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Archive for the ‘Federal Criminal Defense’ Category

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.

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Monday’s order against John Steele / Prenda Law Inc. / Steele|Hansmeier (no matter which of these entities hurt you through their “copyright trolling” activities) is nothing other than a wonderful victory for justice, and I thank and commend the lawyers involved in bringing justice to one of the worst sets of copyright infringement (bittorrent-based) cases I have seen in my law career.

My apologies for leaving attorneys out of this (as there were many who were involved in making this happen) and for my lack of recollection of the details, but immediate kudos goes to Paul Godfread who served John Steele while he got off of an elevator as soon as he realized that his client Alan Cooper (who did landscaping for Steele) had his identity stolen by Steele and his signature forged as the mastermind behind all of the bittorrent cases.

This was a common theme in Steele’s lawsuits — pick a patsy (whether it was Alan Cooper, Mark Lutz [his paralegal], or Paul Duffy [rest in peace]), elevate that patsy to be the “mastermind” behind all of the lawsuits, hire local counsel across the U.S. to file lawsuits, and run every lawsuit like the captain of the ship while being tied to none of the lawsuits for liability purposes.

The story goes much deeper and it involved many twists and turns, but bottom line, through the hard work of Paul Godfread, Morgan Pietz, Jason Sweet, Erin Russell, Steven Yuen, David Madden, and so many more attorneys that I cannot even remember, AND the almost daily blogging by bloggers such as Sophisticated Jane Doe (FightCopyrightTrolls.com) and DTD (DieTrollDie.com), none of this would have happened and these guys would still be suing hundreds of John Doe defendants at a time in their newest scheme (whether that be accusing defendants of violating the Computer Fraud and Abuse Act (“CFAA”), or shaking down companies for violations of the Americans with Disabilities Act (“ADA”), etc.).

As a result of the judicious reporting of the Steele|Hansmeier / Prenda Law Inc. activities, their scheme has been halted, and the crew are being investigated by the FBI, and (I’ve heard, maybe even) by the IRS for tax evasion.  Paul Hansmeier (one of the Hansmeier brothers) has been disbarred, Steele (I believe) still has his law license (although I remember Steele withdrew from the practice of law himself before being disbarred), and Mark Lutz (the “paralegal” or the “mastermind,” depending on when you ask him) is “in the wind.”

Most importantly, as of Monday, the “Alan Cooper / Paul Godfried” case defending against Steele and Prenda Law Inc. (Case No. 1:13-cv-01569 in the ILND Court) [also known as “Prenda v. The Internet”] has been won.  Judge John Darrah (IL) awarded the defendants $162,448.74 in attorney fees and costs, $11,758.20 in sanctions, AND $500,000 in punitive damages (see Judge’s Order).

Now I am no longer sure whether Prenda Law Inc. has the assets to pay these fees (because if I remember correctly, as part of their scheme, they siphoned the $4-5 Million or so in settlement monies out of the law firm and into an offshore trust in Nevis.

My opinion is that justice is slow to act, and while this is a good result, it does not benefit any of the thousands and tens of thousands of defendants who had their lives destroyed and their savings decimated by these attorneys.  I still think that the justice system failed its people because judges got lazy for years and failed to stop the racket, even when they knew of their activities.  Even today as an outgrowth of the Prenda Law Inc. / Steele|Hansmeier empire, we find Malibu Media LLC lawsuits, Voltage Pictures lawsuits [including Dallas Buyers Club LLC, Fathers and Daughters Nevada LLC, Cell Productions, Criminal Productions Inc.], and too many other “copyright troll” lawsuits which are still rubber-stamped DAILY in the federal courts by judges who ARE AWARE and who WERE AWARE of the “mass bittorrent lawsuit / copyright trolling” problem when the cases initially were filed as early as 2010.

In short, on 5/6/2015, I wrote an article entitled,

No Orange Jumpsuits Predicted For Prenda Law Inc. Just sanctions.

I hate to see that it has been almost seven years since these cases started showing up (six years for team Prenda), and nobody has been jailed.  Judges have failed to guard the gates leading into their courtrooms.  Attorney Generals have sat on their hands and done nothing.  Lawmakers have done nothing.  Bar associations have done nothing.  Thus, I continue to defend these cases in whatever form they have changed into, but I too remain jaded.  This result is a good result, and the FBI/DOJ/IRS so-called investigations are nice to see (referring to SJD’s web logs of individuals visiting her blog), but I am not moved nor is my heart [on behalf of all those who have been affected by this] made whole by this ruling.

Okay, I didn’t expect to go here with the blog article, but in short, awarding $500,000 in damages against Prenda Law Inc. is one wonderful step in the right direction.  I just still want to see orange.

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I am not licensed to practice law in Canada, and my knowledge (as far as I am able to share) is limited to U.S. Copyright Law, and the states in which I am licensed.

That being said, I have received more than just a few inquiries from those of you who have received “DMCA Copyright Infringement Notices” from your ISPs in Canada and Australia, and I thought it was time to clarify which ISPs appear to be “working” with Ira Siegel (CEG-TEK), and what their capabilities appear to be.

HOW CAN CEG-TEK SEND OUT LETTERS TO CANADIAN CITIZENS, AND WHICH CANADIAN ISPs APPEAR TO BE WORKING WITH CEG-TEK?

So far, infringement notices began to be sent out to Canadians under a loophole which allowed U.S. copyright holders to send infringement notices to Canadian subscribers.  While many have received these notices, it appears to me that CEG-TEK is focusing on the following ISPs:

Bell Canada
Rogers Communications (a.k.a. Rogers Cable)

Shaw Communications Inc. (a.k.a. Shaw Cablesystems G.P., or “sjrb.ca”)
ACN Canada
Electronic Box Inc.
TELUS Communications Company
Start Communications (a.k.a. “start.ca”)
TekSavvy Solutions Inc.

Now obviously there are others out there, but these seem to be where the focus of the letters seem to be going out.  Also, remember that CEG-TEK spends a large amount of time recruiting ISPs to sign on to their “cause” to eliminate piracy.  I remember how happy they were when in the U.S., they got COX Communications to start working with them.  No doubt, they are working to recruit more and more ISPs every day, and these few ISPs seem to be the Canadian ISPs that CEG-TEK appears to be regularly using to send out the DMCA settlement demand letters.

WHAT DO THE CANADIAN ISPs [WHO WORK WITH CEG-TEK] APPEAR TO BE PROVIDING THEM?

Originally, I expected that because of the Canadian loophole, that CEG-TEK was sending these “blind,” meaning, not knowing who the downloader is.  But, because of recent trends (where CEG-TEK is now picking up “additional cases” which were downloaded by that same user sometimes weeks or months ago), I am now understanding that certain Canadian ISPs (my best guess, Bell Canada, Rogers, Shaw, and possibly the others) are working with CEG-TEK to provide them 1) geolocation data as to where the downloads are taking place, and/or 2) lists of past IP addresses which have been leased to that internet user / subscriber over the past twelve months (or, whatever that ISPs “IP Retention Policy” before they purge the IP address data for older records).

Thus, Canadian CEG-TEK cases are starting to look and act more like U.S. CEG-TEK cases as far as them having the ability to identify who the subscriber is, and CEG-TEK being able to “look back in time” to see what other bittorrent downloads belonging to their many clients [that their bots tracked on the bittorrent networks realtime weeks or even months ago] these subscribers participated in.

WHAT ARE YOUR CONSIDERATIONS AS TO WHETHER TO IGNORE OR SETTLE WHEN YOU LIVE OUTSIDE OF THE U.S.:

If the Canadian accused of downloading copyrighted materials via bittorrent is concerned that maybe they will be named and served as a defendant in a U.S. federal court, and they have a reputation that they must preserve (meaning, they have little-to-no risk tolerance of having their name become associated with being part of a pornography or piracy lawsuit), AND THE COPYRIGHT HOLDER IS A “COPYRIGHT TROLL,” (meaning, they have sued John Doe Defendants in the U.S. courts, or they have made known that they intend to sue defendants who ignore the DMCA copyright infringement letters that are sent to accused internet users), ONLY THEN does it make sense to settle a CEG-TEK claim against you.

Why?  Because as soon as an individual is named and served as a defendant in a U.S. lawsuit, there are many “spiders” and “robots” which comb the U.S. District Court (federal) court cases, and report and index the names of the court cases on the various search engines.  The efffect of these “spiders” on a Canadian is that information on the lawsuit gets posted on the internet and remains there forever.  That way, if someone (e.g., an employer, a creditor, or someone who wants to dig up information on a particular person) does an internet search for that person’s name, then that person’s name and his involvement in the lawsuit will show up as one of the top entries on the search engine’s results, along with the case information.

And to make matters worse (which is why I would like to see some discretion on the part of the websites NOT to index the names of defendants in search engine results), even if that accused defendant did not do the download but was merely the account holder when the download allegedly occurred, or EVEN IF THAT DEFENDANT FIGHTS THE CHARGES AND WINS — FOREVER, THAT “NAMED” DEFENDANT WILL HAVE THE FACT THAT THEY WERE IMPLICATED IN A COPYRIGHT INFRINGEMENT LAWSUIT FOR PORNOGRAPHY OR PIRACY will have their reputations tarnished because the lawsuit will show up in the search engine results.

This is the most powerful leverage a copyright holder has over an accused defendant, namely, that even if he fights the case and wins, his reputation will forever be tarnished, and for this reason alone people settle the claims against them, even before there is a lawsuit.  I have spoken to hundreds (if not thousands of accused defendants) over the years, and this is the primary reason people (even those outside of the U.S.) settle.

[Personally, this is why I would like to see the laws changed to make it a crime (or more likely, very heavy civil fines, penalties, or sanctions) to name and serve a defendant without having a higher threshold of evidence (e.g., “clear and convincing” rather than “more likely than not”) that it was them who did the crime they are accused of.  Too many families have had their reputations ruined because some overzealous attorney accused them of a crime they did not commit.]

Because of the leverage a copyright holder yields over an accused defendant that they may sue, this is why I read the press releases and follow the financial lives of many of the copyright holders — so that I can properly predict what they will or will not do in the future.  This is also why I make such a large distinction on this blog and when discussing cases with potential clients of distinguishing those copyright holders who are “copyright trolls” (those who have sued in the past, or are likely to sue in the future) versus those who have not yet sued in the U.S. federal courts, and those who (in my opinion) will never sue.  That way, at least I can properly advise clients as to which copyright holders pose the greatest risks, and which copyright holders they can ignore based on who the copyright holders are, what they have done in the past, and what they have publicly stated (in court cases, motions, press releases, and on website articles) that they will do in the future.

IN SUMMARY:

So for those of you who live in Canada, or Australia, or whatever countries the U.S. copyright holders will go next to enforce their rights, please be level-headed when receiving these infringement notices from CEG-TEK and the like.  Don’t call the copyright holder or CEG-TEK and argue whether you are “guilty” or not, because their job is merely to collect a settlement from you.  Rather, contact an attorney (me, or someone else who knows the operation of CEG-TEK and the tendencies of the specific copyright holder), and determine whether you are dealing with what I refer to as a “copyright troll” or not.  Assess your risks, and proceed accordingly down the “settle” or “ignore” route we discuss on our calls.

Once again, the main consideration as to why people settle is if you have a copyright holder who is a “copyright troll,” and you are concerned that you will be named and served as a defendant in a U.S. lawsuit, and that your involvement in that lawsuit (whether or not you are found guilty) will tarnish your reputation abroad in a search engine when someone searches your name when applying for a job, etc.  Otherwise, learn who your copyright holder is and if there is a low risk of them suing, save your money.

LEGAL DISCLAIMER: I personally find it silly to see attorneys place disclaimers on website articles, but here it is actually appropriate.  In this article, I am not suggesting that any person ignore a settlement demand letter that is sent to them, nor am I suggesting that they settle the claims against them.  I am also merely stating my thoughts about the likelihood of being sued so that they can evaluate their options and the risks and rewards of each course of action.  These are not legal opinions, nor are they to be considered advice to act upon or not act upon. 

Every person’s situation is different, and every person has a slightly different set of circumstances that can affect whether the best course of action is to ignore, fight, or settle, and every copyright holder similarly makes the same financial risk-reward analysis of whether it makes financial sense to take a particular action.  Often, lawyers take actions which do not make financial sense for an alternative reason, e.g., to get a judgement in a particular location against a poor person, NOT to ever collect that judgement, but as a trophy or a weapon to show the next set of would-be defendants that he is ready, able, and willing to pursue a particular line of attack against them as just as they did to so-and-so.  The opinions stated here are my own calculations based on my own understanding of the circumstances.


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.

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Last month, I wrote an article entitled, “Whether internet porn viewers ‘should expect viewing histories to be made public.”  The fear that prompted that article was that someone could hack into the logs of a porn-streaming website, and with that information, expose the porn viewing habits of millions of Americans.  The conclusion of that article was that it would be difficult for a hacker to hack into a website which streams adult content, steal the website’s logs containing the IP addresses of those who have viewed the web pages which stream the videos, and then somehow correlate that IP address list with the actual identities of the internet users.  Thus, I do not expect to see any Ashley Madison hacks for websites streaming copyrighted content anytime soon.

The next question people asked was, “can I be sued for viewing copyrighted content on a YouTube-like site?”  In short, the answer is yes, you can be sued, but it will likely never happen.  Here’s why:

POINT #1: A COPYRIGHT HOLDER WOULD LIKELY NOT BE ABLE TO OBTAIN THE IP ADDRESSES OF THOSE WHO VIEWED THE WEBSITE STREAMING THE CONTENT.

While a hacker would likely be able to obtain the IP address records from a pornography website’s analytics through theft, a copyright enforcement company such as CEG-TEK or RightsCorp would be unable to get this information without 1) a court order, or 2) the cooperation of the adult website itself.  The reason for this is that 1) porn website owners are notoriously outside the U.S., and thus, they are outside the jurisdiction of the U.S. federal courts.  The copyright holders could try suing the website owners, but this is often a difficult task (finding an elusive website owner outside the U.S. is a much more difficult task than suing internet users who participate in a bittorrent swarm to obtain files using BitTorrent).

While the analytics companies could be sued and forced to disclose the list of IP addresses for a particular website, this is also an unlikely scenario because complying with such a court order directing them to turn over records for one of their clients’ websites could be 1) illegal, and 2) it could put them in jeopardy of being sued by their customer.  So this is not a likely outcome.

Secondly, the copyright holders could “join forces” with the website owners to participate in the financial earnings of going after the downloaders (alternatively, they could be outright paid to disclose this information), but again, doing so would put the websites own visitors (their own customers) in financial jeopardy, and thus they would likely not participate in such a scheme.

In short, it is unlikely that a copyright holder would be able to obtain this needed list of IP addresses of those who viewed certain copyrighted content, and thus, with a streaming site, the copyright holders would likely not be able to learn who you are.

NOTE: It is still advisable to use a VPN when accessing a site streaming content, because your own ISP could be monitoring your web viewing habits, and they ARE in the U.S., and they could be sued and/or pressured to hand over “evidence” that your account visited a particular web page at a certain date and time.  It is unlikely this would ever happen, but it is best to err on the side of caution.

POINT #2: ALL LAWSUITS TO DATE HAVE BEEN FOR BITTORRENT ACTIVITY.  I HAVE NEVER (YET) SEEN A LAWSUIT SUING SOMEONE WHO VIEWED A PARTICULAR VIDEO ON A PARTICULAR WEBSITE.

To date [and as far as I am aware], all of the copyright infringement lawsuits filed in the U.S. District Courts (the federal courts) across the U.S. have been for BITTORRENT ACTIVITY.

With very few exceptions where the copyright holder identified and sued the UPLOADER (the one who POSTED the video onto the website) based on a watermark or secret code embedded into the copyrighted video that identified the accused infringer as being the one who disseminated the copyrighted materials, there has never been a “John Doe” bittorrent lawsuit against a downloader who got caught by viewing content streamed on a YouTube-like website.  This is not to say that there will not be one in the future based on future internet fingerprint IDs forced upon internet users by government entities, or the like.

Thus, copyright holders have not yet and likely will never go through the initial step of 1) suing the website owner to obtain the list of IP addresses, and for this reason, I have not seen and do not foresee seeing lawsuits filed against internet users who view copyrighted content using a YouTube-like streaming service.

This is not to suggest or encourage that someone use this medium of viewing copyrighted films as technology can change, laws can change, and as the courts loosen their long-arm jurisdiction against foreign corporations and entities (weakening the Asahi case), the United States might start asserting its jurisdictions over foreign countries or foreign entities or corporations, and they might start forcing an internet fingerprint ID on the citizenry to track each citizen’s internet usage.  The takeaway, however, is that it is a lot harder to sue someone for viewing streamed content rather than suing someone for downloading content via bittorrent.

NOTE: An obvious exception to this article are those who have created accounts using their real identity or contact information, either 1) to participate or comment on forums or in the comment sections of the websites, or 2) those who pay a monthly or annual membership to access the premium content (e.g., faster speeds, unlimited content, etc.).  If you have an account on a website which streams content, then YES, your identity is at risk, and your viewing habits could be exposed for the world to see.  Otherwise, likely not.

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Copyright Enforcement Group (CEG-TEK) has sent possibly hundreds of thousands of letters to internet users accused of downloading copyrighted content via bittorrent. In their letters, they invoke the Digital Millenium Copyright Act (DMCA) as the justification for their “intellectual property (IP) enforcement” activities. They claim to be the good guys, but are they?  Are they “naughty or nice”?

CEG-TEK claims to be the good guys — they stop piracy, and as a result of their efforts, fewer people download on the ISPs’s networks (a social “good” and a “win” for the copyright holders). They have stopped the copyright troll lawsuits, for the moment. And, although they are charging $300 per title for each downloaded movie (sometimes higher) for what is often an accidental “click of the mouse,” they claim that they are not “bad” or “vindictive” like their Rightscorp competitor, which charges only $20 per title, but then sues the accused downloaders in federal courts, and then even go so far as contacting the ISPs in order to attempt to shut down the internet accounts of those accused of downloading their clients’ copyrighted titles via bittorrent.

But then again, CEG-TEK is a business. While I have had success negotiating away cases against veterans, the elderly, and in many cases, college kids, CEG-TEK has taken a number of steps which at best would be questionable.

Most relevant is the “admission of guilt” clause in their settlement agreements, which at the time of writing this article has flipped back to the version which does not include this clause. Months ago, when CEG-TEK expanded into Canada and then Australia, the settlement agreements which released those who have settled from liability included the following clause:

111715 Admission of Guilt in CEG-TEK Settlement Agreement

[For those of you who cannot see the image, it says, “…in the event of a (i) failure to clear, (ii) chargeback, (iii) cancellation, (iv) failure to complete…this Release shall be considered admissible and conclusive evidence of RELEASEE’s infringement of the copyright in the Work and that RELEASEE will be liable to CONTENT COPYRIGHT OWNER for all damages, statutory and/or otherwise, for such infringement plus attorney fees plus costs as of the Settlement Date…” (emphasis added)]

[Now as a side note, for those who are particular about formatting and details, note that CEG-TEK placed that inflammatory clause at the bottom of Page 2, and they split it up where half of it is at the bottom of the page, and the other half is at the top of the next page, where even a careful individual might not read the clause in its entirety because the inflammatory clause is separated by being on different pages.]

The problem with such a clause admitting guilt is that it is binding on an unsuspecting individual who tries to settle the claims against him by paying with a credit card. How?  These contracts are available to the individual paying the settlement fee on the CopyrightSettlements.com website to review, and upon processing the credit card payment, they agree to the terms contained within the contract.

Then, when their credit card transaction fails (either because their card is not accepted by CEG-TEK’s website, or because the transaction is declined, or, if through no fault of their own, because of the website itself the bank flags the transaction as suspicious (fraud alert for a large online charge) and fails to approve the transaction), at that point, the individual has admitted guilt to copyright infringement, which carries a $150,000 statutory fine for each title downloaded. Assume for the moment that the individual has five (5) cases.  Multiply this $150,000 amount by five separate copyright holders, and the individual could be looking at 5 x $150,000 lawsuits (= $750,000 in statutory damages separated into multiple lawsuits filed by different copyright holders all of whom hired CEG-TEK as their agent to enforce their copyrights) where the internet user has already admitted guilt.

Then, when the confused internet user who tried to settle calls CEG-TEK on the phone already having admitted guilt, what sort of leverage does the individual have if they are asked for more than $300 per title? Legally, they likely have no defense because according to the terms of the agreement, they already admitted guilt — even if the credit card transaction failing was not their fault.

So… Copyright Enforcement Group may be the “good guys” because they let attorneys negotiate away cases for vets, old ladies, and elderly gentlemen who don’t realize that they should be using a VPN when they download adult content, and CEG-TEK may serve the public good by demonstrating that piracy has gone down because of their efforts. While this is all true, remember: watch their contract, because caveat emptor still applies.

I don’t want to make this into a “you should have hired an attorney for your $300 matter” blog entry, but really, this is but one example of how even the “good guys” need to be approached with caution, and better yet, through a proxy by using an attorney. [I won’t even go into the conspiracy theories about CEG-TEK trying to get more than the $300 per title that is listed on the website.] Let’s stick to the facts and look at their contract to judge them on whether they are truly “naughty or nice.”

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Judge Alvin Hellerstein of the Southern District of New York just did the right thing in denying “expedited discovery” which would allow Malibu Media, LLC to send a subpoena to the Time Warner Cable ISP, thus preventing Malibu Media from learning the identity of the John Doe Defendant.

The copyright troll blogosphere is no doubt about to erupt with this story — in fact, the Twitter feed is already bustling with comments from Sophisticated Jane Doe (@FightCopytrolls), Raul (@Raul15340965), and other bloggers. Bottom line, a United States District Court Judge just said “no” to allowing Malibu Media’s extortion scheme to proceed.*

Judges are the gatekeepers of the law, and the reason these cases have been allowed to fester and infest our legal system is because judges [until now] have been asleep. They have blindly allowed the plaintiff copyright trolls the ability to wreak havoc on the accused downloaders by allowing the copyright trolls access to them so that they can intimidate, harass, embarrass, and threaten to deplete all of the funds of the accused defendant’s [sometimes life] savings in order to avoid the costly alternative of litigating a copyright infringement lawsuit.

For the purposes of this article, I am focusing on two points which I found to be interesting in today’s Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04369; NYSD) ruling (see Judge’s order here).

RULING 1: OBSCENE PORNOGRAPHY MIGHT NOT BE ELIGIBLE FOR COPYRIGHT PROTECTION.

This ruling (based on Judge Marrero’s Next Phase Distribution, Inc. v. John Does 1-27 (Case No. 284 F.R.D. 165, 171 (S.D.N.Y. 2012)) case is the “third rail” issue in copyright troll litigation. Do copyright rights extend to pornographic materials? What if they are considered “scenes a fair,” or scenes which contain the same “roles” and “characters” as in other films — are these considered copyrightable (keep the same story, scene, genre, and roles, but switch the actors)? Are these works considered art? And, what happens if the copyrighted film violates one or more obscenity laws — does that film still have copyright protection?

These are just questions, and to date, they are unresolved. However, the fact that Judge Hellerstein brought it up means that he is seriously considering whether this should be a basis to deny copyright infringement claims against John Doe Defendants.

Reference: See my 8/14/2012 article entitled, “How to make bittorrent cases go away once and for all…” (Reason 3)

RULING 2: MALIBU MEDIA ACCUSES A JOHN DOE DEFENDANT, BUT PROVIDES **NO EVIDENCE** THAT THE “JOHN DOE” DOWNLOADER IS THE ACCOUNT HOLDER. THUS, THERE IS **NO BASIS** FOR SUING THE ACCOUNT HOLDER OR IMPLICATING THE ACCOUNT HOLDER AS BEING THE “JOHN DOE” DOWNLOADER DEFENDANT IN THE LAWSUIT.

This has always been a blatantly simple, and yet tough argument to describe. But when you think of it, the simplicity — once it jumps out at you with the “aha!” moment — is charming and unforgettable.

In short, Malibu Media can prove that SOMEONE downloaded one or more of their titles. However, they do no prove (or even assert any evidence) to indicate that it was the account holder who downloaded the copyrighted film… so what legal basis does Malibu Media have to sue the account holder?? Judge’s answer: None.  In order to make a “prima facie” case that would convince a judge to rubber-stamp a subpoena permitting the copyright holders to force an ISP to turn over the identity of the account holder (whether or not he is the actual downloader), the copyright holder needs to provide some “link” identifying the actual downloader as being the account holder. No link is ever provided in Malibu Media’s pleadings, and thus in legal terms, the pleading “fails” and the copyright holder’s request for expedited discovery should be denied.

That’s it.  My two cents, for what it is worth.

Congratulations to District Judge Hellerstein for a brave and correct ruling on the law. Now if all of the other judges in the Eastern District of New York would fall in line with this ruling and abandon the “my court, my world, my rules” mentality, we can put an end to these cases once and for all.

Additional Reference:
Fight Copyright Trolls (SJD): Citing previous Malibu Media’s sheer abuse of court process, New York judge denies early discovery

*UPDATE (7/7, 6:30am): I am surprised that there are not more articles on this topic.  This should be all over the news for other NY judges (and judges in other federal district courts) to see.  Unfortunately, if other judges do not see [and act on] this ruling, then it gathers dust and it has little-to-no effect on future Malibu Media, LLC lawsuits. …and the scheme continues unhindered.

OTHER RECENT MALIBU MEDIA (NYSD) CASES:
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04713)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04717)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04720)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04725)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04728)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04729)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04730)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04731)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04735)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04736)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04738)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04732)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04733)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04734)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04741)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04742)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04743)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04739)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04740)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04744)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04745)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04367)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04374)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04370)
Malibu Media, LLC v. John Doe (Case No. 7:15-cv-04377)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04368)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04369)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04371)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04373)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04378)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04380)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04381)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-04382)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03130)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03135)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03137)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03138)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03143)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03144)
Malibu Media, LLC v. John Doe (Case No. 1:15-cv-03134)

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In July, 2010, this blog was started to address the at-the-time unknown problem of copyright trolling.  For years, myself and my staff wrote articles explaining the business model of copyright trolling, which at the time was an adaptation of patent trolling (where “patent trolls” would file [often frivolous] lawsuits against alleged infringers who refused to pay what appeared to be a “shakedown” of the patent holders [e.g., “pay us or else you will end up having to pay even more to defend the claims against you in a federal court”], even when the patent being asserted against the would-be infringer had absolutely nothing to do with the product the targeted company was producing).

There were common threads between patent trolls and copyright trolls, and as the cases developed, there were common themes of how a copyright troll must act to make his model of extorting the public (the bittorrent internet users) profitable.  At the time, that included questions of 1) where and how can a copyright enforcement company or lawyer sue a group of defendants (personal jurisdiction), 2) how to link non-related downloaders into a cohesive set of defendants into a cohesive set of “John Doe Defendants,” (joinder, and my controversial strategy to force a copyright troll to sue the entire bittorrent swarm when a defendant is named and served) and 3) how to avoid risking the potential settlements from hundreds or thousands of accused bittorrent users by moving forward and “naming and serving” one or more defendants.  There were also time limits they faced based on a) how long the ISPs retained the records of which IP address was leased to which account holder / subscriber, b) statute of limitations on how long a copyright holder has to file a lawsuit, and c) how long a copyright troll attorney may keep a case alive before a judge imposes the time limits described in the Federal Rules of Civil Procedure (FRCP Rule 4m, a.k.a. the “120 Day Rule”).

Then, over the years, there arose a confusion under the discussions of “net neutrality” asking questions such as whether an internet service provider (ISP) was governed under the cable act, and if so, under what title.  The reason for this was that there were allegations that various ISPs were outright sharing the contact information of its subscribers without valid court orders to do so, thus violating the privacy rights of its subscribers.

In sum, there were a lot of issues, and we tackled each one over the course of almost five years.  The goal was to educate the bittorrent user and the accused downloader about the issues so that they understand how to act, react, and in many cases, fight against a group of attorneys with questionable ethics.

The problem is that these articles — the ones that have been so helpful to tens of thousands of accused defendants — these articles have been buried by the search engines because they are simply now aging and many articles are now many years old.  An accused defendant can no longer search for a “copyright troll” on Google and find any of my older articles.  [And, enterprising attorneys (and good for them) have put up websites containing SEO-based content full of keywords in hackneyed sentences, but devoid of useful content (e.g., the “contact our law firm, we can help you with your copyright troll lawsuit issue” type of website), while what I consider to be the “useful” content (not only mine, but content written by other attorneys in their blogs, and proactive users [really, trailblazers such as “Sophisticated Jane Doe” of FightCopyrightTrolls and “DieTrollDie”] in their respective blogs) is no longer accessible by typing the name of the particular copyright troll, issue, or case that has been recently filed.

What I will be doing to remedy this as far as this blog is concerned — and I apologize up front to the thousands of you who get updated on each and every article that I or a staff member of mine writes — is that I need to rehash some of the “older” content on the educational topics that I have already covered in the blog ad nauseam.  The reason for this is that the older content explaining the legal concepts in terms of the bittorrent lawsuits (and now in terms of the DMCA letters being sent to subscribers through the ISPs) is just as relevant today as it was five years ago.  There has been little-to-no judicial or legal oversight of the copyright trolls from the attorney generals of each state and from the lawmakers (both federal and in each state), and the problem and issues surrounding “copyright trolling” is just as relevant today as it was almost five years ago.

For these reasons, I need to violate my own preference not to repeat information or content that has already been described or hashed-out in previous articles (my opinion is that one article describing a topic is enough, and writing multiple articles containing the same topic “waters down” or “cheapens” the content of a website).  The reason I now feel the need to rehash some of the older topics is to re-teach those who have not yet been victimized by the copyright trolls, as my older articles are no longer found, even by those looking for that particular topic.

ALSO.  Copyright trolls are now enjoying a seed of legitimacy by the courts, where once upon a time us defense attorneys were “winning” the cases by arguing concepts such as “an IP address does not equal a person,” or “my client had an open wireless router, it could have been anyone who downloaded this video,” the arguments themselves have also aged and are now increasingly being ignored by the courts, even though the arguments remain “an elephant in the room,” meaning, just as valid today as they were yesterday.  On the flip-side, faulty and failed arguments (e.g., “are you negligent if you let someone else use your internet connection to commit copyright infringement” [Answer: NO!]) are being reasserted by the copyright trolls, and to my utter disbelief, they are not immediately being dismissed by the judges as being a faulty argument.

Copyright trolling has not changed in the past five years, and the successful arguments defending a case do not deserve to be ignored just because they have been used successfully by defendants in older lawsuits which too are aging.  Ignoring good case law is contrary to law, as successful arguments in one jurisdiction are binding on all other judges in that federal district, and are persuasive on cases in the federal districts in other cases.  Yet, I see more and more lawlessness in judges who ignore the case law from not only other jurisdictions, but from their own jurisdiction as well (creating a “split” in the court), and they are denying a John Doe defendant’s ability to assert what was a successful argument in another court (even one binding upon them in their own jurisdiction).

In sum, judges are allowing plaintiff copyright holders to sue larger number of defendants each week, even though nothing has changed making this new trend permissible (in my opinion, whether 200 defendants were sued by a plaintiff attorney in one lawsuit or in ten cases [having 20 defendants in each case] filed in the same week still means that 200 defendants were sued; it does not matter that the plaintiff made the cases “appear” to be smaller, especially if they are implicating the same bittorrent swarm in each of the ten cases).

Remember, the underlying copyright troll business model of “shakedown, extort thousands of dollars from each defendant, but avoid moving forward against anyone [but pretend that you are prepared to move to trial]” is still the same as it was five years ago.  It should not matter whether the content of the lawsuit is a Hollywood movie or an adult film.

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