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Dec 13 2016

Troll Lawyer Denied Attorney’s Fees in Copyright Lawsuit

In an important decision from the Federal Court for the District of Oregon, a court has denied attorney’s fees to a successful copyright litigant because the court ruled that in this instance the award did not further the purposes of the Copyright Act. The lawsuit involves the pervasive litigation filed by porn companies against folks who downloaded their movies over the Internet. Usually an adult film company hires one of a handful of copyright trolling lawyers who handle these massive claims and then seek to extract (or I as I say extort) settlements from folks who can’t afford a lawyer or who are embarrassed to be sued over downloading porn or who simply have no clue how to defend the case so paying $2,000 or so seems like a logical resolution.

Here, however, Cobbler Nevada Inc,. the porn producer, ran into Santos Cerritos, the downloading defendant, who retained Thomas Freedman of Pearl Law in Portland, Oregon. Together they mounted a simple defense based on the value of the claim. In the end, the successful management of the claim led to the court denying attorney’s fees. The decision has far-ranging ramifications as copyright trolling is not just for porn. Over the past eight years, my office has represented 3,000+ businesses in claims brought by Getty Images and other digital image warehouses for folks using one of their digital images in a blog post or on their website. We have handled similar trolling cases over the use of a poem called “The Dash;” bars and restaurants playing live or recorded music; and even fought lawsuits over the unlicensed use of clip-art. In most of these cases, the defendants did in fact use the work without permission, so liability is not an issue. The main thrust of all of these claims is that in addition to whatever the infringement is worth, the loser will face paying the legal fees of the copyright holder as under the Copyright Law, attorney’s fees are usually awarded to a prevailing plaintiff.

copyright logoSo why did the court refuse to award them in this case. First of all, the lawyer for the porno producer Carl Crowell has faced judicial scrutiny before. He was denied legal fees in another film downloading case recently and the court there noted that he has brought these lawsuits against folks on Social Security Disability and even against a foster home where there was no proof of who downloaded the film. Second of all his conduct in this case did not help his cause: he served the defendant even though his counsel would have accepted service on his behalf thereby avoiding process server fees; he turned down fair offers of judgment even after the defendant proved his indigency by turning over financial records; and he continued to serve discovery demands and motions even though the defendant had admitted liability and the court had frozen discovery while settlement talks were ongoing. The other factors in denying the fees was that the defendant and his counsel admitted liability (limiting discovery as I stated); made several offers of settlement in writing; and always focused the court’s attention on the minimal impact this infringement had on the plaintiff and the world at large. So when Crowell sought $17,400 in legal fees when he received only the statutory minimum award of $750, the court decided to make a statement. The result of this clash of styles of lawyering was a decision that had many elements that will be used by others (including myself) as they fight these plagues on the court system. I will give you a smattering of some of the most important language in the court decision (a link to the full opinion is at the bottom of the article).

1. “We do not believe Congress intended that the prevailing plaintiff should be awarded attorney’s fees in every case.”

2. “The Supreme Court noted that a court may also consider the need to “deter . . . overaggressive assertions of copyright claims.'”

3. The most important factor in determining whether to award fees under the Copyright Act, is whether an award will further the purposes of the Act and the primary purpose of the Act is to “encourage the production of original literary, artistic, and musical expression for the good of the public.” (Meaning its primary purpose is not to produce infringement awards).

4. The court noted that $17,346 in fees to get an award of $750 is excessive.

5. The court noted that stopping one infringer when thousands have illegally downloaded the same film is a de minimus (minor) success.

6. While the court certainly understands the need to protect and enforce one’s copyright, making an infringer pay $750 in statutory penalties plus $525 is a sufficient deterrent in this case.

7. An award attorney’s fees should be given only if doing so will further the purposes of the Copyright Act. In these mass copyright cases, the threat of fee-shifting has emboldened Plaintiff’s counsel to demand thousands of dollars to settle a claim, even where the infringing defendant admits early in the case that he illegally downloaded the movie.

8. The threat of fee-shifting in these cases has created an unjust scenario in this and other districts, in which enterprising plaintiffs’ counsel can demand thousands of dollars to settle these cases before the infringer is even named as a defendant, because the cost of federal litigation is prohibitive (for one party, let alone paying for both parties’ attorney’s fees). A startling number of [target defendants] are failing to show up for Rule 45 depositions, and alleged infringers are more often than not choosing default judgments over litigation. By allowing this scenario to occur for several years now, the federal courts are not assisting in the administration of justice, but are instead enabling plaintiffs’ counsel and their LLC clients to receive a financial windfall by exploiting copyright law.

9. When an individual who has illegally downloaded a movie is contacted by Plaintiff’s counsel, and faces the threat of a statutory damage award that could theoretically reach $150,000 (see 17 U.S.C. § 504(c)(2)), as well as the threat of a substantial fee award, the resulting bargaining process is unequal, and unfair. For this Court to award Plaintiff its attorney’s fees in this case would only contribute to the continued overaggressive assertion and negotiation of these Copyright Act claims.

The last two paragraphs are music to my ears as they summarizes why I call these trolling campaigns “legalized extortion.” Hopefully, the tide is turning against these lawsuits. The potent weapon of attorney’s fees needs to be taken away from the trolls. We need courts around the country to follow suit and recognize that the Copyright Act’s allowing of attorney’s fees should only be applied where it will further the purpose of the Act and should not be used as a threat to make minor infringers pay exorbitant penalties far in excess of the damages sustained.

COBBLER NEV, LLC v. CERRITOS full text

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5 comments

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  1. Dirk Diggler

    #5 seems like a strange one. It’s an acknowledgement of how pervasive “de minimis” infringement is and then denying the plaintiff fees for not being able to put any real dent in it. What is the plaintiff supposed to do.

    What may help constrain this sort of infringement may be the hammer of stat damages + fee recovery that you are whining about. Though I read something recently that made a good argument that what has really damped down low dollar infringement has nothing to do with litigation but is a function of making the work easily accessible for license and at a “reasonable” price. Alas, you can’t go to iTunes for your porn.

    Re #9. That seems what Congress intended. Fair ? See the courts acknowledgement of the scale of this type of infringement in #5. That is the flip side of the coin. It’s generally uneconomic as you well know to pursue small dollar infringement if you can’t recover attorney fees.

    An issue you didn’t address. D still had to pay his lawyer. Am I happy I “won” a copyright infringement suit if I have to pay my lawyer thousands to defend me. No, I am not. At all.

    Meanwhile Trump will still be POTUS unless 37 electors come to their senses.

    1. Oscar Michelen

      Yes D did have to pay his lawyer. But as these types of decisions expand, trolls will be less likely to pursue these claims and if you set the right number in your Rule 68 offer of Judgment and the plaintiff gets less, then the plaintiff has to reimburse you for legal fees as well. As to what is the plaintiff supposed to do? Simple, be satisfied with the minimum statutory damage and the cease and desist and move on. $750 per infringement is very fair for these porn claims.

  2. Dirk Diggler

    Not sure I agree with how you believe it should work though I’m sympathetic in this case.

    It seems to be that small dollar infringement is rampant. The chances of getting caught approach nil. However, if you get caught you will get bullied by statutory damages (with or without fee shifting which is always a risk as well) in the extremely rare case there was pre-infringement registration.

    That seems to be how Congress designed it. You can’t come close to making a dent in this type of infringement (as the court suggested) but when you catch one you have some serious tools to extract a settlement that makes it cost effective to pursue infringement.

    And something tells me that $750 offer of yours isn’t coming when there isn’t timely registration. Closer to $0 sounds more like it.

    Interesting that the number in this case was $750 suggesting no “innocent infringer” story. Isn’t that part of your usual rap ?

    1. Oscar Michelen

      Yes many times these folks are innocent in that third party web designers selected and uploaded the offending images. Here, I think that this user would be hard-pressed to claim innocent infringement. And you are also correct that we would not recommend an offer of $750 if the image was not registered prior to infringement. I think congress could establish a small-claims-type process where claims of under $5,000 for copyright infringement can be brought with limited discovery, no need for corporate representation by an attorney, and summary trials to expedite the process

  3. Nostradamus IV

    “Yes D did have to pay his lawyer. But as these types of decisions expand, trolls will be less likely to pursue these claims and if you set the right number in your Rule 68 offer of Judgment and the plaintiff gets less, then the plaintiff has to reimburse you for legal fees as well.”

    Will you be taking on many defendant cases THROUGH TRIAL on contingency only to be paid when and if the court awards attorney fees to your client ?

    If not, your predictions as to the future and fee shifting don’t mean much when someone has to come up with money for a retainer.

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