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Posts Tagged ‘copyright trolls’

It is now three days later, and I am unhappy with the “ME2 Productions, Inc. Texas-based Copyright Infringement Lawsuits” article I wrote on Friday. For this purpose, I am providing a quick summary so that those implicated in this lawsuit will understand what appears to really be going on ‘under the surface.’

ME2 Productions, Inc. is the legal entity suing Comcast ISP subscribers for the download of the “Mechanic: Resurrection” movie with Jason Statham (think, “The Transporter”). This ME2 movie appears to have been shared on the Popcorn Time software at the same time as the Septembers of Shiraz movie, the “The Cell” movie, among others. On Friday, I referred to this lawsuit as the “third leg” because the three movies were often mentioned within the context of the other two when defending a John Doe Defendant in Josh Wyde’s concurrent lawsuits (September Productions, Cell Film Holdings). My ‘gut’ understanding was that someone who inadvertently clicked on the “The Cell” movie also downloaded the Mechanic: Resurrection movie. Why? Because they were likely next to each other on the Popcorn Time PC or cell phone app.

WHY POPCORN TIME USERS CAN GET ACCUSED OF COPYRIGHT INFRINGEMENT

Popcorn Time developers and I have exchanged a number of heated arguments over the years. My primary objection to them is that they lure users in with their professional appearance, they offer a VPN claiming to ‘hide’ the identity of the user when searching for the movie, but as far as I can recall, the VPN is not used when the Popcorn Time software connects to the internet via BITTORRENT and creates a conduit through which the user can watch the copyrighted movie without a license. Because Popcorn Time connects to BITTORRENT to serve the movie to their end user (making the end user the downloader for copyright infringement and liability purposes), the end user’s internet IP address is shared by the software in the bittorrent swarm (which is then monitored by the copyright holder), which is how the end user gets ‘caught’ and sued in federal court for copyright infringement.

Again, my arguments with Popcorn Time happened over two years ago, and I do not monitor their software.  All I know from the attorney perspective is that I am still getting clients sued as “John Doe” defendants in a number of cases, and too many of them are telling me they never used bittorrent — only Popcorn Time on their phone, or on their computer.

WHAT SEEMS TO BE THE ‘DIRTY SECRET’ OF THE COPYRIGHT TROLLS AND THEIR ATTORNEYS?

Now I do not know whether the plaintiff attorneys solicited the copyright holders for the Mechanic: Resurrection movie and sold their services to enforce the copyrights just as they are doing so for the other production companies. Rather, just as one tugs at a string until the whole thing unravels, I have been tugging at the various ‘copyright troll’ cases for years now, and the ME2 lawsuit just smells like a Voltage Productions, Inc. scenario.

What does that mean in the conspiracy world of copyright trolling? In the copyright troll world, you usually have one or more entities, most popularly, a German company named Guardaley with various companies here in the US who employ local attorneys to ‘shake down’ downloaders of their copyrighted films. Similarly, there is the Voltage Pictures, Inc. company (possibly linked with Guardaley, possibly not), which contacts copyright holders in the US, and offers to monetize the copyrights owned by those production companies. They sign an agreement with the movie company to create an entity using that movie company’s name, and they engage in business parading as that company when really they are the licensee (the one receiving the license from the movie company to make as much money as possible for that company). Included in the Voltage business model (as far as I understand it from the Dallas Buyers Club vs. Dallas Buyers Club lawsuit) is to sue downloaders of the copyrighted movie parading as that movie studio, when really, they are not the holder of the copyright rights. It’s a scam which evaded many people and judges, myself included, for a long time.

Thus, when a client was sued by Dallas Buyers Club, LLC, unbeknownst to anyone, they were sued by Voltage Pictures, Inc. masquerading as Dallas Buyers Club, LLC — even setting up local Texas entities using the name “Dallas Buyers Club, LLC” when the movie company itself could have been called “Dallas Buyers Club, Inc.” incorporated in some other state. This sounds like minutia, but in the eyes of the law, this is a serious misrepresentation, maybe even rising to the level of fraud.

For the clients I defended over the years, a dismissal against Dallas Buyer’s Club, LLC is binding on the real Dallas Buyer’s Club copyright holder, regardless of whether Dallas Buyers Club was cheated by the Voltage attorneys who signed the agreement, but did not pay Dallas Buyers Club the royalties and settlement payments they were due according to their agreement. The reason for this is because the Dallas Buyer’s Club attorneys were acting as the agents of the real Dallas Buyers Club movie entity.  Nevertheless, the ‘behind the scenes’ activity which is hidden from even my eyes until one entity sues the other still is interesting to one implicated in the lawsuit (and it is useful in the defense as well should we begin inquiring as to the identity of the so-called copyright holder suing the John Doe Defendants).

Because I did not properly explain this, I was unhappy with last week’s article. I threw out the suspicion that the ME2 case was not Josh Wyde (ME2’s local counsel here in Texas) going from one copyright holder to another trying to “drum up business” and acquire new clients, but rather, I am sensing that each of the lawsuits they are filing are coming from the same singular entity, my best guess being Voltage Pictures, Inc. (or possibly Guardaley, IPP, or some linked entity), who instructs their network of lawyers across the US to “sue these internet users for the download of this or that movie,” and not much effort goes into actual contact with the movie company itself who spent the time and effort to make, produce, and film that movie.

My gut feeling is that this “Voltage / Guardaley / IPP” ‘scheme’ of licensing copyright rights for the purpose of suing defendants using the same attorneys for each copyright lawsuit is a scam which goes to the heart of possibly ALL of the “copyright troll” lawsuits filed across the US.

WHY A FINANCIAL INCENTIVE TO LITIGATE CREATES AN OVERZEALOUS COPYRIGHT TROLL ATTORNEY

The difference between the other copyright infringement attorneys I have fought against and Josh Wyde (including his counterpart, Gary Fischman) is that these two are zealous in their representation of their client. They are quick to name and serve a defendant, and they are quick to drum up paperwork in a court proceeding, which is why I suspected that they weren’t just running a commission-based copyright troll scheme.  Rather, I suspect that they are actually getting paid by the hour by the copyright holders (or the entities masquerading as the copyright holders), and thus their incentive to be litigious is higher than the average copyright troll.

This is relevant to the John Doe Defendant because unlike the usual copyright troll attorneys who file lawsuits across the US using templates provided to them by the copyright troll, in Texas, the plaintiff attorneys appear to be more litigious and more aggressive because they appear to be paid for their time.  Either that, or they really care about suing downloaders accused of piracy and believe in what they are doing.

TO VILIFY THE ‘COPYRIGHT TROLL’ ATTORNEY, OR NOT TO VILIFY…

Unfortunately, as much as I would like to vilify the Texas-based ‘copyright troll’ attorneys for even taking on the clients who sue defendants for the download of copyrighted videos, I cannot do so without also mentioning that they have *helped* a number of my clients get out of precarious situations. On the flip side, they have grossly misrepresented articles I have written on this blog to the point of their filing to the court being an intentional misrepresentation — taking words I have written on the blog [about the option to ‘ignore’ a copyright infringement lawsuit and its repercussions] completely out of context for their own benefit, and they have sometimes been unfairly harsh and overzealous towards clients of mine for no apparent reason, …akin to a lawyer who zealously fights to defend a rapist because that lawyer believes that even the rapist has the right to a fair trial. Now copyright trolling is far less offensive than representing a rapist, but because a copyright infringement lawsuit can devastate the savings of the average family, I have seen too many lives destroyed by copyright infringement lawsuits and thus I see the copyright holders not as rapists, but rather, as predatory.

On my end, whether the John Doe Defendant downloaded the copyrighted title or not, I still feel good about defending them against the copyright holders. I acknowledge the damage piracy does to the copyright holders (as do many of my clients), but I do not believe someone who clicks on a link should be held liable for statutory damages of $150,000 in a copyright infringement lawsuit, and so I defend them; any of them, even the worst ‘offenders’. And yet, as damaging as piracy is said to be for the copyright holders, a John Doe Defendant is not a predator. Rather, the other side — the Voltage Pictures / Guardaley entities of the world — are the predators, so to speak, and I would not represent a predator just as I would not represent a rapist. But my opposing counsel would, which is what separates us.

Vilifying the attorney who sues you feels good to do, but really, it is their client who is the predator. And while I wouldn’t take such a predator as a client in my practice, I stop myself from vilifying the attorney who takes them on as a client.

This isn’t a “defense attorney, good, copyright troll attorney, bad” article. Rather, I am hoping that this article will serve to be an insight for the Texas John Doe Defendant into the mindset of the attorneys on the plaintiff attorney’s side (especially since most movie-based copyright infringement lawsuits are filed by the same attorney working for what I believe is the Voltage/Guardaley/IPP entity as their client), because understanding the motivations of both the attorneys and their underlying clients (and true nature of the entities filing the lawsuits and their motivations, sometimes for a ‘quick buck’) can be helpful when defending a John Doe Defendant who is accused of copyright infringement or negotiating a settlement when “the deed (the unlawful download) is known and can be proven.”

KNOWN Texas Southern District Court ME2 Cases [Filed in 2017]:

ME2 Productions, Inc. v. DOES (Case No. 4:17-cv-00501)
Filed: Feb 15, 2017, Judge: TBA

ME2 Productions, Inc. v. Does 1-12 (Case No. 4:17-cv-00404)
Filed: Feb 09, 2017, Judge: TBA

ME2 Productions, Inc. v. DOES (Case No. 4:17-cv-00275)
Filed: Jan 27, 2017, Judge: TBA

ME2 Productions, Inc. v. Does (Case No. 4:17-cv-00143)
Filed: Jan 17, 2017, Judge: TBA

Again, for an analysis of the other ME2 Productions, Inc. bittorrent-based cases filed across the US, click here. I hope this article has been insightful.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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Because the “ME2 Productions, Inc.” copyright infringement lawsuits appear to be the ‘third leg’ to the “September Productions, Inc.” (leg 1) and the “Cell Film Holdings, LLC” (leg 2) lawsuits, I felt compelled to write something about it.

This third leg of cases, each of which have been filed by Josh Wyde and Gary Fischman consist of four cases (and counting), each filed here in the TX Southern District Court. ME2 Productions, Inc. itself [through their local counsel across the US] has filed 112 cases so far, and each case appears to be following the same template. There are 10-20 John Doe Defendants per case, and the cases are spaced apart when filed, hoping that no proactive judge receives and consolidates all of the cases in one federal district (this has not yet happened in Texas).

ME2 CASES ARE STILL IN THEIR INFANCY IN TEXAS.

In Texas, the ME2 cases are still in their infancy, and all that has happened is that judges have rubber stamped what are called “expedited discovery” requests to allow the plaintiff attorneys to force the ISP(s) to send subpoenas to the account holders of those IP addresses where unlawful downloading is claimed to have happened.

As of writing this message, the Comcast / XFinity ISP has received three subpoenas, and has sent letters to the accused account holders (the “John Doe Defendants”) indicating that they should file an objection to the subpoena with the court before the ISP is forced to hand out the subscriber information to the plaintiff attorney.

As of now, there are three known ‘deadlines’ to file an objection (e.g., motion to quash) with the court — 3/2, 3/16 and 3/20 — corresponding to three of the four cases so far filed in Texas. I’ll update this article with the fourth date as soon as I get it.

WHAT MOVIE IS BEHIND THE ME2 CASES? AND, HOW DO THEY RELATE TO THE OTHER BITTORRENT CASES RECENTLY FILED?

More generally, ME2 Productions, Inc. is suing for copyright infringement based on the the illegal download of the Mechanic: Resurrection movie, starring Jason Statham and Jessica Alba. (NOTE: If you are considering downloading any of the Transporter movies also with Jason Statham, I wouldn’t be surprised if we see lawsuits from the production companies for those movies as well in the near future based on a trend I’ve noticed in the past. Also be on the lookout for lawsuits for the ‘Transporter’ movies as well for this same reason).

Based on my conversations with the plaintiff attorneys who are attempting to sue downloaders of the Mechanic: Resurrection title, I understand that a number of those implicated in these lawsuits may have also been implicated in the September Productions, Inc. v. Does lawsuits for the download of the Septembers of Shiraz video and possibly also the Cell Film Holdings, LLC v. Does lawsuit for the download of the “The Cell” video. For some reason, these three videos appear to be a trio, perhaps because they were shared on the piracy websites or Popcorn Time software platforms at the same time, or that there is some ‘contractual’ connection between the three movies (e.g., perhaps Voltage Pictures has signed an agreement with each of the three copyright holders giving Voltage a right to take on the movie production’s company name as they did with Dallas Buyers Club, LLC, to act and to sue on their behalf in order to ‘monetize’ and enforce the copyright rights those productions companies have from the creation of the copyrighted films).

I wrote this last paragraph very quickly, without much explanation. Do you even care if the company suing you is really Voltage Pictures, Inc. who has contacted the movie companies and said, “sign a contract with me — I’ll sue in your name and get lots of settlement money for you”? Bottom line, you are implicated as a John Doe Defendant in what looks to be a copyright troll lawsuit, Comcast is about to hand over your information to plaintiff attorneys Joshua Wyde and Gary Fischman, and you are staring down the barrel of a $150,000 copyright infringement for clicking and possibly watching a movie that may not have been any good.

WHY THESE CASES ARE BOTH SIMILAR AND SLIGHTLY DIFFERENT FROM CONVENTIONAL COPYRIGHT TROLL CASES.

In sum, whether this lawsuit indeed falls under “copyright troll” status or not, the plaintiff attorneys have taken great strides to mask the true nature of this lawsuit, namely, that this lawsuit will likely not go to trial for any of the defendants, because it is not economically profitable for the copyright holder (or Voltage Pictures, if this is the case) to spend the money to chase some student in Houston, TX and force a $150,000 judgment on them that the student will never and could never pay. Yet based on the documents I have seen these attorneys file in the court (sometimes even quoting this blog), they seem to want to litigate.

Whether they are paid hourly by their copyright holder clients (the production companies) or whether the simply take a commission based on a percentage of the settlement amount they elicit from the defendants (my gut feeling is that they are actually being paid hourly by their clients which gives them an incentive to spend more time filing documents in the court) they do spend significant amounts of time drafting motions, and they do spend the money to name and serve defendants, and they DO fight the case *as if* they were taking each John Doe Defendant to trial. Whether this is because they are trying to overcome the bias the federal judges in Texas have against the pornography bittorrent cases which wasted the past seven years of the court’s time or because they are trying to prove the legitimacy of bittorrent based copyright infringement lawsuits, bottom line, they are fighting these cases differently from the way other plaintiff attorneys have fought them in recent years.

So here is the solution. If you did not download the Mechanic: Resurrection movie, then fight back. Hire an attorney (me, or any other attorney) to fight your case. If you did the download, well, there are also solutions found with an attorney, but you knew this already, and it will require both sides to be reasonable to come to an amicable solution.

I did not mention this before, so I am mentioning this here since it is relevant — it is not profitable for a movie company to bring a copyright infringement lawsuit to trial. This gives us on the defense side leverage to either come to an amicable solution, or to fight back and force them to dismiss. The plaintiff attorneys Josh Wyde and Gary Fischman will fight back, but facts are facts, and justice is for the most part blind. If they cannot prove that it is more likely than not that you were the downloader of the copyrighted movie, then they cannot find you guilty for copyright infringement.

NOTE: An unintended consequence of fighting back from a purely academic perspective is that doing so forces the copyright holders to focus their set of John Doe Defendants to those downloaders to whom they can prove did the download, because each ‘misfire’ (meaning, each John Doe Defendant who did not do the download and who fights back) costs the copyright holder severely, and we have said for years that this would be the demise of the ‘copyright troll’ model if they sue without vetting their data as to which John Doe Defendants apparently did what and when. Make it too expensive to blindly name and serve (without vetting the John Doe Defendants first), and their model falls. However, fight back, and they will focus and limit their list of John Doe Defendants to those who subscribers (or their family members) who actually did the downloading, and this will only feed back into their cash stream by encouraging settlements to avoid being named and served, sued, and found liable for copyright infringement. It’s a messy problem.

KNOWN Texas Southern District Court ME2 Cases [Filed in 2017]:

ME2 Productions, Inc. v. DOES (Case No. 4:17-cv-00501)
Filed: Feb 15, 2017, Judge: TBA

ME2 Productions, Inc. v. Does 1-12 (Case No. 4:17-cv-00404)
Filed: Feb 09, 2017, Judge: TBA

ME2 Productions, Inc. v. DOES (Case No. 4:17-cv-00275)
Filed: Jan 27, 2017, Judge: TBA

ME2 Productions, Inc. v. Does (Case No. 4:17-cv-00143)
Filed: Jan 17, 2017, Judge: TBA

For an analysis of the other ME2 Productions, Inc. bittorrent-based cases filed across the US, click here.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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NOTE: Since there has been so much activity with the Siemens Product Lifecycle Management Software, Inc. software company (more out-of-the-court) and their lawsuits, I figured I would put all blog posts, etc. in one page for easy referencing. The original page can be found here.

SIEMENS PLM CASES (MAIN PAGE):

I have added this page for internet users who have become entangled in the Siemens Product Lifecycle Management Software, Inc. (a.k.a. “Siemens PLM Software”) cases.  The goal here is to keep up to date on this plaintiff, and to discuss their various cases.  Should you learn of any updates regarding one of their cases, please post it here using the following format — (e.g., “Siemens Product Lifecycle Management Software, Inc. v. John Does 1-100 (Case No. 4:17-cv-12345) filed in the U.S. District Court for the Southern District of Texas”).  Please also feel free to post new cases you find where Siemens Product Lifecycle Management Software, Inc. is listed as the plaintiff.

Siemens PLM has been known for suing John Doe Defendants across the US for the unauthorized use of their NX 7, NX 8, NX 8.5, NX 9, NX 10, NX 11, and Solid Edge ST9 Foundation software versions.  The lawsuits are all copyright infringement lawsuits filed in the Federal Courts, and each lawsuit sues for statutory damages of $150,000.

Remember to please exercise discretion when posting (e.g., do not post your real name or e-mail address), and as usual, avoid using vulgar or offensive language (both towards the plaintiff and towards other users).

CASE HISTORY OF THE SIEMENS PLM CASES:

Siemens Product Lifecycle Management Software, Inc., better known as “Siemens PLM Software” has been filing lawsuits against John Doe Defendants in federal courts across the US since 2011.

In 2011, Siemens PLM Software started their lawsuits in New York (NYSD) with two innocuous cases containing 50 John Doe Defendants which spanned NX 7 users living across the US. This led them to sue TWIVision Engineering Group, LLC in the Texas Eastern District Court (TXED) later in the year.

In 2012, they sued 50 John Doe Defendants in the Eastern District of Pennsylvania (PAED).

From 2012-early 2014, there was a lack of lawsuits from Siemens, but in 2014, they sued 100 John Doe Defendants AGAIN in New York (NYSD). Later, they again reached into Texas (TXED), but this time, they sued a number of engineering companies, including BTL Machine, Inc., and Mercury Metal Forming Technologies, LLC. They also initiated two John Doe lawsuits, Case Nos. 4:15-cv-00582, and 4:15-cv-00017.

2014-2015 Siemens continued its litigation strategy in the Texas Eastern District Courts for the remainder of 2015.

2016 was a busy year for Siemens PLM Software, as they filed large 100-Defendant cases against John Doe Defendants, this time in the Houston-based Texas Southern District Courts (TXSD). They also reached their individual lawsuits into both Ohio (OHSD) and Connecticut (CTD) where they sued Manufacturing Services International, Inc. and Demin, an individual defendant.

The cases of note currently in Texas are:
1) Siemens Product Lifecycle Management Software, Inc. v. Does 1-100 (Case No. 4:16-cv-01422), filed in May, 2016, and
2) Siemens Product Lifecycle Management Software Inc. v. Does 1-100 (Case No. 4:16-cv-03552), filed in December, 2016.

As of writing this page, most of the attention and controversy has been surrounding the December 4:16-cv-03552 case here in Texas.

SIEMENS PLM SOFTWARE STRATEGY:

In short, it appears as if the Siemens PLM Software strategy is as follows:
1) File a large 100+ Defendant lawsuit, encourage the court to approve early discovery allowing Siemens PLM to obtain the contact information for each of those 100+ John Doe Defendants.
2) Contact each of those defendants, convert accused defendants into paying customers (where the cost of the software can range from a few thousand dollars to tens of thousands of dollars).
3) Expand the lawsuit inquiry to the employer of the accused defendant engineer, and ascertain whether they have purchased volume licenses for their engineer employees.
4) Name and Serve and/or sue one or so defendants in a court outside the jurisdiction of the original court (this demonstrates that their reach is not limited to the courts in which they filed their original lawsuit). Unclear whether this is to obtain a $150,000 judgment for copyright infringement, or to convince that company to comply with their software licensing demands. I understand the goal of the lawsuits is to convert accused defendants into customers.
5) Proceed over the next three years contacting the various John Doe Defendants [even after the case is dismissed?]. File a new lawsuit against 100+ more John Doe Defendants, and repeat Steps 1-5.

BLOG POSTS:

How an attorney should handle a Siemens PLM Software, Inc. lawsuit, on 1/11/2017.
Siemens PLM NX-based lawsuits – converting accused engineers into loyal customers, on 1/9/2017.
Software Developers are now tracking piracy through the USE of downloaded software, on 9/9/2016.
Siemens Software Case IS a Bittorrent Case, on 6/20/2016.
What to do about the Siemens Product Lifecycle Management Software Inc. v. Does case (TX), on 1/16/2016.

LIST OF FEDERAL COURT CASES FILED (*UPDATED*):

IN THE CONNECTICUT DISTRICT COURT:
Siemens Product Lifecycle Management Software Inc. et al v. Demin (Case No. 3:16-cv-00553)

IN THE NEW YORK SOUTHERN DISTRICT COURT:
Siemens Product Lifecycle Management Software, Inc. v. Does 1 – 100 (Case No. 1:14-cv-01926)
Siemens Product Lifecycle Management Software, Inc. v. Does 1-50 (Case No. 1:11-cv-08469)

IN THE OHIO SOUTHERN DISTRICT COURT:
Siemens Product Lifecycle Management Software In v. Manufacturing Services International, Inc. (Case No. 3:16-cv-00182)

IN THE PENNSYLVANIA EASTERN DISTRICT COURT:
Siemens Product Lifecycle Management Software, Inc. v. Does 1-50 (Case No. 2:12-cv-06795)

IN THE TEXAS EASTERN DISTRICT COURT:
Siemens Product Lifecycle Management Software, Inc. v. BTL Machine, Inc. (Case No. 4:14-cv-00506)
Siemens Product Lifecycle Management Software, Inc. v. Does (Case No. 4:15-cv-00582)
Siemens Product Lifecycle Management Software, Inc. v. Mercury Metal Forming Technologies, LLC (Case No. 4:14-cv-00002)
Siemens Product Lifecycle Management Software Inc. v. Does (Case No. 4:15-cv-00017)
Siemens Product Lifecycle Management Software Inc. v. TWIVision Engineering Group, LLC (Case No. 6:11-cv-00679)

IN THE TEXAS SOUTHERN DISTRICT COURT:
Siemens Product Lifecycle Management Software Inc. v. Does (Case No. 4:16-cv-03552)
Siemens Product Lifecycle Management Software, Inc. v. Does 1-100 (Case No. 4:16-cv-01422)


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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In my last article, I mentioned that “On April 18th, 2016, Keith Lipscomb told all of his local counsel that he is no longer representing Malibu Media, LLC (citing a lack of profitability).”

Was Lipscomb right? Were the Malibu Media LLC v. Doe lawsuits no longer profitable?:

I thought a lot about this one, and I will answer it using fuzzy numbers (rough estimates).

Malibu Media, LLC filed 6,800+ lawsuits in federal courts.  Since the start of their lawsuit, the cost of filing a lawsuit increased to $400.

$400 filing fee/case x 6,800 cases = $2.7 Million in filing fees (likely $2.4 mil based on the fee change because the filing fee was not always $400).

6,800 cases, estimate 10% pay a settlement fee (one out of every ten John Doe Defendants), and assume an average settlement amount of $10,000.  [6,800 cases x .1 settlement rate = 680 settlements x $10K/settlement = $6.8 Million in settlement funds received].

But what if the average settlement was $8,000 but they didn’t tell you about that, and only 5% actually paid the settlement?  Then the numbers would look like this: [6,800 cases x .05 settlement rate = 340 settlements x $8K/settlement = only $2.72 Million in settlement funds received].

Now the local attorneys who “extract” the settlement likely get a 30% piece of the settlement.  So let’s assume 30% in commissions goes to the local counsel. [$2.72 Million in settlements received x .7 [that’s 70% after the 30% attorney cut] = $1.9 Million Left for Lipscomb].

Subtract the $1.9 Million Left for Lipscomb from the $2.7 Million in filing fees paid, and Lipscomb has a loss.  Likely a businessman like Lipscomb would see this coming and would not allow 6,800 cases to be filed if they were not significantly more profitable.  Thus, I think my original numbers were more accurate (if not, Lipscomb was not a smart businessman and is about to file for bankruptcy).

Going back to the original numbers, even if you take the original assumptions of a 10% settlement rate, and an average settlement of $10K (=$6.8 Million), minus the local counsel’s 30% cut, that leaves a net profit of $4.76 Million Left for Lipscomb.  Minus the $2.7 Million in filing fees from the $4.76 Million Left for Lipscomb, and that leaves a $2 Million Net Profit, but Lipscomb only paid Malibu Media $100,000 (which would be a 5% commission rate to Malibu Media, LLC).

Thus, based on what the real numbers actually were, I do see how Lipscomb may be able to claim that the copyright trolling campaign was not profitable for him.  My best guess is that the truth of what the numbers really were are somewhere in between my estimations, however, the only way we will be able to learn the truth is 1) if it comes out in discovery in the Malibu v. Lipscomb lawsuit, or 2) if the feds analyze their books.


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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I thought that TAC’s response to my article last night deserved a spot of its own, so I am pasting it below.

In short, he’s right. As a lawyer, I get so caught up with each individual client and defending whether copyright infringement actually happened or not that I overlooked the big picture “elephant in the room” point — that if the movie production companies would actually make good content which would inspire someone to buy a movie ticket, and if they would make that good content readily available rather than blaming downloaders for a few bucks of loss of revenue, then piracy wouldn’t even be a problem.

I used to be a movie buff. I would see every movie in the theaters, and if there was something I missed, I would catch it later when it came out on DVD. However, the… pardon my language… “crap” that has been coming out of the theaters over the last ten years has lost me as a fan. I cannot remember the last time I saw a movie and felt that I got my money’s worth. More often then not, I leave the theater feeling cheated.

The internet created a problem for the movie companies where it enabled average internet users to share digital copies of movies which [by definition of being “digital”] are the identical quality as the files burned on DVDs from which they are ripped. They tried to stop the copying through creating privacy measures that blocked an individual from being able to copy videos, but individuals got around those protections.  Then they passed the Digital Millennium Copyright Act (“DMCA”) statutes and made it a crime to unblock the copy protections, but people did it anyway.  Then they sued the downloaders and claimed they were going after the lost revenue, but instead, they went after statutory damages of $150,000 per instance of infringement.  In the process of suing downloaders (rather than suing the initial uploader or working to take down the infringing videos), with the birth of the Dunlap Grubb and Weaver, LLC Voltage Pictures, Inc. “Hurt Locker” and “Expendables” lawsuits, Voltage Pictures, Millennium Films, and other production companies turned their failed b-rated movies into a money-making extortion-like shakedown scheme where they asked for tens of thousands of dollars for what was really the loss of a movie ticket or a DVD rental.

The point is that Hollywood and their production companies spend so much time trying to clamp down and stop people from getting content that if they spent those same dollars finding new ways to make content readily available, they would stop the piracy problem (or at a very minimum, they would convert many would-be pirates into paying customers).  Netflix, Amazon Prime Video, and Redbox have the right idea of trying to find ways to get movie content into consumers’ hands, but even they run into licensing problems where the Hollywood movie studios won’t let them provide content to their subscribers (and thus great movies and TV shows are commonly lost to history).

[Case in point — The Stargate TV series (Stargate SG-1, Stargate Atlantis, and Stargate Unvierse) — all AMAZING shows, but there was a point that Netflix took them down from their site citing licensing issues, and if you wanted to see them, you would have needed to either buy the DVDs on Amazon, or “look elsewhere” for them (meaning, piracy).  I would have happily paid more to Netflix to keep them available, even in a “click here to pay a bit more to see this video” fashion.  UPDATE: I am happy to share that Amazon Prime provides all seasons of these shows to their paying customers, so yes, Jeff Bezos is doing his job of making content available.]

This argument has gone around in circles for many years. Point being, the movie companies have obviously chosen that their focus will be to clamp down and spend their money to fight the losses from piracy rather than innovate and make good content that would inspire people to open their wallets and pay for a movie ticket or rent a DVD.

This is my point, this is my feeling, this is how I see things. I could be wrong, but who cares. Unless I see quality new content in the theaters (and not recycled old story lines), I’m not buying a ticket. Superman versus Batman?!? Really? Yet one more Borne Identity?!? Really? Ice Age in Space?!? Really? How many times can I hear the same story told over and over again? I’m honestly bored of all of this recycled media crap and I wish they would start looking for new and original content.

Thus, in all fairness and thanks to “That Anonymous Coward (TAC),” below is his comment to last night’s “We are winning the bittorrent piracy war against copyright holders, but what are the unintended consequences?” article which inspired this entire line of thought.

TAC from that anonymous coward :
 

And there in lies the biggest problem.
People look at Popcorn Time, and don’t understand how it works. They might assume that its just an awesome service. It works like everyone imagines we should be able to get content.

The “war” has always been pointless.
Everything done to “stop” pirates, ends up punishing paying customers… and eventually when you hassle paying customers enough they look for other ways to get the content.
We’ve missed out on technology moving forward, because of screams that it MIGHT hurt the bottom line of an industry that has its own special ‘accounting’ practices that manage to make a world wide blockbuster look like it lost money.
They aren’t honest about their books, they aren’t honest about actual harm, they aren’t honest about why they refuse to stop punishing paying customers & creating more consumers that might turn to piracy because it meets their want for the content how, where, when they want it that the industry can’t seem to understand.

When they cling to an outdated business model, ignoring the consumer demand for access, they have forgotten they are in business to sell content… not impose pointless control over people who already paid them who get treated worse for playing by the rules.

Imagine what they could have done with all of the time and money they have dumped into the anti-piracy schemes (that never pay that well or accomplish what is promised) and had used it to “fix” the horrible patchwork of laws & rules to create a unified worldwide business model that makes getting the content customers want faster & easier. But then they would be making more money they they ever imaged possible… but would still be imagining there is a dollar out there they aren’t getting & end up harming paying customers chasing the imaginary dollars.

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

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

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

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

111715 Admission of Guilt in CEG-TEK Settlement Agreement

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

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

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

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

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

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

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


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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

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