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“In a nutshell, I believe the only films that are hurt by torrent sharing are mediocre and bad films. In contrast, the good films of any genre only benefit from file-sharing. Due to this, I feel the current file-sharing trend is a catalyst for a true evolution in filmmaking...”

What can be distilled from this new approach is that plaintiff independent film companies and their counsel have resorted to self-help in an advertising campaign to Save Cinema, claiming that unless their settlement demands to identified defendants of between $1,500 -$2,500 are met, anyone who tries to defend the case in court could end up paying $150,000 in statutory damages, plaintiff’s costs, and on the front end - even more foreboding – their own attorneys fees to defend them in federal court. This type of puffing and bravado is not new to litigation – but what is new is that it arises in an Internet milieu, via lawyers’ web-based solicitation of clients, from a data base of anonymous IP addresses, identified by a software program which links the address to one film’s filesharing, and then from that data base a really massive Doe population is created upon which one single federal copyright infringement suit is filed. Once filed, the court process via subpoenas directed at the ISP is engaged, and once the real party defendants are identified, demand letters are sent and the leverage of being named and forced to defend in an inconvenient forum becomes the power under the lever – well, let’s now call it a club, not a lever, since it is now a weapon threatening enough to cause most folks to pay up irrespective of their rights, a good faith defense, or their ultimate culpability.

Plaintiffs have now served ISPs with over 14,000 subpoenas attempting to gain the identity of anonymous users of BitTorrent for which they have matched unauthorized downloads. Unlike some servers who made voluntary disclosure of their users, Time Warner has moved to quash, and in an unlikely alliance, the EFF, Public Citizen and the ACLU have joined Time Warner in this effort. The EFF’s articulated position is that "These are organizations that are formed for the purpose of suing, and they view the legal system as a system for making money and then use it to fund additional lawsuits."

Dunlap, Grubb, & Weaver, through lead partner Thomas Dunlap, describes in its law firm blog that it is the firm behind the US Copyright Group’s stated mission of demanding payment through “settlement offers” from all those it has identified as illegally downloading protected films. On the US Copyright Group’s website, it states that it will end illegal filesharing by collecting more in settlement than the content is worth, which research suggests will end film piracy: is this method of extracting settlement abuse of process? In a 1972 California Supreme Court case, Barquis v. Merchants Collection Association of Oakland, Justice Tobriner, writing for a unanimous Court, held that if a collection agency willfully and knowingly filed actions in an improper county pursuant to statutorily inadequate pleadings for the ulterior purpose of impairing defendants' rights to defend the suits in order to coerce inequitable settlements and default judgments, such strategy constituted ‘abuse of process'; that if the plaintiff was threatening to continue such practice in the future, the same could be enjoined either as a continuing mass tort against which legal remedies were inadequate or as an ‘unlawful business practice’ constituting unfair competition. Litigation strategies can go amok when reviewed in light of all of the circumstances, including statements by the parties and web-based advertising soliciting clients and making claims of what they intend to accomplish by filing suit.

Here is the underbelly of a mass litigation strategy (see also the EFF Amicus Brief in support of Time Warner’s Motion to Quash for a thorough review of the law):

• Alleged violation of civil litigation safeguards designed to protect due process rights of individuals, including not having to defend in an inconvenient forum and improper joinder which jeopardizes the right to a meaningful defense (FRCP 20 & 21);
• Violation of precedent set forth in the RIAA cases with respect to the privacy rights of anonymous Internet users;
• Disregard for FR 11 pleading standards based on failure to conduct an evaluation of facts and law as applied to each individual defendant, and each alleged disparate incidence;

Does this settlement strategy give rise to a scheme which constitutes abuse of process (with settlement demands already being dubbed “extortion letters”)? Are there also possible violations of professional ethics with respect to claims made in attorney advertising designed to solicit clients, and will groups asserting these strategies face possible unfair competition claims from lawyers who do not adopt an “unlawful” strategy and therefore are at a disadvantage as they compete for clients using only lawful means? U.S. District Judge Rosemary M. Collyer of the District of Columbia has already chafed at the practice brought before her in the Motions to Quash. (A recent 12b Motion brought by Voltage in a case where it is the defendant demonstrates that it agrees that having to defend an action in an inconvenient forum is grounds to dismiss. )

With relaxed lawyer advertising now commonplace (but still regulated by applicable state bar rules), the US Copyright Group has created a website as an entrepreneurial marketing tool actively recruiting plaintiffs, and then using the threat and specter of protracted expensive federal court litigation against defendants as a lever for immediate settlement. Just as with the GBS, there may be other concerns which must be addressed as this business model is held up as a way to monetize infringement by use of court process. We are familiar with rightsholders’ trade groups championing their cause, as in the GBS and RIAA, but who is the US Copyright Group? Its web ad does not identify its principals. And finally, does resort to a business model monetizing that which the rightsholders’ claim they want to prevent solve the file-sharing infringement problem, or is there a Bigger View that will, as with the GBS, eventually be addressed by the courts, as well as interested parties and policy groups?

And with accusations that law-wholesaling intentionally and rather blatantly ignores both procedural and substantive rights of individual defendants, and when using the imprimatur of a federal court may constitute abuse of process, this new strategy may not survive – more will be revealed as the cases come under judicial review. While critics of the GBS may find some similarity between the class action lever and these class defendants, certification of the class itself conflates legal issues through legitimate litigation practices, where most folks are represented and their rights and interests acknowledged. GBS’s structural flaws– among which was the opt-out aspect which neglected unrepresented orphan works - and the lack of any representative for the public interest – may not be inherently insurmountable once additional interests are given a seat at the table.

Ray Dowd’sCopyright Litigation Blog June 6, 2010 post, demonstrates that there are consequences to copyright infringement litigation positions, tactics, strategies and most of all schemes, and that even when a right’s holder believes that the net catching the infringers is safe and will not harm, it may not be acceptable to the traditions of fair play we rely on in a legal system where everyone has an interest to protect. Ray comments on the 9th Circuit’s recent slam against an attorney, sanctioning on its own motion pursuant to 28 U.S.C. §1927, and in an earlier post on the 7th Circuit‘s similar result, slamming an attorney for bringing a copyright infringement action which the court found lacked merit. I think anyone who practices before the federal courts is aware of Rule 11’s stringent requirements, and the courts’ inherent power to sanction under §1927. What seems to be true is that these new strategies to address IP infringement cannot be viewed out of context. There is a Bigger View. Will be interesting to see where these new “levers” lead and whether this recent trend can in fact “Save Cinema.” For a view of the actual paper trail involved in the US Copyright Group’s strategy, here is a link to some of the documents.

-MZ