Copyright Case Teaches How to Deal with Trolls

A recent decision dealt with a “copyright troll,” an attorney that had filed over 500 copyright cases in the Southern District of New York alone. Pereira v. 3072541 Canada Inc. Although the case denied attorney’s fees to the defendant, the history of the case recites several procedural steps that defense counsel used to thwart the plaintiff, who had sought a substantial settlement ($25,000) largely on the procedural burden of litigating the case.

The case teaches valuable lessons in how to effectively deal with a troll

The case involved a claim of infringement of copyright in photographs of two celebrities, alleging that the photographer owned a copyright and that the defendant had infringed it by printing the photographs on T-shirts.

Plaintiff’s counsel is a notorious “copyright troll” who has filed hundreds of cases, seeking to exploit the burden and costs of federal litigation to extract significant settlements. He demanded $25,000 to settle the case.

But the defendant’s counsel did a bit of research, and discovered that the copyright in the photographs at issue had not been registered with the Copyright Office (a pre-requisite for suit) until after the infringement allegedly began. That meant that the plaintiff was not entitled to either statutory damages or attorney’s fees under 17 U.S.C. 412. The only remedies the plaintiff would be entitled to would be actual damages or the defendant’s profits, which would total less than $100.

So defendant offered $100 to settle. (We would have recommended at this point doing an offer of judgment under Rule 68.) Plaintiff refused, sticking to the $25,000 demand.

This came to the court’s attention, and on its own motion, entered an Order to Show Cause why Plaintiff should not be required to post a bond for costs under a local rule. After some delay, the plaintiff dropped the case.

Defendant then sought attorney’s fees. Although the conduct of the litigation described seemed egregious, the court declined to award fees.

Nevertheless, the case shows a possible strategy to deal with trolls:

  • Calculate maximum damages, taking into account legal limitations such as contained in Section 412 of the Copyright Act.
  • If the maximum amount is small, offer a little more than that in settlement (or consider making an offer of judgment under Rule 68).
  • Ask the court to require a bond for costs. Many federal courts have such a provision in their local rules. (Since the Copyright Act defines attorney’s fees as costs, 17 U.S.C. 505, this may be considerable.)

In the appropriate case, this could put considerable pressure on the plaintiff, who, as in the Pereira case, would hopefully then drop its claims.