by Paul Alan Levy
Apparently out of the blue, a copyright lawsuit filed in federal court in Dallas by a German pornographer against 670 anonymous Internet users, who were charged with infringing the copyright in the film by making it available for download, has been dismissed. The back story holds lessons for judges confronted with demands to discover the identify of anonymous Internet users.
Evan Stone, the lawyer for plaintiff Mick Haig Productions, has built a legal practice around representing the makers of pornographic movies – many of them, apparently, based abroad with no evident connection to Dallas other than that he is their lawyer – in mass copyright lawsuits against anonymous Internet users whom he accuses of using BitTorrent software to obtain and distribute his clients’ wares. His hiring pitch — that under Fifth Circuit law, unlike many other circuits, the plaintiff may sue after filing an application to register its copyright, without having actually received action on the application. Armed with the strong statutory remedies, including statutory damages and attorney fees, that are available against those who commit infringement after a work is registered, Stone uses early discovery to obtain the names of the Doe defendants, and then threatens to throw the book at them unless they quickly pay $1500 or $2500 in settlements, amounts that are deliberately set so low that it is rarely cost-effective to hire an attorney to fight him. And he takes advantage of their anxiety not to be publicly identified as having been involved with his clients’ products.
This case turned out a bit differently.
Stone Faces an Adversary
On most occasions when a lawyer files an ex parte motion for early discovery, the motion is granted as a matter of course. But Judge David Godbey understood that this was a form of discovery that could easily have adverse consequences for those who were publicly identified as being involved in the distribution of some scuzzy material. In this regard, his insight is reminiscent of Judge Kenneth MacKenzie, a Morris County New Jersey judge who decided not to allow a motion for discovery from Dendrite International to be granted without a chance for opposition, but instead ordered Dendrite to publish a notice of the subpoena in a place where the Does were likely to see it. But unlike Judge MacKenzie, Judge Godbey decided to seek an adversarial presentation on this issue. His chambers contacted the Electronic Frontier Foundation, which then partnered with Public Citizen (I had recently drafted a brief to oppose a discovery from Stone on behalf of a different pornographer, also with no connection to Texas; Stone dismissed my client when I sent him a copy of the anonymous affidavit we were ready to file). Judge Godbey appointed us as temporary lawyers for the Doe defendants, pending a ruling on the motion for leave to take early discovery. In late November, we filed a brief arguing that Stone had not made a sufficient showing of entitlement to sue in Dallas, that he should not be allowed to join 670 unrelated Does as defendants in the same suit, and that there were holes in Stone’s factual showing of an entitlement to identify the Does in any event.
One thing we pointed out is that, from the allegations in the complaint, it appeared that there was a flaw in the claim for statutory damages and attorney fees, in that it appeared that the film had been released more than three months before the registration of the copyright and that the infringements alleged were also before the registration. And it is the threat of those remedies that can produce the settlements that make Stone’s business model work. Otherwise he has to prove actual damages or actual profits on the part of the Does.
But the matter in Texas came to a head because, without waiting for Judge Godbey to rule on his motion for leave to take early discovery, Stone just went ahead and served subpoenas on the ISP’s whose services the Does had allegedly used. This fact came to my attention when I got a call from one of the 670 Does who was just worried sick — his wife had opened a notice of subpoena from Comcast and they were both terrified about being publicly albeit falsely accused of having some involvement with Mick Haig’s product, perhaps the result of a temporarily unprotected wi-fi network. So when Stone refused to take or return my phone calls, and after consulting with my co-counsel at EFF, I wrote to Stone to point out that sending out subpoenas that had not been authorized was an abuse of process, and I proceeded to pose a series of questions to find out whether he had been in touch with any of the Does and, even more important, whether any of them had paid him any money. We wanted to be sure that he destroys all information that he got from our clients as a result of the improper subpoenas, and that he returns any ill-gotten gains.
Why Stone May Have Been So Quick to Dismiss
Two days later, Stone dismissed all of Doe defendants with prejudice – meaning that Mick Haig cannot sue them again for the same downloading. His ill-tempered notice of dismissal goes on at some length to blame the judge for appointing EFF and Public Citizen to explain the reasons why his discovery should not be granted, instead of instead of appointing a local lawyer who would play nicely or requiring us to cooperate with him to bring the Does into the case by name.
But there are some oddities here – he claims that as a result of our filing, he has lost the opportunity to take discovery; does that mean that he believes our arguments are meritorious, and hence that his motion should be denied? After all, the judge ordered the ISP’s to preserve identifying information for the Does, so it is not as if that information was going to disappear while he was waiting for a decision. And previously he claimed that these were 670 people who had seriously damaged his client by obtaining its copyrighted product illegally and then re-distributing it illegally. If his client has been injured, why has he dismissed the claims with prejudice, which means not only the client cannot bring suit in a proper jurisdiction but also that the Does are now prevailing parties who are entitled to seek an award of attorney fees under the Copyright Act?
My guess is that this is all about Evan Stone and not at all about his client. Stone’s business model depends on easy settlements in the four figures, and he must have recognized that a win would not come easily. In my view, it is also fair to read the dismissal as an admission of our argument that he has no claim for fees and statutory damages. Thus, the litigation of the case on the assumption that he could use the threat of litigation to demand four figure settlements was no longer possible, and Stone may just have been unwilling to continue to represent his client without that possibility. Moreover, it seems likely that Stone worried about the possibility of a sanctions motion, and about having to answer questions incident to that motion about his communications with the ISPs and with the Does, and that he dismissed with prejudice in an effort to cut off such inquiries. The very fact that he is dodging the questions makes me worry that he may have already made some profits from our clients for which he does not want to be accountable. What he may not have recognized is that dismissal of a case not only sets up a motion for attorney fees, but does not deprive the court of jurisdiction to consider sanctions. And because we have an obligation to protect our Doe clients, we are going to have to pursue such a motion until we are satisfied that none of them has been abused.
Lessons for the future
There are at least two lessons for the future here. With respect to Stone in particular, this incident points up an inherent contradiction in his appeal to prospective clients to hire him to sue in Texas. If the main reason for hiring Stone is that the client has not yet registered the copyright, and hence wants to take advantage of the Fifth Circuit rule allowing filing based on application even though registration has not yet occurred, at the same time the case is likely one in which there is no claim for statutory damages and attorney fees. So the client may be better off registering the copyright immediately, waiting for more downloads, and bringing suit elsewhere. Moreover, we can hope that other Texas judges focus on the fact that Stone's clients have no relationship to Texas, and hence that there is no conceivable basis for personal jurisdiction in Texas.
The larger lesson is that, no matter how clearly meritorious the plaintiff’s claim may be from a first review of an ex parte motion for early discovery, more judges should emulate Judge Godbey and Judge MacKenzie by deferring a ruling on the motion for leave to take immediate discovery until there has been an opportunity for consideration and adversary litigation. Judging from the panicked calls that my EFF colleagues and I received after the notices of subpoena went out, the mere receipt of notices of subpoena alarmed a number of innocent people until they got word that the ISP’s were going to hold off on production. The mere need to decide on a short schedule whether to respond to a subpoena may be harmful, and sad to say there are ISP’s out there who just assume when they receive a subpoena that their clients are likely criminals who should be identified as soon as possible (I’ll have more to say soon about the scoundrels at Bluehost). Judges should demand some evidence of wrongdoing before they allow discovery to identify the alleged wrongdoers, and if they are not sure of their ability to evaluate the papers in their own chambers, they should consider appointing pro bono counsel to respond to the motion.
Demanding this sort of inquiry does not protect those whose online conduct is tortious, because plaintiffs with valid claims have little difficulty making the showings that are demanded under the Dendrite standard, especially in copyright suits over downloading. But it holds out the prospect of protecting some innocent people.
Mick Haig's lawyer has refused to answer any questions about his dealings with the Doe defendants, such as whether he actually was able to get any money out of anyone before we discovered that he had served subpoenas. We have filed a motion for sanctions and/or an award of attorney fees.