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Copyright Trolls: The Meaner Stepsister of Patent Trolls

Written by Beth Hutchens
Hutchens Law Office, PLLC
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Posted: December 8, 2010 @ 5:38 pm
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Ladies and Gentlemen, allow me to take this opportunity to introduce you to intellectual property’s latest monster- the copyright troll. Please hold your applause. It looks like patents have an uglier, even meaner stepsister.

Copyright trolls are a relatively new beast, and it’s hard to nail down a definition, so I’m just going to fall back on the immortal words of Justice Stewart’s famed copout “I shall not today attempt further to define the kinds of material I understand to be embraced . . . but I know it when I see it . . .” Boy, you said it, Justice Stewart. Of course, he was talking about obscenity and I’m talking about troglodytes. But to me, copyright trolls are like patent trolls. They have very little or no interest in the progress of the arts and brandish their copyright like a sword. They threaten to sue anyone and everyone who even looks at their copyrighted material without permission.

Like a patent troll, a copyright troll sometimes even makes more money from infringement suits than it does from the copyright itself. Half the time they didn’t even create or market the subject of the copyright; they just wait to exploit a hot mess of a body of law to make more money. This is often done under the dubious premise of a million billion zillion dollars in lost profits. Oh, and something or other about protecting the honest law abiding public from those no good dirty rotten infringers, it’s the principle of the thing, or… or something like that. Trolls- ugh. Sigh.

So here we have the US Copyright Group (“USCG”), who has sued more than 20,000 accused file-sharers. Bit torrent evildoers, if you will. USCG also apparently plans to target a lot more evildoers in the future. Did I not get the memo? Is there a contest for most defendants named in a calendar year or something? Long story short, and from what I gleaned from their website and other resources, USCG works like this: Identify an infringing ISP (lots and lots and lots of them), subpoena the (individual small-fry random citizen) owner’s name and address, send a letter to that individual small-fry random citizen telling them they infringed a copyright and demand payment (around $1500 or so, I believe), tell them if they don’t settle, they can be sued for copyright infringement and may be liable for all kinds of big time damages (even the statutory kind), tell them how costly litigation is and how beneficial settlement is, and then sit back and wait for the money to roll in. They do tell the person to talk to a lawyer though. So that was nice of them. 20,000 of these letters thus far and more to come. Wow.

Riddle me this. Accusations are made against an individual based on information obtained from the ISP, so how is USCG going to prove that the accused is the one who actually infringed? They get the information based on IP address so what do they do if they can’t prove, for example, Broomhilda Brapstein from Cheboygan, Michigan, is the person who actually illegally downloaded that movie? I guess they could trot out that she owns the IP address, so it was contributory infringement, but isn’t that a knowledge based argument? Don’t both of those accusations require, um, what was it called? Oh yeah, evidence. Besides, isn’t there some pesky rule about grounded in fact and law or some other such nonsense? And the suits are all based out of DC, but isn’t there also some weird thing we learned in law school about personal jurisdiction or something? One Mr. Dmitriy Korosov thought about some of this and a whole lot more. He’s kind of miffed at USCG so in a special Thanksgiving Day treat, and representing a proposed class of nearly 5,000 other bit torrent defendants, he slapped a lawsuit against USCG alleging (among other things) conspiracy, extortion, racketeering, and a couple of different flavors of fraud. Take that, USCG!

The complaint is pretty long (96 pages) but it’s totally worth a read. Make the time for it. You’ll thank yourself later. It’s well reasoned, well researched, and well written. Briefly, Mr. Korosov is alleging first and foremost that settlement letters were sent alleging infringement of a copyright that wasn’t even registered at the time, but still alleging the owner may be entitled to statutory damages. (Psssst- you can’t get statutory damages if the infringement happens prior to registration). The complaint also alleges that USCG knew it had no right to statutory damages but didn’t tell the person receiving the letter that and that this was a “misstatement of material information [that] was made to maximize the damage awards that Defendants could pursue, the claims for Ineligible Remedies they could threaten in demand letters, and the volume and amount of extorted ‘settlements’ that would result”. And USCG purposefully didn’t tell the Copyright Office about the actual first date of publication of the movie in question. And, given the size of the law firm that owns / is affiliated with USCG, they couldn’t possibly have the capacity to handle that many open matters. And a whole bunch of other stuff. Trust me, read the complaint.

If the allegations are true, I can’t wait to see how USCG responds to this one. But still, I can’t help but wonder if Mr. Korosov’s argument against USCG will work. Something tells me USCG did its homework before moving forward with its business model. Maybe they found a loophole or maybe they didn’t find anything that said they couldn’t do this (which is as good as a go ahead in some circles). I don’t know, but at any rate, I think there has to be something there or, in my humble opinion, they wouldn’t be so free with their business model and information. Plus, are we really sure we want to brand them trolls just yet? I have my opinion and you have yours, but let’s think for a minute. Do they just seem like trolls because of the huge number of defendants or are they really big ol’ meanies taking advantage of the system? Are they exploiting a loophole or do they really believe digital pirates are the scourge of human existence? I mean, technically, at least some the defendants did infringe, didn’t they? Maybe even willfully, so not unlike like the false marking troll suits, isn’t USCG kind of right? A little shady and totally groan-inspiring? Perhaps. But unlawful? I’m not so sure. I suppose they shouldn’t be sending out settlement letters threatening statutory damages if statutory damages aren’t on the table, but meh, I’m not sure how far one could stretch that argument in this case. At any rate, the blogosphere is on fire with this one, leading me to believe that popular opinion is USCG had it coming.

At any rate, kudos to Mr. Korosov. Sort of. I am a big fan of the little guy fighting back, but I’m not condoning piracy (so stow it before you even start). To all you file swappers, counterfeiters, and pirates- for crying out loud, would you guys knock it off already? Just pay the stupid $1.29 or whatever. You waste more time and money figuring out how to steal stuff than you would if you just paid for it. Besides, you do know that those big ol’ companies just pass the money they lose because of you to their paying customers. You knew that, right? And to you behemoth copyright owners, would ya’ll just chill out a little bit? Pretty pretty please with sugar on top? It’s getting beyond ridiculous. We need to work on preventing piracy, but is it that difficult to brainwork the huge screaming difference between a 12 year old file swapping in his Grandma’s garage and those bozos selling pirated DVDs on eBay? Sort it out already! Lest this copyright troll thing gets really out of hand (as if it hasn’t already).

I’ve said it before and I’ll say it again- a rigorous adherence to what is good in theory makes very little common sense. So I ask (as I often do when referring to copyright law) why are they snarling after the littlest Billy Goat when there’s a really big Billy Goat just around the corner-one who’s tromping on the bridge more? I honestly have no idea where this suit is going to end up. The “you didn’t register the copyright” argument may operate to dismiss some members of the class, but not all of them. And I’m still not sure that USCG is skirting the law or if the racketeering, conspiracy, and fraud charges are going to hold up. The suit is certainly making a loud statement, though. Oh, wait. Didn’t the Billy Goats Gruff wind up defeating the troll in the end?


About the Author

Beth is an Intellectual Property attorney licensed to practice before the United States Patent and Trademark Office and the State Bar of Arizona. She received her B.S. in Biological Sciences from CSU, Sacramento and her J.D. from Whittier College School of Law, where she earned a Certificate in Intellectual Property. She enjoys being a solo practitioner in Phoenix, Arizona.

22 comments
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  1. I love the article and the way you write. Always good when information can be provided that is fun to read.

    From my perspective, the problem with patent trolls (and likely with copyright trolls too) is that they don’t engage in any due diligence and simply sue. They place the burden on the target to demonstrate they are not violating the law, which to me is unconscionable. Until the Courts deal with the de facto shifting of the burden and the trolls holding individuals and companies hostage and extorting money we can only predict we will see a lot more of this behavior. On the patent troll side gone are the days when just the big players get sued. Increasingly small companies that clearly don’t infringe are being held up, and that is sickening if you ask me.

    -Gene

  2. Thanks, Gene.

    They don’t engage in due diligence, IMHO, because it’s not cost efficient for them to do so. They simply throw it out there and see what sticks. Given the number of letters, even a small percentage of responses is a great return on their minuscule investment, especially if the letters are some form of template and they have an intern just splatting addresses.

    I agree with you that the practice is beyond reprehensible. The problem lies in that 1) even though its hugely important, the burden argument can be viewed as kind of a small fish compared to infringement and it may be even left out of a lot of defensive pleadings simply because the court could just brush it aside and 2) how does one remedy what is clearly exploitative philosophically but still within the metes and bounds of the law? I’m open to suggestions as to how we can fix this because I’m still scratching my head.

    Though I guess should be thanking them for giving me the opportunity to use the word “troglodyte” in a blawg. Really, how often do we get a chance like that, and with such an apropos a candidate for the term?

  3. Yes, this is a very good article. Thanks so much Beth.

    I don’t want to speak to the content – which speaks for itself – but on the style.

    Lawyers take note – this is how a longish blog piece should be written. It is lively, well put together, professional, but not dull.

    Remember – when you are writing a blog post you are not writing for the Akron Law Journal. Most of us won’t read Law Rev. articles on the computer screen – so don’t try to write one.

    Bravo Beth and Gene!

    Nils
    The Online Guys

  4. As I have discussed before, the term “trolls” is bandied about like such a plaything that it is easy to forget who coined the term and why that term was coined.

    A big glass of my special Kool Aid to Beth for fostering that ignorance with this article, and in all due respect to Nils, the standards of writing for a law journal should (for the most part) apply even in writing for a blog – at least when it comes to content.

    And now for something a little off-topic:

    Get your dose of daily irony with a message from Peter Zura at http://271patent.blogspot.com/2010/12/intellectual-ventures-launches-massive.html

    Therein Peter explores the angle that Intellectual Ventures (“IV”) wishes to exploit in side-stepping the Ebay mindset: “IV also describes itself as a scientific research entity that ‘has a staff of scientists and engineers who develop ideas’ and ‘has invested millions of dollars developing such ideas . . . [and] has also invested in laboratory facilities to assist with the development and testing of new ideas.’

    This could be significant, since research entities are given a little more slack when seeking injunctions in a post-eBay world. In CSIRO v. Buffalo Technology, Inc., E.D. Tex. (6:06-CV-324), June 15, 2007, the district court made the following “irreparable harm” determination on CSIRO (a non-practicing entity) when it granted a permanent injunction

    Good lawyering has always been compared to “demon”ing, when that lawyering is done for an unpopular (yet still fully legal) cause.

  5. BD-

    Come on man! Have you been dipping into your own Kool Aid stash?

    I think I am finally starting to settle on what it means to be a troll, whether a patent troll or a copyright troll. I think a troll is anyone who doesn’t engage in basic due diligence and brings a lawsuit that forces the defendant to prove they are innocent of the allegations of infringement without any support of their own to believe there is infringement. Those that sue everyone and then force the defendants to spend money to defendant are the problem, regardless of whether they have a legitimate claim or not. Without a requirement that there be at least basic due diligence the under belly of the beast will continue to be rewarded and a legal perversion will be not only allowed but encouraged as being an appropriate business model. That is NOT what litigations are suppose to be. Sanctions are not enough for those who sue others without any reasonable belief there has been a harm, and the title of a patent coinciding with the broadly defined business of a defendant is not a reasonable belief.

    -Gene

  6. No legal expertise here, but when I hear the word “troll” I think of this term in respect to the fish industry. A trolling vessel puts out a huge net and at slow speeds picks up any and everything caught in its nets. IMO these copyright trolls are doing just that, they themselves logon to p2p downloading networks and log all the ips they can for a particular torrent thereby catching “suspected infringers” by ip and sending out threat letters in hopes of “catching” some money.

  7. Those that sue everyone and then force the defendants to spend money to defendant are the problem

    Gene, that is a structural problem largely unrelated to patents. Do not conflate your crowing about the legal systems of civil procedure with the patent system.

    The genesis of the troll term bears keeping in mind – that is the Kool Aid that has the slight almond aftertaste.

    If someone plays the game according to the rules, demonizing them is plainly not fair. If you do not like the rules – have those rules changed. Executing to a fully legal business plan may not be popular, but where is the harm? Counter to all of the post-issue-newly-added-requirement folks, maximizing existing property, wherein the Quid Pro Quo has already been met is simply shrewd business.

    The sky simply is not falling. At least not the Patent Sky.

  8. If someone plays the game according to the rules, demonizing them is plainly not fair.

    That’s a ridiculous statement. The entire reason why the courts of equity were created in the first place (and therefore, the reason injunctions are even available as a remedy for anything) is because there are ways of playing by the rules that are nevertheless unfair and lead to undesirable results.

    Sometimes it’s easier and more effective to simply make fairness-based rules (e.g. against vexatious litigation without defining “vexatious”), rather than drawing a bright line that a bunch of lawyers will line up barely on one side of while still gaming the system as much as possible. We all know when people are unfairly playing to the letter of the rules. Even the plaintiffs and their lawyers know it in this case, and you know it just as well.

    If you do not like the rules – have those rules changed.

    Is pointing out the unfairness of people gaming the current rules in a public forum not a step in that direction?

    where is the harm?

    Ah, that would be what the economists call an “externality”. The question is always rhetorical, as if to imply that the harm is no real harm so long as it’s happening to somebody else.

    Well, “somebody else” just got a lawyer.

  9. The “rules” I speak of include the courts of law and equity. Your “entire reason” tirade is misplaced.

  10. So. Can I just start sending out letters to people accusing them of downloading a move and ask for money to settle? Or do I have to be an attorney for that to be “legal”?

    This crap is a scam. Does DGW have an office in Nigeria?

  11. The “rules” I speak of include the courts of law and equity.

    Ah, but the rules of equity have always been open to sanctioning people who obey the letter of the law with unclean hands.

    So, plainly, these people are not playing the game according to the rules, insofar as one of the rules is “don’t be a jerk about your legal rights. Yes, you. You know what you did.”

  12. Indeed, @IANAE. I think one of the biggest problems is that, beyond Gene’s due diligence argument, it doesn’t appear as though NPE’s are doing anything against the rules, per se, but they still make us feel creepy. And, lively discussion notwithstanding, I’m still out of ideas as to how to remedy it.

    I’d like to pose a question to the group. What if your client was being sued by an NPE? They technically DID download that movie, but their infringement pales in comparison to, say, counterfeiters on eBay. What would you argue? Gene’s burden argument? IANAE’s vexatious litigation theme? Some creative flavor of de minimus? I was particularly fond of Mr. Korosov’s attorneys’ extortion argument, though I’m not sure it will hold water.

    @BD- would you like to take this opportunity to give us your opinion as to how the litigious activities of NPEs further the progress of science and the arts?

  13. The warning here is to guard against the mentality of “but they still make us feel creepy“.

    Therein lies a path to the dark side.

    Beth,

    As to NPE activity fostering “progress of science and the arts”, the very fact that you ask that question means you have missed the point of what the Quid Pro Quo is all about. At the point of litigation, the Quid Pro Quo exchange has already been made and this is now a “rights protection” issue and not a “rights substantiation” issue.

    Unless of course, you too see some legal reasoning to require more from a patent holder after grant depending on just who that holder is… I would love to see the legal foundation for that reasoning.

    Notwithstanding your miss of the real issue, one aspect of NPE’s that has been expressed is the functionality of thicket busting. As large organizations organize patent thickets and threaten a “nuclear” retaliation, NPE’s are immune to such and thus advance the dynamics of patent use after the original Quid Pro Quo exchange.

  14. What if your client was being sued by an NPE?

    I think you’d have to fight fire with fire – throw everything at them you can think of, and try to transfer the cost burden back to them as much as possible.

    For Gene’s argument, you want to fire back an informal request for particulars, including relevant registration numbers, chain of title and dates for statutory damages, and specific evidence that you’re liable to them for an infringement. Why should you pay anything until they can show you that they have a good claim?

    On the de minimis front, you can argue the incremental future damages of a single download either with no further sharing or with your client’s shared file among dozens/hundreds/thousands of copies of the same file. And of course, the damages caused by your download itself, especially when you never would have bought the movie in the first place.

    On the equity front, you might point out that what they’re doing is obvious extortion if they’re not attacking the problem at the root – file sharing services have already been found liable, and there’ll always be someone else sharing as long as there’s someplace to share. They’ve made a choice to sue someone who has done very little and caused them no incremental damage, while allowing further widespread infringement that they’re obviously aware of. I don’t think there’s technically a laches-type defense for going after David while Goliath openly infringes, but you’re not in court yet.

    If you’re feeling magnanimous, you can counter-offer to settle for whatever that movie costs on iTunes. Presumably iTunes takes a cut on those sales, so they’re actually coming out ahead.

    Close it all off by letting them know that they can sue you if they want, and it’ll cost them far more than $1500 to collect far less than $1500. Of course, by now you’ve probably paid your lawyer $1500 just for this letter, and if you’re feeling snarky you can point that out in the letter and say it was worth it.

    And if everybody does it, it will be.

  15. BD-

    The warning about going after them because they make us feel creepy is well taken. I think you and others know that I typically walk the line on the troll issue and try and dampen down the rhetoric, at least when blank comments about NPEs are made because that loops in R&D companies, Universities, Federal Labs and Independent Inventors, none of whom are traditionally (or realistically IMHO) viewed as problematic.

    You do say this: “one aspect of NPE’s that has been expressed is the functionality of thicket busting. As large organizations organize patent thickets and threaten a “nuclear” retaliation, NPE’s are immune to such and thus advance the dynamics of patent use after the original Quid Pro Quo exchange.”

    I understand what the words mean, but I’m not seeing the greater concept. Perhaps I just haven’t had enough coffee this morning, and perhaps I am bleeding your statement about NPEs into saying something about those who we could all agree are trolls (or thuggish). I’m not sure how one who acquires patents and then sues indiscriminately without engaging in any due diligence is advancing the quid pro quo exchange. Those folks seem to be engaging in extortion if you ask me, and from what I can tell there are more and more of them suing small to mid-size companies who clearly are not infringing, forcing those companies to defend.

    -Gene

  16. @BD that doesn’t answer my question. And speaking of missing the issue, you do realize this is a copyright article, right?

  17. Beth,

    Your question was:
    take this opportunity to give us your opinion as to how the litigious activities of NPEs further the progress of science and the arts?

    I will state that I have answered your question. You may not like my answer, but your question has been answered. Putting on airs is like wallowing in that mud pit. It may feel good, but you only get dirtier.

    As to the focus of the article being on “copyright”, that ship sailed in the inital response lumping in more than just “copyright”. I used the patent example because that is the most evident (and typically most vociferous) example of “troll” behavior.

    Gene,

    I concur that general “thugness” in the litigation arena can be a problem. But as I posted on other threads, that behavior is not relegated to only patent cases, and you are dealing with a general civil procedure issue. I do not begrudge you the view that such ill-pleaded items should be tossed – but toss them on the “merits” and leave the “troll-speak” out of the discussion.

  18. BD-

    “toss them on the “merits” and leave the “troll-speak” out of the discussion.”

    I don’t know how you can say that. You seem to be trying to separate the skin from the animal. Ill-plead complaints that are not researched and thrown out to harrass are exactly the identifying behavior of a troll. If we are going to ever try and define what is and what is not a troll, what better way? Those who abuse the process and hold businesses hostage, forcing them to pay money to prove they didn’t do something they didn’t do all because there is a patent titled something similar to what they do? All because it is too difficult to determine if they are infringing a copyright? I think that is exactly where the troll label is appropriate.

    Also, for better or for worse, the industry has settled on the term. I personally try and perpetuate the term because it is illustrative of so many things. Non-practicing entity sterilizes the discussion and allows for those who want to use the problem to sweep up those who clearly are not problematic and should be considered vital and contributing players in the IP system.

    -Gene

  19. Gene,

    I am only trying to prevent the definition from untowardly focusing on the patent portion.

    I have no trouble whatsoever of using “troll” (as a term) for those who use the legal system as a bully pulpit with unclean hands – once again, distinguish the IP from the equation, and we are largely in agreement. Plainly speaking, the abuse of the legal system is not constrained to those in the IP arena.

    I do not accept the capitulation of the term. The very fact that NPE is used and that the term “troll” still does not have one defined meaning belies your assertion. Conflating only benefits those (with an ulterior motive) that initiated the term in the first place. This forum should be a force for positive discussion. Hence my refusal to capitulate and hence my initial reason for discourse here on this thread. Comments like Nils at number three are simply in the wrong direction. Beth may have meant well, but with comments like “They have very little or no interest in the progress of the arts and brandish their copyright like a sword”, the water is made muddy, rather than clear. As I pointed out – a “protection‘ issue is not the same as a “substantiation‘ issue. Buying into that conflation is drinking the Kool Aid.

  20. Beth:

    I’m a wannabe writer, hoping to break into royalty publishing but for the moment writing on-line articles for content sites ad on-line magazines. On one site I’m having trouble with monetary success, earning a mere $0.12 per article per month in advertising royalites. My articles are stolen all the time by scrapers and plagiarizers. Whenever I find one (through Google Alerts or manual Google searches), I do all I can to stop it and reverse it, using the provisions available to me under the DMCA. Given that I’m doing this prevent someone from stealing a few of my peanuts, does that make me a copyright troll?

  21. @David,

    You don’t appear to be based on the facts you gave.

  22. What if your client was being sued by an NPE?

    Perhaps a little late, but I discovered this other way of dealing with baseless litigation threats.