Prenda Law: The Abuse of Law by Copyright Trolls

[PedroDaGr8]

This has been a fascinating legal mystery to watch unfold. I don't think you could WRITE a better courtroom drama than this. I know it is a bit long but its a good summary of what went on as covered by Ars Technica (an EXCELLENT website if you want in depth articles written with a proper journalistic style). Darrel this might be something you would enjoy taking on in a legal ethics class sometime. It's incredible how convoluted things got.

Some background on copyright trolls. They are often law firms which offer their services to copyright holders, sometimes operating on behalf of the copyright holders or they become assignees of the copyright themselves. They sue LARGE numbers of supposed offenders often relying on the fact that it is cheaper to settle than to fight it. They then split the proceeds with the original copyright holder on a percentage or per case basis. The way it usually works is they will look for a bittorrent cloud of a copyrighted work and file john doe lawsuits against every IP address in the cloud. They then use these John Doe lawsuits to subpoena the relevant ISPs in order to find out the identity behind the IP address. Now on the surface, these lawsuits are not what I would consider horrible things. In fact, I support them on prinicple. With modern services like spotify there are very few reasons to pirate music. The problem is there are two glaring flaws with these lawsuits. The intelligent amongst you will note that just being part of the cloud does not mean you are sharing files (courts only RECENTLY recognized this fact) which is a requirement for copyright infringement. Secondly, just because something comes from an IP address does not mean it comes from the person listed as "owning" this IP address. For example, unprotected wifi networks, viral infections, etc. can result in someone other than the owner seeding from the IP address.


Prenda Law deals/dealt in one of the sleazier realms of copyright law. Pornography. Now no one wants their name associated with possibly having downloaded Granny Gangbang 19. Needless to say, this has a high potential to cause plantiffs to settle under duress (I think this is the right term) as they end up weighing fighting the lawsuit and having their name attached to a pornographic work or just settling and paying the money to have it go away (even if they are innocent). It is this potential which caused the courts to look at copyright trolls in general much more closely.

The first sign that something was wrong came about in Florida. An Illinois attorney, John Steele, registers a Miami, Fl arm of his practice Prenda Law. A state which he is not licensed to practice law. A concerned lawyer filed a complaint with the Florida bar which then had Steele file an affadavit that he would not practice law in Florida. Fast forward a few months:

A porn company called Sunlust Pictures is suing a defendant, Tuan Nguyen. Sunlust was represented by a local Florida attorney named Jonathan Torres, who told Judge Scriven that he was appearing on behalf of Prenda Law, a law firm with ties to Steele. Syfert, the attorney who had reported Steele to the Florida Bar, was representing the defendant and had filed a brief arguing that the plaintiffs had concealed key information from the court. So the judge began to ask questions about who exactly was representing Sunlust.

"I'm a little confused," she said. "There was a lawyer who moved to withdraw, and there was another lawyer who moved to appear, then he moved to withdraw." She then asked: "Who is on first, I guess?"

Scriven had good reason to be confused. Torres, speaking to the court by phone, said he had been brought into the case recently as a Florida counsel by Prenda Law. But Judge Scriven said, "I got a letter from someone from the Prenda Law Group saying they were not representing any party in this case and were not involved in the case and had no authority to speak on anyone's behalf in this case."

In any event, Torres told the judge he wanted to be excused from the case because he was recently "contacted by defense counsel and was advised of certain issues that were going on in the case."

Source

In light of this suspicious behavior, the judge begins digging into the history and identity of SunLust Pictures.

But it turned out that he was a "representative" in only the loosest sense of the term. Under questioning from Judge Scriven, Lutz admitted that he wasn't an attorney, wasn't an officer of Sunlust, was not "authorized to bind the company to any legal contracts," and couldn't even name any of Sunlust's officers. Indeed Lutz admitted he was not a salaried employee of Sunlust at all. He was an independent contractor whose only role with Sunlust was to show up in court on their behalf.

Judge Scriven then spotted another man near the plaintiff's table and asked who he was. "Your Honor, my name is John Steele," he said. "I'm an attorney, but not involved in this case," he said. Indeed, he stressed that "I want to make very clear to this Court I'm not purporting in any way to be an attorney licensed in the State of Florida."

Syfert, the defense attorney, then helpfully pointed out that Lutz used to work for Steele. "Mr. Lutz was actually a paralegal and debt collector for Prenda Law when it was a multi-state, multi-jurisdictional law firm between here and Illinois," Syfert told Judge Scriven. The judge grilled Steele about his knowledge of Sunlust, but Steele also pled ignorance about who owns and operates Sunlust Pictures.

Source

As a result of all of this, the lawsuit was dismissed due to failure to appear, failure to produce a lawful agent and attempted fraud of the court. Additionally, another Prenda founder, Paul Duffy, was to be investigated for sanctions due to lying to the court about Prenda's involvement. He is the one that claimed that Prenda was not involved in any way. Now all of this is enough to cast this firm in an ill light but this is just the slight tip of the iceberg.

In Minnesota a firm named AF Holings appears and files a John Doe suit. The judge overseeing the suit receives a very strange letter from an attorney for a man named Alan Cooper. Cooper is the caretaker for a Mr. John Steele. He says that on multiple occasions Steele bragged about a potential plan for massive copyright litigation. Additionally, Steele tells Cooper to call him if anyone calls asking about copyright litigation. This of course alarms Cooper and he confronts Steele about it but Steele plays it down. He gets further alarmed when he finds copyright lawsuits being made by AF Holinds which lists a Mr. Alan Cooper as the CEO. In the process of looking into this matter deeper he discovers ANOTHER prenda-linked firm named Ingenuity 13 listing the CEO again as Alan Cooper. Worried that he is being dragged into these matters against his will, he has his attorney file the letter asking that Prenda assure that he is NOT the same Alan Cooper. Prenda's response is basically that they will not respond to these claims nor will they answer any questions about who the CEO is for these two companies.

Because of this letter, defense attorneys involved in other Prenda Lawsuits begin looking into matters further. Almost entirely across the board Prenda and its affiliated firms stonewall any questions detailing who owns what. In California, AF Holdings is suing a defendent in the courtroom of the Honorable Otis Wright. Brian Gibbs (who is employed by AF Holdings/Prenda) tells the court that they have a copy of Alan Coopers signature on file. Though under questing by defense attorney Morgan Pietz he refuse/can't provide proof. Let's just say that doesn't make Judge Wright happy. He orders that they clear up this mess before proceeding any further. Prenda responds by attacking him, saying that he is prejudiced against pornography copyright owners, etc. They further attack Pietz saying that he should prove that he actually represents a John Doe, that they feel he is overly hostile towards them (isn't that his job) and is not representing anyone.

At this point things are getting pretty hostile against Prenda Law. Firms have started to realize that Prenda has not actually taken to court to outright sue anyone. None of the lawsuits have gotten past the discovery phase. In fact, its beginning to look like they use the discovery phase to coerce settlements from potential defendants. As this starts being brought up they come up with another novel idea. Collude with "defendants" to be sued in court with the charges later settled/dismissed. In one case, a they went back on their deal and blew the defendant blew the cover on what was happening. Source

This isn't the only area that Judge Wright picks up on. If you remember one of the abuses I mentioned:

In addition to the Alan Cooper issue, Judge Wright is concerned about the slipshod way Prenda identifies defendants. When a household has multiple members, Prenda evidently decides who to sue based on statistical guesswork. "For example," Prenda wrote in one court filing, "if the subscriber is 75 years old, or the subscriber is female, it is statistically quite unlikely that the subscriber was the infringer."

Judge Wright is unimpressed by this methodology: "The Court interprets this to mean: if the subscriber is 75 years old or female, then Plaintiff looks to see if there is a pubescent male in the house; and if so, he is named as the defendant. Plaintiff’s 'factual analysis' cannot be characterized as anything more than a hunch."

According to Judge Wright, Prenda has failed to provide any hard evidence that the individual defendants it has named were responsible for the illicit downloads. The firm did nothing to rule out "other members of the household; family guests; or, the next door neighbor who may be leeching from the [defendant's] Internet access."

In Judge Wright's view, Prenda should have done more to establish the defendant's identity. For example, Prenda could have sent someone to visit the defendant's house to observe whether it has an open Wi-Fi connection. It could have checked whether the same IP address downloaded infringing videos on other days to rule out a transient houseguest. And "an old-fashioned stakeout may be in order: the presence of persons within the subscriber’s home may be correlated with tracking data."

But Prenda didn't do any of that. Judge Wright concludes that filing a lawsuit based on such flimsy "evidence" is a violation of the court's rules. Plaintiffs are expected to have "evidentiary support" for their charges; a "rumor or hunch" doesn't cut it. Yet in Wright's view, Prenda's practice of assuming that teenage boys are always responsible for infringing downloads amounts to just that.

Source

The reason that they didn't do this of course is that they didn't want to fight a lengthy lawsuit they just wanted settlements for minimal work. These things cost money which would dramatically cut into their profit.

In this same trial it is discovered the that the supposed owner of AF Holdings is a person named Salt Marsh. It is discovered that Steele's sister's live in boyfriend is named Anthony Saltmarsh. Additionally, several other shell companies are found registered under Cooper's name with the address of Steele's sister.

Fed up with this mess, Judge Wright threatens the attorney Brian Gibbs with jail time for defrauding the court if he doesn't explain what is going on. Gibbs lawyers up and blames everything on his superiors as he is just outside counsel. So Judge Wright orders pretty much EVERYONE to court to explain what the heck is going on. They try to get out of it by claiming there isn't enough time to book plane flights to LA. Oh yeah in the meantime they take a break from their busy copyright trolling schedule to sue some anonymous posters and Alan Cooper for defamation because they called them assclowns and brain damaged. In the process they demand the IP address of EVERY single person who read the blogs where these individuals posted.

Around this time a second man claims that Prenda falsely used his name to form at least a few other shell companies.

In court, several fail to show but one of my favorite parts of the exchange was:

Gibbs was also taken to task by Wright about his failure to disclose a notice of related cases each time he filed a complaint against several Does. “Why is it that in every single one of these cases, there’s no notice of related cases?” the judge fired off.

Waxler responded, “The downloads are done by separate infringers and while the plaintiffs are largely the same… perhaps it was in error, Your Honor.” Wright pressed, saying that a lawsuit over a porn title called Popular Demand looked exactly like another filed around the same time.

Waxler answered, “Well obviously they are relat—“

“That’s what I thought, too,” Wright quipped as he cut the attorney off coolly.

Source

Things were so complex some lawyers didn't even know which side they were supposed to sit on. In particular Brian Gibbs which was now working with the defense had a hard time deciding where he belonged.

The day ended with:

“The client has been running everything here,” Wright said pointedly. “And I know who the client is,” he added, implying it was John Steele. Wright then dismissed Gibbs from the stand.

“Thank you, Your Honor,” Gibbs said as he stepped down.

“Good luck to you,” Wright responded.

Source

[PedroDaGr8]

At this point they begin dismissing cases left and right, trying to contain the legal damage. Cooper files a SLAPP counter suit claiming that the sole purpose of the defamation lawsuit is to intimidate him and silence him.

So the judge demands these guys show up at another date, which they do. They then proceed to plead the fifth. Now keep in mind this is a civil suit, not a criminal one so pleading the fifth does not carry the same weight. Pleading the fifth can be interpreted as you have something to hide in a civil suit.

At this point the wheels just fall off entirely. The judge threatens sanctions against the men, they file a brief saying Alan Cooper is crazy and off his meds, etc. etc. Additionally, it is becoming more and more clear that Prenda actually holds controlling interests in the firms they claim to represnt. They didn't just set them up they own them lock stock and barrel. This would be at best unethical and at worst outright illegal. I'm not familiar with the laws around this but from what I understand, you have to declare a financial interest.

Around this time some additional sham lawsuits come to light where it appears the defense and plantiffs collude to allow very broad dsicovery terms (such as subpeona-ing any ISP about anything at any time).

Also, Judge Wright refers John Steele to the the DoJ and the IRS for investigation into alleged fraud.

The fallout from this is remarkable. For example, in a case in northern georgia a Prenda affiliated counsel trys to block the defense from submitting the issues in LA because California recognizes gay marriage. I wish I was making this up. Source

On top of that Prenda sends out a new batch of letters implying that they will tell your neighbors (via trying to find the real killers err downloaders) about your possible porn download.

One of the last and most damning things filed was the fact that it appeared that Prenda actually initiated the seed for their own torrents. They basically uploaded the file and seeded it then tried to sue the people that downloaded it.

As things start winding down, two calls surface where John Steele claims to be Alan Cooper and another gentleman Mark Lutz. Essentially tying Steele to two companies he claims are owned by others.

Lastly, the most humorous revelation is how Alan Cooper found out htat his idenity was being stolen. Turns out that Steele's own mother in law messaged Cooper giving him the heads up on what was going on.



This whole thing was a complete mess and has been quite interesting to watch unfold. There are pages of details I omitted for brevity (all jokes aside). Thankfully sites like Ars Technica have kept up with the trial.

[CitizenBBN]

One of the last and most damning things filed was the fact that it appeared that Prenda actually initiated the seed for their own torrents. They basically uploaded the file and seeded it then tried to sue the people that downloaded it.

Fascinating stuff Pedro, and exactly why I don't like our abundance of laws. I was waiting for this shoe to fall, finding out that the best way to do this is to in fact initiate the torrent yourself, or otherwise produce the opportunity for specific downloads so you can then go after them. Surprised they didn't run a website offshore that posted it for direct download in order to really nab folks.

Identity theft, perjury, all kinds of good stuff in there. Hope they all end up in a Cali jail.

[PedroDaGr8]

One of the last and most damning things filed was the fact that it appeared that Prenda actually initiated the seed for their own torrents. They basically uploaded the file and seeded it then tried to sue the people that downloaded it.

Fascinating stuff Pedro, and exactly why I don't like our abundance of laws. I was waiting for this shoe to fall, finding out that the best way to do this is to in fact initiate the torrent yourself, or otherwise produce the opportunity for specific downloads so you can then go after them. Surprised they didn't run a website offshore that posted it for direct download in order to really nab folks.

Identity theft, perjury, all kinds of good stuff in there. Hope they all end up in a Cali jail.

What worries me more is the fact that if they had been less stupid, brash and arrogant. They would have actually easily gotten away with this. It's basically full scale legalized extortion.

[PedroDaGr8]

Looks like another judge has started to lay the smack down on Prenda.

ArsTechnica Link

Refers them to the US Attorney General
Requires them to pay back four settlements done in his court + legal fees

Today's order minces no words in condemning Prenda or Steele, whom the judge practically accuses of lying under oath.

The Court further concludes that, once all of the ill-gotten gains are fully disgorged from AF Holdings, it would not be a wise use of the Court’s limited resources to sua sponte attempt to fully untangle the relationship between Hansmeier, Steele, Duffy, Dugas, Lutz and Prenda Law, on the one hand—and the Plaintiff, AF Holdings, LLC., on the other. Such investigation can more effectively be conducted by federal and state law enforcement at the direction of the United States Attorney, the Minnesota Attorney General and the Boards of Professional Responsibility in the jurisdictions where the attorneys involved in this apparent scheme are licensed to practice law.

Good to see the legal system is finally wising up.