Strike 3 Holdings settlement amounts vary greatly from one defendant to another based on 1) how many titles that defendant allegedly downloaded, and 2) how much MONEY Strike 3 Holdings believes they can get from that accused defendant. How Strike 3 tries to achieve a Strike 3 Holdings settlement amount from each accused defendant and remain profitable is the subject of this article.
Strike 3 Holdings, LLC, a quasi-legitimate settlement extortion scheme threatens accused John Doe Defendants with $150,000 copyright infringement lawsuits in federal court if the accused defendant does not come to an agreement to settle the claims against them.
Strike 3 Holdings Settlement Amounts – How much is an average settlement?
Strike 3 Holdings settlement amounts range from $750/title allegedly downloaded or unlawfully copied (also known as “minimum statutory damages”), all the way to $500/title… sometimes $300/title, or less. A typical Strike 3 Holdings settlement amount would be $13,000 (which comes out to be $500/title x 26 titles <– the national average of how many titles each accused defendant generally downloads before they a Strike 3 Holdings settlement amount is solicited from them).
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However, I have seen a Strike 3 Holdings settlement cost as high as $30,000-$40,000 (e.g., for cases where the accused downloader has downloaded 100+ titles). To be clear: just because Strike 3 Holdings might ask for a $40,000 settlement does not mean they will get it. Really, they need to sue a John Doe Defendant who can actually afford to pay such a settlement.
[Just so that I do not scare you, the Strike 3 Holdings settlement cost is often just a few thousand dollars because this is literally all my client can come up with. This is where the settlement extortion scheme game is played.]
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The Strike 3 Holdings Settlement “Extortion Scheme” Explained
STEP 1: STRIKE 3 HOLDINGS FILES A COPYRIGHT INFRINGEMENT LAWSUIT IN A FEDERAL COURT.
For years, Strike 3 Holdings settlements used to be reached after they paid a $400 filing fee to file a copyright infringement lawsuit in federal court against ONLY ONE John Doe Defendant. This doesn’t sound like a lot, but it certainly adds up.
The lawsuit would be filed in the federal court where the defendant lives (they can determine in which state and in which federal court to file the lawsuit based on the IP address).
They file the lawsuit claiming copyright infringement because the law gives the copyright holder $150,000 in damages [per instance of infringement] for the unlawful copying of their copyrighted films. The copyright laws are federal laws – states cannot pass their own copyright laws. This is why the lawsuits eventually need to be filed in federal courts.
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Why would Strike 3 Holdings pay a $400 filing fee without yet knowing the identity of the accused downloader?
This was literally they was it was done. Strike 3 Holdings cannot achieve a multi-thousand-dollar settlement (or any settlement) without first knowing who the downloader is (or did they?). But to obtain the identity of the accused downloader, they need to file a copyright infringement lawsuit and then they need to convince the judge to allow them to send a subpoena to the ISP to force them to reveal the account holder’s identity. Only then can they ask for a settlement from someone.
Does it make sense to pay a $400 filing fee to a federal court to sue someone without knowing whether they will settle?
The economics of Strike 3 Holdings’ scheme are interesting too. Think of it — a Strike 3 Holdings settlement costs them a $400 filing fee for the expectation that the defendant they sue in the federal court will hire an attorney and will pay Strike 3 Holdings a settlement many, many times more than the $400 filing fee they paid to sue that defendant.
But with exceptions, Strike 3 Holdings LLC file the lawsuits BLINDLY — they do not know who the defendant is when they file the lawsuits and pay the $400 filing fee. So how do they know who to sue and who not to sue?
My understanding is that they decide who to sue by geolocating the IP address to determine statistically which accused downloaders live in a location where the residents of that area have money. They decide to sue those defendants based on the demographics of everyone else who lived there in that town, zip code, or area.
But really, it is a money game. File one lawsuit, pay $400. File one hundred lawsuits against John Doe Defendants, pay $40,000 (hoping that they will profit at least that much in settlements yielded from their lawsuit campaign).
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Strike 3 Holdings lawsuits are filed to obtain settlements.
It makes financial sense that Strike 3 Holdings, LLC files these lawsuits for the sole purpose of obtaining the identity of each accused defendant so that they could solicit a settlement from each one of them.
(Obviously, Strike 3 will disagree and will claim that they file the copyright infringement lawsuits to protect the copyright rights provided to them by the law, whether or not that leads to a settlement. They will also claim that they only sue those who actually do the downloads.] Either way, practically, Strike 3 Holdings wants a settlement in the form of a settlement check.
However, the checks do not come rolling in — they need to first FILE THE LAWSUIT against an internet user who actually downloaded their client’s copyrighted titles, and they need to determine whether that defendant can actually pay a settlement (so that they can decide whether to proceed with the lawsuit or move on to other defendants who can pay a settlement). To do this, they need to figure out who they are suing.
NOTE: It does not make sense to go into the topic of ANONYMOUS SETTLEMENTS, but you can read about why I think they are a bad idea here.
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STEP 2: FIGURE OUT WHO THEY JUST SUED BY SENDING A SUBPOENA TO THE ISP ASKING THEM TO REVEAL THE IDENTITY OF THE ACCOUNT HOLDER (who presumably did the download).
Strike 3 Holdings, LLC first seeks to determine the identity of the accused John Doe Defendant. They achieve this by sending a subpoena (with the court’s permission) to reveal the identity [and often the address] of the account holder who was assigned the IP address at the date and time Strike 3 Holdings’ “investigators” monitored and observed the accused defendant’s account uploading, downloading, and/or streaming their copyrighted adult films using bittorrent.
Once Strike 3 Holdings LLC obtains the accused John Doe Defendant’s account information, they feed their name and address into a “magic blackbox” to do a search on who that defendant is. Why? They do this do determine whether or not the defendant has MONEY.
[While I have spent quite a bit of time going into the details of software they use to look up each defendant, really between us, I wouldn’t be surprised if their super-secret-so-called-“research” was really a search of the account holder’s address on Zillow.com to find out how much the property they are living in is worth, and to see a picture of the neighborhood that they are living in. …Well, that, and a quick Facebook, LinkedIn or Instagram search of the accused John Doe Defendant to see 1) what he does for a living (Strike 3 Defendants are generally male), 2) whether he is employed, and 3) whether there are any suggestions that he has MONEY.]
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STEP 3: SOLICIT A SETTLEMENT FROM EACH DEFENDANT, RINSE, AND REPEAT.
There is not much to say here. Once Strike 3 Holdings LLC learns the identity of the account holder AND they determine that he likely has money to pay a settlement for the copyrighted titles he allegedly downloaded, they try to settle the claims against that defendant.
Very often, this is where Strike 3 Holdings, LLC makes a mistake. They’ll sue a defendant who did not download their copyrighted films (which means that defendant should NOT pay a settlement), or they sue a defendant who cannot afford to settle the claims against them.
Alternatively, the timing of the lawsuit could cause Strike 3 Holdings, LLC settlement costs to be too high. This can result in cashflow problems, where the money they pay out is less than the money they have coming in.
Filing so many cases at the same time, each case against one defendant, the numbers can go against them very quickly, making their entire campaign unprofitable.
This is where the Miami-Dade County, Florida Bill of Discovery cases came in.
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How the Miami-Dade County, Florida Strike 3 Holdings cases solved their cashflow problem.
In the Miami-Dade County Court, Strike 3 Holdings devised a way to unmask the identities of THOUSANDS of defendants without needing to sue each defendant in Federal Court. They did this by exploiting the Florida “Pure Bill of Discovery” laws, which allow Strike 3 Holdings to send subpoenas to ISPs to reveal the identity of the accused John Doe Defendants… without needing to file a copyright infringement lawsuit in the federal courts.
In other words, Strike 3 Holdings was able to pack hundreds of defendants into each Florida case filing (essentially paying a $300 filing fee to “sue” hundreds or thousands of defendants in one lawsuit). Then they would review each of the hundreds of accused defendants in each Florida Bill of Discovery lawsuit to determine whether they have MONEY using their “magic blackbox.”
Then, if they cannot get a settlement from that accused Miami-Dade, Florida defendant, they file a lawsuit against that defendant in the federal court where that defendant lives.
In sum, instead of paying a $400 filing fee to sue ONE DEFENDANT in federal court without knowing whether he could pay a settlement or not, they first “vet” hundreds of defendants together with a $300 filing fee, and only then [if that defendant does not settle the claims against him], they file the lawsuit against that defendant in the federal court.
What is actually interesting, however, is whether Strike 3 Holdings, LLC took those thousands of names they received from the Miami-Dade Bill of Discovery cases, and whether they ended up suing many of those defendants again in federal courts.
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I think the Miami-Dade cases went a bit deeper than just them wanting to save some money on filing fees. I think they were trying to avoid creating case law.
So yes, federal court lawsuits are $400 a piece for ONE DEFENDANT. And yes, they could sue hundreds if not thousands of defendants with one ~$400 filing in a Florida state court. All true.
The interesting consideration, however, is WHY did they move out of federal courts when they did? What was going on when they started filing the Florida cases?
Just my thought – take it for what it is worth. Not all judges like Strike 3 Holdings lawsuits, and some were giving them problems. ONE JUDGE (one bad ruling in a federal court) can kill all of their federal court cases in that state by not allowing them to send a subpoena to the ISP (this link is a bit dated, but I dug it up as an example). Why? Because ONE BAD RULING for them creates case law which is then used by other judges in their other cases.
Do Strike 3 Holdings actually sue those who do not settle in federal courts?
In short, yes. In February, 2020, I wrote an article asking this very question, and the answer is “yes, Strike 3 Holdings, LLC will sue defendants who do not settle the claims against them.”
I revisited this same question just yesterday (8/19/2020), and arrived at the same answer. Strike 3 Holdings, LLC is suing those defendants who do not settle the claims against them… if they can pay.
IN SUMMARY
So as you can see, Strike 3 Holdings LLC is running a “well oiled,” quasi-legitimate settlement extortion scheme. Strike 3 Holdings settlement cost varies greatly based on the number of titles the accused downloader allegedly downloaded, and how much he is able to pay.
The lawsuits are not initially filed in federal courts (where copyright infringement lawsuits belong), but rather, the accused downloaders’ identities are revealed in a Miami-Dade County, Florida Strike 3 Holdings, LLC lawsuit. Then, each defendant (once their identity is known) then is vetted to determine whether they have MONEY.
If that defendant does not pay a Strike 3 Holdings settlement amount, then Strike 3 Holdings, LLC follows-up with a lawsuit against that defendant in the federal court in the state in which they live.
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