Righthaven’s contract unsealed; sanctions a real possibility

Joe Mullin at paidContent has just posted a story about Righthaven’s previously sealed contract with Steves Media, parent company of the Las Vegas Review-Journal:

The contract reveals that the controversial copyright-enforcement company and the LV R-J are splitting their net earnings from suing hundreds of bloggers on a 50-50 basis. It also shows that the LV R-J is still largely in control of Righthaven’s litigation strategy—a fact that could end up being ruinous for Righthaven’s campaign of copyright lawsuits.

A link to the judge’s order and the contract is available here.  I’ll update this post when I’ve had time to read and analyze it thoroughly…

Update: After reading through the contract and order to unseal for myself, I think these are the most relevant sections:

Section 3.3

Stephens Media shall have the right to Notify Righthaven…that Righthaven should not take any Infringement Action with respect to a particular putative infringer.…Stephens Media shall only send any Declination Notice on a reasonable basis with the grounds of reasonability being that a particular putative infringer [1] is a charitable organization, [2] is likely without financial resources, [3] is affiliated with Stephens Media directly or indirectly, [4] is a present or likely future valued business relationship of Stephens Media or otherwise would be a Person that, if the subject of an Infringement Action, would result in an adverse result to Stephens Media.

I guess it’s safe to conclude that Stephens Media did not see fit to step in on behalf of the Center for Intercultural Organization (“a charitable organization”), Brian Hill (an autistic blogger who practically defines someone “likely without financial resources”), various newspaper sources (“affiliated with Stephens Media directly or indirectly”), or any of the hundreds of other bloggers (“likely future valued business relationship of Stephens Media”) Righthaven has sued.

Sections 7 and 8

Section 7.1:

Stephens Media shall effect the assignments to Righthaven of copyrights as required by this Agreement…by executing a particularized assignment with respect to each copyright and each consistent with (and in form and substance the same as) the scope of assignment….

Section 7.2:

Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery.

Section 8:

Stephens Media shall have the right at any time to terminate, in good faith, any Copyright Assigmnent (the “Assignment Termination”) and enjoy a right of complete reversion to the ownership of any copyright that is the subject of a Copyright Assignment; provided, however, that if Righthaven shall have commenced an action to prosecute an infringer of the Stephens Media Assigned Copyrights, Stephens Media shall be exclusively responsible for effecting termination of such action including, without limitation, all Losses associated with any dismissal with prejudice.

Taken together, these three excerpts seem to affirm that Righthaven is essentially buying the right to bring lawsuits from Stephens Media, which is arguably impermissible under Silvers v. Sony Pictures Entertainment, Inc., 402 F. 3d 881 (9th Cir. 2005).

Section 11

Stephens Media understands and acknowledges that Stephens Media and Righthaven may be liable for an Infringer’s attorneys’ fees as required by Law in connection with an Infringement Action. Stephens Media further understands that a lawsuit brought solely to harass or to coerce a settlement may result in liability for malicious prosecution or abuse of process. If any Claim made by an Infringer in an Infringement Action results in Losses, other than Losses described in Section 8, Righthaven shall be solely liable for such Losses and shall indemnify Stephens Media from and against any such Losses but only if such Losses do not arise out of a misrepresentation by Stephens Media or other breach by Stephens Media of a provision of this Agreement.

I guess we now have incontrovertible evidence that both the newspaper and Righthaven knew “that a lawsuit brought solely to harass or to coerce a settlement may result in liability for malicious prosecution or abuse of process”!  I wouldn’t be surprised if this section gets referenced in a future sanctions order.

Conclusion:  what does Judge Hunt think?

It’s impossible to know, of course, what’s inside Judge Hunt’s mind.  However, his order to unseal the Righthaven contract strongly suggests that he is growing weary of Righthaven’s legal antics:

There is an old adage in the law that, if the facts are on your side, you pound on the facts. If the law is on your side, you pound on the law. If neither the facts nor the law is on your side, you pound on the table. It appears there is a lot of table pounding going on here.

There has been presented absolutely no basis to strike the Request to Unseal, and that motion will be denied. [emphasis added]

No doubt Righthaven is already sorry they filed this case.  The only remaining question is whether their sorrow will be measured in dollars.  And just how many.

Sign here, and here, and here…

You probably don’t thoroughly read contracts you are asked to sign (or click through).  But lest you think that lawyers read through things they are asked to sign in everyday life, Above the Law is reporting that even the legendary Judge Richard Posner [bio] didn’t read his home equity loan contract, much to the amusement of the audience at the panel where he made his confession.

I suppose Posner should be grateful that his bank didn’t take his soul as part of the deal?  (Don’t laugh–it happened to 7,500 customers of a British computer game retailer earlier this year.)

As amusing as such stories may be from a news perspective, they clearly raise troubling questions about the sacrosanct role of contracts within our society.