Massachusetts Legal Developments Blog

Porn-Trolling Empire’s Fortune may have Run Out as Court gets Wise to Lawyers’ Copyright Infringement Scheme

A group of so-called Internet “porn-trolling” attorneys received a bit of a shakedown last week in The United States District Court for the Central District of California. According to District Court Judge Otis T. Wright’s Order Issuing Sanctions, the principals of firm Prenda Law abused the statutory copyright law scheme, and the court system, in order to harass thousands of defendants to settle outright.

Judge Wright held that Prenda Law principals John Steele, Paul Hansmeier, and Paul Duffy created shell corporations AF Holdings and Ingenuity 13, and assigned to these shells the copyrights to several pornographic movies. John Steele elaborated on the method by which Prenda Law lawyers made their millions with Forbes.com in October of 2012. Forbes reported that Mr. Steele originally conjured up the idea for porn-trolling litigation when he was a law student at the University of Minnesota. He noticed the high level of copyright infringement occurring on internet routers with music, and wanted to find a way to find the infringing persons and sue them. After law school, and a stint in family law, Mr. Steele partnered up with companies in the adult entertainment industry to do just that—except he would troll peer-to-peer network sharing platforms for users ripping off porn movies, rather than music.

Prenda Law lawyers find their defendant porn copyright infringers by monitoring (or “trolling”) peer-to-peer file sharing platforms like BitTorrent. Through these platforms, Prenda lawyers would get alleged infringers’ Internet Protocol (IP) addresses, and then name the IP addresses as “John Doe” defendants in an infringement suit. Prenda Lawyers would then obtain a court order for the Internet Service Provider (ISP) to disclose the identity of the customer account corresponding to the IP address. With an alleged infringer’s identity in hand, Prenda lawyers would then send the alleged infringer written notification of the suit, and would give the alleged infringer an opportunity to settle for a relatively low amount (around $3,000). Due to the sensitive nature of the allegedly infringed material, and the statutory copyright laws, porn-trolling became very lucrative for Prenda lawyers.  

Mr. Steele filed his first porn copyright infringement case in the year 2010, under the firm Steele Hansmeier. At the time of the Forbes article, Mr. Steele noted that he was filing twenty porn copyright lawsuits per month, and wanted to increase the number to 300. He also noted that he and his associates had made a few million dollars litigating the suits.

After Judge Wright’s Order, Prenda Law’s good fortune may have run out. Ars Technica summarized the Order, noting that, among other things, Prenda lawyers “engaged in ‘vexatious litigation designed to coerce settlement’,” and then dropped cases the minute defendants would fight back. Judge Wright also found that Prenda Law lawyers engaged in numerous other unlawful acts, such as providing misinformation to the Court, filing numerous boilerplate complaints without informing the Court, and engaging in forgery.  In fact, two defense attorneys brought the boilerplate suits to Judge Wright’s attention, which eventually lead to his findings that Prenda lawyers had used a combination of AF Holdings and Ingenuity 13 and fraud to commence the suits.

Ultimately, Judge Wright ordered Prenda lawyers to pay over $81,000 in attorney’s fees (the base amount of fees was doubled as a punitive measure). He also recommended that Prenda Law lawyers be disbarred, and is referring Prenda Law lawyers to their state bar associations. Judge Wright additionally noted that the Prenda Law scheme could be criminal in nature. To that end, Judge Wright decided to refer the Prenda Law matter to the United States Attorney for the Central District of California, and to the Criminal Investigation Division of the IRS.  Finally, Judge Wright decided to notify all judges presiding over other Prenda Law cases of this issue.

Copyright laws are complex and, as this case demonstrates, can often catch a defendant off-guard. Internet trolling presents an especially invasive method of tracking down alleged copyright infringers and suing them for copyright infringement. If you are named as a defendant in a copyright infringement lawsuit, it is important for you to seek out the assistance of an experienced attorney. An experienced attorney can help you with your case and can defend you in court. Contact an experienced attorney immediately for a confidential consultation.