Judge Calls Out Malibu Media For Its Attempt To Cut And Run When Faced With Challenge To Its Infringement Claims

from the so-many-trolling-jerks,-so-little-time dept

IP trolls are about 90% cardboard facade. They puff themselves up with blustery legal threats written on serious-looking legal letterhead, but it's really no different than the defensive mechanisms of many creatures found on the lower end of the food chain. For most, the slightest of pushes back results in the whole charade collapsing.

There's a great future in speculative invoicing, said no one ever in any seminal coming-of-age, post-college disillusionment film. Just look at Prenda Law, which resorted to fraudulent behavior when its aggressive, but incompetent, trolling failed to pay the bills. And yet, nothing stops the trolls from trolling. The occasional speed bump surfaces, but trolls dismiss these rather than meet the challenge head on. They're in it for settlements, not wins… and certainly not precedent.

Unfortunately, too many will get away with the following tactic, as covered by indispensable thorn-in-trolls'-side, Sophisticated Jane Doe of Fight Copyright Trolls.

[T]he “main course” served on Monday was the order denying plaintiff’s motion to dismiss counterclaim in Malibu Media v John Doe (CAND 15-cv-04441, defense attorney: Joseph C. Edmondson). As I will explain shortly, this order essentially destroyed one of the two main foundations of the copyright trolling.

While answering Malibu’s complaint on 4/26/2016, the defendant counterclaimed with a single count of declaratory judgment of non-infringement (basically asking the judge to formally rule that the defendant was not an infringer).

Malibu moved to dismiss the counterclaim, arguing that such counterclaim mirrors defendant’s denial of liability found in the Answer. The defendant replied, cleverly pointing to Oracle v Google (a lawsuit handled by the same judge), where Google made a similar counterclaim.

While Judge Alsup agreed that there is certain duplicity between the denial as an essence of the counterclaim and the denial as a part of the Answer, he nonetheless denied the plaintiff’s motion, leaving the defendant’s counterclaim alive.

Why is this denial of Malibu's motion to dismiss important? Because it undercuts its sole interest in litigation: easy money.

As I mentioned above, copyright trolling rests on two turtles: astronomically (and maybe unconstitutionally) high statutory fines, and the absence of downside for the troll as it can always cut and run, leaving the defendant with painful legal bills.

Judge Alsup just closed the second avenue, at least in his district. The case is now “locked,” and it is not in the plaintiff’s power to dismiss it unilaterally any longer.

It's a cheap legal trick -- one that even the US government isn't above using to escape cases where it may be found liable for legal fees. When the pushback arrives, dump the case. Standard m.o. There's very little margin in their normal shakedown work. That's why they try to bundle up as many Does as possible in every filing. And that's why they move to dismiss as soon as they encounter a little friction.

Malibu seeks this, knowing full well it has almost zero chance of "recovering" this amount -- hoping that the scarily large numbers (fully supported by ridiculous IP laws) will intimidate the defendant into a settlement. From Judge Alsup's denial [PDF]:

Malibu Media seeks statutory damages of at least $17,250 for defendant’s alleged infringement of twenty-three videos ($750 per work), with a potential for much greater liability if infringement is found to be willful or if the jury finds Malibu Media is entitled to damages on the higher end of the range provided by statute.

Malibu tried to pretend the counterclaim imposed an unfair burden on its trolling effort.

Malibu Media argues that permitting defendant’s counterclaim to proceed would require it to file an answer in which it would deny all the allegations and refer back to the complaint.... Malibu Media also contends the declaratory judgment counterclaim would confuse a jury.

And found no sympathy in Judge Alsup.

Not really, however, a jury would never need to know that the case involves an affirmative claim of infringement and a declaratory judgment counterclaim of non-infringement. The jury could render one verdict resolving both claims. Malibu Media will suffer no prejudice.

Alsup goes on to call Malibu's motion what it is: a transparent attempt to dodge potential liability for legal fees.

Malibu Media’s motion seems more like a gimmick designed to allow it an easy exit if discovery reveals its claims are meritless.

This, as Alsup notes, tilts the system heavily toward the plaintiff, considering what a defendant might be facing if found to be culpable.

The damages exposure in this case, as with Malibu Media’s many other cases, is significant, so a defendant may feel pressure to settle even a meritless case. Coupled with the taboo nature of the subject matter, there remains potential for abuse.

[...]

Dismissing defendant’s counterclaim would eliminate one avenue for a fee award, and, as stated, maintaining the counterclaim would cause no prejudice to Malibu Media.

It will take a steady stream of opinions like these to stem the flow of IP trolls -- and some sort of consistency between multiple jurisdictions -- but every decision that calls trolls like Malibu out for their predatory behavior is a good one.


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  • identicon
    Sunhawk, 27 Jun 2016 @ 2:12pm

    Sooo... I wonder what will happen next? Malibu stuck its hand in that there tar baby...

    And if it works out for the defendant (and I imagine the defendant is at least mildly confident if he makes this move), it would provide a useful blueprint - certainly in that jurisdiction and perhaps for others in which the judge feels Malibu is pulling a fast one.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 27 Jun 2016 @ 2:58pm

    I still don't understand what the counterclaim is for or how it works. Why would it keep Malibu in the current court case?

    reply to this | link to this | view in chronology ]

    • icon
      Ben S (profile), 27 Jun 2016 @ 3:12pm

      Re:

      Basically, until a decision is made on the counterclaim, the case stays in court. This prevents Malibu Media from deciding to drop their claim should they find the defense is likely to win, and set an unfavorable precedent. This also prevents them from dropping the case should it look like the judge is leaning toward awarding legal fees to the defense due to claims made by Malibu Media in bad faith.

      Had the judge decided to dismiss the counterclaim, then Malibu would be free to just drop their claim, and with nothing else on the docket to be decided, the case would be over.

      reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 27 Jun 2016 @ 4:26pm

      Re:

      I still don't understand what the counterclaim is for or how it works. Why would it keep Malibu in the current court case?

      The counterclaim is for declaratory judgment of noninfringement. Basically not asking for cash, but wants the court to say "I do not infringe." That's a legitimate thing to bring to court, and now that it's there Malibu Media can't single handedly drop its side of the case any more. It's just as if the defendant had gone to court first and asked for a declaratory judgment ruling.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 27 Jun 2016 @ 9:25pm

        Re: Re:

        But wouldn't the very act of having a judge say that a person is a non infringer completely negate the case? Or is the fact that two sides say different things in two different lawsuits mean that either it goes to a jury or both parties agree to an amicable ending?

        Also how would you get a judge to make that kind of judgement? Wouldn't Malibu show up to the court so it is not summary judgement?

        reply to this | link to this | view in chronology ]

        • icon
          That Anonymous Coward (profile), 27 Jun 2016 @ 9:52pm

          Re: Re: Re:

          If the Judge ruled that way, the defendant would be the prevailing party and entitled to their costs according to the law.

          The Judge would look at the "evidence" which is a millisecond of an alleged file transfer vs the fact there was open wifi, many users, & they can not tie the accused to the infringement in any real fashion beyond MM's imagination.

          Even in cases where defendants have hired their own experts & proved beyond reasonable doubt that MM's claims were without merit, MM's standard action is to dismiss without prejudice (so they could TOTALLY bring the case again when they get more evidence) and trash the defendant, their counsel, & claim that because they couldn't find evidence is proof they hid the evidence to well... and stick the defendant with paying his own bills. So for a $400 filing fee, trolling all of the defendants devices & online accounts, while evading providing anything in discovery... running up bills hoping the defendant will hit a point where its cheaper to settle than prove they are innocent. And even when its clear that MM has failed to prove anything they alleged, the courts have often been loathe to award fees even as MM has released names, passwords, & other private details in violation of court orders.

          reply to this | link to this | view in chronology ]

        • icon
          sophisticatedjanedoe (profile), 28 Jun 2016 @ 7:38am

          Re: Re: Re:

          But wouldn't the very act of having a judge say that a person is a non infringer completely negate the case?


          It would, but the judge didn't say that. He just allowed the counterclaim to stay for a future resolution, which will take place either during a trial (not likely) or on a motion for summary judgement.

          A common mistake is to conflate case with complaint: while a plaintiff conjures a case by filing the complaint, it does not have power to close the case, only to dismiss its own claims (subject to rules). If the defendant doesn't counterclaim, dismissing the complaint normally results in an administrative closing. However, if the defendant files a counterclaim, the plaintiff has no power over it, and the case stays alive.

          reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 27 Jun 2016 @ 3:42pm

    Once is good, all the time would be better

    Given the ability to just drop a case should it look like it is or might be going poorly is one of the primary tools of patent and copyright trolls, this ruling is good and needs to spread like wildfire everywhere else as soon as possible.

    The trolls are in it for the money, the cheap and easy (couple thousand) bucks, adding a little risk to the equation would do a world of good in cutting down on frivolous, weak and/or non-existent cases as now it would no longer be a no-risk venture to shake people or companies down for some easy money.

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 27 Jun 2016 @ 4:57pm

    Poor MM, they parted ways with the FL braintrust (with one of its lawyers jumping ship to the new firm) and they can't keep up with everything.

    Far to often even after discovery makes it clear the defendant is clearly innocent, they make claims of super secret spoliation based on the 'hunches' of their former addict expert and keep pressing to get a settlement. They admitted in documents to defense counsel they didn't have access to the evidence the case was brought upon and couldn't/wouldn't produce it in discovery... and yet somehow after a case dragging on forever... they Judge let them cut and run sticking an innocent with huge bills.

    It is nice to see that a Judge has finally caught up to the idea that the system is caught up in the illusion lawyers would never bring a bad faith case to just shake out a settlement, and allowing them to exit without having to make defendants they harassed for (in some cases) years whole is wrong. We've seen filings from MM where despite their expert finding nothing, reality disproving claims, still maintaining the defendant was guilty as they dismissed the case. Nothing like getting to make parting shots after turning someones life upside down.

    I look forward to the day some agency finally raids their offices and finds out what happened with all of the data they copied & passwords they kept...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 27 Jun 2016 @ 5:55pm

    That sound you hear is Whatever, antidirt and Slonecker furiously grinding their teeth in solemn protest against this "pirate" judge and his "crusade" against "honest content creators".

    reply to this | link to this | view in chronology ]

  • identicon
    knuckle Down, 28 Jun 2016 @ 3:01pm

    Sue Malibu Media right in the p-ssy.

    reply to this | link to this | view in chronology ]

  • icon
    sophisticatedjanedoe (profile), 28 Jun 2016 @ 3:18pm

    Breaking: Malibu Media sues its former counsel Keith Lipscomb and his firm for professional negligence and breach of fiduciary duty.

    As the first comment aptly notes,

    Reservoir Dogs? Why is that the name of the movie? a friend once asked me. Well, I told them, in areas with wild dogs they hang out near watering holes, ponds, or puddles or whatever but as the summer goes on in some places it starts to dry up and the dogs, who once shared the water begin to turn on each other.

    Humans do it for a lot less than water is the difference.

    reply to this | link to this | view in chronology ]

  • icon
    G Thompson (profile), 30 Jun 2016 @ 2:01am

    Surely and slowly the USA is coming around on tort reform where the equity should ALWAYS be on 'loser pays" in civil actions (unless both parties are at fault).

    reply to this | link to this | view in chronology ]


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