Righthaven faces $119,000 legal fee demand

Unsuccessful copyright infringement lawsuits filed by Righthaven LLC of Las Vegas are threatening to become more costly, with attorneys for another prevailing defendant now demanding Righthaven pay their $119,457 in legal fees and costs.

Attorneys for former federal prosecutor Thomas DiBiase filed their request for fees Wednesday in U.S. District Court for Nevada after U.S. District Judge Roger Hunt dismissed Righthaven’s suit against DiBiase last month for lack of standing.

Righthaven since March 2010 has filed 274 lawsuits in Nevada, Colorado and South Carolina charging website operators, bloggers and message board posters have misappropriated content from the Las Vegas Review-Journal and the Denver Post.

While many defendants have settled, the litigation campaign appears to be stalled as two federal judges have found Righthaven lacks standing to sue and three more are threatening to do the same thing. Righthaven lost outright on the standing issue last month when Judges Hunt and Philip Pro found it doesn’t obtain full rights in copyrights it uses for lawsuits. Case law requires copyright plaintiffs to have full and complete control of the copyrights at issue, the judges said in their rulings.

Righthaven has also been hit with three fair use losses involving two Review-Journal stories and a column.

Attorneys for prevailing defendant Wayne Hoehn have already asked to be awarded $34,000 in fees and costs while attorneys for defendant Michael Leon, whose case was dismissed when he wasn't served in time, have won $3,815 in fees against Righthaven.

Wednesday’s $119,457 request is far larger than those previously requested – but it likely will be dwarfed by an upcoming fee request in Righthaven’s lawsuit against the Democratic Underground.

Hunt dismissed Righthaven from the Democratic Underground case for lack of standing after intense legal wrangling that so far amounts to 131 court docket entries. And that case is continuing with Hunt threatening sanctions against Righthaven and the Democratic Underground prosecuting a counterclaim against Review-Journal owner Stephens Media LLC.

The DiBiase case, by comparison, is up to 80 docket entries.

Righthaven hit DiBiase with one of its no-warning lawsuits last year after he posted a Review-Journal story on his website focusing on "no-body" murder cases – cases in which a murder is suspected or confirmed but the victim’s body hasn’t been located.

Case law created by the Righthaven lawsuits suggests DiBiase’s use of the story would be protected by fair use as it was noncommercial and judges have found there can be no market harm to Righthaven for such uses since there is no market for copyrights Righthaven obtains for lawsuit purposes.

On top of that, DiBiase’s attorneys say his website performs a public service by educating police and prosecutors about no-body murders, in the process helping to bring justice to victims and their families.

Hunt, in dismissing the suit, didn’t rule on the fair use issue.

Nevertheless, DiBiase’s attorneys say that under the fee-shift provision in copyright law, they’re entitled to recovery of their fees because DiBiase won on the standing issue and Righthaven's suit had no merit.

Attorneys for DiBiase are Kurt Opsahl and Corynne McSherry of the Electronic Frontier Foundation in San Francisco; Colleen Bal and Bart Volkmer of the firm Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif.; and Chad Bowers in Las Vegas.

In Wednesday's filing, they took several shots at the Righthaven suit against DiBiase and Righthaven’s litigation campaign, saying they involve:

--"Sham" copyright assignments from Stephens Media.

--Efforts to "mislead" DiBiase about which entity actually owned the story at issue in his case.

--Efforts by Righthaven to "hide the fact that Stephens was the true owner of the copyright at issue."

--A copyright registration "obtained by fraud."

--A dubious website domain name seizure demand that was thrown out of court by Hunt. These domain name demands have been widely criticized as a litigation tool to coerce defendants into settling, though Righthaven says they're legitimate and that it should be able to seize websites of defendants that default on judgments or that won't stop infringing.

--Dubious demands by Righthaven for $75,000 in damages and its own attorney’s fees. (After the suit was filed, Righthaven increased its standard lawsuit demand to $150,000 – but is known to have settled for as little as $1,000).

The $119,457 fee award for DiBiase’s attorneys "is appropriate based on the frivolousness of Righthaven’s case, the need to encourage parties like Mr. DiBiase to fight fraudulent copyright infringement lawsuits, and the need to deter Righthaven—and other entities like it—from running litigation shake-down operations that stifle legitimate online speech," their filing said.

"Righthaven’s lawsuit against Mr. DiBiase was a shameless attempt to extract a nuisance value settlement from someone who spends his free time trying to assist prosecutors and investigators by maintaining a one-stop Internet resource for information about `no-body’ murder cases. Mr. DiBiase prevailed in this action because he demonstrated that Righthaven could not—as a matter of law—establish the first element of a valid copyright infringement claim: ownership of a copyright. Righthaven’s case was objectively unreasonable from the outset and motivated by improper purposes throughout," their filing charged.

Righthaven has not yet responded to this fee request or the request for $34,000 in the Hoehn case.

Because of these fee requests – and others likely to come -- observers are more frequently questioning whether Righthaven’s mass lawsuit model is financially viable.

But Righthaven and Stephens Media are backed by Arkansas investment banking billionaire Warren Stephens of Stephens Inc. and his family – meaning they have plenty of financial resources to maintain Righthaven’s business plan if they choose to do so.

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Discussion 19 comments

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  1. The Stephens family may have deep pockets, but one would hope they have learned enough to see that the current business model is not profitable and the end result so far has caused more harm to their goals than good.

    Not only is Righthaven not economically viable at this point, but the adverse rulings they have inspired are the exact opposite of what was being counted on. It now seems that Righthaven can't even bring new actions without major structural changes to the SAA.

    Throw in the bad will that has been generated towards Stephens Media (and the R-J in particular) and it makes no sense whatsoever for the Stephens family to prop RH up any longer.

  2. The fact that Righthaven is not profitable means they are being subsidized almost entirely by Stephens Media. This appears some sort of money laundering operation to keep certain expenses and liabilities off the books at Stephens Media. Since Righthaven is almost completely subsidized by SM this could be a basis for bringing them into these lawsuits as well. Stephens media must be held accountable for what they have created.

  3. Actually, it is SI Monitor, LLC and Net Sorte, LLC that are subsidizing Righthaven if that is needed. Stephens Media is a litigation partner, but not ownership partner.

    That said, section 3 of the SAA not only says that SM has certain rights pertaining to litigation, but implies that they might have some amount of responsibility to prevent wrongful litigation as well. That might open them up to counter-claims such as the one by Democratic Underground.

    I would hesitate to think this is a money-laundering scheme. It is much easier to think RH was supposed to be a "fire-and-forget" tool that also allowed for a potentially better balance sheet.

  4. SI Monitor is also a Stephens Media subsidiary and Net Sorte, LLC is owned by Steve Gibson of Righthaven. Someone needs to follow this money trail and it appears to lead to the Stephens Family.

  5. Net Sorte, LLC has no Internet presence as far as I been able to find. Do a Google search and there is nothing there except references to it from Righthaven stories. Makes you wonder if it is even a real company or just another front that exists entirely for accounting and tax purposes?

  6. From prior stories and the SAA SI Monitor, LLC is an affiliate, not a subisdy of Stephens Media, and has been said to be owned by members of the Stephens family who also own Stephens Media. The exact relationship has not been given other than some of the same people have ownership of both.

    So if anything SM and RH are "siblings" so to speak. RH certainly deserves to be treated like a red-headed step-child for its behavior.

  7. The office my company moved into is in the same building as Righthaven. Their office appears to be deserted. They're probably making themselves scarce around there to avoid being served.

  8. Bob

    Their office is deserted? WOW! That is really telling. Righthaven may be a company that only exists on paper. This is interesting.

  9. What goes around comes around. Karma is a bitch.

  10. It appears that section 11 of their agreement lets Stephens Media off the hook for the attorney fee's and leaves Righthaven holding the

    The real question really is, who all is funding Righthaven and do they have the funds to cover all these judgments that are going to eat them alive.

    This is just the tip of the iceberg. I am betting we see many more suits filed against them by people that have already settled. There is going to be some smart attorney take that one up real soon.

    Who wants to start the pool on the date that Righthaven files BK?

  11. Section 11 does nothing of the sort. Stephens Media can still be sued by victims. The only thing section 11 does is bar Righthaven from suing SM. The minute Righthaven files for bankruptcy the victims and lawyers will turn their attention to Stephens Media and MediaNews Group. They will not be able to escape this. They have put themselves in a black hole.

  12. vegaslee,

    Back on June 14 (when Judge Hunt ruled against RH on standing) I put the over/under as 60 days until RH ceased operations. So that would be about August 13 I think.

    I'll take the under.

  13. Where's Sgt. Rock has he disappeared with the righthaven office personell? Just wondering I haven't seen a post from himas of yet on the new turn of events.

  14. "Net Sorte, LLC has no Internet presence as far as I been able to find."

    I checked out the NV Secretary of State

    "No results for entity name search on "Net Sorte""

    hmmmmmm.

  15. It looks like Righthaven moved to a smaller office.

  16. The correct spelling is "Net Sortie" and *not* "Net Sorte." My mistake. :(

  17. The ill-advised Righthaven business plan is coming home to roost. We are likely to find out what constitutes adequate capitalization for Nevada LLCs, as the holders of awards of attorneys fees seek recovery from the Members of the Righthaven LLC. It seems to me that the Righthaven business plan made the possibility of such losses quite foreseeable.

  18. boftx

    The miss-spelling was my fault, My apologies.

  19. I'd like to see the tax treatment on these settlements. It must be a hodgepodge of extensions. Perhaps these entities will volunteer to show their tax filings to the public.