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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.

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I was reading an article called “Collaborative Intellectual Property Purchasing” by a blogger called Close to Anonymity. In his article, he clearly describes the concept of “group buying,” and suggests that it is one method to provide a solution to the piracy problem. The problem is that in many circumstances [as the copyright laws and DMCA statutes are in their present form] “group buying” is illegal.

NOTE: While he approaches the topic from an honest and upstanding discussion on how to provide a “fix” to the copyright statutes, this article is a dark, cynical, and corrupted view of the topic from a jaded view of the law. This article approaches the merits and faults of group buying, but it does so by viewing it through the eyes of a “pirate.” Up front, I ask for the forgiveness from the author.

Collaborative buying, or “group buys” is something that you will find on various bittorrent websites (not public websites like Pirate Bay or what was KAT, but more often on “private” file sharing websites which host “private” trackers). To get access to these websites, you usually need an invitation and need to know someone who knows someone, etc. The private tracker sites are often topic-specific, so if you are looking for art-related books, you’ll go to one bittorrent website which hosts this kind of content, and if you are looking for business-based torrents, you’ll go somewhere else.

The idea as I have seen it in practice is that someone posts a proposed “Group Buy” on a forum for a digital product. This can be a DVD course, a piece of software, or anything that can be copied and shared online. This digital product costs, say, $100, so to get the price down to $10 per person, the user proposing the group buy will ask for ten people to commit to spending $10 a piece. I am not aware of how the funding happens (e.g., through an intermediary website), but one person will purchase the product on behalf of the group, and they will share it with the other users who participated in the purchase. I suppose the group buy participants believe that they are not “pirating” the software or the media because they each contributed a few dollars to purchase it, and in a way, they are right.  However, the law disagrees.

As for the legality of group buys, copyright licenses for multimedia products and software often think in “one purchase, one license, one copy, [or, one purchase, one installation]” terms. You see this concept of “one purchase, one copy” on full display when trying to view a digital copy of a book purchased by your local library via the Overdrive app.  If a library has purchased one copy of an ebook or an audio book, they can only allow that one digital copy to be “taken out” by one user at a time, even though the technology is there to share the ebook or audio book with all of their patrons at the same time.  It’s a silly model for a library to prevent all of their patrons from accessing the copyrighted content at the same time, and my best guess is that if they were to negotiate unlimited licenses, then the cost of licensing the content to the library would be significantly higher, perhaps on the level of a scribd, or a Netflix.com.  Thus, they opt to buy the “one copy” and they strictly adhere to the “one copy owned, one copy available for use” copyright model.

In the context of piracy and group buys, when one end user purchases the product and shares that product with ten other individuals (each of whom paid a proportional share of the cost of the product, and each of whom install the software product on their machines and use the same serial code to activate the product), when the software “phones home” to authenticate the same serial number for the ten computers, the software developer sees the 9 users as “infringers” and the original purchaser as someone the one who is responsible for the piracy, and they’ll deactivate the software for everyone.

Similarly, when group buying something as simple as a movie or a DVD title, the individual who breaks the copy protection on the DVD and provides copies of the cracked DVD to a number of his friends who contributed to the purchase is seen as both violating the DMCA laws (breaking copy protection), and violating the copyright statutes because that user copied the DVD without authorization from the production company.

Thus, the copyright rules and the DMCA rules do need to be updated to stop piracy. I commend the author of the “Close to Anonymity” blog for proposing a viable solution to making products more affordable to end users while at the same time providing the content creators (the copyright holders) with extra money and sales through the group buy. The solution will not stop the “piracy problem,” but allowing for group buys on a large scale can at least mitigate (somewhat) the damage that copyright holders claim to suffer at the hands of piracy.

I am jaded somewhat, however, and I cannot stop the nagging feeling that group buying will never be legalized. The content producers will claim that group buying would hurt their sales, in that if the nine (9) users were unable to get together to purchase the $100 piece of software, if at least two (2) of them paid the full $100 for it, then the content producer would have made $200 in sales, whereas with group buying they would only be making a $100 sale. Thus, they would not go for such a concept.

Similarly, I cannot imagine the lawmakers [who are showered with benefits for voting in line with the MPAA / RIAA lobbyists] would ever try to make content more readily available to end users. If you look at the way lawmakers have voted over the years, copyright statutes only get worse and worse for the public, not better. Case in point (and I am going by memory here without checking this fact) — the statutory damages for copyright infringement were not always $150,000 in the US. This ever-increasing statutory damages limit is the doing of the lawmakers who I can only think had their pockets lined for voting in favor of harsher and harsher penalties for copyright infringement.  Between you and me, I am already of the opinion that the statutory damages for copying one video, music, or copyrighted work are already unconstitutionally high, but good luck getting a judge to rule this way.

Lastly, in the author’s article, he mentions the idea of a group buy for a $1.29 hypothetical song called “Hey Moe.” If the copyright holders knew that multiple individuals could purchase their same song in a group buy settling (e.g., increasing the price to $1.34 by having one purchaser pay $1.24 [a discount] and the other purchaser pay $0.10), while the solution proposed by the author would provide the copyright holder with a $1.34 sale, the “greedy” copyright holder would sulk at the $1.24 in lost profits by claiming that if such a group buy were not available, both purchasers would have paid $1.29 each for the song.

[How would they see lost profits? $1.29 x 2 sales = $2.58 in sales – $1.34 for the group buy sale = $1.24 in lost profits.]

Thus, the realistic result [if a “group buy” framework were legalized and made possible when purchasing copyrighted media] is that the “greedy” copyright holders would steeply increase the price of the media so that the “net” amount they make is the original $1.29 per copy that they would have made were there no group buy in the first place.

In sum, group buying is a great idea and it should be considered when revising the copyright statutes. But practically, because copyright holders in my experience are profit-driven to a fault (greed), and lawmakers are corrupt to a fault, I do not think we will ever see group buying being made legal in the near future.

However, for the pirates out there on private trackers, “group buying” will remain a viable method of obtaining new content to be shared first with the participants of the group buy, and then later with the members of the website. I am by no means encouraging or endorsing the practice, but with things as they are, group buying seems to be the most “ethical” (and still yet illegal) way to obtain content without paying full price for it, and bittorrent websites seem to provide the perfect forum for allowing such a practice to happen. In my opinion, if the bittorrent website only shared content with members who “bought in” to the group buy without sharing it with anyone else, that would be the closest to an ‘ethical’ solution (and yet it would still be illegal). A less ethical solution is to allow each user to buy in after the fact, making the product progressively cheaper-and-cheaper with every downloader “buying in” to the group buy, and thus crediting every previous purchaser’s account every time a new downloader “buys in” to the group buy after the fact.

But then again, through this example, I just made the point of the copyright holder. Eventually with group buys [after-the-fact], the product price would become infinitesimally small, and the copyright holder would only have made one sale of the product, which would then be shared with potentially hundreds or thousands of downloaders. This is copyright infringement in the classic sense — the unlawful copying or duplication of a copyrighted work, and one sale through a group buy would not adequately compensate the copyright holder for the purchase of his work.

In sum, the copyright system is broken, there is piracy, and until the content producers work with end users to make their content more readily available, or they price their products correctly to the point where they could capture the sale of a majority of those who would purchase their product, there will remain end users who might have purchased the product if it were more available or priced lower, but who instead turn to piracy to obtain that media because of the unavailability of that content for a price that the “market” can bear.

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This is a follow-up article to the “What to do about the Siemens Product Lifecycle Management Software Inc. v. Does case (TX)” article I wrote last week.

I did a bit more digging into the Siemens Product Lifecycle Management Software Inc. v. Does 1-100 (Case No. 4:16-cv-01422) lawsuit in the U.S. District Court for the Southern District of Texas, and I learned more about their software, and more about where some of the John Doe defendants are coming from.  What I also learned was that this is not the first time they have sued defendants for copyright infringement.

The Siemens Product Lifecycle Management (“PLM”) software being sued over is known as the Siemens NX software.

According to Wikipedia, “NX, formerly known as NX Unigraphics or usually just UG, is an advanced high-end CAD/CAM/CAE software package originally developed by Unigraphics, but since 2007 by Siemens PLM Software… NX is a direct competitor to TopSolid, CATIA, Creo, Autodesk Inventor, and SolidWorks.”

The Pirate Bay shows 9 torrent files for “Siemens NX” software (below).

062016 Siemens PLM NX

Surprisingly, for version 9, there are only 3 seeders (uploaders).  For all others, there is only one seeder.  For a program that takes on average 1GB-5.7GB to download, a download like this could take forever to complete.

Looking at version 10 (the current stable release; version 11.2 is probably a fake), there is one seeder (uploader) and one leecher (downloader).  See attached.

062016 Siemens PLM NX 10

As dry as this post may be, the point is that my suspicions were correct — even though the bittorrent file provides a serial number (probably a valid, but likely an OLD registration code), and even though there is an “activator” which modifies or “cracks” the pirated file to allow the software to accept the old serial number [it likely does this by blocking the “authentication” feature when the software checks with the server to verify the registration key], the software looks to the user as if he has successfully registered the software.

However, through the normal use of the software, the activator software is likely not persistent, which means that after the software is registered using the old key, it restores the software’s executable (.exe) file to its original state.  Then, when using the software, it connects to Siemens’ servers for whatever purpose (to download an update, to check for new features, etc.), and this is how their copyright enforcement / IT department can identify the IP address of the individual using a pirated copy of the software.

In sum, what this means is that Robert Riddle and the Siemens copyright holder likely knows how long the software has been in use, and which IP addresses have been using an old or invalid serial number.  This will likely be a consideration when discussing the matter with the plaintiff attorneys on behalf of my clients.

What all this means for you — 1) June 22nd appears to be the date that Comcast will be ordered to hand over the names and addresses of the 100 accused John Doe defendants, so there is no anonymity and the John Doe defendants will be exposed to being named and served as defendants in the lawsuit. 2) If you have been using the software, they likely know more details than you would like as to what you have been doing with it.  3) Speak to an attorney (me, or anyone else) about what options you have to get out of this, whether you were the downloader, the purchaser (of a pirated copy of the software), or whether you have absolutely no idea why you have been implicated as being one of the John Doe defendants in this case.

 

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We already know that it is the business model of CEG-TEK and other copyright monetization companies is to develop relationships with the internet service providers (“ISPs”), and to have them forward copyright infringement / DMCA notices to their subscribers.

I have mentioned this already with regard to the relationships CEG-TEK has with Charter, CenturyLink, and Suddenlink, and as we know, COX Communications, Inc. signed on with CEG-TEK in December of 2015, and has been sending CEG-TEK’s DMCA violation notices to their users.  What we did not notice until now is that Cox Communications has become CEG-TEK’s “golden goose.”

WHY COX IS CEG-TEK’s “GOLDEN GOOSE”:

Why Cox? Because Cox provides its users the same IP address each day. This “one subscriber, one static IP address” trend provides copyright holders and government officials an “ID” of sorts which allows them to identify a particular IP address, watch the activities of that IP address over time as it interacts with different websites (e.g., to see what links that internet user clicks on, to learn where they shop online, what accounts they use, what items they purchase, and what bittorrent downloads they participate in).  Then, when they have developed enough of a profile on that user to convict, they then trace that IP address back to a certain Cox Communications account for prosecution, or in our case, extortion.

For CEG-TEK, they are focusing their efforts on Cox because by doing so, they do not need to obtain from the ISP a past list of IP addresses assigned to that user, and it is very easy for CEG-TEK to go back in time and check their own logs of the past bittorrent swarms to see whether that particular subscriber / IP address participated in any other downloads of their other clients. Some have suggested to me that CEG-TEK can do a search to see what other bittorrent downloads the accused Cox subscriber has participated in. In short, Cox’s “one subscriber, one static IP address” is nothing short of a violation of their subscriber’s privacy, and it is only a matter of time before someone’s IP address gets “followed” and someone gets hurt because Cox is not obscuring the identity of their subscribers.

BRIGHT HOUSE NETWORK IS NOW WORKING WITH CEG-TEK:

Other than Cox, I have recently learned that Bright House Networks (brighthouse.com) is now working with CEG-TEK. I do not yet know in what capacity they are working with CEG-TEK, or in what kind of relationship, but it appears as if they are a new ISP “recruit” in CEG-TEK’s “war” against piracy.

NEW CHARTER COMMUNICATIONS POLICIES AS TO HOW THEY FORWARD DMCA NOTIFICATIONS (THE GOOD AND THE BAD):

For the thousands of you who are Charter subscribers, Charter has recently changed the way they forward the DMCA notices, and this can only be good for subscribers. Instead of forwarding the notices in an e-mail, they are now asking subscribers to “log in” to their website, where only then can then view and copy for themselves a copy of CEG-TEK’s letters.

This is both very good, and bad. On the good side, any “hoops” an ISP makes a subscriber jump through to see the claim(s) against him might annoy the subscriber, but it no doubt infuriates the copyright holders and “monetization” companies (like CEG-TEK) that rely on them seeing their DMCA notices to provide their copyright holder clients their dirty money (I could have said “ill-gotten gains,” but emotionally, calling it “dirty money” seemed to fit better).

THE PROBLEM OF “LOST” DMCA NOTICES:

However, BUYER BEWARE! I have received many calls about people who have physically LOST their DMCA notice because they did not copy it down when they viewed it. And when they called me about it panicked, because I couldn’t see the claims because they did not know who was claiming copyright infringement against them, I couldn’t tell them whether the copyright holder was a “copyright troll” or not, or whether they are suing downloaders in the federal courts. So please, as soon as you access the DMCA violation notices sent to you, either download a copy of it for yourself, or copy-and-paste it into a text file.

GOOGLE FIBER IS A DISORGANIZED ISP WHICH HAS ALSO LOST DMCA NOTICES:

Google Fiber subscribers also — Google Fiber seems to not be organized as to keeping track of the DMCA notices that they are forwarding to their subscribers. So when an internet user inadvertently deletes that notice, it is gone forever. Neither I, nor anyone else can help you fight or settle (or even advise you as to your options) if you accidentally deleted the notice. I suspect that if you are reading this article, it may already be too late.

CANADA — NEW CANADIAN ISP RECRUITS:

Okay, last piece of news and then I need to get back to work. As we know, CEG-TEK has been sending letters for months to Canadians and forcing the ISPs to send these letters to their subscribers under what is known as “notice and notice.” I have written about the problem and the solutions here in my “CEG-TEK: What are your financial risks and considerations of ignoring, settling, or being sued for copyright infringement if you live in Canada or Australia?” article. The news is that just as CEG-TEK is growing their business by signing on new ISPs in the US, this is also true in Canada.

The new Canadian ISPs now working with CEG-TEK appear to be Videotron (a.k.a., Vidéotron), Bell Aliant (www.bellaliant.ca), and Eastlink (www.eastlink.ca) — this will also affect their FibreOP users under the ISP names NorthernTel, DMTS, Telebec (Télébec), and Cablevision. If anyone receives notices from these internet providers, I would like to see them, as I hear that CEG-TEK is not following the notice rules.

As for the older ISP names — Bell Canada, Rogers Cable, Shaw Communications (sjrb.ca), ACN Canada, Electronic Box Inc., TELUS Communications, Start Communications, and TekSavvy, yes, these are still in play. The only one of these that has my respect thus far is TekSavvy which has tried to protect their users by fighting back, but even so, they are still sending CEG-TEK’s DMCA violation / copyright infringement letters, so my respect is limited.


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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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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It has been almost a full day since yesterday’s historic Prenda flop where the attorney for Prenda Law Inc. (formerly, Steele|Hansmeier, PLLC and before that, Steele Law Firm PLLC) appeared to be woefully unprepared to overturn the sanctions that were ordered against Prenda Law and their team. (Flashback: “The 12 minute hearing and the end of Prenda Law Inc.” on 4/3/2013)

For those of you who missed it, you can watch the entertaining video here (fast forward to the tall guy).

As a quick recap, two years ago, Prenda Law was caught forging the name “Alan Cooper” on the copyright assignment documents which gave them the apparent authority to sue on behalf of their clients. The “real” Alan Cooper (John Steele’s gardener) who was the victim of identity theft hired an attorney, showed up at one of Prenda’s hearings, and served John Steele with his own lawsuit.

I don’t know how to explain what happened in a recap other than that the whole “house of cards” that was Prenda Law Inc. was unraveled — not because of the Alan Cooper forgery issue, but because John Steele couldn’t stay away from the cases when he successfully made the courts believe that he sold his Steele Hansmeier PLLC law firm to Paul Duffy. Shortly afterwards, he resumed making phone calls and openly running things himself, and he started showing up at hearings and speaking to the judges. This is what tipped off Judge Otis Wright to ask who the real parties in interest were in these lawsuits.

Personally, it jaded me a bit to see that after being caught (having their grand scheme exposed by good lawyers), the lawyers for Prenda continued their stories of misinformation by lying under oath in their depositions and in court proceedings. Further, I was annoyed when I learned about the scheme unfold in its entirety, including the creation of various offshore entities created to funnel settlement payments, and where Prenda peddled the blatant lie that Mark Lutz (the paralegal) was the mastermind behind the lawsuits.

Being behind the scenes when all this was happening, I was also hearing about issues of Prenda Law lying to, not paying, and in one notorious case, turning against their own local counsel who put their law licenses in jeopardy to file the lawsuits on Prenda’s clients’ behalf. Lastly, there were even more issues that I was privy to that never even made it into the courtroom, namely what appeared to be a credible accusation that Prenda Law Inc. was uploading and seeding their own clients’ content on the bittorrent networks — the same bittorrent swarms in which they sued the internet users for downloading the content they uploaded.

My own thought process was that the proper judicial response was 1) for the federal judges to serve as the “guardians of the gates” of the federal courts [e.g., to kill the copyright infringement cases as they are filed based on principles of improper joinder, etc.], and 2) to prevent the attorney(s) at this point from practicing law through the remedies of suspension and disbarment through their local bar associations. If the attorney persists, the attorney(s) should be charged with the unauthorized practice of law. Yet none of this happened. A lawyer (who for the purposes of this article will remain private) filed ethical charges against John Steele to have him disbarred, and in return, Steele filed ethical charges against him [a story for him to tell, not my secrets to tell].  Then, Steele at some point appeared to have voluntarily disbarred himself and retired from the practice of law, and his organization went inactive in the Illinois state registry. Yet his involvement in the cases persisted.

Thus, I was not surprised when Judge Wright wrote his order sanctioning John Steele, the Hansmeier brothers, and all those involved in the conspiracy. What surprised me was their hubris in that they continued fighting after they already lost. This is why I call the Prenda Law fiasco a “circus.” Everybody continues to argue in circles, but nobody goes to jail.

So, getting back to yesterday’s hearing (YouTube Link), there were THREE ITEMS that I took note of in what was perhaps the most entertaining 3-panel judge hearing I have ever seen.

ITEM 1) John Steele and the Hansmeiers were quite upset that Judge Wright implicated them as having broken criminal laws, and even though they were never charged for the violation of those laws (which I could only guess include identity theft [forgery], extortion, perjury, fraud, and perhaps even money laundering and/or racketeering). [NOTE: There were other acts allegedly committed, including the unauthorized practice of law, violation of countless ethical rules including compensating a non-attorney as a partner of the law firm, alleged tax evasion, and misuse of corporate structures after they were dissolved, etc.] Many of these acts if looked into could make the principles of the law firm personally liable for any charges without the protection of a corporate entity.

They appear to have hired attorney Daniel Voelker for the sole purpose of disputing the $200K+ in sanctions awarded against them because Judge Wright implicated them in a lawsuit which they tried their darnedest to keep at an arms length through the use of legal structures, funneling money into offshore entities, using the paralegal as the “fall guy,” and through the use of local attorneys. But rather than arguing against the sanctions award on the merits of whether it was proper to award the sanctions, they appear to have been offended by the implication of having broken criminal law in what Judge Pregerson called “an ingenious extortion fraud [scheme].” Thus, they instructed attorney Voelker to request that the court REMAND (meaning, return to the lower courts as a “do over”) the case to the U.S. District Court so that they can properly defend the insinuation that they committed one or more crimes while running what was — at the time — the most successful copyright trolling extortion scheme in existence.

ITEM 2) Attorney Daniel Voelker appeared to be woefully unprepared for the hearing. When asked about the details of the various copyright troll lawsuits filed by Prenda Law Inc. / Steele Hansmeier PLLC / Steele Law Firm, PLLC, he was unaware of anything other than what was the subject of the appealed case. This was surprising to the judges, it was surprising to me, and I am sure it was surprising to the hundreds of “fans” who were watching the hearing live and streamed over the internet. How could this attorney not be aware of the hundreds of other filings that his client took part in?!?

I also want to point out that YET AGAIN, STEELE, HANSMEIER, AND MARK LUTZ THE PARALEGAL WERE NOTORIOUSLY ABSENT FROM THE PROCEEDINGS.

ITEM 3) Simplifying the discussions of damage multipliers and other damages issues that were discussed, the jist of what the judges needed to decide were 1) whether to uphold the sanctions award against Prenda Law and company, and 2) whether to remand the case so that the questions of criminal conduct could be hashed out.

IN MY OPINION, again, this whole Prenda Law fiasco is a circus. John Steele and his buddies have been “gaming” the system since they began, and even when their whole scheme came tumbling down around them, they turned to lying, cheating, and misdirection in order to get around the rules.

Nothing will right the wrongs that were inflicted on tens of thousands of internet users except seeing each of these attorneys disbarred and jailed for criminal conduct. Yet I cannot see this happening because notorious criminals today too often go uncharged. Judges too often find the “lazy” alternative of slapping an attorney with sanctions, and then not following up on their order when the attorney weasels their way out of paying those sanctions. This is a sign of a corrupt system, and as much as I have faith in the law, I do not have faith that the judges will inflict stern judgement (“fire and brimstone”) against a bunch of lawyers who look more like a**clowns in the courtroom.

Thus, it is my best guess that the sanctions will not only be upheld, but they will be strengthened and perhaps multiplied. However, as for the criminal prosecution of the clowns who perpetrated this grand heist of an extortion scheme, their activities will go unpunished. Maybe they’ll lose their law licenses (noting that in part, this has partially happened to some of them). Maybe they’ll be held personally liable without the shielding of the corporate entities they tried to use to hide their involvement in these cases. Maybe one or more of them will need to continue to hide their money indefinitely and file for bankruptcy. Maybe one or more of them will need to move out of the country and live out their days on a beach somewhere.

I don’t see orange jumpsuits in anyone’s future here. Not in today’s lawless society.

 

USEFUL ARTICLES ON YESTERDAY’S HEARING:

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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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