Sanctions Against Porno Copyright Trolls at Prenda Law Upheld
Am I the only one whose ears perk up when I hear "porno copyright trolls"?
Let's back up. The Prenda Law saga began several years ago when a law firm began suing for copyright infringement on behalf of Lightspeed Entertainment, which makes adult films. Prenda Law alleged that many thousands of John Does were illegally downloading copyrighted material and tried to use the discovery process to get their real names.
Courts around the country collectively raised their eyebrows when each one eventually learned that the principals of Prenda Law were also, coincidentally, the principals of the companies holding the copyrights to the works being allegedly infringed. Prenda Law not only failed to disclose this fact, but also used possibly every procedural tactic in the book to avoid having to disclose this information. Many hundreds of thousands of dollars and referrals to various state authorities later, Prenda Law's tactic of making money by suing file-sharers is toast.
The Seventh Circuit is the latest court to weigh in on the sanctions that will be levied against John Steele, Paul Hansmeier, and Paul Duffy, Prenda Law's principals. In an opinion last week, a three-judge panel dismissed their pleas that the district court violated their due process rights in an award of attorneys fees and costs against them.
Alter Egos
The panel was unimpressed by one of Steele and Hansmeier's favorite arguments: namely, that they didn't have notice of the motion for sanctions because they were appearing on behalf of "Alpha Law," a separate straw law firm, but the motion was served on the offices of Prenda Law. This argument always goes down in flames because courts are wise to their subterfuge: Steele and Hansmeier operate under both the names Alpha Law and Prenda Law, and frequently use the same business address for both "firms."
Frivolous Sanctions? More Like Frivolous Lawsuit
Prenda Law was also sanctioned for unreasonable and vexatious litigation when it attempted to name several ISPs as "co-conspirators" in the illegal file sharing after the ISPs refused to divulge the names of the thousands of alleged infringers without a court order. The Seventh Circuit resoundingly upheld these sanctions, agreeing that Prenda Law was engaged in "abusive litigation" by "simply filing a lawsuit to do discovery to find out if you can sue somebody."
Yes, You Can Pay
Finally, the Seventh Circuit upheld a finding of civil contempt for Prenda Law after they refused to pay fines, claiming an inability to pay. Their professed inability to pay was accompanied by woefully incomplete financial disclosure forms that "omit[ted] substantially all of the disclosures required by generally accepted accounting principles," the court said.
After Steele, Hansmeier, and Duffy wasted so much of everyone else's time and money, reading orders for their sanctions carries with it no small amount of schadenfreude. Emphasis on the freude.
Related Resources:
- Order Issuing Sanctions (U.S. District Court, Central District of California)
- How Two California Solos Helped Take Down Porn Troll Prenda Law (ABA Journal)
- Notorious Porn, Copyright, Patent Trolls Down But Not Out (FindLaw's Technologist)
- White House Announces Initiative to Fight Patent Trolls (FindLaw's In House)
