Fox Rothschild and the ‘Dark Art of Copyright Trolling’

[Len]

The firm is representing a pornography company in its latest nationwide copyright infringement campaign. Can it avoid the controversies that preceded its involvement? Or will a small-time lawyer from Oregon provide the blueprint to stop it?

Through the first six months of this year, 2,864 copyright infringement suits were filed in U.S. district courts, giving 2018 a good chance at being the most copyright-litigious year in recent memory. About twice the number of copyright suits have been filed at the midway point compared to last year, and the spike can be traced directly, more or less, to two pornography studios and one Am Law 100 firm: Fox Rothschild.

One of those studios, Malibu Media LLC, is an old pro in the mass copyright enforcement game, having filed nearly 7,000 suits in the past decade. The company’s suits were profiled in The New Yorker in 2014, but it has nevertheless ramped up its litigation machine this year following a dispute with its former law firm that led to a largely lost year in 2017. Through June, Malibu Media had filed on average more than three cases a day, according to data from legal analytics platform Lex Machina.

The relative newcomer to the scene is a litigant known as Strike 3 Holdings LLC. The company makes pornographic films under the brands “Vixen,” “Tushy” and “Blacked.” Its semi-Instagram-famous founder is a sturdy, bearded Frenchman named Greg Lansky who has won an industry award for director of the year three years in a row, partly thanks to a female empowerment message. “What you do is art,” he said to a cheering crowd the last time he received the award. Lansky was profiled earlier this year in a Rolling Stone story that said he was turning the porn industry into “high art,” mostly thanks to pricey photo shoots such as one where a bikini-clad model’s stilettoed feet dangle outside a helicopter over Los Angeles.

“Who the hell is going to have me hang out of a helicopter for porn’s sake?” the adult film actress, Tori Black, asked in the article.

“That was a great shoot,” said Fox Rothschild’s Lincoln Bandlow, a Los Angeles-based partner who has also been commissioned by Lansky. In Bandlow’s case, he has overseen most of the 870 copyright infringement suits that Fox Rothschild has filed on behalf of Strike 3 in the first six months of 2018.

Bandlow served as president of the Los Angeles Copyright Society in 2005 and he has represented movie studios, filmmakers and publishers in a legal career that began with his graduation from the Boston University School of Law in 1993. A look at his Twitter profile, @lalincolnLawyer, shows that Bandlow is an advocate for free speech and the First Amendment. And that’s before you find out that he has been a visiting professor at the University of Southern California’s journalism school for more than two decades.

Bandlow also grew up in the same San Fernando Valley that has long been the epicenter of the porn business. That is perhaps one reason that Bandlow and Fox Rothschild are the first Am Law 100 firm to represent a porn production company in a nationwide copyright enforcement campaign. Bandlow said he spoke with his firm’s leadership about taking on Strike 3 as a client to make sure they were “comfortable.” He also said he asks individual lawyers who work on the cases whether they have any qualms about representing a porn company. Fox Rothschild, no stranger to quirky clients, declined to discuss the matter.

Lincoln Bandlow

“It’s not the sort of abusive stuff we would never have anything to do with. It’s not demeaning or degrading. It’s good content, and a quality company that pays its employees well,” said Bandlow, who joined Fox Rothschild in 2015 from Lathrop Gage. “It’s not particularly unusual for a guy like me who grew up in the San Fernando Valley.”

One narrative for production companies in the porn business, such as Strike 3, is that they are slumping because of the advent of “tube sites” that stream free, often stolen videos. PornHub, one of the better branded tube sites, is the 13th most popular website in the country, according to Amazon.com Inc. Another form of piracy is the kind that Bandlow’s suits are trying to stop: BitTorrent theft, which is, in effect, downloading videos rather than streaming them.

It’s hard to say for certain how much this piracy is eating into the porn business, but a 2016 book, “The Pornography Industry,” estimates the impact of stolen porn to be $2 billion a year.

This gloomy landscape appears at odds with Lansky’s vision for making porn “high art.” Helicopters are expensive, after all. But Bandlow said Strike 3’s brands have become some of the most popular in the business precisely because the company invests in “high-quality content.” Strike 3 has one of the highest subscriber bases ($99.95 a year), and is the “No. 1 seller” of DVDs in the industry, Bandlow said.

But how does the litigation campaign fit into the business? Is it a coincidence that a porn company that brags about its high cost of production is the same one that appears to have an extra revenue stream generated from suits filed across the country? Bandlow said that is a misinterpretation; the litigation is not an extra revenue stream for Strike 3.

“We needed to send a message that this piracy is something we will address,” he said. “It’s not really a money-maker. It’s mostly a break-even. But it’s a policy position for us.”

Of course, there is a policy position on the other side: That litigants such as Strike 3 and Malibu Media are abusing copyright protections by leveraging the high cost of defending a federal case to run a money-making settlement scheme. The now-common word for that is “copyright troll,” a term that Bandlow calls “wrong and offensive” when applied to Strike 3.

Still, the most threatening challenge to Bandlow and Strike 3’s litigation spree comes from a small firm lawyer near Portland, Oregon, who is seeking to nullify Strike 3’s copyrights using a strategy partially outlined in a law school professor’s paper titled, “Defense Against the Dark Arts of Copyright Trolling.”

The ‘Anti-Prenda’

Dark art or not, copyright trolling has a deeply troubled history.

That is largely due to the infamous lawyers behind the firm known as Prenda Law. Chicago-based John Steele and Minnesotan Paul Hansmeier were pioneers of the copyright litigation model that has come to flood district courts. Amidst other troubling behavior, Steele and Hansmeier muddied the waters between lawyers and clients. They filmed some of the movies themselves; owned the films’ copyrights through a complex web of sham entities; and uploaded the films to the very websites from which they were later stolen.

After the trap was set, Prenda used the courts to make more than $6 million from settlements, according to a criminal plea deal that the now disbarred Steele signed in March 2017. Facing up to 10 years in federal prison, he agreed to cooperate with authorities as Hansmeier, who is also under investigation for bankruptcy fraud, prepares for a criminal trial scheduled for September.

Neither Malibu Media nor Strike 3 are accused of anything like Prenda’s illegal behavior. But Bandlow’s team of Fox Rothschild lawyers have still been put in the uncomfortable position of defending their work from being associated with a group of lawyers facing prison sentences.

That occurred after a federal judge in Seattle, Thomas Zilly, in January ordered that Fox Rothschild refrain from directly communicating with any defendant (whose identities were also ordered to be kept secret) in a group of Strike 3 infringement cases. After some defendants settled and Fox Rothschild dismissed the cases, Zilly ordered an explanation as to why Strike 3’s lawyers shouldn’t be sanctioned.

In a 17-page response filed in June, Seattle-based Fox Rothschild partner Bryan Case wrote: “To be clear to the Court, Plaintiff must address the elephant in the room, and that elephant’s name is Prenda. That was a big, dumb, malicious animal from years ago that unfortunately now poses the risk of trampling the rights of all the legitimate content creators, such as Plaintiff, who have been forced to seek court intervention to address the tidal wave of internet infringement that puts content creators at risk of drowning in a sea of theft. The Court should rest assured: Plaintiff and its counsel are the anti-Prenda.”

The response also explained that Fox Rothschild dealt with the settling defendants through lawyers, rather than the defendants (who still remained anonymous). Ultimately, Zilly did not order sanctions.

“Nothing Zilly has done gives me any indication that he has some necessary problem with these cases,” Bandlow said. “I frankly think Zilly has some knowledge of the Prenda situation, and we want to make it very clear to him that this is not [Prenda].”

Malibu Connections

In the evolution of mass copyright litigation, Strike 3 is at least two generations removed from Prenda. But Strike 3’s litigation is closely related to Malibu Media’s machine, largely due to one lawyer involved in the suits filed by both companies: Emilie Kennedy.

Kennedy’s experience with copyright law dates back to at least 2006, when she helped file copyright applications for a Florida-based record label named Neurodisc Records. After graduating from Florida International University College of Law and passing the Florida bar in 2011, Kennedy got even more experience filing copyright applications at a Miami-based firm then called Lipscomb, Eisenberg & Baker. She filed more than 750 copyrights on behalf of what was likely the firm’s largest client: Malibu Media.

That information comes from a deposition in a Malibu Media case filed in January 2017 in which Kennedy was represented by Bandlow. The Fox Rothschild partner said the two first met at a speaking engagement regarding copyright infringement and political campaigns.

Kennedy left the Lipscomb firm in early 2016 to join the Beverly Hills, California-based Pillar Law Group, where she would go on to file more copyright applications for Malibu Media. The next month, Lipscomb’s firm sued Malibu Media and the Pillar Law Group in Florida state court, alleging unpaid fees in a complaint that remains sealed. Days after that suit was filed, Malibu Media, through its counsel at the Pillar Law Group, sued Lipscomb’s firm in California federal court.

The Malibu Media complaint alleged that the Lipscomb firm had never had a written fee agreement with the porn company and that, in recent months, Lipscomb had ceased sending the company its cut of the “copyright enforcement program.” Using defense counsel at Hinshaw & Culbertson, Lipscomb’s firm was able to get the Malibu Media suit tossed on the grounds that the Florida case had already been filed. It appears the Florida litigation was never pursued, and last month the case was dismissed for failure to prosecute.

Malibu Media’s litigation practices have come under scrutiny in other matters. A federal magistrate judge in Maryland denied a local counsel’s request for attorney fees this past January after finding 14 other cases in which seven different Malibu Media lawyers presented identical charts and requests for fees following entries of default judgment. The judge found that the lawyers were “signing off” on fee petitions provided by Malibu Media’s general counsel.

“While no court has found that [Malibu Media] has filed a fraudulent suit, many courts have questioned whether plaintiff is a ‘copyright troll,’ initiating suits against infringers as a profit-making scheme rather than as a deterrent, as legislators intended,” wrote U.S. Magistrate Judge Charles Day in Greenbelt, Maryland. “In the present case before this court, that question is exacerbated by the presence of questionable business practices.”

Kennedy became general counsel at Vixen Media Group in June 2017, right around the same time that Strike 3 first began filing copyright applications for its films. Fox Rothschild’s first cases prosecuting infringement of Vixen movies were filed in October. Kennedy currently oversees Fox Rothschild’s work as Strike 3’s lead law firm.

The history of mass copyright enforcement campaigns is replete with lawyers who have been formally disciplined by courts and ones who have been viewed skeptically. Bandlow said that is due to Prenda, and he disputed the notion that the litigation between Pillar Law Group, Lipscomb and Malibu Media represented a bad ending for the lawyers involved.

“Prenda besmirched all of this,” Bandlow said. “Those were terrible lawyers. And before I got involved in doing these things, I’d read about the Prenda stuff and I shook my head. Because as a lawyer, most of us are upstanding people, and then you get these idiots. I don’t like it.”

Peanuts and Scotch

Somewhere in the Seattle area in late 2017, a retired police officer in his 70s received a letter from his internet provider. The letter alerted him that he—or, more accurately, the IP address related to his account—had been sued in federal court. The complaint alleges that the IP address was connected to 80 movies made by Strike 3 downloaded from a BitTorrent site between May and October of last year.

The retired police officer got a hold of J. Curtis Edmondson, a lawyer based in Beaverton, Oregon, near Portland, who spends his free time surfing and has gradually made a name for himself as a pain in the side of mass copyright infringement schemes. Edmondson came about as close as any lawyer has in recent years to taking a John Doe porn suit to trial before settling with Malibu Media in March 2017 in the Northern District of California. Any financial terms were confidential, but Edmondson said he was “very pleased” with the result.

Edmondson styles himself a “computer guy,” which is helpful in understanding how he attacks such porn suits. He holds a master’s degree in electrical engineering from the University of California, Santa Barbara, and his first job out of college involved testing nuclear warheads. When a software company he helped develop was sold in 2001, Edmondson went to law school as a way to kill off a three-year noncompete clause.

He first defended a case against lawyers from Prenda around 2011, and said there are about three lawyers in Washington state that handle porn copyright infringement cases. More recently, Edmondson said other lawyers have asked him to get involved in their cases when it comes to analyzing the technical evidence plaintiffs bring to prove that, in fact, a copyrighted movie was stolen and resides on the defendant’s computer.

“I work for peanuts and scotch,” Edmondson said. “Not even good scotch.”

Controversial Takedown

There are a few reasons Edmondson said he takes on these cases. He isn’t hurting for work or money. He feels for the defendants, many of whom he said are wrongly targeted. And he believes such suits are a moneymaking abuse of the copyright infringement regime.

“I don’t like bullies,” he said.

Edmondson’s argument for why they are abusive is that Strike 3 and others should be using cheaper tools available to them under the Digital Millennium Copyright Act to either scrub their stolen material from the internet or restrict repeat infringers’ internet access.

So-called DMCA takedown notices can be sent to internet service providers with proof that their users are stealing content. ISPs are supposed to have an elevated warning system that can lead to revoking a user’s internet access. Edmondson thinks that is a cheaper and more effective way of ending the infringement, which is what Bandlow and others claim is their only goal.

Curtis Edmondson

“What is the cheapest way to solve 99.9 percent of your headaches? DMCA notices. Why don’t you try that first before the taxpayer subsidizes your lawsuit,” Edmondson said.

Bandlow counters that Strike 3 sends out “hundreds of thousands” of DMCA notices, but they are nowhere near as effective as Edmondson believes. In a June filing in the Seattle case with the unidentified retired cop, Kennedy testified that Strike 3 has paid a digital rights enforcement firm, xTakedowns, to send out more than 7.5 million DMCA notices. Most of them, Kennedy said, are sent to websites that host the BitTorrent swarms. Virtually all of those are ignored. Kennedy said sending takedown notices to individuals doesn’t carry harsh enough penalties to deter the theft. As for Internet service providers, Kennedy testified that she doesn’t know of any that actually terminate repeat infringers’ subscriptions.

For instance, Cox Communications Inc., an internet provider that serves 4.5 million customers, had a 13-strike policy with regard to DMCA notices. The number of strikes reset every six months and the 13th strike wasn’t even a strikeout. Thanks to what one employee called an “unwritten semi-policy” that allowed Cox to receive “a few extra weeks of payments,” the Atlanta-based company routinely reactivated repeat infringers’ service. In fact, from 2009 to 2012, Cox terminated zero subscribers due to repeat copyright infringement.

And that could end up costing Cox. A federal jury in Virginia last year awarded $25 million to the music rights management firm BMG after it claimed that Cox’s nontermination policy was a violation of the DMCA. The U.S. Court of Appeals for the Fourth Circuit sided with BMG on that question—whether they violated the requirement to have a termination policy—but sent the case back to a jury to reconfigure damages.

Bandlow said he is watching the case to see if it will mean internet companies, or ISPs, are more aggressive at refusing service to repeat criminal infringers.

“We are exploring more remedies against ISPs,” Bandlow said. “But the ability to explore remedies from ISPs does not preclude you from going after downloaders. But that is definitely something we’re looking at and have been attempting to set up with our notices. Anyway we can get this to stop, we’re looking at.”

Economic Theory

Edmondson’s belief that suits brought by Strike 3 and others are a moneymaking machine is supported in part by an analysis from an economics expert he hired in the Northern California case involving Malibu Media that almost went to trial.

Eric Fruits, president and chief economist at Economics International Corp., estimated that Malibu Media made between $1.78 million and $6.68 million in litigation revenue per year from 2012 to 2015. That would account for between 16 percent and 42 percent of Malibu Media’s annual revenue. Edmondson thinks the motivation behind Strike 3’s cases is the same: Money.

“Greg Lansky was making pornos long before Emilie Kennedy came in” to Strike 3, Edmondson said. “I don’t think he even registered copyrights. All of a sudden, he starts registering copyrights just like Malibu did. And then he has this moral outrage? Really, it’s a business strategy brought in by Emilie Kennedy.”

Kennedy declined an interview request through Bandlow, who remains adamant that such suits are not filed for the purpose of making money. Instead, he claims they are a deterrent.

“Any money that’s made from this litigation goes right back into the company and it’s not even a remotely substantial part of the company,” Bandlow said.

Putting Up a Fight

Edmondson is not alone in viewing the suits filed by Strike 3 and Malibu Media as abusing copyright law.

Matthew Sag, a professor at the Loyola University Chicago School of Law, has been studying John Doe suits and copyright trolls since at least 2015, when he published “Copyright Trolling, an Empirical Study.” The study documented the rise of John Doe suits, which accounted for more than half of the copyright cases filed in 2015, and stated that “pornography is uniquely well suited to exploit the litigation incentives of our current copyright system.”

Malibu Media paid more than $2.3 million in federal filing fees alone, Sag found. For his next act, the law professor developed a strategy to overcome the financial and technical gaps that prevent lawyers from successfully defending clients in these cases.

“These lawsuits are filed primarily to generate a list of targets for collection; these are not cases that have been built to stand up to the scrutiny of litigation,” wrote Sag and his co-author, Jake Haskell, of counsel at Portland, Oregon-based Arce Stark Law.

That is precisely the theory that Edmondson is testing.

The way he is testing it involves the digital bread crumbs of Vixen, Tushy and Blacked movies leading Strike 3 to the IP addresses it sues. Those bread crumbs are collected in Germany by a software company called Excipio, which basically monitors what are known as BitTorrent “swarms.” The data from the Excipio report contains an IP address, a time stamp and, among other things, a “hash,” which is a unique set of characters that is linked to a particular movie.

That data is analyzed by a handful of companies that appear to be substantially similar. Or, at least, most of them employ a man named Tobias Feiser. Feiser told Edmondson in an October 2016 deposition that he was paid 1,700 euros each month to verify the Excipio reports, which basically meant comparing the videos from the swarm to those on Malibu Media’s website, x-art.com. In short, the job involved watching porn, or at least clips of it, for hours on end. Feiser’s testimony is still relied on by Strike 3 in its various cases.

But Edmondson and Sag said there are significant shortfalls to the evidence collected by Excipio and relied on to file such suits. That is because the data they collect—or at least the data Edmondson has been given in certain cases—does not show evidence that the entire movie actually exists on the hard drive associated with an IP address that gets sued. The data the software pulls, in many cases, has shown as little as 16 kilobytes of a movie on the hard drive it surveys. For an 87-minute movie, Sag points out that 16 kilobytes is the equivalent of the first two words in “Harry Potter and the Sorcerer’s Stone.”

“Several courts have rejected this so-called ‘snapshot theory’ of pleading in BitTorrent cases because a snapshot does not prove what happened next,” Sag writes. “If plaintiffs want to allege a copy was made, they should collect evidence that a copy was made, not simply that a small fraction of a copy was made.”

Bandlow said that the technology being used by Strike 3 no longer only grabs a snapshot of its movies.

“That’s how it used to be, but not with the tech that we have,” he said. “We are getting pieces of the full version of the film.”

Edmondson is trying to find out. Following the advice put forth by Sag in his law review article to seek more information on a company’s evidence, Edmondson has filed a motion for a “more definitive statement” in the case of the ex-cop near Seattle. He is seeking clarity on what evidence Strike 3 has that there are 80 Vixen, Tushy and Blacked movies on his client’s computer. Edmondson contends the downloads never happened. He wants to go to trial, and he is seeking an injunction to stop Strike 3’s prosecution of its copyrights.

Actually getting a trial on record could go a long way toward what Sag’s article asserts is its purpose: Diffusing the knowledge of how to fight litigants such as Strike 3 and Malibu Media so that “these particular copyright trolls will recede into the darkness from whence they came.”

Of course, threatening a trial could also be Edmondson’s own type of leverage. By dragging out the case, he makes it more costly for Bandlow and Strike 3 to pursue it. Perhaps they’ll just give up on the old police officer in the Pacific Northwest. And then some other defense lawyer will have to take up the baton all over again. The final piece in Sag’s paper to take down copyright schemes such as Strike 3′s, Stage IV, is called “Trial.” It reads simply: “There is no Stage IV.”

“To put it colloquially,” Edmondson said, “the goal of the plaintiff in this case is wham, bam, thank you, ma’am.”