by Dragon

The first time I read Judge Otis Wright II’s order issuing sanctions against Prenda et al, I knew I was witnessing history in the making. There were many times, in this blog and elsewhere in the community where Does expressed frustration that judges were simply not paying attention to the various infringement suits that were coming across their desks. It was an anomaly for a judge to question or put restrictions on discovery. While Prenda had everyone’s full attention in California, and justifiably so, Malibu Media took advantage of this fact with a landslide of lawsuits headed up by the weasel Keith Lipscomb and his “merry men.” As in the past, most of these lawsuits were granted discovery, which allowed Plaintiff the opportunity to “plunder the citizenry.” Then came May 6th. As word of Wright’s “proclamation” has begun to spread, judges are starting to lift their heads and pay attention to what is going on. Two particular districts in the past few days, where judges have looked beyond face value, have now taken an interesting turn.

Wisconsin

Three days ago, in the Western District of Wisconsin, Magistrate Judge Stephen L. Crocker, took a closer look at what was going on and decided it was time for “the court to go to battle stations.” He issued an order today that literally had me clapping and cheering (at work mind you) for his ability to get to the root of what is really going on with these suits. Malibu has filed 11 suits in his district, which even though he is well aware of the criticism levied against them, has “no problem” with plaintiff protecting its copyright or negotiating settlement, regardless of the content involved.

Now here’s where it gets interesting. You may recall in Malibu cases, that additional infringement is now being entered as exhibits (exhibit “C” to be precise¹) under the guise of asserting that the Doe is a “serial infringer.” This community had concerns about including infringement of works that did not belong to Plaintiff and clearly those concerns are shared by this Honorable Judge.

This is nonsensical. Complaints are pleadings, not affidavits, so they have no “evidentiary purpose.” Complaints are to provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” F.R. Civ. Pro. 8(a)(2). Here, in each case, plaintiff is explicitly disavowing any claim based on Exhibit C. If it were to matter, under what rule of evidence would Exhibit C be relevant at any stage of this lawsuit? Propensity evidence is forbidden by F.R. Ev. 404(b)(1). Plaintiff makes no claim that Exhibit C is relevant under Rule 404(b)(2), and if it did, then the weighing process of Rule 403 would militate forcefully toward excluding this evidence. So what’s really going on here?

Well, we knew all along “what’s really going on here.” Slap down a complaint, coupled with 100 plus additionally alleged infringements, and you have now increased the chance of settlement exponentially. Trolls prey on FUD (fear, uncertainty, doubt) and these exhibits are one unhealthy dose of it. It’s no surprise that the average settlement amount in these particular cases is between 10 and 15 thousand dollars. Unfortunately for Malibu, Judge Crocker gets the joke; and he’s not laughing.

Even a cursory review of each lawsuit’s Exhibit C shows first, that it is always much, much longer than the short list of titles that is the actual subject of plaintiff’s lawsuit, and second, thatamong the innocuous titles listed in each Exhibit C (e.g., “Top Gear,” “Star Trek VI”) are numerous “adult” programs, usually many more than the handful for which plaintiff is claiming a copyright violation, and many with titles exponentially more lewd than any title claimed by plaintiff Compare “Red Satin”with“[Bestiality] Young Blonde . . . Dog (www.sickporn.in).” One needn’t be a cynic to suppose that an intended purpose–perhaps the primary purpose–of Exhibit C to the complaint in each of these lawsuits is to increase the pressure on a subsequently identified Doe defendant to settle before s/he is publicly linked to hardcore/deviant titles that are completely irrelevant to plaintiff’s actual claims in the lawsuit. If this is true–and right now it is the court’s operating hypothesis–then plaintiff probably has violated F.R. Civ. Pro. 11(b)(1). Nothing else is going to happen in these lawsuits until the court decides this matter.

Put another way, GAME OVER. He concludes by ordering all documents sealed, “to protect them from prying eyes” while the court is able to determine if these exhibits “should be stricken and whether plaintiff should be sanctioned” (emphasis added). Malibu now has to explain to the court what they were up to, or face sanctions.

Illinois

Moving on to the Central District of Illinois. Magistrate Judge Byron Cudmore has long been handling Malibu cases, essentially passing local counsel Mary K. Schultz the keys to discovery without so much as breaking a sweat. Currently, I count 38 cases pending in this district alone. While there isn’t a whole lot of detail to share yet, the following text was entered in each of these cases yesterday:

ORDER REASSIGNING CASE. Case reassigned to Chief Judge James E. Shadid and Magistrate Judge John A. Gorman for all further proceedings. Judge Michael M. Mihm, Magistrate Judge Byron G. Cudmore no longer assigned to case. All discovery and deadlines are stayed pending further order of the Court. Entered by Chief Judge James E. Shadid on 5/30/2013. (MC, ilcd) (Entered: 05/30/2013)

Again, while there isn’t much detail to relate with these particular suits, it is worth noting that the Order issued has taken the cases from Springfield, IL and placed them now in Peoria to be handled. That raises some eyebrows as to what exactly was happening in Springfield that caused the reassignment.

Along with the Bellwether trial, Malibu Media is finally starting to get some much deserved notice and it couldn’t have come sooner in my opinion. As the winds of change start to blow, hopefully more judges across the country will start to uncover the truth: the troll “business model” is alive and in full swing with Malibu Media.

6/1/2013 (SJD)

According to RFC Express (which is buggy, so the numbers may be slightly off), orders reassigning cases and staying discovery have been filed in at least 21 cases². Strangely, exactly at the same date (5/30/2013) Malibu/Lipscomb/Schultz voluntarily dismissed without prejudice (example) at least 9 cases. Feeling the heat and running away like thieves caught pilfering cigarettes? All these cases feature “extended surveillance” Exhibit “C,” which I hope will serve as a ground for sanctions against Lipscomb and his gang — first in Wisconsin, then in other states. I urge all the named and unnamed defendants in all states file judicial notes attaching Judge Crocker’s order.

Followup

@SaltMarshGhost has posted an interesting analysis of recent events on the copyright trolling front, with big emphasis to Judge Crocker’s order and its possible impact. Below is the entire piece (I only linkified it).

The Copyright Troll Big Picture

@SaltMarshGhost

2013-06-01



Several big things have happened in the last month in the copyright troll world. First, Ingenuity 13 v. Doe, 12-cv-08333 (C.D. Cal.) has essentially ended (some drama regarding Klinedinst’s withdrawal notwithstanding). Several Prenda characters have filed appeals with the Ninth Circuit; those will not bring about any news until October, when their opening briefs are due (fans of schadenfreude, however, can look at In re: Hansmeier, in which Paul Hansmeier has to file a “status report” regarding his sanctions by July 14. Or perhaps he will not file one, and withdraw his application to the bar. Anything is possible with Prenda). Paul Duffy posted a bond to the district court, but will not motion to stay until June 24 (not sure why this is), so there won’t be any news out of the Central District of California for at least three weeks. The CAND 12-cv-02396 AF Holdings LLC v. Joe Navasca case was closed recently, to our dismay, with Judge Chen saying that Prenda had “substantially complied” with his order to produce the Salt Marsh signature by claiming to no longer have it (given my twitter handle, I am personally disappointed by this). Sunlust v. Nguyen in FLMD also ended unexpectedly, with Syfert withdrawing all sanctions motions, in an apparent deal.

But in this lull, M. Keith “don’t call me a pornographer” Lipscomb has been busy. As discussed above, Judge Crocker in W.D. Wisconsin warned Lipscomb that his now-infamous Exhibit C put him in serious jeopardy of sanctions under FRCP 11(b)(1). (Note that Judge Wright, before moving to inherent sanctions power, was considering sanctioning under FRCP 11(b)(3).)

The relevant paragraphs of FRCP 11:

(b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.

Wright’s assertion wrt FRCP 11(b)(3) was that Prenda did not sufficiently show that the Doe they were going after was actually the infringer; basically, that the IP address does not equal the infringer. While this is important, this isn’t actually central to the copyright trolling M.O. And his sanctions were not based on that at all; his sanctions were for Prenda’s asshattery with regards to their corporate structure, the Alan Cooper issue, etc. That’s where Judge Crocker comes in, and where Lipscomb has made a very, very bad mistake.

The primary component of the copyright troll’s M.O. is of course that a person who is accused of illegally downloading pornography will, much of the time, settle to prevent the news from being public. This smells of extortion, and Paul Duffy’s wife has admitted of Facebook to what amounts to inter-state extortion, according to Popehat. Where Lipscomb made a very bad mistake is in the so-called “Exhibit C”, which listed *other* works the Doe is accused of infringing, which appears to be nothing more than a print-out of the Bittorrent monitoring software and includes works that Malibu Media doesn’t even own the copyright to, such as real Hollywood movies. Crucially to Judge Crocker, it also includes several works with titles much cruder—and so more incriminating and more embarrassing—than used by X-Art. Judge Crocker finds this to be in violation of FRCP 11(b)(1).

This could be a crucial step in the dismantling of the copyright troll business. Judge Wright’s sanctions on Prenda, if upheld by the Ninth Circuit, would destroy Prenda but leave Lipscomb and other trolls intact. The broadest effect it might have is tilting other jurisdictions toward adopting an IP-address-is-not-the-infringer doctrine, due to Wright’s findings of fact. A finding that Lipscomb violated FRCP 11(b)(1), on the other hand, would strike at the heart of the copyright troll business model by saying that *filing a porn lawsuit based on trying to get somebody to settle to keep it out of the public eye* is legally-unacceptable harassment.

There is, however, one caveat—Judge Crocker seems to be interested in Exhibit C specifically. This leaves room for suits where the troll is not so stupid as Lipscomb and files a suit against a single, named Doe, for a single work. My understanding is that Lipscomb/Malibu are leaning toward this angle. (See Cashman on this.) If Crocker rules broadly and says that even that would violate FRCP 11(b)(1), then porn copyright trolls are all absolutely dead. If not, then Lipscomb/Malibu Media need to be watched very closely.

What with this and the talk of “copyright small claims” by Judge Titus in Maryland, the post-Prenda era (fingers crossed) still remains an exciting time for copyright troll watching.

Followup 2

¹The linked exhibit is from a different case: the complaint and all exhibits in this case are sealed per judge’s order embedded above. Yet it is perfect as an illustration: all such exhibits are essentially the same, only filenames differ.

²ILCD Malibu Media cases stayed and reassigned: