Prenda's John Steele Gets 5 Years In Prison; Insists He's Really, Really, Really Sorry

from the redeemable? dept

A month after his partner in crime Paul Hansmeier was sentenced to 14 years in prison, with scathing commentary from the judge in the case about Hansmeier and his copyright trolling scheme, John Steele has been sentenced to five years in prison in a sentencing that appeared to go quite differently than Hansmeier's. In front of the very same judge, a very different story was told. At the Hansmeier hearing, the judge said this:

"It is almost incalculable how much your abuse of trust has harmed the administration of justice," [Judge Joan] Ericksen said during the sentencing hearing in U.S. District Court in Minneapolis.

At the Steele hearing, after federal prosecutors apparently heaped praise upon Steele for confessing, and helping build the case against Hansmeier, Erickson gave Steele a chance to speak, at which point he at least put on a credible performance of contrition. He explained how he had met Hansmeier, how Paul had concocted the scheme and he joined in -- including lying to federal judges about what they were up to. From the Star Tribune's Dan Browning's excellent reporting:

First, he said, he enrolled at the University of Minnesota Law School at the age of 37 without any sense of mission other than making money. It was there that he met and befriended Hansmeier, which led to a second poor decision in April 2010.

“I’ll never forget that day,” Steele said, choking up. “I received a call from Paul Hansmeier about an idea he had about seeding pornography content online.”

The third bad decision came when federal judges around the country began questioning Hansmeier’s and Steele’s methods of filing hundreds of lawsuits to identify the owners of computers that were used to download pornography so that they could pressure them to settle to avoid public humiliation.

Steele said he could have told the judges the truth but opted to blame others and hide behind offshore companies that had technical ownership of the copyrights on the movies.

This is... a very different version of Steele. I remember the long interview he gave with Kashmir Hill where he boasted of the success he was having and mocked the idea that his copyright trolling, by threatening to expose people's porn habits, was unethical by saying:

“People don’t like to get caught doing anything wrong,” he says. “They should be embarrassed about the stealing.”

Interesting quote. Or then there's the interview Steele did with Joe Mullin in which he did his usual bluster after a judge (Otis Wright) had first called him on his bullshit trolling scam. At the time, Steele seemed overly boastful of his ability to succeed:

It's not our job to—there was no evidence against us! I think everyone, even the people that dislike anti-piracy litigation, would agree that I don't have to answer questions if I don't want to. That's my right. The fact that people take the Fifth Amendment, against compelled testimony, is not allowed to be a negative inference.

I have no involvement in this case. I've never made a misrepresentation [to the court], either me or Paul Hansmeier.

This judge is completely biased against our type of litigation. Anyone who's researched this judge knows it. There have been some very harsh rulings by this judge against intellectual property plaintiffs. I think there were some errors made, and that's why we have appellate courts.

I think the judge knows we're going to appeal. He wrote that the sanctions were designed to cost just less than [an effective appeal]. Look, you may hate me and the litigation that's gone on in the past, but most people have to be a little nervous when a judge puts out a number and says that.

In that interview, he insisted that he had "no involvement" with the shell companies AF Holdings and Ingenuity 13. Of course, part of the federal charges, which Steele admitted to in great detail in his guilty plea, was that he and Hansmeier set up AF Holdings and Ingenuity 13. In his guilty plea documents:

In or about 2011, defendants convinced R.R., the owner of Heartbreaker Productions, to transfer the copyrights to Sexual Obsession and Popular Demand to AF Holdings. In order to disguise their control over AF Holdings, defendants used the name of an acquaintance of STEELE--whose initials are A.C.--on the copyright transfer agreement to purportedly sign on behalf of AF Holdings. Furthermore, defendants represented and caused to be represented to multiple courts that AF Holdings was owned by a trust named "Salt Marsh" whose manager and sole beneficiary was M.L., a paralegal employed by STEELE and Hansmeier. In fact, and as defendants knew, M.L. was nothing more than a figurehead who agreed to pose as the owner of AF Holdings in order to help STEELE and Hansmeier obscure their ownership and control over the company.

For long time Prenda watchers, you may recognize those initials. A.C. being Alan Cooper, a former caretaker for a cabin John Steele owned, whose name Steele forged on the various documents. Cooper, having no idea what was going on, later sued over the forged documents. M.L., of course is Mark Lutz, the "paralegal" who Steele and Hansmeier falsely tried to present as the real mastermind behind everything.

This week, in court, Steele told a very different story.

He said he went back to building and rehabbing homes and began studying stoicism. He said for the past couple of years he has been working for one of his sisters in Phoenix.

“I’m trying to live a life of virtue,” Steele said. “All I can control is obviously the thoughts and actions now and in the future. I think it’s important that I stand here today and look at you and apologize.”

The Assistant US Attorney in the case heaped praise upon Steele for his cooperation, and contrasted Steele to Hansmeier in how they dealt with the charges -- including noting how much Steele's assistance helped in getting Hansmeier to plead guilty as well (though Hansmeier's was "conditional" based on some of his legal attempts to dump the case).

Judge Ericksen still noted how abusive and serious the trolling operation was, but also noted that it appeared that Steele recognized how serious this whole thing was:

“You abused the court system, as you say, for your personal ends,” she said, adding that the courts “are not a tool in the box for anybody’s hustle.”

Even so, Ericksen agreed with prosecutors that given Steele’s cooperation and efforts to turn his life around, five years in prison was “eminently fair.” ....

“I condemn the actions that you took in committing this crime. I congratulate you, however, on the actions you took” in responding to the charges, Ericksen said.

The Judge had already order Hansmeier to pay back $1.5 million, and now put that on Steele too, making the two of them "jointly and severally liable" -- effectively meaning that the two of them together need to figure out how to come up with that cash to pay back.

Given how vocal and how adamant (and, frankly, how sleazy and confident he was that he could talk his way out of any mess) Steele was over the years, consider me not totally convinced that he's really had a change of heart. It would be great if that were true, but it's going to take more than a single performance in court to convince most of us. Either way, five years in prison is still a significant prison sentence. And, now, it appears we can finally close the books on Prenda.

Filed Under: copyright, copyright trolling, john steele, paul hansmeier
Companies: prenda, prenda law

Prenda Mastermind Gets 14 Years In Prison, Told To Pay Back Just $1.5 Million

from the welcome-to-the-big-leagues dept

The process may have taken forever, but Paul "welcome to the big leagues" Hansmeier, who was the apparent mastermind behind the Prenda copyright trolling scam has finally been sentenced to 14 years in prison, and told to repay $1.5 million to 704 victims of his scam. We've been covering the actions of Hansmeier and his partner in crime, John Steele, going back many, many years now. None of us have the time to recount all of the many scams they've pulled, but they took copyright trolling to new lows. They tried using Florida's "pure bill of discovery" rules to try to abuse the system to get names to shakedown based on IP addresses. They sent totally unqualified and unprepared "associates" into courts to try to hide their own involvement in cases, they abused the CFAA by pretending movies they uploaded themselves were "hacked" in an attempt to get around restrictions on copyright trolling, they got someone they threatened to sue to basically take a dive in order to get access to other people to shake down (and then they went after that guy anyway). Oh, and then there was the whole thing about setting up their own fake movie production house, creating their own porn films to upload themselves, and then pretending in court that they were not the owners of the company in questions. And we don't even have much time to get into the time Steele tried to forge the signature of his housekeeper to pretend he was the actual officer of one of those fake shell companies.

Over and over and over again, Hansmeier and Steele played every possible game with a single focus in mind: getting names of people to send threatening shakedown letters to. And, apparently, they took in about $6 million over the years -- though a bunch of civil cases have forced them to cough up plenty of that before the criminal charges came down.

And there is no indication that Hansmeier had any regrets about all of this. Even after his arrest, he (and his wife) engaged in an analogous scheme of ADA trolling, looking for small businesses who might technically violate the ADA, and demanding cash from them to avoid a lawsuit. Hansmeier is facing an investigation over that as well.

Oh, and then there was the whole bankruptcy fraud thing. Seriously, the list goes on and on and on and everytime you think you remember it all, you're reminded of some other really sketchy thing Hansmeier and Steele did.

So it should probably come as little surprise that the judge in the case was not impressed, and even said he considered giving him even more time in jail:

"It is almost incalculable how much your abuse of trust has harmed the administration of justice," [Judge Joan] Ericksen said during the sentencing hearing in U.S. District Court in Minneapolis.

[....] Ericksen said she considered going beyond sentencing guidelines but decided instead to impose the maximum of that range, followed by two years of supervised release. She ordered Hansmeier to pay restitution, calling it a conservative toll for his crimes. While the amount of money is significant, she said, "that's not even a major part of the harm" he'd done with his scheme.

"The major harm here is what happens when a lawyer acts as a wrecking ball," Ericksen said.

She did actually sentence him to longer than the DOJ requested, but only said he has to pay back $1.5 million, as that's the amount they apparently received after they started posting torrent files themselves in order to track down people to shake down.

John Steele's sentencing is still to come, though, unlike Hansmeier, Steele actually started cooperating much earlier, meaning it's likely that he'll get a somewhat shorter sentence.

As I said years ago, Steele and Hansmeier remind me of some people I've met over the years who basically seem to think that they can talk their way out of anything, and thus lie and scam with impunity, and when caught, just keep thinking they can talk their way out of that as well. In this case, it finally caught up to them.

Filed Under: cfaa, copyright, copyright trolling, fraud, jail, paul hansmeier
Companies: prenda, prenda law

Mathew Higbee Cuts And Runs When Finally Challenged On A Questionable Shakedown

from the do-his-clients-recognize-their-own-liability? dept

Last month, we wrote about a declaratory judgment lawsuit that had been filed against a client of Mathew Higbee. As we've discussed at length, Higbee runs "Higbee & Associates" which is one of the more active copyright trolls around these days, frequently sending threatening shakedown-style letters to people, and then having various "paralegals" demand insane sums of money. In some cases, it does appear that Higbee turns up actual cases of infringement (though, even in those cases, the amount he demands seems disconnected from anything regarding a reasonable fee). But, in way too many cases, the claims are highly questionable. The lawsuit mentioned last month represented just one of those cases -- involving a threat against a forum because one of its users had deeplinked a photographer's own uploaded image into the forum. There were many reasons why the threat was bogus, but as per the Higbee operation's MO, they kept demanding payment and dismissing any arguments for why the use was not infringing (and, relatedly, why it was against the incorrect target).

Paul Levy and Public Citizen filed for declaratory judgment that the use was non-infringing, and in the process, pondered publicly whether or not Higbee had warned his various clients that they might end up in court in response to Higbee's aggressive tactics. Apparently, in the case of photographer Quang-Tuan Luong, the photographer was not particularly happy about ending up in court, and Higbee and his client quickly agreed to cut and run, despite Higbee's insistence that he was ready to take this matter to court.

I gave Higbee a chance to withdraw his client’s claims; however, Higbee had previously told me that my arguments about non-liability for infringement in an identical case were “delusional,” so we decided to give Higbee a chance to explain to a judge in what way these defenses were delusional, that is, in response to an action for a declaratory judgment.

I confess that, in filing that lawsuit, I wondered whether Higbee had ever warned Luong that he would not necessarily get to make the final decision whether his demand would end up in litigation, in that the very aggressiveness of Higbee’s demand letters, coupled with persistent nagging from paralegals to offer a settlement or face immediate litigation, sets up his clients to be sued for a declaratory judgment of non-infringement. That speculation proved prescient, because Higbee’s immediate response to the lawsuit was to offer to have his client covenant not to sue Schlossberg for infringement. Higbee also told me that he had offered to defend Luong against the declaratory judgment action for free.  It appears, however, that even such a generous offer was not enough to hold onto Luong as a copyright infringement claimant in this case. A settlement agreement has been signed; because there is no longer a case or controversy, the lawsuit has now been dismissed. 

Levy makes it clear, however, that he's actively looking for other such cases to challenge in court in response to Higbee's overaggressive demands:

Since that blog post, I have got wind of several other situations in which Higbee has claimed large amounts of damages against forum hosts.  We are considering which ones would make the best test cases.  

My last blog post about Higbee mentioned another case in which he had made a demand against the host of a forum about United States elections, where a user had posted a deep link to a photograph by another of Higbee’s stable of clients, Michael Grecco. Higbee has sued on Grecco’s behalf on a number of occasions, and Higbee told me that, unlike Luong, Grecco was a true believer who was looking for opportunities to pursue Higbee’s copyright theories in litigation.  Higbee said that he was going to be talking to Grecco to confirm that he wanted to litigate against the election forum. I could not help suspecting at the time that Higbee was blowing smoke to show what a tough guy he is.  That was a month ago, and yet so far as I can tell, Higbee has not yet got around to talking to his client about the subject. I have to wonder just who it is that wants to litigate Higbee’s legal theories.

Indeed, I have asked Higbee whether he warns his clients generally that they can be sued for a declaratory judgment of non-infringement even if they have never given Higbee authority to go to court on their behalf. He told me that he is too busy to address my questions.

He also notes that another such declaratory judgment filing has been made against the very same Michael Grecco:

That case involves another demand letter from Higbee, this time to an indigent young man named Lee Golden who lives in Brooklyn with his parents and blogs about action movies.  Because Golden included a Grecco photograph of Xena the Warrior Princess, Higbee sent his typical aggressive  demand letter, setting $25,000 as the required payment to avoid being sued. Golden responded with a plaintive email, apologizing profusely, saying that he had no idea about copyright issues, that he had taken down the photo...own, returning to its demand for $25,000 and threatening to seek $30,000 or even $150,000 if the case had to be litigated. Higbee even sent a draft infringement complaint, threatening to make Golden defend himself in the Central District of California even though many of Higbee’s actual lawsuits are filed in the jurisdiction where the alleged infringer lives, perhaps because Higbee wants to avoid having to litigate personal jurisdiction.

But Golden’s counsel likely did not know this, so Strupinsky and his partner Joshua Lurie have filed suit on Golden's behalf in the Eastern District of New York, seeking a declaratory judgment of non-infringement. We will see how anxious Michael Grecco is to litigate this case.

We see this again and again with copyright trolling operations. They often promise potential clients that this is a "no risk" way to make money. Just sign up and they'll scour the internet and you'll just sit back and receive the payments. Indeed, Higbee's site suggests just that:

Let a national copyright law firm take care of all of your copyright enforcement needs— from reverse image search to collecting payment. You pay nothing up front. We only get paid when you get paid. Best of all, by using us for reverse image search you will be eliminating the middle man and nearly doubling your profit.

His site also claims that he'll go to court for you "assuming you want us to" -- leaving out the risk of a declaratory judgment filing (and associated embarrassment for trying to shake down non-profits and personal websites of people with no money).

Filed Under: copyright, copyright trolling, declaratory judgment, deep linking, embedding, mathew higbee, michael grecco, paul levy, quang-tuan luong
Companies: higbee and associates

Why Is Congress Moving Forward With Its Plan To Encourage Copyright Trolling?

from the shameful dept

You would be hard pressed to think what the world needs is more copyright lawsuits. As we've discussed for years now, the US is already inundated with copyright lawsuits, many (perhaps most) of them filed by so-called "copyright trolls" who are seeking to shakedown recipients with "settlement" demands. A competent Congress would respond by looking at this abuse of the court system for extortionate purposes and maybe make it less inclined to abuse.

But not this Congress.

Instead, it has decided to bring back a truly awful idea: a special copyright trolling court, which it likes to say is the equivalent of a "small claims court" for copyright. The latest version of the CASE (Copyright Alternative in Small-Claims Act of 2019) in the House and the Senate was introduced recently, and is getting lots of love from all the usual sources.

We should note, that the House bill is sponsored by Rep. Hakeem Jeffries, along with Jerry Nadler. You may recall that those two Congressman were recently seen hosting a giant $5k per ticket fundraiser at the Recording Industry's biggest party of the year, the Grammys. And, right afterwards, they suddenly introduce a bill that will help enable more copyright trolling? Welcome to the world of soft corruption.

As we explained last year when this monstrosity was introduced as well, the bill is written in a manner totally disconnected from reality. Supporters insist it is "too difficult" to sue over copyright, yet provide no evidence that this is true. But, more importantly, the entire framing of the bill is based on the idea that those who sue for copyright infringement only do so when they have valid claims. Indeed, anyone paying even the slightest bit of attention to copyright lawsuits over the last decade would know this is laughable.

The entire bill is disconnected from reality and would only serve to make copyright trolling become an even bigger problem, and would enable an even more significant level of the copyright shakedown game, in which dubious claims of infringement are tossed around in hopes of extracting settlement fees. At a time when we should be looking to stop such extortionate acts, these bills move in the other direction. It's a joke.

Filed Under: case act, copyright, copyright trolling, hakeem jeffries, jerry nadler, small claims

US Magistrate Judge Provides The Template To End Copyright Trolling With Ruling Against Strike 3

from the you're-out dept

While we've been busily pointing out that the practice of copyright trolling is a plague across the globe, it seems there is something of a backlash beginning to build. For far too long, copyright trolls have bent the court system to their business model, with discovery requests and subpoenas allowing them to unmask internet service account holders on the basis of IP addresses, and then using that information to send settlement/threat letters to avoid trials altogether. Put simply, that is the business model of the copyright troll. The backlash against it has been multi-pronged. Canada has begun restricting what types of threat letters trolls can force ISPs to send to their customers, for instance. Elsewhere, Swedish ISPs have have led something of a legislative crusade against copyright trolls. In the US, some courts are finally realizing how bad IP addresses are as evidence, pushing trolls to get something better.

But the key to ending the plague of copyright trolling has probably been best outlined in a recent decision by a US Magistrate Judge against Strike 3 Holdings, in which the judge argues using Strike 3's own statistical analysis that it is abusing the court system to the detriment of innocent people.

Judge Orenstein denied motions for expedited discovery in thirteen cases. This means that the adult video company can’t get a subpoena to identify the alleged pirates. While we have incidentally seen similar decisions, the motivation, in this case, is worth highlighting.  

In his order, the Judge writes that allowing Strike 3 to obtain the identities of the account holders creates a risk.

Specifically, it will put Strike 3 “in a position to effectively coerce the identified subscribers into paying thousands of dollars to settle claims that may or may not have merit, so as to avoid either the cost of litigation or the embarrassment of being sued for using unlawful means to view adult material.”

In other words, the Judge is noting that Strike 3's copyright troll business model is, by nature, one that should disallow it from the kind of unmasking of account holders it so desperately needs to do to make any of this work. Essentially, granting these motions in favor of Strike 3 would have the court endorsing, if not actively participating in, the systematic extraction of money from people based on fear and embarrassment. Whatever that is, it sure ain't justice.

The court doesn't stop there, however. The order continues by noting that granting the discovery of account information would almost certainly not result in Strike 3 actually bringing any cases to trial. Trial proceedings are supposed to be the point of such subpoenas, but Strike 3's own statistics prove it's not after trials at all.

Since 2017, Strike 3 has filed 276 cases in the district, but zero have gone to trial.

Of the 143 cases that were resolved in the district, 49 resulted in a settlement and 94 were voluntarily dismissed. The latter number includes 50 cases where Strike 3 wasn’t confident that the defendant is the infringer. In other words, people who are likely wrongfully accused. This means that in one-third of the resolved cases, Strike 3 has likely targeted the wrong person. This number is “alarmingly high,” according to the Magistrate Judge.

“Strike 3 acknowledges that in many cases, the ‘Doe’ it has sued – that is, the subscriber – will prove to be someone other than the person who engaged in the allegedly unlawful conduct the Complaint describes,” the order reads. “And as it has now revealed in response to my inquiry, the proportion of such unprovable cases is alarmingly high,” Judge Orenstein adds.

None of this is surprising to readers here, of course. This is how Strike 3 operates. The entire business model relies on a scattershot approach to threat letters, in which some percentage will comply and pay out of pure fear. The problem is and has always been that too many courts don't actually consider this fact when granting subpoenas to unmask account holders. Here, the court manages to put that thought into its decision.

And, as a result of these "alarming" statistics, the judge has denied the motion to unmask the account holders in these cases. It's not exaggerating to say that if all, or even most, courts took the same route as this one, copyright trolling as a business model would completely fall apart.

And that would be a very good thing.

Filed Under: copyright, copyright trolling, magistrate judge, trolling
Companies: strike 3

Canadian ISPs Call For Standardization And Fines For Copyright Trolls Ignoring Changes To Copyright Law

from the needs-teeth dept

Sometimes stories that appear to have good outcomes end up with unsatisfying ends. Such appears to be the case with the recent changes to Canada's copyright laws. After ISPs in Canada began making a great deal of noise about the plague that is settlement threat letters, which ISPs are required to pass through to their customers under threat of fines, the government did the unthinkable and changed the law. The changes made it so that copyright trolls could not force ISPs to pass these letters to ISP customers if the letters contained the usual tactics: offers to settle the claim of infringement, requests for payment or personal information, a reference or link to any such demands, etc. This should have been the end, in other words, of copyright troll fishing expeditions as facilitated by ISPs.

But, as Michael Geist pointed out at the time, that hope was always fleeting, as the new law failed to put in place any punishment for copyright trolls should they simply ignore the law. And ignore the law they most certain did!

Unfortunately the new rules – as predicted – are being abused by companies who feel the law doesn’t apply to them.

As reported by TF earlier this month, anti-piracy outfit Digital Millennium Forensics (a Canada-based company), in conjunction with Elevation Pictures, is continuing to send notices that breach all of the rules, especially the demands for cash settlement. Since the publication of our article, TF has received numerous additional copies of notices sent to even more customers of Eastlink, the ISP featured in the piece. The government says that ISPs don’t have to pass abusive notices on but Eastlink told us they don’t have the capability to filter them out, since there are so many of them.

Since then, the flow has continued. TorrentFreak has received even more copies of abusive notices sent by Digital Millennium Forensics and forwarded by other ISPs. They include Shaw, one of Canada’s most prominent providers, through to Xplornet, the country’s “leading supplier” of rural high-speed Internet.

The examples continue to flourish from there. ISPs that have bothered to comment have pointed out that they have no good way of filtering the letters trolls send to them for content that violates the law. There are so many of these letters, which was the entire problem to begin with, that doing this manually would be a full on nightmare. It's also worth noting that the ISPs' job is not to confirm that third parties are complying with these new aspects of Canadian copyright law. So the ISPs are throwing up their hands, forwarding all notices along as they had been before, and nothing has changed.

Well, some ISPs have suggested how this might be fixed: the standardization of these notices and some actual teeth in the law to punish violations.

Unfortunately, Xplornet did not respond to TorrentFreak’s request for comment. Shaw Communications did, however, and a spokesperson indicated that it’s aware of the issue and is calling for measures against senders of abusive notices.

“Unfortunately, some rightsholders and their representatives may continue to disregard the requirements of the notice-and-notice regime. Shaw makes it clear to our customers that they are not obligated to comply with settlement demands,” Shaw said in its response. “At the same time, we are urging the introduction of measures in the Copyright Act to end this practice – such as monetary penalties applicable to rightsholders who issue notices that include settlement demands or other prohibited content.”

Frankly, the very least the government could do would be to give its constituents some reason to comply with its written law. After all, if the law was worth writing, isn't it worth making sure that that same law is actually followed? Not to mention that ISPs are already under threat of monetary fine if they don't comply with the law in forwarding the notices on to customers, so why not ensure rightsholders are treated the same?

Geist is back again, pointing out that this is all a problem of scale. A problem of the copyright trolls' own making.

“The problem is that the government’s approach does not penalize sending settlement notices via this system. Instead, it merely states that ISPs are not obligated to send such notices,” Geist told TF. “However, given that ISPs are still required to send compliant notices under threat of penalty, many ISPs will send all notices because it is too difficult to manually distinguish between compliant and non-compliant notices.”

Like the ISPs, Geist says there are potential solutions, such as the standardization of notices or establishing penalties for sending non-compliant notices, as suggested by Shaw. As things stand, however, things are likely to continue as they are.

Making the much-needed changes to Canadian copyright law is an exercise in mental timewasting and isn't worth whatever paper the law was written on. The encouraging part of all of this is that ISPs were able to get this law written in the first place. Hopefully, they'll be able to get the law some actual teeth as well.

Filed Under: canada, copyright, copyright trolling, demand letters, isps

Strike 3's Lawyer Sanctioned By Court, Excuses His Actions By Claiming He Can't Make Technology Work

from the strike-1 dept

When it comes to the art of copyright trolling, part of that art necessarily pretends that all potential victims of the trolling effort are assumed to be masters of both technology and copyright law, such that they are both responsible for what goes on with their internet connections and that no action they take could possibly be a forgivable accident. These assumptions operate across the victim spectrum without regard to the the victim being of advanced age or incredibly young, or even whether the victim is sick or lacks the mental capacity to carry out the supposed infringement. The assumption in just about every case is that the accused is fully responsible.

Which is the standard that then should be applied to Strike 3 Holding's lawyer, Lincoln Bandlow, who had to go to court to explain why he and his firm failed to provide a status update on 25 cases, despite the court ordering he do so, and was forced to explain why he thinks the court shouldn't just sanction him. Barlow attempts to explain this all away as a simple matter of he and his firm not being able to make their technology work.

The most recent sanctions hearing in Sacramento came as a result of Bandlow and Strike 3 failing to provide a status report related to at least 15 cases within a 45-day period. On Jan. 2, Magistrate Judge Carolyn Delaney ordered Strike 3 to explain why it shouldn’t be sanctioned $250 for missing those deadlines. At least 25 Strike 3 cases are at issue on Wednesday, according to a search of Strike 3’s court dockets.

Bandlow said in court filings that Strike 3 failed to file the status reports because it had “encountered issues with its calendaring procedure” for cases in U.S. District Court for the Eastern District of California. He also said the filing mistakes were in part due to a lack of staff during the holidays and an inability to receive emails from the court.

In a separate interview, Bandlow complained that this whole issue is ridiculous, since he claims that in his copyright trolling cases there would be very little about which to update the court after a mere 45 days. He also blamed the failure to provide these status updates on his firm's spam filter. The claim is, apparently, that the firm's spam filter blocked several emails from this specific court. In addition, he and his firm also had issues using this specific court's docketing software.

None of which, mind you, would have been valid excuses were this one of Bandlow's copyright cases. You can practically hear one of Strike 3's victims proclaiming that they weren't sure how to set up proper security on their wireless access point to make sure others couldn't come along and use it to infringe. It's obvious how that argument would play to Bandlow's ears were it to be made.

It's also worth noting that this particular lawyer aand this particular law firm are not the typical copyright trolling outfits. Fox Rothschild is an enormous firm, employing more than 900 attorneys. Barlow is a higher-up at the firm. With the resources afforded to this lawyer at this firm, blaming technology for not meeting court-mandated deadlines is laughable. And, yet, here he is blaming his inability to whitelist the court's email server as the reason he should not be sanctioned for not following the court's orders.

Well, that and the ridiculous claim by Bandlow that he's already sanctioned himself.

Bandlow voluntarily dismissed the cases in which he missed a deadline and told the court he would not file new cases in the Eastern District of California until he was able to fix the technical problems he was experiencing with the court.

“In essence, we’ve sort of sanctioned ourselves in a weird way because that is $400 per filing, and all of that is down the drain,” Bandlow said.

It takes a lot to make me cry and this doesn't quite reach that bar. And it didn't meet the court's bar either, apparently as the decision came down to sanction Barlow despite his excuses and despite the voluntary dismissal of the cases in question.

In light of Mr. Bandlow’s representations at the hearing, the court recognizes that his bad faith is not the most egregious kind. The court believes that Mr. Bandlow’s apologies are sincere. At the same time, the fact remains that Mr. Bandlow delayed and disrupted the litigation here by willfully ignoring, and thereby disobeying, explicit orders and warnings from the court—conduct that is unacceptable from any attorney, let alone one with over twenty-five years of experience. See Chambers, 501 U.S. at 46. Therefore, for the foregoing reasons, the court determines that it is appropriate to impose monetary sanctions on plaintiff’s counsel, Lincoln D. Bandlow, but in a lesser amount than originally contemplated.

The sanctions only amount to $750. Still, this is the first time Barlow has ever been sanctioned by a court and it only happened once he decided to get into the trolling bed with a porn company infamous for copyright trolling. Perhaps that will serve as some kind of a warning for other attorneys out there.

Filed Under: copyright, copyright trolling, lincoln bandlow, porn trolling, sanctions
Companies: fox rothschild, strike 3, strike 3 holdings

Court Refuses To Allow Defendant In Copyright Trolling Case To Proceed, But Hints At Reform

from the losing-but-winning dept

Over the course of the last year or so, coverage of copyright trolling stories turned up a common movie multiple times. That film was The Hitman's Bodyguard, and the outfits contracted to push for fees via settlement letters were both prolific and devious in trying to manipulate the settlement offer amounts to achieve the highest conversion rates. Whatever the level of intelligence that goes into these operations, however, there will almost always be a misfire, with a wrong target picked in the wrong court in such a way that makes the troll look like, well, a troll.

Such appears to be the case when Bodyguard Productions went after Ernesto Mendoza in court, claiming that he downloaded the film via bittorrent. The problem with the case is that Mendoza is both very, very insistent on his innocence and also manages to cast about as sympathetic a figure as one might be able to find. Mendoza is in his 70s and has end-stage cancer. When Bodyguard Productions attempted to voluntarily dismiss the case when it became clear that Mendoza wasn't going to settle, he tried to push the court to force the case to go forward so that he could recover his legal expenses. Sadly, the court refused.

After hearing both sides, Illinois District Court Judge Robert Dow decided to dismiss the case, ordering both parties to pay their own fees. This was a huge disappointment for the alleged file-sharer, who now has to bear the costs for a case that he isn't allowed to fight. According to his attorney Lisa Clay, the Court should ensure that plaintiffs are ready and willing to prove their case.

“Unfortunately, the Court’s recent order does not,” Clay tells TorrentFreak. “Granting the Plaintiff’s disingenuous motion to dismiss without penalty has the real consequence of strengthening the troll business model."

That's exactly correct. The fact that copyright trolls can simply back out of a case they aren't going to have settled -- the entire point of the troll's business model -- acts as an insurance policy against its efforts. By not forcing trolls to face the potential penalty of paying legal fees, there is essentially no consequence to firing off lawsuits with no regard to the facts. That's a truck-sized loophole in the legal system that clearly does an injustice to the accused party in copyright lawsuits.

It seems that even the court in this case recognizes the problem.

On a broader scale, there’s a positive note for future defendants. In the order, Judge Dow notes that the Court should re-evaluate how it handles these cases. In addition, the potential for abuse may also deserve the attention of the Rules Committee.

“[T]he points advanced by Defendant about the potential for abuse across the universe of peer-to-peer copyright infringement cases convince the Court that it should re-evaluate its own overall treatment of these cases and consider whether to suggest that the Rules Committee in this district look into the matter as well,” Judge Dow writes.

Which is great, except we still have a 70-year-old cancer patient out legal fees after a copyright troll cut and run from its own lawsuit simply because the troll was careless in filing its lawsuits. It's quite obvious that whatever that is, it sure isn't justice.

Filed Under: copyright, copyright trolling, ernesto mendoza, illinois, the bodyguard
Companies: bodyguard productions

One Person's Unsettling Experience With A $20k Higbee Copyright Troll Demand Letter

from the calling-out-the-trolls dept

Last week we wrote about the questionable practices of copyright troll Mathew Higbee, based on thorough research from lawyer Paul Levy. As we noted in the post, we've heard from a few recipients of Higbee's questionable letters, and one has agreed to share his experience. This will be a two part series, with the first part, below, written by the recipient of the threat, web developer Daniel Quinn, and tomorrow, more information from the perspective of his lawyer, Carolyn Homer. Update: Here is the second post.

Hi. My name's Daniel Quinn. Off the bat, there's a few things you should know about me:

1. I'm a self-taught web designer.
2. I have a background in English literature, creative writing, and publishing.
3. I'm a huge scifi nerd.

I probably value those three things from most important to least important in reverse order.

One of my favorite fandoms of all time is The X-Files. As a kid, I wanted to grow up to be as dreamy and mysterious as Fox Mulder himself. Of course I now have a lifelong affection for conspiracy theories, cerebral redheads, and aliens. I just finished writing a science fiction novel that features all three elements.

Back when dial-up modems were a thing, I loved The X-Files so much I used to list my physical address on social media as Fox Mulder's fictional apartment in The X-Files: 2360 Hegal Place Apt #42 in Alexandria, VA 23242. To this day, my physical address on Facebook is listed as Mulder’s address—something I do intentionally to confuse Facebook’s greedy algorithm. (This will all become relevant later.)

I never expected that the show which brought me so much happiness in my youth would become responsible for grief and terror at age thirty-four.

In 2016, Fox released The X-Files season 10 and broke my heart with its retconning of the series' central mystery. I wrote a fraught review about it on my personal blog, as I am wont to do whenever a fandom lets me down. Writing stuffy, literary critiques of pop culture on my blog, usually about science fiction movies or TV shows (e.g., “A Feminist Reading of Grindhouse” or “Mr. Robot is Cyberpunk for the Masses”), is about the only hobby I have time for outside of freelancing.

In both my web design work and scifi review-writing hobby, I'm rather meticulous about my IP research. I always source photography that accompanies my articles via Creative Commons-licensed or license-free photography on Flickr. I even check the “commercial use allowed” option just to be safe. That’s thanks to interesting coursework on intellectual property I took during my Masters in Writing & Publishing from Emerson College. There I learned about the copyleft movement. Larry Lessig is someone I admire. In fact, all of my website’s original content, including my blog posts, are licensed Creative Commons because I believe in its mission. As a web developer I work frequently with open source software. My very own WordPress boilerplate—for which my livelihood depends on as a web developer—is licensed open source.

This is all to say I'm not some lazy pirate who copy-pastes from Google Image Search to source photography. As a creative, I care about copyright. And as a freelance web designer, I'm managing intellectual rights all the time, whether it's by signing over the copyright to websites that I create as a work-for-hire contractor, or by selecting stock assets for my clients to buy, be that photography or software.

This winter I got a phone call out of the blue from one “Tuesday Maudlin” at the law firm Higbee & Associates claiming I was infringing on the copyright of a photographer Michael Grecco. I was more mortified than I was scared. How could that even be possible, given that I've been so careful to attribute everything I use? The photo in question was a thumbnail on my X-Files Season 10 review, a picture of Mulder and Scully I'd found listed as “Creative Commons” on Flickr over two years ago.

Over the phone, I explained to Tuesday how I source photos, and asked her whether this image had been mistakenly uploaded or mislabeled. Tuesday said her client doesn’t provide Creative Commons licenses. While I had her on the phone, I clicked madly through the Flickr archive to see if I could still find the photo there … but of course, two years on the web is an eternity, and I couldn’t find that particular one. When I offered to take the photo down right then and there (which I did), Tuesday said her client “also wants to recover the license fee that should have been paid prior to the usage.” I asked her what his license fee might be for this image, thinking that I could pay Mr. Grecco a few hundred bucks for my (albeit accidental!) usage. After all, he seemed like a legit professional, and as a freelancer myself, I have respect for honest contract work.

Tuesday said that Grecco’s license fee was $20,000.

Honestly, my heart leapt into my throat. I freaked out. Winter is my slow season. It was the middle of December, the month I take off to recoup for new business in the new year. Like most working Americans, I didn't have $20k lying around. I had major end-of-year expenses coming up. I didn't have any assets, except my millennial-sized retirement fund. Would I have to dip into that in order to pay what seemed like an absolutely crazy license fee?

I mean, I've bought stock from Getty in the past for clients. Getty can get pretty expensive, but honestly I’d never even seen a license for a single image that was more than $500. And that’s for 8,000+ pixel photos with global usage rights and unlimited print runs / digital impressions. I have some experience working in the publishing industry: $20k is what a midlist author would earn as an advance on an entire book, or what a photographer might earn for the exclusive rights to a photo that might appear on the cover of Rolling Stone, which has a paid circulation of like 1.5 million! My usage amounted to a single, 558-by-263 pixel-wide image that, according to my own analytics, reached a total worldwide audience of 98 visitors in the two years it’s been published on my personal blog. How the heck was I going to prove to Tuesday Maudlin that I innocently got the X-Files image from Flickr two years ago? And (just my luck), I couldn't find the damned thing in Flickr's ever changing archive.

I also had a lingering suspicion in my head that Tuesday might not be a real person. Who has a name like Tuesday Maudlin? Her name sounds like a character from a Wes Anderson movie. Or maybe Higbee & Associates might not be a real law firm. While she was on the phone, I Googled “Higbee and Associates.” What I found was not comforting. Today, when I do the same search I get two links from the website of the supposed “National Law Firm,” and the third from a website called ExtortionLetter.info. The fourth is from /r/legaladvice with the title “Copyright Image: $1,000 payable to firm?” The fifth, from Techdirt with the excerpt “Back in June I was begrudged with a large piece of mail that I soon found out was from a National Law Firm, known as Higbee & Associates.” (I expect Paul Levy’s and Mike Masnick’s posts from last week will soon be indexed and rise up in the rankings.) Something seemed fishy.

Tuesday then told me she'd emailed me several times about the claim. Now, I’m not one to overlook emails. I practice Inbox Zero every day. As a web designer, every missed email is a potential missed lead. It wasn't until I was off the phone that I found the Higbee emails: they had all been captured by my junk filter in Postbox. At a glance, I could see why my junk filter classified them as spam: the message headers were not DMARC compliant. Two of the three emails lacked SPF authentication and all of them lacked DKIM signatures. Tuesday’s email in particular was the spammiest looking, given the all-caps subject line “517865 / IMPORTANT LEGAL MATTER” and the scrunched together paragraphs of text with mismatched fonts. The original email links to an “online portal” and provides login credentials—all things which were, in my opinion as someone who’s created HTML emails for clients in the past, tell-tale signs of a phishing attack.

Honestly, even if I had seen them prior to the phone call, I probably would've dismissed them as elements of an automated scam. But Tuesday also claimed she'd mailed a physical letter to me; the earliest-dated email that I recovered from my junk folder also mentioned a physical letter. Where to, I asked? After all, in the past two years, I had moved to three different apartments, so I wouldn’t have been surprised if a letter wasn’t forwarded.

She gave an address: 2360 Hegal Place Apt #42 in Alexandria, VA 23242.

I was too sick to laugh. Higbee & Associates must have found Fox Mulder’s fictional address from my Facebook, and mailed it there. I told her to mail me the paperwork to my actual address, and we could go from there.

I told my wife the news when she got home. I felt helpless and ashamed. How could I, of all people, make this sort of mistake? My wife reassured me that whatever happened, we'd survive. I became less optimistic the more I learned about Higbee & Associates. I worked up the courage to download the Higbee emails into a virtual machine so I could safely open the files they'd attached to the emails. Sure enough, there was the supposedly infringing X-Files photo staring back at me, and in Higbee's letter, the scary demand:

“If forced to go to court, my client will ask for the maximum relief possible, which may include statutory damages under 17 U.S.C. §504 for up to $150,000 for intentional infringement or $30,000 for unintentional infringement. My client would also ask the court to have you pay court costs and attorneys fees. Copyright lawsuits can result in judgments, wage garnishments and liens on property. In some instances, the business owner can be held individually liable.”

The copyleft movement suddenly felt like a trap. What if other images I'd acquired from the Creative Commons were misattributed like this one? I took down ALL the posts on my blog and stayed up all night, going back to see which ones I could find again on Flickr, making a log of the attributions and screenshotting the links. If I had any doubt at all, I replaced images with better-sourced ones and live links. I couldn't afford to be ruined financially for any fandom, let alone my favorite.

Higbee & Associates brags about their high success rate and the money they’re generating for their clients. That scares me. If Higbee & Associates is in fact using automated technology to search for infringements and then issuing these demands en masse, most people will not have the resources at their disposal to defend themselves or pay the mind-boggling settlements. How many thousands of other people are in a position similar to mine, right now? Unable to afford an exorbitant fee, believing the threat is real, and terrified to lose their home over a single photo?

One of wife’s close friends suggested I get in touch with an attorney specializing in IP law. She said the demand letter looked suspect, but she was in no position to advise because her area of expertise wasn’t in intellectual property rights. My wife reached out to a women’s networking group for referrals—which led to my meeting Carolyn Homer.

Needless to say, I am so glad I did. Not only is Carolyn a nerd like me, but she lives and breathes IP. The depth of her generosity in taking on my case was matched only by her confidence and knowledge of copyright law. I started to breathe again. There were serious problems with Higbee’s demand. I could contest them, not roll over and cough up $20k.

The second post, by Carolyn Homer is now available here.

Filed Under: copyright, copyright trolling, mathew higbee, threat letters, tuesday maudlin, x-files
Companies: higbee and associations

As Canadian ISPs Requested, Canada Get Proposed Law To Ban Copyright Settlement Letters

from the ISPlease dept

Well, that didn't take long. We had just discussed Canadian ISPs petitioning the government to amend copyright law such that they would no longer be forced to pass along copyright settlement threat letters to their customers from copyright trolls such as Rightscorp. The opportunity for this comes as part of Canada amending its copyright law as a result of Donald Trump's NAFTA replacement, the USMCA. Well, it seems like there are those in the Canadian government who were listening, as a new bill has been introduced that will effectively outlaw such settlement letters.

The applicable language is part of the budget implementation Bill C-86 and reads as follows.

A notice of claimed infringement shall not contain
(a) an offer to settle the claimed infringement;
(b) a request or demand, made in relation to the claimed infringement, for payment or for personal information;
(c) a reference, including by way of hyperlink, to such an offer, request or demand; and
(d) any other information that may be prescribed by regulation.

This text will effectively ban all settlement attempts. That’s good news for members of the public who are no longer at risk. However, the Rightscorps of this world will be less pleased, as it destroys their business model in Canada.

It seems to me that this actually goes further than ISPs had requested. All those ISPs had asked was to not be party to something that looks like extortion of their own customers. This law, by my reading, goes further and forbids the common settlement letter entirely. While this all still has to be voted on and approved before it becomes law, all of the early response to this news has been positive from the Canadian public. The government going against that sentiment and siding instead with copyright trolls would be an insane move, meaning that this will likely pass into law.

And then, perhaps, we can export a like law to the States. You know, to "bring our copyright laws in line to meet our international trade obligations"?

Filed Under: canada, copyright, copyright trolling, settlement letters, shakedowns