Prenda Law Tries To Close The Barn Door After The Horse Has Lawyered Up

from the run-away!-run-away! dept

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

My prior coverage of the Prenda Law saga is here.

Yesterday, March 14, as Judge Wright was busy issuing a new Order to Show Cause directing Prenda Law clients and affiliated attorneys to appear before him, Prenda Law was busy too.

More specifically, Prenda Law — through Paul Duffy, one of the lawyers Judge Wright has ordered to appear — was busy dismissing cases and filing a “Notice of Allegations” informing other courts of what is going on. Sort of.

A tipster told me that Mr. Duffy had a busy day yesterday. PACER showed it’s true. More specifically, Mr. Duffy filed voluntary dismissals of multiple AF Holdings LLC cases in the Northern District of Illinois — here and here and here (in which he stipulated to dismiss the case with prejudice, meaning it can’t be re-filed) and here. In one of those cases he filed the notice of dismissal even though AF Holdings had already secured a default against the defendant, leaving nothing but proving damages. I haven’t yet counted all the cases in which Duffy filed dismissals yesterday.

In each of those cases — and in a case in the Northern District of California — Duffy also filed a substantially identical document styled a “Notice of Allegations.” Here’s what they all say:

Plaintiff hereby notifies the Court of allegations of forgery that were made during a hearing in a matter pending before the U.S. District Court for the Central District of California. Ingenuity13 LLC v. John Doe, No. 2:12-cv-08333-OWD-JC (C.D. Cal. Mar. 11, 2013). On March 11, 2013, an individual by the name of Alan Cooper alleged that his signature was forged on two separate agreements assigning the rights of various copyrighted works to Plaintiff, including the assignment at issue in this matter. (See, ECF No. 1-2 at 2.) Plaintiff categorically denies Mr. Cooper’s allegations, which arise nearly two years after certain of the alleged conduct occurred. Mr. Cooper has a pecuniary interest in his allegations by virtue of a lawsuit he filed against Plaintiff. Cooper v. Steele, et al., No. 27-CV-13-3463 (Minn. Dist. Ct., Hennepin Cty., 2013).

Even if Mr. Cooper’s allegations were true—and they are not—Plaintiff’s assignments, including the assignment at issue in the instant action, remain valid. The formal requirements of a copyright assignment are “quite simple”: a writing signed by the assignor. 17 U.S.C. § 204; Effects Associates, Inc. v. Cohen, 908 F.2d 555, 557 (9th Cir. 1990) (“The rule is really quite Case: 1:12-cv-03567 Document simple: If the copyright holder agrees to transfer ownership to another party, that party must get the copyright holder to sign a piece of paper saying so. It doesn’t have to be the Magna Charta; a one-line pro forma statement will do.”); see also Order, AF Holdings LLC v. Does 1-96, No. 11-cv-3335-JSC (N.D. Cal. Nov. 22, 2011), ECF No. 29 at 5 n.1 (“The written copyright assignment recites that it is between the original copyright owner, Heartbreaker Films, and Plaintiff here, AF Holdings, LLC. . . . As the law requires only that the assignment be signed by the assignor and not the assignee, this inconsistency does not prevent a prima facie showing of copyright ownership.”) (internal citations omitted).

Mr. Cooper’s allegations relate to the assignee, not the assignor. The assignment at issue in this action satisfies the Copyright Act’s formal requirements. It is a writing signed by the assignor. Plaintiff’s rights in the copyrighted work in this action were transferred when the assignor executed the assignment.
Plaintiff is treating Mr. Cooper’s allegations with utmost seriousness and is investigating their substance. Because Mr. Cooper’s allegations relate to the assignment agreement at issue in the instant litigation, Plaintiff respectfully brings the matter to the Court’s attention.

Broken down, here’s what Duffy is saying: (1) Cooper’s claim is untrue, (2) but we’re treating the claim seriously and investigating it, (3) but even if it were true, it doesn’t matter, because an assignment only needs a valid signature from the person giving the property, not the person receiving the property.

Many things could be said about that argument. Among them: the first two points are oddly at war with each other, particularly when uttered in such proximity. If AF Holdings knows the allegation is not true, then what precisely is AF Holdings carefully investigating? Doesn’t AF Holdings already know whether or not Mr. Cooper consented to be an officer for it and executed documents for it? What is there to investigate, exactly?

Duffy’s third point is about a doctrine that lawyers — including, for instance, prosecutors and defense lawyers — call materiality. Most civil or criminal laws prohibiting false statements only extend to material false statements — that is, statements that are the sort that could make a difference in the issue at hand. Duffy seems to be previewing Prenda Law’s defense by suggesting that even if Cooper’s identify was misappropriated and his signature forged on assignments, that false statement was not material because a copyright assignment only needs a valid signature from the guy giving the copyright, not the guy receiving it.

There are a number of problems with that argument. Among them: Judge Wright is not only interested in whether Prenda Law made fraudulent representations about who received the assignments. Judge Wright is investigating — and has ordered Prenda Law to explain — whether Prenda Law made fraudulent representations about the true owners of plaintiff entities like AF Holdings. Whether Alan Cooper is a real officer or not is unquestionably material to that. Judge Wright has specifically ordered them to explain:

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 [of the March 14, 2013 Order];

Prenda Law’s apparent theory of materiality may be apt in analyzing whether the copyright assignments are valid. But it may not be apt in determining whether any misstatements were material for purposes of civil or criminal fraud allegations directed at the ownership and management of Prenda Law’s clients. For instance, as I’ve discussed before, for purposes of charging defendants with false statements to the government, materiality is defined very broadly to include the sorts of statements that have the capacity to influence the government, whether or not the government is actually misled.

All that said, aside from questions about the exact language of the “Notice of Allegations,” Paul Duffy is very likely doing the right thing legally and ethically by dismissing the cases and informing courts of the allegations against Prenda Law. In doing so he is reducing the risk that he will be accused of continuing any alleged fraud on the court after the March 11, 2013 hearing.

With respect to what has already happened, though — my friends, that die is cast, the Rubicon crossed, the ram has touched the wall.

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Companies: prenda, prenda law

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Comments on “Prenda Law Tries To Close The Barn Door After The Horse Has Lawyered Up”

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Anonymous Coward says:

Broken down, here’s what Duffy is saying: (1) Cooper’s claim is untrue, (2) but we’re treating the claim seriously and investigating it, (3) but even if it were true, it doesn’t matter, because an assignment only needs a valid signature from the person giving the property, not the person receiving the property.

Sorry, Ken, but you’re not allowed to call copyrights “property” on Techdirt. Copyrights are the devil.

Anonymous Coward says:

Re: Copyright property

Well, this is the kind of thing us programmers can understand easily (object versus pointer to object) but often trips up non-programmers (or beginning programmers).

There are two things in play here. The object (the story or film or whatever you have), and an abstract piece of paper which says you own that object (the copyright). The later refers to the former, but is not it; the copyright is not the story, and the story is not the copyright.

The copyright is something which can be sold, or stolen (for instance via a counterfeit document saying it was sold when it wasn’t). Only one abstract entity can have it. It is also an artificial construct, like for instance shares in a company. It exists only because the laws say so and people believe in these laws. There is no problem in calling it property.

The story or film, however, is a natural thing. It is nothing more than information; as such, it can naturally be copied, and many people can have it. My possession of a copy does not diminish your possession of a copy. This is the thing people object to being called “property”, since it has too many properties distinct from physical property (the main one being that it is a non-rival good).

So yeah, you can assign a copyright as property. But what you are assigning is the thing saying you own the story or film, not the story or film itself.

elemecca (profile) says:

Re: Re: Copyright property

This. A thousand times this. Indirection and the various derived objects it creates is something many, many people have trouble following.

I have one gripe with your explanation, though. You set out to explain that the creative work itself is not and cannot be owned, but then you describe it using the terminology of property (including the word “own”). The copyright in a work does not grant ownership of the work. Rather, it grants a temporary, exclusive right to exploit some aspects of the work. Inasmuch as we have collectively agreed that such a right exists, its exclusivity makes it rivalrous and thus it can reasonably be owned and transferred as property. Even allowing for the existence of the exclusive right, however, the work itself remains non-rivalrous and thus cannot be property.

AWarnock says:

Re: Devilish Copyrights

The idea behind the copyright isn’t all that bad. A person who creates the work is entitled to compensation for it’s reproduction. This means that artists, writers, and other sorts of creative people can make a living doing what they love.

It’s a nice theory anyway. In practice both copyrights and patents have been used as cudgels to extort money from anyone you can and to beat down competition, but to say that copyrights are the devil seems really short-sighted, and if they were lifted, who’s to say that the big content companies wouldn’t cherry-pick the best stuff from different sites and sell it as their own without having to pay the original artist anything.

To put it another way, just because the pipes leak, the drains are clogged, and the house is flooded doesn’t mean that the idea of indoor plumbing is evil, just that the current implementation is in dire need of repair.

Now whether the current assclowns in the US Congress and the Oval Office have enough brain activity to do this is up for debate. Personally, I think I like my chances of winning the lottery in the five states around where I live.

nasch (profile) says:

Re: Re: Devilish Copyrights

if they were lifted, who’s to say that the big content companies wouldn’t cherry-pick the best stuff from different sites and sell it as their own without having to pay the original artist anything.

Of course they would. And if they did the best job of selling people what they wanted to buy, they would deserve that money. What’s the problem there?

Anonymous Coward says:

I can see it now...

In doing so he is reducing the risk that he will be accused of continuing any alleged fraud on the court

I can see it now:

“Your honor, as our actions show, as soon as we discovered our actions were unethical, we immediately put a stop to them. Since we (as lawyers) couldn’t possibly be expected to know what’s unethical or not, we should just be forgiven now that we’ve put things right. Right?”

Anonymous Coward says:

It is our contention that Alan Cooper very much exists but as it turns out may be a conman or a schizophrenic or someone possibly known to us who suffers from multiple personality disorder. But the important thing for everyone to notice is no one relating to Prenda law or AF holdings has done anything wrong in fact it is surely clear that we are the victims here and look how noble we are in letting crooks away scot free which is surely the definition of both nobility and goodness.
Furthermore butter wouldn’t melt in our mouths.

Anonymous Coward says:

“In one of those cases he filed the notice of dismissal even though AF Holdings had already secured a default against the defendant”

Wow. They had actually won that case by virtue of the defendant not showing up, and THEN they dismissed? That’s a sign of major problems.

My best guess is that the companies filing the lawsuits will entirely cease to exist in the near future. Although it’s anyone’s guess as to whether they will reappear under a different name.

That Anonymous Coward (profile) says:

Re: Prenda has been wasting public money

Not to mention if the courts decided there was misjoinder (piling together unrelated defendants) like they have in many of these cases, they might have to accept that these cases were filed to keep costs low.

They have packed hundreds and thousands of people into these cases. So for going after 100 Does that they are SURE ‘stole’ this IP they pay $350 instead of $35,000 to pursue each one.

As they demand thousands from their targets, they have the income to support individual suits so these cases are filed out of economy as they have no intention of bringing any/all 100 to trial.

Machin Shin (profile) says:

Porn owner?

So… unless I am understanding this wrong. The only signature that matters on the transfer of the copyright is the one of the old owner. So, Didn’t they basically just say that Allen Cooper just had ownership of a ton of porn just fall in his lap?

How about that for stolen identity. Find that no they didn’t clean out your bank, in fact they gave you a lot of stuff.

kenichi tanaka says:

This simply means that because Duffy is dismissing these cases and informing the courts, that the rest of those associated with the travesty of these copyright laws in this particular matter could end up before the “American Bar Association” for moral and ethical misconduct and could end up losing their licenses to practice law.


You gotta love that.

Mr. Duffy has simply decided to save his own ass, and toss everyone else into the guillotine.

special-interesting (profile) says:

Is likely that the dismissed cases are the ones that use funky evidence or skewed shell companies. A default award left on the table? -paints BIG red bullseye- An attempt at damage control for sure. It may not matter since these were already filed and accusations made.

Hard to understand the argument based on a present rightsholder ‘quick signature’ as compared to the signing of a receipt? Get the evidence thrown out on technicality? Sounds like an ?you don’t understand (legalese) but I do? obfuscation by convoluted detail defense.

If I remember right even the large music corps were forced to show they had the exact copyright that was being enforced with no shell firms because they never (and will never) gave up the rights in the first place. Only some vague permission/assignation to a meaningless shell firm to sue which is not in any definition a rightsholder. A firm either holds the copyright or they don’t and only that firm is allowed to be named on the complaint as plaintiff. (am really stretching my legal awareness it this totally correct?)

How Prenda (porno chasing small fry’s) rate a pass on that?

If Mr Cooper says he did not sign then where is this new Mr. Cooper? So far the house caretaker Mr. Cooper has given statements and dutifully shown up in court whereas Prenda has not.

For clarification a copyright is not a right as we know such from the Bill of Rights. A copyright is an artificially imposed deceleration that a short temporary monopoly has been given to an original-works creator hopefully to generate more original-works. Since its not working that way toss it out.

Definitely the buttered. More butter please!

Anonymous Coward says:

the “investigating” mean they don’t think it is true, but are checking to make sure. It’s basically CYA to avoid the notice being taken as a confession. (Incidentally, I’m kind of suspicious about Prenda’s argument about only the Assignor needing to sign. For a contract to be valid, it has to be agreed by both parties. Therefore, I can only assume the argument is that the signature is valid as agreement by Prenda to the contract (which is correct, incidentally. A signature doesn’t have to be your name ( the principle comes from the time when your average person couldn’t write, so scrawled an X to indicate their agreement.)

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