A court-appointed receiver asked a federal judge for guidance Tuesday after Las Vegas copyright lawsuit filer Righthaven LLC balked at surrendering its copyrights to her for auction.
Lake Tahoe-area attorney Lara Pearson last month was named Righthaven’s receiver with orders to auction its copyrights, trademark, website domain name and physical assets to raise cash to cover at least part of a Righthaven defendant’s legal fees.
The defendant, Wayne Hoehn, defeated Righthaven in court after the company hit him with one of its 275 no-warning lawsuits alleging copyright infringement of material from the Las Vegas Review-Journal and the Denver Post.
Since Hoehn was found not to have infringed on a Righthaven copyright, Righthaven either can’t or won’t pay his $63,720 in legal fees.
Pearson managed toseize Righthaven’s website domain name and is selling it through an auction that ends Friday. The current high bid is $1,900, and higher bids must be made in increments of $100.
Pearson, in the meantime, reported Tuesday to U.S. District Judge Philip Pro in Las Vegas that her negotiations with Righthaven for the company to turn over its 278 federal copyright registrations, trademark and physical assets, including office equipment, had been unsuccessful.
"I have tried to work with Righthaven to ensure its compliance with the court's (receivership) order, but Righthaven has refused to execute the copyright assignments and has ignored repeated requests for a trademark assignment and an inventory of physical assets without explanation," Pearson wrote in a report to Pro.
Letters filed with her report from Shawn Mangano, an outside attorney for Righthaven, said the company and its CEO, Steven Gibson, were concerned they would possibly be subjected to liability if they signed over the copyrights.
One issue, Mangano wrote, is that Gibson, a Las Vegas attorney who owns half of Righthaven, needed to gain permission to turn the copyrights over from his partner, a limited liability company owned by the family of billionaire Arkansas investment banker Warren Stephens.
Stephens also owns the Review-Journal, which was Righthaven’s first partner in a lawsuit spree initiated in March 2010 that involved the assignments of copyrights to newspaper content for lawsuit purposes.
Mangano, in a Dec. 30 email to Pearson, said he had asked the Stephens entity that co-owns Righthaven for permission to turn over the copyrights, but had not received a response. This caused Pearson to complain that Righthaven had waited until Dec. 29 to gain permission from Stephens — more than two weeks after Pro approved the copyright auction plan.
A second issue, Mangano suggested, is that since judges have found Righthaven lacked standing to sue under its newspaper copyright assignments, most of its federal copyright assignments may not be valid and the newspapers are likely still the actual owners of the copyrighted-content at issue.
"The very real fact is that the copyrights are not owned by Righthaven, but rather constitute property of the assignor based on the ineffective assignment of ownership," Mangano wrote in his email. "Simply put, Righthaven cannot assign copyrights that are owned by the assignor for sale to a third party through an auction."
Pearson, in responding to Mangano on Dec. 30, said Pro’s order requiring the auction "mandates that you must transfer whatever rights Righthaven has in the copyrighted works and allow the market to determine the value therein."
She proposed that during the planned auction of the copyrights, buyers be warned that "The assets being auctioned are being sold 'as-is' without representation or warranty as to their validity or enforceability."
However, in Tuesday’s court filing, Pearson said this issue still hadn’t been resolved by Tuesday.
"I request guidance from the court as to whether Righthaven is required to transfer any and all rights it may possess (even if none) in order to effectuate the court’s Dec. 12 (receivership) order," Pearson wrote in her filing. "Righthaven has refused to execute the assignments due to perceived deficiencies that it could have, but failed to, correct and has ignored repeated requests for a trademark assignment and an inventory of physical assets without explanation. Righthaven has been uncooperative in this endeavor, which is not in its best interest since the value of its property likely will decrease over time, while the judgments against will continue to grow and multiply over time."
Separately, the 9th U.S. Circuit Court of Appeals has yet to rule on Righthaven’s emergency motion that the seizure and sale of its assets be halted.
Also, lawsuit records obtained Tuesday confirmed that Righthaven is being sued by a process server in Las Vegas over allegedly unpaid bills.
In a complaint filed in Las Vegas Township Justice Court on Sept. 7, Legal Wings Inc. charged it provided services to Righthaven between May and October 2010 valued at $5,670, but Righthaven has failed to pay that amount.
Righthaven is accused in the lawsuit of breach of contract, breach of the implied covenant of good faith and fair dealing and unjust enrichment.
"In obtaining the services of plaintiff without paying for them, the defendant has unjustly enriched itself at the expense of plaintiff," the suit charges.
Righthaven has not yet responded to the lawsuit.