Techdirt. Stories filed under "lawsuit"

Bogus Lawsuit Plus Threats To Those Who Write About It Leads To Epic Response

Mike Masnick — Fri, 17 May 2013 10:32:43 PDT

Reader Jason sent over a blog post that sent me down a bit of a rabbit hole, following the story through a variety of twists and turns. The key player in the story is Jonathan Monsarrat, who among other things founded the video game company Turbine (Asheron's Call, Lord of the Rings Online, Dungeons & Dragons Online, etc.). In early 2010, Monsarrat was arrested concerning events at a party in Massachusetts. The charges against him were later dismissed. However, there were various blog discussions among local bloggers and commenters. Not long ago, approximately three years after all of this happened, Monsarrat sued two named defendants and 100 "John Does" in a Massachusetts (not federal) court on a variety of charges, centering around defamation, but also including copyright infringement, commercial disparagement, deceptive trade practices and conspiracy. He's asking for an astounding $5.5 million.

Reading through that complaint first, before digging deeply into a variety of other sources, there were some immediate oddities. Many of the "defamatory" statements didn't seem to have anything that could possibly be defamatory in them. Some of them possibly reached the level of defamation, but at worst they read like typical silly hyperbole among internet commenters. Hardly worth worrying about. But other stuff seemed even odder. A copyright claim not in federal court? And for what sounded like adding context/imagery to a news article? Hmmm. That doesn't sound right. State copyright claims are pre-empted by federal copyright law (and, no, this isn't one of those possible exceptions involving pre-1972 recordings). Commercial disparagement? Over some blog comments? There were a lot of alarm bells, signalling something that required a lot deeper look.

Then, I came across the actual news reports of his arrest -- both the Boston Globe one linked above and the Wicked Local story. Both seem to be pretty clear that they're reporting based directly off of a police report -- and state things from that police report that Monsarrat is now claiming are entirely untrue and defamatory. But... for those who repeated them on the blog, even if they did turn out to be untrue, they'd have an incredibly strong fair report privilege claim. For example, the lawsuit suggests that Monsarrat was just a guest at the house and knew little of the party before it happened. From his filing:

The party leading to Plaintiff's arrest was hosted by another third party, "Trano", and not by Plaintiff.

This other third party, Trano, provided music entertainment, bouncers and beer at this party, which Plaintiff knew nothing about until the immediate time leading up to the commencement of the party.

The non-use of Trano's full name is also an interesting choice. Anyway, according to the Boston Globe coverage of the incident:

Upon arriving at the scene, police found broken beer bottles near the door of the first floor of the apartment and 25-30 teenagers inside. Many were attempting to conceal bottles of beer and other alcoholic beverages, the police report states. Open bottles of alcohol were found in the kitchen area as well as a small amount of marijuana.

Monsarrat identified himself as the host of the party, but denied that any alcohol was being served, the report states. When asked by an officer to inform his guests that the party was ending, Monsarrat became “argumentative” and refused to follow instructions, police said. Officers asked for identification from several partygoers who responded, “We're in high school, we don't have ID."

Then the story gets even odder. In researching it, up popped a press release from Monsarrat himself about the lawsuit, in which he refers to himself as a "dotcom era icon and Internet expert." Also, there's this:

Jon Monsarrat announced this week that as part of an Internet defamation case, he will expose the real identities and addresses of 100 cyber bullies as part of his new cyber investigation service.

Oh, wait a second...

Earlier in 2013 he created a cyber-investigation service, which cracks the real identities of cyber bullies who post defamatory material online. The release of names and identities is part of this new service, for one of Monsarrat's client with an ongoing legal case against cyber bullies. His company is working in partnership with Defend My Name, perhaps the most technically advanced of the top anti-defamation services, and Ishman Law Firm, which has expertise in defending victims from cyber-attack.

Jon Monsarrat said, "Cyber bullies harass and spread lies about their victims using the power of the Internet, which leads to thousands of suicides a year. The police and courts are not always up to the challenge of fighting back. Now I'm bringing two patented technologies to bear to help people in need." Monsarrat was referring to his two patents in collecting and analyzing data from public websites.

This might present a possible reason that it took about three years after the original blog posts to file a lawsuit (by the way, statute of limitations on defamation in Massachusetts: three years).

And then, a bunch of LiveJournal users -- including some who claimed they never commented on the original blog post -- began receiving letters saying that they're being added to the lawsuit. Apparently, those letters have some bogus boilerplate in them claiming copyright on the letter and stating "I prohibit anyone from publishing or disclosing it in whole or in part, on the internet or any other venue or any other means, without first obtaining my written consent." That, of course, is bullshit. It is not how copyright works, especially on a legal threat letter. At least one blogger has written that Monsarrat threatened to include him in the lawsuit for merely writing about the lawsuit and for the comments others had left on that blog. Of course, there is no legitimate claim against writing about the lawsuit, and the blogger is protected from liability from the comments under Section 230 of the CDA.

Then, and only then, did I finally get to reading the epic response letter from the lawyer representing Ron Newman, one of the two named defendants in the lawsuit. The lawyer is Dan Booth of Booth Sweet LLC, a law firm you may recognize from its awesome job fighting back against numerous Prenda Law cases. I cannot do justice to the entire 18 page letter, so I suggest you read it in its entirety, but I will give you a few highlights. I will note that this is not a legal document filed with the court in response to the lawsuit, but rather a letter to Monsarrat's lawyer, Mark Ishman, of the Ishman Law Firm, which Monsarrat's press release names as a "partner" in this new "expose-the-cyber-bully" business.

The letter picks apart the case piece by piece in devastating fashion, noting repeatedly that the claims made in the lawsuit are so far removed from reasonable that if Ishman and Monsarrat do not drop the lawsuit, Booth and Newman will seek sanctions for bringing bad faith claims. He then goes on to lay out, in excruciating detail, what their arguments would be in court, repeatedly asking Ishman if he's ever actually read the statutes he's relying on. He notes the articles based on police reports as just a starting point. He then points specifically to the few quotes that were actually Newman's, showing how the complaint appears to take them entirely out of context and misrepresent what they were saying, and there is simply no way they were even remotely defamatory. Some of them are ridiculous when put back into context -- including using a comment about how Newman and some other admins had agreed to close the original thread to more comments, and saying that was defamatory. It also, of course, references CDA 230 to point out that Newman clearly is not liable for anyone else's comments.

Those are the basics. Then it goes even deeper. I'll let Dan Booth handle this part:

The second claim for relief is supposed to be under Chapter 93A of the Massachusetts General Laws. Have you ever actually read that statute? I'm not sure you made it all the way through to Section 9(3), which requires that a demand letter complying with certain statutory requirements must be mailed to a defendant at least 30 days before filing suit under Chapter 93A. "[T]he thirty-day requirement, as part of the requirement of a written demand for relief, is a prerequisite to suit, to be alleged and proved." York v. Sullivan, 369 Mass. 157, 163 (1975). Perhaps you jumped the gun a bit here? You filed suit on February 4, so you would have needed to send a demand letter before January 5, 2013 to satisfy the statute. Mr. Newman received no such letter. As far as I can tell, you didn't even comply with the spirit of the 30-day requirement -- you made no attempt to settle the dispute amicably before filing suit, or before filing the amended complaint, or before having it (and its telephone-book sized pile of exhibits) served on Mr. Newman.

How about the commercial disparagement stuff? Yeah, under the law, such statements need to be made by a competitor, which Newman clearly isn't. Oh, and Booth notes he didn't actually disparage any products or services, as required by the law. And then we move on to the copyright claim. We already noted the oddity of trying to shove a copyright claim into a state (okay Massachusettians: commonwealth) court, and Booth highlights some more problems:

Attorney Ishman, I see on your website that you hold yourself forth publicly as a copyright lawyer. I am too. I commend you for that, and for any work you do to legitimately support and protect creators. I like copyright law a lot; I just hate to see it abused. So I wonder whether you may have gotten a bit ahead of yourself with this cause of action.

Claims of common-law copyright are preempted by the Copyright Act, 17 U.S.C. § 101 et seq. Have you read that statute? Since the 1976 Copyright Act became effective, Section 301 has explained that copyright claims are "governed exclusively" by the Act, and that "no person is entitled to any such [copyright] or equivalent right in any such work [within the subject matter of copyright] under the common law or statutes of any State." 17 U.S.C. § 301(a).

In other words, common-law copyright claims are a relic. "Under the Copyright Act of 1976 ... common law copyright is abolished." Burke v. NBC, Inc., 598 F.2d 688, 691 n.2 (1st Cir. 1979). There have been no reported cases in Massachusetts state courts since the 1976 Act in which a common-law copyright was found valid. But there have been several that say things like, "These common law claims ... have clearly been preempted by the 1976 Copyright Act." Sicari v. Raccula, 2 Mass. L. Rep. 109 (Mass. Super. Ct. May 8, 1994). To the extent such claims exist, they're generally limited to media where, due to quirks of the Act's history, no statutory right ever existed, such as extemporaneous speeches or pre-1972 sound recordings. But the copyright claim in this case concerns a photograph, and those have been covered by the Copyright Act since Oscar Wilde was a young man. Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53 (1884). Your assertion that Mr. Monsarrat's images are "subject to common-law copyright protection under the laws of the state of Massachusetts" (Complaint ¶ 102) is wrong as a matter of black-letter law.

Booth even goes through a "sake of argument" explanation for how, even if common-law copyright could apply to a photograph (which, as noted, it cannot), via Monsarrat's own actions, that photograph would be in the public domain under the specifics of the prevailing copyright law.

Booth then goes on to point out when you look at Newman's actual comments, he actually was quite even handed when the story broke, noting things like, "To my knowledge he hasn't been found guilty of any crime in a court of law." And he invited Monsarrat to present his side of the story. And yet, Monsarrat tries to paint Newman's activity as "extreme and outrageous" for the sake of "intentional infliction of emotional distress."

And then, Booth goes on to point out that the record suggests the version of the story that Monsarrat presents in his filing is less than accurate:

Those assertions are directly contradicted by the record. Set aside the fact that Mr. Monsarrat was at the party and that he was arrested at the party. Set aside the fact that both the police report and the Somerville Journal article stated plainly that Mr. Monsarrat had "identified himself as the host of the party." Set aside the fact that the police report indicates that Mr. Monsarrat denied, to the arresting officer, that there was any alcohol at the party, despite the officer's firsthand observations. Mr. Monsarrat publicly announced his role in the party online, before his arrest. As Mr. Newman pointed out at the time, Mr. Monsarrat had posted an open invitation on his Wheel Questions blog, announcing that he was holding the party, two days before it happened. Complaint Exhibit 4 p. 69 ("I'm holding a party Friday in the Boston area. RSVP to johnny@wheelquestions.org and say a little about yourself for the location.") (quoting Mr. Monsarrat). If Mr. Monsarrat wants to clear his name by suggesting that he was a mere innocent bystander at the party, he cannot hope to succeed in rewriting the public record. His own words will be admissible as non-hearsay, to prove the truth of his statements identifying himself as the host, and to disprove statements to the contrary in the complaint. See Commonwealth v. DiMonte, 427 Mass. 233, 243 (1998) ("A party's admission is excluded by definition from the hearsay rule.") (citing Proposed Mass. R. Evid. 801(d)(2)); see also Flood v. Southland Corp,. 33 Mass. App. Ct. 287, 294-95 (1992).

And we're not done yet. He points out that many of the comments included in the claim are way outside the statute of limitations, and Massachusetts has a well established single publication rule, meaning that the date when the content is published is when the clock starts ticking on the statute of limitations. The fact that the content remains online is meaningless. Booth also points out the ridiculousness of the $5 million dollar demand.

The complaint seeks punitive damages in an amount to exceed $5,000,000. That is outrageous on its face, and wholly unsustainable under controlling law. Massachusetts has not allowed such damages since 1974. "In a case of defamation the plaintiff's recovery is limited to actual damages, which are compensatory for the wrong done by the defendant. ... Punitive damages are never allowed ... even after proof of actual malice." Stone v. Essex County Newspapers, Inc., 365 Mass. 246 (1974) (citations omitted). The Supreme Judicial Court of Massachusetts reaffirmed that position the following year: "We reject the allowance of punitive damages in this Commonwealth in any defamation action, on any state of proof, whether based in negligence, or reckless or wilful conduct. We so hold in recognition that the possibility of excessive and unbridled jury verdicts, grounded on punitive assessments, may impermissibly chill the exercise of First Amendment rights by promoting apprehensive self-censorship." Stone v. Essex County Newspapers, Inc., 367 Mass. 849, 860 (1975).

As for the letters that various LiveJournal users are receiving:

It is my understanding that Mr. Monsarrat has busied himself, since the filing of the amended complaint, by reaching out to people he believes responsible for these three-year old discussions, sending them wildly improper threatening letters and/or directly confronting in person. In at least one of those letters, he states, "The purpose of this correspondence to is [sic] notify you that I am suing LiveJournal forum moderator Ron Newman for $5,500,000 for defamation, and that you are named as a Doe Defendant in this lawsuit..." These actions are deeply dismaying. Mr. Monsarrat is tarnishing Mr. Newman's name in scattershot fashion, to many people who may have had no relation to the postings at issue. He may not harass people in the Somerville community by seeking to intimidate them into removing their legitimate free speech comments.

Booth also points out that in intimidating various LiveJournal users into possibly removing their comments, there may be further issues with regard to encouraging the destruction of key pieces of evidence:

When Mr. Monsarrat succeeds in this intimidation, he helps to destroy the record that would be at issue if the litigation were to proceed. If this pattern of behavior continues, he may be subjecting himself to sanctions for suborning spoliation. Thanks to poor formatting, many of the Complaint's Exhibits reproduce discussion threads in piecemeal fashion, omitting much or all of the text of longer comments. See, for just one example, Complaint Exhibit 4 pp. 31-42. These fragmentary Exhibits leave the original online discussions as the only reliable source of material evidence. Any deletion of those comments, as Mr. Monsarrat demands, makes them invisible to subsequent viewers, depriving defendants of the context-specific defenses that a defamation claim requires. "'The destruction of relevant evidence ... has a pernicious effect on the truthfinding function of our courts.' ... The doctrine of spoliation permits the imposition of sanctions or remedies where a litigant or its expert negligently or intentionally loses or destroys evidence that the litigant (or expert) knows or reasonably should know might be relevant to a possible action, even when the spoliation occurs before an action has been commenced." Scott v. Garfield, 454 Mass. 790, 797 (2009) (quoting Fletcher v. Dorchester Mut. Ins. Co., 437 Mass. 544, 553 (2002)).

Booth also notes the same press release I saw, and raises some questions about it:

It appears this action has been filed with an ulterior purpose: not as a good faith means to redress any legitimate grievances, but as a case study to be used in marketing one of Mr. Monsarrat's business ventures. That would be more than improper enough, but worse, the entire purpose of "cyber investigation service" seems to be to empower litigants to make endruns around the discovery process, as Mr. Monsarrat has done.

And, also, the oddity of the fact that Ishman appears to be both a lawyer for Monsarrat and a business partner:

This partnership, in the place of a putative client and attorney relationship, is more than irregular. It may subject Attorney Ishman and his law firm to the same liability as Mr. Monsarrat, based on their involvement in a larger scheme. See Kurker v. Hill, 44 Mass. App. Ct. 184, 192 & n. 8 (1998). "[A] civil action is wrongful if its initiator does not have probable cause to believe the suit will succeed, and is acting primarily for a purpose other than that of properly adjudicating his claims." G.S. Enterprises, Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 273 (1991). It appears that Mr. Monsarrat has dragged Mr. Newman into court, and badgered an untold number of others, to make a name for his "cyber investigation service." This ulterior purpose, combined with the paucity of the complaint's factual allegations and legal claims, strongly suggest that the action has been undertaken without good faith. These improprieties would support counterclaims of abuse of process, see generally Millennium Equity Holdings, LLC v. Mahlowitz, 456 Mass. 627, 636 (2010), and under Chapter 93A, see Northeast Data Sys., Inc. v. McDonnell Douglas Computer Sys. Co., 986 F.2d 607, 611 (1st Cir. 1993) (filing legal claim "which proves baseless" is an unfair trade practice if claim brought with "ulterior motive"); Nova Assignments, Inc. v. Kunian, 77 Mass. App. Ct. 34, 44 n. 7 (2010); Refuse & Envtl. Sys., Inc. v. Indus. Servs. of Am., Inc., 932 F.2d 37, 43 (1st Cir. 1991) ("bringing [a] lawsuit in spite of the evidence" can violate Chapte 93A). These improprieties would further support sanctions under M.G.L. c. 231, § 6F, see Fronk v. Fowler, 456 Mass. 317, 334 -35 (2010) ("Claims that are so unmoored from law or fact are the very definition of 'frivolous': 'Lacking a legal basis or legal merit; not serious; not reasonably purposeful.'") (quoting Black's Law Dictionary 739 (9th ed. 2009)), and under Mass. R. Civ. P. 11, see Van Christo Adver. v. M/A-COM/LCS, 426 Mass. 410, 416-17 (1998).

Believe it or not, those aren't even all of the highlights of the letter. I imagine that this one could get interesting if Ishman and Monsarrat choose not to take Booth's stern suggestion that they immediately dismiss the claims against Newman with prejudice.

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Royalty Collection Agency SABAM Sues Belgian ISPs In Pursuit Of Its Fantasy 'Piracy License'

Glyn Moody — Tue, 7 May 2013 07:37:42 PDT

Back in November 2011, we wrote about the Belgian music royalty collection agency SABAM's demand for 3.4% of Internet subscriber fees as "compensation" for online piracy in Belgium. As Tim Cushing explained back then, this was ridiculous on just about every level. But SABAM doesn't let little things like that get in the way of its desperate attempt to avoid moving with the times and coming up with new business models. So after failing dismally to convince Europe's highest court that it could force ISPs to spy on their customers, SABAM has now moved on to suing ISPs instead, as TorrentFreak reports:

This week SABAM sued the Belgian ISPs Belgacom, Telenet and Voo, claiming a 3.4 percent cut of Internet subscriber fees as compensation for the rampant piracy they enable through their networks.

SABAM argues that authors should be paid for any "public broadcast" of a song. Pirated downloads and streams on the Internet are such public broadcasts according to the group, and they are therefore entitled to proper compensation.

One of the ISPs being sued, Belgacom, has a better analogy for what's going on here: "A postman doesn't open letters he delivers. We are also just transporting data, and we are not responsible for the contents," Belgacom says.
That's the "mere conduit" principle, and as TorrentFreak points out, if that defense is overturned here, and the "piracy license" is imposed, the cost will inevitably be passed on to users, which means that people who buy music legally will be paying twice for the privilege. And of course, it wouldn't just be SABAM: the other copyright industries -- films, books, photos, software, games -- will doubtless all line up for their free handout, making online access prohibitively expensive in Belgium.

But along with all the other problems mentioned by Tim back in his 2011 post, there's another major flaw in SABAM's logic. According to recent work carried out by the European Commission's Joint Research Centre, it's not even clear that the recorded music industry is being hurt by unauthorized downloads:

Perhaps surprisingly, our results present no evidence of digital music sales displacement. While we find important cross country differences in the effects of downloading on music purchases, our findings suggest a rather small complementarity between these two music consumption channels. It seems that the majority of the music that is consumed illegally by the individuals in our sample would not have been purchased if illegal downloading websites were not available to them. The complementarity effect of online streaming is found to be somewhat larger, suggesting a stimulating effect of this activity on the sales of digital music.

That is, streaming sites might even promote digital music sales; so maybe SABAM should be giving money to the ISPs, not asking for it....

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

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Now That Paul Ceglia's Been Arrested For Fraud, Court Says It Can Probably Drop His Lawsuit Against Facebook

Mike Masnick — Tue, 26 Mar 2013 20:11:33 PDT

This is hardly a surprise (other than the fact it took this long...), but since Paul Ceglia was arrested for fraud back in November after it became pretty clear that he had almost certainly forged the contract he used to claim that Mark Zuckerberg promised him 50% of Facebook, a magistrate judge has now said that Ceglia's original lawsuit against Facebook should probably be dismissed. Talk about a judicial understatement. In the end, this just becomes a bizarre footnote in the history of people trying to get themselves a piece of Facebook they never deserved. Nearly all of those claims were jokes, but this one looks like it was just a pure fabrication. It makes you wonder how Ceglia thought he could ever get away with it, or if he just thought that Facebook would pay him off somehow to go away. Whatever he was thinking, he was wrong.

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Iran Wants To Sue Hollywood Over Argo Somewhere, Some Time, & For Some Reason

Timothy Geigner — Thu, 14 Mar 2013 07:50:50 PDT

I have to admit, I kind of like writing about Iran. They make posting about them so much fun. From their photoshopped war-machines to their plans for internet IDs all the way to their blocking useful internet services like email, it's like watching a documentary on how to be ineffective at trolling the rest of the world and your own people. But this time they've gone too far, damn it. Iran wants to take on Hollywood over Argo, specifically calling out director Ben Affleck for not including things they wanted him to include in his movie.

Side note: I consider the Iranians not protesting Gigli an act of war
Image source: CC BY 2.0

Of course, if you'd like any real details on what Tehran is planning on doing about any of this, good luck.

Iran is planning to sue Hollywood over the Oscar-winning "Argo" because of the movie's allegedly "unrealistic portrayal" of the country, Iranian media reported Tuesday. Several news outlets, including the pro-reform Shargh daily, said French lawyer Isabelle Coutant-Peyre is in Iran for talks with officials over how and where to file the lawsuit. She is also the lawyer for notorious Venezuelan-born terrorist Ilich Ramirez Sanchez, known as Carlos the Jackal.

Ah, lovely. The problem is that, while Iran is dismissing Argo and its awards as CIA propaganda, because everyone knows how pro-military Hollywood is, they aren't really disputing any specific points in the movie. They just say it shows Iranians as being too violent during the hostage-taking (er...), that Affleck failed to show why Iranians were so angry at the United States (they must have missed the movie's opener), and called Argo's awards an "attack against humanity." Other than that, no details were provided on what charges they were going to bring in what court and at what time. Why?

Well, probably because there is roughly f#@$-all they can actually do about it, outside of their own borders, where their own population has been gobbling the movie up via bootleg DVDs (are copyright pirates also pro-CIA?). Regardless, a quick message for my Iranian friends: it's a movie, get over it.

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The Pirate Bay's 'Lawsuit' Against Anti-Piracy Group More About Exposing Double Standards In Enforcement

Mike Masnick — Mon, 18 Feb 2013 11:02:00 PST

We stayed away from the story that made the rounds last week, concerning the claims that The Pirate Bay was going to file a lawsuit against Finnish anti-piracy agency CIAPC for setting up a site that parodies The Pirate Bay, using a copy of TPB's stylesheet. Knowing how TPB operates, we assumed that this was not an ordinary situation, even as eager reporters mocked the site for its apparent hypocrisy. Having seen how TPB has acted in the past, we figured there was more to this, and this week the details are starting to come out.

TPB has now said that it has reported the parody CIAPC site to the Economic Crime Unit. Why? Well, it appears the whole thing is really about exposing the double standard by Finnish law enforcement. You see, recently, Finnish prosecutors went after a parody site by Finnish "software developer, researcher and internet activist" Matti Nikki. So, TPB, is noting that it just wants to see the law applied equally (by which it means, showing how farcical the law is, knowing that law enforcement will never prosecute this):

“In a similar case, the prosecution and the Helsinki Court of Appeals have found that a parody site can violate the moral rights of the original author. Changing the logo or making slight edits to the text are not enough to remove this liability,” they informed the police.

The Finnish EFF supported this claim, explaining to TorrentFreak (in the link above) that seeing how prosecutors reacted would be quite telling:

“It’s interesting to see, how the police reacts to Pirate Bay’s demands. On facts the case is indeed very similar to Matti Nikki’s case, in which the prosecutor decided to bring the charges on behalf of Save the Children.

“The law should be the same for everyone so now the objectivity of the Finnish police is going to be tested. Anyway as others have already pointed out, even if Pirate Bay loses the case, it’s a victory for their cause.”

So, while others were mocking, it appears there was a much more serious thought process going on here. One of the following possibilities are likely to occur:

Finnish prosecutors do absolutely nothing, thus exposing their complete double standard in enforcing the law.
A lawsuit happens, and TPB "loses" the case, as it's an obvious parody situation which should be allowed -- and thus, TPB reinforces the protections for parody.
A lawsuit happens TPB actually wins the case, which most people would equally recognize as preposterous after seeing the initial press coverage of the story.

It's looking like this was, yet again, a more clever move than many gave them credit for initially.

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Some Dell Shareholders Don't Know Much About This Leveraged Buyout, But They Know They Don't Like It

Dealbreaker — Thu, 7 Feb 2013 19:05:00 PST

Cross-posted from

The Dell deal documents are out and they are short of juicy details; we'll have to wait for the proxy for details on things like just how much of a discount Michael Dell is taking on his shares or what exactly the terms of Microsoft's loan are. There is, though, the information that that loan will take the form of $2 billion of subordinated debt, and that the total cash equity investments from Silver Lake, Michael Dell and MSD will total $2.25bn. This seems pretty sensible; Microsoft is effectively writing half of the equity check, though for a fixed-but-subordinated return, plus emotional benefits or what have you. And if you're worried about how easily debt markets will swallow some $3.25bn of bonds, $5.5bn of Term B/C, and billions of assorted other secured financing,¹ which with $4bn of existing bonds brings Dell to around 4x total leverage, making $2 billion – almost half a turn – of the debt subordinated, long-term, and emotionally committed can’t hurt.

But for most of the fun stuff we’ll have to look forward to the proxy. And that isn't good enough for some people. Reuters reports that the first shareholder lawsuit over the deal has already been filed, one day after announcement, which I assume means it was in the works before the deal was announced. This sort of amazed me:

Some shareholders said they were angered by the lack of specifics about the deal, making it hard for them to determine if the price was fair. The company, which declined to comment on the lawsuit, had said the board had conducted an extensive review of its strategic options before agreeing to the buyout.

I would characterize myself as mildly saddened by the lack of specifics, but that's why I will wait until the proxy is out and then read the specifics. You know there's a whole section of the proxy explaining why the bankers thought the deal was fair, right?²

There’s nothing new here – as Reuters notes, "Almost every merger worth more $100 million prompts a shareholder lawsuit" -- but the speed continues to amaze. And it's becoming ever more a fact of life:

That’s from this depressing report, which also has a sad-comical list of 16 deals each with 15 or more lawsuits filed. (The tech industry averages 4.9 suits, so, y'know, look out for 3.9 more.)

You can sympathize a little. Management buyouts are of course all about bottom-ticking the stock price; management would be pretty dumb if they took the company private at its all-time high. Dell's various stakeholder communications -- all to the tune of "this will is the start of a whole new chapter for Dell, in which everything will remain exactly the same" -- make that pretty clear: the deal has little to do with operational changes and much to do with the fact that Michael Dell thinks that (1) Dell and (2) debt are both cheap right now.

But that's kind of the market, and the fact of life is that if shareholders think that $13.65 is too cheap for their shares, they can always vote the deal down. By all accounts this deal was pretty fully negotiated, so it seems unlikely that the lawsuit will reveal that Dell and Silver Lake would have coughed up an extra $1 a share if the board had just asked more aggressively. And it's no secret that Michael Dell thinks that his company is worth more than $13.65. Even if that hasn't been specifically disclosed yet.

Dell 8-K, Merger Agreement, Voting Agreement [EDGAR]
Dell Buyout Broken Down: Silver Lake Puts in $1.4 Billion [Deal Journal]
Dell Aims for Double-B Rating, Leverage Less Than 4x Ebitda [Deal Journal]
Dell investor sues to block founder’s leveraged buyout [Reuters]
Reasons to Be Suspicious of Buyouts Led by Management [DealBook]
Dell’s Talks Said to Break Up a Few Times Over Pricing [Bloomberg]

1. From the 8-K:

Each of Bank of America, N.A., Barclays Bank PLC, Credit Suisse AG and Royal Bank of Canada and, in some cases, certain of their affiliates (collectively, the “Lenders”) have committed to provide debt financing for the transaction, consisting of a $4 billion senior secured term loan B facility, a $1.5 billion senior secured term loan C facility, a $2 billion ABL facility, senior secured interim loan facilities consisting of a $2 billion first lien bridge loan facility and a $1.25 billion second lien bridge loan facility (or, alternatively, senior secured first lien and second lien fixed rate notes that would be issued in a high-yield offering pursuant to Rule 144A under the Securities Act of 1933), a $1.9 billion term commercial receivables financing facility and a $1.1 billion revolving consumer receivables financing facility, each on the terms and subject to the conditions set forth in a commitment letter dated as of February 5, 2013 (the "Debt Commitment Letter").

2. The answer is always along the lines of "because you paid us to think that," but still.

Other posts from Dealbreaker:

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Aaron Swartz Unlikely To Face Jail Or Conviction... Until Feds Decided To 'Send A Message'

Mike Masnick — Fri, 25 Jan 2013 19:39:00 PST

Things just keep looking worse and worse in the Carmen Ortiz/Stephen Heymann vendetta against Aaron Swartz. Now it's come out that state prosecutors, who were originally looking into the case had no interest in pursuing felony charges or prison time... until Carmen Ortiz and her team showed up. Instead, state prosecutors had focused on the initial charges: "breaking and entering in the daytime" which they expected "would be continued without a finding, with Swartz duly admonished and then returned to civil society to continue his pioneering electronic work in a less legally questionable manner." Instead, the report notes:

Tragedy intervened when Ortiz’s office took over the case to send “a message.”

In case you were wondering what "continued without a finding" means, Harvey Silvergate (author of Three Felonies a Day) explained to Declan McCullagh:

"Continuance without a finding" was the anticipated disposition of the case were the charge to remain in state court, with the Middlesex County District Attorney to prosecute it. Under such a disposition, the charge is held in abeyance ("continued") without any verdict ("without a finding"). The defendant is on probation for a period of a few months up to maybe a couple of years at the most; if the defendant does not get into further legal trouble, the charge is dismissed, and the defendant has no criminal record. This is what the lawyers expected to happen when Swartz was arrested for "trespassing at MIT." But then the feds took over the case, and the rest is tragic history.

The report above also notes that Ortiz is in some additional hot water, as another one of her overreach cases, involving an attempt to seize a family-owned motel in Massachusetts by claiming that it was "facilitating drug crimes" has failed miserably, tossed out by the magistrate judge. Not only was it noted that there were only 15 drug-related incidents over a 15 year period (during which 196,000 rooms were rented out), but also, the motel owners worked closely with local police to deal with drug issues and that other local businesses that had drug incidents were not targeted by Ortiz.

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Mike Masnick — Thu, 6 Dec 2012 15:06:26 PST

Last week, we wrote about how student Richard O'Dwyer cut a deal with the feds to end the extradition attempt and criminal charges against him for running TVShack.net, a links site similar to other UK sites that had already been deemed legal. We noted that as a part of this "deferred prosecution," O'Dwyer would need to come to the US and pay a "small sum." He's now done so, and the court has ordered that he pay £20,000. That's still a decent chunk of change, but not a crippling amount like what we've seen in cases like the Jammie Thomas or Joel Tenenbaum cases (which were very different types of cases, but arguably over much lesser charges -- civil vs. criminal for one thing...). It still seems ridiculous that he needed to pay anything at all, but getting the case over, for an amount that he can "afford," while avoiding jail seems like a pretty big victory for him -- especially given the language that the feds (and Hollywood) have used to describe O'Dwyer. In the meantime, guess how much of the £20,000 will be going to the artists O'Dwyer supposedly was harming?

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Penguin Taking Underperforming Authors To Court To Recoup Paid Advances

Tim Cushing — Thu, 27 Sep 2012 08:08:03 PDT

This looks like it might be a new sign of the disrupted times. With major publishing houses competing with damn near everyone for readers, they can longer be expected to hand out hefty advances, especially in exchange for the literary equivalent of vaporware.

Penguin has decided to reclaim a bit of the money it threw at a selection of authors and, in one case, a potentially heartwarming tale of love and concentration camp survival that turned out to be completely fabricated. The Smoking Gun has published the names and amounts sought by Penguin in the lawsuits filed for "breach of contract/unjust enrichment." Here's a couple of defendants from the list:

* Blogger Ana Marie Cox, who signed in 2006 to author a "humorous examination of the next generation of political activists," is being dunned for her $81,250 advance (and at least $50,000 in interest). Her Penguin contract totaled $325,000.

* Holocaust survivor Herman Rosenblat was signed for $40,000 in 2008 to describe how he "survived a concentration camp because of a young girl who snuck him food. 17 years later the two met on a blind date and have been together ever since, married 50 years." While Rosenblat’s story was hailed by Oprah Winfrey as the "single greatest love story" she had told on the air, it turned out to be a fabrication. Penguin wants him to repay a $30,000 advance (and at least $10,000 in interest).

Ten more authors were named, including "Prozac Nation" author Elizabeth Wurtzel, who failed to deliver a "book for teenagers to help them cope with depression." The total amount, including interest, totals to over a half million dollars. Authors failing to deliver something printable (or anything at all) to publishers is nothing new, but a shotgun blast of legal filings against authors is a bit novel. (Oh, ho! A book pun.) It would be tempting to call this a new "revenue stream," but only the interest would be "new" money.

Theories as to ulterior motives or possible underhandedness on Penguin's part are being advanced (and another pun! completely unintentional!). In The Smoking Gun's comment thread, Trident Media Group chairman Robert Gottlieb speculates (strongly) that Penguin's treatment of its authors is disingenuous, at best:

Authors beware. Books are rejected for reasons other than editorially and publishers then want their money back. Publishers want to reject manuscripts for any reason after an author has put time and effort into writing them all the while paying their bills. Another reason to have strong representation. If Penguin did this to one of Trident’s authors we could cut them out of all our submissions.

Another possible angle is offered by literary blogger Edward Champion:

Why did Penguin wait until NOW to go after advances? Has Ducksworth been settled? And are authors having to pay up for discrimination?

Champion refers to the age discrimination lawsuit filed earlier this month against Penguin by Marilyn Duckworth, who alleges the publisher forced her out after 27 years of employment to pursue employees that were "faster, stronger and more nimble."

At this point, it's tough to judge the merits of the lawsuits based on anything other than Penguin's claims. It looks like straight-up breach of contract and the range of topics left unpublished (the rise of Bass Pro Shops, an "analytical forecast arguing for the future success of gold," a second book from the "dynamic pastor of the Empowerment Temple") suggest that Penguin's not limiting legal action to trendy bloggers or other "next big things." If this action proves to be successful, it's not tough to imagine other publishers following suit (Pun trifecta!), especially with the possibility of collecting 25-30% interest thrown into the mix.

But, if you're an author-to-be, and choosing to sign a publishing deal with a major publishing house, you'd have to think that this kind of thing would make you a lot less willing to sign with Penguin. Who wants the added stress of possibly being sued for the advance the publisher gave you? It would seem that authors may start to be a lot less interested in publishing with Penguin.

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Anti-Islam Movie Actor Sues Producers, YouTube To Have Film Removed

Timothy Geigner — Thu, 20 Sep 2012 12:04:54 PDT

Not long after I had written my opinion that YouTube should absolutely not censor the disgusing anti-Islam movie that has inflamed oft-flammable parts of this rock we all live on together, interesting news began filtering into the bloodstream. Actors in "Innocence of Muslims" began accusing its producers of misleading them about the roles they played, dubbing dialogue over their performances, and other bizzare tactics that had supposedly been used to keep those in the film from knowing what the end product was going to look like.

[Lily] Dionne was one of about 79 cast and crew who say they were "grossly misled" when they answered casting calls on Craigslist, Backstage magazine and other publications in July 2011 for a film that was described as "an historical Arabian Desert adventure."

But from the beginning, Dionne said the cast and crew had questions, including why the central character in a period piece had a Western name.

"We did wonder what it was about. They kept saying George. And we were like, 'This is the Middle East 2,000 years ago. Who's George?'" she said.

According to Dionne, the actors were then brought back after shooting to do the dubs, but the producers had them speak isolated lines and words, completely out of context. For instance, they were asked to simply say the name "Mohammed" and nothing else, with no explanation as to why. 79 cast and crew members have since released a statement claiming they were taken advantage of.

Now, one actress, Cindy Lee Garcia, has gone a step further and sued the man who produced the film, as well as YouTube, to, among other things, get the film taken down.

In a 17-page complaint filed Wednesday in Los Angeles Superior Court, the lawsuit from Cindy Lee Garcia also names YouTube LLC, the video-sharing website on which the video is posted, and its parent company, Google Inc., as causing irreparable harm to Ms. Garcia for refusing to remove the content from their site.

"The lawsuit is not an attack on the First Amendment or the right of Americans to say what they think," but it demands the content be pulled off because "Ms. Garcia in no way consented to the use of her performance, image or likeness in such an offensive and file film," Garcia's attorney, M. Cris Armenta, said in a statement.

A couple of things strike me here, so I'll take them in order. First, I'm unaware of how a film's director could be sued for slander (another aspect (pdf) of Garcia's lawsuit) because of the way he/she decides to portray the actors in their films. Slander should be out the window, since Garcia and the others were playing fictional roles, and so are not portrayed to be anything at all beyond the characters they were playing. Could Kevin Bacon sue Sleepers director Barry Levinson because the result of post-production for the film made his character look just a tad too child-rapey? The privacy violation and likeness rights violation in the suit seem equally ridiculous. She consented to be in a film! It's understandable why she's upset, but if that's allowed, imagine how many actors would start suing every time a film edit is a disaster and makes them look bad.

As for the "fraud" claim, that may be the strongest of a bunch of very weak claims. You could make the case that the various elements of fraud are present, but almost every one of them is a stretch.

In any case, today the judge refused to order an emergency takedown of the video—though the lawsuits will move ahead.

Even if there is a civil suit to be had here, targeting YouTube and requesting they take the film down has all the hallmarks of a head-in-the-sand approach (beyond raising questions of secondary liability). The cat is not only out of the bag at this point, it's protesting at its local US Embassy. The damage is done. I can certainly understand* the distress actors feel over the worldwide reaction to a film they probably thought would never be seen, but that doesn't mean the film has to come down. Google, thus far, agrees, and has refused to remove the video beyond censoring it in certain countries.

*One caveat: the trailer for this film was released in May. Where the hell were all these outraged actors back then? Why is it only now the film has made the news that they are releasing statements, speaking out, and filing lawsuits? Did none of these actors bother to view the movie they were in before the mainstream media picked this up?

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How The Royal Family Got The World To Look At Naked Photos Of Kate Middleton [Updated]

Mike Masnick — Mon, 17 Sep 2012 08:21:25 PDT

Update: Good points made in the comments that suggest that the graph below is actually more about the original news coming out in the evening, and the national UK press running the story in the morning -- rather than in response to the threat to sue. While the legal action certainly didn't help push the story under the rug (it's the only way I heard about it, for instance), it looks like we (picking up on the Forbes piece) went too far in assuming that the threat to sue is what resulted in the attention. The original story remains below.

I don't tend to follow news like this, so there could be plenty of reasons why I missed the report that the wife of Prince William, Kate Middleton, had been photographed topless while on vacation with William in France. Of course, it could also be because almost no one paid attention to the story... until the royal family decided to sue. As Kash Hill correctly notes, this seems like yet another perfect example of the Streisand Effect in action. The story got very little attention... until legal action was threatened. It may be upsetting and embarrassing, but it's difficult to see how suing makes things better. All it did was get a lot more people looking for the photos and put a lot more attention on the story itself. I know that, at times when someone is wronged, there's a feeling that they must do something, but does it really make sense to "do something" if it also makes you much worse off?

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Songwriter Wins Copyright Case In Spite Of Herself

Mike Masnick — Fri, 31 Aug 2012 08:55:19 PDT

A few weeks back, the NY Times had the story of a copyright lawsuit in NY that is really quite incredible on a few points. It was a "pro se" lawsuit (i.e., filed by a woman on behalf of herself, without a lawyer) in which she made a ton of mistakes -- such that the court got noticeably upset with how she dealt with the case, and later sanctioned her... and yet she still "won" the case. But even that victory may turn out to be Pyrrhic in the long run. Pro se cases can often be quite nutty, but this one takes it to another level. In this case, the woman, Peggy Harley, a songwriter, sued a bunch of folks, but mainly singer Ann Nesby and indie record label Shanachie, for supposedly infringing on the copyright to a song that Harley wrote and recorded in 2002 (though she didn't bother to register the copyright until 2008). She demanded millions in damages (and went with actual damages rather than statutory -- which you don't often see). As the NY Times reports, this was basically a comedy of errors:

“My lifes work was stolen from me,” she wrote in a 13-page complaint riddled with misspellings and grammatical errors. “I am afflicted with pain and suffering and emotional distress.”

But Ms. Harley proceeded to do just about everything possible to sabotage her own claim.

She failed to appear for hearings or showed up late. Judges accused her of interrupting them, filing frivolous motions, disobeying court orders and refusing to participate in the discovery process. She accused judges of bias.

She was admonished in court, ordered to pay about $13,000 in sanctions and even barred from using certain evidence.

One particularly exasperated judge observed: “The world is going to end someday, and my job is to try to see that this case gets adjudicated before the world ends.”

But then... she won. Well, at least the copyright part. A different judge granted summary judgment, claiming that the two songs were similar enough. To be honest, Harley should be amazingly thankful that the judge sided with her here. Going through the docket in this case, Harley appears to have done pretty much everything possible to antagonize the judge. Below I've embedded (among other things) a transcript of a hearing to respond to Harley's request to have the judge removed from the case for bias. Harley showed up 20 minutes late, after the judge explained why such a removal was not reasonable and highlighted that her request was based on "frivolous and ad hominem attacks." When Harley eventually did show up, she challenged the judge repeatedly, despite her clear annoyance at the situation. Here's how the hearing ended, though reading the whole thing (it's not that long) is worthwhile:

MS. HARLEY: Yes. For the record, why am I not entitled to have you disqualified as a judge?

THE COURT: Ms. Harley, had you been here on time, you would have heard. Now we actually waited until 10:15.

MS. HARLEY: But I'm here now, and for the record, I'd like to have you disqualified.

THE COURT: For the record, I will repeat it to you. In this one instance I will tell you why your motion was baseless and entirely frivolous, but there is a transcript of this proceeding. Your motion indicates that this case was somehow assigned to me in a way that evidences partiality. It was not.

MS. HARLEY: Pardon me? I'm sorry. I don't understand that. Could you repeat that.

THE COURT: I will repeat what I'm going to say one time, and then we are going to adjourn.

Your motion indicated that this matter was assigned to me in some way that evidenced my partiality. It was not. That I was somehow showing bias.

I will not entertain questions.

MS. HARLEY: Why?

THE COURT: I will not entertain questions. Your motion also indicated that the manner of the removal of the reference also indicated some sort of bias. Everything that has been done in this matter has proceeded according to the routine practice for all matters that have come to me.

MS. HARLEY: Objection.

THE COURT: That is it, counsel. We are adjourned on this matter. Thank you.

MS. HARLEY: Objection.

THE CLERK: All rise.

The order (pdf) about sanctions against Harper detail a rather incredible pattern of absolute refusal to actually comply with basic discovery processes, which indicate that Harley appears to believe she could withhold evidence she planned to use at trial. End result? Despite her attempts to get out of it, she was told to pay over $13,000 in sanctions.

And she still "won."

The judge basically said that despite all of this the two songs were similar enough (though not identical) and there was enough evidence to suggest that the defendants had access to the song (Harley had given copies of the song to someone who was thanked on the album). While the actual songs may be similar, even the "similarities" in terms of lyrics seem pretty damn generic to me. The judge notes the following lyrics as infringing:

(1) Never meant to hurt you/Never meant to cause you pain;

(2) Sorry baby/Sorry that I hurt you; and

(3) I will never hurt you again/It will never happen again.

It's hard to come up with three more generic musical lyrics. In fact, a quick search on LyricFind of "never meant to hurt you" turns up 180 songs with that lyric. "Sorry that I hurt you" gets 25 songs. "Never happen again" shows up in 84 songs. That doesn't mean that this wasn't necessarily infringing, but damn are those generic lyrics that are found in an awfully large number of songs.

It's really quite amazing that she won the summary judgment.

And, of course, looking over the docket, it's just full of crazyness. It's not worth going through it all, but aspects of the case have continued since the summary judgment ruling, including Harley trying to appeal certain things, only to be told by the judge that "there is no basis for an appeal at this time. Plaintiff must await a final judgment."

In the end, it's entirely possible that there was infringement here. Certainly the judge -- despite all of the problems with Harley's actions in the case -- felt the songs were similar enough to grant summary judgment. But if you're looking for a guide in how not to go about a lawsuit, this seems to be it.

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Charles Carreon Sues Matthew Inman... And The Charities He's Raising Money For

Mike Masnick — Mon, 18 Jun 2012 05:06:00 PDT

Update: The full details of Carreon's lawsuit are now public, and they are just as nonsensical as you'd expect.

The situation with Charles Carreon just keeps on progressing. The latest is that, according to a report from Courthouse News Service, Carreon has now not only sued Matthew Inman, but also IndieGoGo and the National Wildlife Federation and the American Cancer Society. Read on for the details...

If you've been away from the internet for the past week, this story started as an online dispute between Matthew Inman, creator of the webcomic The Oatmeal, and a site called Funnyjunk, which lets users post content to the site. About a year ago, Inman wrote a blog post complaining about Funnyjunk's reposting of his webcomics. As we've noted a few times, Inman's statements about Funnyjunk were overly aggressive -- and did mention "stealing" of his own work. He seemed to ignore that it was users who uploaded the content. However, while we disagree with Inman's original characterization of Funnyjunk and how it operates, it certainly did not reach the level of "defamation." Also, we appreciate that Inman chose not to sue, but rather to make use of the court of public opinion. In response, Funnyjunk lashed out, incorrectly stated that The Oatmeal wanted to sue him (when Inman very clearly stated he had no intention to sue) and also asked a bunch of Funnyjunk users to contact Inman.

Everything seemed to die down, until about a week ago, when lawyer Charles Carreon, representing Funnyjunk, sent a letter to Inman, threatening to sue Inman for the initial blog post, claiming that it was defamation and a Lanham Act (trademark) violation for false advertising. Neither claim makes much sense, and Inman responded with both an excellent letter from (occasional Techdirt contributor) Venkat Balasubramani, and Inman's now famous annotated letter, leading to an IndieGoGo campaign to raise $20,000 (the amount Carreon/Funnyjunk demanded from Inman) for two charities: The National Wildlife Federation & the American Cancer Society.

Following that, Carreon told MSNBC he intended to shut down the fundraisers, and then bizarrely accused Inman of "instigating security attacks" against his website. Finally, on Friday he told Forbes that he wasn't backing down and that there had to be "something" in the California code that he could sue Inman over.

Apparently he's found something. As reported by both Ken at Popehat and Kevin at Lowering the Bar, Courthouse News has a notice saying that Carreon has filed a lawsuit in the federal district of Northern California. And, as mentioned above, he doesn't just sue Inman, but also IndieGoGo and the two charities. Yes, the two charities. I'll repeat that again: Charles Carreon appears to be suing two of the most well known charities because Matthew Inman asked people to donate to them. Ken's summary -- based on what limited info is available via Courthouse News:

1. The lawsuit is captioned Charles Carreon v. Matthew Inman; IndieGogo Inc.; National Wildlife Federation; American Cancer Society; and Does [Does are as-of-yet-unnamed defendants], Case No. 4:12 cv 3112 DMR.

2. Charles Carreon appears as "attorney pro se," meaning "I am attorney but am representing only myself"....

3. CNS included the following description of the case, which is most likely drafted by CNS upon review of the complaint: "Trademark infringement and incitement to cyber-vandalism. Defendants Inman and IndieGogo are commercial fundraisers that failed to file disclosures or annual reports. Inman launched a Bear Love campaign, which purports to raise money for defendant charitable organizations, but was really designed to revile plaintiff and his client, Funnyjunk.com, and to initiate a campaign of "trolling" and cybervandalism against them, which has caused people to hack Inman's computer and falsely impersonate him. The campaign included obscenities, an obscene comics and a false accusation that FunnyJunk "stole a bunch of my comics and hosted them." Inman runs the comedy website The Oatmeal."

As Ken notes, the summary from CNS may be flawed. In fact, it clearly is, because it says "Inman's computer" was hacked, and I'm sure the complaint means Carreon's. So take it with a grain of salt until the actual filings appear on PACER or Carreon shares them with others. However, there would appear to be a bunch of problems with the filing if the other parts are accurate. Let's start with the big one: Carreon is filing for himself, representing himself. According to the report above, it does not appear that he is doing this representing Funnyjunk. That raises significant questions about what standing Carreon has alone, unless he's arguing that Carreon is Funnyjunk as well. Either way, Carreon seems to rely on things said about Funnyjunk, but is still filing on his own behalf. That's just weird.

Blogger Nick Nafpliotis called Carreon on Friday and posted an interview with him, which reveals a bit more behind Carreon's thinking on the legal front, and may explain why IndieGoGo and the charities are included in the lawsuit:

Carreon replied that under California law, you must be properly registered to conduct a fundraiser, something he is certain that Mathew Inman (operator of The Oatmeal) and IndieGoGo (the crowdfunding site being used The Oatmeal) are not.

"You might think of it as the 'Pseudo Santa' law," he explained. "Anybody can get a Santa suit. Then around Christmas time, you can probably make pretty good money wearing one outside of Macy's, ringing a bell, and saying you'll give the money to the Salvation Army. But you can't do that."

Carreon went on to say that he had been in contact with the American Cancer Society and the National Wildlife Federation and confirmed that Indiegogo had not executed the proper fundraiser paperwork. He explained that this missing documentation gives a sponsoring organization the power to shut down a campaign that may bring a charity itself into disrepute or injure its goodwill...or might be "using a charity as a human shield for a slander campaign inciting people to cyber vandalism," Carreon added.

Even given all of that, I'm not sure why IndieGoGo, NWF or ACS were included. Even if we assume that Carreon is correct that this is some sort of "illegal" fundraiser, it seems like IndieGoGo should be protected under Section 230 of the CDA. Amusingly, since Carreon continually insists that Funnyjunk is protected under the DMCA's safe harbors, you would think he would be up on the 230 safe harbors as well. Separately, again, even assuming that Carreon's analysis is correct, I'm not sure why that gives him standing to sue. Others (the charities? the government?) would seem like more reasonable entities who could bring a case. But Carreon?

IndieGoGo has told others that Carreon did, indeed, request it take down Inman's fundraising effort, and it turned him down, but (unlike the DMCA safe harbors), that's not that big of a deal. There's no "takedown" requirement to retain immunity in Section 230.

Separately, I can't see where there's a trademark claim. Carreon has indicated that he has trademarked his name, but unless there's something in the filing that shows something completely different than what's currently been made public, I can't see how there's any trademark issue at all. Inman's statements may have mocked Carreon, but that's not trademark infringement. You'd have to be using the name in commerce in a manner that caused a likelihood of confusion in that people would somehow believe that Carreon supported Inman's actions. That is difficult to believe no matter how you look at this.

We'll wait to see what's in the actual filing, but from what's already been said, this seems like a massive uphill battle, and one not made any better by the fact that he appears to be suing two famous charities in the process.

Two other points:

In that interview with Nafpliotis, Carreon makes some odd justifications for why he thinks it's okay to blame Inman for various attacks on his site (and a fake Twitter account). He basically says that because the comics that Inman draws are "dehumanizing," it's fair to assume that the attacks are because of that -- and (I'm not joking) compares it to Disney drawing cartoons that mocked Japanese people leading to Truman dropping the bomb on Japan:
"It might not have seemed very dehumanizing when Walt Disney made Japanese people look silly with buck teeth and big glasses who could not pronounce their 'R's or their 'L's. But it was dehumanizing, and the purpose was to direct evil intentions against them, which ultimately resulted in the only nuclear holocaust that ever occurred in the history of humanity. I don't think Truman would have ever done that if we hadn't so dehumanized the enemy."

"When you dehumanize someone, that is the first step to inciting people. The emails that I've gotten...many of them wish me death or wish for the complete collapse of my law practice...and they are virtually all uninformed."
If people are sending Carreon nasty emails, that's a pretty stupid thing to do, but it's silly to blame Inman for it.

Carreon also hints that Inman might be responsible for someone setting up a fake Twitter account in his name which had some "offensive statements." His evidence that Inman was responsible? At the same time that the fake account tweeted some stuff, Inman posted a tweet mocking Carreon in somewhat offensive terms. That tweet did not link to or reference the fake account, but according to Carreon: "I don't know if that's coincidence. Why was he on twitter at the same time the impersonator was? I don't know."

We've suggested in the past that Carreon might want to learn a bit more about how the internet works. And here's one reason why: many people who use Twitter are pretty much always on Twitter. There's nothing surprising or odd about being on Twitter all the time. Inman's tweet indicates that he uses TweetDeck, one of (if not) the most popular Twitter applications, which you leave running all the time and thus has you "on Twitter" basically all the time.
As most people know, you will find perhaps no person around who is more vehement in saying that copyright infringement is not theft. I have argued that at length for years. Copyright infringement is not theft. It's not theft, it's not stealing. It's just not. That said, in no way do I think that someone who discovers that their work has been infringed and then refers to it as "theft" or "stealing" has "defamed" someone else. That's just crazy. It's an inaccurate portrayal, but one that is used colloquially all too frequently. To rise to the level of defamation would be something else entirely. Of course, it does not appear from the description that defamation is even a consideration here, since the lawsuit is from Carreon not Funnyjunk.

Lastly, Inman here has definitely won in the court of public opinion, and Carreon's legal efforts aren't doing him any favors in that battle -- by just not knowing when to stop digging (and almost creating a Godwin's law reference).

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Class Action Lawsuit Filed Against Apple Because Siri Doesn't Always Work Right

Mike Masnick — Thu, 15 Mar 2012 14:38:00 PDT

Technology doesn't always work quite as well as the advertisements claim. But is that any reason to sue? Apparently, yes. Some guy is trying to kick off a class action lawsuit against Apple because Siri doesn't work quite as well as it does in the TV ads. I imagine this lawsuit is going nowhere fast. Perhaps next time the guy should try asking Siri for legal advice...

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IP Throwdown: Patent Lawyers Sued For... Copyright Infringement

Mike Masnick — Thu, 1 Mar 2012 12:28:00 PST

Last month, we wrote about how the USPTO had stepped in to a brewing fight between copyright lawyers and patent lawyers, saying that it believed that submitting journal articles as part of the patenting process was fair use. Apparently, the copyright lawyers working for the scientific journals disagreed... and the fight is on: the journals have sued a bunch of patent lawyers for making use of articles from the journals in preparing their patent applications. The journals, in their desperate desire to squeeze more cash out of everything, were demanding that patent lawyers get an additional license if they wanted to submit copies of journal articles along with patent applications.

While it's rare that you'll find me agreeing with the patent bar on very much, on this one, I'm on their side. The lawsuit, lead by publisher John Wiley, is kind of crazy. We're not talking about people who are getting copies of the journal for free. These are generally people who have a legitimate subscription to the journals, and are submitting copies of the information as part of the patent process -- as they're required to do by law. This is just yet another attempt by the publishers to get paid for every single possible use, even for those who already have legitimate access. And, of course, these journals don't have the best reputation these days, with their attempts to block open access requirements. While there may be some appeal in making it more difficult to get a patent (something where I believe the bar needs to be much, much, much higher), I don't think this is as reasonable way to do so.

In nearly every way, it seems like submitting such a journal article as part of a patent application process should be seen as fair use. It really does fit the kind of key "spirit" of the fair use rule.

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Movie Studios Jump In Late: Sue LimeWire And Demand Cash From Dead Site

Mike Masnick — Mon, 6 Feb 2012 15:28:26 PST

Limewire is long dead and buried as a file sharing platform, and with the company settling the lawsuit filed against it by the major record labels for $105 million (down from the many trillions it had originally said it deserved), you might think that the legal shenanigans were long over. Apparently, someone in the MPAA just woke up to the fact that this might be a way to get some easy cash to pump into its next lobbying campaign, and has just now sued Limewire as well, demanding cash for any of its files that were traded. Of course, a bunch of indie record labels also sued, so it appears that lots of those who chose not to innovate are now trying to feed off of what's left of Limewire's carcass. It does make you wonder, of course, what made the movie studios wait so damn long. Of course, isn't that just like Hollywood? Rather than do something original, it just does a "remake" of something someone else already did?

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Process Server Sues Righthaven For Unpaid Bills... From 2010

Mike Masnick — Thu, 5 Jan 2012 19:52:59 PST

Another day, another story of Righthaven incompetence. The latest is that a process server that the company used, most likely for some of its hundreds of lawsuits against websites for supposedly infringing on copyrights, is now suing Righthaven for failing to pay its bills. The lawsuit, embedded below, is pretty straightforward. Legal Wings Inc. was used between May and October of 2010, for which it billed Righthaven to the tune of $5,670 -- not a particularly huge sum. According to Legal Wings, Righthaven simply never paid, despite multiple requests to be paid. What strikes me as interesting here is that I can almost understand Righthaven's recent efforts not to pay up the legal fees it owes, if you believe that the company is effectively out of cash and/or saving up its cash to fight the appeals. Obviously, there are reasonable arguments to be made that even that's bogus, but if we can grant that assumption, the recent refusals to pay make at least some sense.

But this involves a company that Righthaven used in 2010. That is, this all happened way, way, way before Righthaven's legal campaign fell apart. It happened many months before judges ruled that Righthaven didn't actually hold the copyrights over which it was suing. In other words, this was back in the time when companies were still paying Righthaven good money. The company was supposedly flush with money, from both an investment from Stephens Media as well as settlement cash from sites that just paid up rather than fought. And it still refused to pay a simple $5,670 bill. It really makes you question what the folks behind Righthaven were really up to all of this time...

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RIAA Claims It Succeeded In Getting Piracy Under Control Years Ago

Mike Masnick — Tue, 6 Dec 2011 08:48:32 PST

This one's just bizarre. Via Eric Goldman, we learn of an opinion piece in the Tennessean newspaper, in which the RIAA argues that its strategy of suing tens of thousands of file sharers "succeeded" in "bringing piracy under control." The opinion piece is a response to an earlier story in the paper that claimed (quite reasonably, I might add) that the sue fans strategy failed, because "the suits ultimately proved ineffective in ending systematic online piracy." The RIAA, however, says the goal has never been to end piracy, but to "bring it under sufficient control" and they claim they succeeded.

The RIAA's argument makes little sense. Here's the basis for their success claims:

Our legal efforts served as an essential educational tool: Fans know far more now about copyright laws and the legal consequences of stealing music than ever before. Before initiating lawsuits in 2003, only 35 percent of people knew file-sharing on P2P was illegal; afterward, awareness grew to 70 percent.

Where there was virtually no legal digital market before the lawsuits, today the market exceeds $3 billion annually, and revenue from online platforms will comprise more than 50 percent of total industry revenues this year. To boot, there are more than 400 licensed digital services worldwide, compared with fewer than 50 in 2003

First of all, none of that has anything to do with "bringing piracy under control." For all of the supposed "education," all it really served to do was teach more people about file sharing. The amount of file sharing wasn't brought under control, it sky-rocketed, and there's good reason to suggest it was helped along by the legal strategy. There have been studies in the past about how education campaigns telling people not to do something will often increase that action. For example, signs that tell people not to remove rocks from the petrified forest in Arizona were shown to lead to greater rock taking. So I'm not sure what the RIAA thinks it accomplished here.

Furthermore, it's completely laughable that the RIAA is suggesting here that its legal strategy had anything to do with the "legal digital market." The labels were pushed kicking and screaming into iTunes and other offerings. That had absolutely nothing to do with its legal strategy.

But, let's get to the key point: if the RIAA truly believes that it successfully brought piracy under control via these lawsuits that ended a few years ago... why is it supporting things like SOPA and PROTECT IP? After all, isn't the problem solved?

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Cisco Sued For Helping China Repress Falun Gong

Mike Masnick — Mon, 23 May 2011 19:00:00 PDT

News.com has a report of a class action lawsuit, filed by 11 plaintiffs who claimed they were tortured by the Chinese government, against Cisco for apparently supplying the government with the tools to track and (in some cases, falsely) arrest supposed members of Falun Gong:

The lawsuit, which seeks class-action status, alleges that Golden Shield--described in Cisco marketing materials as Policenet--resulted in the arrest of as many as 5,000 Falun Gong members. Cisco "competed aggressively" for the contracts to design the Golden Shield system "with full knowledge that it was to be used for the suppression of the Falun Gong religion," according to the lawsuit.

While I find the Chinese government's actions in suppressing dissident reprehensible, I'm not at all sure how there's a legitimate case against Cisco here. It may have made a bad decision to do business with the Chinese government, but is that illegal? While News.com doesn't supply a copy of the lawsuit (and why not?), I can't see what legitimate charges there can be here. This seems like yet another case of misapplied liability. Obviously, these people feel they can't go after the Chinese government, but using Cisco as a legal proxy doesn't make much sense. I could see protesting Cisco's actions, but suing the company seems like a stretch.

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Summit Entertainment Sues Fans Who Tweeted Images From Upcoming Twilight Flick

Mike Masnick — Thu, 21 Apr 2011 13:02:34 PDT

We've noted in the past that movie studio Summit Entertainment is more aggressive than most at going after just about anyone it thinks is violating its intellectual property -- especially when it comes to its flagship Twilight franchise. Apparently, some photos from the set of the latest installment of the film were leaked and got passed around online. Note: this wasn't video, just still photos. It's hard to see how or why anyone could be too upset about that. Having those photos passed around would seem like a nice sign of how much fans are anticipating the film. Initially, the folks behind the film (along with book author Stephenie Meyer -- who at one point seemed to get this stuff) put out a statement asking people to stop sharing the images:

As some of you may know, pictures and screen grabs of The Twilight Saga: Breaking Dawn as a work in progress have leaked on the internet. We are extremely proud of this film and also extremely heartbroken to see it out there at this stage.

The film and these images are not yet ready or in their proper context. They were illegally obtained and their early dissemination is deeply upsetting to the actors, the filmmakers and Summit who are working so hard to bring these movies to fruition to you in November 2011 and November 2012.

Please, for those who are posting, stop. And please, though the temptation is high, don’t view or pass on these images. Wait for the film in its beautiful, finished entirety to thrill you.

As these things go, that's not too bad. It's a little ridiculous to claim that some photos of a movie getting passed around is "deeply upsetting" to everyone involved in the film, but it's a heartfelt plea, not entirely unlike some suggestions we've made for other studios.

However, it appears that it wasn't just a heartfelt plea going on. While they were appealing to people agreeing to stop sharing the photos, Summit was also filing a lawsuit against 10 John Does accused of sharing the images via Twitter. The lawsuit is so that the company can subpoena Twitter to try to get the identities of those individuals.

Honestly, the whole thing seems insane. These people like your movie and they can't wait to see it or get any information about it. That's a good thing. Nothing in the photos takes away from the movie or hurts the movie. Suing your fans, however for expressing how much they love the film? Yeah, that can hurt a film...

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Happy Days Cast Not So Happy: Suing CBS & Paramount For Missing Royalties

Mike Masnick — Wed, 20 Apr 2011 06:40:22 PDT

Apparently most of the cast of the iconic sitcom Happy Days aren't particularly happy with CBS and Paramount right now, as they've filed a lawsuit against the two companies, saying those companies haven't been paying the royalties they owe the cast from home video sales and merchandise sales (there's still Happy Days merch on the market?!?). Notably missing from the lawsuit are stars Ron Howard and Henry Winkler, but much of the rest of the main cast is there. Amazingly, the lawsuit was apparently triggered by a Happy Days cast member seeing a Happy Days slot machine, and wondering why no royalties were being paid. After contacting Paramount to find out how much money was owed from merch, and being told the answer was (of course), none, they moved on to a lawsuit. What struck me as most interesting is that, typically in these types of lawsuits, the studios being sued claim that the actors are wrong. In this case, however, CBS actually put out a statement saying: "We agree that funds are owed to the actors and have been working with them for quite some time to resolve the issue." Of course, that should probably make you wonder if actors from other shows also need to file a lawsuit just to get what's owed to them...

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You Can't Eat Prestige

Nina Paley — Tue, 12 Apr 2011 13:39:19 PDT

Mimi & Eunice summarize the latest Huffington Post drama.

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Pilot Sues TSA For Overly Intrusive Searches

Mike Masnick — Fri, 19 Nov 2010 15:02:00 PST

Before the don't touch my junk guy, there was Michael Roberts, the pilot who, back in October, refused both the naked backscatter scan and the intrusive groping pat-down, was not allowed to fly his plane, and was put on leave by his company (ExpressJet). He's now suing the TSA over the search process:

"People are messed up because they touch your crotch," pilot Michael Roberts said. "They touch your bottom, your breasts, I mean, everything.

That said, I haven't seen the actual legal filing, so I'm not sure if he has much of an actual case here. It will be interesting to follow either way.

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Yellow Pages Sues Seattle For New Law Letting People Opt-Out Of Getting The Phone Book

Mike Masnick — Thu, 18 Nov 2010 10:26:11 PST

A few weeks ago, I walked out my front door to see a phone book dropped on the front step. I honestly couldn't remember the last time I'd seen one. But I picked it up and walked it straight over to the paper recycling bin, where I deposited it. That's what an awful lot of people do these days. Apparently, the city of Seattle passed a law recently creating a "do-not-deliver" list for residents, that would bar phone book providers from delivering the books to their homes. However, the Yellow Pages Association has now sued the city, claiming that this law is a First Amendment violation:

The complaint... asserts that the ordinance enacted last month violates the First Amendment, which prohibits government from licensing or exercising advance approval of the press, from directing publishers what to publish and to whom they may communicate, and from assessing fees for the privilege of publishing. The suit also claims that the Seattle ordinance unlawfully interferes with interstate commerce and violates the privacy rights of Seattle residents...

The Seattle ordinance unfairly singles out the Yellow Pages industry with regulations and fees that are not imposed on other media, including discriminatory license fees for the right to publish and unprecedented "advance recovery fees" that previously have been limited to toxic or hard-to-recycle materials. The ordinance also mandates that publishers turn over consumers' private information to the City of Seattle and imposes obligatory cover language dictated by the city government.

Now, I'm a pretty big First Amendment supporter, but I'm not sure how a bar on dropping a phone book on someone's property -- at their request -- is a free speech violation. Perhaps I'm missing something? In the meantime, the group actually says that it's not against letting people opt-out, and is actually creating a website to let people do just that. It just doesn't like this particular law.

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Lily Allen Said To Be Suing Apple Over Her Hacked Laptop... But Details Are Scarce And Hazy

Mike Masnick — Wed, 22 Sep 2010 14:29:00 PDT

Reader technofear was the first of a few of you to send over variations on the story that Lily Allen is allegedly suing Apple to force the company to help her figure out who hacked into her laptop. At least that's about all I can figure out from the various press reports. I've read about a dozen at this point, and all of them are incredibly vague. There's a hacked laptop. There's a request to Apple, which was refused, and then there was a "lawsuit." While I'm not sure how UK law works on this topic, if it were in the US, it sounds more like a situation where she's seeking someone's IP address, and is filing for a subpoena (or something like it) to compel Apple to reveal certain information which may identify who was involved. That's not quite "suing Apple," but again, the details are vague. It's also not clear what "hacked her laptop" means... or why Apple would have the details. Is there anyone out there who has actual details beyond the absolutely awful press reports?

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