CEG-TEK is now your friendly “photo” copyright troll.

I try my hardest to separate out the “photo” copyright trolls from the “bittorrent” copyright trolls when writing articles on this blog, as they are a separate category of trolls with their own rules.

In sum, “photo” copyright trolls search the web for images that are used on websites, often by bloggers, without permission or license from the owner of that photograph. Essentially, a blogger writes (for example) about the topic of “red pepper” vegetables. To make their blog entry more visually appealing, they search Google Images for “red pepper,” copy the first image they see, and they paste it on the top of their blog.

Most bloggers stay away from pictures that have a watermark on it, or from images which have a copyright logo marked on it. The problem is that 99% of the pictures out there have no copyright marking, and are not sold anywhere. Unsuspecting bloggers use these photos or random pictures on their blogs, and unbenownst to them, the owner (or a third party who purchases the rights to the photo with the intention of suing bloggers) begins asserting their copyright interests in the photo. Many accused bloggers who I have spoken to have expressed that they didn’t think they needed a license for a photo for non-commercial activities, and now they are facing threats of a lawsuit for using an image on their website.

Where the waters get muddied is that now Copyright Enforcement Group (a.k.a., “CEG-TEK”, “CEG TEK”, and more recently, “CEG”) is sending out the same DMCA letters that they ordinarily send to my bittorrent clients, but now they are in the “photo trolling” business. Their letters assert that a particular website used a copyrighted photo without a license, and the copyright holder is now asserting his rights for the “theft” that happened to his intellectual property rights. Thus, they are asking for $500 per photo, which in my opinion is obscene considering all their other letters ask for $200 per video shared via bittorrent.

On a personal note, hitting website users with a threat of a lawsuit over an image pulled from a Google image search is simply obscene. I would certainly understand such a letter if the image had a watermark pointing the user to a website where they can purchase rights to the photo without the watermark, or if there was a copyright mark on the image. Yet these photos have none of these, and they are literally trolling old websites and blogs looking for photos which were copied from other websites.

What makes this so obscene is that the photo copyright owners are asserting the same copyright infringement claims as do the copyright holders for the bittorrent cases we deal with daily. Along with the same copyright claims come the same shock of having the law provide statutory damages of $150,000 to the copyright holder who can prove the infringement. $150,000 for a movie download in my mind is an obscene and disproportionate punishment for the “crime” of downloading a copyrighted title. Even moreso for a photo. AND, even moreso for an unmarked and unwatermarked photo freely available on a Google image search.

Now here are the details as they are unfolding. So far, it appears as if the “photo” copyright troll entity asserting the copyrights is a company called “AKM Images / GSI Media.” The letter CEG-TEK is sending out provides a screenshot image of the blog containing the photo (and in a number of cases, the blog is no longer in existence and is only shown in the internet archives on the “Way Back Machine” on http://archive.org). It appears as if even CEG-TEK was unsure if they wanted to go into this area, because many of the screenshots are said to be from last year (2012). And, the so-called DMCA letters are not sent by ISPs, but appear to be forwarded by the website admins who host the various blogs.

6/13 UPDATE: There is some talk about the copyrighted images being posted on the website owner’s website or blog by a third party RSS aggregator. In sum, the accused blogger or website owner in many cases didn’t even post the images themselves, yet they are still asked by CEG to pay $500 to avoid a lawsuit.

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My Response to the yet-to-be-written guilty verdict in the Malibu Media, LLC Bellwether Trial (PAED).

Image courtesy of @artur84 / FreeDigitalPhotos.net

Much of the bittorrent world is saddened by the leaked news reports of the recent “Bellwether” case in the Eastern District of Pennsylvania (Malibu Media v. John Does, Case No. 5:12-cv-02088) where at least one defendant is reported to be facing close to $112,500 in damages plus attorney fees for the peer-to-peer downloads he is said to have taken part in. The plaintiff attorneys, along with Keith Lipscomb and others who have a vested interest in seeing bittorrent cases against internet users succeed are drinking champagne and celebrating their victory.

It is both my professional belief and my personal conviction that copyright trolling lawsuits are wrong, and while there is nothing illegal in suing a defendant for copyright infringement, doing so in my opinion is unlawful and morally corrupt. These lawsuits are nothing more than a STAGE SHOW to permit a behind the scenes SHAKEDOWN of accused interent users, whether or not they actually participated in the accused infringement. For G-d’s sake, the “guilty” so-called “criminal” defendant merely clicked on a link, and downloaded a title that was openly shared with thousands of other downloaders. To hit that defendant with a shock lawsuit where they face $150,000 statutory damages for a video that could have been purchased for a few bucks is a disproportionate punishment for the “crime” of downloading copyrighted films. Rather, instead of suing downloaders and letting the piracy continue, why not just end the piracy problem by issuing a DMCA take down notice to the bittorrent tracker? The alternative of sitting in bittorrent swarms and employing tracking software to track the IP addresses of who is downloading to me just seems like an abusive step to what would otherwise be a simple problem of making the torrent files go away so that unsuspecting downloaders couldn’t click on the links.

It is my conviction that copyright infringement lawsuits are wrong because it is simply immoral to shake down EVERY John Doe Defendant (yes, each one) with the threat of having to defend a lawsuit in federal court unless they cough up tens of thousands of dollars for downloads that the John Doe Defendant often did not even take part in. I have personally seen copyright trolls such as Malibu Media, LLC take large sums of money from defendants who did not do the download, but who were pressured into settling simply to avoid being named in a lawsuit. It is no secret that defending a case is sometimes significantly more expensive than settling a case.

Yet even with the pending resolution of this lawsuit, accused defendants across the U.S. in their own lawsuits should understand that this ruling will not be binding on other federal courts in other federal districts. Each federal court makes their own rules as to what constitutes copyright infringement, and what evidence is required to prove a defendant guilty when the so-called infringement happens via a bittorrent download. This is our job as attorneys — to know which districts have rules in favor of bittorrent users, and to know which districts have ruled in favor of the copyright holders. No doubt, the Eastern District of Pennsylvania will now become a favored spot to sue internet users accross the U.S. for copyright infringement.

Lastly, on a personal note, this case does not change the way a lawyer handles copyright infringement cases. At least in our Cashman Law Firm, PLLC, there is no silver-bullet approach — some defendants choose to settle, and many do not. Considerations as always involve 1) whether the download actually happened and the circumstances surrounding the accused activities, 2) the accused defendant’s willingness to fight and defend a copyright infringement lawsuit, 3) the accused defendant’s aversion to risk of having their name become public knowledge in a court proceeding, and 4) the accused defendant’s financial ability to take each of the various pathways we suggest.

In sum, not all guilty defendants settle, and not all non-guilty defendants fight.  It is simply a calculation and a risk assessment that is based on the client’s desires, the federal district in which the lawsuit is filed (taking into consideration past bittorrent cases filed in that jurisdiction), the judge who assigned to the case (taking into consideration his past rulings), and the plaintiff attorney (or more frequently, the local counsel’s) proclivity towards naming, serving, and taking defendants to trial balanced with their willingness to negotiate an amicable settlement should we decide to go that route.

Bittorrent cases [in their current form] have now been around for three (3) years, and now we have a verdict where a case has been taken to trial — by Malibu Media, LLC surprisingly enough.  When we started, there were no cases taken to trial, and now there is one.  Before the appearance in 2010 of the bittorrent cases, all we had to go on were the old Napster and Grokster cases, combined with the various lawsuits filed by the RIAA / MPAA and miscellaneous copyright infringement files dealing with the internet. Up until now we have been developing case law surrounding peer-to-peer downloads as each case matures. Now we are starting to get some clarity as to the law surrounding bittorrent use.

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Malibu Media targets rich neighborhoods, and introduces prejudicial character evidence into each case.

Malibu Media, LLC has been filing lawsuits across the U.S. with a fervor with one change — most of them appear to be “Single John Doe” lawsuits against defendants whom they believe have deep pockets.

In other words, it appears that Malibu is looking at the geolocation data of the various IP addresses of the so-called downloaders, and they are going after defendants who live in towns which have high value residential homes. I know this because based on the individuals who call our office, a disproportionate number of them have commented that they have multi-million dollar estates, and they were wondering whether it was ethical to target high value individuals in their copyright infringement lawsuits.

To make matters worse, Malibu Media, LLC appears to have incentivized their local counsel with financial rewards for bringing in higher settlements. In the olden days, I could have called one of their contacts directly, and within a few phone calls, I knew what kind of settlement a defendant could get based on how many “titles” or alleged instances of infringement they were accused of downloading. From there, the client and I would decide whether it made more financial sense to fight the case by waiting to be named and filing an answer in court, or whether it made more financial sense to settle the case. Malibu has complicated this process in order to provide the appearance of legitimacy for the courts. Now, they are having their local counsel negotiate the settlements themselves. This would be okay, but it is my experience that local counsel are asking for higher numbers than I know Malibu would have settled for just a few months ago. “The old settlement numbers you used to have with Malibu are no longer in effect,” one local counsel told me as she pushed for higher numbers. “We are doing this ourselves now.”

To make matters worse, when Malibu Media, LLC identifies a downloader by his IP address, they track that IP address and monitor that defendant to see what other bittorrent files that defendant is downloading (wiretap?). They continue to monitor that defendant downloading non-Malibu Media titles such as “The Walking Dead,” “Homeland,” “Breaking Bad,” often creating a list multiple pages long of “other” infringing activities that defendant has taken part in. Their logic is that because a particular defendant downloaded those other titles, he is a “serial downloader” and thus it is more likely that he downloaded their titles as well. A number of us attorneys have explained to their local counsels’ deaf ears that just because a particular IP address downloaded a number of bittorrent titles does not mean that the accused defendant is that downloader. However, even the best attorney’s understanding of the law can be clouded when money influences that attorney’s understanding of it.

On a positive note, in just a few weeks, we have seen judges rule that the “other” BitTorrent activity listed in their complaints [for works not owned by Malibu Media] is inadmissible under the Federal Rules of Evidence (“FRE”), specifically Rule 404 on “Character Evidence.” The reason for this is because “Evidence of a person’s character or character trait is not admissible to prove that on a particular occasion the person acted in accordance with the character or trait.” In other words, proving that a particular defendant is a “serial downloader” is not admissible to prove that on a particular date and time, that defendant downloaded Malibu Media’s copyrighted titles. Shame on Malibu attorneys for not knowing this.

Further, judges have ruled that introducing evidence of “other” downloads is not relevant and is actually prejudicial to the defendant, and thus that so-called evidence is not admissible to prove that the defendant downloaded Malibu Media, LLC’s titles. As one example, Judge Stephen Crocker has frozen all of Malibu Media, LLC’s cases in the Western District of Wisconsin for this very purpose (link).

In sum, messing up on the Federal Rules of Evidence and doing so on each of their “Single Doe” upper-class cases was a big mistake which they might not be able to undo.  And also on a positive note, because they have filed so many “Single Doe” cases across the country, judges across the U.S. are looking deeper into their tactics and their evidence of infringement.  See @Ddragon229′s article on the FCT website, “Winds of change begin to blow on Malibu Media” for details on the character evidence issue.

Despite this, Malibu Media, LLC continues to file lawsuits across the U.S. in alarming numbers, and in each case, they continue to file this prejudicial information of “other” downloads as their “Exhibit C” in each case. A snippet of cases filed in just the last few weeks is pasted below:

Cases filed by Chris Fiore in the Pennsylvania Eastern District:
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02858)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02859)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02867)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02868)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02854-JP)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02855-MMB)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02856-JD)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02857-SD)
Malibu Media LLC v. John Doe (Case No.2:13-cv-02863-PD)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02864-HB)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02765-MSG)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02766-MSG)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02767-WY)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02768-PD
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02769-RB)
Malibu Media LLC v. John Doe (Case No. 2:13-cv-02770-CMR)

Cases filed by Mary Schulz of Schulz Law PC in the Illinois Northern District:
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03726)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03699)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03700)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03703)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03704)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03705)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03706)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03707)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03710)
Malibu Media LLC v. John Doe (Case No. 1:13-cv-03711)

Cased filed by Paul J. Nicoletti of Nicoletti & Associates PLLC inn the Michigan Eastern District:
Malibu Media LLC v. John Doe subscriber assigned IP address 71.238.205.92 (Case No. 4:13-cv-12231-MAG-MAR)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.42.185.159 (Case No. 2:13-cv-12210-RHC-MJH)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.43.4.96 (Case No. 2:13-cv-12213-SFC-DRG)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.43.84.236 (Case No. 2:13-cv-12214-AJT-MKM)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.60.140.87 (Case No. 2:13-cv-12216-PDB-RSW)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.62.41.133 (Case No. 2:13-cv-12217-VAR-RSW)
Malibu Media LLC v. John Doe subscriber assigned IP address 69.14.181.108 (Case No. 2:13-cv-12218-NGE-DRG)
Malibu Media LLC v. John Doe subscriber assigned IP address 69.246.89.172 (Case No. 2:13-cv-12220-AJT-DRG)
Malibu Media LLC v. John Doe subscriber assigned IP address 67.149.158.6 (Case No. 2:13-cv-12197-GAD-PJK)
Malibu Media LLC v. John Doe subscriber assigned IP address 67.149.89.224 (Case No. 2:13-cv-12198-PDB-MKM)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.40.123.7 (Case No. 2:13-cv-12200-GER-MKM)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.40.46.12 (Case No. 2:13-cv-12201-DPH-DRG)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.43.35.2 (Case No. 2:13-cv-12202-PDB-DRG)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.41.170.197 (Case No. 2:13-cv-12204-GAD-RSW)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.41.19.221 (Case No. 2:13-cv-12206-DPH-LJM)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.41.86.4 (Case No. 2:13-cv-12208-MOB-RSW)
Malibu Media LLC v. John Doe subscriber assigned IP address 68.42.172.154 (Case No. 2:13-cv-12209-SJM-MKM)

Cases filed by Paul J. Nicoletti of Nicoletti & Associates PLLC in the Indiana Northern District:
Malibu Media LLC v. John Doe 12 (Case No. 1:13-cv-00166-PPS-RBC)
Malibu Media LLC v. John Doe 5 (Case No. 1:13-cv-00164-PPS-RBC)
Malibu Media LLC v. John Doe 9 (Case No. 1:13-cv-00165-PPS-RBC)

PERSONAL NOTE: Even with all these cases, I have only listed 46 cases having 46 defendants. With the hundreds of filings, it becomes impossible to track and report on each case. The more I look at each of these cases, the more I feel as if they have succeeded in preventing attorneys like myself from tracking and reporting on each of their hundreds of cases. Obviously I am still here, and I am still reporting on these cases. My list of cases to track has just gotten a bit larger.

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Prenda is essentially done

Reblogged from Fight Copyright Trolls:

We have been waiting for this moment for a long time. Congratulations to everyone involved, especially Morgan and Nick.

Media coverage

• TechDirt: Judge Wright Tells Team Prenda To Pay $80k, Refers Their Activity To State Bars, Feds & IRS by Mike Masnick.
• Wired: Judge Asks IRS, Feds to Investigate Copyright-Trolling Attorneys by David Kravets.
• Popehat: Does Prenda Believe In No-Win Scenarios?

Read more… 480 more words

Sometimes there are no words other than silence to best express the thoughts I have about Judge Wright's order essentially referring John Steele and the Prenda Law Inc. gang to the IRS' Criminal Investigation Division (CID) for all the settlements on which no taxes were paid. There is one police agency that a criminal organization does not want to be contacted by, and that is the CID. The $81K in sanctions essentially funds the lead attorneys who spent time on this case. And, the referral to the bar associations means that the principals at Prenda Law Inc. may no longer have their law licenses shortly. In sum, there is not much for me to comment here, except to be silent, because the judge's order itself says all it needs to. Copyright trolling may seem profitable for the attorneys filing the lawsuits, but no money can compensate for the loss of freedom that one experiences when what was once a multi-million dollar law practice lands the principles in prison for tax evasion. This should be a lesson to all other copyright trolls out there. Judge yourselves accordingly.

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The Thompsons Cases - Copyright Trolls Join Unrelated BitTorrent Activity

Reblogged from DieTrollDie:

• 

While answering a question for a Doe, I decided to dig a little deeper into the various "Thompsons" cases filed throughout the US.  I apologize for missing an 'interesting' aspect in case The Thompsons Film, LLC, v. Does 1-155, 6:13-cv-00469.   complaint_00469(OR)  The SHA1 hash number I listed was ONLY ONE of THREE hash files in the IP address listing. 

Read more… 556 more words

For those of you interested in the "chemistry" behind the bittorrent lawsuits and the "SHA1 hash numbers" affiliated with each title allegedly downloaded in each copyright infringement case, Die Troll Die has written up a very simple to understand article on the topic. His analysis relates specifically to the The Thompsons Film, LLC v. Does 1-155 (Case No. 6:13-cv-00469) and similar cases, however the application of the SHA1 hash number analysis is relevant to any bittorrent lawsuit.

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Congratulations to the Cashman Law Firm, PLLC defendants dismissed from the Nu Image, Inc. v. Does 1-3,932 (FLMD) case.

Congratulations to the Cashman Law Firm, PLLC clients and former defendants who were dismissed from the Nu Image, Inc. v. Does 1-3,932 (Case No. 2:11-cv-00545) case in the Middle District of Florida.

We’ve known that this case has been “dead” since December, when the court denied the plaintiff’s request for an extension of time to name and serve defendants. I was surprised that they did not instantly dismiss the case months ago, but it lagged on with almost no activity.

I suppose the timing of this case is fortuitous for those following the Prenda Law Inc. scandals, because the judge in this case is US District Judge John E. Steele, having no relation to John Steele of Prenda Law Inc.

A few months ago, I referred to this case as an “abandoned, dead floating ship.” Even then I had no idea that the timing of the death of this case by Judge John Steele would coincide so nicely with Judge Wright’s hearing just the day beforehand.

For those that want to know what actually happened here, the politics were very simple. Copyright troll attorney Jeffrey Weaver of Dunlap, Grubb, & Weaver, PLLC (now “Dunlap Weaver, PLLC sans former partner Grubb”) took this case after his main attorney Nicholas Kurtz left the firm leaving the oldest copyright troll without teeth to go after defendants. Nu Image, Inc. came in wanting to sue, and so Jeffrey Weaver took the case. Almost 300 documents, 79 weeks, and 2 days later, the case is dead.

Congratulations again to all 3,932 defendants who have been dismissed from the case.

View this document on Scribd

Link to the dismissal order.

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The 12 minute hearing and the end of Prenda Law Inc.

While the Cashman Law Firm, PLLC and its clients were celebrating “freedom,” I am sure some of my readers will be wondering the fate of Prenda Law Inc. / Steele Hansmeier, PLLC / John Steele / Paul Duffy / Mark Lutz / Brett Gibbs et al. after their hearing today before Judge Wright.  Today was the big day where the world of those who have been injured by Prenda Law Inc.’s activities looked on to see their demise.

In sum, the hearing was short, and John Steele and his “gang” showed up as they were ordered to, but they decided to plead the Fifth Amendment to the United States Constitution rather than answer Judge Wright’s questions.  As a result, the judge did not allow them the pleasure of “pleading the fifth” as he appears to have no interest in lawyer gamesmanship.  Thus, after 12 minutes, he walked off the bench and ended the hearing.

While there was no immediate gratification for those who flew over to attend the hearing, in my opinion, “Popehat” described their fate better than I ever could:

“Prenda Law may still be standing. But it’s dead.”

I would be very surprised if I saw any further activities coming from this law firm. I expect that in a few days (if not sooner), Judge Otis Wright will write an order which will make any copyright troll shake in their boots, and it is my hopes that this order will serve as a warning shot to any of the other copyright trolls who go after individual downloaders using the tactics and corporate structures that Prenda employed.

It is my opinion (although I *am* still cautious until I actually see Judge Wright’s order,) this will likely be the end of Prenda Law Inc., John Steele, and Paul Duffy, as I expect that this will evolve into inquiries which will endanger their law licenses. I don’t think we’ll see the end of them, per se, as it is not so difficult to find a hungry lawyer who will agree to have his hand held while he lets others practice under his law license in the shadows.

On the other hand, I believe the result of this case (and Judge Wright’s influence over the the future penalties of unlawful copyright enforcement tactics) will force the bittorrent cases to evolve from its current state (which comprise mere pre-trial settlement “or else” tactics) to actually taking clients to court on the merits.  Also, while the inquiry in this case surrounded plaintiff copyright trolls who “invent” corporate figureheads, who seem to falsify copyright assignment documents, and who structure their business tactics to allow their activities to proceed with limited affects on the attorneys furthering their scheme) no doubt, this will be a damaging blow to those copyright holders who try to enforce their copyrights against individual downloaders.

Articles on the topic:
Forbes: Porn Copyright Lawyer John Steele, Who Has Sued More Than 20,000 People, Is Now The One In Legal Trouble

ArsTechnica: Prenda lawyers take Fifth Amendment; judge storms out: “We’re done” — Those in attendance describe Judge Otis Wright as “incandescently angry.”

TechDirt: Team Prenda Shows Up In Court, Pleads The Fifth… Angry Judge Ends Hearing In 12 Minutes

TorrentFreak: Prenda Copyright Trolls Plead the Fifth

Fight Copyright Trolls (SJD): Prenda trolls appear in Judge Wright’s courtroom only to plead the Fifth. Furious judge ends the hearing after 12 minutes

Follow-Up Articles:

ArsTechnica: Judge smash: Prenda’s porn-trolling days are over

Popehat: Prenda Law’s Attorneys Take The Fifth Rather Than Answer Judge Wright’s Questions

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CEG-TEK’s new “you didn’t settle” letters sent from Marvin Cable.

Back in November 2012, I wrote an article about CEG-TEK’s CopyrightSettlements.com web site “crashes” where following a failed settlement transaction (purposeful or not), accused infringers received letters essentially saying, “[B]ecause you have decided not to settle, we will be moving forward against you in a copyright infringement lawsuit. Please pay us $3,500 or else we will sue you.” These letters were apparently sent from Copyright Enforcement Group (CEG-TEK), a software brainchild of Ira Siegel.

Now it appears that CEG-TEK is “stepping up” their game again, and more letters are being sent out, but this time from CEG-TEK’s local counsel, Marvin Cable. What is particularly concerning is that this letter appears to be sent out to:

1) ANYONE WHO CALLED IN TO CEG-TEK, BUT DID NOT SETTLE (they are scouring the CALLER-ID RECORDS and matching them with publicly available contact information), and

2) ANYONE WHO ENTERED THEIR CONTACT INFORMATION ON THEIR WEBSITE (e.g., to process their credit card payment), but the website “crashed,”

3) ANYONE WHO LEFT “BREADCRUMBS” WHEN INTERACTING WITH THEM, BUT DID NOT SETTLE.

NOTE: I have personally heard reports of 1) and 2), but 3) is a catchall for items I have not yet heard about, but expect that they are doing.

In sum, as I suspected when the Six Strikes System was put into place, with the big ISPs no longer forwarding their “$200 per title” settlement letters, their settlement stream of cash has started to run dry. As such, their production studio clients are forcing them to do whatever they can to “monetize” their clients IP (here, scrubbing the voicemail records, the caller ID records, and website tracking records, and putting names to those traces left by accused internet users), or else sue. In order to keep these clients, we see examples of letters such as this one:

 

View this document on Scribd

Just to be clear, for a long time, when people ask “Should I settle or ignore CEG-TEK’s DMCA letters? What are my chances of being sued if I ignore?” I have been telling people that they could do either, and I laid out the factors to consider.  I am still of this opinion, namely that 1) Neither Ira Siegel, Terik Hashmi, Marvin Cable, or Mike Meier have sued anyone in MANY MONTHS (since July, 2012 to be exact), and 2) the purpose of their CopyrightSettlements.com website was to convince production companies that it is easier for them to sign on with CEG-TEK and run a settlement “IP monetization” campaign, rather than to sue everyone in a copyright infringement lawsuit.  I assume they are still trying to salvage this system, especially with the renewed efforts to find those who have not settled.

And as always, if you haven’t read my previous articles on the topic, I am still getting reports of website transactions not working (website “crashes,” failed transactions), and so once again, be smart and protect your contact information. Know that when you visit a website, unless you are using Tor or you subscribe to a private VPN, you share with that website your IP address, and when you call Copyright Enforcement Group’s phone number to inquire about your matter, you leak your phone number which can easily be cross-referenced back to you.

In other words, be careful with your information, and the “breadcrumbs” you leave when you conduct your daily life.  These breadcrumbs can be traced back to you, and next thing you know, you’ll be on the phone with me asking how to defend a copyright infringement lawsuit filed against you and 200 other Doe Defendants.

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TorrentLawyer: Thoughts about the effects from Monday’s sanctions hearing.

A number of interested readers have wondered what my opinion was about Monday’s sanctions hearing against Prenda Law Inc., Brett Gibbs, John Steele, Paul Hansmeier, and the others [Case Cite: Ingenuity 13 LLC v. John Doe, Case No. 2:12-cv-08333, in the California District Court (Case Documents "Recap'd" here)]. Quite frankly, I read the #Prenda Twitter stream throughout the day just as many of you did.

Up front, there were some pretty good articles on the event, and as far as I am concerned, there is nothing substantive that I can add to what has already been written. I advise anyone affected by the AF Holdings, LLC cases (or any of Prenda Law Inc.’s so-called “trusts”) to read the following articles:

IN ORDER OF APPEARANCE:

• Techdirt [1 of 2]: “Team Prenda Does Not Show Up In Court; Judge Is Not Amused”
• Techdirt (via Popehat) [2 of 2]: “Deep Dive Analysis: Brett Gibbs Gets His Day In Court — But Prenda Law Is The Star” (alt link)
• ArsTechnica: “Angry judge blasts porn trolls: ‘Someone has an awful lot to hide’”
• FightCopyrightTrolls: “March 11 hearing: another story by a witness”

In sum, it is my opinion that whatever the result, there was a lesson taught — that copyright trolls are not “above the law,” so to speak. As far as the effect of Monday’s hearing, we will not know the effect until we read Judge Wright’s order (which we do not expect to see for a few days). However, as for the applicability, the ruling will apply nationwide, and no doubt every court which hears their cases will probably receive a copy of the order.

There is a lot of mention of “trusts” when it comes to the Steele|Hansmeier organization.  I have a “love-hate” relationships with trusts. They form a wonderful legal alter-ego function when it comes to protecting assets and benefiting third party beneficiaries. However, in scenarios like this, I believe they are tools to break the law and hide from responsibility. The problem here is that I’m not so sure Steele and Co. could pull off having a trust without it being broken by the courts.

From what I have read, it is my opinion that there is too much involvement in the trust by all parties, and putting it simply, keeping the classic definition and rules of a trust, I’m not sure they’ve done it in a way which could withstand scrutiny. For example, I’m not sure who the grantor is, who the grantee (receiver of assets) is, and for which beneficiary or purpose was the trust formed. Are there any documents relating to the formation of the trust?  Are there any filings anywhere relating to the trust?  Also, who is the trustee who is in charge of directing and managing the funds of the trust? I would be worried of the parties mishandling the movement of the funds (the trust assets), and this is where they may get busted for playing the trust game… not to mention that I hear that nobody has filed taxes on this income and all the members are U.S. citizens? I can’t believe no taxes have been filed or paid, because if not, the IRS would be after them for tax evasion (and I have heard nothing of the sort happening).

As far as the Hansmeier deposition that nobody gets paid and that every lawyer gratuitously works for free without receiving an income, I call BS on that statement. It appears to me that he is playing semantics with the term “income” according to the tax code, and he can get in trouble the way he has maybe misused the term. No lawyer, as wonderful as any of them might be, would work for “no income.” Even Brett Gibbs. I assume there is some foreign trust account set up for each of them into which funds get deposited on a regular basis. And, those “offshore trusts” need to pay taxes just like any other legal entity.

My sadness from Monday’s events stem from the fact that Steel/Hansmeier/Duffy clan staying out of court was a very smart move. By staying as far away from the court as possible, Judge Wright was unable to swear them in, and he was unable to take their [what would likely have been incriminating] testimony. If he sanctions them, if he orders a bench order for their arrest (not likely), or if he does something to them, from a distance [and out of jail], they can easily appeal any order the judge makes, essentially eviscerating any legal authority Judge Wright may show.

I mentioned to a few other lawyers how queasy attorneys get when a judge speaks strong words. However, we all have been watching these cases for almost THREE YEARS NOW (come June), and I have never seen a judge do any damage to a copyright troll. Even Evan Stone, the prolific copyright troll out of Dallas, Texas — for sending subpoenas out before the judge gave authorization to do so, he was only sanctioned $10,000 (essentially one day’s income for Steele, according to Alan Cooper’s testimony, or three of Evan Stone’s settlements).

At the end of the day, unless the result of this hearing is a state bar disciplinary hearing (or more seriously, a criminal investigation if there was indeed “fraud” in the legal sense), and unless some lawyers lose their licenses, there will be no deterrance from Prenda Law Inc. (or any other copyright troll) thinking twice about their actions, and copyright trolling lawsuits will grow exponentially until enough people cry out, “this must be stopped!”

–

UPDATE (3/14/2013):

SJD reports that Judge Wright has ordered the Steele|Hansmeier gang to appear on 3/29/2013 based on “their pecuniary interest and active, albeit clandestine participation in these cases” (emphasis added).  He continues that “Not only does [their motion not to appear] lack merit, its eleventh-hour filing exemplifies gamesmanship”  (emphasis added).  Wow.  Further, the judge expanded his inquiry to impose sanctions not only to the original masterminds of these lawsuits, but to the so-called entities who are supposed to be separate and apart from their operation (they’re not).  He called Livewire Holdings LLC, and 6881 Forensics, LLC to be present at the hearing.  Now if these entities will be represented by the same Steele / Hansmeier / Duffy / Lutz characters (Hansmeier’s deposition already pegged paralegal Lutz as the CEOs of a number of these entities), this will look very bad for them.

NOTE: A commenter referred to this article (or me) as a “buzzkill,” and that got a good laugh out of me.  If you knew how much my reporting on these blogs represented how dull I sometimes am in real life, the humor of that comment is pretty on-point.  On this note, however, if you read Judge Wright’s order carefully, again, he’s only threatening sanctions.  Even if he imposes $1 million dollars in sanctions, I cannot imagine Steele and the others would pay it.  After all, they technically don’t “own” that money that is in the various trusts (#sarcasm).

Also see:

• ArsTechnica Article, “Court will sanction Prenda lawyers if they don’t appear March 29“
• SJD Article, “Prendacalypse #2: Judge Wright orders a follow-up hearing on March 29; no excuses for not appearing,” and
• Popehat Article, “Another Day of Reckoning Scheduled For Prenda Law“

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Congratulations to the Cashman Law Firm, PLLC clients dismissed from the Century Media, Ltd. & Baseprotect UG, Ltd. NJ cases!

Congratulations to the Cashman Law Firm, PLLC clients who have been dismissed from the BASEPROTECT UG, LTD. v. JOHN DOES 1-X (Case No. 2:11-cv-03621) and the CENTURY MEDIA, LTD. v. SWARM AND JOHN DOES 1-944 (Case No. 2:12-cv-03868) cases in the U.S. District Court for the District of New Jersey.

The politics leading to the dismissal of these cases is quite simple. Each of these cases lagged on for almost TWO YEARS with little progress being made against the hundreds of John Doe Defendants implicated in the lawsuits. After 178 documents were filed with the court in the Baseprotect case (whether they be motions to dismiss defendants who have settled, motions to quash, or administrative motions and/or hearing notes), eventually the case got stale.

On 2/26, Judge Joseph Dickson issued an ORDER TO SHOW CAUSE (which is usually indicative of a soon-to-be-dead case) as to why the court should not SEVER AND DISMISS all defendants except for John Doe 1.

In other words, Judge Dickson figured out that the John Doe Defendants in this case — the alleged co-defendants of the “same” bittorrent swarm — had download dates which were spaced so far apart that it was very unlikely that each of the hundreds of defendants participated in the “same swarm and the same time.” In other words, joinder was obviously deficient and the judge was about to break apart the case into a few hundred pieces telling plaintiff attorney Jay McDaniel that he better pay the $350 filing fee for each of the John Doe Defendants and file separate actions, or else he’s dismissing everyone except for John Doe #1.  The judge set the hearing date for 4/1.

In sum, McDaniel decided to cut his losses (which if you look at just how many people settled, you would conclude that this case was very profitable for him since its original filing on 6/23/2011), and without even waiting to attend the 4/1 hearing, he dismissed the case in its entirety.

Oh, and while he was at it, he also dismissed the Century Media, Ltd. case that same day.

Once again, congratulations to all who have been dismissed from these cases.

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