Prenda Law, the firm that became controversial as a prolific "copyright troll" by suing thousands with lawsuits over downloading porn movies, has fallen apart over the course of the last year. The organization and the lawyers widely believed to be behind it—John Steele, Paul Hansmeier, and Paul Duffy—have been sanctioned by numerous federal judges.

While Prenda has settled a few cases, most of the Prenda setbacks, including the original hammer-drop from US District Judge Otis Wright, are actually being appealed.

Yesterday, the Prenda lawyers had their first oral argument (audio) on appeal in front of the US Court of Appeals for the 7th Circuit. It went about as badly as close Prenda-watchers might expect. While it's dangerous to try to guess the results of an appeal based on questions at oral argument, it doesn't look good for Prenda. The judges repeatedly challenged the statements of Daniel Voelker—the attorney defending Steele, Hansmeier, and Duffy—and that's when things were going well for the once-vigorous copyright enforcer.

The low point was probably when Judge Diane Sykes asked Voelker to describe the relationship between the three iterations of law firms that Steele and Hansmeier have gone through.

"Can you describe to me, in 25 words or less, what the relationship is among these various firms: Steele Hansmeier PLLC, Prenda Law, Alpha Law?" asked Judge Diane Sykes.

"I can't, Your Honor," said Voelker. "I don't know. I don't know what it is today, I don't know what it was a year ago."

"That is shocking," said Sykes.

Light speed toward failure

The Lightspeed v. Smith case was one of several "hacking" claims that Prenda began to make in late 2012. By avoiding copyright, Prenda hoped to avoid federal court. Instead, it filed a lawsuit in state court in southern Illinois, seeking to get discovery for the names of 6,600 Internet users who Prenda claimed were somehow connected to Anthony Smith, a "master hacker" who had broken into a website owned by Lightspeed Media, a porn company.

Lightspeed and Prenda failed to get the discovery they wanted when they were shot down by the Illinois Supreme Court. But they didn't back down. Instead, they sued Comcast and AT&T, saying the ISPs were "aiding and abetting" the hacking. The ISPs lawyered up, and the case ended up with Prenda losing badly and being ordered to pay more than $260,000 to cover the legal fees of Comcast, AT&T, and Smith.

During the appeal, Voelker tried to move the discussion away from the murky relationships between the parties—the "shell game activity," as Sykes put it at one point. He hammered home his point that US District Judge Patrick Murphy's order amounted to assumptions and conjecture based on reading other court's orders—orders that were on appeal.

Voelker also said that Judge Wright, who penned the original sanction against Prenda, had essentially reached his conclusions by surfing the Web.

"[Murphy] found that the attorneys had a 'relentless willingness to lie,' and there's no support for that in the record," said Voelker. "He also found that they're 'starving attorneys with shattered law practices.' Those are basically facts that the district court in California found based upon Internet research."

At least two of the judges on the three-judge panel clearly didn't see it that way.

"Some of these misrepresentations were in front of him, though," said Judge Diane Wood. "There's an overall concern that this was a proceeding in bad faith. It's kind of an attempt to hold up these 6,600 people [and] see who will settle. It's a troublesome record."

"The district judge... couldn't point to a single allegation they made that was untrue," said Voelker at one point.

"He thought they were all frivolous, actually—as I read his opinion," said Sykes.

"He may have," said Voelker. "But he still has an obligation under the law to identify what it is that's frivolous, and he just didn't do that. Instead, he just adopted conclusions from other courts and different cases involving different plaintiffs."

That accusation caused Sykes to start reading the most damning part of district court judge's order aloud.

"At the November 13 hearing, Hansmeier skirted the Court's questions, Steele made feigned protestations, and both flat-out lied about their association with Prenda Law, Inc. in the face of documentary evidence on the record in this case and their sworn declarations in other cases," she intoned.

"That has nothing to do with whether, under [28 US Code section] 1927, the claim was baseless legally and factually," insisted Voelker.

On the defense side, time was split between Bart Huffman, arguing for AT&T and Comcast, and Dan Booth, the lawyer representing defendant Anthony Smith.

"Was there a reasonable inquiry?" asked Booth. "We don't believe there was. Judge Wright said they didn't have much more than a 'hunch and a rumor.' In this case, our client was misidentified. They had the wrong person. They said he conspired with 6,600 other people he didn't even know."

The Lightspeed v. Smith case is one of several Prenda appeals that will be considered in the near future. In California, the Ingenuity 13 v. John Doe case that Wright oversaw has been fully briefed. Another company controlled by Prenda lawyers, AF Holdings, has an appeal being argued next week in Washington DC.

While Prenda has mostly experienced setbacks since Wright's ruling last year, it was able to dodge one batch of sanctions last month when a Minnesota judge ruled that the US Magistrate Judge who had issued the sanctions overstepped his authority. Voelker tried his best to make hay out of that event yesterday, arguing that at least one judge had decided "on the merits" that sanctions against Prenda were wrong-headed. Defense lawyers said the March decision to overrule sanctions was more procedural in nature, relating to the bounds of the magistrate judge's power.