from the rule-68 dept
In the last couple of years, lawyer Richard Liebowitz has really made a name for himself in copyright trolling circles. He’s quite aggressive, and even got a huge profile written about him at Slate, in which it notes that, unlike many trolls who focus purely on shakedown settlement letters, Liebowitz runs straight to court to leverage the power of an expensive court case to push for insane settlements. “Sue first and negotiate later.” The Hollywood Reporter has done its own profile on Liebowitz as well.
It appears that many of his cases have ended up before federal judge Denise Cote, who clearly sees through his scam. Last year, we noted her scolding him for his practices, including not following court rules. Cote even referred to him as a “copyright troll” — something that offended him so much he requested that it be redacted. That request not only failed, but Cote reiterated:
“His litigation strategy in this district fits squarely within the definition of a copyright troll.”
Liebowitz is back before Judge Cote yet again in one of his many cases, and it’s not going well. As pointed out by the copyright troll fighters at Booth Sweet, Liebowitz is busy setting precedents that are bad for copyright plaintiffs. In this particular case, the issue has to do with Rule 68 of the Federal Rules of Civil Procedure. Under Rule 68, when sued, a defendant may make a settlement offer that includes some specific terms.
In this particular case, Liebowitz, representing photographer Gregory Mango, sued Democracy Now!. Democracy Now! looked up how much Mango was licensing his photos for (a maximum of $220) and made a Rule 68 offer to settle for 5 times that amount. Liebowitz quickly turned the offer down, as he was seeking much more. But here’s the fun part of Rule 68. It’s part (d):
Paying Costs After an Unaccepted Offer. If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.
Translated: If Mango/Liebowitz’s final judgment is less favorable than the ~$1,000 Democracy Now! offered under Rule 68, then Mango is on the hook for all of Democracy Now’s legal fees incurred after that offer was made. That is likely to be many thousands of dollars. As Booth Sweet notes, many courts have said that Rule 68 doesn’t apply to copyright cases, but in Cote’s latest ruling she says it does, and tells Liebowitz to post a bond for $50,000.
In other words, even if Mango “wins” the case, but gets less than $1,000, he may be on the hook for tens of thousands of dollars in legal fees.
Cote relies heavily on the fact that the Supreme Court has made it clear that fee shifting is proper in copyright cases. And she makes it clear that Mango/Liebowitz’s decision not to take the offer was unwise:
The allegations of infringement set forth in the complaint involve a single photograph used in one article. In such copyright infringement cases, awards rarely exceed three to five times the license fee for a work. See Rice, 2019 WL 2865210, at *2 (collecting cases). The highest licensing fee that Mango charges on photo licensing websites appears to be $220 for a single photograph. Mango does not dispute that Democracy Now?s Rule 68 offer is five times greater than the typical licensing fee for editorial use of images similar to the Photograph. In the only one of his lawsuits in this district that proceeded to trial, Mango recovered less than $4,000 in statutory damages on his claim for copyright infringement.
Democracy Now, a non-profit entity, is not alleged to have profited from the use of the Photograph and removed the Photograph from its website promptly upon receiving notice of this lawsuit. It had not received any prior notice, demand, or request from Mango. Democracy Now may very well have complete defenses, including a fair use defense. In light of these facts, Mango is unlikely to recover an amount greater than the Rule 68 offer and moreover may be liable for Mango?s post-offer costs including attorney?s fees.
She also notes the requirement of the bond since there’s evidence Mango wouldn’t be able to actually afford Democracy Now’s legal fees:
Democracy Now has also shown that it is likely that Mango will be unable to pay the costs it will seek in this litigation, another factor to be considered in deciding whether a bond should be awarded. Mango sought bankruptcy in 2004, and records from his bankruptcy filing show that his liabilities greatly exceeded his listed assets. Mango has offered no evidence to suggest that his financial resources remain anything but modest.
The judge also notes that Liebowitz’s over aggressive actions in this case suggest it will run up Democracy Now’s legal bills… which now may fall back on Mango:
Mango?s interrogatories and document demands already suggest that he intends to pursue expensive litigation. He has made fifty-three document requests, many of which appear to have little relevance to the single asserted infringement in this case. He has also served 29 interrogatories, many of which exceed the scope of permissible interrogatories at this stage of the litigation per this district?s Local Civil Rule 33.3. Based on this and other evidence, the defendant predicts that its pursuit of its defenses in this action will result in defense costs that exceed $110,000. That is not an unreasonable prediction.
Finally, Cote highlights Liebowtiz’s growing history of trollish behavior before this same court, including “failing to comply” with court orders, as another reason why a bond should be posted:
Finally, compliance with past court orders must be weighed. Mango?s counsel, Liebowitz, has filed over 700 cases in this
district since 2016 asserting claims of copyright infringement. At least 500 of these lawsuits have been voluntarily dismissed, settled, or otherwise disposed of before any merits-based litigation has occurred. In the course of litigating these cases, Liebowitz regularly fails to comply with court orders. See McDermott v. Monday Monday, LLC, No. 17CV9230 (DLC), 2018 WL 5312903, at *2 (S.D.N.Y. Oct. 26, 2018) (collecting cases). Recently, Liebowitz was described as ?earn[ing] the dubious distinction of being a regular target of sanctions-related motions and orders.? Rice, v. NBCUniversal Media, LLC, No. 19-CV-447 (JMF), 2019 WL 3000808, at *1 (S.D.N.Y. July 10, 2019) (imposing sanctions for Liebowitz?s failure to comply with court orders).
The history of Liebowitz?s failure to comply with court orders counsels in favor of the imposition of an additional bond. Mango has chosen Liebowitz as his counsel, and it is not unreasonable to weigh his counsel?s failure to follow this district?s local rules and to comply with court orders in assessing this final Cruz factor.
As we’ve seen with similar trollish operation, Mathew Higbee, it’s unclear whether these trolling operations are fully informing their clients that this kind of litigation could leave the clients on the hook for paying the other side’s legal fees. Both Liebowitz and Higbee promote their services on their respective pages as nearly risk free. Liebowitz’s says: “We work on a contingency fee basis, meaning we don?t get paid unless and until you get paid.” Higbee’s reads: “We are results oriented, so most of the cases we handle even have a money back guarantee or are done on contingency.”
That’s probably why so many photographers are willing to jump on board — as it seems like a “free” way to get extra cash while doing nothing. But not realizing that you may be opening yourself up to quite a bit of liability for filing bogus copyright lawsuits seems like a problem. Actually, it seems like a risk that a good lawyer would explain to his or her clients before signing them up. One wonders whether or not Liebowitz actually warns his clients of such a risk.
Either way, the ruling in this case suggests that, at least in certain courts, there may be a much cheaper and quicker way out of these lawsuits, by utilizing rule 68 to make a much more reasonable offer than a typical troll demands.
Filed Under: copyright, copyright troll, denise cote, fee shifting, gregory mango, richard liebowitz, rule 68, settlements
Companies: democracy now