Back In The Day, Perfect 10 used to be a monthly magazine devoted to topless or nude photos of "all natural" women, but since it last published a print issue in the summer of 2007, it's become a subscription-only website—and a major plaintiff in lawsuits against such entities as Amazon, CCBill, Google and Visa, all of which, the magazine's owner Norman Zada claimed, violated Perfect 10's copyrights by publishing thumbnails of the magazine's covers and sometimes content. Perfect 10, Inc. lost all of those lawsuits "big time," according to the website Techdirt.com, and in the process was labeled a "copyright troll" by many legal commentators—a reputation it maintains to this day.
Two of the parties to which it lost one of those lawsuits were Giganews, Inc., a Texas corporation that serves as an ISP conduit for Usenet, and its affiliate, Livewire Services, Inc., based in Nevada, which offers access to Usenet through Giganews servers, and on March 24, 2015, Judge Andre Birotte, Jr., of the Central District of California, ordered Perfect 10 to pay attorney fees and costs to those former defendants in the amount of $5,637,352.53 for Perfect 10's "unmeritorius claims" against those companies.
Just one problem, though: Neither Giganews nor Livewire has seen one red cent of that judgment—so they've now filed a lawsuit against the company to try to collect, in the process charging Perfect 10 and Zada with fraud for allegedly transferring Perfect 10's assets to Zada's personal possession, beginning in early 2014, in order to avoid paying the court-ordered judgment.
"Perfect 10’s undisputed conduct in this action has been inconsistent with a party interested in protecting its copyrights," wrote Judge Birotte in awarding the fees and costs. "All of the evidence before the Court demonstrates that Perfect 10 is in the business of litigation, not protecting its copyrights or 'stimulat[ing] artistic creativity for the general public good' ... In the life of the company, more than half of Perfect 10’s revenues have been generated by litigation. However, all of those revenues were generated by settlements and defaults—Perfect 10 has never obtained a judgment in a contested proceeding in any of its roughly two dozen copyright lawsuits."
So Zada probably had some inkling that an award like the one given to Giganews and Livewire was inevitable, and the lawsuit charges that, "beginning in early 2014, Zada caused Perfect 10 to begin unlawfully transferring Perfect 10’s corporate assets to Zada in anticipation of unfavorable court rulings and a possible judgment against Perfect 10 for attorneys’ fees."
The suit goes on to detail a series of transfers of Perfect 10's assets to Zada, beginning on January 3, 2014, of amounts between $50,000 and $200,000, with a massive transfer of $850,000 on November 20, 2014, "approximately six (6) days after this Court granted summary judgment in favor of Plaintiffs on November 14, 2014." The lawsuit goes on to note that Zada admitted during a Judgment Debtor's Examination that the transfer was in anticipation of an adverse court order.
But that's not all: "On or around March 2015 (within a few weeks of the court’s order awarding attorneys’ fees and costs), Zada fraudulently transferred substantially all of Perfect 10’s physical assets (i.e., non-cash assets) to himself in a sham transaction for inadequate consideration," the suit alleges. "These assets include, but are not limited to, Perfect 10’s car, furniture, magazines, computer servers, external hard drives, and t-shirts. Zada admitted that he caused Perfect 10 to make these transfers because 'it would have been totally disruptive to have those [assets] seized' in satisfaction of the judgment. Perfect 10 continues to operate much as it has in the past. It still offers for sale the magazines and t-shirts that Zada purchased; when a customer expresses interest, Zada simply 'gives' those assets back to Perfect 10 to complete the sale." (Citations omitted here and below)
Not only that, but according to the suit, Perfect 10 is still filing copyright actions against online companies both in the U.S. and Germany, with no apparent end in sight!
But essentially, Giganews is tired of Perfect 10's crap, and wants the court to settle their hash once and for all. It's asking the court to "enjoin Perfect 10 from further transferring or disposing of any assets of any type ... and enjoining and restraining Zada from transferring, conveying, assigning, encumbering, hypothecating or otherwise disposing of any of the unlawfully transferred assets to any other person or entity"; declare that Perfect 10, Zada and anyone working for or representing them is "hold[ing] the unlawfully transferred assets in trust for Plaintiffs"; and that Perfect 10, Zada and those other persons/entities not only pay the judgment already entered plus 10 percent interest per year, but also "award Plaintiffs punitive and exemplary damages from all defendants jointly and severally in the amount of $20,000,000, or in such other amount that the Court determines to bear a reasonable relationship to Plaintiffs’ actual damages and does not otherwise violate the requirements of due process," plus attorney fees and costs, as well as "any other relief that it considers just and proper."
Last week, the parties stipulated to Perfect 10's and Zada's request for additional time to answer Giganews' complaint, which will now be due on September 5—but it appears that there's a good chance that there may be further fireworks in the case before that deadline is reached.
Or as Techdirt put it, "The fangs are clearly out, but one can hardly blame Giganews, which had to defend itself against what was clearly a frivolous lawsuit filed on behalf of a company that can't seem to figure out how to look anything other than shady in the extreme."
Illustration courtesy of Giganews, Inc.
