Hearing in LW Systems case reset for June; Affidavit in Minnesota case outlines alleged 'John Doe' strategy

Internet service providers (ISPs) seeking to quash subpoenas of customer identities will argue their joint motion before St. Clair County Circuit Court Judge Andrew Gleeson on June 6 – reset from May 16 – in a case where targets are accused of gaining unauthorized access to online pornography.

CenturyTel Service Group, Comcast and Verizon Online and other ISPs collectively have called the litigation “feigned” and ask the Court to investigate possible collusion between plaintiff LW Systems LLC and defendant Christopher Hubbard.

Hubbard and his alleged co-conspirators are accused of hacking into LW Systems’ computer system that supplies content for adult Web site operators.

Early on in the case - filed in January - LW Systems reached a discovery agreement with Hubbard's defense attorney.

An agreed discovery order was signed by Chief Judge John Baricevic less than two weeks after the case was first entered, allowing LW Systems to subpoena the names, addresses, phone numbers, email addresses and Media Access Control addresses associated with particular Internet Protocols (IPs) from more than 300 ISPs,

Hundreds of “John Does” who had been contacted by their ISPs about the lawsuit and subpoenas have objected to the release of their personal information. Gleeson will hear arguments involving the Doe motions to quash on June 27.

In the meantime, the attorney for LW Systems, Paul Duffy of Prenda Law in Chicago, faces sanctions in federal court in California in a case similar to the one in St. Clair County.

U.S. District Judge Otis Wright found that Duffy and other lawyers had engaged in “brazen misconduct and relentless fraud” in a copyright infringement case involving pornographic content.

Wright ordered the referral of Duffy as well as attorneys John Steele and Paul Hansmeier of Steele Hansmeier in Chicago and Brett Gibbs of San Francisco to the criminal investigation unit of the Internal Revenue Service, the U.S. Attorney in Central California and their respective state and federal bars where they are admitted to practice.

Wright held that Duffy, Steele and Hansmeier created business entities for the sole purpose of litigating copyright infringement cases.

Wright indicated he would inform courts where the lawyers have current litigation pending of his order.

Minnesota Court: Guava LLC v. Spencer Merkel

A case in Minnesota state court -- Guava LLC v. Spencer Merkel --makes similar claims as the case in St. Clair County, and an affidavit filed by the defendant in that suit appears to shed some light on the process in which Prenda Law uses to bring these types of cases.

Filed in January in Minnesota’s Fourth Judicial Circuit, Merkel’s affidavit alleges that on Sept. 26, 2012, he received a letter from Prenda Law regarding a case Hard Drive Productions, Inc. brought against hundreds of John Does.

The letter, the Oregon resident asserts in his affidavit, stated that his Internet Protocol (IP) address “was observed distributing a movie called Amateur Allure – MaeLynn” and then gave him two weeks to consider to settling the case against him.

Before the settlement deadline, Merkel contends he contacted Prenda Law and spoke with a man named Mike or Michael, to whom he admitted downloading the movie in question. Merkel then claims he asked this man how he could settle the matter because he couldn’t afford the $3,400 payment offered in the letter.

Michael, Merkel asserts in his affidavit, offered him a deal consisting of three parts.

“I would agree to be sued,” Merkel states in his affidavit, adding that Prenda Law would then “ask for, and I would provide, a copy of the bit-torrent log from my computer. The excuse for gathering this log is that it would corroborate the IP address evidence that they had already gathered through the use of Prenda’s software.”

Upon receipt of that information, Merkel claims in his affidavit that Prenda Law would then dismiss the case against him.

Merkel states in his affidavit  that prior to the filing of the suit, he had not heard of Gauva LLC.

“I believed that I would be sued by Hard Drive Productions, Inc.,” he alleges. “I believe that Guava LLC's case against me is based on my admission to Michael that I downloaded the video at issue in the Hard Drive Productions case.”

Merkel also notes that he believed that opposing counsel in the case against him would be Prenda Law since that firm sent him the letter, but that Alpha Law Firm in Minnesota actually represents Guava LLC in the case against him.

“After subpoenas were served in the case against me, I learned of Guava LLC's and Prenda Law's practice of finding one John Doe to be a named defendant, and then discovering the names of and requesting settlement money from other John Does by issuing subpoenas to ISPs,” Merkel asserts.

The week before he filed his affidavit, Merkel claims that Prenda Law Firm contacted him again, saying he needed to make arrangements for his settlement payment or he’d be sued.

He further asserts in his court filing that he does not know the names, contact information or IP addresses of any of the other users of the now-defunct website he downloaded the movie in question from.

Besides his statements, Merkel’s affidavit also includes a copy of the letter Prenda Law sent him. The firm notes it had been retained by Hard Drive Productions “to file lawsuits against people caught stealing its movies.”

Prenda Law explained in that letter that Comcast Cable Communications had identified Merkel’s IP address and the exact time of the alleged infringement “in response to a subpoena issued in connection to a federal lawsuit.”

“Our client’s forensic experts deploy sophisticated computer software to capture illegal downloading activities,” Prenda Law states in the letter, adding that these “experts preserved a piece of the file that the user of your IP address distributed to other infringers.”

The letter goes on to say that under the U.S. Copyright Infringement Act, “copyright owners may recover up to $150,000 per infringing file, plus attorney’s fees.”

“In a Minnesota case very similar to this case, IP address account holder, Jamie Thomas-Rasset rejected an initial settlement offer and chose to litigate her case through trial,” the letter states.

The jury, the letter adds, “disregarded” Thomas-Rasset’s argument that someone else had used her account and “awarded the copyright owner $222,000 in damages.”

In addition to that case, Prenda Law notes in its letter to Merkel that another alleged copyright infringer, Joel Tennenbaum, rejected a $3,500 settlement offer in a Massachusetts case over music file infringement and that the music companies ended up securing a $675,000 judgment against him.

“As with Ms. Thomas-Rasset and Mr. Tennenbaum, you have an opportunity to resolve this matter now,” Prenda Law states in its letter to Merkel. “You will be able to put this matter behind you, avoid the stress of appearing as a defendant in a multi-year federal lawsuit, and the risk of a crippling jury verdict similar to those described above.”

The letter, which was signed by Duffy, goes on to tell Merkel to mail his settlement in a check or money order payable to Prenda Law Inc. Trust Account.

Editor's note: Bethany Krajelis contributed to this report.