Righthaven’s only interest in the Work is “the right to proceeds in association with a Recovery.” The Copyright Assignment Agreement defines “Recovery” as “any and all sums . . .arising from an Infringement Action.” Thus, when read together, the Assignment and the Copyright Assignment Agreement reveal that MediaNews Group has assigned to Righthaven the bare right to sue for infringement – no more, no less. Although the assignment of the bare right to sue is permissible, it is ineffectual….Accordingly, Righthaven is neither a “legal owner” or a “beneficial owner” for purposes of § 501(b), and it lacks standing to institute an action for copyright infringement….I convert Mr. Wolf’s Rule 12(b)(1) motion to a Rule 56 motion and GRANT him SUMMARY JUDGMENT. Furthermore, in light of the need to discourage the abuse of the statutory remedies for copyright infringement, I exercise my discretion under Section 505 of the Copyright Act and ORDER that Righthaven shall reimburse Mr. Wolf’s full costs in defending this action, including reasonable attorney fees. [emphasis added]
The Las Vegas copyright-trolling firm Righthaven told a Nevada federal judge Friday it might file for bankruptcy protection, or cease operations altogether.
To prevent that, Righthaven is asking U.S. District Judge Philip Pro to stay his decision requiring Righthaven pay $34,000 in legal fees to an online commenter it wrongly sued for infringement.
Wired has posted Righthaven’s Motion to Stay here (pdf). They are exceptionally candid about the economics of copyright troll litigation:
In Colorado, 35 Righthaven copyright infringement cases have been stayed since May 19, 2011 pending a ruling on whether the company has standing to maintain these actions. Likewise, ten infringement actions, most of which involve an amended version of the SAA that addresses the concerns expressed by this Court in its subject matter decision, have been stayed in this District until a standing determination is made. Thus, Righthaven has been precluded from actively litigating and resolving the stayed cases. Moreover, Righthaven has delayed filing new copyright enforcement actions until a standing determination is made based upon the terms of the currently operative version of the SAA. Throughout this period, and despite a lack of incoming revenue given that numerous pending action are stayed, Righthaven has continued to incur operating expenses.
Clearly, Righthaven is a cash-poor outlet these days. And here’s where things get really interesting: based on its motion, Righthaven seems deathly afraid that they might have to sell some of their assets to satisfy a $34,000 judgment. As they explain to the court:
Righthaven also has significant proprietary rights in its copyright infringement search engine software (the “Software”), which plays an integral role in the company’s operations. If a stay is not granted pending appeal, this valuable Software may be seized and liquidated in an attempt to satisfy the Judgment. Liquidation may result in the Software being sold to a competing organization or entity.
Talk about woeful undercapitalization. A $34,000 judgment is going to force them into selling off their core business assets? Really?
Righthaven always presented defendants in its copyright litigation with an unfair dilemma:
(1) pay out a few thousand in “go away” money now, or
(2) mount an actual legal defense (at an initial, minimum cost of a few thousand, with no guarantees that things would work out well).
It seems that Righthaven now faces a dilemma of its own:
(1) raise enough capital to pay off this $34,000 pending appeal, or
(2) go bankrupt.
The difference, of course, is that the dilemma Righthaven faces is fair. They put defendants to the expense of hiring lawyers. Some of those defendants won. The law says that those winning defendants should have their legal expenses paid by Righthaven. Sounds about right to me. If Righthaven can’t afford to pay without selling assets, perhaps they never should have been filing lawsuits in the first place.
I noted yesterday that copyright troll Righthaven hasn’t filed any new lawsuits in the past two months, but I was suspicious that it was all over. After reading Wired’s coverage today, however, I think Righthaven’s end is near:
The new chief executive of MediaNews Group, publisher of the Denver Post and 50 other newspapers, said it was “a dumb idea” for the nation’s second-largest newspaper chain to sign up with copyright troll Righthaven.…
“The issues about copyright are real,” [John] Paton told Wired.com in a telephone interview. “But the idea that you would hire someone on an — essentially — success fee to run around and sue people at will who may or may not have infringed as a way of protecting yourself … does not reflect how news is created and disseminated in the modern world.”
I stand corrected. Barring a court-ordered miracle, it seems only a matter of time before Righthaven closes up shop.
David Kravets over at Wired notes today that Righthaven appears to be on “life support” since it hasn’t filed any new lawsuits in a while:
With [a bunch of sanctions and adverse fee awards] now on appeal, the litigation factory’s machinery is grinding to a halt. A review of court records shows Righthaven has not filed a new lawsuit in two months, after a flurry of about 275 lawsuits since its launch at the beginning of last year. A court filing indicates there have already been layoffs (.pdf) at Righthaven’s Las Vegas headquarters, and even some already-filed lawsuits are falling by the wayside because Righthaven isn’t serving the defendants with the paperwork.
I think Wired may be a bit premature in its prediction of Righthaven’s demise. Litigation factories have a tendency to rise again and again from the ashes. Still, it’s nice to hear that no new bloggers are being hassled by Righthaven, at least at present.
The court system issued another stunning rebuke of Righthaven and its business model, as an Electronic Frontier Foundation press release reports:
In a decision with likely wide-ranging impact, a judge in Las Vegas today dismissed as a sham an infringement case filed by copyright troll Righthaven LLC. The judge ruled that Righthaven did not have the legal authorization to bring a copyright lawsuit against the political forum Democratic Underground, because it had never owned the copyright in the first place. [emphasis added]
This is a big win for bloggers, and the news gets even worse for Righthaven:
As part of his ruling today, the judge ordered Righthaven to show why it should not be sanctioned for misrepresentations to the court.
More coverage at Techdirt.
I guess we’re starting to get that copyright law clarity I was hoping for…
Ars Technica is reporting that one Righthaven defendant is “launching a class-action counterclaim against Righthaven”:
BuzzFeed…quickly moves from a defense of its own conduct to an attack on the conduct of Righthaven, and it asks the judge to put every Colorado defendant into a class which can pursue Righthaven for extortion-style behavior.
I’m not sure that Righthaven’s behavior should be turned into some sort of perverse-reverse legal payday for defendants, but I suppose this was an inevitable development.
I wrote an expanded post on Righthaven for the Citizen Media Law Project, covering developments in two recent cases.