Last month I wrote about a default judgement in a Malibu Media case: an Illinois judge expressed a concern that all these lawsuits are designed to be a secondary revenue stream for rightsholders rather than a legitimate recovery of lost sales. As a result, he awarded the minimum amount allowed by law, $750 per work, $9,000 in total (plus attorney’s fees).

Regarding the “per work” part of the law, I noted that

[…] Lipscomb found a bonanza in the fact that for the purpose of the statutory award the law doesn’t differentiate between a multi-million full-budget movie and a cheap, plotless porno flick illegally filmed at the pornographers’ home in a course of hours. Thus, the judge couldn’t award less even if he wanted. This loophole guarantees that the shakedown business stays profitable no matter what.

It seems that I was too pessimistic: today Judge Sheri Chappell awarded a $6,000 default judgement (plus $1,657.00 in fees and costs) for 47 “works” in Malibu Media v. Danford (FLMD 14-cv-00511). She reasonably ignored the overblown claim of multiple infringements, thus patching a loophole Keith Lipscomb has been abusing for years. In addition, the judge questioned the “lost revenue” hype copyright trolls are so accustomed to pulling out of thin air (emphasis is mine):

Malibu Media asserts in this instant case, the infringement was committed willfully. Specifically, Malibu Media seeks $1,500 per work in statutory damages. Since Malibu Media alleged Danford infringed 47 works, Malibu Media seeks a total of $70,500 in statutory damages. Malibu Media argues this amount is reasonable because Danford aided other participants through the BitTorrent system to infringe its copyright and caused the lost sales of its content which likely exceed lost sales of $70,500 or more. The Court, however, finds a statutory award of damages of $70,500 would provide Malibu Media a windfall and therefore is not warranted here. Clever Cover s, Inc., 554 F. Supp. 2d at 1313 (“statutory damages are not intended to provide a plaintiff with a windfall recovery.”) […]. Here, Malibu Media failed to provide any evidence of its own lost sales, profits, or licensing fees as a result of the infringement to assist the Court in determining the appropriate amount of statutory damages to award. Similarly situated courts addressing statutory damages where a defendant has downloaded copyrighted materials through a BitTorrent system have assessed damages of approximately $6,000 based on an inference of willfulness.

The judge refers to three non-porn cases where there was an award of $6,000 per a single movie, and concludes:

Nothing about this case materially distinguishes it from cases in which damages in the range of $6,000 have been awarded. In light of the facts and circumstances in this case as well as other similarity situated cases within this district, the Court finds a statutory award of $6,000 is appropriate.

I hope that this is the beginning of a pattern that will bring more or less reasonable numbers into the game, thus rendering the shakedown business model less profitable.



It is worth repeating that while in this particular case the default judgement was far less than a typical settlement demand in a Malibu Media case, relying on a favorable default is not a good idea. We saw default judgments that exceeded $100K.

Coverage

Updates

5/27/2015

Surprise, surprise… Lipscomb moves for reconsideration. “Your Honor, please, please don’t destroy our gravy train; I was so clever to discover that four dozens of plotless, cheap, criminally produced home clips depicting teenagers having unprotected sex should be treated separately for statutory purposes. Each of this shitty clips is equal to a blockbuster.” You think I’m exaggerating? Lipscomb indeed said this (emphasis is original):

The cases cited indeed assessed damages at $6,000.00, but each such case involved only one copyrighted work. […] Since Countryman Nevada, TCYK, Thompson, and Bait Production each involved only one copyrightable work, the $6,000.00 award granted in those cases was within the permissible per work range of $750.00 and $150,000.00. […] Your Honor overlooked, however, that Defendant infringed not merely one (1), but forty seven (47) , of Plaintiff’s works. Adopting the $6,000.00 per work analysis utilized in Countryman Nevada, TCYK, Thompson, and Bait Production, the proper award here would be $282,000.00.

This default judgment is an existential threat to shakedown artists, so I expected this missive to be filed sooner rather than latter.

6/3/2015

The judge says “oops” and sides with Lipscomb

This order could put an end to Lipscomb’s extortion racket, but at the same time it looked too good to be true. Some attorneys I talked to were skeptical that this order would stay. Alas, they were correct: yesterday the judge reconsidered her order and increased the award to $35,250 (statutory minimum per title) from the original $6,000.

Despite the odds, I hoped that Judge Chappell would stick to her order, arguing that the copyrights-in-suit can be interpreted as “compilation” for the statutory purposes according the language of the 17 U.S. Code § 504 (c)(1):

Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

I think that the ease of the change of judge’s opinion was partially due to the fact that it was a default judgment, i. e. Lipscomb’s motion for reconsideration was uncontested. In other words, Lipscomb came for the defendant — and there was no one left to speak for the defendant.

The racket continues.