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.
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:
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  is a charitable organization,  is likely without financial resources,  is affiliated with Stephens Media directly or indirectly,  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
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….
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.
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).
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.
Righthaven comes up a lot here at Legally Sociable, and I’ve mentioned their suit against Brian Hill, a 20-year-old blogger with autism and severe diabetes, before. In another victory for defendants in Righthaven lawsuits, Ars Technica reports that Righthaven is dropping its suit against Brian, after the judge noted that enabling a cheap, easy settlement “is not my primary concern”:
Though the case was moving forward, Righthaven made clear it wasn’t actually interested in litigating the suit; it wanted to settle. “Righthaven is no longer willing to engage in settlement discussions over trivial issues while the Defendant and his counsel seek to extend this action for publicity purposes,” said the company. With settlement not a possibility, the company now just wants the suit to go away. [emphasis added]
Indeed, Righthaven’s lawsuits are starting to drop like flies. It was just two weeks ago that Righthaven dismissed a suit against the freelance author of another Ars Technica article that covered Righthaven’s litigation antics. In dropping the suit against Ars’ reporter, Righthaven claimed it was all just a mistake:
“We took immediate corrective action” after learning that Righthaven had just sued a reporter, said [Righthaven lawyer Shawn] Mangano. He added that, since reporters make use of copyright and tend to know a good deal about fair use, “It’s somewhat counterintuitive to sue a reporter for copyright infringement!”
While I certainly applaud Righthaven’s decision to drop these two particularly suits, I have to wonder about the outcomes in the other 260+ lawsuits they have filed over the past year.
Dictionary.com defines “bully” as “a blustering, quarrelsome, overbearing person who habitually badgers and intimidates smaller or weaker people.” This definition appears to describe Righthaven perfectly; indeed, it is only when a defendant proves not to be “smaller or weaker” that they tuck tail and run. Clearly, Righthaven didn’t think it was worth fighting a reporter backed by one of the largest magazine publishers in the U.S. or a highly sympathetic blogger with a clearly competent lawyer (PDF). However laudatory in result, its dismissals in these cases seem to confirm that Righthaven is not truly defending a principled (if overzealous) view of copyright law. Instead, Righthaven appears to be a garden-variety bully out to shake down the small and weak for four-digit settlements.
Copyright reform, anyone?
Update 4/12/2011: Joe Mullin at paidContent has additional information about the Hill dismissal:
In a 3-page motion, Righthaven tries to let Hill off the hook but maintains a complainy sort of tone….Judge Kane responded to that by taking another extraordinary action—he actually ordered Righthaven’s “warning” to be stricken from the record entirely, along with all the company’s complaints about Hill’s bad behavior. That part of the filing was “immaterial and impertinent,” Kane wrote. That’s a strong suggestion that Kane has become quite annoyed by Righthaven’s tone and actions in this case.
Wow. I think I’d be quite worried about sanctions if I were representing Righthaven in this case.
Further reading (hat tip to paidContent):
I’ve covered the antics of Righthaven, a copyright-enforcement entity that sues first and asks questions later, before. From their activities over the past year, it seems clear that Righthaven thinks (at least, it loudly says) it fighting the good fight by vigorously enforcing copyrights in news stories.
Ironically, Steve Green at the Las Vegas Sun thinks that Righthaven is undermining newspapers’ case for copyright protection:
One year ago, U.S. newspapers and broadcasters could feel confident they controlled the news content they created….Then along came Righthaven LLC of Las Vegas, the self-appointed protector of the newspaper industry from such news sharers.
Some 250 Righthaven lawsuits later, Righthaven’s startling achievement is that newspapers now have less — not more — protection from copyright infringers.
Steve’s full analysis is well worth reading, as is his cogent summary of highlights from recent Righthaven-related cases.
Personally, I find this idea that Righthaven may be hurting copyright owners more than helping quite compelling. Copyright law is often ambiguous, and the precise line between infringement and fair use is unclear. Whatever else can be said about the merits of a typical Righthaven lawsuit, the sheer number of cases is forcing courts to take a hard look at the policies underlying copyright law and to provide some much-needed clarity. Insofar as Righthaven’s tactics are, in practice, little better than bullying, judges seem to be doing every thing they can to skew that clarity in favor of Righthaven defendants — and away from established news publishers.
It is ironic that Righthaven’s own actions are starting to set precedents that are undermining the legal foundations for copyright’s protection of news stories. If I were a publisher with an expansive view of copyright law, I’d be furious at Righthaven.