Why CEG-TEK’s DMCA settlement system will FAIL.

This is a rather tricky article to write, especially since I am setting some copyright trolls apart from others, and I am unsure whether this is a good idea or not.

It is my opinion that the “Six Strikes” System which has recently gone into effect will ultimately kill Copyright Enforcement Group’s (CEG-TEK)’s “CopyrightSettlements.com” settlement system. In short, their selling point of attracting new copyright holders (the production companies) with the promise of big profits through volume settlements (from you, the internet users) by the sending of DMCA scare letters directly to internet subscribers via their ISPs will fail. I am concerned that the production companies / copyright holders might decide to start once again suing defendants in copyright infringement lawsuits.

Copyright trolls take two forms — the “copyright troll” lawyer, and the production company who embraces the concept of extorting settlements from so-called “infringers” rather than selling their copyrighted product on the marketplace.  There is one entity often missing from our blog’s focus on lawyers and their clients — the “IP enforcement company” (“IP” = intellectual property) who is working behind the scenes to 1) acquire clients for their firm, 2) track the peer-to-peer / bittorrent downloads and torrent swarms, 3) hire and maintain one or more attorneys capable of suing, and 4) converting their tracking efforts into CASH [in terms of $$$ settlements from accused downloaders].

This explains why whether you are sued by Patrick Collins, K-Beech, or Malibu Media, you’ll be contacted by someone on the Lipscomb & Eisenberg law firm’s collection team. Similarly, if the production company is Digital Sin, Zero Tolerance, Girls Gone Wild, etc., then your IP enforcement company is the Copyright Enforcement Group (CEG-TEK) and you will be sent DMCA letters suggesting that you settle their claims against you or else they may sue you (so far, this has not been the rule, but the exception). Yet, if your plaintiff is AF Holdings, Hard Drive Productions, Openmind Solutions, or any of the others connected with Prenda Law Inc. or the new Anti-Piracy Law Group, your IP enforcement company is one of John Steele’s entities. In other words, every copyright troll plaintiff is a client of a particular IP enforcement company, and that IP enforcement company has one or more lawyers on their team (or more often then not, as with John Steele and Ira Siegel — very different entities) — the lawyers themselves appear to own an ownership interest in the IP enforcement companies they run and work on behalf of.

It is my understanding that an enterprising attorney (or members of his IP enforcement company’s sales team) will often attend annual pornography conventions, and they will rub shoulders with production companies who end up being the copyright holders in these lawsuits.

The traditional IP enforcement companies (Lipscomb, Steele, etc.) will tell them, “I am aware of your company’s piracy problem, and I have a solution. Look at all our data as to the piracy of your videos.  Our team of experts can track the piracy of your copyrighted content, and our team of “expert” lawyers will sue defendants on your behalf. Instead of defending themselves, the accused internet user will be shamed with a lawsuit and will settle with us for thousands of dollars (average asking price: $3,400), we’ll take our commission, and we’ll both be millionaires. And, we’ll cut down on piracy in the process.

CEG-TEK (the Copyright Enforcement Group) and Ira Siegel has a different approach, and I believe the Six Strikes System will be the achilles heel of their “out-of-court pre-lawsuit settlement” approach.

The Copyright Enforcement Group was essentially formed because Ira Siegel didn’t like the idea of suing defendants and having all of his settlement activities monitored by a federal judge who can ask him uncomfortable questions about his activities. Rather, he has been paying ISPs to send out “DMCA” settlement letters (invoking and in my opinion, misusing the Digital Millennium Copyright Act) in order to scare defendants into settling cases before they are filed in federal court. Settlements average $200 per accused title, but I have seen a few $500 per-title settlements as well.

It is my understanding that the way CEG-TEK acquires new clients — their “unique selling proposition,” if you will — is that they tell production companies, “we can track and sue the downloaders if we want — we have attorneys in a number of states who can sue defendants, and possibly get a $3,400 settlement from a few of them [once in a while]. However, if you come on board with us, we will send DMCA settlement letters out to the internet user directly via his ISP, and that letter will point them to our Copyright Settlements (www.copyrightsettlements.com) website where they can enter their unique username and password and privately pay their settlement fee. The settlement fee will be $200 and not $3,400, but the quantity of users who will pay us our small fee and move on will be significantly higher than those who will settle a federal copyright infringement lawsuit. We’ll all make millions!”

The reason I think CEG-TEK’s business model of sending DMCA letters will ultimately fail is because the Six Strikes System has undermined CEG-TEK’s abilities to contact so many internet users. In short, instead of sending the DMCA letters directly to the ISP subscribers as Charter and a number of smaller ISPs do, the big ISPs have banded together and formed something called the “Six Strikes System” which essentially gives six warnings to their subscribers before giving copyright holders access to their subscriber’s contact information for the purposes of suing for copyright infringement or sending DMCA threat letters as CEG-TEK does every day.

In other words, anyone who has Comcast, Time Warner, Verizon, etc. as their ISP will no longer receive CEG-TEK’s DMCA letters. Instead, they receive a notice such as “we have received a complaint of copyright infringement from your account; stop this activity.” But with ISP members of the Six Strikes Program, CEG-TEK’s DMCA LETTERS ARE NO LONGER FORWARDED OVER TO THE SUBSCRIBERS! What this means is that let’s say 75% of the market share of internet users (I’m using this number merely as a hypothetical) will no longer go online and settle CEG-TEK’s claims against them. Or in other words, the www.CopyrightSettlements.com website as of a week or so ago [the plan went into effect roughly a week or so ago] will have experienced a 75% drop in settlements.

Knowing the production companies who signed on with CEG-TEK with the sole purpose of making millions in settlements from these DMCA letters, I suspect that they are starting to get upset and impatient because CEG-TEK’s promise of directing would-be defendants to their website is no longer the money-making machine they thought it would be. As a result, I am concerned that the production companies who signed on with CEG-TEK might start opt for suing defendants once again en masse.

PERSONAL NOTE: I obviously don’t want to scare anyone because I am very far from screaming “the sky is falling.” We have been defending clients in countless cases filed in federal courts across the U.S., and in recent months, there has been a clear change in the level of education of the judges and their feelings towards “copyright troll” plaintiffs. Possibly with the help of our POLICY LETTER (or simply our phone calls and faxes to a judge’s chambers when one is assigned to a copyright infringement case).  Judges are now educated as to the copyright trolling problem, and it is much more difficult to go after defendants because our collective arguments (such as, “an IP address is not a person,” and “just because you can prove an IP address snapshot was involved in a download does not mean that copyright infringement occurred,” etc.) are starting to take plant themselves deeply in the federal court system. In other words, if they start suing, we are very prepared, and they are almost a year-and-a-half behind.


UPDATED COPYRIGHT ENFORCEMENT GROUP (CEG-TEK) ARTICLES (from this blog):
Canada begins receiving CEG-TEK DMCA settlement letters. (3/12/2015)
How time limits / purged records stop a copyright holder from learning a downloader’s identity. (12/18/2014)
CEG-TEK’s growing list of participating ISPs, and their NEW alliance with COX Communications. (11/12/2014)
The Giganews VPN Problem (11/12/2014)
CEG-TEK is now your friendly “photo” copyright troll. (6/13/2013)
CEG-TEK’s new “you didn’t settle” letters sent from Marvin Cable. (3/22/2013)
CEG-TEK’s DMCA Settlement Letters – What are my chances of being sued if I ignore? (2/22/2013)
Why CEG-TEK’s DMCA settlement system will FAIL. (2/22/2013)


CONTACT FORM: If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

Malibu Media, LLC — New “Copyright Troll” on the Block.

malibu-media-anonymous-settlement

Meet your new troll: Malibu Media, LLC

There seems to be a new production company who has decided that it is a better business model for them to start suing internet users (e.g., copyright trolling) rather than selling their cheap flicks on the internet one by one. The company name is Malibu Media, LLC, and while the actual “film” allegedly downloaded probably varies from case-to-case, it appears as if “Tiffany Teenagers in Love” seems to be the primary title they are using in their lawsuits.

 [NOTE: BEFORE READING THIS ARTICLE: If you have not already done so, and you are implicated as a John Doe in a Malibu Media, LLC lawsuit, read these first:
1) “Everything You Need To Know in One Page About Your Malibu Media, LLC (X-Art) Lawsuit [FAQ]
2) “In-Depth Malibu Media.  Their Lawsuits, Their Strategies, and Their Settlements

FOR IMMEDIATE CONTACT AN ATTORNEY: To set up a free consultation to speak to an attorney about your Malibu Media, LLC lawsuit, click here.  Lastly, please feel free to e-mail me at info [at] cashmanlawfirm.com, or call 713-364-3476 to speak to me now about your case (I do prefer you read the articles first), or to get your questions answered.]

Why are the lawyers the same as we have seen with other troll lawsuits?!?

What surprises me is that while this is a new “troll” (using the term loosely,) the local counsel they are using suggests to me that the same entity [behind the Patrick Collins, Inc., K-Beech, Inc., NuCorp, Inc., Raw Films, Ltd., Zero Tolerance, etc. cases] is also behind this case. In other words, this is simply a new client climbing on the bandwagon looking to cash in on the ongoing mass extortion scheme. The rules, however, have not changed.

[HINDSIGHT: (2017 UPDATE:) LITTLE DID I KNOW AT THE TIME THAT GUARDALEY WAS NOT ONLY THE FORENSIC COMPANY BEHIND THE MALIBU MEDIA, LLC LAWSUITS, BUT ALL OF THE MAINSTREAM MOVIE LAWSUITS *AND* ADULT FILM LAWSUITS FILED ACROSS THE U.S. (PRESUMABLY WITH THE MPAA / RIAA AS THE INVESTOR BACKING THE LAWSUITS).]

Pasted below is a list of the cases, separated by the court in which the case was filed in, and who the local counsel is. I have dealt with each one of these guys before, so as far as I am concerned, this is just one more troll to add to the list of companies who are suing defendants.  I have included the newer filings of Raw Films, Ltd. to show that these are the same attorneys.

California Central District Court – Adam M. Silverstein of Cavalluzzi & Cavalluzzi

Malibu Media LLC v. John Does 1-10 (Case no. 2:12-cv-01647)
Malibu Media LLC v. John Does 1-10 (Case no. 2:12-cv-01675)
Raw Films, Ltd. v. John Does 1-10 (Case no. 2:12-cv-01653)

Virginia Eastern District Court – David / Wayne O’Bryan of O’Bryan Law Firm

Malibu Media, LLC v. John Does 1-26 (Case no. 1:12-cv-00160)
Malibu Media, LLC v. John Does 1-26 (Case no. 1:12-cv-00161)
Malibu Media, LLC v. John Does 1-15 (Case no. 1:12-cv-00163)
Malibu Media, LLC v. John Does 1-27 (Case no. 1:12-cv-00165)
Malibu Media, LLC v. John Does 1-08 (Case no. 1:12-cv-00166)

California Southern District Court – Adam M. Silverstein of Cavalluzzi & Cavalluzzi

Malibu Media, LLC. v. John Does 1-13 (Case no. 3:12-cv-00358)
Malibu Media, LLC v. John Does 1-25 (Case no. 3:12-cv-00362)
Malibu Media, LLC. v. John Does 1-15 (Case no. 3:12-cv-00369)
Raw Films, Ltd. v. John Does 1-11 (Case no. 3:12-cv-00368)

Colorado District Court – Jason Aaron Kotzker of Kotzker Law Group

Malibu Media, LLC v. John Does 1-29 (Case no. 1:12-cv-00397)
Malibu Media, LLC v. John Does 1-16 (Case no. 1:12-cv-00399)
Malibu Media, LLC v. John Does 1-30 (Case no. 1:12-cv-00402)
Malibu Media, LLC v. John Does 1-10 (Case no. 1:12-cv-00405)
Malibu Media, LLC v. John Does 1-27 (Case no. 1:12-cv-00406)
Malibu Media, LLC v. John Does 1-18 (Case no. 1:12-cv-00407)
Malibu Media, LLC v. John Does 1-15 (Case no. 1:12-cv-00408)
Malibu Media, LLC v. John Does 1-27 (Case no. 1:12-cv-00409)

District Of Columbia District Court – Jon A. Hoppe of Maddox Hoppe Hoofnagle & Hafey LLC

Malibu Media LLC v. John Does 1-5 (Case no. 1:12-cv-00233)
Malibu Media LLC v. John Does 1-16 (Case no. 1:12-cv-00235)
Malibu Media LLC v. John Does 1-11 (Case no. 1:12-cv-00237)
Raw Films, Ltd. v. John Does 1-3 (Case no. 1:12-cv-00234)
Raw Films, Ltd. v. John Does 1-19 (Case no. 1:12-cv-00236)

Pennsylvania Eastern District Court – Christopher P. Fiore of Fiore & Barber LLC

Malibu Media LLC v. John Does 1-15 (Case no. 2:12-cv-00664)
Malibu Media LLC v. John Does 1-17 (Case no. 2:12-cv-00665)
Malibu Media LLC v. John Does 1-10 (Case no. 2:12-cv-00666)
Malibu Media LLC v. John Does 1-11 (Case no. 2:12-cv-00667)
Malibu Media LLC v. John Does 1-22 (Case no. 2:12-cv-00668)

What to expect based on what these “?attorneys?” have done before.

On a personal note (obviously not legal advice, as each plaintiff above handles cases differently, and each person’s situation is different): We have seen these attorneys before in other cases. If you receive a copy of a subpoena from your ISP indicating that you have been implicated as a John Doe Defendant in any one of these cases, you’ll probably be instructed in the letter to file a motion to quash. As you know from my MANY articles on this blog, you know my opinion that such motions have been a waste of time for defendants (e.g., plaintiff attorney will claim that because you are not yet “named” as a defendant, you have no “standing” to file such a motion, etc., etc., etc.). More likely than not, you will not receive a letter from your ISP, and one of their creditor-like “bulldogs” will begin calling you and threatening to name you as a defendant unless you settled your case against them. They will make up odd numbers on the spot as to how much their “client” will settle for, but remember, these guys and gals (who often do not even sound sober and are probably sitting in a cubicle somewhere reading you a script) are not attorneys and likely do not have authority to settle your case. If you have spoken to me, you know my opinion is that 1) they shouldn’t even be calling you in the first place, and 2) you should not be discussing your case with them.

What else can you tell me about the Malibu Media cases?

[2017 UPDATE] The best way to learn about Malibu Media, LLC is to read what happened to them as it happened.  The list of stories below (in the order I listed them) tell the Malibu Media story in a way that you will understand them.


FOR MORE INFORMATION ABOUT MALIBU MEDIA, LLC:Again, if you have been implicated as a John Doe defendant in a Malibu Media, LLC lawsuit, there are TWO (2) main articles you should read immediately:

1) “Everything You Need To Know in One Page About Your Malibu Media, LLC (X-Art) Lawsuit [FAQ],” and then
2) “In-Depth Malibu Media.  Their Lawsuits, Their Strategies, and Their Settlements.”

FOR IMMEDIATE CONTACT WITH AN ATTORNEY: To set up a free consultation to speak to an attorney about your Malibu Media, LLC lawsuit, click here.  Lastly, please feel free to e-mail me at info[at] cashmanlawfirm.com, or call 713-364-3476 to speak to me now about your case (I do prefer you read the articles first), or to get your questions answered.

CONTACT FORM: Alternatively, sometimes people just like to contact me using one of these forms.  If you have a question or comment about what I have written, and you want to keep it *for my eyes only*, please feel free to use the form below. The information you post will be e-mailed to me, and I will be happy to respond.

NOTE: No attorney client relationship is established by sending this form, and while the attorney-client privilege (which keeps everything that you share confidential and private) attaches immediately when you contact me, I do not become your attorney until we sign a contract together.  That being said, please do not state anything “incriminating” about your case when using this form, or more practically, in any e-mail.

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