Appeals court nukes the copyright troll business-model

Yesterday, a federal judge in the DC circuit court of appeals handed Prenda law -- the most loathed and evil porno copyright trolls in the business -- its own ass on a plate, and struck a blow against copyright trolling everywhere. The Electronic Frontier Foundation's Mitch Stoltz has a deep dive into the case, which EFF participated in.

Prenda (previously) is one of the leaders in the shady practice of accusing people of downloading pornographic films with embarrassing titles and then demanding money in exchange for not filing a lawsuit against them, using the threat of having your name associated with "Anal Invaders XII" in public records forever as a lever to get you to settle even if you've done nothing wrong. In AF Holdings v. Does 1-1058, Judge Tatel struck an important blow against this practice by ruling that trolls have to file cases in the same jurisdiction as their victims in order to get court orders to reveal the victims' names and addresses, without which the cases cannot proceed. But filing cases in the correct jurisdiction will likely cost more than the average blackmail payment that Prenda extorts from its victims, making the whole thing into a losing business.

The court also held that merely being accused of having, at some point, participated in a Bittorrent swarm does not join you with everyone else who ever joins that swarm, and that there is only joint liability for people who download from one another, as part of the same swarm at the same time. This is the first-ever federal ruling on copyright trolling's most evil practices, and it represents a major victory for the good guys.

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Podcast: Collective Action - the Magnificent Seven anti-troll business-model


Here's a reading (MP3) of a my November, 2013 Locus column, Collective Action, in which I propose an Internet-enabled "Magnificent Seven" business model for foiling corruption, especially copyright- and patent-trolling. In this model, victims of extortionists find each other on the Internet and pledge to divert a year's worth of "license fees" to a collective defense fund that will be used to invalidate a patent or prove that a controversial copyright has lapsed. The name comes from the classic film The Magnificent Seven (based, in turn, on Akira Kurosawa's Seven Samurai) in which villagers decide one year to take the money they'd normally give to the bandits, and turn it over to mercenaries who kill the bandits.

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Another judge hands Prenda Law its own ass on a plate

Remember the copyright trolls at Prenda Law, the slippery crooks who claimed that no one actually owned their extortionate racket, that no one made any money from it, and that no one was responsible for it? Yet another judge has called bullshit on them, insisting that they produce financial statements prepared by a chartered public accountant, and dismissing their objections as "attorney speak." Cory 3

Canadian court rules on copyright trolls: letters can go ahead, under strict supervision

Michael Geist writes, "The Canadian federal court has released its much anticipated decision in Voltage Pictures v. Does, a case involving demands that TekSavvy, a leading independent ISP, disclose the identities of roughly 2,000 subscribers alleged to have downloaded movies without authorization. The case attracted significant attention for several reasons: it is the first major "copyright troll" case in Canada involving Internet downloading (the recording industry previously tried unsuccessfully to sue 29 alleged file sharers), the government sought to discourage these file sharing lawsuits against individuals by creating a $5,000 liability cap for non-commercial infringement, TekSavvy ensured that affected subscribers were made aware of the case and CIPPIC intervened to ensure the privacy issues were considered by the court. Copies of all the case documents can be found here."

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Goldeneye: a copyright troll that's all talk and no trousers

What happens if you ignore the £500 demand letters from porno-copyright-trolls Goldeneye? They give up and leave you alone. Cory 7

Porno copyright trolls Prenda Law fined $261K

Things aren't looking good for copyright trolls Prenda Law -- they've been ordered to pay $261K in opponents' fees, and the judge has made all three of Prenda's principles -- Paul Hansmeier, John Steele, and Paul Duffy -- jointly liable for the sum. He also called them liars. They're much worse than that. Cory 9

Porno copyright troll John Steele accused of identity theft -- by his mother-in-law

John Steele is one of the shadowy figures behind the notorious porno-copyright-trolls Prenda Law, about whom we've written rather a lot, as they are a colorful bunch of grifters. Steele had previously been accused of stealing the identity of Alan Cooper, the caretaker of one of his properties, making him the CEO of one of the shell companies behind which Prenda hides.

But that identity theft is hardly as damning as the latest revelation: Steele's mother-in-law has accused him of forging signatures in the course of Prenda's dirty business.

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Porno copyright trolls Malibu Media sanctioned by court for "extortionate" tactic

Malibu Media is a notorious porno-copyright-troll, a company whose business-model is sending blackmail letters to Internet users threatening to sue them for downloading pornographic movies (and forever link their names to pornography) unless they pay up. They invented a particularly loathsome tactic that sets them apart from other pornotrolls: their blackmail letters make a point of mentioning extremely explicit pornographic titles associated with films that they have no interest in -- basically, a sideways way of implying that any legal action eventually taken against you will include a bunch of humiliating and embarrassing movie-titles, when nothing of the sort is possible, since they don't represent those rightsholders and can't take legal action on their behalf.

Finally, a court has seen fit to sanction Malibu for this tactic, after an amicus brief by the Electronic Frontier Foundation argued against it. The judge went so far as to call it extortion.

Mike Masnick points out that other copyright trolls like Prenda and Righthaven have flamed out after the courts caught on to their shady tactics and started issuing sanctions and ruling for defendants. We can only hope that this will be Malibu's (near) future.

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Copyright troll's lawyer wants record sealed so we won't make fun of him

Remember Jacques Nazaire? He's the lawyer who represented notorious, disgraced copyright trolls Prenda Law (who victimized thousands of Americans by threatening to link them to spurious lawsuits over downloads of pornography with embarrassing titles unless they paid hush-money). He got written up here when he told a judge in Georgia that a California judge's rebuke of Prenda should not be taken into consideration because California is a horrible, strange place where gay people get married.

Now Mr Nazaire has asked the court to seal the rest of the proceedings from the case, because he's worried that people might make fun of him on message boards. Because someone who thinks ZOMGCALIFORNIAGAY is a legal argument clearly has something to worry about on that score.

By the way, lawyers for one of Prenda's victims are fundraising to get the money to depose the Prenda team. I pitched in.

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Pirate Bay outs porno copyright trolls: they're the ones pirating their own files


Yesterday, I wrote about an expert witness's report on Prenda Law (previously), the notorious porno copyright trolls (they send you letters accusing you of downloading porn and demand money on pain of being sued and forever having your name linked with embarrassing pornography). The witness said that he believed that Prenda -- and its principal, John Steele -- had been responsible for seeding and sharing the files they accused others of pirating.

After hearing about this, the administrators for The Pirate Bay dug through their logs and published a damning selection of log entries showing that many of the files that Steele and his firm accused others of pirating were uploaded by Steele himself, or someone with access to his home PC.

The Pirate Bay logs not only link Prenda to the sharing of their own files on BitTorrent, but also tie them directly to the Sharkmp4 user and the uploads of the actual torrent files.

The IP-address 75.72.88.156 was previously used by someone with access to John Steele’s GoDaddy account and was also used by Sharkmp4 to upload various torrents. Several of the other IP-addresses in the log resolve to the Mullvad VPN and are associated with Prenda-related comments on the previously mentioned anti-copyright troll blogs.

The logs provided by The Pirate Bay can be seen as the missing link in the evidence chain, undoubtedly linking Sharkmp4 to Prenda and John Steele. Needless to say, considering the stack of evidence above it’s not outrageous to conclude that the honeypot theory is viable.

While this is certainly not the first time that a copyright troll has been accused of operating a honeypot, the evidence compiled against Prenda and Steel is some of the most damning we’ve seen thus far.

The Pirate Bay Helps to Expose Copyright Troll Honeypot [Ernesto/TorrentFreak]

Porno copyright trolls Prenda: expert says they pirated their own movies to get victims to download

The saga of porno-copyright-trolls Prenda Law (previously) just keeps getting more tawdry. Prenda is a mysterious extortionate lawsuit-threat-factory that claimed to represent pornographers when it sent thousands (and thousands!) of legal threats to people, telling them they'd get embroiled in ugly litigation that would forever tie their names to embarrassing pornography titles unless they paid hush money.

Their con has unraveled in a series of legal losses. Now, one of their victims has had an expert witness file an affidavit in First Time Videos vs. Paul Oppold, a case in Florida. The expert fields an astonishing accusation: Prenda Law's principle, John Steele, is the person who uploaded the infringing pornography in the first place, listing it on BitTorrent index sites with information inviting people to download it -- people whom he then sent legal threats to for downloading those selfsame movies.

Among other things, sharkmp4 seemed to be able to post these works on The Pirate Bay before the works were even mentioned anywhere else, and in at least one case, "sharkmp4" put a video up on The Pirate Bay three days before Prenda shell company Ingenuity 13 had even filed for the copyright. On top of that, the "forensics" company that Prenda uses -- which is supposedly run by Paul Hansmeier's brother Peter, but which had its domain registered and controlled by (you guessed it) John Steele -- apparently identified "infringements" almost immediately after the videos were placed on The Pirate Bay -- meaning they were likely looking for such infringement in conjunction with the upload.

At the end, however, Neville pulls together really damning evidence, tying together a website set up to distribute Ingenuity 13 porn films with the same exact IP address that was confirmed as being used by John Steele to log into his own GoDaddy account, highlighting how Steele -- or someone with access to his logins -- clearly has full access and control over Ingenuity 13 works. As you read through all of the evidence it appears highly likely that Steele is in control of Ingenuity 13, despite all his protests to the contrary.

As the filing notes:

Prenda Law's business structure is such that it is pirate, forensic pirate hunter, and attorney. It also appears that Prenda Law also wants to/has formed/is forming a corporate structure where it is: pornography producer, copyright holder, pornography pirate, forensic investigator, attorney firm, and debt collector. Other than the omission of appearing in the pornography themselves, this would represent an entire in-house copyright trolling monopoly- not designed to promote their own works for distribution and sale, but to induce infringement of their works and reap profits seen from mass anti-piracy litigation.

New Filing Presents Evidence That John Steele Uploaded Videos To BitTorrent Himself

Porno copyright troll to Georgia judge: "Ignore California judge! They have gay marriage!"

When US Federal Judge Otis Wright ruled against Prenda Law (a gang that used sloppy accusations of illegal downloads of pornographic movies to extort millions from people who didn't want the embarrassment of being publicly sued), he ordered Prenda's lawyers to give copies of his ruling to judges in all the other places where they were suing their victims. Judge Wright's ruling called Prenda a "fraud" and said its lawyers engaged in "moral turpitude."

One of Prenda's most colorful lawyers is Jacques Nazaire. He's asked a judge in Georgia to ignore the Judge Wright's order, because Judge Wright is a California judge, and California has gay marriage.

It doesn't stop there. It notes that California courts have different immigration rules and (randomly) that NY has different gun rights. Basically, it throws out every hot button issue that stereotypical conservatives might disagree with stereotypical liberals on.

Of course, all of that is meaningless. While it's true that Judge Wright's ruling is in no way a precedential ruling for the Georgia court, it's still a ruling about federal law, not any specific state law. And the ruling itself is about flat out misconduct (including potential racketeering and tax evasion claims) by the plaintiff in this case, because of actions in a nearly identical case. That's not about California having a "mandate" over Georgia. It's about very relevant additional information that the court should know about.

Nazaire then goes on to list out a ridiculous parade of horribles that he claims would happen if the Georgia court "followed the aforesaid California Order" including that law firms wouldn't be able to use boilerplate text any more. This makes absolutely no sense at all. First of all, the inclusion of Judge Wright's order is not about having the Georgia court "follow" the order, but adding additional important information about the parties in this particular case. Separately, the idea that adding a California ruling into the docket suddenly means lawyers wouldn't be able to cut and paste any more... just doesn't make any sense at all.

Prenda Lawyer Says Judge Wright's Order Is Inapplicable In Georgia Because California Recognizes Gay Marriage [Mike Masnick/TechDirt]

Welcome to the century of the copyright troll: Prenda Law was just the beginning

As the saga of the porno copyright trolls Prenda Law moves into its end-game (likely to involve disbarments and jail time for the fraudsters behind the multimillion-dollar scheme that relied on bogus legal threats and sloppy accusations of copyright infringement), it's worth asking, how, exactly, this scam was able to go on for so long, and what can be done to prevent it in the future.

A pair of articles -- one by the Electronic Frontier Foundation's Mitch Stoltz, the other by Ars Technica's Nate Anderson -- delve into this in depth.

First, Anderson explains how Prenda hit on a cunning legal strategy that allowed it to try out variations on its scam, looking for the right combination of tactics to extract maximum revenue from its victims, without risking its own finances. This strategy cost the public a fortune in court costs and cost the victims another fortune in their legal costs, but Prenda didn't bear any of that. In effect, the public subsidized its brute-force attack on the American legal system:

How could the scheme go on for so long even as federal judges complained about fraud, as "John Doe" defendants complained repeatedly that they had no idea what the cases were about, and as critics complained about the injustice of the entire business model? The answer is that federal judges aren't generally investigators. Prenda had gone to great lengths to obscure what was really going on, who was doing what, and where the money went. Judges want to clear cases off their dockets and in rare cases will entertain sanctions motions, but to unravel something as complex as Prenda's behavior required a real investigation. Yet without more details, actual criminal investigators had very little to go on; most of the judicial complaints dealt with behavior in court, not public crimes.

So Prenda could essentially turn the entire US judiciary into a laboratory for incrementally refining its porn trolling techniques, testing venues, judges, corporate structures, collection procedures, and legal arguments, looking for perfection. And what it arrived at in the end had a certain devious logic to it. Even Otis Wright, the federal judge in Los Angeles who brought down Prenda's principals and referred them all for criminal and tax prosecution this week, had to concede the conceptual beauty of the system.

But as EFF's Stoltz explains, this isn't a bug in the system, it's a feature. Modern copyright law has been bought, paid for, and designed by the entertainment industry, and they demanded as system with as few safeguards and checks and balances as possible. Every element of copyright law that might enable an innocent person to easily defend herself meant added expense and burden for the entertainment industry's lawsuits against its customers and against technological innovators:

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Prenda law judge says porno copyright trolls are frauds, identity thieves; $80K in fines and disbarment pending

Judge Wright has issued his long-awaited ruling in the case of Prenda Law, the notorious porno copyright trolls who used fraud and bullying to extort millions from Internet users by threatening to sue them for downloading pornography videos with embarrassing titles. Prenda used a combination of offshore shell companies, obfuscation, and even identity theft to disguise the ownership of their con, and when they landed before Judge Wright, it all started to unravel.

The judge has fined Prenda $80,000 ($40K in fees, doubled for punitive measure) and asked the FBI to investigate them for racketeering. He held that their operation was a fraud, that they had committed identity theft, and, importantly, identified Steele, Hansmeier, and Paul Duffy as the "de facto owners" of Prenda. He's asked the lawyers' bar associations to have them disbarred. And he made a lot of Star Trek references!

Nevertheless, it is clear that the Principals’ enterprise relies on deception. Part of that ploy requires cooperation from the courts, which could only be achieved through deception. In other words, if the Principals assigned the copyright to themselves, brought suit in their own names, and disclosed that they had the sole financial interest in the suit, a court would scrutinize their conduct from the outset. But by being less than forthcoming, they defrauded the Court. They anticipated that the Court would blindly approve their early-discovery requests, thereby opening the door to more settlement proceeds.

As for penalties, they begin with attorneys' fees. Prenda will have to pay these to the two defense lawyers who have been instrumental in this case: Morgan Pietz and Nicholas Ranallo. Wright awards $36,150 in fees to Pietz, $1,950 in fees to Ranallo, as well as legal costs (copying and filing fees, for example) to both. He then doubles the amount "as a punitive measure," arriving at $81,319.72. In a footnote, Wright says that the sum "is calculated to be just below the cost of an effective appeal"—a final dig at the Prenda business model of settlement offers just below the cost of defense. The Prenda folks have 14 days to pay up.

The harshest penalties are saved for last. First, Judge Wright suggests the Prenda lawyers should be disbarred, writing "there is little doubt that Steele, Hansmeier, Duffy, [and] Gibbs suffer from a form of moral turpitude unbecoming an officer of the court." In many states, including California, crimes reaching the standard of "moral turpitude" lead to automatic disbarment. Wright will be referring the four lawyers to every state bar in which they are admitted to practice...

Third, though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO. The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage. The Court will refer this matter to the United States Attorney for the Central District of California. The [court] will also refer this matter to the Criminal Investigation Division of the Internal Revenue Service and will notify all judges before whom these attorneys have pending cases.

Prenda hammered: Judge sends porn-trolling lawyers to criminal investigators [Joe Mullin/Ars Technica]

Notorious porno copyright trolls Prenda Law have a very bad day in court

Today marked the long-awaited courtroom showdown of notorious copyright porno trolls Prenda Law (previous posts) and United States District Judge Otis D. Wright II, the judge who figured out that Prenda was running something that looked a blackmail racket that involved systematic fraud against courts around the country. After stalling and fum-fuhing, Prenda's lawyers and principals were dragged before Judge Wright, where they sat for a hearing that ran for 12 whole minutes before Wright furiously banished them from his courtroom. Ken "Popehat" White was there, and sent tantalizing tweets about the total trainwreck he'd witnessed, which he has now had a chance to write up in full.

In a nutshell, the Prendateers showed up and took the Fifth, refusing to speak. Their lawyer tried to enter some argument into the record, but the judge didn't allow it. Prenda had filed no briefs, and had been called to answer basic, factual questions about lawsuits. Wright wasn't happy about it. Ken has written up a list of likely consequences Prenda will now face. It's not pretty. At very least, the firm and its activities are at an end. At most (though not likely), this could end in prison for the principals here.

Judge Wright grew steadily and visibly more outraged. "I want to know if some of my conjecture is accurate — and the only way to know is to have the principals here and ask them questions. This is an opportunity for them to protect themselves," he said. But Steele's lawyer confirmed his client would exercise his right to remain silent. Attorneys for Paul Hansmeier, Paul Duffy, and Angela Van Den Hemel confirmed their clients, too, would invoke their rights to remain silent. Judge Wright did not — unless I missed it — confirm whether Peter Hansmeier or Mark Lutz would answer questions.

An Opportunity To Be Heard

Heather Rosing, appearing for Paul Duffy, Angela Van Den Hemel, and Prenda Law, rose and asked Judge Wright for an opportunity to present "about a half hour" of argument on the points in his Order to Show Cause. Look: when you are a lawyer, representing a client, you have to stand up. You have to hold your ground even in the face of a furious federal judge. When a judge is yelling at you, however unsettling it is, you have to hold fast and remember you are there to represent the interests of your client against the terrible power of the court. Heather Rosing stood up, and has my admiration, whatever I think of her clients.

Judge Wright was uninterested in hearing legal argument, as opposed to testimony or evidence. "My clients have a right to a reasonable opportunity to be heard," Ms. Rosing protested. "Excuse me?" thundered Judge Wright, probably thinking — not unreasonably — that Ms. Rosing's clients could have filed briefs in advance to address any legal arguments they had, and that Ms. Rosing's clients have been evading questions for months. Judge Wright began to count off the questions he wanted answered. "I'm looking for facts," he said. He wanted to know who directs Prenda Law's litigation efforts, who makes its decisions, whether there is another Alan Cooper, and what happens with the money Prenda Law makes from settlements. Ms. Rosing answered (wisely, and properly) that she could not personally testify to those things. Why, Judge Wright demanded, did Prenda Law conceal its attorneys' financial interest in the cases? "There's no evidence that they have an interest," Ms. Rosing protested. "Excuse me?" Judge Wright boomed even louder. Were there windows, they would have rattled. "Have you read Paul Hansmeier's deposition?" he demanded, referring to the bizarre deposition in which Paul Hansmeier failed to explain Prenda Law's shadowy owners or flow of funds. "I have," Ms. Rosing said, but stood her ground.

Prenda Law's Attorneys Take The Fifth Rather Than Answer Judge Wright's Questions