Opinion

Alison Frankel

Illegal download claims tarred by porn copyright troll brush

By Alison Frankel
May 29, 2013

U.S. District Judge Otis Wright‘s May 6 ruling in Ingenuity 13 v. John Doe is one of those decisions every lawyer should read. It’s only six pages long and sprinkled with Star Trek references, but its value lies in the cautionary tale outlined by the San Francisco judge. Wright was presiding over one of the many, many cases filed in the last few years by copyright owners suing tens of thousands of defendants over the supposedly illegal downloading of their content via online file-sharing sites. The litigation, as you probably know, is a specialty of pornography producers, whose cases benefit significantly from defendants’ understandable reluctance to be outed (even falsely) as consumers of online pornography. Occasionally defendants or their Internet service providers have stood up to porn purveyors. More often, defendants identified through subpoenas of their ISPs chip up a few thousand bucks to make the whole nightmare go away, leading public interest groups such as Public Citizen and the Electronic Frontier Foundation to call these en masse illegal downloading cases a shakedown operation.

Wright is one of the first judges to agree wholeheartedly with that assessment and issue sanctions based on it. “Plaintiffs have outmaneuvered the legal system. They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs,” he wrote. “Copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic-media era to plunder the citizenry.” The judge went considerably further than mere rhetoric, though. In the course of hearing discovery motions by the plaintiff, a copyright holding company called Ingenuity 13, the judge found out a bit about Ingenuity’s counsel, a shadowy firm known as Prenda Law. When Wright’s preliminary inquiries about Prenda revealed what he called a “cloak of shell companies and fraud,” the judge “went to battle stations,” he said in his opinion. He ordered four lawyers associated with Prenda (but not in the Ingenuity case) and two purported principals in holding companies engaged in the business of asserting porn copyrights to appear at a series of hearings in March and April.

Based on testimony and filings, Wright said, he concluded that the lawyers John Steele, Paul Hansmeier andPaul Duffy, who had all previously experienced “shattered law practices,” began copyright trolling as a way to make “easy money.” According to the judge, the attorneys had forged the name of Steele’s former groundskeeper on a copyright assignment and had otherwise engaged in a pattern of deceit and subterfuge, involving shell companies and elusive law firms, to mask the reality that they were the only beneficiaries of the suits they brought. “The principals’ web of disinformation is so vast that the principals cannot keep track – their explanations of their operations, relationships, and financial interests constantly vary,” Wright wrote. “Though plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO.” The judge ordered sanctions of $81,320 against all of the lawyers and firms he found to be part of the copyright scheme. He also referred his ruling to the U.S. Attorney’s office, the Internal Revenue Service and relevant bar associations.

Steele, Hansmeier, Duffy and the other folks smacked by Wright have all appealed the sanctions order. Hansmeier and Duffy didn’t return my phone messages, but Steele told me in a phone interview that Wright should never have issued sanctions against him, since he’s never appeared before the judge or even practiced in California. He also claimed Wright based his ruling on a 12-minute hearing. “There was no evidence introduced, no testimony offered, nothing,” said Steele, who told me he was never a partner in Prenda Law but was merely “helping on an ad hoc basis” with some oral arguments. Steele said he’s licensed only in Illinois and hasn’t really practiced law in more than a year. “I’m not interested in litigation,” he said. “This is a controversial area of the law.”

Steele told me that what has been lost in the extensive coverage of Wright’s decision is that copyright owners have legitimate claims against downloaders who steal their content. “The only racket going on is the widespread use of BitTorrent,” he said. “The image is of out-of-control lawyers, but you have to remember: The vast majority of cases wind up in our favor.”

Perhaps. But whatever happens to Steele and his colleagues – and I could, but won’t, spend days telling you about all of the litigation they’re in the middle of - Wright’s deep skepticism about illegal downloading suits is beginning to impact other judges overseeing such cases, even if the cases do not involve plaintiffs or counsel linked to Prenda Law. “Awareness is up,” said staff attorney Mitch Stoltz of EFF, which represents two bloggers in defamation suits by Prenda. “In that sense, Prenda is the gift that keeps on giving.”

This probably isn’t a complete list, but this month alone (in chronological order), U.S. District Judge Ann Aikenof Oregon found that more than 300 Doe defendants sued for illegally downloading by Voltage Pictures must be named inindividual suits, not in a single swarm. U.S. District Judge Robert Lasnik, ruling a few days after the Wright sanctions decision, issued a show-cause order in a case brought by Zembezia Films against 66 unnamed defendants. Lasnik cited Wright in expressing “some concerns regarding both the appropriateness of joinder and the possibility that the judicial authority of the United States may be used to wrest improvident settlements from pro se litigants under threat of huge statutory penalties.” On May 16, U.S. District JudgeRoger Titus of Greenbelt, Maryland, established formal procedures in consolidated illegal download litigation by Malibu Media, precluding Malibu from engaging directly with defendants. The following day, U.S. District JudgeDonald Spatt of Central Islip, New York, included an extensive discussion of abusive litigation tactics by porn copyright holders, though he said there hadn’t been such abuses in the case before him.

No Prenda Law people or entities were at issue in those rulings, but they’ve also been hit in the last couple of weeks by fallout from Wright’s decision. U.S. District Judge Susan Bolton of Phoenix denied Prenda’s request to subpoena records from the ISP of Die Troll Die, one of the blogs the law firm is suing for defamation, after the blog’s counsel at EFF cited Wright’s decision. In another Arizona case, U.S. District Judge Murray Snowordered a show-cause hearing on why he should not dismiss a case by AF Holdings, a Prenda client, finding “substantial reason to question the validity of the assignment on which plaintiff bases its case” in the wake of Wright’s decision. Finally, last week U.S. District Judge Charles Breyer of San Francisco ordered AF Holdings to pay defense fees of $9,400.

Prenda doesn’t seem to be filing any new cases under that name, though some lawyers who once operated under that umbrella are still bringing copyright infringement suits under other law firm names. According to Stoltz, the EFF lawyer, illegal downloading plaintiffs are also turning to state court, where they’ve refashioned copyright infringement claims as computer hacking violations. “It’s the same game,” Stoltz said. “They tell ISPs, ‘Give us the names.’”

But EFF is planning to keep capitalizing on Wright’s decision, using Prenda as a poster child for abusive litigation. “Other lawyers have been doing it without forging signatures and using shell companies,” Stoltz said. “But they’re no less harmful.”

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