May 7, 2013 | By Mitch Stoltz

Prenda Law Is The Tip of the Iceberg

The Internet is rejoicing with news that notorious copyright troll Prenda Law, and its attorneys John Steele, Paul Hansmeier, Paul Duffy, and Brett Gibbs, received a stinging sanction from federal judge Otis D. Wright, II - over $81,000 in attorney's fees and a referral to federal prosecutors. Using no fewer than twelve Star Trek references, Judge Wright accused Prenda Law of using "the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs" to "plunder the citizenry."  He referred the matter to "the federal agency eleven decks up" - the U.S. Attorney's Office - which is "familiar with their prime directive and will gladly refit them for their next voyage." Popehat, Wired, Techdirt, and many others have great summaries of the order.

We can rightly celebrate that Prenda Law has been rebuked and its practices exposed. Prenda (under various names) has filed hundreds of suits against thousands of Internet users, and their fall should discourage others from pursuing this business model. But the problem remains. Copyright is a broken system, biased in favor of copyright owners at the public's expense, prone to harsh punishment and ruinous damages, steeped in the misleading and unhelpful rhetoric of "theft" and "piracy."  A system so out of balance is a natural haven for lawsuit abuse. Remember that Prenda Law (under various names) operated with impunity for about three years. These sanctions only happened because of sustained effort and careful research by many defense counsel and concerned citizens. Other troll lawyers are continuing to subpoena for the names of Internet subscribers, then shaking them down for "settlements," without the extreme conduct that landed Prenda in hot water but no less damaging to their victims. And broken copyright causes more subtle harm at the hands of law-abiding, even well-intentioned people.

Consider this: U.S. copyright law provides statutory damages of up to $150,000 per work - without the copyright owner having to show actual harm. Individuals have been hit with damages in the six figures, and companies with bankrupting judgments in the tens of millions. Threats of damages like this are one of the main ways that copyright trolls convince their victims to pay $2,000 to $4,000 in "settlements."  But statutory damages are also wielded as a club by entertainment, media, software, and technology companies. They can destroy competitors and dry up investment with mere threats of litigation, giving them veto power over new technologies and emerging artists.

And consider "secondary liability," the judge-made rules for when one person can be held responsible for copyright infringement by another. The rules are vague and their application often uncertain. Copyright trolls use this uncertainty to make plausible-sounding threats against Internet subscribers. You may not have been the one who downloaded our movie, say the trolls, but your name is on the cable bill and the law will hold you responsible. It's not always true - in many cases, an ISP subscriber is protected from liability for others' downloading - but the rules are vague and complex enough to make the threat sound real. 

Looking beyond trolls, the same vague legal principles create legal nightmares - and sometimes financial ruin - for people that try to play by the rules. Companies like ReplayTV and Veoh went bankrupt trying to convince courts that they shouldn't be held responsible when customers copy TV and movies. Dish Networks/ReplayTV, YouTube, and many less prominent technology companies face lawsuits where the toolmaker must answer for the tool user. Only lawyers benefit, as vagueness means long fights and lots of legal fees.

Last but not least, consider the rhetoric our government officials use when they talk copyright.  The omnipresence of FBI "anti-piracy" warnings on digital media, the Department of Homeland Security's campaign of shutting down websites based on mere accusations of infringement, and the sheer volume of resources and tax dollars devoted to copyright enforcement have elevated the protection of copyrights above so many other public values.  Free speech, due process of law, and privacy often take a backseat when someone cries "copyright." In this climate, it's no wonder that Prenda Law and its fellow trolls talk about "digital pirates" who are "threatening entire areas of creative works" when the trolls demand money - it puts them rhetorically on the side of motherhood and apple pie.

The U.S. Congress is beginning to take a serious look at copyright law, with the first hearing scheduled for May 16th. Lawmakers must keep in mind how privileges given to copyright owners can be used as tools of abuse as Prenda Law has done. And anyone who comes to Congress asking for expanded rights and powers for rightsholders should be prepared to explain how the public will be protected against the abuse of those rights.

Let's celebrate today. But let's keep our eyes on the ball.


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