We see this every single time the music labels (usually RIAA or IFPI) "win" a big case against an alleged "pirate" site. They're awarded a bunch of money... and none of it goes to the artists. We've heard about it happening with Limewire and YouTube (though that was payoff to prevent a lawsuit, rather than the result of a lawsuit). And, once again, that appears to be happening with The Pirate Bay. TorrentFreak has the leaked document from the IFPI showing that it plans to reinvest whatever it gets... in the IFPI to continue its "anti-piracy efforts," such as going after other sites to get similar settlements for the same reason.

To be clear, the IFPI notes that it's unlikely to collect much, if any, of the money in this particular case, because (contrary to what it claimed all along), it certainly doesn't appear that TPB made very much money -- and the people sued "have no traceable assets." However, the ruling was clear that the money being awarded to the labels was "to compensate artists and rightsholders for the losses they suffered. But that's not how it would be used:

“There is an agreement that any recovered funds will be paid to IFPI Sweden and IFPI London for use in future anti-piracy activities,” IFPI writes.

TorrentFreak quotes Peter Sunde, one of the four who was convicted, noting that this is a case where money was directly promised to artists and not delivered. That seems a hell of a lot more like "theft" than anything that he did:

“They say that people who download give money to thieves – but if someone actually ends up paying (in this case: three individuals) then it’s been paid for. So who’s the thief when they don’t give the money to the artists?”

According to Sunde the news doesn’t come as a surprise.

“As far as I know, no money ever won in a lawsuit by IFPI or the RIAA has even gone to any actual artist,” Sunde says.

Indeed. I am unaware of any of the proceeds from any such lawsuits ever making it back to artists.

For years, we've been pointing out that our class action lawsuit system is broken. It makes sense, in theory, that if a large group of people are wronged, they can team up to right that wrong—but in practice it has morphed into a system where a bunch of bottom-feeder lawyers sue just about any company at every opportunity... and then those lawyers end up taking the bulk of the money. The "class" (the people supposedly wronged) rarely get much, if any money at all. Of course, one of the first stories that clued me into all of this involved a settlement in a class action lawsuit against Netflix way back in 2005, in which the lawyers got $2.5 million... and everyone in the "class" just got their accounts upgraded for a month (and if you forgot to manually downgrade after that month was over, you were charged more). As I noted at the time, this seemed more like a promotional stunt for Netflix and a way for a bunch of lawyers to make a ton of money.

So it's interesting to see that with yet another class action lawsuit being settled involving Netflix, there are similar concerns. A whole bunch of folks sent in variations on the fact that Netflix will be paying out $9 million with a grand total of none of it going to the class (unless you happened to be one of the two named plaintiffs -- Jeff Milans and Peter Comstock -- who get to split $30,000). Most of the money is going to a charity. But somewhere around $2.25 million is going to the lawyers.

To be clear, I think the lawsuit itself is a bit silly anyway. It involves the fact that Netflix retained info on customers who quit. Big whoop. But whether or not you agree with the premise of the lawsuit, the end result seems even sillier: those supposedly "harmed" get nothing, but the lawyers walk away with over $2 million? It's this kind of thing that creates incentives for more such lawsuits driven by law firms in the hopes of cashing in.

We live in a litigious society. That's not a secret. So it's no surprise that, in the aftermath of the Aurora, Colorado Batman shootings, lawsuits will be filed. But as always the question is: who do you sue? Well, if the linked TMZ article is accurate, Torrence Brown Jr., who was in the theater, but not directly injured (though a friend of his was killed), has lawyered up, hiring an attorney named Donald Karpel to sue Warner Bros. for making the movie too violent. He's also apparently planning to sue the theater for not properly guarding the emergency exit, which is apparently where Holmes left and re-entered with the weapons. Oh yeah, and the doctors of shooter James Holmes for not properly monitoring him.

This certainly seems like a frivolous lawsuit. Going after Warner Bros.? For what? That's likely to get laughed out of court. This seems like a clear case of a "Steve Dallas lawsuit," named for the famous Bloom County comic strip in which lawyer Steve Dallas gets beat up by Sean Penn after trying to take a photograph of the star. He then explains why the proper target of a lawsuit is not Sean Penn, but the "Nikolta Camera" company, because "a major corporation with gobs of liquid cash ... was criminally negligent in not putting stickers on their camera which read, 'warning: physical injury may result from photographing psychopathic Hollywood hotheads." In a coincidence that you simply couldn't make up, it turns out that Karpel once represented (no, seriously) a paparazzi photographer beat up by Sean Penn. Life imitates comic strips.

There are days that the actions of the MPAA just make you shake your head and wonder just what goes through the minds of the lawyers running that insane asylum. The latest is the news that they're considering suing Megaupload users directly, as if their reputation wasn't already mud. The details actually have to do with the fight over whether or not the data on Megaupload's servers is going to be deleted. There was a point, soon after the shutdown, when it was suggested that, due to a lack of anyone able to still pay the bills, the hosting provider that Megaupload used, Carpathia Hosting, would soon wipe the servers clean. That struck me as odd, because I would have thought that the data on those servers represented evidence in a criminal case -- but for reasons still not clear, the government insists it has no need for the data and that Carpathia is free to delete it. I won't even begin to speculate over the fact that the person who sent the letter to Carpathia suggesting this also happens to be the BSA's former head anti-piracy VP. An ex-anti-piracy exec for an industry lobbyist, now running a criminal anti-piracy case, basically telling the data center to delete evidence? Hmm...

Others, of course, were concerned about both the evidence that could exonerate Megaupload as well as the legitimate files that were going to be lost -- so there was an effort made to try to have the files retained, and the hosting firm has said (for now) that they won't delete the data, despite the fact it is costing the company $9,000 per day to maintain these servers and the 25 petabytes of data they contain. But it wants to.

So here's the surprise. Those fighting to keep the data have an unexpected ally: the MPAA. Yes, you see the MPAA wants to keep its options open and is considering directly suing users who may have used Megaupload for infringement -- and for that to work, they'd need that data to remain available. This came out in a filing by Carpathia to the court, in which it notes that there is significant interest in keeping the data around, but it wants out of the burden of paying for all of this and having to retain the data itself. The filing notes that Megaupload itself wants the data for its defense, the EFF wants to help users get legit files back... and the MPAA wants the data to sue people. Apparently, unbeknownst to the public until now, the MPAA sent Carpathia a letter arguing in agreement with Megaupload and the EFF that the data shouldn't be destroyed, but only because the MPAA wants to have access to the data in case it decides to go hogwild and completely and permanently destroy its reputation by suing users directly. From the letter the MPAA sent Carpathia:

Independent of the ongoing criminal proceeding, the Studios have civil claims against the operators of Megaupload, and potentially also against those who have knowingly or materially contributed to the infringement occurring through Megaupload...

... In light of the potential civil claims by the Studios, we demand that Carpathia preserve all material in its possession, custody, or control, including electronic data and databases, related to Megaupload or its operations. This would include, but is not limited to, all information identifying or otherwise related to the content files uploaded to, stored on and/or downloaded from Megaupload; all data associated with those content files, the uploading or downloading of those files, and the Megaupload users who uploaded or downloaded those files; all data reflecting or related to payments to third parties (including Carpathia) by the Megaupload operators; all data reflecting or related to payments to the Megaupload operators, including by users and other third parties, all electronic records regarding communications by the individuals involved in Megaupload's operations; and all internal documents and communications regarding Megaupload.

Of course, recognizing just how bad its own lawyers' statements are on the matter, the MPAA has sent in its PR folks to try to clean up the mess. Almost immediately after David Kravets at Wired published the original article highlighting this, MPAA PR people started calling him insisting that it wasn't true at all. MPAA PR VP Howard Gantman told Kravets that the MPAA has no intention to sue users, despite the clear language of the letter it sent Carpathia.

“The reason we did that filing so that there is a possibility that litigation might be pursued against Megaupload or various intermediaries involved in Megaupload’s operation. We’re not talking about individual users...”

That's not what the plain language of the letter itself clearly states -- but never let facts get in the way of a good yarn spun by MPAA PR people desperately trying to make the organization seem not 100% evil. But, this is how the MPAA thinks: lawyers shoot their mouths off with threats first, and the PR folks are left to do cleanup. That's what happens when you put the lawyers in charge, without any real knowledge of technology, business or just how ridiculously bad they make themselves look with their extreme positions. And then they wonder why no one sides with them in debates like the one over SOPA. Perhaps it's because their position is so crazy that anyone with the slightest bit of common sense would have known to stay miles away. But that's not how the MPAA rolls. It goes to crazytown and beyond, and then just denies it was thinking about suing users, despite claiming exactly that.

Back in January, we wrote about the bizarre decision by Ron Paul to file a lawsuit to unmask some anonymous internet users, who had created a controversial anti-John Huntsman video. At the end of the video, the anonymous videomakers had endorsed Paul, but some conspiracy-minded folks insisted that they were really working for Huntsman and staging an elaborate ruse to put up a video that looked bad about Huntsman to have that backfire on Ron Paul. For a variety of reasons that's either improbable or just downright stupid. But even if we assume the worst case scenario, Ron Paul's lawsuit not only made absolutely no legal sense, but it also seemed to go against nearly everything he believed in concerning internet freedom and the overreaching power of the government.

Either way, a judge has rejected Paul's attempt to unmask the videomakers on the narrow grounds that he failed to state a legitimate claim, since the video was not commercial in nature (necessary for a trademark violation). The judge did not go so far as to get into the First Amendment issues, but made clear that if Paul comes back with an amended suit with an actual claim, then the First Amendment considerations will be covered. Kudos to Paul Levy at Public Citizen for filing a pair of amicus briefs in the case to make sure the judge was aware of what was happening -- and hitting back at Paul's camp for its initial filing that completely ignored the relevant law and legal standards for unmasking anonymous internet users.

There are a number of especially troubling items in terms of how Paul and his camp went about this. First, just trying to unmask anonymous internet speech seems extremely problematic. Second, however, is the way in which he tried to twist trademark law to do so. As Eric Goldman explains, Paul's attempts to route around the clear requirements of trademark law were especially mockable:

To try to salvage the situation, Paul tries two mockable arguments. First, he argues that YouTube and Twitter are commercial sites, and that gives the dispute enough commerciality. The court rightly points out that the inquiry is about the defendant's conduct, not the websites where it took place, and notes the argument's illogic would mean non-commercial activity on any commercial website would be governed by the Lanham Act. In a footnote, the court adds that "using another company’s commercial website to post a comment or video is just far 'too attenuated' to result in an individual’s own conduct automatically meeting the Lanham Act’s commercial use requirement."

Second, Paul argues that "the video was intended to frustrate Plaintiff’s fundraising efforts and increase the amount of money contributed to Presidential nominees other than Ron Paul." The court says the Lanham Act is predicated on the defendant trying to improve its competitive status, and these defendants had no competing services; and the video on its face didn't try to solicit any donations.

Anonymous speech is protected under the First Amendment, and abusing trademark law to try to unmask anonymous speakers, whose speech was not commercial, is clearly an abuse of the law to try to "out" people online. As some have noted, it appeared to go against Ron Paul's own key principles -- and whether you agree with him or not, Paul certainly has the reputation for standing up for his principles. Yet here, suddenly, all of that went out the window:

What continues to amaze me, though, is how Paul is getting a free pass for this assault on free speech. Mitt Romney and Rick Santorum haven't filed lawsuits over identical videos that use their names in attacking Huntsman; why is Ron Paul the only candidate who filed such a suit? Indeed, so far as I have been able to discover, he is the only serious candidate for President in the past few decades who has ever filed a libel suit, and there are certainly Presidential candidates who have suffered far worse attacks. (I am not thinking of candidates who sued longer ago, but fifty years takes us back to the beginning of First Amendment protection against libel litigation brought by public figures). Why aren't the reporters who follow him around on the campaign trail not asking him how he can justify his use of litigation to oppress his critics and how it is consistent with the principles of liberty for which he claims to stand? How is this consistent with his First-Amendment based assault on campaign finance regulation such as McCain-Feingold? Does he just want to substitute the courts and privately financed litigation for the FEC?

Also surprising to me, is that even Paul's very vocal online supporters seem to refuse to recognize the issue here. I was amazed on our original post how many commenters came to Paul's defense here because they think that the videos were designed to make Paul look bad, and therefore the people "must" be revealed. That's not how the law works and that's not standing up for the basic principles of free speech, internet freedom and liberty that they supposedly stand for.

The sign of a truly principled person is when you're willing to retain those principles in the face of a situation where standing firm hurts you. Instead, Ron Paul folded and suddenly relied on big federal government regulations and abuse of the law to try to take away individuals' free speech rights.

We've seen this many times before, where famous musicians are totally screwed over by the major labels. A bunch of folks have sent over a summary of Kenny Rogers' lawsuit against Capitol Records (EMI), which highlights the levels to which Capitol Records went to not pay Rogers. The central facet of the lawsuit is similar to that of lawsuits that a number of artists have been filing, concerning whether or not iTunes transactions are sales or licenses -- for which massively different royalty rates apply.

However, there's plenty of other crazy things in the lawsuit, most of which involve an "audit" that Rogers requested from Capitol in April 2007... and which took until March 2009 to complete. Yes, it took two years. For a basic audit just to make sure he was getting the money he was owed. Oh, and the audit showed that he was not getting the money owed. From there, things got worse... with all sorts of stalling and foot dragging, finally resulting in the lawsuit. That stalling included repeated promises to resolve the problems and pay up. Rogers was told at times that the company was "still ironing out a few things," and then later found out that the people he'd been negotiating with were no longer at the company -- replaced by a lawyer who just told Rogers that he would be happy to work with Rogers to "promptly try to resolve the Rogers audit" -- nearly two years after the audit was completed and four years after it was requested.

Among the problems in the audit are a bunch of unprocessed royalties that were put into a "suspense" file for no reason. These kept $76,956 from Rogers. There were also actions in foreign territories where Capitol appears to have ignored the royalties it's supposed to pay Rogers. There were also things as simple as just not reporting royalties on money from record club sales. The company is also accused of playing some tax games to double count taxes to avoid paying royalties. There's also the fact that Capitol charged Rogers the full amount for a video production to his own expenses (i.e., money they'd "recoup" out of his portion of royalties), but they ignored their own contractual agreement that only 50% could be expensed that way.

Then there's the fact that Rogers wants his cut from the money Capitol has received in various lawsuits -- those against Napster, Kazaa, AudioGalaxy, Grokster, BearShare and others. As we've noted in the past, the labels have bent over backwards to avoid paying out such money to the actual artists -- but Rogers wants his piece:

Such lawsuits have resulted in Capitol Records receiving monies from entities such as Napster, Kazaa, Audiogalaxy, Grokster, BearShare, and others. Capitol Records has refused to provide Kenny Rogers with an accounting regarding the amounts actually received. A portion of the monies received by Capitol Records is attributable to the Masters and Kenny Rogers is entitled to that portion of Capitol Records‟ receipts. Capitol Records‟ refusal to account to and pay that money to Kenny Rogers has resulted in Kenny Rogers suffering direct financial harm in an amount that cannot be determined until Capitol Records provides a full, fair, and accurate accounting.

There are a few other charges as well, but those are the big ones. None of this, of course, is to say that it's "ok" to infringe because the major labels are somehow "bad." But it does show just how ridiculous it is if anyone assumes the majors represent the best interests of artists in any way.

While not everyone agrees with the EFF's position on various issues, the group is still pretty widely respected in legal circles. So it seems a bit odd that a copyright troll has apparently decided to spend an entire filing trying to block the EFF from filing an amicus brief ("friend of the court" brief) in one of its cases, attacking the EFF directly as some sort of "radical" and "quasi-anarchist" group. The lawsuit involves Prenda Law, who took over the cases formerly brought by divorce lawyer-turned-copyright troll John Steele. I hadn't been following it closely, but sometime last year, Steele apparently handed his practice off to Prenda -- though there have been some questions over whether or not Steele is still involved and to the legality of the transfers.

Either way, Prenda clearly does not like the EFF and basically spends the entire filing insulting the organization based on next to nothing. A few examples:

• The EFF is opposed to any effective enforcement and litigation of intellectual property law, which seeks a platform by which to advance its agenda.
• The EFF is an anti-intellectual property group, which appears in the present action merely in order to obstruct or delay Plaintiff’s copyright infringement litigation.
• The EFF’s crusade continues, despite their lack of success, not out of any concern for proper application of the law.
• The EFF Is a Radical Special-Interest Group Generally Opposed to Any Effective Or Efficient Enforcement of Intellectual Property Law
• This mission is radical, quasi-anarchist, and intrinsically opposed to any effective enforcement of intellectual property rights.
• their history of advocating lawlessness on the Internet suggests that their purpose is not to help this Court administer justice, but to hinder and obstruct the process

It also focuses on the fact that the EFF failed in one of its attempts to question whether or not joining together so many defendants was proper -- in a case presided over by a judge who had only recently joined the bench, after a stint as an RIAA lobbyist. It ignores that the EFF has won its argument that joinder is improper many more times than it has lost. Hopefully the court sees through this.

One of the key points behind Ron Paul's success in this Presidential campaign (as well as in 2008) was his reputation for actually "getting the internet" and making good use of it to promote his message and motivate and activate his supporters. But it appears that perhaps he doesn't quite get the internet that well. That's all I can think after reading the details of a dreadfully short-sighted lawsuit that he filed to try to unmask some anonymous internet users. Basically, some random internet users created a pretty dumb, racist and offensive anti-John Huntsman attack video, essentially questioning his "values" because he speaks Chinese. However, it was posted by a user under the name NHLiberty4Paul. And, at the end it briefly says "Vote Ron Paul." Still, there's absolutely nothing to indicate this was created by the Paul campaign. The video has received some attention on the campaign trail, with both Paul and Huntsman speaking out against the video. Huntsman said he doesn't mind people making fun of him for speaking Chinese, but was upset about bringing his family into it with some pictures and videos of his adopted daughters. Paul disavowed the video and the creators of the video, saying: "Nobody who actually supports Dr. Paul’s principles would put together something like that." Separately, they called it disgusting.

And really, that should be it. However, for whatever reason, the Paul campaign has now filed a lawsuit in the federal courts, in the Northern California district, seeking to identify whoever created and uploaded the video -- alleging trademark infringement and defamation. Even more ridiculous is that he's filed for expedited discovery to try to unmask those uploaders quickly. This is all sorts of bizarre and not particularly smart. It also seems to go against a bunch of Paul's main points -- including his belief in state's rights over federal (he's suing in federal court, not state court, using some questionable theories) and his support of the First Amendment -- which, many courts have pointed out, includes the right to speak anonymously.

Even more specifically, on the actual details of the lawsuit it's difficult to see how this is a trademark claim in any way, since it's questionable how this is a "use in commerce" (necessary for trademark law). Second, the defamation claim is just bizarre. As a public figure, the bar for defamation is crazy high -- and he'd likely have to prove that the video was made maliciously to make him look bad. That seems like a massively high hurdle, since it's just as likely that some clueless/ignorant people made the video thinking it would help him. But, on top of that, is just putting his name on a dumb and offensive video -- without ever suggesting he was directly associated with it -- even defamation in the first place? Hell, if anyone has a defamation claim here (and I don't think anyone does) it would be Huntsman.

Finally, what good does filing this lawsuit do? I can't figure out any conceivable argument under which filing the lawsuit makes sense. Not only is it on questionable legal theories and contrary to his core statements on Constitutional support, but it also simply calls more attention to the offensive video and brings the story back into the news cycle, after he's been trying to distance himself from it. No doubt, the video is stupid, but this lawsuit may be even dumber.

Max Mosley knows a thing or two about scandal. After an alleged "Nazi-themed" sex party was caught on tape and delivered to the entire world via News of the World (and the internet in general), Mosely attempted to wrangle an injunction out of the UK courts. It was pointed out that the "dam had already burst," thus rendering an injunction useless.

Undeterred, Mosley attempted to have a law crafted that would require that certain people (rich, famous, rich and famous) be notified by newspapers, etc. ahead of the publication of possibly damning information, presumably to allow said rich/famous people to file injunctions preventing the publication. Needless to say, this also failed.

But Max is nothing if not determined. Mosley is now bringing lawsuits against Google in France, Germany and for some reason, California in order to prevent the further spread of the Nazi sex party story.

In his testimony at the Levinson Inquiry, Mosley clarified his legal "strategy:"

I think we have litigation going on in 22 or 23 countries at the moment, and it's just an ongoing process because -- I mean I'm trying to do everything I can to get this material removed from the web and it's not easy, it's ongoing, it's very expensive, but Germany is actually the number one example. Because of the Nazi thing, it got very much picked up in Germany.

Yes. Well, Germany is still rather touchy about its position as world's greatest villain for years 1939-1945.

One of the difficulties is that Google have these automatic search machines so if somebody puts something up somewhere, if you Google my name, it will appear. We've been saying to Google, you shouldn't do this, this material is illegal, these pictures have been ruled illegal in the English High Court. They say we're not obliged to police the web and we don't want to police the web, so we have brought proceedings against them in France and Germany where the jurisprudence is favourable. We're also considering bringing proceedings against them in California.

As automatic as Google's "search machines" are, they don't add n to x randomly. If something shows up in the search results, it's because something exists on the internet. Whether or not these pictures were ruled illegal by a high court has nothing to do with Google's search engine. If the pictures are still available on the web, then Google will find them. The attempt to grant a search engine some sort of anthropomorphic properties (including a vindictive streak) is imaginative but hardly a sound basis for a legal battle. Notice also: proceedings are being brought where "jurisprudence is favourable," rather than for any sort of logical reasons.

But the fundamental point is that Google could stop this material appearing, but they don't, or they won't as a matter of principle. My position is that if the search engines -- if somebody were to stop the search engines producing the material, the actual sites don't really matter because without a search engine, nobody will find it, it would be just a few friends of the person who posts it. The really dangerous thing are the search engines.

Mosley, I'm going to give you the benefit of a doubt. Perhaps you just misworded your statement. Search engines don't "produce" anything. They can bring you results, but they do not produce content. (And when they do start producing content, I assume we'll hear even more whining from content producers, rather than less.) So, search engines aren't "dangerous." They're agnostic. Or impartial. Or (if we're granting them human qualities) "unemotional" and "uncreative."

Mosley is himself a lawyer. And he has engaged the services of other lawyers. Now, either somebody in this group is thrilled with the possibility of endless billable hours or no one involved understands search engines. Simply put, this legal battle will have no end. Every time Mosley files a suit or testifies in court, new articles appear linking him to the very event he's trying to get the collective internet to forget. If he would stop trying to make it all go away, chances are it would recede into the metaphoric past at a much faster rate. Right now, he's stuck in a loop and he's trying to sue his way out of it.

If Mosley is acting as the advisor for his legal team, he's in trouble. Here's a quote from his official statement that was presented to the inquiry:

It is sometimes assumed that the Internet is not subject to the law - that it operates as a sort of Wild West with its own rules which the courts cannot touch. This is a fallacy. The Internet and those that use it are clearly subject to the law like everyone else. It may sometimes be difficult to enforce the law because of the international nature of the Internet. But that is a separate question.

Ah. The Wild West. We never tire of hearing the internet compared to a dusty, corpse-strewn, sepia-toned image of the past. If anything, it's more like international waters, where national laws can't stake a claim, where gambling using funds from offshore accounts is rampant, pirate ships laden with freshly burned DVDs dot the waves and bottled water prices exceed even the most ruthless rave promoter's dreams. Or maybe it's more like Sealand, an offshore community that respects no national law and in return, is respected only by budding teen anarchists and people who think Neuromancer already happened.

We make a shopkeeper or a publican responsible for what they sell and to whom. There is no reason not to do the same to Internet service providers.

Another terrible analogy which makes one wonder whether Mosley is going to target ISPs if the Google lawsuits fail to produce the intended results. Blaming Google for unpleasant search results is a bit like blaming the guy manning the porn store counter for bringing you the porn you asked for. And blaming the ISPs for not preventing unwanted content from existing is like blaming the porn store for porn. Either way, it is not the responsibility of "search machines" or "shopkeepers" to police the internet to protect you from stuff. The internet does not exist to protect your reputation. Even if Mosley's recounting of the events is entirely factual and that the tabloid manufactured the situation for loosely termed blackmail, his complaint should begin and end with the offending publication. The dissemination of this sordid business is not the responsibility of Google, Internet service providers or a lack of a tamed "Wild West." And every piece of litigation only adds to the very thing Mosley is trying to subtract.

We've written about famed patent troll Erich Spangenberg and the variety of shell companies under his control a few times in the past. He's the guy who a court told to pay $4 million for shuffling patents around among shell companies and suing the same company twice with the same patent, despite a settlement the first time that precluded future suits. Spangenberg is also famous for his motto, "sue first, ask questions later," in part because he wants his lawsuits to take place in Eastern Texas.

Apparently, he doesn't always sue first, but can't resist being sneaky anyway. On behalf of an anonymous "client," he (under the guise of his company IP Nav) sent a letter to Renaissance Learning, asking them to enter into totally secret negotiations over possible patent infringement. He refused to name the client or the patents, but wanted Renaissance to sign a gag agreement that they would never talk about anything that came out of the discussion. Renaissance, instead, went to its local court, in Wisconsin, and got a subpoena asking Spangenberg to identify the patent and the patent holder, for the purpose of getting a declaratory judgment that it did not infringe the anonymous patent holder's unknown patent.

Spangenberg, perhaps regretting not following his "sue first" mantra, filed a motion to quash in Eastern Texas, arguing that the Wisconsin court had no jurisdiction (despite Renaissance being in Wisconsin). The court leaned towards agreeing with Spangenberg, saying he had raised "substantial questions" about the jurisdiction, but that it was an issue for the Wisconsin court to discuss. In response, the Wisconsin court looked at the issue and issued a pretty damning order about Spangenberg's threat letter being enough to file for a declaratory judgment. While it notes that Spangenberg may have been careful to avoid making a direct threat (necessary for declaratory judgment), the intent is clear... and the court uses Julius Caesar and Anton Chekov to make the point:

Some might look at the silky wording of IP Nav's letter to Renaissance and see a close question; this court, however, sees an unmistakable and intentional warning shot across the bow. The actual message is pellucid to any patent litigator, so that IP Nav's use of apophasis is disingenuous and unavailing. Remember Mark Antony's funeral oration in Julius Caesar? That's how an experienced business executive or lawyer would view IP Nav's assertions that "we are focused on addressing these issues without the need for costly and protracted litigation" and "our client's preferred approach is to conclude licensing discussions without resorting to litigation. We hope you share this objective." The implied "or else!" oozes from this letter like lye from lutefisk. To paraphrase an observation attributed to Anton Chekhov, you don't hang a gun over the mantle in Act I unless someone is going to fire it in Act III.

Doe enlisted IP Nav–a specialist in "monetizing" patents for its clients–to communicate with Renaissance on its behalf. The fact that such correspondence was sent anonymously through a hired gun proud of its "aggressive pursuit of patent infringers" reasonably would invoke "a different reaction than would a meet-and-discuss inquiry by a competitor, presumably with intellectual property of its own to place on the bargaining table." Hewlett-Packard Co., 587 F.3d at 1362. The letter makes clear that Doe or IP Nav already has gone to the expense of analyzing Renaissance's products and has concluded that there was a "basis for . . . infringement claims against [Renaissance's] products or services." Further, IP Nav's refusal to identify its client or the patents at issue, along with the unnecessarily tight ten-day response deadline, reasonably can be viewed as components of a strategy to preclude Renaissance from obtaining the facts it needed to file a declaratory judgment action; from this approach one also could reasonably infer that Doe already was prepared to litigate if necessary and intended to retain for itself the choices of when and where to file its lawsuit if Renaissance would not play ball. Then there is demand for a one-sided forbearance agreement that required that Renaissance not file suit but imposed no reciprocal obligation on Doe. All of this reasonably implies that Doe intends to enforce a patent and that a real controversy exists.