Ken White blogs at Popehat. He's a litigator and criminal defense attorney at Brown White & Newhouse LLP in Los Angeles. His views are his alone, not those of his firm.

My past coverage of the Prenda Law saga is here.

There are few things more terrifying to a lawyer than a furious federal judge.

Today I saw one of those things.

It was a federal judge who was furious, intimately familiar with the case, and consummately prepared for the hearing.

Today United States District Court Judge Otis D. Wright II made it explicitly, abundantly, frighteningly clear that he believes the principals of Prenda Law have engaged in misconduct -- and that he means to get to the bottom of it.

It was one of the most remarkable hearings I have ever witnessed.

The Scene

Today was the hearing on Judge Wright's Order to Show Cause, directing former Prenda Law "Of Counsel" Brett Gibbs to show cause why he -- or others associated with Prenda Law -- should not be sanctioned. (I previously wrote about the circumstances leading up to that order.) The hallway outside Judge Wright's courtroom was crowded half an hour before the hearing -- crowded with lawyers, press, past defendants targeted by Prenda, Electronic Frontier Foundation representatives, and various interested citizens. I didn't know Mr. Gibbs by sight, nor his lawyers, but I guessed when they rounded the corner, looked at the crowd, and assumed facial expressions I'd summarize as aw, this has 'long day' written all over it.

Eventually I counted 42 spectators in the courtroom, not counting lawyers for people present.

Judge Wright Minces No Words

Judge Wright took the bench, grim and stentorian and bow-tied, and immediately commenced to take absolutely no shit from anybody. "I spent the whole weekend reading a deposition," he said, referring to the astounding deposition of Prenda principal Paul Hansmeier. "It is perhaps the most informative thing I have read in this affair so far." There was a collective intake of breath from the onlookers, who guessed that was not a good thing for Prenda Law. They were right. "There was so much obstruction in this deposition that it's obvious that someone has an awful lot to hide," Judge Wright commented later.

Wright began by establishing who was present. To his visible irritation -- if not surprise -- John Steele and Paul Hansmeier and Paul Duffy and their paralegal Angela Van Den Hemel were not present. Heather Rosing, their attorney who had filed a last-minute application seeking to excuse their presence, was there, but Judge Wright was not having any of her. She said her clients were "not physically here" -- implying they were here in spirit, of which I have no doubt. Judge Wright angrily pointed out that she had filed her application late Friday afternoon, very much the last minute. She began to protest that her clients had only been served last Thursday, but he cut her off and directed her to take a seat. She did not participate further in the hearing except to note that her clients were available by phone. Judge Wright did not take the opportunity to give them a call. He noted that he had "extended an offer" for them to attend (a rather gentle description of his order) and that an "opportunity to explain themselves" was all that he was required to give them. I, for one, took this to mean that he would make rulings about their involvement without further input from them.

What followed was three hours of witnesses and legal arguments. I will deal with them thematically rather than chronologically.

The Real Alan Cooper Stands Up And Reveals Threats

One of the most interesting live witnesses was Alan Cooper -- the actual Alan Cooper, who has accused Prenda attorney John Steele of stealing his identity to use as the figurehead executive of Prenda's various "clients." Cooper is a tall, rangy man, dressed modestly today in jeans and a t-shirt, looking a bit like a gray-haired Jim Caviezel. He took the stand at Judge Wright's bidding, and clearly nervous and out of place in the magisterial federal courtroom, told his story. He explained that he took care of two houses Steele owns, and Steele let him stay in one as payment. He knew Steele when Steele was in law school; later he knew Steele to aspire to be a divorce attorney, and then later something else. "Something in . . . internet porn piracy?" Cooper said hesitantly. "Internet porn piracy sounds pretty good," quoth Judge Wright. (In interacting with Cooper, Judge Wright became kindly, but with his anger writhing visibly just below the surface.) Cooper said that Steele bragged of wanting to make "$10,000 a day" by "sending letters to downloaders." Cooper himself is "not very internet savvy" and couldn't say more about the plan.

Eventually, Cooper said, Steele told him words to the effect that if anyone called him about Steele's law firm or anything "out of place," Cooper should call Steele. But Cooper was clear: he never signed anything as an executive for any of Prenda's clients, was never asked to be a representative of any of the Prenda Law client entities, and never agreed to do so. Shown signatures purporting to be his, he disclaimed them. "I use a middle initial," he said, and these signatures did not. He also disclaimed even seeing lawsuits filed using his signature or assignments of copyright bearing his signature in multiple cases. Cooper said that the address Prenda Law used for him wasn't his, and that the johnsteele@gmail.com email address Prenda Law used for him definitely wasn't his. He also wasn't familiar with web sites registered using his name. "No tissues dot com -- or perhaps that's pronounced not issues dot com," said Mr. Pietz, getting the best laugh of the day.

Gibbs' attorney Andrew Waxler tried gamely to object to some of this evidence on the grounds that some of the cases mentioned weren't listed in Judge Wright's OSC. "It's about fraudulent practice in federal court" said Judge Wright in the sort of eerily level tone that makes a lawyer wish the judge were yelling again instead.

The most dramatic part of Cooper's testimony -- and perhaps the most dramatic moment in the hearing -- came when Cooper described what happened when his lawyer Paul Godfread notified Prenda Law that he was suing for the misappropriation of his identity. Within minutes, he said, John Steele began to call him. Steele called many times, and over the course of weeks sent texts and left several voice mail messages. Mr. Pietz played the messages for the court.

In each message, Steele began by telling Cooper that Steele understands that Cooper's lawyer is only representing Cooper in Cooper's lawsuit, not in Steele's and Prenda's and Duffy's lawsuits against Cooper. It's evident that Steele was saying that in an attempt to justify why he would be directly calling a represented party, which lawyers are prohibited from doing by the disciplinary rules of every jurisdiction. In the calls, Steele talked with escalating intensity about how Cooper was now facing lawsuits, that Cooper needed to call Steele to talk about being deposed and responding to discovery, how things were going to "get ugly" now, and how things were now "complicated." On hearing the voice messages, I thought there was only one reasonable interpretation: John Steele was trying to menace and intimidate Alan Cooper to get him to back off from talking about John Steele's use of his name. By the end of the calls, there was a stunned silence in the courtroom, and I suspected that many spectators were sharing with me a deep sympathy for Mr. Cooper and an abiding sense of revulsion for John Steele. Judge Wright rather clearly felt mercy towards Mr. Cooper as well, some of which bled into pointed comments to Brett Gibbs' legal team. "You turn it from the O-F-F position to the O-N position" he said rather sharply when Gibbs' counsel asked how to turn the monitor on their table on.

By the way, someone told me that the Electronic Frontier Foundation may be picking up Mr. Cooper's expenses for flying to Los Angeles. Good for them if that's true.

AT&T and Verizon Say They Didn't Get The Order

Judge Wright also permitted testimony from attorneys for AT&T and Verizon. You may recall that one of Judge Wright's concerns -- to use the mild term -- was the allegation that though he had ordered a stay on discovery in the Prenda Law cases before him and ordered Prenda Law to send his order to the ISPs, Prenda Law did not do so and in fact collected consumer data from the ISPs after Judge Wright's order. Today Verizon filed a declaration directly contradicting Brett Gibbs' assertion that they had been called off. On the stand, attorneys for Verizon and AT&T asserted that their clients never received Judge Wright's order from Prenda Law, and AT&T's lawyer said that Prenda Law paralegal Angela Van Den Hemel continued to contact AT&T seeking the status of the pending subpoenas. It was only after AT&T itself discovered Judge Wright's order on PACER and responded to her that discovery was stayed that she subsided.

Brett Gibbs' attorneys pointed out -- rather reasonably -- that the ISP's attorneys couldn't say of their own knowledge what their clients did or didn't receive, and suggested that ISPs are known for destroying such documents too quickly. (On this point Judge Wright pointed out that it seemed that Verizon had maintained everything else except the purported notification from Prenda Law, and characterized Gibbs' argument as "they eliminate their documents pretty much the way Mr. Gibbs eliminates original documents," which was perhaps not the response Gibbs was hoping for.)

On this point, Gibbs' attorneys represented -- and Gibbs testified -- that the other attorneys of Prenda Law were responsible for handling all subpoena-related correspondence, that Gibbs reported Judge Wright's decision to John Steele and Paul Hansmeier, and that they told Gibbs that they would take care of it, and later claimed they had. But Judge Wright made Gibbs admit that Gibbs found out that the ISPs had produced documents to Prenda Law after Judge Wright's order, and never updated the court about that or amended his prior status report to the court. To put it mildly, Judge Wright was not happy about that.

Client, Client, Who's The Client?

It was clear from the beginning of the hearing that Judge Wright viewed Prenda Law's clients as shams -- as mere instruments of the lawyers involved. "The only entities getting funds are law firms," said Judge Wright. There was "no effort to transmit those funds to the entities," which got "not dime one," and the entities had not filed income tax returns, because they had no income. Wright also pronounced it "very interesting" that Hansmeier's declaration suggested that settlement funds were being moved from one firm's client trust account to another. He demanded of Waxler: "Is that what you get? That's what I get." Waxler responded that Gibbs had no personal knowledge of such things, and suggested that Hansmeier's deposition showed he was the one with knowledge. "Mr. Hansmeier has no knowledge of anything," Judge Wright scoffed, rather accurately depicting Mr. Hansmeier's know-nothing stance at his deposition. There was a nervous titter -- one of many -- in the courtroom.

Waxler suggested that Prenda Law retains the funds to pay litigation expenses for things like forensics. "Like Hansmeier's brother?" Judge Wright shot back, referring to payments to Hansmeier's brother who acted as a computer forensic expert. Waxler later suggested that the funds are used to retain law firms. "They retain firms? Seriously? You can barely keep a straight face!" retorted Judge Wright. Judge Wright concluded that the law firms "basically prosecuted on their own behalf."

All of that is important, by the way, because it goes to the disclosures that litigants must make in filing a federal case. Adam Steinbaugh has a good description of the federal rules requiring lawyers to disclose the parties with an interest in the lawsuits they file or defend. Judge Wright's comments strongly suggested that he believed that Prenda Law's principals were the only beneficiaries of these lawsuits, and that by concealing their interest, they were violating applicable federal rules. Under tough questioning from Judge Wright, Gibbs' attorneys said that Gibbs made no such disclosures because he was aware of no such hidden interests -- he relied entirely on Hansmeier and Steele for client information.

No Crying in Baseball, No Speaking Objections In Los Angeles

Mr. Pietz called a former client, Jessie Nason, who briefly testified that Brett Gibbs sued him in state court on various harebrained substitute-for-copyright state law claims, and that Gibbs had represented to a state court that he was able to identify Nason as a downloader because he lived alone. Nason noted indignantly that he doesn't live alone, he lives with his wife, and therefore it wasn't right to assume that he was the downloader. Dude, I don't think you've thought this plan all the way through. This testimony fell largely flat -- Judge Wright had already clearly formed an opinion that Mr. Gibbs' investigation of the identity of downloaders was insufficient, and Nason's testimony didn't seem to accomplish anything. When one of Gibbs' attorneys objected, at length, Judge Wright rather sternly told him that there are no speaking objections in Los Angeles (meaning you say "objection, irrelevant," and then sit down -- you don't speechify). Damn straight.

Brett Gibbs' Terrible, Horrible, No Good, Very Bad Day

Eventually Gibbs' lawyers called him to the stand. He's a tall, thin, dark-haired young man with a serious expression. He looked appropriately unhappy. I felt bad for him. "Let me be honest with you," he stuttered at one point. "That would be good" said Judge Wright, deadpan.

Gibbs explained that he was hired as an independent contractor -- not an employee -- by Steele & Hansmeier, and later by Prenda Law. He took all his direction from Hansmeier and Steele -- which cases to file, what to do with them, etc. Later, when Judge Wright began to question Prenda Law's approach, he and Hansmeier and Steele together made a "cost benefit analysis" and decided to pull out of cases in this district. I'm sure. Later in January 2013, he said, Hansmeier offered him a job as "in house counsel" at Livewire LLC. This made him, Hansmeier told him, in house counsel of AF Holdings as well, because Livewire LLC owned AF Holdings.

On this point there was a rustling in the audience, where many people remembered that in February 2013 Hansmeier testified in San Francisco that a mysterious "undefined beneficiary trust" owned AF Holdings, not Livewire. Gibbs nervously explained that he was informed that the trust had sold AF Holdings to Livewire, but then learned at the time of the deposition that the transaction had not happened yet, hence Hansmeier's testimony. I'm not sure what that made Gibbs between January and February, but that's neither here not there.

Gibbs explained that he learned that Prenda Law, without his permission or knowledge, was sending out many letters with his signature stamp demanding settlements in cases across the nation. Ever optimistic, he asked Mark Lutz to stop it -- but Lutz unsurprisingly responded that this was a matter for Steele. Gibbs smartened up and quit, substituting out of all California cases and letting Paul Duffy of Prenda Law substitute in.

Quitting under those circumstances sounds reasonable. Yet Judge Wright was aghast that Gibbs knowingly allowed Prenda Law to use his phone number and email address on Prenda Law cases filed in other states across the country by other lawyers. Gibbs explained he was tasked to help those other lawyers, and that he would forward messages to them. "That doesn't sound sensible to me," said Wright, rather understating it.

Judge Wright also questioned Gibbs rather harshly on how he identified downloaders, suggesting that he found Gibbs' methodology (which included looking at maps to determine how far wifi signals from houses might reach) to be entirely insufficient. Judge Wright was looking at different maps. In fact he revealed that he looked up things on Google Earth himself -- a comment that bought him much geek cred in the courtroom. (Pietz had more, by virtue of using an iPad mini to display his exhibits on the monitors, which I regarded as simply showing off.)

I found Gibbs believable as a young attorney out of his depth who fell in with the wrong crowd and made bad choices. But Judge Wright was clearly not entirely satisfied. He quizzed Gibbs on why he didn't file notice of related cases informing the court that the various Prenda Law cases were related. Gibbs responded that courts in San Francisco had said that in Prenda Law cases up there, Prenda improperly joined multiple defendants in the same case even though they should be separate. That, Judge Wright points out, confuses the question of joinder of parties in one case with the question of whether cases are related, as every attorney in the room (save Gibbs') nodded. Ultimately, on this point as on others, Gibbs said that Steele and Hansmeier made the decision.

We're All Perry Mason In Here

In real life, people in the audience in court proceedings do not spring up to make dramatic revelations, because that gets you arrested. Today, it happened. Just after Gibbs testified that he had only limited responsibility for AF Holdings, an attorney in the audience stood and asked to be heard. I cringed, waiting for the kill. But Judge Wright asked him who he was and what he wanted. He identified himself as an attorney for Paul Godfread, who in turn is Alan Cooper's attorney. Gibbs, he said, spoke with him in November 2012 and represented himself as "national counsel" for AF Holdings, one of the Prenda Law clients. Wright shook his head. "Have you noticed," he said in rhetorical tones, "that every representation made by a lawyer with Prenda Law is not true." The lawyer sat back down again. Some might say that didn't bode well for Prenda.

The Road Ahead

Ultimately Judge Wright took the matter under submission, meaning he will rule in writing. "Good luck to you," he said to Gibbs as he stepped down, eliciting more nervous chuckles.

Brett Gibbs is in trouble. I buy him as a dupe here. Indeed, he admitted that "maybe" he felt duped. Yet though he pointed to Hansmeier and Steele as the decision-makers in this travesty, and disclaimed any knowledge of wrongdoing, he and his attorneys seemed oddly reluctant to throw Steele and Hansmeier all the way under the bus. It's more like he handed them a bus schedule and gave them a gentle shove in that general direction. Gibbs continued to argue that it wasn't clear until Cooper's testimony today that the Cooper signatures weren't genuine, a position that drew guffaws in the courtroom and an incredulous expression from Judge Wright. He and his attorneys seemed to want to suspend judgment about whether Prenda committed any misconduct at all -- a tactical error at this point, I think, and harmful to their credibility. The judge interrupted their closing arguing by asking pointedly whether a lawyer -- even if he is supervised by people out of state -- has an obligation to investigate facts himself. Ultimately, Judge Wright did not sound inclined to accept Gibbs' innocent stance.

Wright did not say, explicitly, what he would do about Steele, Hansmeier, Duffy, or the rest of the Prenda Law team. But when Pietz began laboriously to explain the basis for jurisdiction over each of them, Wright cut him short, suggesting that he found the evidence clear. (So, for the record, did I, given the evidence of Steele's contacts with California, Steele's and Hansmeier's supervision of Gibbs in California, and Duffy's substitution into cases in California and membership in the California bar. Their lack-of-jurisdiction argument is borderline frivolous.) I suspect, based on his comments, that Judge Wright will not let the consequences of this situation rest entirely on Gibbs' shoulders. What could he do? He could probably sanction the Prenda Law parties under his inherent authority based on their supervision of Gibbs. But I suspect Judge Wright will go further than that, with criminal referrals and messages to various state bars. There could also be further orders to show cause, or even bench warrants. Judge Wright didn't seem inclined to give them warning. But every indication is that they are in real legal peril.

There's been a lot of anticipation of today's hearing. The hearing lived up to it. It was a disastrous day for Prenda Law.

I'll analyze Judge Wright's order when he issues it.

Things that we use every day, like cell phones, computers, and other consumer electronics, actually contain a wide variety of valuable metals, such as europium, dysprosium, neodymium, terbium, and yttrium. When these electronics reach the end of their useful life, these metals are often lost to landfills if they're not properly recycled. Rather than let these useful materials go to waste, the U.S. Department of Energy is now working to recover rare earth elements from used consumer products, using methods employed in nuclear fuel reprocessing. Here are some other examples of ways to get at valuable metals.

• Researchers at Murdoch University have developed a faster and cheaper microfluidics approach to recover precious metals like platinum and palladium from spent automotive catalyst. The new technique could also be used for the purification of rare earth elements.  [url]
• British company Metalysis is hoping to isolate useful metals like tantalum, titanium, neodymium, tungsten, and vanadium from their oxides via electrolysis in molten salt at 1,000 degrees Celsius. The electrolysis is done directly on the powdered oxide, which acts as the cathode and is gradually transformed from the oxide to the metal. [url]
• Companies like Planetary Resources and Deep Space Industries have ambitious plans to mine asteroids for useful metals (and water). Planetary Resources plans to build a couple of low-cost robotic prospecting spacecraft that can survey, intercept, and process asteroids, and then deliver the resources directly to where they're needed. DSI has similar plans, but it's also developing a 3D printer ("Microgravity Foundry") that will be able to create high-quality metal components in orbit. [url]

If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.

Update: And here is the deep dive analysis by Ken.

We'll have a more complete report soon from Ken "Popehat" White, who was in the courtroom for the Prenda hearing today and will be writing about it for us (and for his own site), but for the quick version of what happened, with a huge assist from both Adam Steinbaugh and White, is that the judge has not made a ruling yet, but he is not at all pleased, saying "the client has been running everything. I know who the client is." There was no direct admission of who owns AF Holdings (other than that it had been transferred to another holding company, LiveWire -- as Pietz pointed out in his chart), but nothing else directly came out in court, apparently, other than Judge Wright's claim that he knows what's going on. In fact, he noted that the shell companies are "not even shells." This does not bode well for Prenda.

Of all the people ordered to appear, Team Prenda decided not to bother -- instead telling the judge they were available by phone, though the judge chose not to call. The only person (outside of Gibbs and Morgan Pietz) who did make it was Alan Cooper. But just one of the Alan Coopers. The caretaker one, who claims that his name was used illegally on various documents. In other words, as expected, Prenda and John Steele have still failed to produce another Alan Cooper who actually was associated with the shell companies. Apparently, Cooper showed up with voicemails left by John Steele which sound vaguely threatening, promising to tie him up in litigation -- possibly the defamation case that Steele filed against Cooper and the anonymous internet commenters. This will not help Steele's case. At all.

Apparently, Judge Otis Wright was not particularly pleased about this turn of events. Similarly, he blasted Paul Hansmeier for his deposition in which he tapdanced around pretty much every question. Remember, Hansmeier gave the deposition as the official designated "representative" of AF Holdings, one of the mysterious shell companies at issue in these cases, but Judge Wright pointed out that Hansmeiers evasiveness suggested he "doesn't know anything about his own firm." Or, you know, he's choosing not to say things.

Gibbs was put on the stand to testify, and apparently continued his "I was just taking orders" defense, in which he pointed the judge to Prenda. He also apparently claims he left Prenda because of the "online harassment and unwelcome exposure," though that wouldn't explain why he then became "in house counsel" for LiveWire, the shell holding company that was "acquiring" various Prenda shells. Judge Wright pointed out that Gibbs was the official counsel of record, and therefore the person responsible, even if he was attempting to throw Prenda under the bus. Gibbs also claimed that while he was "in house counsel" for LiveWire for two months, he never got paid (just like the Hansmeier deposition). It seems that no one associated with Prenda ever seems to want to pay anyone. Funny, that.

Also, Gibbs and his lawyers apparently tried to push back on the Verizon filing, which suggested that Gibbs failed to inform Verizon that the order allowing subpoenas to move forward in one of the cases had been killed by the court, and, furthermore, suggested Gibbs then lied to the court in claiming that Verizon had been informed. However, Verizon's lawyers showed up, and that apparently silenced Gibbs' lawyers.

Anyway, that's our quick update... There will be a ruling soon enough, but come back tonight when we post a more complete analysis from inside the courtroom.

We've written a few times about employers snooping through the emails of employees, and for the most part, courts have found this to be legal. There are a few exceptions -- such as for attorney/client communications -- but for the most part, if you're using work provided email, they can spy on it. Of course, just because they can doesn't mean they should. As we've been pointing out for over a decade, doing so probably fosters an environment of paranoia, which may not be the most productive. Still, it's a bit surprising to see that Harvard University chose to snoop through the emails of staff members in trying to hunt down the source of a leak. Specifically, the university searched the emails of 16 deans, telling them about the search a few days later. Again, even though this is likely legal, it seems odd that a university like Harvard would do it, as it inevitably creates distrust with some of its most important staffers. Indeed, the news apparently has faculty and staff up in arms.

Havard has defended the search by arguing it was very limited -- just to specific accounts and just to subject lines:

Consequently, with the approval of the Dean of FAS and the University General Counsel, and the support of the Dean of Harvard College, a very narrow, careful, and precise subject-line search was conducted by the University's IT Department. It was limited to the Administrative accounts for the Resident Deans — in other words, the accounts through which their official university business is conducted, as distinct from their individual Harvard email accounts. The search did not involve a review of email content; it was limited to a search of the subject line of the email that had been inappropriately forwarded. To be clear: No one's emails were opened and the contents of no one's emails were searched by human or machine. The subject-line search turned up two emails with the queried phrase, both from one sender. Even then, the emails were not opened, nor were they forwarded or otherwise shared with anyone in IT, the administration, or the board. Only a partial log of the 'metadata' — the name of the sender and the time the emails were sent — was returned.

"The Resident Dean whose account had been identified was asked about the incident and voluntarily reviewed his/her own sent items and confirmed that she/he had indeed forwarded the message to two students. Although the Resident Dean's actions violated the expectations of confidentiality surrounding the Administrative Board process, those involved in the review and the conversation with the individual were sufficiently convinced that it was an inadvertent error and not an intentional breach. The judgment was made not to take further action.

The issue, though, is the expectation of privacy and the level of trust built up between staffers and the university -- and actions like this, even when done narrowly and carefully, can break down that trust in significant ways.

We're big fans here of the WNYC radio show On The Media which regularly covers a number of the same issues we cover here at Techdirt. So we were quite thrilled to hear that their latest episode was entirely devoted to one of our favorite topics: The Past, Present, and Future of Ownership, mostly as it relates to ownership of things that are non-rivalrous and non-excludable. There were lots of great segments:

• The Current State of Ownership: which covered the DRM Chair, and also talks to one of our favorite scholars on the subject, Professor James Boyle, about how the concept of "ownership" of culture has gone too far.
• Happy Birthday: which explored the history of the song and the claims that Warner Music owns it -- even though all of the evidence suggests that Happy Birthday is 100% in the public domain. In the segment, producer PJ Vogt suggests that he wanted to test this by putting up a version of the song on iTunes, but unfortunately, their lawyers nixed that idea.
• Fan Fiction and the Law: in which they talk to another of our favorite scholars, Rebecca Tushnet on the nature of fair use.
• 3D Printing, in which Chris Anderson explains how 3D printing is going to change the world in amazing and astounding ways.
• Don't Screw It Up, in which Public Knowledge's Michael Weinberg worries about politicians killing off all those amazing and astounding things that Chris Anderson talked about once they freak out about how 3D printing will disrupt a bunch of industries.
• Plaigiarism: Maybe It's Not So Bad where they talk to professor Kenneth Goldsmith, the new poet laureate of the NY MOMA, who apparently thinks that plagiarism is an art form. He apparently has his students buy an online term paper, hand it in, and then has them defend it as if it was their own. At one point, he notes that students are doing this anyway, so he might as well teach them to be better at it.

All in all a great program for folks interested in these topics. There was only one segment that I found disappointing. I get the feeling someone at OTM felt they needed someone to represent "the other side" of the argument that "ownership society" has gone too far, and so they had musician and critic of the "new media world," David Lowery (you may recall him from the past, like when he claimed that Apple iTunes did nothing more than host songs, leaving out the whole aspect of bringing everyone together, processing payments, etc.) In that segment, he chooses to take a swipe at The Sky is Rising report, which I co-authored, and he does so by completely misrepresenting what's in the report, as he has done in the past. I responded in the comments on that story on OTM's own site, and a lively discussion has ensued. Furthermore, Lowery took a completely gratuitous swipe at Amanda Palmer, bizarrely suggesting that the only reason she's successful is her penchant for getting naked. His disdain for someone who actually is successful by embracing fans and the internet is quite clear and insulting to the thousands of artists who have found success online whether or not they get naked. I don't mind people disagreeing with my opinion, but flat out saying we said stuff we never said is pretty bad, as is gratuitous insults for successful artists like Amanda Palmer, and it hurts OTM's reputation to present such things in that format.

Either way, it's great to see the rest of the segments get public attention, as more and more people are recognizing that copyright law today is broken, and is creating a society where a focus on "ownership" takes things so far, as to actually hinder the rights of the public in dangerous ways.

Back when "The Harlem Shake" first went viral, we pointed out that it was a bit hypocritical of Baauer to use copyright to issue a takedown on a version of the song he didn't like when it was clear from his own statements that the song itself was a mashup of samples from others which he did not license. Later we wondered why it was proper that he was the one who mostly cashed in on the viral meme, since he had basically nothing to do with making the song viral.

Either way, there's no doubt that Baauer and his label, Mad Decent, clearly made out nicely for a song that had been out for a while and hadn't really set the world on fire until the meme took off. And, of course, once people start making money, out come the copyright claims. Apparently, multiple artists, whose works were sampled on Baauer's "Harlem Shake," are now demanding cash from Mad Decent.

The people who spoke the two key "lyrics" in the song, "con los terroristas," and "then do the Harlem Shake," have both complained about the use of the samples. The "con los terroristas" line came from a former reggaeton singer turned evangelical preacher Hector Delgado, who went by the stage name Hector El Father. The "do the Harlem Shake" line was from Jayson Musson as part of a song for the Philadelphia rap collective Plastic Little. Delgado seems to be overplaying his hand a bit:

"It's almost like they came on my land and built a house," Mr. Delgado said.

No, actually, it's nothing like that. At all. Because it didn't take away from his song, which very few people knew about before. If anything this has suddenly increased interest in Hector's former professional works.

Musson's approach seemed a lot more reasonable in recognizing the reality of the situation:

Mr. Musson said he called Mr. Rodrigues and thanked him for "doing something useful with our annoying music"

But, of course, he still wants a cut.

That's not to defend Baauer, of course, who had no problem pretending he could claim copyright over the work, despite not licensing the original samples. Oh, and as for who's going to get paid in the end, it sounds like it may be Universal Music. Apparently, Delgado's work was released on a label owned by Universal, so you'll have to image they'll get involved soon enough:

Since that call, Mr. Gomez said, lawyers for Machete Music, which is owned by Universal Music Group, have been negotiating with Mad Decent over payment for the sample.

"Hector will get what he deserves," he said. "We can turn around and stop that song. That's a clear breaking of intellectual property rights."

Gomez is Delgado's manager. Of course, if he released it under Universal, one wonders if Hector will get anything at all, or if Universal will declare any proceeds for itself, claiming that Delgado has not yet recouped any advance...

As the minutes tick off until the Prenda hearing today, yet another bit of news has dropped in relation to the case. Verizon has stepped in and filed a declaration stating that contrary to Brett Gibbs' own claims to the court, it does not appear Gibbs informed Verizon not to follow through and identify the people in the subpoena that had originally been sent.

To understand what happened here, the key aspect to many Prenda cases is getting the identity of people associated with IP addresses, often by getting a court to grant discovery, after which Prenda's lawyers send subpoenas to ISPs with a list of IP addresses. As has happened a few times, courts readily grant the request for expedited discovery (which is rarely denied in normal court cases), but upon learning of Prenda's overall practices, they then pull back that permission and (usually) order the lawyers to immediately inform the ISPs that the order has been withdrawn and not to comply with the subpoena. Here, the same thing happened, and Prenda's Brett Gibbs told the court that he informed ISPs that the order had been withdrawn.

Just a little while ago, however, Verizon stepped in to the case, with a declaration saying they never received any notice of the withdrawal, and had, instead, complied with the subpoena, believing it was valid.

On or about September 6, 2012, Verizon received subpoenas from plaintiff AF Holdings in AF Holdings v. John Doe, C.D. Cal. Case No. 12-cv-6669 and AF Holdings v. John Doe, C.D. Cal. Case No. 12--cv--6636. ...Verizon processed these subpoenas in the ordinary course.

Based on Verizon's records, it does not appear that Verizon received from AF Holdings or its counsel a copy of the Court's Order Vacating Prior Early Discovery Order and Order to Show Cause dated October 19, 2012, nor does it appear that Verizon received other form of notice that the subpoenas attached as Exhibits A and had been withdrawn or were invalid. If Verizon had received such notice, we would not have processed these subpoenas for AF Holdings.

I have reviewed a declaration filed by Brett Gibbs in this litigation, dated February 19, 2013, in which Mr. Gibbs states:

Following receipt of the October 19,2012 Orders, I caused the Court's October 19, 2012 Orders to be served on the registered agents for service of process of Verizon Online ensure that Verizon Online LLC had notice not to respond to the subpoenas that had already been served.

(Gibbs Decl. dated Feb. 19, 2013...) Again, based on Verizon's records, this statement appears to be wrong.

Verizon released the information responsive to AF Holdings' subpoenas in the cases identified above (case nos. 12-cv-6669 and 12-cv-6636) by fax to the Prenda law firm on November 7, 2012. If Verizon had received notice of the Court's Order dated October 19, 2012, we would not have released these records to Plaintiff.

Having Verizon come out and more or less directly state that Gibbs lied to the court isn't going to go over well when it appears that Judge Wright is already not happy with Gibbs or his buddies at Prenda...

While we've had a few stories about the "revenge porn" website "IsAnybodyDown," that site was really just a copycat of one of the most popular "revenge porn" websites, called "Is Anyone Up." Back in 2011, On The Media did an interview with Hunter Moore, the creator of Is Anyone Up, in which you learn what a swell human being he is (i.e., not at all). A few months later, however, Moore shut down the site and claimed he was turning over a new leaf. It later came out that he actually sold the domain (but not the content of the site) to a company called ViaView, which ran the anti-bullying website Bullyville. ViaView's President, James McGibney, had apparently been talking to Moore for a while, trying to get him to shut down the site. After buying the domain, McGibney had traffic routed to the Bullyville site.

Months later, for unclear reasons, Moore started going after McGibney and Bullyville online, claiming that McGibney was a pedophile, had failed to report child porn images, and was guilty of a variety of other charges. He also stated, strongly, that he intended to have sex with McGibney's wife. In response, McGibney sued Moore for defamation, represented by Marc Randazza, who has made it something of a personal mission to go after "revenge porn" sites (in case you're unaware, such sites solicit naked photos of people, often from ex-lovers, and then post them online, sometimes with contact info).

Moore failed to officially respond to the lawsuit, despite being served and apparently making it clear he was aware of the lawsuit on Twitter. In response, the judge ruled in favor of McGibney on default judgment, and also ordered Moore to pay $250,000 in damages, along with legal fees. Of course, getting Moore to actually pay may be difficult, but Randazza has a history of going after the assets of those who refuse to pay out in such cases.

As we near the Prenda hearing that's scheduled for 1:30 pm this afternoon, in which everyone is supposed to be showing up for Judge Otis Wright, the Star Tribune in Minnesota has a decent summary article about the entire mess, with particular focus on the case's ties to Minnesota, where Alan Cooper lives, and where John Steele and Paul Hansmeier (oh yeah, and Brett Gibbs, though he's not listed in the article) all attended law school. It's also where Paul's brother Peter, who supposedly handles the "forensics" for tracking down file sharers lives. But, most importantly for this article, it's where Allan Mooney lives. As we explained last week, there were some hints at another possible Alan Cooper situation, in which Prenda filed documents showing someone in charge of a shell company who apparently was unaware they were drafted to that position. In this case, Prenda spelled his name differently on different filings. There's Allan Mooney, Alan Mooney and Alan Mony.

The key bit in this article is that the reporter tracked down Allan Mooney, who Paul Hansmeier admitted is a former client, and he apparently has no clue that his name is appearing on these documents suggesting he runs Guava LLC and MCGIP LLC.

Allan Mooney, a Minnesotan who has brokered the sale of Internet-based businesses, said he introduced his friend Paul Hansmeier to some contacts in the porn industry. But he denied knowing that he was listed as the “sole organizer” of MCGIP LLC, a plaintiff in at least 20 lawsuits filed by Steele Hansmeier or contract attorneys.

Mooney also has been listed in court filings — with his name misspelled — as an agent for an entity called Guava LLC, which is registered in the Federation of St. Kitts and Nevis in the West Indies. Guava has been the plaintiff in 21 federal lawsuits since October, including six in Minnesota.

“That would be news to me,” Mooney said. “I’m not involved in any of that type of stuff. I’m more or less a personal trainer.”

Morgan Pietz has already filed the article with the court, even though Mooney is not among the list of folks asked to show up in court (though Alan Cooper is).

We've written before about cities and states luring Hollywood studios with multimillion dollar subsidies in the hopes of giving their local economies a bit of a bump. In nearly every case, this has been a money loser for the locale involved. A 2010 Tax Foundation study found that most states were lucky to see $0.20 in revenue from every dollar handed out. And yet, this surefire money loser remains incredibly popular.

The latest case of self-victimization belongs to the state of Michigan, which lured the production of "Oz The Great and Powerful" to the state with a $40 million subsidy.

Michigan has 4.5 million individual taxpayers, and the state gave the film studio $39.7 million to shoot the movie in Pontiac. That works out to a subsidy of $8.82 per taxpayer while average ticket prices nationwide are $7.96.

The subsidy was granted in 2010 when the program refunded up to 42 percent of Michigan expenses to film makers — essentially a check from the treasury to Hollywood studios. The program expired, but the Legislature, dominated by Republicans, overwhelmingly decided to keep it around.

As the article points out, the studio basically received paid admission from every taxpayer in the state. But that $40 million was apparently just a "good start," because the state soon found the studio knocking at its door again, cap in hand.

As part of the financing process, the filmmakers wanted to borrow about about $18 million in municipal bonds. In order order to do that, they needed a backer. So the state stepped in, and agreed to use its state worker pension funds as a guarantee. "If the investors failed to pay," the New York Times reported in a piece on the deal last December, "the retirees would be on the hook."

One would expect a Disney-backed venture to be able to scrounge up payments on an $18 million loan simply by digging around in the couch cushions. But one would be mistaken.

Michigan Motion Pictures Studios, which is being celebrated in the local media for having made the movie, "Oz The Great and Powerful," in Pontiac, has missed its last three payments on $18 million in bond obligations...

According to state officials, the state retirement system has made three payments since February of last year totaling $1.68 million.

This isn't good news for the state's pension fund, which is already underfunded by several billion dollars. It's pretty much guaranteed that the state will never recover the entire $58 million given to Michigan Motion Pictures Studio, either in the form of added revenue or even loan payments, for that matter. And Michigan should know better. According to the study mentioned in the first paragraph, Michigan's return-on-investment sits at $0.11 per subsidy dollar.

But Michigan Motion Picture Studios (formerly Raleigh Studios) can explain. You see, it was doing just fine... until the state decided to cut its allowance.

In March 2012, Raleigh Studio's then-chief financial officer Steve Lemberg blamed the studio’s financial struggles on the film tax credit being reduced.

The state reduced the tax credit from $100 million when the studio was being built in 2011 to $50 million last year. Gov. Rick Snyder has $25 million budgeted for tax credits this year.

There's something inherently flawed with a business model that relies heavily on being handed free money in exchange for the vague promise that a small percentage of it will be pumped back into the local economy. But I suppose it could be worse. Much, much worse.

The city of Allen Park recently requested an emergency manager after losing what will turn out to be tens of millions of dollars on a failed movie studio project that promised to create 3,000 jobs. It created none and left the town nearly bankrupt.

That's the sort of thing that happens when politicians get stars in their eyes and roll out a red carpet made of constituents' money. The best case scenario is still a money loser, as any economic effects are brief and underwhelming. The worst case scenario is taxpayers are on the hook to bail out their own pension funds or, in the case of Allen Park, their hometown.

There is an extremely dangerous trend to remove proper judicial review from cases involving alleged copyright infringement. Sometimes that means "voluntary" actions by ISPs -- the SOPA and ACTA approach. Sometimes, it means appearances before tribunals by members of the public without adequate legal representation, as is happening under New Zealand's "three strikes" law. And sometimes it might involve a judge, but consist of the latter simply agreeing to requests from the copyright industry, without anyone challenging the grounds for doing so.

That was the case for the most recent action by the British Phonographic Industry (BPI), which represents the recording industry in the UK, as reported by Techdirt last week. Now Andres Guadamuz on his TechnoLlama blog has dug a little deeper into the judge's reasoning for granting these orders, and discovered the following remarkable section:

the evidence indicates that blocking orders are reasonably effective. The effect of the order made in Italy with regard to TPB [The Pirate Bay] referred to in 20C Fox v BT at [197] was a 73% reduction in audience accessing TPB in Italy and a 96% reduction in page views. The blocking order made in Italy in relation to KAT has had a similar effect. As for the effect of the orders made in England in relation to TPB, as at 19 December 2011, TPB was ranked by Alexa as number 43 in the UK, while as at 21 November 2012, its UK ranking had dropped to number 293.

As Guadamuz notes:

I had to look for the source of such astounding information, but I was not able to obtain any reliable resources, and I suspect that it is a figure given by the BPI, which may have been pulled out of the nether regions of their institutional anatomy. On the contrary, I found a report from Torrent Freak claiming the opposite, but this claim should be taken with a pinch of salt.

The use of Alexa is also rather surprising, since it is very rarely quoted these days:

Alexa works by measuring the behaviour of users who have installed a toolbar in their browser. This gives a snapshot of a very narrow demographic, that of Alexa toolbar users. Needless to say, people who are more likely to share files online are less likely to have any sort of toolbar installed on their browsers, particularly one that tracks online behaviour. Similarly, there are studies that prove that Alexa's rankings tend to be wrong for both small and big websites, as they tend to produce some serious mismatches with reality.

And Guadamuz goes on to point out:

In the end, the best way to try to ascertain the effect of ISP blocking orders is to ask the people who are engaged in the practice. This is precisely what was done by Dutch researchers Joost Poort and Jorna Leenheer. They conducted a survey of thousands of Dutch residents about their downloading behaviour. While more than 75% of respondents claimed that they never downloaded any illegal content, those who engaged in the practice replied that they were not affected whatsoever by the blocking of TPB in the Netherlands. Only 3.6% claimed that they are downloading less, and only 1.9% admitted that they had stopped downloading entirely. This seems like a huge failure of blocking orders.

But none of this information was presented in court. Instead, the judge used his own -- or maybe the BPI's -- figures to justify his blocking orders. That's why it's regrettable the ISPs involved did not mount any kind of challenge where they could have offered an alternative view on how effective such orders really are, so that the judge could form a more balanced view of the situation. More generally, this episode shows the dangers of moving to systems where the other side of the copyright story is not fully and fairly presented.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

There have been questions for quite some time now as to whether or not the traditional US postal system can survive the digital era. Frankly, the outlook isn't good, what with email replacing the sending of letters in large part and the postal service losing billions of dollars each year. The postal service itself tried to fight what I guess they thought was just a hip email trend by reminding everyone how terrible email is and how great letters are, or something. Sadly, it appears that campaign made little headway and the US mail system continues to look for a savior.

That's where Gordon Wozniak, Berkeley City Councilman and bad-idea generator, hopes to enter into the equation with his monumentally dumb idea of micro-taxing email, a service everyone uses, to fund the postal system, which nobody cares about.

Wozniak told the council: "There should be something like a bit tax. I mean a bit tax could be a cent per gigabit and they would still make, probably, billions of dollars a year… And there should be, also, a very tiny tax on email," perhaps one-hundredth of a cent. He said this would discourage spam and not have much impact on the typical Internet user. Wozniak went on to suggest a sales tax on internet transactions that could help, in part, fund "vital functions that the post office serves."

Let's set aside for a moment that the proliferation of spam blocking software and appliances has mostly erased spam emails for anyone interested. If Wozniak wants to propose tax law, he should at least familiarize himself with the relevant laws on the books, including the Internet Tax Nondiscrimination Act, which bans internet taxes entirely. Seems like kind of a big roadblock, no? Fortunately, Wozniak's idea is not only dumb, but it's also completely unworkable, as noted by Harvard Law School's Jonathan Zittrain:

"To the extent that the cheap flow of flat rate first class mail has positive effects for society at large, the insistence that the Post Office be revenue-neutral may not make sense," Zittrain said. "Taxing email as an alternative, however, is a terrible idea: bad in theory and truly unworkable in practice. There have been proposals to see fees imposed on email by service providers — or recipients themselves — as a way of minimizing spam, but to impose an external tax on it when there are ready substitutes (Facebook messaging, anyone?), and when collection would be a nightmare, seems a non-starter. There is no reason to tax electronic mail users in particular to save the Post Office, any more than it would make sense to tax coffee drinkers to do it."

In response, Wozniak said that despite not being an expert on internet taxes (wut?), he still thinks the idea deserves to be considered because "many billions of emails are sent every day [and] an email tax could raise substantial sums." By the way, he delivered that statement...wait for it...via email.

Well, I'm not a bad-idea tax expert, but since there are so many bad ideas generated every day, we could solve every financial crisis everywhere by taxing the hell out of bad ideas. Let's start with yours, Mr. Wozniak. After all, the postal service needs you.

Oh, EA. I would imagine that there are more than a few execs and PR people who are hoping their employer is siphoning off a bit of its $5 billion market cap and putting it towards time machine R&D. With this post-facto mulligan tearing a new hole in the spacetime continuum, EA should be able to do a proper game launch and collect some accolades along with a ton of non-refundable cash. (Obviously, the time machine has yet to be built because this post still exists. Mind blown?)

EA's debacle, which makes the Diablo 3 launch look positively competent and issue-free by comparison, has seen the company receive even more criticism than it's accustomed to. Not only have a variety of game reviewers delivered less than flattering reviews, but now public figures like Minnesota Vikings punter Chris Kluwe (an avid gamer) are stepping up to pile another helping of derision onto EA's overloaded plate. (Note: all redacted swearing courtesy of Business Insider.)

Don’t get me wrong, the game itself is great. When it works, that is. And oh boy, does it hate working.

At the time of writing this piece, SimCity 5 has been active for almost 62 hours. Of those 62 hours, I’ve been able to log in for around ten. Of those ten, four consisted of massive latency issues and corrupted games, so (quick calculation here), I’ve had access to the actual game for maybe 10 percent of the time I’ve had it. EA’s servers are, to put it bluntly, utterly bug[redacted], and there’s no option to play the game offline.

We're going to do a little math here, because there's more interesting math on the way. Who in their right mind would purchase an item that worked roughly 16% of the time, fresh out of the box, especially if the product didn't even perform at 100% capacity when it actually got going? Thousands of people, many of them not in the NFL, paid for a product with a mere 1 in 10 chance of working as advertised and only a 16% chance of doing anything at all. Understandably, Kluwe and thousands of others are irate.

Making matters worse is the insistence that the "always on" connection is required because so much processing is being handled on EA's servers. Kluwe's experience seems to indicate that EA isn't being completely honest about this in order to justify its online-only requirement.

The fact that EA requires an “always on” connection is ostensibly because so many operations are taking place server side that your computer won’t be able to handle it (which is a blatant falsehood, since when I was streaming the other night, the only times I DIDN’T have latency was when I was disconnected from their servers and my computer had to run all the game operations), but in reality it’s to try to combat piracy.

Now, we have heard from the developers themselves that EA servers do host (and very often, corrupt) players' saved games, making a mockery of such modern inventions like hard drives. But the insistence that a large amount of processing happens server-side has been met with incredulously raised eyebrows, including Kluwe's own. Even if true, the main reason for the server-side processing is to keep client machines from containing enough code to go rogue and starting their own brisk trade at The Pirate Bay.

So, EA's simply protecting itself from the piracy threat by crippling the paying customer's experience. The ultimate aim is to make more money. But EA's anti-piracy calculations apparently never factored in negative reviews and word-of-mouth, both of which can have a deleterious effect on game sales.

Sadly, EA seems to have failed to do some very simple math. Let’s look at an example. We’ll assume that for an amazingly successful game like SimCity, about 20,000 people will end up pirating it (those who have the technical knowhow and Internet savvy to find a working crack). I have 160,000 Twitter followers, of whom around 50,000 follow me for gaming. I just told those 50,000 people NOT to buy SimCity because EA cannot handle its s***, and the game is unplayable. We’ll say half those people listen to me and haven’t bought the game already. Soooo, carrying the pi, we see that EA is already out 5,000 more sales than if they had just created a normal, single player offline capable game with multiplayer components.

Many members of various industries have wrangled numbers in order to equate a pirated copy to a lost sale while failing to realize that a bad review can ALSO equal a lost sale. Because of this faulty extrapolation, the assumption generally becomes "more DRM/enforcement = good." EA is finding out, firsthand, that this just simply isn't true.

Even if Kluwe's back-of-the-internet calculations are completely wrong, EA is still leaking sales. Many have demanded refunds from Amazon (and received them), and many more are lining up at Origin to get their money back. EA is taking a hard line on refunding digital sales, which is only going to hurt it in the long run. It might be able to push back here in the US, but overseas (the market it's currently underserving launching in) generally has stronger consumer protections, which makes its no-refund-on-digital-sales policy null and void.

In addition, more than 1,000 negative reviews are doing even reputational damage at Amazon, which has decided to stop handing out refunds, not by screwing customers, but by pulling the digital version from its shelves.

Beyond the bad math, the inadequate customer service, the decision to make the game even worse until the servers can keep up with the demand, is EA's refusal to allow customers to own the product they purchased. By keeping enough of the code running only on its servers, no SimCity purchaser can ever claim they own the game. All they own is a key to the door. EA still owns the house. And once EA decides the house is no longer worth living in, 5 or 10 years down the road, even the key will be worthless.

While we were certainly happy that the White House came out in favor of allowing mobile phone unlocking, we were dismayed that they said the fix was to apply a narrow change to telco law. That's bizarre, because the whole problem came out of copyright law -- specifically the DMCA's anti-circumvention clause, 17 USC 1201. We've long argued that the anti-circumvention clause was a huge problem. It makes any attempt at circumvention of DRM or other "technical protection measures" illegal, even if the content being unlocked would not violate copyright law. That's really incredible when you think about it. Bypassing DRM on public domain material, for example, would still be considered infringing under 1201. Yikes!

So it's great to see a new campaign kick off, called FixTheDMCA.org, entirely focused on the problem of Section 1201.

While many in the tech community like to complain about the entire DMCA, it's important to remember that some of the DMCA was actually quite good: setting up things like clearly defined safe harbors that separate platforms and services from the actions of their users was a necessary step in creating the web that we know and love today. The problems with the DMCA are with both section 1201 and with the notice and takedown provisions (shoot first, confirm later), and both of those should be fixed. So it's good to see this effort under way, specifically targeted at the anti-circumvention clause.

Unfortunately, this may be the hardest part of the DMCA to fix. For reasons that still aren't entirely clear to me, Hollywood is obsessed with anti-circumvention clauses. They demand them in every new copyright law being put in place around the globe. It's the one part of Canada's new copyright law that was most troubling. Anywhere you see new copyright laws popping up, you're almost certain to see anti-circumvention clauses. It's one of those things that the entertainment industry insists on, and simply won't budge over. I still don't understand why they're so insistent on it, since it really seems to only harm legitimate buyers, and do next to nothing to stop actual infringement.

Hopefully, as people realize that Section 1201 leads to ridiculous situations like not being able to unlock your mobile phone, we can start to get Congress to recognize that the anti-circumvention clauses are a problem that needs fixing, and a site like FixtheDMCA is a good place to start.