Chicago Business Litigation Lawyer Blog
While copyright attorneys are very useful in protecting the rights of citizens, there are those who allegedly use illegal means to take advantage of copyright laws, as well as the high cost of litigation.
Three attorneys, Paul Hansmeier, John Steele, and Paul Duffy allegedly set up a copyright-trolling operation which came to be known as Prenda Law. The attorneys at Prenda Law allegedly forged copyright documents to give themselves the right to sue those who illegally downloaded pornography. They would then search the IP address of those who illegally downloaded the porn and sue. Before going to trail however, Prenda Law would offer the defendant a settlement of about $4,000, just below what a bare-bones defense in court would cost. To avoid the expense of litigation, and the embarrassment of having their names associated with a public trial involving pornography, the defendants allegedly were, more often than not, willing to pay the settlement.
In order to pull off this alleged scheme, the attorneys would file early-discovery requests with the courts so they could settle. Once they came upon a determined defendant though, Prenda allegedly quickly backed off. U.S. District Judge Otis Wright notes that, “Without better technology, prosecuting illegal BitTorrent activity requires substantial effort in order to make a case. … It is simply not economical viable to properly prosecute the illegal download of a single copyrighted video.”
Instead of admitting to the existence of other possibilities (for example, an outsider using a home WiFi signal), Wright says that Brett Gibbs, an attorney who worked for Prenda Law who is now testifying against Prenda, deliberately downplayed them. In one case, Gibbs described the defendant’s property as “a very large estate consisting of a gate for entry and multiple separate houses/structures on the property.” A quick search using Google Street View though, showed a very different picture: a modest home in West Covina, a Los Angeles suburb. Wright says, “It is a small house in a closely packed residential neighborhood, … There are also no gates visible. Gibbs’s statement is a blatant lie.”
At the hearing, the attorneys behind Prenda took the Fifth Amendment. They refused to answer such simple questions as who owned their shell companies and where the settlement money (rumored to be in the millions) was going.
The judge ordered the three Prenda attorneys to pay sanctions to defense attorneys of $36,150 to Morgan Pietz and $1,950 to Nicholas Ranallo. Wright then doubled that amount “as a punitive measure” for a total of $81,319.72. The judge says in a footnote that the total “is calculated to be just below the cost of an effective appeal”. The Prenda attorneys have 14 days to pay the sanctions.
Wright is also suggesting that the attorneys be disbarred. He states that, “there is little doubt that Steele, Hansmeier, Duffy [and] Gibbs suffer from a form of moral turpitude unbecoming an officer of the court.” In many states, California included, crimes reaching the level of “moral turpitude” lead to automatic disbarment. Wright says that he will be referring the four lawyers to every state bar in which they are currently admitted to practice.
Additionally, the judge has suggested that the alleged Prenda scheme warrants criminal investigation. In his conclusion, Wright says, “The Court will refer this matter to the United States Attorney for the Central District of California. The [court] will also refer this matter to the Criminal Investigation Division of the Internal Revenue Service and will notify all judges before whom these attorneys have pending cases.”
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