The need for a substantial bond to secure payment of costs and fees from Prenda is not an idle request. Prenda Law, Inc. and its associated lawyers are an organization that is rapidly falling apart. They have dismissed the vast majority of their pending court cases across the country—cases which are their sole source of revenue. Meanwhile, as the days go by, they are increasingly being hit with new motions and orders to show cause for sanctions in various courts where they have tried, with mixed success, to escape from the consequences of their actions. Further, the lawyers and the entities involved here are likely the subject of potential criminal investigations, including an IRS investigation, flowing from the court’s formal referrals in the sanctions order below. In short, there may not be any solvent persons around to collect from for much longer. Further, as will be detailed in briefing on the merits, the lawyers’ interests in these cases (as well as their assets, one presumes) are hidden behind a web of Nevis LLC’s and mysterious offshore trusts. These are all complicated factual issues, with which the district court is already familiar, which is why the district court should set the amount and terms of the bond

Appellant's emergency motion for a stay of the district court’s May 6, 2013 sanctions order is denied without prejudice to renewal, if necessary, upon the filing and disposition of such request in the district court. See Fed. R. App. P. 8(a)(1).

In other words: no, Paul, you can't have admission to the Ninth Circuit until this is cleared up, and we won't let you represent a client before us in the interim.

Actions have consequences.

For example, although Gibbs claimed he was supervised by Steele and Hansmeier at Prenda Law, when pressed for specifics about the degree of supervision he received, Gibbs only offered that Steele and Hansmeier gave him authority to file certain cases here. See Dkt 108-5, at 77:8-24. Gibbs' further testimony has revealed he had significant autonomy in handling the cases. See Dkt 108-5, at 77:25-78:4 (claiming Steele and Hansmeier "gave me certain parameters [pursuant to] which I could settle the case myself.");

The Court stated: "First, with an invalid assignment, Plaintiff has no standing in these cases." Dkt 48, at 9:8. Apparently re-articulating the same concern, the Court added: "Second, by bringing these cases, Plaintiff's conduct can be considered vexatious, as these cases were filed for a facially improper purpose." Dkt 48, at 9:9-10. As both Gibbs and Prenda/Duffy/ Van Den Hemel noted in their Responses To The OSC, the Court is mistaken about the law in this regard; the signature of the assignee is irrelevant to the validity of the assignment, so long as the assignor signs. See Dkt 49, at 25:9-26:19; Dkt 108, at 11:24-12:9.; see also 17 U.S.C. 204(a). Lastly, the Court stated: "the Courtm will not idle while Plaintiff defrauds this institution."; Dkt 48, at 9:10-11. However, even if the Court were to discount the evidence submitted impugning Cooper's credibility and blame Steele for this "fraud,"; it hardly rises to the level of fraud upon the court recognized by the Ninth Circuit, i.e., "a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication." In re Intermagnetics Am., Inc., 926 F.2d 912, 916 (9th Cir. 1991).

Regarding any other alleged fraud the Court may consider, as Section III above makes clear, except in rare circumstances not present here, this Court is not empowered to sanction Steele or anyone else based on conduct occurring entirely outside of the subject cases and the Central District. Based on its prior statements, the Court may have erroneously felt otherwise before.

Disturbingly, the Court's apparent conclusions about the relationships between the persons and entities named in the March 14, 2013 OSC wholly ignores evidence to the contrary. Compare, e.g., Dkt. 69-1, pp. 21:18-2, 38:22-39:15, 40:8-12 (regarding who owns AF Holdings) with Dkt 108-5, at 114:5-8 (I do have the picture, and I know who the client is. We have talked about the client, and the client has been running everything. Yeah, I know who the client is”); see also Dkt 108-5at 19:15-18 (suggesting Prenda law is "controlled by Mr. Steele.")

However, Steele cannot be sanctioned for any of these alleged misrepresentations made to this Court regarding the relationships among the parties and entities named in the Court’s March 14 OSC because Steele has taken no actions nor made any representations to this Court of any kind, nor is there any evidence before this Court that he acted or was otherwise involved in anyone else's alleged misrepresentations to this Court.

Not only does the Ex Parte Application lack merit, its eleventh-hour filing exemplifies gamesmanship. Accordingly, the Ex Parte Application is DENIED.

a) John Steele, of Steele Hansmeier PLLC, Prenda Law, Inc., and/or Livewire Holdings LLC;
b) Paul Hansmeier, of Steele Hansmeier PLLC and/or Livewire Holdings LLC;
c) Paul Duffy, of Prenda Law, Inc.;
d) Angela Van Den Hemel, of Prenda Law, Inc.;
e) Mark Lutz, of Prenda Law, Inc., AF Holdings LLC and/or Ingenuity 13 LLC;
f) Alan Cooper, of AF Holdings LLC;
g) Peter Hansemeier, of 6881 Forensics, LLC;
h) Prenda Law, Inc.;
i) Livewire Holdings LLC;
j) Steele Hansmeier PLLC;
k) AF Holdings LLC;
l) Ingenuity 13 LLC; and
m) 6881 Forensics, LLC.

These persons and entities are ORDERED to appear on March 29, 2013, at 10:30 a.m., TO SHOW CAUSE for the following:

1) Why they should not be sanctioned for their participation, direction, and execution of the acts described in the Court’s February 7, 2013 Order to Show Cause;

2) Why they should not be sanctioned for failing to notify the Court of all parties that have a financial interest in the outcome of litigation;

3) Why they should not be sanctioned for defrauding the Court by misrepresenting the nature and relationship of the individuals and entities in subparagraphs a–m above;

4) Why John Steele and Paul Hansmeier should not be sanctioned for failing to make a pro hac vice appearance before the Court, given their involvement as “senior attorneys” in the cases; and

5) Why the individuals in subparagraphs a–g above should not be sanctioned for contravening the Court’s March 5, 2013 Order (ECF No. 66) and failing to appear on March 11, 2013.

Should the persons and entities in subparagraphs a–m above not appear on March 29, 2013, the Court is prepared to draw reasonable inferences concerning their conduct in the cases before the Court, including any inferences derived from their failure to appear. Failure to comply with this order will result in the imposition of sanctions.

I've been a lawyer for almost 19 years now. I've practiced in federal court that entire time. Here's what's very strange to me about Gibbs' opposition to the ex parte application, and about Gibbs' sanctions motion: they conspicuously avoid direct engagement with the most incendiary accusations Pietz makes. It's one thing to argue that Pietz' evidence is insufficient, or that other courts have failed to act based on them. It's quite another to evade the question of who "Alan Cooper" really is. I find it very difficult to imagine a scenario in which an experienced litigator would have a good reason to avoid confronting such a serious charge of fraud head on by saying, for instance, "the Alan Cooper who is a principal in Ingenuity 13 LLC is a real person who is resident of the State of X, living at Y, and has no relation to the Alan Cooper who has made scurrilous allegations against Prenda Law. Here is a declaration from the Alan Cooper who is a principal of Ingenuity 13 LLC, and here are reasons why the other Alan Cooper has a grudge against Prenda Law and is lying." It is very difficult to imagine an innocent scenario explaining why Prenda Law would not offer such a response if it could.

3. Some of the individuals named could assert that exigent circumstances or medical conditions prevent them from attending, or could ask for an extension to allow them to retain counsel and get their new counsel of up to speed.

4. Some of the individuals named could show up and answer Judge Wright's questions.

Judge Wright could certainly issue monetary sanctions against, at a minimum, Mr. Gibbs. The question of what other attorneys he could sanction under Rule 11 and his own inherent authority depends on a tedious discussion too long for this post; suffice it to say that he might conclude that he can sanction supervisory attorneys with Prenda Law.

Judge Wright's terrifying comment aside, his ability to jail people before him for contempt is quite limited when they have not been charged with a crime by the executive. That, too, is a discussion too complex for this post. But Judge Wright might well refer the case to the U.S. Attorney's Office for criminal prosecution if he concludes that criminal contempt or fraud has occurred. Such referrals tend to get immediate and intense attention. Moreover, if Judge Wright finds misconduct, he could refer the matter to various state bars.

I have never met Alan Cooper, and do not know what the extent of Mr. Cooper's role is in A F Holdings aside from seeing a signature from an "Alan Cooper" on the copyright assignments and pleadings. Based on the assignment agreement, A F Holdings held the valid and exclusive rights to reproduce and distribute the film Popular Demand. I was not present when the assignment agreement was executed. I also never had any direct contact with either Raymond Rogers or Alan Cooper. I have never executed a document as "Alan Cooper." I did not play a role in or have knowledge of the assignment transaction at issue. Senior members of S & H provided the assignment agreement to me and informed me that the copyright assignment was a true and correct copy of the copyright assignment and to include it as an exhibit in complaints filed on behalf of A F Holdings L L C . Before filing any such complaints, I confirmed that A F Holdings L L C was in fact listed as the valid copyright holder.

I have never had a financial or fiduciary (i.e., ownership) interest in A F Holdings. AF Holdings was a client of S&H and then Prenda. The face-to-face and direct interactions between S&H and later Prenda with A F Holdings were handled by the senior members of the law firms and not me.

I confirmed the existence of the client-executed verification either by seeing a copy of the signed verification, or at the very least, being informed by a representative of S&H or Prenda that a signed verification was in the possession of S & H or Prenda.

In Case No. 84, Mr. Pietz first asked for a copy of Mr. Cooper's verification to the petition to perpetuate testimony on or about December 2012, well after the petition had been discharged. Given the length of time since the case was discharged, I was informed and understand that S&H (and later Prenda) no longer has a copy of Mr. Cooper's verification to the petition to perpetuate testimony.

What seems increasingly clear though is that Prenda, and its “of counsel” here, Mr. Brett Gibbs, have crossed the Rubicon in these cases, by resorting to fraud, which includes identity theft, sham offshore shell companies, and forged documents.

Yet as confirmed by at least one ISP—AT&T—notwithstanding this representation, Prenda did in fact “pressur[e] the ISPs to respond to the subpoenas” notwithstanding Mr. Gibbs’s interpretation of the stay order.

The threshold of consciousness is the dividing line between something that can be processed by the conscious mind and something that enters the subconscious mind without any such processing. A hidden message is not intense enough to produce a sensation but has sufficient intensity to influence the behavior and mental processes of one's mind. The decisions the conscious mind makes are based upon the knowledge and reasoning skills one has developed through experience and education....

The Supreme Court has made clear that "[m]usic, as a form of expression and communication, is protected under the First Amendment." Ward v. Rock Against Racism, 491 U.S. 781, 790 (1989). Thus, because the Song is a protected work of art, the use of plaintiff’s name therein does not violate the New York Civil Rights Law.

The fact that the Song was presumably created and distributed for the purpose of making a profit does not mean that plaintiff’s name was used for “advertising” or “purposes of trade” within the meaning of the New York Civil Rights Law.

Even if the Court were to conclude that plaintiff had sufficiently alleged that her name was used in the Song for purposes of advertising or trade, the isolated nature of the use of her name would, in and of itself, prove fatal to her New York Civil Rights Law claim. “Courts in New York are reluctant to impose liability under §§ 50-51 for incidental use of a person’s name or image because of the danger of imposing an uncalled-for burden and hazard on publishers.”

The Redline demonstrates that, contrary to Attorney Ovadia’s assertions in the Letter, not one of the changes in the proposed amended opposition would have corrected or cured the plagiarized portions of the Opposition. Instead, most of the changes to the plagiarized portions of the proposed amended opposition were merely corrections and insertions of citations to case law.... Attorney Ovadia, who is represented by her own counsel in connection with the sanctions motion, does not respond to the allegation that her representation in the Letter – i.e., that the proposed amended opposition would have “obviated any alleged plagiarism concerns” – was, in fact, untrue. Based on the fact that Attorney Ovadia made this undisputedly false representation to the Court, and pursuant to the Court’s inherent powers, Attorney Ovadia is hereby fined in the amount of $750.00. This amount shall be paid by Attorney Ovadia and shall be made payable to the Clerk of the Court on or before March 22, 2013.

With respect to defendants’ allegations that the majority of the Opposition was plagiarized, plaintiff and her counsel do not deny these assertions. Indeed, defendants’ submissions to the Court evidence that almost the entire text of the Opposition is taken from unidentified, unattributed sources. (See Jimenez Decl., Ex. A.) Obviously, this type of conduct is unacceptable and, in the Court’s view, is sanctionable pursuant to its inherent powers. Attorney Ovadia takes the position that the Court should refrain from imposing sanctions because “additional fact-finding will be necessary” to determine which of plaintiff’s two attorneys is responsible for the plagiarism and/or the degree to which any such responsibility should be apportioned between them. (See Ovadia’s Sanctions Opp’n at 9.) The Court recognizes that Attorneys Ovadia and Ahuja dispute which of them drafted the final version of the Opposition that was ultimately filed. It is clear, however, that only Attorney Ovadia signed the Opposition. In the Court’s view, this leaves Attorney Ovadia solely liable for the sanctionable plagiarism. Cf. Kiobel v. Millson, 592 F.3d 78, 87 (2d Cir. 2010) (“‘The person signing, filing, submitting, or advocating a document has a nondelegable responsibility to the court, and in most [situations] should be sanctioned for a violation.’”) (quoting Fed. R. Civ. P. 11 advisory committee note). Accordingly, pursuant to the Court’s inherent power, Attorney Ovadia is hereby fined an additional $750.00 which shall also be made payable to the Clerk of the Court on or before March 22, 2013.12

“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.”

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.

(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.

"I want you!!! ...to enjoy the Mists of Pandaria Persian-free."

Last week, a user claiming to be from Iran posted on an official World of Warcraft forum to report that the game was inaccessible. A Blizzard employee responded to the thread on Saturday, writing that "United States trade restrictions and economic sanction laws prohibit Blizzard from doing business with residents of certain nations, including Iran."

"This week, Blizzard tightened up its procedures to ensure compliance with these laws, and players connecting from the affected nations are restricted from access to Blizzard games and services," the employee said.

You can have your rials back when you pry them from our cold dead fingers...
Image source. CC BY 2.0

“They just punted, and said you waived your arguments, so we have to affirm,” he told Ars Friday morning. “I'm ready for someone to take this up, this issue of copyright subpoenas in the Fifth Circuit. That's really the bigger issue. I'm just going to move on from this whole sanction thing. I think it's bullshit and I think it shouldn't have happened. I’d rather move on with my life than be right. That's what I’m going to do. We're going to do some more copyright subpoenas, and we're going to bring them before the district and see if they are accepted or denied and then bring them before the Fifth Circuit.”

We conclude, however, that no miscarriage of justice will result from the sanctions imposed as a result of Stone’s flagrant violation of the Federal Rules of Civil Procedure and the district court’s orders. Stone committed those violations as an attempt to repeat his strategy of suing anonymous internet users for allegedly downloading pornography illegally, using the powers of the court to find their identity, then shaming or intimidating them into settling for thousands of dollars--a tactic that he has employed all across the state and that has been replicated by others across the country.

But beyond his questionable legal tactics, Stone lamented the fact that larger ISPs, like Verizon, (against whom he filed a subpoena in late May 2012 over a pirated work of anime in an ongoing case) fight him “tooth and nail,” while smaller ISPs simply “cough up the user information.”

And, he argues, Verizon isn’t protecting their users out of principle or out of an interest in legal fairness, but rather to protect their highest-paying customers, which, according to Stone, are pirates.

On appeal, Stone argues that the sanctions cannot be justified under Rules 26 and 45 or under Federal Rule of Civil Procedure 11 or the inherent power of the district court. He also contends that the attorneys ad litem lacked standing to bring the sanctions motion and are not the proper recipients of the attorneys’ fees awarded by the district court. Stone raises this last argument for the first time on appeal and raised the other arguments for the first time in his untimely motion in the district court to stay sanctions pending appeal, which was filed after this appeal was initiated. None of these arguments, thus, was preserved for purposes of appeal, nor does Stone contend they were. Accordingly, all the issues Stone raises on appeal have been waived....

Nonetheless, Stone asserted, at oral argument and for the first time, that this court can consider his arguments because his appeal is one of “extraordinary circumstances,” involving only “pure question[s] of law [in which] a miscarriage of justice would result from our failure to consider [them].” .... We conclude, however, that no miscarriage of justice will result from the sanctions imposed as a result of Stone’s flagrant violation of the Federal Rules of Civil Procedure and the district court’s orders. Stone committed those violations as an attempt to repeat his strategy of suing anonymous internet users for allegedly downloading pornography illegally, using the powers of the court to find their identity, then shaming or intimidating them into settling for thousands of dollars--a tactic that he has employed all across the state and that has been replicated by others across the country.

Geneva-based WIPO has a mandate from members to help developing countries modernize their patent offices. Iran and North Korea, both subjects of international trade embargoes including Security Council resolutions, were both beneficiaries of “standard information-technology equipment” after meeting WIPO’s needs-assessment and validation procedures, according to Edward Kwakwa, legal counsel at the organization.

I would suggest we go ahead ONLY if you think this arrangement is of crucial importance to WIPO. But given the sensitivities and the broad sweep of the sanctions language, I would prefer that WIPO simply desist from entering into any such arrangement, as it does not seem to be of any consequence or benefit to WIPO, and can bring more trouble than benefit ultimately.

“As part of WIPO’s technical assistance program -- and through a mandate from its member states -- the Organization has been supporting IP [intellectual property] offices in developing countries to facilitate the processing of patent and trademark applications since the 1990s,” the spokesman said. “The assistance in question was part of this program.”

The assistance “is intended to enhance the efficiency of the operation of registration for patents by replacing the current ICT equipment with more efficient ICT [information and communications technology] equipment,” the spokesman continued.

...extremely concerned by the fact that WIPO staff may be implementing a project in violation of two UN Security Council Resolutions... and possibly in violation of staff's own international obligations, and their national laws.

The project also raises serious ethical concerns, namely whether an International Organization should be funding a project that would not be required if the state concerned allowed its population to access the Internet.

I would suggest we go ahead ONLY if you think this arrangement is of crucial importance to WIPO. But given the sensitivities and the broad sweep of the sanctions language, I would prefer that WIPO simply desist from entering into any such arrangement, as it does not seem to be of any consequence or benefit to WIPO, and can bring more trouble than benefit ultimately.

Indeed, if Warner were correct, which it is not, Section 512(f) would become largely superfluous. Any company could sidestep accountability for improper takedowns by simply outsourcing the process to a computer. What is worse, copyright owners would have a perverse incentive to dumb-down the process, removing human review so as to avoid the possibility of any form of subjective belief. The tragic consequences for lawful uses are obvious: untold numbers of legal videos would be taken down, whether or not the uses were fair or even licensed.

Imagine the potential for mischief: Let’s say that Warner does not like competition from Universal. It could set a computer to search through Universal’s online presence, with the loosest possible settings, and issue takedown after takedown to Universal’s ISP for spurious claims. Nor is this scenario far-fetched: as noted above, supra at 4-5, anticompetitive uses of the DMCA takedown process are commonplace.

Well, I quite frankly think, Mr. Mangano, that you could have handled this a lot better if you would have placed yourself in the position of somebody other than yourself by looking at it and seeing what hoops you were making opposing counsel jump through that are totally unnecessary.

I have an extraordinary dislike for assessing attorneys' fees against attorneys, and I am not going to assess them against you under 1927. But I can tell you right now that I am right on the cusp of doing that.

I think you could have been a lot more civil and a lot more understanding about this. And I don't like to impose sanctions against attorneys, because I think it lives with them for a long time.

What happens to your client is another matter, and I am really not concerned with that. But I am telling you right now, you've got more stuff to do in this Court, and you better start thinking in terms of civility if you don't want me to jump on you with both feet.

The fact is that after Mr. Mangano and his client lost the exact same argument eight times, Mangano still persisted in forcing this defendant to litigate the same issue a ninth time. It is the Defendants' position that perhaps the first time that Mangano signed pleadings in direct contravention with the 9th Circuit’s holding in Silvers, it could have been a forgivable attempt. The same may have been true for the second and third times, with declining defensibility. When it came to being told eight times that he brought an unsupportable claim before the court, Mr. Mangano under a clear obligation to exercise some degree of client control; to refuse to bring the exact same arguments; or to dismiss a case with an inescapable outcome, such as this one, rather than to force a defendant to litigate the same exact issue a ninth time on grounds identical to the previous eight defeats. Forcing this issue nine times had no effect except to punitively impose litigation expenses on this Defendant. This Defendant deserves to be made whole for the expenses incurred due to that misconduct.

Righthaven is precluded from further arguing that it has standing to bring this action under the SAA, and that its amendments executed after filing suit are effective, by the doctrine of issue preclusion – formerly known as collateral estoppel. When an issue has been fully and actually litigated, as these issues have been ad nauseam in this District, a party is barred from relitigating the issue.

Notice is hereby given that Evan Stone, a subject of a sanctions motion filed by attorneys ad litem after termination of their ad litem appointment, appeals now to the United States Court of Appeals for the Fifth Circuit from the sanctions order entered September 9, 2011 (Dkt. 17), which finally disposes of the only remaining issue in this case.

To summarize the staggering chutzpah involved in this case: Stone asked the Court to authorize sending subpoenas to the ISPs. The Court said “not yet.” Stone sent the subpoenas anyway. The Court appointed the Ad Litems to argue whether Stone could send the subpoenas. Stone argued that the Court should allow him to – even though he had already done so – and eventually dismissed the case ostensibly because the Court was taking too long to make a decision. All the while, Stone was receiving identifying information and communicating with some Does, likely about settlement. The Court rarely has encountered a more textbook example of conduct deserving of sanctions.

This argument also fails. Discovery proceeds in “normal fashion” according to the Rules of Civil Procedure. They provide that no discovery of any kind takes place prior to a Rule 26(f) conference unless the Court orders otherwise. Although Stone might believe that motions like the Discovery Motion are mere formalities and that courts routinely grant them, that misapprehension provides no basis for proceeding with preconference discovery without court order. The only “highly irregular” activity here is Stone’s disregard of the Rules and the Court’s orders, which would have constituted sanctionable conduct even if the Court eventually had granted the Discovery Motion.

In addition to finding that Eon-Net filed an objectively baseless infringement action, the district court also determined that Eon-Net filed the lawsuit in bad faith and for an improper purpose... In particular, the district court found that Eon-Net's case against Flagstar had "indicia of extortion" because it was part of Eon-Net's history of filing nearly identical patent infringement complaints against a plethora of diverse defendants, where Eon-Net followed each filing with a demand for a quick settlement at a price far lower than the cost to defend the litigation.

The record supports the district court's finding that Eon-Net acted in bad faith by exploiting the high cost to defend complex litigation to extract a nuisance value settlement from Flagstar. At the time that the district court made its exceptional case finding, Eon-Net and its related entities, Millennium and Glory, had filed over 100 lawsuits against a number of diverse defendants alleging infringement of one or more patents from the Patent Portfolio... Each complaint was followed by a "demand for a quick settlement at a price far lower than the cost of litigation, a demand to which most defendants apparently have agreed."... In this case, as with the other cases, Eon-Net offered to settle using a license fee schedule based on the defendant's annual sales: $25,000 for sales less than $3,000,000; $50,000 for sales between $3,000,000 and $20,000,000; and $75,000 for sales between $20,000,000 and $100,000,000. Rule 11 Sanctions Order, at 3—4.

In this case, Flagstar expended over $600,000 in attorney fees and costs to litigate this case through claim construction. Supplemental Order on Fees and Costs, at 8—11. Viewed against Eon-Net's $25,000 to $75,000 settlement offer range, it becomes apparent why the vast majority of those that Eon-Net accused of infringement chose to settle early in the litigation rather than expend the resources required to demonstrate to a court that the asserted patents are limited to processing information that originates from a hard copy document. Thus, those low settlement offers—less than ten percent of the cost that Flagstar expended to defend suit— effectively ensured that Eon-Net's baseless infringement allegations remained unexposed, allowing Eon-Net to continue to collect additional nuisance value settlements.

First, as Righthaven points out in its motion, when the Court issued the sanctions the Court and counsel referred to “parties,” not merely cases. Accordingly, it is insufficient to merely file the required documents; Righthaven must produce the documents to the parties in those cases as the Court clearly stated. The reason for this is simple: the Court is fully aware of Righthaven’s practice of filing suit against a party and then entering settlement negotiations (and frequently settling) without ever serving the party. The Court concludes that depriving those parties of the benefit of the Court’s order would be unjust.

Finally, after reexamining the issues and counsel’s stated difficulties, the Court concludes that it was overly generous in granting the extension because counsel’s situation is largely—if not entirely—of his and Righthaven’s own making. Righthaven and its counsel should concentrate their efforts on material issues and court orders, not wishful research. Further, if counsel does not have time to do all that he needs to in Righthaven’s dozens of cases, the Court kindly suggests that he or Righthaven obtain additional help, not complain to the Court about time constraints. Righthaven also informed the Court in its motion that it plans to request a stay of the monetary sanction. The Court already granted an extension, which it will not change, and suggests Righthaven not waste its time on a motion requesting any further relief from the sanction.

As shown in the preceding pages, the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthaven’s failure to disclose Stephens Media as an interested party in Righthaven’s Certificate of Interested Parties. (Dkt. #5.) Rule 7.1-1 of the Local Rules of Practice for the District of Nevada requires parties to disclose “all persons, associations of persons, firms, partnerships or corporations (including parent corporations) which have a direct, pecuniary interest in the outcome of the case.” This Local Rule requires greater disclosure than Federal Rule 7.1, which only requires non-governmental corporate parties to disclose parent corporations or corporations owning more than 10% of the party’s stock. Frankly, if receiving 50% of litigation proceeds minus costs (Dkt. #79, SAA Section 5) does not create a pecuniary interest under Local Rule 7.1-1, the Court isn’t sure what would.

Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court.

Unless otherwise ordered, in all cases except habeas corpus cases counsel for private (non-governmental) parties shall identify in the disclosure statement required by Fed. R. Civ. P. 7.1 all persons, associations of persons, firms, partnerships or corporations (including parent corporations) which have a direct, pecuniary interest in the outcome of the case.

Rather, former in house counsel for Righthaven apparently failed to consider the full scope of the "direct, pecuniary interest" language under Local Rule 7.1-1 in failing to list Stephens Media on its Certificate of Interested Parties.... Unlike its federal rule counterpart, Local Rule 7.1-1 does not define what constitutes a direct, pecuniary interest and there is an absence of case law addressing the scope of the required disclosures. While the Court has concluded otherwise, it is certainly understandable how Local Rule 7.1-1 could have arguably been reasonably construed to not require the disclosure of Stephens Media’s interest in any recovery in excess of costs under the Strategic Alliance Agreement (the "SAA").

The obligation to disclose Stephens Media as an interested party pursuant to Local Rule 7.1-1 was certainly not appreciated by Righthaven's undersigned outside counsel, who has been licensed to practice before this Court since 1998.... Counsel reasonably viewed any contingent payment to Stephens Media under the SAA as constituting an indirect interest that required a two-step payment process assuming any case resulted in a recovery.... Simply put, receipt of settlement funds through settlement or recovery by the enforcement of a judgment would be made to Righthaven.... Righthaven would then be contractually obligated under the SAA to subsequently pay Stephens Media any recovered sums over and above costs incurred.... Thus, while counsel certainly appreciates the Court's guidance and will adhere to its decision, there is certainly an arguable and reasonable basis to construe Stephens Media's pecuniary interest as indirect, and not direct, under the SAA.

Pursuant to Section 501(b) of the 1976 Copyright Act... only the legal or beneficial owner of an exclusive right under copyright law is entitled, or has standing, to sue for infringement. Silvers v. Sony Pictures Entm't Inc.... In so holding, the Ninth Circuit followed the Second Circuit’s decision in Eden Toys, Inc. v. Florelee Undergarment Co.,... superseded by rule and statute on other grounds.... Section 106 of the Act defines and limits the exclusive rights under copyright law.... While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights.... Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee.... One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright... Further, to obtain a right to sue for past infringement, that right must be expressly stated in the assignment.

This conclusion is flagrantly false—to the point that the claim is disingenuous, if not outright deceitful.

The companies’ current attempt to reinterpret the plain language of their agreement changes nothing. In reality, Righthaven actually left the transaction with nothing more than a fabrication...

Righthaven argues that Section 15.1 of the SAA gives the Court authority to correct any provision of the SAA that is deemed void or unenforceable to approximate the manifest intent of the parties. The problem is that this argument requires a provision of the SAA to be void or unenforceable. However, Righthaven’s problem is not that any provision of the SAA is void or unenforceable but that the SAA simply does not grant Righthaven any of the exclusive rights defined in Section 106 of the Act required for standing. Therefore, the SAA is not void or unenforceable, it merely prevents Righthaven from obtaining standing to sue from the Assignment. Accordingly, the Court need not and shall not amend or reinterpret the SAA to suit Righthaven’s current desires...

Here, Righthaven does not ask the Court to recognize an oral transfer with a late made written memorandum of the deal, but to fundamentally rewrite the agreement between Righthaven and Stephens Media to grant Righthaven rights that it never actually received...

Finally, Righthaven contends that multiple courts within this district have already determined that Righthaven has standing to bring claims for past infringement under the Silver standard based on the plain language of the copyright assignment. At best, this argument is disingenuous. As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction by disclosing the SAA or Stephens Media’s pecuniary interests. As the SAA makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthaven’s and Stephens Media’s current contentions. Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Media’s right to proceeds from these lawsuits...

As shown in the preceding pages, the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthaven’s failure to disclose Stephens Media as an interested party in Righthaven’s Certificate of Interested Parties. (Dkt. #5.) Rule 7.1-1 of the Local Rules of Practice for the District of Nevada requires parties to disclose “all persons, associations of persons, firms, partnerships or corporations (including parent corporations) which have a direct, pecuniary interest in the outcome of the case.” This Local Rule requires greater disclosure than Federal Rule 7.1, which only requires non-governmental corporate parties to disclose parent corporations or corporations owning more than 10% of the party’s stock. Frankly, if receiving 50% of litigation proceeds minus costs (Dkt. #79, SAA Section 5) does not create a pecuniary interest under Local Rule 7.1-1, the Court isn’t sure what would.

Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court.

Mr. Stone surreptitiously issued unauthorized subpoenas to an unknown number of internet service providers ("ISPs"), demanding the disclosure of the identities of anonymous Defendants so that he could pressure the alleged downloaders of pornography into settlement. Incredibly, months later Mr. Stone participated in the briefing of the very question of whether he should be allowed to issue discovery... all the while allowing ISPs to process the improperly issued subpoenas. Plaintiff's counsel's behavior demonstrates blatant contempt for the rule of law and the authority of this Court.

Moreover, the full extent of Mr. Stone's actions is not yet known because he refuses to meet and confer. Accordingly, rather than requesting a specific form of relief, Defendants instead ask this Court to order Mr. Stone to fully account for his actions so that the Court and Defendants can be made aware of the harm inflicted and so that they may respond accordingly. Once the Court has ascertained the full extent of Mr. Stone's actions, and the extent to which his client should properly bear responsibility for his actions ostensibly performed on his client's behalf, the Court can then decide whether an award of attorney's fees under 17 U.S.C. § 505, discovery sanctions under the Federal Rules, or some other relief is appropriate. Defendants ask this Court to impose some sanction for Mr. Stone's conduct to send a message that should hardly be necessary: abusing the Court's authority to improperly investigate and push settlements onto litigation opponents will not be tolerated.

"Any attorney ... who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct."