Righthaven: The controversy over copyrights

The time has come to add copyright lawsuits—alongside casinos—as one of the things Las Vegas is best known for nationally. Copyright lawsuits? Yes, in national legal and media circles, Las Vegas is also now known as the epicenter of newspaper copyright infringement lawsuits. Who would’ve thought?

Well, say hello to Las Vegas’ own Righthaven LLC, the entity behind the curious notoriety.

Since March 2010, Righthaven has teamed with the Las Vegas Review-Journal and the Denver Post to file a whopping 275 federal lawsuits alleging copyright infringement and seeking damages of $150,000 apiece. These lawsuits are filed in retroactive fashion, meaning if someone posted a Review-Journal story without authorization in December, Righthaven spotted the infringement in January, obtained the copyright to the story in February and sued the unsuspecting defendant in March. The suits say Righthaven has the right to collect damages for infringements, be they in the past, the present or the future. Internet sites, bloggers and message board posters throughout North America and in Europe are accused in the suits of posting, without authorization, on their websites partial or entire stories from those newspapers, as well as editorials, columns, graphics and photos.

The suits were filed with no story preceding them by the Review-Journal warning readers what it was about to do. And they were filed even as Mark Hinueber, the general counsel of Stephens Media LLC, owner of the Review-Journal, acknowledged that the newspaper industry hadn’t done a good job of educating readers about the rules for using its online content.

By his way of thinking, “If you’re operating in the Internet space, you’re presumed to understand you don’t steal your neighbors’ Crayons.”

That’s what Hinueber told the local chapter of the Society of Professional Journalists last fall.

Along the way, Las Vegas and Righthaven have received plenty of national news coverage about the lawsuits by the likes of The New York Times, The Wall Street Journal, Los Angeles Times, Fortune, Bloomberg News, Associated Press and Wired. This national media coverage wasn’t flattering for the Review-Journal, the Post or our city’s legal community, with Righthaven and its newspaper partners often portrayed as digital ambulance chasers using lawsuit settlement shakedowns and the court system to make a quick buck. That’s because of the no-warning nature of the lawsuits, court rulings finding some of the lawsuits were without merit, judges’ comments critical of Righthaven, a series of foul-ups in executing the suits and because the lawsuit spree was unprecedented for the newspaper industry. Ever.

With Righthaven and its newspaper clients now facing a ferocious legal backlash that could cost them hundreds of thousands, if not millions, of dollars, Righthaven has caused a public debate that Southern Nevada business leaders and public policy makers should contemplate or even participate in. This debate is over two fundamental questions:

• Should the R-J and its sister newspapers, as longtime institutions in the community, be in the business of suing their own readers, news sources and advertisers over alleged copyright infringements? Or, in a supposedly civilized society, should they be educating them about the proper way to use copyrighted content before resorting to expensive and embarrassing lawsuits?

• Should the court system and the agency that regulates attorneys, the State Bar of Nevada, allow Righthaven—and similar companies that may emerge—to use lawsuits not for the purpose of justice, but merely to make money?

The origins of Righthaven, and what its true purpose is, haven’t been disclosed.

Righthaven says its mission is to protect the content of newspapers and other clients it’s still hoping to sign up.

Stephens Media, which has declined to comment when asked about the litigation, has argued in court papers that Righthaven is addressing a “parasitic” business model based on unauthorized use of newspaper content.

Critics believe it was created in early 2010 by the Review-Journal and its parent company in Arkansas to make money by going after copyright infringers the same way the music and movie industries have addressed rampant online piracy for years: With mass lawsuits.

Either way, the Review-Journal and other newspapers have a legitimate beef with those who misappropriate content. At VEGAS INC, the Las Vegas Sun and other Greenspun Media Group publications, we regularly see our stories copied and pasted in full on illegitimate websites or by people who just don’t understand that’s copyright infringement. Our approach is to contact infringers and have that content removed and replaced with the lead paragraph of the story and a link back to our publication. That tactic works for us and the rest of the US newspaper industry—except for the Review-Journal and the Denver Post.

Out of the blue, their copyright enforcer, Righthaven, started filing its no-warning infringement lawsuits 16 months ago. For the federal court in Nevada, the timing couldn’t have been worse. Thanks to the recession, our federal judges are already swamped handling a growing number of lawsuits challenging foreclosures and suits filed by laid-off workers claiming they were fired on the basis of age, sex or race. Righthaven had through July 15 filed 217 suits in Nevada over matters that could have been resolved out of court—at a time when Nevada’s federal judges have seen their caseloads swell to 577 cases apiece. That’s well above the national average of 430.

(The court had been hit with an 18 percent increase in civil filings in 2009 and experienced an 11 percent increase in 2010).

Righthaven’s suits were not against parties that competed for advertising dollars with the Review-Journal or the Post. Most were against special-interest websites. Allegra Wong in Boston, for example, posted an R-J story on her noncommercial blog about birds killed in a fire. It was a blog about cats, written from the point of view of a cat. This caused a Los Angeles Times writer to suggest the R-J had “blasted a small tabby with a howitzer.”

Immediately, protests were raised that Righthaven had not complied with the law because it failed to send required takedown notices. But those protesters were mistaken. Federal law requires takedown notices only in limited circumstances: Where the website has registered itself with the US Copyright Office and where the material was posted by a third party, a message board user for instance.

The bloggers and website operators were stunned to be sued and they and their attorneys, of course, complained about Righthaven’s tactics. Some had posted stories by the thousands over many years with no objection from the source newspapers throughout the country. Faced with statutory damage claims of $75,000 initially, and later $150,000, as well as what turned out to be dubious claims for attorney’s fees and seizure of their website domain names, most defendants quickly settled for a few thousand dollars.

But even as Righthaven filled its coffers with settlement money—with most settlements believed to be in the $1,000-$5,000 range—it never won a suit on the merits (none have gone to trial) and its lawsuit campaign was unraveling.

First came a couple of lawsuit dismissals in which judges said websites—commercial and noncommercial—were protected by the fair use doctrine of copyright law in posting complete or partial Review-Journal stories. Then, this summer, three federal judges ruled Righthaven lacked standing to sue over Review-Journal stories and dismissed those cases—with mass dismissals now likely to follow of suits over both Review-Journal and Denver Post material. In one of these dismissals over standing, the judge handed Righthaven a third fair-use defeat as well.

The problem for Righthaven is that its lawsuits were based on lawsuit contracts and copyrights assigned to it by the Review-Journal and the Denver Post. But when judges looked at the fine print, they found the Review-Journal maintained control of the copyrights despite assigning them to Righthaven for lawsuit purposes. And that’s not allowed under case law, the theory being that copyrights have a special place in the law and are to be used for informational and entertainment purposes, not just for lawsuits.

Copyrights protect every movie ever produced, every song ever recorded, every book ever published, every newspaper story ever written and so on. Righthaven critics say the Copyright Act is designed to encourage such creativity—and that Congress, in writing the act, didn’t intend for copyrights to be bartered for lawsuit purposes.

Righthaven is trying to regroup and has rewritten its lawsuit contract with the Review-Journal in the hope that it has all the rights necessary to sue. Suits dismissed under the original contract may be re-filed based on the new pact. In fact, one defendant saw his suit dismissed this month, only to see Righthaven sue him again the same day.

The lone judge in Colorado handling 33 active Righthaven suits over Denver Post material as of July 15 hadn’t ruled on the standing issue. But since the Post lawsuit contract is similar to the Review-Journal contract, those suits may be dismissed as well. If that happens, Righthaven may have to regroup there just as it has in Las Vegas.

Righthaven faces a similar challenge to its standing to sue in its lone case in South Carolina.

But even if its standing to sue is revived or upheld, Righthaven faces more problems down the road on the fair use issue, as judges are finding no harm to the market for Righthaven-owned copyrights. (Potential harm to the market of a copyrighted work is one of the factors used by judges in deciding whether one’s use of another’s work is permitted as a fair use.) That’s because Righthaven uses the copyrights strictly for lawsuits, as opposed to using them to publish newspapers or books or for other informational purposes. This means, according to the judges in the Righthaven rulings, there’s no market for the stories and columns the copyrights are intended to protect.

An even bigger problem facing the company is that several judges handling Righthaven cases clearly don’t like the company and its litigation tactics, which they say are blatantly aimed at coercing defendants into settling. During one hearing, a Righthaven attorney trying to defend the company endured a lengthy tongue-lashing by US District Judge James Mahan.

Mahan barked, “Righthaven only sues people, apparently’’—and then told the attorney he’d heard enough and ordered him to sit down.

Related to this, Righthaven was fined $5,000 by one of the Nevada judges on July 14 for covering up the fact that the Review-Journal’s parent company, Stephens Media, shares in Righthaven’s lawsuit revenue with a 50 percent cut after costs. Perhaps ominously, in levying the fine as a sanction, Judge Roger Hunt commented that Righthaven, which isn’t licensed to practice law, has been acting like a law firm with a contingency fee arrangement with Stephens Media.

That’s a significant charge that didn’t go unnoticed by the State Bar of Nevada, which for months has been looking into grievances filed against the company by parties that haven’t been identified. It’s believed these complaints involve allegations about the unlicensed practice of law and that Righthaven has been involved in barratry and champerty. These concepts are generally defined as a form of illegal ambulance chasing in which a party with no real interest in a dispute tries to make money by inciting and prosecuting litigation over that dispute.

Further adding to the troubles of Righthaven and its owners—Las Vegas attorney Steven Gibson and a sister company to Stephens Media—is that defendants prevailing in Righthaven lawsuits are now asking for their attorney’s fees. That alone could run in the hundreds of thousands of dollars.

In addition, Righthaven and Stephens Media face potentially expensive counterclaims in some lawsuits, as well as existing and threatened lawsuits filed directly by Righthaven defendants against Righthaven, Stephens Media, the Denver Post and its owner MediaNews Group. These counterclaims and lawsuits by Righthaven defendants say the company has filed fraudulent lawsuits based on fraudulent copyright claims, among other things. Legal fees and potential damages in these cases could easily come in at millions of dollars.

Who’s responsible for this mess?

Steven Gibson, its CEO and a copyright fanatic, is the public face of Righthaven. He says criticism of its lawsuit campaign comes from “the infringement community” and that Judge Hunt’s criticism of Righthaven for misleading the court was merely “guidance” for future Righthaven-type companies.

Gibson is gaining notoriety for dubious claims in and about the Righthaven lawsuits. Most notable are his claims rejected by multiple federal judges that Righthaven owned the copyrights it was suing over; as well as false certificates of interested parties Gibson signed off on that failed to name Stephens Media.

On top of that, his lawsuits demanded defendants’ website domain names be seized and turned over to Righthaven—a demand that fellow copyright attorneys said should be laughed out of court since it’s not authorized by the Copyright Act. This was clearly a scare tactic aimed at intimidating defendants into settling. Hunt swiftly threw it out of court.

Hunt also found merit in arguments that Righthaven couldn’t demand attorney’s fees in suits filed by in-house counsel, since there’s no attorney-client relationship involved. Look for that ruling to come back to haunt Righthaven in some of the counterclaims and lawsuits against it, as that demand appears to be yet another settlement tactic.

In talking about Righthaven, Gibson has repeatedly linked copyright infringements to failures and bankruptcies of newspapers and entire newspaper chains.

But there’s not a shred of evidence to back up this claim. We’ve looked hard for it—in newspaper company SEC filings, Wall Street analyst reports and newspaper bankruptcy filings. It’s simply not there.

Righthaven, in court filings, has repeatedly linked online copyright infringements to financial problems facing the newspaper industry. In talking about Righthaven and newspaper woes, Gibson has cited the 2008 bankruptcy of one of the nation’s largest companies, Tribune Co., owner of the Chicago Tribune, Los Angeles Times and other media properties.

However, when Tribune Co. filed for bankruptcy reorganization, the supposed threat of copyright infringement to its online audience wasn’t mentioned in its filing. Rather, Tribune was unable to service its $13 billion in debt because of dramatic declines in advertising revenue caused by the recession.

The infringements of the type Righthaven sues over—keep in mind it’s not suing Google or any direct competitors of ad dollars to the R-J and the Post—are not identified by credible sources as affecting newspaper industry revenue one way or the other. In fact, the Newspaper Association of America reported July 12 that newspapers in the second quarter of this year continued to grow their share of the Internet audience. Newspaper websites in the second quarter attracted more than 110 million unique visitors per month—64.6 percent of adult Internet users. Those numbers are up from the first quarter of 108 million and 63.9 percent, respectively. Monthly page views for newspapers in the second quarter averaged a staggering 4.2 billion.

This hardly seems like an industry vulnerable to the likes of Wong and other notorious Righthaven targets such as Sharron Angle and Brian Hill, a young autistic blogger in North Carolina.

And then there’s Righthaven marketing material where Gibson’s company claims copyright infringement “losses” to copyright holders annually “are currently estimated to be in the trillions of dollars.” That’s trillions with a “t,” which is ludicrous, given that the sales of the combined “information” sector of the US economy run at about $1 trillion annually. In other words, Gibson wants potential clients to believe that infringements are valued at multiples of everything published and broadcast in the United States, plus all the revenue of the telecommunications, software and Internet industries. By everything published and broadcast, we mean every copy of every piece of software, junk mail, newspaper, magazine, book, directory, catalog, greeting card, music CD and television program—as well as movies on cable and in theaters. Telecommunications, of course, means landlines and cellphones. All of it.

There’s a catch, obviously, with Righthaven’s “trillions of dollars” estimate. It’s not based on actual damages, but what infringements are worth in statutory damages that could be recovered in lawsuits. And that explains why a meaningless or even unintentional use by a message board poster of a story offered online for free by the Review-Journal or the Denver Post is a $150,000 federal offense.

Gibson, by the way, stopped communicating with us about the time we asked some questions about the State Bar of Nevada inquiry into his company, why his company had acquired copyrights to two porn movies and why his company was representing it was in good standing in lawsuits at a time when its status was listed as in “default” by the Nevada Secretary of State. We’re still waiting, by the way, for Gibson to sue infringers of the porn movies.

The drama surrounding Righthaven and its hundreds of lawsuits is only now getting really interesting. Stay tuned.