

  2. It is shallow. It’s shallow because – borrowing from Christenson’s comment above – to the best of my admittedly limited knowledge, Malibu and their attorneys never went after the initial seeders before this.

    Furthermore, I wonder at the change of German firm (or at least the name) coincides with the change in legal counsel here in the states. If I didn’t know better, I’d suspect the lawyers were really the masterminds behind this entire gambit.

  3. Lost among two dozen links is an interesting article published by the Yale Journal of Law and Technology in 2014: Copyrighted Crimes: The Copyrightability of Illegal Works. The author, Eldar Haber (Postdoctoral Research Fellow, Haifa Center for Law & Technology, Faculty of Law, Haifa University) questions the current state of affairs (illegal works currently enjoy copyright protection):

     

    After examining how the current copyright regime deals with works involving illegal activity, this article suggests a new framework. First, I review the elements of copyright and consider existing content-based restrictions in copyright, trademark, and patent law. After evaluating whether copyright law should impose content-based restrictions on illegal works, and whether such impositions would be constitutional, I conclude that creators should not benefit from works that are linked to harmful criminal activities. I propose a new framework for the copyright of such works that de-incentives their creation by eliminating profits from the works themselves and reducing profits from the felon’s other works due to his or her notoriety, while also compensating victims.

  4. it sounds like (to me), one of the following:

    Scenario 1: Malibu Media wising up, due to the apparent troubles with behind the scenes stuff. If Malibu Media is not as directly gaining from these trolling efforts (not receiving much of the settlement proceeds), Malibu Media is going to the FBI as a separate entity to again, pressure legit seeders into stopping torrent seeds, possibly avoiding the trolling scheme side of things, which may signal a dual pronged approach, or an actual split of paralegals and Malibu teamwork.

    Scenario 2: If the trolling collective and Malibu are still in a joint effort, i guess if the lawyers cannot find anything after stringing along these dockets (new and old), they can come back with FBI reports on alleged seeders and downloaders. So it becomes another way of dual attacking people. “oh look, the FBI says you’re guilty…PAY UP”. My guess is that people who have been let off the hook (after settling or otherwise), the FBI will have their names, ready to go for another round. But those that have settled cannot be sued again, correct? But then, if the initial verdict was “not downloader”, then “is seeder” becomes the new standard of trolling?

  5. I am not a lawyer, but it sounds like Malibu took four years to figure out how to seed their own content and find a system to make sure they couldn’t get punished for suing people for downloading their seeded files…

  6. Thank you SJD for this great article. Greed is such a powerful motivator. It is the only reason BT Copyright Trolling was started in the first place and why we are seeing the various Troll entities screw each other over for more of the money. Sad to say, but if it had been run better (with honesty between the dirt-bag parties), it wouldn’t have gone bad. It has never been about “stopping piracy.” Too bad our legal system is happy to let it continue for this long and under such an obvious flag of BS on so many levels.

    I’m not surprised with Malibu Media filing more law suits. They have to fund the legal fight with Lipscomb and there is no easier cheaper way for them to keep the cash flowing. Unless Lipscomb can somehow prevail on own his self-perceived brilliance, the FL case is likely to drag on and cost him lots of money. LOL! Malibu Media simply needs to maintain a steady flow of BT Copyright Trolling cases and they have a good chance of getting him to beg and plead for a deal eventually.

    All it took for Malibu Media was some time to set-up the new arrangements with the attorneys, Germans, and even “Never Convicted,” forensic examiner Patrick Paige. I was wondering if Mr. Paige would come along with Malibu. Without a cheap (and morally lacking forensic examiner – MY OPINION), Malibu Media would have a hard time going up against a Defendant who decided to taking it to Discovery. I may be wrong, but I don’t think the new Malibu team will be as eager to push as far into Discovery as Lipscomb liked to. Doing so could bring Malibu into possibly having to fight more cases (in addition to the Lipscomb one)/multiple fronts. But the Trolls are not too smart at times. I assume they will continue to work settlements for a majority of Defendants, default judgements on the non-responsive Defendants, and then eventually walk-away deals for the rest. The walk-away deals are the worst (IMO), as Malibu Media is going to hold to the Lipscomb model of not accepting one until the case/trial costs are more than if a Defendant had settled. Malibu knows it is either going to get paid up front or take its pound of flesh from the Defendants by Defense costs and/or stress.

    I think the truly sad thing is all the attorneys who rationalize their actions of working these cases for the Plaintiff – “everyone is entitled to defend their rights…” Blah Blah Blah, BS, BS, BS. That or claiming they are only playing by the rules, “that is how copyright law is written…” For the Troll attorneys who honestly didn’t know what was going on when they started – after 30 days you knew damn well what a sham operation it was and how there is NO truth to the claims of fighting piracy. By continuing to work these cases and take your small share of the tainted money you are just the same – scum. I don’t care about your debts or other troubles you have. It is just your excuse for you flexible ethics, weak morals, and your arrogance in your abilities. And some of you even think the defense attorneys you work with think you are OK guys/gals. They most of all know what pieces of crap you are and are simply trying to get a better deal by acting nice to your face. I will continue to call this operation what it is – A Game – for everyone except the ISP subscriber/Doe. You all laugh and make statements like “well, if the person (or family members) didn’t torrent, they would be in this mess.” Yes it is a mess, but it is a mess that that essentially is making a mountain out of a mole hill – AND done simply to make other people rich. Copyright infringement is wrong, but that in no way justifies the efforts of the Copyright owners, those who purchase the copyrights (to sue), the German BT monitoring firms, the attorneys, or support personnel, who keep this going. Funny how Malibu Media/Lipscomb (and Voltage Pictures) claim they are NOT like Prenda Law. Well it looks like they are going down a similar road – might not be the same one, but the direction they are heading is.

    DTD 🙂

    • One thing that Lipscomb can do is fall on the sword and turn state witness for limited protection (immunity and a lesser charge). That may derail their lawsuit and most definitely would be a poison pill to the whole BT shakedown.

      Never underestimate the fear of a coward.

  7. Maybe Malibu media can get tips on hunting down the real perpetrators from OJ Simpson, who is still looking for real killers – every fine golf course and country club must be thoroughly and personally inspected by OJ, just to be sure. I suspect Malibu Media will be similarly thorough… 😛

      • Doh! I forgot about that conviction! Is there nothing this man won’t do and nowhere he won’t go to find the real killers? Such dedication.

        You are right, I can only hope that Malibu Media shows the same level of dedication as OJ Simpson.

  8. Malibu media needs to keep on filing lawsuit. That is their business model. Without it, Collette gets no money (she will be a “nothing”; just another real estate agent). They are playing with the percentages. If they file 136 lawsuits and each lawsuit costs around $400. They spend $54,000 total. If even 1 out of 10 people settle, (around 13 total people settle), and each of these people who settle pay lets say, $8,000, that’s a total of $104,000; if 2 out of 10 people settle, that’s over $200,000. After paying their local lawyers, etc., there’s probably a good enough return on investment in their eyes to continue this racket. I assume no more than 3 out of 10 people settle and pay. That being said, I think their margins are thin, but still profitable. Besides, what else is Collette going to do? This is all she really has.

    Malibu media is just playing the averages. They IMHO, do not want to really prosecute a case. It costs way too much for discovery (imaging cost money, actual forensics cost money, depositions cost money, etc. etc.); they want to rev up the pressure by trying to delay these type of cases without doing any work. They already have the answers to what most defendants will ask in the interrogatories. They already have the disclosure documents, etc. It’s basically a “cut and paste” job for Malibu. Malibu media replies with “cut and paste” documents, and answers while trying to delay the lawsuit in order to ratchet up pressure on the defendant.

    How many current cases has Malibu media done “real” forensics? How many current cases have Malibu media deposed the defendant or anyone for that matter? The Tashiro case showed how Malibu media “over prosecuted” — imaging hard disks, deposing witness, etc. Malibu media went all out in that case and at the end of the day, they won the case, but they ultimately lost money. According Lipscomb the lead prosecutor for Malibu, they lost over $300,000. Lipscomb is a shady character and the $300,000 figure could be inflated, but I am sure, they lost money; and I think this is one of the reasons why Lipscomb left Malibu.

    Malibu media is playing the odds. They are sending “cut and paste” responses to lower their costs hoping to make money. They are ignoring defendants lawyers until they really have to reply. They are trying to not do any e-discovery unless they are 100% sure that they will find incriminating evidence. I think it’s true when Lipscomb said there’s no money in these type of cases. However, I think Malibu media has changed. They are still suing people, but NOW, they are not really prosecuting the defendants. Basically, to lower the cost everything is done via email and efficiently as humanly possible (including ignoring emails). It truly is “cut and paste” for Malibu now. The only way Malibu media will die is if more defendants fight. If defendants make Malibu media spend more time and resources to prove that the defendants are guilty instead of allowing Malibu media to delay and drag along lawsuits.

  9. Latest Alsup/Malibu Media docs have some interesting points, I’m betting Alsup will be “impressed”. Edmonson(Defense) resembles the D-day invasion: slow, methodical, covers *everything*, and going for the jugular. And keeps “helpfully” pointing out what plaintiff is supposed to do.

    Defense: “I’m surprised your client wasn’t aware of the rule 68 offer”!
    Defense: “A significant portion of the depo time was spent with Collete attending to her cell phone. In addition she was an hour late to the depo”
    Defense: “In the interim, should you wish to discuss these myriad deficiencies, please feel free to call me”
    Defense: “IPP International …. is licensed as a California Private Investigator”. (wonder what the registration # might be, or if this is a feint).

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  1. Who leaks Malibu Media’s porn before the release? | Fight © Trolls