Legal Ethics

9th Circuit upholds sanction against 'copyright trolling' lawyers who sued porn downloaders

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A federal appeals court has upheld a federal judge’s $81,000 sanction against three lawyers who made millions of dollars by pursuing porn downloaders for minor cases of copyright infringement.

The San Francisco-based 9th U.S. Circuit Court of Appeals upheld the sanction imposed against three lawyers who operated Prenda Law: John Steele, Paul Hansmeier and the late Paul Duffy. Ars Technica and the Minneapolis Star Tribune covered the June 10 unpublished opinion.

The lawyers, through their law firm, set up shell companies that purchased copyrights to pornographic movies. When someone illegally downloaded one of the films, Prenda Law or a local lawyer it hired would file a complaint against the “John Doe” downloader and use discovery to discover his or her identity. That person would then receive a letter threatening suit unless he or she paid about $4,000 to settle. The plaintiffs’ real business, the appeals court said, was “copyright trolling.”

U.S. District Judge Otis Wright had imposed the sanction in a May 2013 opinion peppered with Star Trek references. The $81,000 sanction was double the cost of attorney fees for two defense lawyers.

The judge did not abuse his discretion when he found the three lawyers were responsible for the “abusive litigation” and acted as leaders and decision-makers in Prenda Law’s “national trolling scheme,” the appeals court said. Nor did he abuse his discretion in requiring the lawyers to pay double the attorney fees and costs, the appeals court found.

The 9th Circuit also upheld two appeal bonds totaling about $235,000. One bond was for the $81,000, multiplied by 125 percent to account for interest. The other bond, for about $135,000, covered estimated defense costs on appeal.

The district court had “ample reason” to require additional bond for the appeal, the appeals court said. “The Prenda principals have engaged in abusive litigation, fraud on courts across the country, and willful violation of court orders,” the appeals court said. “They have lied to other courts about their ability to pay sanctions. … They also failed to pay their own attorney’s fees in this case.”

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