Why Making an Offer of Judgment in a Strike 3 Holdings or Malibu Media Case May Be a Horrible Idea

Both Strike 3 Holdings LLC and Malibu Media LLC have flooded federal courts nationwide with claims of defendants stealing their adult video content online using BitTorrent software. These copyright infringement lawsuits raise the specter of a potentially ruinous court judgment in the tens or even hundreds of thousands of dollars.

In practice, most cases settle out of court for substantially less sums. How much the typical Strike 3 Holdings LLC or Malibu Media LLC settlement is unknown.

The reason is that every lawsuit settlement comes with a settlement agreement that contains a confidentiality agreement. Therefore, if one reads online what the typical settlement is, or if someone posts their own supposed settlement outcome, it may be difficult to rely on the veracity of such a claim because either the person posting the information is violating their settlement agreement (which comes with substantial penalties) or simply does not know what they are talking about.

In our practice, we have litigated (fought in court) or negotiated settlements in more than 1,200 cases involving either Strike 3 Holdings LLC or Malibu Media LLC.

The defense strategies used involve many factors, including the possible use of affirmative defenses, counterclaims requesting a declaration of non-infringement, and other methods.

One method our firm does NOT recommend using is what is called “making an offer of judgment”.

The idea behind a defense attorney’s use of making an offer of judgment can be appealing at first. In basic form, in a federal copyright infringement case against Strike 3 Holdings LLC or Malibu Media LLC, the defense attorney writes a letter to the movie company’s attorney offering that an agreement be made that a judgment be entered in the court record against the defendant, but for only a much smaller dollar amount that the initial settlement demand made by the movie company. The procedural rule in federal litigation is called a Rule 68 Offer of Judgment.

This article published by the American Bar Association says in part:

“On its face, Rule 68 is straightforward—a defending party makes an “offer of judgment,” and if the plaintiff accepts, the clerk automatically enters judgment as the judgment of the court. It is important to note that, on its face, Rule 68 applies only where a defendant makes an offer to the plaintiff, but not vice versa. The hook, though, is where the plaintiff does not accept the offer, in which case the plaintiff “must pay the costs incurred [by the defendant] after the offer was made” if the judgment finally obtained by the plaintiff is not more favorable than the unaccepted offer. However, ambiguous offers and confusion surrounding what constitutes “costs” have served to undermine the rule’s purpose and, in many cases, have led to further, not less, litigation. Specifically, in the context of fee-shifting cases, the matters most often litigated are whether attorney fees are or are not included in the term “costs” within the meaning of Rule 68 and whether the language used in the defendant’s offer was ambiguous as to whether it did or did not include the plaintiff’s attorney fees.”

Here is why making a Rule 68 Offer of Judgment in a BitTorrent copyright infringement case filed by Strike 3 Holdings LLC or Malibu Media LLC, might be a horrible idea:

• Many people accused of online copyright infringement are actually innocent. By voluntarily allowing yourself to have a judgment entered against you, even if the dollar amount (“settlement amount”) is relatively low, there is now a public court judgment that you as the Defendant actually committed copyright infringement. This could negatively affect future employment decisions, credentialing decisions, or security clearance decisions.
• If the Defendant should ever be accused again of committing copyright infringement, it would be much easier for the Plaintiff in the second copyright infringement lawsuit to argue that the Defendant should be held liable for that is called “willful” copyright infringement. Under the federal Copyright Act, 17 U.S. Code § 504 (c)(2) states that instead of a statutory damage award of $750 to $30,000 at stake for each movie… BUT the statutory damages for “willful” copyright infringement is $30,000 to $150,000 per movie. Plus, the plaintiff’s attorneys’ fees.

Think very carefully before you consider committing yourself to an Offer of Judgment to resolve a Strike 3 Holdings LLC or Malibu Media LLC copyright infringement lawsuit.

Settling the lawsuit can be done in a legally and economically effective manner without putting yourself in danger of potential future consequences brought about by allowing yourself to have a judgment entered against you if the movie company accepts your Rule 68 Offer of Judgment.

Have you received a Malibu Media LLC or Strike 3 Holdings Subpoena?

Your next step is deciding how you want to handle your subpoena.  We are an experienced internet service provider subpoena defense specialist firm.

We work with clients nationwide. Click here to schedule your free consultation, or call us: 312-201-8310.