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Smut Trolling 'Prenda Law' Firm Gets No 9th Cir. Sympathy

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By Jonathan R. Tung, Esq. on June 20, 2016 4:10 PM

Trolling is the ultimate business model -- until it finally comes to a grinding halt. This appears to be how things are rolling out for the now defunct Chicago outfit Prenda Law that made a name for itself in recent years by buying up porn copyrights via shell companies and extracting settlement monies out of lonely downloaders.

In the words of Alison Frankel of Reuters, misusing copyright law and deceiving the courts are good tactics to enrage judges and turn sentiment against you. Not a good strategy at all for law firms.

Blackmail via Porn

Few things are more embarrassing to the average person than the publication of his private porn habits -- especially the fetishy stuff. And this is the public reality that the Prenda Law firm banked on. The Chicago law firm's business model involved purchasing the copyrights of pornographic movies, sending subpoenas to ISPs, and extracting settlement sums of about $4,000 a pop for every name they could identify.

No surprise, most recipients of Prenda's letters would simply pay up -- but only to preserve their reputation. As a result, Prenda's bread and butter was settlement, not "on the merits" litigation.

Another Circuit

Prenda's tactics have been the subject of much vitriol before in the Seventh Circuit which had upheld contempt sanctions against the firm and its principals John Steele, Paul Hansmeier, and Paul Duffy.

In the Ninth Circuit, the court adopted a similar tone to its sister circuit's, but did not reach the merits of the substantive issues. All the court said was that the company had been given adequate notice of major monetary sanctions against the firm in the amount of $100,000, thus affirming the lower court finding that the firm "engaged in abusive litigation, fraud on courts across the country and willful violation of court orders."

Weigh the Benefits Carefully

Prenda must have had a pretty good model going. In the course of several years, it booked millions in settlement profits. At the end, it would still only be facing perhaps a few hundred thousand dollars in fines and litigation expenses. It sounds like copyright trolling is a good gig, right?

Perhaps no so much. According to Frankel, Duffy is dead and his other two partners have not fared much better. Hansmeier has filed for chapter 11 and Steele is being investigated by the Illinois bar amidst allegations of ethical violations involving "fraud, deceit and misrepresentation."

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