In 2017, I awarded the grand prize for IP criminals to the disgraced Prenda Law Firm. This stain on the legal profession had created honey pot porn websites and then sued people who downloaded their content for copyright infringement. The lesson of creating your own porn to entice illegal downloads seems to have resonated. But wholesale copyright infringement cases are still out there.

Wholesale copyright infringement cases usually work like this. The owner of the content (doesn’t have to be porn) has a list of IP addresses that show alleged illegal downloads. The content owner files suit naming a number of “John Does” using a boilerplate complaint. Then the lawyers file a motion for expedited discovery to figure out who holds the accounts for the IP addresses. Once they get the names and addresses, they send out demand letters. The amount in the demand is usually low enough to make it more expensive to hire a lawyer then to defend the case. A certain number of low hanging fruit John Does agree to pay the demand. When the plaintiffs reach a saturation point, they dismiss the case.

Over the years, some courts have denied expedited discovery based on a boilerplate complaint. The courts have held that the IP address is not enough and that the complaints have to contain facts that demonstrate that the subscriber of the IP addresses actually infringed. But, there are other courts who are perfectly fine with these wholesale, bare bones complaints.

Strike 3 Holdings LLC, an adult movie company that produces films under the names, Blacked, Tushy, and Vixen, was able to overturn two rulings that denied its motions for expedited discovery. Up until these two decisions, Strike 3’s motions were routinely denied making a huge dent in Strike 3’s copyright infringement litigation. That trend may now be reversed.

In one case, the lower court focused on Strike 3’s robust filing history to determine that Strike 3 didn’t know if any Doe defendant actually committed copyright infringement. So the lower court held that the complaint failed to state a claim for relief. On appeal, the court reversed finding that the complaint alleged enough at the pleading stage to warrant the expedited discovery.

In the second case, the lower court didn’t hide its disdain for Strike 3 while denying expedited discovery. The court described Strike 3's films as "aberrantly salacious" and assigned "great weight" to the privacy expectations of the John Does in a case involving "particularly prurient pornography". The appellate court reversed finding that the district court focused on the unsupported and negative inferences from Strike 3’s litigation strategy rather than on the legal aspects of stating a claim in the complaint.

Time will tell if these decisions will result in a surge of John Doe copyright infringement cases.

WHY YOU SHOULD KNOW THIS. Let’s focus on what this might mean for any unsuspecting business. Illegal downloads from the Internet are not confined to porn. Mainstream movies fight the battle of illegal downloads too. Then there’s other types of content like photos, graphics and music. Employees have been known to illegally download content during work hours for their personal use as well has on behalf of their employers. The opportunities for doing so have only heightened since the COVID-19 pandemic with more people working remotely. Then there are the opportunists who highjack signals and aggregate them to illegally download content in clusters. There are some measures that a business can take to reduce this exposure. First, create and enforce policies and procedures for employees’ use of company computers. Second, build in systems that block access to websites that are outside the scope of the business. Third, make sure that systems are safe and secure from cyberattacks. And fourth, obtain cyber insurance.

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