Ninth Circuit Upholds Sanctions Against Attorneys Who Ran Abusive Copyright Operation Over Downloaded Porn Movies

I have previously written about a large number of law firms on retainer to bring these actions and artists and companies that do little to limit them. The greatest problem is the success of this lobby in getting Congress and the Obama Administration to push through virtually any legislation that they demand — criminalizing violations, approving warrantless searches, and allowing for obscene awards. Every year it gets worse as companies claim ownership over common phrases and images — reinforced by these legal factory operations of bullying lawyers. We recently discussed the claim of Citigroup to ownership of “ThankYou.” Now in an all-too-rare ruling, The United States Court of Appeals for the Ninth Circuit has upheld an $81,000 sanction against three lawyers — John Steele, Paul Hansmeier and the late Paul Duffy — for being little more than legal trolls in harassing and threatening people into giving them money for downloading pornography. These three lawyers operated “Prenda law” which was little more than a disgraceful shakedown operation.

Here is how it worked. The lawyers set up shell companies that purchased copyrights to pornographic movies and waited for someone to download the film. Prenda Law or a local lawyer would then file a complaint against the “John Doe” downloader and use discovery to discover his or her identity. That person would then be hit with a demand for $4,000 or a lawsuit.

U.S. District Judge Otis Wright was livid at what he saw:

They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video. Then they offer to settle—for a sum calculated to be just below the cost of a bare-bones defense. For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn. So now, copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic-media era to plunder the citizenry.

Wright actually referred the lawyers to criminal investigation for their abusive practices. He even referenced a common Star Trek line that “resistance is futile” to describe the threats and “fraud” of these lawyers.

The Ninth Circuit agreed and found that Wright had “ample reason” for his sanctions as well as the need for attorneys fees: “Considering the magnitude of the Prenda Principals’ misdeeds, and the covert nature of their businesses, the district court did not abuse its discretion by increasing the bond amount. Without hope of receiving attorney’s fees for defending sanctions on appeal, Doe and other victims of abusive litigation would be left with no remedy. Doe would likely not defend the sanctions in appellate court, and thus would lose the only compensation—attorney’s fees at the district court level—that he was awarded.”

This is a reassuring opinion but it is a relatively rarity in this field. There are a growing number of bottom-feeding, predatory firms that bully and threaten average citizens for settlements for copyright and trademark violations. Clearly, neither the Obama Administration nor Congress will confront this powerful lobby. However, the bar can. What concerns me is the lack of any indication of a bar action against John Steele, Paul Hansmeier and Paul Duffy (before Duffy’s passing) but also those local lawyers who assisted them. We need to strip these types of lawyers of their licenses and crackdown on factory operations, which are little more than “smash and grab” litigators.

Here is the opinion: Prenda Decision