Feeds:
Posts
Comments

Siemens PLM Software has been suing John Doe Defendants in federal courts for the piracy of their NX software since it was in version 7 (so far, I have seen claims against users of NX 7, NX 8, NX 8.5?, but not yet for NX 9, NX 10, or NX 11 — all of which are available on the bittorrent networks). Most recently, I have seen lawsuits focusing in on the unlawful use of the Solid Edge ST9 Foundation software.

In June, I wrote the “What to do about the Siemens Product Lifecycle Management Software Inc. v. Does case (TX)” article which provided specific information surrounding the lawsuit from information acquired from the Siemens PLM lawyers themselves. However, back then, there was much still unknown, and now (almost 6 months later), I have a much better idea of how this is happening, what Siemens PLM is doing to catch those using the software illegally, whether claims of piracy are leaking over to the employers of the engineers who use the pirated software at their workplace, and how they are handling claims against those defendants, both in and out of the courtroom.

What you need to know about these lawsuits is that the Siemens PLM lawsuits still deceptively look like “copyright troll” lawsuits, but they are not. I will get into this momentarily.

*UPDATED* LIST OF FEDERAL COURT CASES FILED:

IN THE CONNECTICUT DISTRICT COURT:
Siemens Product Lifecycle Management Software Inc. et al v. Demin (Case No. 3:16-cv-00553)

IN THE NEW YORK SOUTHERN DISTRICT COURT:
Siemens Product Lifecycle Management Software, Inc. v. Does 1 – 100 (Case No. 1:14-cv-01926)
Siemens Product Lifecycle Management Software, Inc. v. Does 1-50 (Case No. 1:11-cv-08469)

IN THE OHIO SOUTHERN DISTRICT COURT:
Siemens Product Lifecycle Management Software In v. Manufacturing Services International, Inc. (Case No. 3:16-cv-00182)

IN THE PENNSYLVANIA EASTERN DISTRICT COURT:
Siemens Product Lifecycle Management Software, Inc. v. Does 1-50 (Case No. 2:12-cv-06795)

IN THE TEXAS EASTERN DISTRICT COURT:
Siemens Product Lifecycle Management Software, Inc. v. BTL Machine, Inc. (Case No. 4:14-cv-00506)
Siemens Product Lifecycle Management Software, Inc. v. Does (Case No. 4:15-cv-00582)
Siemens Product Lifecycle Management Software, Inc. v. Mercury Metal Forming Technologies, LLC (Case No. 4:14-cv-00002)
Siemens Product Lifecycle Management Software Inc. v. Does (Case No. 4:15-cv-00017)
Siemens Product Lifecycle Management Software Inc. v. TWIVision Engineering Group, LLC (Case No. 6:11-cv-00679)

IN THE TEXAS SOUTHERN DISTRICT COURT:
Siemens Product Lifecycle Management Software Inc. v. Does (Case No. 4:16-cv-03552)
Siemens Product Lifecycle Management Software, Inc. v. Does 1-100 (Case No. 4:16-cv-01422)

JOHN DOE DEFENDANTS ARE GETTING CAUGHT THROUGH THE *USE* OF THE SOFTWARE, NOT THROUGH THE ACQUISITION OF THE SOFTWARE.

In September of 2016, I was still piecing together how a person can get caught not through the download of pirated software via BitTorrent, but through the USE of that software (that article is still available for viewing, although the picture is more clear to us now as I describe my current understanding of it here, specifically tailored to the Siemens PLM Software-based lawsuits).

As we’ve learned, most Siemens PLM NX Software available for download on the piracy websites comes with a serial number (“SN”) and an “activator” which modifies the application to allow it to accept a random password that the SN activator generated.  (Not relevant, but still interesting to know:  The serial number + details about the computer or laptop upon which it is installed creates a “Unique ID” which can be checked with valid IDs on the server; this circumvents a computer from using a “valid” registration code for a computer for which that registration code was not licensed to.  Thus, even though the serial number activator provided the software with a valid serial number, the company servers know the software is pirated.)

This application modifier is known as a “crack,” and software which is altered to accept the serial number generated by the crack thinks locally (that is, on the laptop in which it was installed) that the software was properly acquired, purchased, and lawfully registered. Most cracks also revert the executable file used to run the file back to its original unaltered state once the software has been registered.

The problem is that even cracked software connects to the internet, for example, to access libraries in the program file which are stored on the company’s servers. In other words, for economy purposes, it would take up too much hard drive space to store every piece of a large multi-gigabyte-sized program on each person’s hard drive. Thus, companies now store core components of their software on their servers. This is generally referred to as “cloud-based software,” but what exactly is stored online with the Siemens PLM software is still unknown (and they keep this purposefully undisclosed because they track the IP addresses of the computers who run the software and access these files online).

EVEN IF THE SOFTWARE HAS BEEN REGISTERED using a “SN and an activator,” (as provided on the bittorrent websites), when the software connects to Siemens PLM’s servers to access pieces of the software to run, if the registration code (or more accurately, the Unique ID, as described above) does not match a valid paid registration from their own records, that software unbeknownst to the user is flagged as being unlicensed, and the IP address is recorded.  We now understand that the software user is not made aware of this until he is implicated as a John Doe Defendant in a copyright infringement lawsuit.

EVERY TIME that user uses the NX software, another entry of unlicensed use is recorded (date, time, etc.) and the IP address of the internet connection used when accessing the software is also logged. This is how a Siemens PLM lawsuit against a John Doe engineer can leak over to his employer receiving letters for the infringement of their software, even when the software was acquired at the accused John Doe engineer’s home.

WHO IS THE TARGET OF THESE LAWSUITS.

I mentioned above that the Siemens PLM lawsuits look deceptively like “copyright troll” lawsuits, but they are not. Rather than extorting a few thousand dollars from every John Doe Defendant regardless of guilt, Siemens is looking for a particular defendant.

Siemens PLM Software wants to find the engineer who is providing “paid” engineering services, either 1) from his own laptop in his own small business, or 2) from his employer’s place of business where unbeknownst to the employer, that employee is bringing his unlicensed software to his workplace and using that pirated software at work [noting that his work does not own or pay for a license for the software].

In other words, Siemens PLM wants to find those engineers who are using their software but who are not paying a license for the use of that software, and they want to turn that enterprising engineer into a paying customer. Moreso, Siemens PLM wants to find that company (the employer of that engineer) who is benefiting from the unlicensed use of their software, and to turn that corporate entity into a “volume license” paying customer. This is where the “big bucks” are made.

WHAT IF YOU ARE A STUDENT?

Students are a different story than paid engineers. Just as law students are fed unlimited free case lookup services and are encouraged with points and free coffee mugs for using as much of services as they can [only to be hit with a multi-thousand-dollar subscription upon graduation for what a few days ago was free (think, WestLaw, LexisNexis)], engineering students are seen as the same “cash cows” for Siemens PLM as law students are seen by the WestLaw/Nexis case lookup services. A poor engineering student today is seen by Siemens as a future subscription-based customer for the rest of his working career, and if not, that engineer’s employer will be a “volume license” customer which is even more profitable for Siemens.

If you have not yet figured this out, I have found that engineering students (and those individuals who are smart enough to figure out that the NX software has specific applications for use in conjunction with their 3D printers) find themselves in the spider web of these lawsuits more than anyone else. These individuals ‘mess around’ with the software in ways which do not provide them an income (what we call “non-revenue-producing use,” or “personal use”). Rather, they use the NX software (or more recently, the Solid Edge ST9 software) to gain professional skills knowing that if and when these students do find employment, use of the Siemens PLM software will become a necessity. So the students download it, play around with it, then get sued and call me fearing that their professional lives are over.

But no attorney at Siemens PLM — not Robert Riddle, and certainly not Steven Dietz — wants to end the financial life of a future customer. Aside from the fact that a student has no assets to seize, it is my understanding that Steven Dietz would rather turn that student into a loyal customer. For this reason, I have been able to accomplish resolutions of claims with students in a way in which is simply not available to the engineer who uses Siemens PLM’s unlicensed software for profit.

That is not to say that an engineer won’t be able to “get out” of this lawsuit — it simply takes a bit more work, perhaps paying Siemens PLM a settlement fee based on their particular circumstances (read that again carefully), and based on what software was allegedly used, what module add-ons were used or needed, whether the use was for personal or business reasons, and whether use of the software is still needed in the future.

Lastly, [since I am listing scenarios I’ve seen over the past few months,] non-engineering students who have roommates or suitemates who are engineering students also have been the recipients of the subpoena letters from their ISP (most recently, Comcast). While Siemens does not see the non-engineering student or enterprising 3D printer genius as a future customer, your engineering roommate or suitemate is still seen as such, and thus involving him or her as part of the solution can easily fix a $150,000 copyright infringement lawsuit against you.

So as you see, Siemens PLM looks like a copyright troll, but they are not. Their attorneys are often not interested in merely a settlement, but in converting the accused John Doe software user into a customer (or, as a future customer). This means that settlements are accepted where there is a future benefit to Siemens PLM, as they are not looking to use the lawsuits as a means to “cash out” or to “punish pirates.” Obviously this could change, and there have been circumstances where it is more feasible to simply defend a client by representing him or her in the federal court rather than having him agree to anything he or she did not do, but for the most part, Siemens PLM seems to be straightforward on what they seek to accomplish with these lawsuits.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

Let’s take this one step deeper, and delve into the 100 most recent cases filed in October, because these are the Malibu Media, LLC cases most relevant to people now (the July-August batch of cases have likely been disposed of by now).

Of the 109 cases, roughly EIGHTY of them were filed in the California Northern District Court, and EACH AND EVERY CALIFORNIA CASE was assigned to Judge William Alsup (going back to even 2011, I referred to him as ‘Judge Rocket Docket’ by the way he handles and disposes of cases). In my humble opinion, it appears to me as if Malibu Media here stepped in the mud.

Here are a list of the cases. I’ll write my opinion about them in just a moment.:

80 CASES FILED IN 10/2016 IN THE CA NORTHERN DISTRICT COURT (CAND) — [I’m not formatting these.  Just note the filing dates.]
Malibu Media LLC v. Doe (Case No. 3:16-cv-05741) Oct 06, 2016
Malibu Media LLC v. Doe (Case No. 4:16-cv-05742) Oct 06, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05742) Oct 06, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05737) Oct 06, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05738) Oct 06, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-05741) Oct 06, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05739) Oct 06, 2016
Malibu Media, LLC v. Doe (Case No. 4:16-cv-05735) Oct 06, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05735) Oct 06, 2016
Malibu Media, LLC v. John Doe (Case No. 5:16-cv-05743) Oct 06
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-05743) Oct 06
Malibu Media LLC v. Doe (Case No. 3:16-cv-05825) Oct 09, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05829) Oct 09, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05827) Oct 09, 2016
Malibu Media LLC v. Doe (Case No. 4:16-cv-05828) Oct 09, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-05826) Oct 09, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-05829) Oct 09, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05826) Oct 09, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05828) Oct 09, 2016
Malibu Media, LLC v. John Doe (Case No. 5:16-cv-05824) Oct 09
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-05824) Oct 09
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-05823) Oct 09
Malibu Media LLC v. Doe (Case No. 4:16-cv-05850) Oct 11, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05845) Oct 11, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05848) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05847) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 4:16-cv-05845) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05849) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 4:16-cv-05848) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05850) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 4:16-cv-05849) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-05855) Oct 11, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05855) Oct 11, 2016
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-05843) Oct 11
Malibu Media, LLC v. John Doe (Case No. 4:16-cv-05843) Oct 11
Malibu Media LLC v. Doe (Case No. 3:16-cv-05925) Oct 13, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05926) Oct 13, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05920) Oct 13, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05927) Oct 13, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05921) Oct 13, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05922) Oct 13, 2016
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-05923) Oct 13
Malibu Media LLC v. Doe (Case No. 3:16-cv-05974) Oct 17, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05976) Oct 17, 2016
Malibu Media LLC v. Doe (Case No. 5:16-cv-05975) Oct 17, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05975) Oct 17, 2016
Malibu Media LLC v. Doe (Case No. 4:16-cv-05977) Oct 17, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-05977) Oct 17, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05970) Oct 17, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05972) Oct 17, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-05973) Oct 17, 2016
Malibu Media LLC v. Doe (Case No. 4:16-cv-06108) Oct 23, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-06110) Oct 23, 2016
Malibu Media LLC v. Doe (Case No. 4:16-cv-06109) Oct 23, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-06111) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06106) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-06110) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-06111) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06107) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06108) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06112) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06109) Oct 23, 2016
Malibu Media, LLC v. Doe (Case No. 4:16-cv-06107) Oct 23, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-06160) Oct 25, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-06146) Oct 25, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-06147) Oct 25, 2016
Malibu Media, LLC v. Doe (Case No. 5:16-cv-06160) Oct 25, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06155) Oct 25, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06141) Oct 25, 2016
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-06144) Oct 25
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-06143) Oct 25
Malibu Media LLC v. Doe (Case No. 3:16-cv-06241) Oct 28, 2016
Malibu Media LLC v. Doe (Case No. 3:16-cv-06242) Oct 28, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06245) Oct 28, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06239) Oct 28, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06247) Oct 28, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06240) Oct 28, 2016
Malibu Media, LLC v. Doe (Case No. 3:16-cv-06249) Oct 28, 2016
Malibu Media, LLC v. John Doe (Case No. 3:16-cv-06243) Oct 28

My first impression when reviewing these cases was… why did they file them in batches of 10-13 cases or less?  Were they trying to ‘play’ the case distribution game in order to make sure the cases were equally distributed between all of the California Northern District federal judges?  Because this backfired on them.  Judge Alsup has all of their California cases.

I actually smiled when I saw that each of the cases are now assigned to Judge Alsup, because he has been known to question Malibu Media’s tactics. Let me say this more clearly — Judge Alsup knows exactly who Malibu Media, LLC is, what kind of copyright trolls they are, and he makes no secret about it. He is even on the record in casting doubt on the reliability and the accuracy of the geolocation data that Malibu Media uses to file their lawsuits.

Most recently, on December 1st (see, Case No. 3:16-cv-05738 (Document 8)), Judge Aslup denied 53 requests by Malibu Media to send letters to the ISPs ordering them to turn over the identity of the accused internet users, which means that 53 of the 80 California ‘John Doe’ defendants in these cases (maybe more by now) will be shielded from Malibu Media, LLC’s copyright infringement lawsuits and tactics.

IN SUM, BECAUSE JUDGE ALSUP DENIED MALIBU MEDIA LLC’S MOTION FOR EXPEDITED DISCOVERY, MALIBU MEDIA LLC WILL NOT BE PERMITTED TO SEND SUBPOENAS TO THE ISPs ORDERING THEM TO HAND OVER THE CONTACT INFORMATION FOR THESE DEFENDANTS.

I have not checked whether anything has happened since 12/8, but in short, if you live in California, Malibu Media is not doing so well.

Sources and Kudos to:
Fight Copyright Trolls, “Judge Alsup questions accuracy of Malibu Media’s geolocation technology, stays subpoena” on 6/20/2016, updated on 12/6/2016.

Fight Copyright Trolls, ““Malibu Media’s geolocation accuracy: more scrutiny” on 6/21/2016.

Techdirt, “Judge Calls Out Malibu Media For Its Attempt To Cut And Run When Faced With Challenge To Its Infringement Claims” on 6/27/2016.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

Yesterday, I wrote about how the Malibu Media, LLC filings stopped dead towards the end of April 2016, and continued for three months (~90 days) to be SILENT… NOT EVEN ONE new case was filed.

Until July 21st, where over the next month, Malibu filings came in with a rush of 134 new cases — 75 in the last ten (10) days of July, and then another 59 cases in August — and then again… SILENCE.

Until October, where someone at Malibu pulled a lever, and each of their local attorneys filed roughly ten cases every few days until a total of 109 cases were filed, but then again… SILENCE.

After Lipscomb and Malibu Media, LLC parted ways in April, I thought Malibu Media — the largest copyright troll ever (have you ever known any person or entity to file 6,800 cases for ONE CLIENT?) — was dead. But rather than being a dead copyright troll, it occurred to me that not only is Malibu Media, LLC still “alive,” so to speak, but the pattern in which they are filing their cases actually replicates a monster [or troll] BREATHING.

You might ask yourself whether I just claimed that Malibu Media is breathing, and I am answering YES. Every 90 days, they are coming out with roughly 100 cases, like the breath of a dragon, or in in the spirit of their name, like the ebb and flow of the waves that crash across the Malibu shores.

That sounds all artistic, but really, there appears to be a hard-nosted money number behind their filings. $20,000. Malibu Media, LLC appears to be trying to keep their monthly filings costs to $20,000/month.

How? (admittedly, this is a stretch, but there is a point.)
July = 75 filings x $400 per filing = $30,000
August = 59 filings x $400 per filing = $23,600 (-16 cases)
September = ZERO FILINGS. (-75 cases)
October = 109 filings x $400 per filing = $43.600
November = ZERO FILINGS. (-75 cases)
December = ZERO FILINGS. (-75 cases)

TOTAL CASES FILED in two quarters: 243 cases / 5 months = avg 48.6 cases/mo.
~50 cases/mo (rounding up) /6 months = $20,000/mo.

Okay, so what does that mean for me or for you? Nothing… except to expect another 100 filings in January 2017… but not in California.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

In my last article, I mentioned that “On April 18th, 2016, Keith Lipscomb told all of his local counsel that he is no longer representing Malibu Media, LLC (citing a lack of profitability).”

Was Lipscomb right? Were the Malibu Media LLC v. Doe lawsuits no longer profitable?:

I thought a lot about this one, and I will answer it using fuzzy numbers (rough estimates).

Malibu Media, LLC filed 6,800+ lawsuits in federal courts.  Since the start of their lawsuit, the cost of filing a lawsuit increased to $400.

$400 filing fee/case x 6,800 cases = $2.7 Million in filing fees (likely $2.4 mil based on the fee change because the filing fee was not always $400).

6,800 cases, estimate 10% pay a settlement fee (one out of every ten John Doe Defendants), and assume an average settlement amount of $10,000.  [6,800 cases x .1 settlement rate = 680 settlements x $10K/settlement = $6.8 Million in settlement funds received].

But what if the average settlement was $8,000 but they didn’t tell you about that, and only 5% actually paid the settlement?  Then the numbers would look like this: [6,800 cases x .05 settlement rate = 340 settlements x $8K/settlement = only $2.72 Million in settlement funds received].

Now the local attorneys who “extract” the settlement likely get a 30% piece of the settlement.  So let’s assume 30% in commissions goes to the local counsel. [$2.72 Million in settlements received x .7 [that’s 70% after the 30% attorney cut] = $1.9 Million Left for Lipscomb].

Subtract the $1.9 Million Left for Lipscomb from the $2.7 Million in filing fees paid, and Lipscomb has a loss.  Likely a businessman like Lipscomb would see this coming and would not allow 6,800 cases to be filed if they were not significantly more profitable.  Thus, I think my original numbers were more accurate (if not, Lipscomb was not a smart businessman and is about to file for bankruptcy).

Going back to the original numbers, even if you take the original assumptions of a 10% settlement rate, and an average settlement of $10K (=$6.8 Million), minus the local counsel’s 30% cut, that leaves a net profit of $4.76 Million Left for Lipscomb.  Minus the $2.7 Million in filing fees from the $4.76 Million Left for Lipscomb, and that leaves a $2 Million Net Profit, but Lipscomb only paid Malibu Media $100,000 (which would be a 5% commission rate to Malibu Media, LLC).

Thus, based on what the real numbers actually were, I do see how Lipscomb may be able to claim that the copyright trolling campaign was not profitable for him.  My best guess is that the truth of what the numbers really were are somewhere in between my estimations, however, the only way we will be able to learn the truth is 1) if it comes out in discovery in the Malibu v. Lipscomb lawsuit, or 2) if the feds analyze their books.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

So we all thought the Malibu Media, LLC lawsuits were dead this summer after Malibu Media sued their attorney Keith Lipscomb (a.k.a., the “kingpin” and “mastermind” behind the 6,800+ lawsuits filed against single “John Doe” defendants)). If you want a quick summary, here seems to be the jist of what happened.

  • Malibu Media, LLC hired Lipscomb to run their copyright infringement / settlement extortion scheme utilizing his network of attorneys spanning the federal courts across the US.
  • Lipscomb appeared to have pulled in hundreds [maybe thousands] of settlements, each settlement likely amounting to $10,000-$30,000, or more.
    (NOTE: This dwarfs the settlement monies collected by Steele & Hansmeier, now arrested for mail fraud, wire fraud, and perjury allegedly committed in the furtherance of their copyright troll scheme.)
  • Lipscomb apparently paid Malibu Media, LLC only $100,000 in commissions (the equivalent of ten settlements [10 x $10,000 = $100K]), but then never paid Malibu Media again.

The relationship between Lipscomb and Malibu became sour when Malibu Media, LLC became suspicious as to how they only earned $100K in commissions.  They demanded an accounting to determine whether they were being paid properly (this is still being litigated, but my guess is no; namely, that Malibu was being cheated by the lawyers they hired to extort others). Lipscomb claims that Malibu actually owes him money (to simplify the numbers, think — 6,800 lawsuits filed x est. $400/filing = $2.7 Million in filing fees alone). Malibu sued Lipscomb, they went to court, and in late April 2016, new Malibu Media, LLC filings stopped dead.

On April 18th, 2016, Keith Lipscomb told all of his local counsel that he is no longer representing Malibu Media, LLC (citing a lack of profitability), meaning that each of his local counsel were no longer representing Malibu Media, LLC, or so we thought. Wrong. Various local counsel continued the lawsuits already filed, but very few new suits were filed.

Here are the number of case filings since:
April 2016 Filings: 97
May 2016 Filings: ZERO!
June 2016 Filings: ZERO!
July 1- July 20 Filings: ZERO!
July 21 -> [end of month] filings: 75
August Filings: 59
September Filings: ZERO!
October Filings: 109 — FULL SPEED AHEAD? Nope.
November Filings: ZERO.
December Filings: ZERO…?

So, we are now in December (six months later), and Malibu Media LLC lawsuits are far from dead, or are they?!?

Here’s what I understand:
1) Lipscomb is no longer in charge of the Malibu Media, LLC lawsuits.
2) Individual attorneys (formerly, local counsel) appear to have taken Malibu Media, LLC as their own client, meaning that Malibu is creating relationships with each attorney, and each attorney appears to have a “territory” or a federal district court in which s/he practices.
3) I still think there is someone at Malibu Media, LLC headquarters (maybe Elizabeth Jones) still directing all of the attorneys.

 

In sum, Malibu Media, LLC and their lawsuits are not dead, at least not yet, but they continue to plague the federal courts and the accused downloaders with their high-ticket settlement prices, and thus they still need to be taken seriously, at least for now.

NEXT: Let’s go into the recent cases themselves to get an idea of what is going on with the last set of cases filed…

Sources:
Arstechnica: “File-sharing lawsuit numbers drop by more than half; both Malibu Media and Prenda Law have run into different roadblocks.” on 7/19/2016.

Techdirt: “Malibu Media Sues Its Former Lawyer Over Missing Funds, Breach Of Bar Rules,” on 6/29/2016.

Arstechnica: “Porn studio that sued thousands for piracy now fighting its own lawyer,” on 6/28/2016

Fight Copyright Trolls: “Malibu Media sues its former counsel Keith Lipscomb and his firm for professional negligence and breach of fiduciary duty,” on 6/28/2016


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

As an attorney, unfortunately there is often information that I need to be tight-lipped about when discussing a case or a particular copyright holder. Malibu Media, LLC and their implosion with Keith Lipscomb (who ran each of their thousands of lawsuits filed across the US) was one such example, but not for the reasons you may think.

This summer, I sat back and watched what was once one of the biggest copyright trolls and their scheme implode as the relationship between the attorney hired to represent their cases across the US (Keith Lipscomb) and Malibu Media, LLC crumbled. Regardless of the screams of autonomy each local counsel hired by Lipscomb claimed in the courts, it was still plain and obvious to me that Lipscomb was running each of the thousands of lawsuits filed against single “John Doe” defendants (not only because the filings were identical, and the court documents allegedly filed by different attorneys had the same spelling errors in each filing, but because every settlement payment — regardless of which local counsel was allegedly in charge of the lawsuit — went to Lipscomb’s Florida office).

Recognizing that there is ‘no honor among thieves‘, I laughed when I learned that Malibu Media sued Lipscomb for not paying them the settlement monies him and his attorneys extorted from hundreds if not thousands of John Doe Defendants across the US, and… he appears to have kept the settlement monies for himself.

However, the reason I stayed quiet was because I knew of something going on internally at Copyright Enforcement Group (CEG-TEK), and I saw a possible reality where Keith Lipscomb got into negotiations with CEG-TEK, and he got them to agree to send DMCA letters to thousands of accused downloaders through their ISPs, but instead of asking for a $300 settlement for one copyrighted title allegedly downloaded, he would list each-and-every title from his X-Art.com siterips.

Instead of CEG-TEK sending a notice for each title allegedly downloaded, Keith would have them send one notice for the siterip [when accessed by clicking a link on a bittorrent website, and that bittorrent file wold contain possibly 100+ titles to be downloaded]. However, when that unsuspecting user logged into CEG-TEK’s copyrightsettlements.com website using the username and password provided in the DMCA notice, each-and-every title in the X-Art Malibu Media siterip would have appeared. Thus, a $300 per accused downloader settlement could have easily turned into a $30,000+ per accused downloader settlement ($300/title x 100+ titles in the siterip). This could have even been exacerbated if Lipscomb asked for higher per-title settlement amounts, as his attorneys are accustomed to negotiate with other attorneys in the $750-$500/title range.

In my opinion, a Lipscomb-Siegel/CEG-TEK marriage would have been a nightmare, and because at the time CEG-TEK was changing their business model and shifting how they send out letters and to whom (remember the Girls Gone Wild fiasco?), the timing was right for Lipscomb to reach out to them, and I was concerned that they would have accepted his plan.

[In passing, I want to note that CEG-TEK had a shake-up as well over the summer. They were changing their business model from sending DMCA notices and soliciting small $300 settlements for copyright infringement claims for just a few titles to sending notices only to “more egregious downloaders” which in turn would increase the per-person settlement amount paid to CEG-TEK on behalf of their clients. They also appear to have been changing their client base by transitioning away from little porn companies to more well-known copyright trolls (e.g., Millennium Films, LHF Productions, etc.) — copyright holders who threatened to sue downloaders (and in at least one circumstance did sue at least one client of mine in federal court.) The point is that they were changing their image from being a company who’s clients didn’t sue to a company who’s clients do sue. Lipscomb fit their former profile of bringing pornography copyright holders to the table, and he matched their new profile because he brings a strong proclivity to sue defendants who ignored the notices. Thus in a possible reality, I saw Lipscomb meeting with CEG-TEK, and I did everything I could behind the scenes to avert this reality.]

Now we are roughly six-months later, and I am happy to share that the marriage between Lipscomb and CEG-TEK never took place, and CEG-TEK is no longer in a place where they would accept Keith Lipscomb or the $10K/client+ settlement amounts he would have brought to the table.

For this reason, I am sharing the story of this nightmare which — even though the ‘stars aligned’ — never happened (and thankfully, will never happen).

…there is new news for Lipscomb’s former Malibu Media, LLC client. I will post about that next.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

JOHN STEELE ARRESTED

johnsteelearrested

We learn this morning that John Steele was arrested under 17 counts of mail fraud, wire fraud, money laundering, and perjury. I have detailed the charges lower down in the article, and a link to the Star Tribune article can be found here (and sincere kudos to both DTD & SJD for breaking this story).  The link to the indictment itself can be found here.

For those of you who became readers more recently, one of the first prolific copyright trolls was John Steele, formerly from Steele Law Firm PLLC, then from Steele|Hansmeier, then most popularly, from #Prenda Law Inc. (that last name even earned itself a hashtag and a group of followers on Twitter).

John Steele hired many lawyers across the US who acted as his “local counsel” just as Keith Lipscomb later did on a larger scale with the Malibu Media, LLC [x-art.com] copyright holder. [As I’ve written before, I believe that Voltage Pictures, Inc. is doing the same thing in a manner which has not yet become public knowledge with their Dallas Buyers Club, Fathers & Daughters, September Productions, Cell Productions, and a number of other non-pornographic copyright infringement cases slowly making their way through the federal courts.]

The relevance here is that John Steele was the original kingpin, and TODAY HE WAS ARRESTED for the following:

COUNT #1) Conspiracy to Commit Mail Fraud and Wire Fraud (18 USC §1349) [using the U.S. mail to extort settlements from bittorrent defendants]

sh-clip1-mailfraud

COUNTS #2-6) Mail Fraud 18 USC §1341 [using the U.S. mail to send “scare letters” threatening to sue accused John Doe Defendants unless they settled the claims against them.]

sh-clip2-mailfraud
COUNTS #7-16) Wire Fraud 18 USC §1343 [using the internet to process settlement checks and upload torrent files containing porn which they would later track and sue defendants for the download thereof]

sh-clip3a-wirefraudsh-clip3b-wirefraud

COUNT #17) Conspiracy to Commit Money Laundering (18 USC §1956(h)) [for the transfer of settlement funds received, knowing that those funds were proceeds from unlawful activity, and disguising the nature, source, ownership, and control of those proceeds.]

and,

COUNT #18) Conspiracy to Commit and Suborn Perjury (18 USC §371) [by scheming to conceal and disguise their involvement by providing false and misleading testimony and declarations, for example, and Mark Lutz (the paralegal) was really the CEO behind all of their activities, etc.]

In short, there is so much to say about this story which has been an evolving saga since 2010 (now six years and counting).  Many internet users were hurt by their activities, and the injustices that John Steele, the Hansmeier brothers, Mark Lutz, and the others more well known as “the Prenda gang” perpetrated on so many thousands of accused John Doe Defendants are still being copied by many copyright troll attorneys even today.

My personal opinion is that this arrest should be a warning sign to other copyright troll attorneys who are still filing lawsuits against John Doe defendants even today using the same tactics described here.  The scheme described in the indictment has not been stopped, and it continues (albeit in more hidden forms where attorneys go through such great lengths to make their outfit appear legitimate).  

My only message to the other copyright trolls perpetuating this scheme is not that “I’m watching,” or that “you’re being seen by the internet bloggers for what you are,” but that the U.S. Federal Government is watching.  

John Steele’s problems are not over.  There are still other departments likely analyzing their activities.  The one department that comes to mind is the Criminal Law Enforcement arm of the Internal Revenue Service (IRS).

Other Links of interest relating to this topic:

DieTrollDie: John Steele & Paul Hansmeier (Steele|Hansmeier, AKA: Prenda Law) Arrested – December 2016
Fight Copyright Trolls: Steele and Hansmeier Have Been Indicted On Fraud, Money Laundering Charges
ArsTechnica: Prenda Law ‘copyright trolls’ Steele and Hansmeier arrested

…and likely many others to come.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.