Lawsuit Against US Copyright Group For Fraud & Extortion Moves Forward

from the conduct-is-actionable,-it-seems dept

US Copyright Group was the first of the US-based copyright trolls, suing thousands of individuals in a single lawsuit, trying to get them to pay up (rather than going through an actual trial). US Copyright Group is really a front for a DC law firm, Dunlapp, Grubb & Weaver. One of its very first "big" lawsuits was against about 5,000 people for supposedly partaking in the sharing of Uwe Boll's Far Cry. Of course, as we had noted, there was a pretty big problem in the Far Cry lawsuit, in that the US copyright registration was filed too late for many of the accusations of infringement.

Partly on the basis of the registration problems, Dmitriy Shirokov (with the law firm Booth Sweet) sued US Copyright Group, DGW and its key lawyers for fraud, extortion and conspiracy back in 2010. DGW shot back angrily, claiming that it's perfectly fine for for lawyers to lie to the court, if it's part of the course of litigation:
"Although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable,"
Of course, the threats and extortion weren't actually "during the course of litigation." DGW also claimed that there was no "harm" for Shirokov, because he didn't settle, and thus hadn't paid up. DGW then went even further, asking for sanctions against Shirokov and Booth Sweet, claiming that it was actually them who were filing lawsuits for "improper purpose."

The court has now ruled in response to DGW's motion to dismiss, and it seems pretty clear that the judge is not impressed by DGW at all. The motion to dismiss was rejected and the class action lawsuit against the company moves forward.
Judge Boal recommended that the motion for dismissal be denied in significant part. The defendants had argued that Mr. Shirokov was not entitled to sue them at all, since he wised up before paying their demands, and his claimed injuries were out-of-pocket costs of investigating the threats. They claimed that the Noerr-Pennington privilege, an antitrust doctrine, prevented any liability. And they argued that lawyers and their clients have absolute immunity for even intentional torts, or in DGW’s words: “although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable.” Just think about that one for a minute.

Judge Boal thoroughly debunked each of those claims. The fees Mr. Shirokov incurred in investigating the trumped-up copyright claims constitute an injury-in-fact that gives him standing to sue. The Massachusetts litigation privilege does not apply to threats of litigation that are not seriously contemplated in good faith. And the Noerr-Pennington antitrust doctrine did not apply outside of antitrust law, and even the First Amendment right to petition isn’t an absolute protection for litigation threats.
It's important to note that, in this case, it's the specific issue of the non-registered copyrights that is key. That is, the lawsuit isn't about the general practice of copyright trolling -- but the fact that it was done using claims and demands that were not true (e.g., the statutory damages if found guilty of sharing, even though such statutory damages were not available for a work that hadn't been registered).

Along those lines, the court didn't completely side with Shirokov, saying that some of the racketeering and fraud charges should be dismissed. But, large parts of the lawsuit survive and will move forward -- which doesn't seem like a good thing for DGW or US Copyright Group. Perhaps, next time, they'll check the copyright registration before filing suit.


Reader Comments (rss)

(Flattened / Threaded)

  •  
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    GMacGuffin (profile), Mar 2nd, 2012 @ 3:51pm

    SOP...

    Perhaps, next time, they'll check the copyright registration before filing suit.

    They knew exactly what they were doing. Unless they knew absolutely nothing about copyright law, they knew they had to register within a certain time frame to be entitled to statutory damages. They threatened those damages anyway because that was their goal; and because lawyers threaten damages they aren't entitled to all the time (litigation privilege). They're more likely to do it when they don't think a lawyer's gonna be on the other end to call them on it -- like here with small numbers involved per party. I think they just didn't consider how it might play out in a mass litigation context.

     

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    mr. sim (profile), Mar 2nd, 2012 @ 4:06pm

    what upsets me is the fact i just found out that lawyers can commit crimes during the course of a court proceeding and be immune from civil actions for it. seeing as they rarely get put in a state that renders them permanently unable to practice the law.

    the fact they lost a ruling trying to save their sunken ship means less than nothing to be compared to that.

     

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    abc gum, Mar 2nd, 2012 @ 5:23pm

    "the lawsuit isn't about the general practice of copyright trolling"

    That's a shame - trolling for dollars continues unabated.

     

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    Anonymous Coward, Mar 2nd, 2012 @ 5:30pm

    The motion to dismiss was rejected and the class action lawsuit against the company moves forward.

    Typical lopsided "reporting."

    First of all, this is just the recommendation of the magistrate judge, not an order of the district judge. The judge can accept or reject the magistrate's recommendation.

    Second of all, the magistrate recommended that the motion to dismiss be granted in part and denied in part. You claim that the motion was "rejected," when in fact, the magistrate is recommending that "Counts 4, 6-7, 9-10, 12, 14-17, and 19" be dismissed. Plus, the magistrate is recommending that Count 11 be dismissed in part.

    How is the magistrate recommending that 11+ counts be dismissed a "rejection" of the motion to dismiss? Talk about faith-based, bias-blinded bullshit. Sheesh, Mike. I know it's a copyright case, but would it kill you to not be so dishonest about it?

    Are you physically/mentally incapable of basic honesty?

     

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      Anonymous Coward, Mar 2nd, 2012 @ 5:35pm

      Re:

      Well, upon review, I see you did mention at the end of the article that some of the counts were recommended to be dismissed. My apologies for missing that before blasting you in the comments.

       

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        Anonymous Coward, Mar 2nd, 2012 @ 6:50pm

        Re: Re:

        You seem to miss a lot dude.

         

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        G Thompson (profile), Mar 2nd, 2012 @ 8:23pm

        Re: Re:

        This is why you should read the post fully.

        It's called due diligence though not the same legal obligare that USCG had towards Shirokov et.al , an ethical obligation on your part nonetheless.


        Though your apology shows you are so much more ethical than USCG & Co.

         

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        Anonymous Coward, Mar 4th, 2012 @ 5:16pm

        Re: Re:

        Ironic, not checking/reading the info = egg on face.

         

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    Anonymous Coward, Mar 2nd, 2012 @ 5:57pm

    Did anyone else read the title and think of the name of the group as:

    "US Copyright Group For Fraud & Extortion"

     

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    Anonymous Coward, Mar 2nd, 2012 @ 6:23pm

    and why aren't anti-trust laws being used against the U.S. copyright group?

     

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    Anonymous Coward, Mar 2nd, 2012 @ 6:27pm

    can I join in on this, they tried to extort me.

     

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    sophisticatedjanedoe (profile), Mar 2nd, 2012 @ 7:21pm

    Yay! Run trolls, run!

     

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    That Anonymous Coward (profile), Mar 2nd, 2012 @ 11:27pm

    And USCG continues their latest filing going after just over 2,000 people for the new Conan movie.
    They moved to a "friendly" court.
    They only filed against those with ISPs known to hand over user info without a fight.
    And they actually tried to make sure that the targets this time would actually be in the jurisdiction of the court.
    The last one is fun because the previously claimed it was impossible to find out where the ip addresses were located geographically, so it was right to pursue people well outside of the courts jurisdiction.

    I am interested to see what else will be discovered in this case, IIRC USCG is using the German firm that was thrown out of German courts because the tech wasn't accurate. One of their former partner lawfirms sued them for not disclosing huge flaws in their system. No court has ever heard of this, or considered that an expert who gets income based on the number of settlements might not be quite straight forward.
    The German firm in the past has used a "honeypot" technique where they make the file available themselves, creating the "pirating" incident they stand to profit from.
    Many of the IP tracking firms seem to be German based, and many might just be rebranding of the parent firm to make sure if one falls the others will not be looked at more closely.

    But then this is just the tip of the iceberg about what is going on out there in the troll landscape.
    SJD, Oh HAI!, runs a very informative blog http://fightcopyrighttrolls.com/ covering many of the str8 porn shakedown kinds. (Oh HAI STEELE, we see you under your new pretend name with an unregistered company giving evidence.)
    There is a growing number of people targeted by these shakedowns who are taking up the fight to educate more people about what scams these are. I can only hope that USCG ends up having to spill the beans about what a scam this actually is and detonates cases across the country.

     

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      sophisticatedjanedoe (profile), Mar 3rd, 2012 @ 1:31pm

      Re:

      Ohai, TAC. A small clarification:

      > Many of the IP tracking firms seem to be German based

      There is no such thing as "IP tracking firms": in a nutshell, it is a single poisonous octopus called Guardaley, and all this logisteps, basenprotects and ipp's are just its tentacles. It can be proved easily.

      It's possible that I'm not 100% correct: there are many unethical opportunists in every country, and there may be some independent extortion outfits, but the lion share of this shakedown market is Guardaley.

       

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        That Anonymous Coward (profile), Mar 3rd, 2012 @ 7:20pm

        Re: Re:

        This might be very true SJD, but I like to cover all of the bases. There used to be just 1 copyright troll in the UK, then ACS:Law and now there are some smaller outfits still trying demand letters.

        There used to be just USCG in the US, then Stone, Steele, Randazza, and a buncha other upstarts.
        It is possible there might be a couple smaller firms trying for a piece of the pie.
        Guardaley is "huge" with all of their sub offerings, all setup to fall independently of each other. And that is what is grotesque to me. It is all 1 set up "tech" and they just create a new name, a new "expert", for each case. All the money goes to the same players, who get the money by making accusations that courts just accept as infallible. And even if a Judge decided to have 1 ripped apart, it wouldn't take out the others.

        It would be nice to build a chart and try to connect each of these firms back to Guardaley, and show the world the octopus they are. I wonder how Judges would feel knowing 1 company with that many names is behind nearly all of the cases, and no ones ever said prove it.

         

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    Anonymous Coward, Mar 3rd, 2012 @ 8:25am

    "Although an attorney may be accused of defrauding opposing parties, knowingly committing discovery abuses, lying to the court, or purposely and maliciously defaming another individual, if it takes place during the course of litigation, the conduct simply is not actionable,"

    An attorney who says anything like this should immediately have their license to practice law revoked, a judge who says this should be immediately removed from the bench, and a politician who says this should be immediately removed from office.

     

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    Steve Worona (profile), Mar 3rd, 2012 @ 8:58am

    Alternate headline

    Court won't reverse USCG troll charges.

     

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    identicon
    brandy, Mar 26th, 2012 @ 6:51pm

    Nu Images,Inc.

    I've gotten letters via comcast or something saying that they have a subpoena for downloading/uploading a video called "The Mechanic" anyways a cop told me to throw it away and not worry, comcast's main office in athens said it was a scam and not to worry. . it's requesting me to get a lawyer or have my information, name ect. handed over. . I did have power around that time but i don't recall if i even had internet but I know for 100% certain that I did not download that movie. . but . . what should I do? ignore it? or. . get a lawyer? I Don't have any money, I have a 3 year old and two other people living with me and a house that is crap that i have to pay to fix like the ac that's gone out. . and other important bills like electric, I get SSI and tanff. . and nothing else since i'm disabled what the hell am I supposed to do D: if they do sue me? my friend and mother even said this was fake and not to worry but i have panic attacks and frankly i'm scared.

     

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