‘Abusive litigation’ by lawyers comes under fire

Trying to collect money from those downloading porn called 'shakedown'

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EAST ST. LOUIS, Ill. — A federal judge in East St. Louis, Ill., recently turned the tables on several lawyers accused of being “copyright trolls,” who attempt to collect money by suing people who download pornography.

Many cases focus on legal, adult pornographic movies that might still prove embarrassing to defendants ensnared by public litigation.

The lawyers who demand payment first obtain copyrights to the movies, then monitor who downloads them and sue in federal court to obtain the identities of the computers that accessed the material. They then sue the computer owners, often offering to settle the claim for less than it would cost the owner to hire a lawyer.

Critics call it a “shakedown” and the people who do it “trolls.”

U.S. District Judge G. Patrick Murphy called it “abusive litigation” in an order dated Nov. 27 in U.S. District Court in East St. Louis.

He ordered three lawyers involved in a suit against a Metro East man, Anthony Smith, to pay $261,025 in fees and costs to attorneys representing Smith and Internet service providers entangled in the case.

Smith’s case, filed in August 2012, was a variation on the legal strategy. It claimed he was one of a group of hackers who used stolen or shared passwords to access pornographic sites owned by Lightspeed Media Corp. Lightspeed voluntarily dropped the suit against Smith in March.

Judges in various courts nationwide have criticized this approach in which a single lawsuit may be filed as a fishing expedition against thousands of possible defendants.

Murphy is not the first judge to criticize the tactics. U.S. District Judge Otis Wright II, in California, issued an order in May saying, “So now, copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic-media era to plunder the citizenry.”

The three lawyers who sued Smith were Paul Duffy of Prenda Law, based in Chicago; John L Steele of Steele Hansmeier in Chicago; and Paul Hansmeier of Alpha Law Firm in Minnesota.

Murphy said in his order that Hansmeier and Steele had “flat-out lied about their association with Prenda Law Inc.,” a prolific filer of porn copyright litigation. Court documents say both men were “of counsel” for Prenda.

In a hearing earlier last month, Murphy complained, “This is simply filing a lawsuit to do discovery to find out if you can sue somebody,” according to a transcript made public Dec. 10. The judge later called the case “pointless, worthless, a sham.”

In the same hearing, Smith’s lawyer, Daniel Booth, called it a “shakedown racket.”

Booth said the lawyers “were not looking to impose actual liability on my client, Smith, who was fully innocent. They had simply picked an individual defendant so that it looked like a more substantive case.” He said the plaintiffs “got the wrong scapegoat.”

Smith’s other lawyer, Jason Sweet, said his client fell victim to a common security flaw: He had an unsecured wireless connection that others could have used to access porn.

Sweet said Smith did not want to comment on the case nor identify himself further, for fear of damaging future job prospects.

Hansmeier said he had “no comment” when reached by phone. The other two lawyers, Steele and Duffy, did not respond to messages seeking comment.

In court last month, Steele said the Smith case was one of his last, and that he no longer practices law. He defended himself, saying, “Despite what another judge may have ruled, there are other ones that have disagreed.”

The lawyers filed notice Dec.12 that they would appeal Murphy’s order.

The suits started with mainstream movies, then moved to porn.

Courts have disagreed over the propriety of filing one suit – and paying one filing fee – to sue hundreds or thousands of alleged copyright infringers.

Some groups fight back, sharing advice and providing copies of court documents on web sites like DieTrollDie and Fight Copyright Trolls.

Lawyers who have countersued say that the basis for claiming a certain person has illegally downloaded a movie is technically flawed, and can lead to errors in identification. One Florida lawyer alleges that trolls set a trap by releasing a video to the downloading site Pirate Bay so they can track downloads and sue.

Some of the harshest critics wear judicial robes.

A court order in May from Wright, the federal judge in California, had strong words for Steele, Hansmeier, Duffy and their associates.

Wright wrote, “They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs.”

They monitor downloads of movies with copyrights owned by their shell companies, sue in federal court to obtain the identities of the downloaders and then offer to settle for “about $4,000,” or, the judge wrote, “for a sum calculated to be just below the cost of a bare-bones defense.”

The judge continued, “For these individuals, resistance is futile; most reluctantly pay rather than have their names associated with illegally downloading porn.”

Steele and the others, Wright continued, use “a modicum of evidence” in boilerplate suits, then dismiss the case when “faced with a determined defendant.”

Wright accused them of hiding their identities and their business relationships, lying to judges and stealing one man’s identity. Then he referred the matter to criminal investigators and state lawyer disciplinary committees.

U.S. Magistrate Judge Franklin Noel, in Minnesota, went further, finding in a Nov. 6 order that he had “been the victim of a fraud perpetrated by AF Holdings, LLC,” a company that had filed five suits and one that Wright has connected to Steele, Duffy and Hansmeier.

Noel said the agreements assigning the copyrights to the films were “fraudulent” and were used to “to expedite discovery and leverage settlement agreements.”

He ordered the company to return the money paid to settle four of the five cases, which ranged from $3,500 to $6,000, and ordered AF Holdings to pay defendants’ legal costs and fees. He also had a copy of his order sent to the U.S. attorney’s office, the Minnesota attorney general and attorney disciplinary bodies in Minnesota and Illinois, writing that they could more effectively investigate.

Sweet, Smith’s lawyer, said that his Massachusetts firm has handled 80 to 100 lawsuits like Smith’s, and is currently owed roughly $136,000 in legal fees after winning decisions against the suits.

Asked if he considers himself an expert on the subject, he said, “Unfortunately, yes.”

He estimated that as of 2012, lawyers associated with Prenda had earned $1.9 million from the lawsuits.

When asked if he’d been contacted by law enforcement about the company, he replied, “I can’t really say anything about that.”