So what is the hell is Qui Tam in relation to the porn copyright troll law suits?
This is the next step in the destruction of the copyright troll business model. First off for those of you new to this, please understand the efforts of the copyright trolls are not based on protecting their clients and recouping lost sales rightfully entitled to them. That is just the sad rationalization that issues from their mouths. This is plain and simply a business model to use the court to extract as much money in settlements from Doe defendants and hopefully never have to litigate the issue on its merits. Once you understand this, then the how Qui Tam relates becomes easier to grasp.
Here is what the Legal Information Institute (LII), Cornell University, says about a Qui Tam Action.
In a qui tam action, a private party called a relator brings an action on the government’s behalf. The government, not the relator, is considered the real plaintiff. If the government succeeds, the relator receives a share of the award. Also called a popular action.
For example, the federal False Claims Act authorizes qui tam actions against parties who have defrauded the federal government. 31 U.S.C. § 3279 et seq. If successful, a relator in a False Claims Act qui tam action may receive up to 30% of the government’s award.
The use of a Qui Tam action has likely been in the works for a while, but just recently was brought out in the open by Attorney Steven Yuen, in the Seth Abrahams v. Hard Drive Productions LLC (Prenda Law), case, #3:12-cv-01006. Link to my previous Abrahams post. At a 21 Sep 12, hearing, HDP/Prenda gave up its stupid argument that the two case dismissals on their part against Mr. Abrahams did not constitute a final judgement in favor of Mr. Abrahams. At this point the court decided to raise the issue of subject matter jurisdiction. Both parties were not ready to discuss the matter and the court gave Mr. Abrahams until 28 Sep 12, to file a brief on their view. HDP/Prenda Law was given until 5 Oct 12, to respond to the brief. I look forward to reading their response and only hope it is better than their initial response on how the two case dismissal rule applied to Mr. Abrahams.
On 28 Sep 12, Mr. Yuen filed a brief in which he requested the court not address the subject matter jurisdiction for the Qui Tam claim at this time. Abrahams supplemental brief
Likewise here, to promote judicial economy, and to preserve the parties’ resources, this court should exercise restraint, and not address subject matter jurisdiction. This is because Hard Drive already stipulated that the two dismissal rule applies. Thus, the court can enter judgment now in Mr. Abrahams’s favor without the court and the parties spending additional resources on his federal qui tam claim which is not easily resolved and more difficult to decide. (See Hal Roach Studios, Inc. v. Richard Feiner and Co., Inc. (9th Cir. 1990) 896 F.2d 1542, 1550, citation omitted.)
Mr. Abrahams tells the court that even if it decides to address the issue of subject matter jurisdiction, he should be allowed to amend his complaint to state the jurisdictional basis of the claim.
According to Mr. Abrahams/Yuen, HDP/Prenda Law made a false claims against the US government when it submitted its initial case against 118 John Doe defendants (Case Archive 4:11-cv-01567). The false claim is based on HDP/Prenda Law only paying a $350 filing fee when 118 separate cases should have been filed and the US government received appropriate payment – $350 X 118 = $43,300. This is covered under 31 USC § 3729 – False claims, section (a)(1)(G):
(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,
So what is the penalty for 117 violation of this statute?
is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-410 [FN1]), plus 3 times the amount of damages which the Government sustains because of the act of that person.
For the mass defendant case Mr. Abrahams was initially under, there were 118 defendants. HDP/Prenda Law paid one fee, so I will use 117 incidents of false claims.
- 117 X $5,000 (Minimum) = $585,000
- 117 X $10,000 (Maximum) = $1,170,000
- Lost fees of $350 X 117 = $40,950 X 3 = $122,850
- Approximate range – $707,850 – $1,292,850 (plus adjustments for inflation)
Please refer to 31 USC § 3730 – Civil actions for false claims, for full details on how much of these penalties Mr. Abrahams could receive, but the maximum is 30%, plus costs and reasonable attorney fees.
As you can see this clearly fits the copyright troll business model of minimum filing fees (knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,) and maximum settlements from the defendants.
Well, such a claim against HDP/Prenda Law is going to send shock-waves through the copyright trolls. The best option for HDP/Prenda Law is going to try to get the claim dismissed early by any means necessary. If they don’t have to address the issue, it is business as usual. If they are forced to address the issue, they will have to show that they had good reason for the mass defendant cases. This means truly showing that all of the defendants were jointly and severally liable, as well as all belonging in this jurisdiction. This will require their technical monitoring personnel (6881 Forensics LLC – Peter Hansmeier) to come out from under the rock and face the music. Details on the monitoring of the BitTorrent swarms, the qualification/certifications of personnel involved, and how easy it is to truly find which defendants are under the courts jurisdiction will come out. So even if the Qui Tam claim is shot down (I highly doubt this), details on the weaknesses of the BitTorrent monitoring will be exposed.
This will be an interesting test case and I’m sure I will have more to post on it in the future. What will be truly fun to watch is when the first Qui Tam cases are filed in New York and other location where the courts have already started to sever all defendants except for Doe #1.
Well John, you may be the “BitTorrent Bull,” but I foresee a little operation waiting for you and the other animals out there. Short Podcast on this.
“Some ships are designed to sink… others require our attention.”