Judge: Righthaven masquerading as a company
14 July 2011
14 July 2011 11:22 a.m.
A judge today fined newspaper copyright lawsuit filer Righthaven LLC of Las Vegas $5,000 for misleading a federal court about its lawsuits.
A Righthaven attorney, Shawn Mangano, said after a hearing before U.S. District Judge Roger Hunt that the firm may appeal the sanction and that its lawsuits will continue.
Hunt said Righthaven deliberately failed to disclose the owner of the Las Vegas Review-Journal shares in Righthaven’s lawsuit revenue. But, without explanation, Hunt didn’t sanction any of the Righthaven attorneys that may have been responsible for the misrepresentation.
Mangano said he and two former Righthaven in-house attorneys, Joseph Chu and J. Charles Coons, made an honest mistake by failing to disclose the interest of Stephens Media LLC in Righthaven’s lawsuits over R-J material.
But Hunt noted it was Righthaven’s CEO, Las Vegas attorney Steven Gibson, who drew up the lawsuit contract between Righthaven and Stephens Media. Defense attorneys have said it was Gibson who signed off on some of the false disclosures and that Gibson is behind the entire Righthaven litigation campaign.
Besides the $5,000, Hunt ordered Righthaven to disclose its original lawsuit contract with Stephens Media in active lawsuits over R-J material. He also ordered that a transcript of today’s hearing, in which he made several negative comments about Righthaven’s conduct, be posted on Righthaven court dockets.
The sanctions could have been more severe, such as disqualification of attorneys. But even with the light sanction, Mangano said Righthaven is considering appealing because Hunt based the sanction on grounds that Righthaven wasn’t given a chance to respond to.
Besides suing over alleged online infringements of material from the R-J, Righthaven sues over Denver Post material. Including a new suit filed Wednesday, it has filed 275 lawsuits since March 2010.
Righthaven has seen three federal judges in Nevada dismiss some of its suits based on its lack of standing — and additional judges in Nevada and Colorado are threatening to do the same.
But Righthaven, with a second amendment to its lawsuit contract with Stephens Media, insists it has solid standing to sue over R-J material.
Hunt dismissed Righthaven’s lawsuit against the Democratic Underground June 14 because of the standing issue and at that time threatened sanctions, saying Righthaven had made “multiple inaccurate and likely dishonest statements to the court.”
Hunt elaborated today. Interestingly, he started out by saying Righthaven — a corporation not licensed to practice law — has been acting like a law firm.
“In the court’s view, the arrangement between Righthaven and Stephens Media is nothing more, nor less, than a law firm — which incidentally I don’t think is licensed to practice law in this state — with a contingent fee agreement masquerading as a company.”
That may bolster the claims of South Carolina attorney Todd Kincannon, who has been litigating against Righthaven and claims it has unlawfully been practicing law.
Hunt went on to say he didn’t buy Righthaven’s arguments that the failure to disclose Stephens Media as an interested party in its lawsuits over R-J material was an oversight.
“The court finds those representations are not true and that they are intentional,” Hunt said.
Laurence Pulgram, a San Francisco attorney representing the Democratic Underground in the case in which the sanction was ordered, said the judge’s condemnation of Righthaven’s deliberate misrepresentations was significant.
As word spreads among attorneys of the sanction, it may increase the chance that defendants that settled with Righthaven may reopen their cases — or separately sue it — on the theory that settlements were made based on facts misrepresented by Righthaven.
And Kurt Opsahl, an attorney for the Electronic Frontier Foundation in San Francisco also representing the Democratic Underground, said the foundation is likely to contest Righthaven’s claims that under the latest amendment to its lawsuit contract it has the right to sue.
Although copyright holders like newspapers and movie and record producers use copyrights for informational and entertainment purposes, “You can’t transfer the bare right to sue,” Opsahl said.
The Democratic Underground’s counterclaim against Stephens Media will continue while Righthaven’s next big test will likely be when U.S. District Judge James Mahan holds a hearing later this month on whether to dismiss another Righthaven lawsuit on the standing issue.
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