CHICAGO — Prenda Law, whose attorneys were sanctioned by a federal judge for fraudulently filing dozens of copyright infringement cases against people accused of downloading porn, has disbanded after posting more than $237,000 in bonds in one case.
The law firm, which incorporated in November 2011, alerted the Illinois Secretary of State on July 26 that it would dissolve its practice.
Prenda Law and its principals earned millions in legal settlements as they exacted payments from thousands of defendants accused of illegally sharing porn through torrents.
But in April they were hit with $81,000 in sanctions after U.S. District Judge Otis Wright in Los Angeles said that the firm "outmaneuvered the legal system."
The judge ordered the lawyers — John Steele, as well as Paul Hansmeier, Paul Duffy and Brett Gibbs — to pay legal fees and penalties in a case they filed against an alleged illegal downloader on behalf of porn copyright holder Ingenuity 13.
Wright, calling the attorney group a "porn trolling collective," said that Prenda Law "discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs."
"And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video," he said. "Then they offer to settle — for a sum calculated to be just below the cost of a bare-bones defense."
In addition to monetary sanctions the firm’s principals, including its chief architect, Steele, were referred to state and federal bar disciplinary panels, as well as federal prosecutors and the IRS.
The judge also ordered the notification of “all judges before whom these attorneys have pending cases.”
Duffy, filing on behalf of Prenda Law, posted a $101,000 bond pending the firm’s appeal on May 23.
Morgan Pietz, the attorney representing the John Doe in front of Wright, argued that the bond should be increased to $237,583 given that there was a "high likelihood that some or all of the Prenda parties will seek bankruptcy protection before their various appeals are concluded.”
Wright granted that request, ordering the Prendal Law to post another $136,000 bond by July 15.
Duffy posted that bond on July 23, but three days later, Prenda Law voluntarily dissolved.
Later, Prenda Law’s murky business plan was found to have another dynamic.
Defense lawyer Graham Syfert said that Prenda Law and Steele, had been accused of running a “honeypot” based on an expert’s analysis over IP addresses.
According to a forensic computer expert, many of the torrents in Prenda Law lawsuits originated from a user on The Pirate Bay called “Sharkmp4.”
The report described many connections between Sharkmp4, the tracking company, and Prenda Law, including ties to a Comcast IP address to Steele’s GoDaddy account.
The same IP address is connected with Ingenuity 13 (one of the litigating porn companies) whose work was shared by Sharkmp4 before it was commercially available, the expert said.
“It appears from all the evidence that John Steele (or someone under his control or with access to his GoDaddy account records with authorization to make changes to domain names) is the most probable candidate for the identity of Pirate Bay user Sharkmp4,” he said.
Pietz on Tuesday told XBIZ that perhaps the reason for the firm's dissolution is that its brand name has been a major liability for some time now.
"The lawyers behind Prenda seem to have made arrangements to try and distance themselves from the Prenda name since at least late 2012, and before in some ways," Pietz said. "First it was Steele Hansmeier, then Prenda.
"Now, in the newer end user cases being filed in Illinois, it's the 'Anti-Piracy Law Group.' Its kind of like the line from Shakespeare, that 'a rose by any other name would smell as sweet,' only in reverse," he said.
"What will be interesting going forward is that the ill will Prenda has stirred up in the federal courts, not to mention with the public, is probably not going to be strictly limited to Prenda cases. The alarm has now been raised."
Pietz said that he was curious to see whether adult companies will continue to sign up with other plaintiffs firms that take end user litigation on contingency.
"For a business that depends on the good graces of the federal judiciary to keep everyone out of jail on obscenity charges, does it really make sense to take a slash-and-burn approach to federal court litigation? One has to wonder if, as a result of the trouble caused by Prenda-style end user litigation, it now gets harder for adult companies to go in and try to shut down the organized, for-profit piracy cartels? Only time will tell."
Steele did not immediately return XBIZ calls for comment.
