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

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.