Commentary:

Righthaven hurts news industry, one ruling at a time

Las Vegas Review-Journal columnist and former Publisher Sherman Frederick’s column today involving his “little friend” Righthaven could be Exhibit A in the case against Righthaven’s litigation strategy.

The case is this: Thanks to Righthaven, newspapers and other media organizations now have less copyright protection for their hard-earned content than they did just three months ago. And that’s more than a little odd, given Righthaven’s stated mission of protecting newspapers from online content infringers.

Exhibit B is by Ken Paulson, a former USA Today executive who now heads the First Amendment Center at Vanderbilt University in Nashville.

Paulson noted a ruling last week by U.S. District Judge Philip Pro in a Righthaven case “suggests that virtually anything written by any news organization that is primarily based in fact can be freely taken in its entirety and posted anywhere, as long as no one is trying to make a buck from it.”

“What becomes of a free press if virtually everything can be freely taken and used by others without compensation to the journalist or the company he works for?,” Paulson asked.

Former Review-Journal Editor Thomas Mitchell added Exhbit C in a blog post, writing “rulings such as this will embolden the intellectual property pirates.”

These thoughts confirm the Righthaven lawsuits are backfiring against the news industry, something we wrote about in March, when U.S. District Judge James Mahan found an Oregon nonprofit was protected by fair use in posting without authorization an entire 33 paragraph R-J story. That was Righthaven’s second fair use loss over R-J material.

Judge Larry Hicks in Reno, last year dealt Rightaven its first fair use loss, with that case involving a partial R-J story post by a Las Vegas real estate agent.

We don’t recall Frederick complaining about the first two fair use rulings at the time.

But now that Pro has found Kentucky message-board user Wayne Hoehn was protected by fair use in posting an entire Frederick column, Frederick is upset.

That’s understandable and every journalist should be concerned about how the Righthaven lawsuits are eroding copyright protections for their stories, columns, editorials, photos, graphics and illustrations.

•••

There’s a back story and many layers of complexity to Pro’s ruling and to Righthaven that Frederick didn’t cover in today’s “I am no rappin’ Barbie doll” column.

Here is what is known:

While Frederick complains about a “bad ruling” by Pro, Pro’s ruling suggests Righthaven left the fair use issue on the table by failing to press for a trial.

“Righthaven argues that summary judgment (on the fair use issue) is premature because Righthaven has not conducted discovery,” Pro’s ruling says. “Righthaven has not presented an affidavit showing the specified reasons it needs to conduct discovery to oppose summary judgment, or, the types of facts it hopes to elicit, that these facts exist, and that these facts are necessary to oppose summary judgment. Accordingly, the court will deny additional discovery on this matter and decide Hoehn’s motion on the facts before the court.”

In other words, Frederick’s “little friend” appears to have let him down on the fair use issue by failing to file a simple affidavit spelling out the type of information it would seek out to show Hoehn hurt the R-J and/or Righthaven.

But then Righthaven isn’t exactly Lionel Sawyer & Collins when it comes to investigating potential lawsuit targets and when it comes to litigation.

As a lawsuit mill, Righthaven is known for suing the wrong parties, for serving the wrong version of a lawsuit on a retired nurse that didn’t even name her as a party, for failing to serve defendants on time, for embarrassing the R-J by suing its own news and advertising sources and for embarrassing the Denver Post by suing an autistic blogger, as well as for suing a reporter for posting a public court record online.

Here’s something else Frederick didn’t point out in today’s column: Pro’s finding that the Frederick column at issue in the Hoehn case “contains a significant informational element” as opposed to being purely creative, is a factor that “is not terribly relevant in the overall fair use balancing.”

The key factors were that Hoehn “did not and could not profit from posting” the column, that he posted it for informational purposes to foster discussion on a public policy issue and that Righthaven failed to show any harm to the market for the column.

•••

The market harm test is crucial in copyright infringement cases and in the Hoehn case, there’s plenty of reason to believe that Righthaven being the plaintiff in the lawsuit — as opposed to the Review-Journal suing Hoehn — virtually guaranteed a finding of fair use.

It appears that Hicks, Mahan and Pro simply aren’t buying arguments by Righthaven that it can collect damages for infringements that occurred prior to it obtaining the copyrights. And it seems they’re not seeing how Righthaven can be harmed in any way by infringements since Righthaven uses copyrights only for lawsuits — meaning there is no market for the copyrights.

This is exactly what Mahan found prior to Righthaven’s second fair use loss in March.

“There is no market for the copyrighted work. You are not publishing it. You are not operating a newspaper. Righthaven only sues people, apparently,” Mahan told a Righthaven attorney during a hearing on that lawsuit against the Center for Intercultural Organizing in Portland, Ore.

During a hearing last month in the Hoehn case, Pro suggested he felt like Mahan did about Righthaven’s ownership of the copyright.

During that hearing, Pro honed in on the lack of harm to Righthaven — as opposed to the original copyright owner, the Review-Journal.

“You’re not having anybody access your website (to see copyrighted material Righthaven owns),” Pro told a Righthaven attorney during the hearing. “You’re not commercially selling it. How does Righthaven suffer any conceivable harm as the owner of the copyright?”

•••

Here’s the back story that may explain why the Review-Journal, Frederick and Righthaven are now at odds with Pro on his fair use ruling — as well as his ruling that Righthaven lacks standing to sue over Review-Journal material.

In August, before federal judges were aware that R-J owner Stephens Media LLC was entitled to share lawsuit revenue with Righthaven, Pro became the first judge to uphold, on a contested dismissal motion, Righthaven’s standing to sue.

In a Righthaven lawsuit against Tuff-N-Uff Productions Inc. of Las Vegas, Tuff-N-Uff challenged Righthaven’s standing to sue and its copyright assignment from Stephens Media. Tuff-N-Uff said Righthaven couldn’t sue since it didn’t own the copyright at the time of the alleged infringement.

Pro noted that his ruling at the time on this “standing issue” was only for purposes of dealing with the motion to dismiss and that the rights associated with the transfer of the copyright could be explored later in the case during discovery or other proceedings.

“I’m not bothered by the ‘standing’ issue,” Pro said during a hearing .

But there was no discovery because Tuff-N-Uff settled with Righthaven within a few hours of Pro refusing to dismiss the suit.

That settlement was likely based on Pro’s refusal to dismiss the suit and Tuff-N-Uff’s belief that Righthaven likely owned the copyright at issue — ownership claims that later turned out to be false, according to Pro and fellow U.S. District Court Judge Roger Hunt.

Does Pro now feel he and Tuff-N-Uff were duped by Righthaven?

Pro last week could have dismissed Righthaven’s suit against Hoehn on the standing issue alone, and left it at that.

Instead, he went to the trouble to analyze and write about the fair use issue — and he included the fair use ruling adverse to Righthaven in his dismissal order. (Righthaven’s lack of an affidavit, noted earlier, may have made this possible).

Pro, of course, isn’t commenting.

But there are plenty of indications the federal judges presiding over Righthaven cases are buying the arguments of defense attorneys about Righthaven.

Those arguments are that instead of truly trying to protect newspaper content, Righthaven is using the federal courts to run a shakedown operation in which defendants in frivolous lawsuits are coerced into settling by draconian threats involving statutory damages of up to $150,000, attorney’s fees and seizure of their website domain names.

Ron Coleman, a New York copyright attorney active against Righthaven in one of its cases, noted on his blog last week that Pro, in the Hoehn case, “went the extra mile to make not only a point about fair use, but an arguably controversial one.”

“Here Righthaven’s problems with its ‘standing’ — the fact that, to put it simply, it never really owned the copyrights it was suing over, which the Copyright Act prohibits — have clearly antagonized the bench and given judges reason to take a very severe look at the whole ball of a wax in way no one would have predicted,” Coleman commented.

If Pro is troubled by Righthaven and its litigation tactics, he’s not alone among the judges handling the Righthaven cases.

Consider these comments from court rulings and hearings:

— U.S. District Judge James Mahan in Las Vegas:

“Plaintiff’s litigation strategy has a chilling effect on potential fair uses of Righthaven-owned articles, diminishes public access to the facts contained therein and does nothing to advance the Copyright Act’s purpose of promoting artistic creation.”

— Chief U.S. District Judge Roger Hunt in Las Vegas:

“Righthaven and Stephens Media have attempted to create a cottage industry of filing copyright claims, making large claims for damages and then settling claims for pennies on the dollar, with defendants who do not want to incur the costs of defending the lawsuits, (and) are now offended when someone has turned the tables on them and insisting on a judgment in their favor rather than a simple dismissal of the lawsuit.”

We’ve earlier suggested Hunt felt Righthaven misled him personally when Hunt, like Pro, upheld Righthaven’s standing to sue in a case last year.

— Senior U.S. District Court Judge John L. Kane in Denver:

“The purpose of the courts is to provide a forum for the orderly, just, and timely resolution of controversies and disputes. Plaintiff’s (Righthaven’s) wishes to the contrary, the courts are not merely tools for encouraging and exacting settlements from defendants cowed by the potential costs of litigation and liability.”

•••

Further hurting the cause of Frederick, the Review-Journal, the Denver Post and Righthaven is evidence that because of the types of defendants it sues, Righthaven can rarely, if ever, win on the “market harm” test in the fair use analysis of alleged copyright infringements.

Righthaven in its 274 lawsuits has sued special-interest websites, bloggers and message-board posters as opposed to actual direct competitors for advertising dollars to the Review-Journal and the Denver Post.

In the real world of the newspaper industry, far from the courtrooms where Righthaven toils, these types of infringements aren’t seen as a threat to newspaper industry revenue and are a non-issue for Wall Street newspaper industry analysts.

Moody’s Investors Service, in its May 31 annual outlook for the U.S. newspaper industry, didn’t mention at all copyright infringements or other misappropriation of content.

The outlook for the industry is negative, with revenue declines expected through 2012, as its share of the advertising market continues to erode, Moody’s analysts wrote in the report.

This is continuation of a long-term trend in which newspaper circulation and associated advertising revenue have declined as consumers embrace alternatives including content provided by television stations and online and mobile sources.

“Digital revenue will increase as companies capitalize on their content in an array of channels (online, mobile, tablets), but we don’t expect the revenue gains will be large enough to offset print losses. A full shift to digital would eliminate the sizable costs of print production and distribution, but the revenue loss is too great for companies to make the switch yet,” Moody’s said in its report.

Similarly, the types of infringements Righthaven sues over are not mentioned as affecting revenue in the 2010 annual reports of three of the nation’s biggest media companies: Gannett Co. Inc., The New York Times Co. and the Washington Post Co.

The Washington Post Co. noted in its report that its online business faces stiff competition from regional and national competitors.

“The Post’s website and the websites produced by The Slate Group face competition from many Internet sites that provide news and information, sites that cover niche content, sites that aggregate content from different sources and sites where users generate content,” the Post’s annual report says.

Despite this competition, revenue from the company’s washingtonpost.com and the Slate Group online sites increased 14 percent in 2010, to $113 million.

Mitchell, in his blog post, is absolutely correct in arguing infringements of news content are widespread on the Internet.

The problem with attacking these infringements with lawsuits, for the most part, is that defense attorneys are successfully arguing that users of special-interest websites would never have otherwise seen the material at issue on the websites of the source newspapers.

They also say so-called infringers often lacked intent to infringe, often simply need to be educated about the use of others’ content and would have promptly complied with takedown requests.

These are some of the reasons takedown notices and requests that infringing posts be replaced with links — as opposed to lawsuits — remain widespread in the news industry.

Mark Hinueber, general counsel of Stephens Media, last year said that infringers shouldn’t be surprised at being sued by Righthaven.

“I don’t think it’s a surprise when you’ve been taught since first grade not to steal,” he said.

At the same time, he acknowledged the news industry hadn’t done a good job of educating people about this issue.

Since then, three federal judges have found three defendants didn’t “steal” R-J content, but instead used it in compliance with the fair use doctrine of copyright law.

•••

There’s much more about Righthaven, Frederick and Stephens Media that Frederick didn’t comment on in today’s column.

Because of a backlash by litigation foes around the country to Righthaven’s no-warning lawsuits and what critics call coercive settlement demands and abusive litigation tactics; Stephens Media and its parent company in Arkansas likely won’t be earning any windfall profits from their investment in Righthaven.

That investment, reported by wired.com as being $500,000, and any of Righthaven’s settlement winnings could be eaten up by Righthaven’s and Stephens Media’s legal fees, as well as damages and legal fees defendants may win against both companies.

And Frederick personally has harmed the Righthaven/Stephens Media lawsuit campaign with his published “we grubstaked” Righthaven and “little friend” comment showing up in counterclaims — and the “little friend” threat even appearing in a key ruling by Hunt, chief U.S. judge for Nevada.

In finding Righthaven lacked standing to sue the Democratic Underground on June 14, Hunt required that Stephens Media remain in the case as a defendant in the Democratic Underground’s counterclaim.

The Democratic Underground, represented by some top copyright attorneys from the San Francisco area associated with the Electronic Frontier Foundation, is now seeking a fair use determination involving the posting of four paragraphs of a 34-paragraph R-J story about Sharron Angle’s U.S. Senate campaign, as well as its attorney’s fees.

“Contrary to its assertions in its moving papers, Stephens Media has threatened Democratic Underground with litigation because, according to the SAA (Strategic Alliance Agreement with Righthaven), Stephens Media approved or consented to suit against Democratic Underground,” Hunt wrote in his order. “Additionally, Stephens Media’s then CEO, Sherman Frederick, generally threatened potential defendants that he would send his ‘little friend called Righthaven after them.’ Here, Stephens Media actually did send Righthaven after Democratic Underground.”

The Democratic Underground’s interpretation of this “little friend” comment is that it refers to Al Pacino’s 1983 film “Scarface,” in which “gangster Tony Montana famously said, ‘Say hello to my little friend!’ as he wields an assault rifle against a rival drug lord in the climactic shootout scene.”

Frederick also may be upset because he’s being sued personally in South Carolina state court by Dana Eiser, who was hit with a no-warning Righthaven lawsuit after a Denver Post column showed up on her Tea Party group’s website. Eiser says she didn’t post the column and that instead it was posted by someone who was associated with her group — someone she says was protected by fair use in doing so.

Eiser and her attorneys, who have hit Righthaven with a racketeering counterclaim in federal court charging its lawsuits are fraudulent, say Eiser has suffered tremendously after Frederick’s “little friend” sued her instead of simply sending a takedown request.

Here’s what Eiser’s attorneys said in their latest court filing about what they call Righthaven’s lack of standing to sue, what they call its coercive demands that defendants forfeit their website domain names and what they call its inflated demands for damages of $150,000 plus attorney’s fees.

“Righthaven’s tactics exceed all possible bounds of decency and must be regarded as atrocious and utterly intolerable in a civilized community. Righthaven’s actions towards Eiser caused her severe emotional distress, and the distress suffered was so severe that no reasonable person could be expected to endure it,” Eiser’s filing said. “Righthaven’s actions put Eiser in fear that she would lose her possessions, her home, and her livelihood. Righthaven’s actions were in fact calculated to have that effect and did so.”

Stephens Media, Righthaven and Frederick haven’t commented on the Eiser state court lawsuit or Eiser’s new federal counterclaim against them.

Frederick, though, today expressed confidence in Righthaven and its “legitimate and righteous work of protecting newspaper content.”

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Discussion 14 comments

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  1. remarkable what you can generate when you're not a lazy sloth like the former publisher of paper down on Bonanza. it's also amazing to me how narrow the vision is of Frederick --- and now to see him play the victim card? priceless.

    as always nice stuff, Steve.

  2. It's clearly obvious that Righthaven is only playing the courts to make money. Unfortunately, this is what crooked lawyers do. Righthaven hasn't written any copyright material. What they do is only copyright something after they have discovered that it has been used by someone. This is all done with the knowledge of Stephens Media. Then Righthaven sues and splits the money with Stephens Media if they happen to get a payout. These people are crooks of the worst nature. They should be hung from the nearest tree.

  3. Every news organization should be outraged at Stephens Media and Righthaven. However they have culpability in this since, by and large, the Righthaven story has been suppressed in the main-stream media. This is especially true among newspapers who are apprehensive in reporting on their own industry.This code of silence has let Righthaven avoid the scrutiny that may otherwise have made Stephens Media tread more carefully and more responsibly.

    In one of my very first blog posts about Righthaven I predicted that Righthaven's tactics would have grave unintended consequences for the newspaper industry. It was extemely irresponsible for Stephens Media to attempt to curtail the posting of content in such a hap-hazard and shot gun approach and devised a scheme to profit over "infringements" rather than reduce them.

    It's the old adage "Choose your battles wisely". Instead of going after sites that may really be harming them they went after everyone and took a zero tolerance approach to posting content without any regard to fair use or the circumstances of the blogger.

    Instead of going after autoblogs and wholesale copying they went after cat ladies, veterans, non-profit organizations, and disabled people. Instances where there was no measurable damage done to the paper's bottom line.

    Their tactics offended nearly everyone's sense of justice and fair play. They offended the public as well as the courts and now they are reaping the whirlwind, as they should.

  4. "is extremely creative as in fiction"

    you wouldn't know fact from fiction if it bit you in the butt. and unlike your protein injection source, Frederick, Steve loads his stories up with incontrovertible fact. Or are you saying that quoting several judges orders is fiction? or are you saying that you know more than Moody's when it comes to financial forecasting? If so seek help straight away --- but right after you toss your computer out the window.

  5. 90% of the issues with standing, harm done, etc could be solved if the RJ and Stephens Media just "manned up" and sued the infringers themselves.

    After reading the judges rulings it seems clear that if the newspaper itself brought the lawsuit, the fair use rulings might not stand, since they would have a much stronger footing for damages and no one could question the copyright ownership issue.

    Stop being a passive-aggressive little b*tch and sue the infringers yourself. Hire Righthaven as outside council to represent you in these matters. The next step forward seems really easy to me. If you're worried about counterclaims and liability, only sue a few people initially (a broad spectrum of violations so you can figure out where the line is) and see those all the way through before you move ahead.

  6. If there is one thing to learn from Righthaven is that lawsuits are the very last resort, after all else fails, and rightfully carry a risk to the plaintiff so people don't abuse the courts by using them as their own personal ATMs and/or collection agencies.

  7. Perhaps the insufferable bore should seek divine intervention since he appears to sit at the right hand of God.

  8. "You don't care to use the tools'

    ohhhh, we "care to use the tools" ---- but I guess asking you neanderthals to use them correctly it just too much, eh?

    you refuse to see the issue at hand.. or you do and you're trying to obfuscate the issue. either way you look like a tard.

  9. SgtRock

    They are not using emotion to make these rulings. They are infact reading the and applying the law as written.

    http://www.copyright.gov/fls/fl102.html

    ----

    Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered fair, such as criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair:

    1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes

    2. The nature of the copyrighted work

    3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole

    4. The effect of the use upon the potential market for, or value of, the copyrighted work.

    ----

    The rules, as outlined by the US copyright office, singles out non-profits as well as using works for criticism and news reporting. which would account for most bloggers who's blogs do not generate any revenue.

    Number 4 is particularly pertinent where Righthaven has failed to show any market value of the works being effected or diminished by the re-postings.

    It is in fact your side that is demanding judges ignore the law and pretend that fair use does not exist.

  10. In all fairness, I think Judge Mahan and Judge Pro played a bit loose with the guidelines for fair use in allowing a full copy and discounting the value of the creative effort expended in creating columns and investigative reporting. Given that Title 17 makes specific mention of using copied material in a face-to-face setting for educational use it could be argued that full copies in an unrestricted environment such as a website goes beyond what was intended.

    My biggest complaint has always been the RH business model that seems like nothing more than digital ambulance chasing and shakedowns.

    That is not to say there has not been legitimate fair use by some of the targets, Democratic Underground comes to mind immediately.

    I agree that Righthaven is doing far more harm to copyright protection than good, and we discussed this months ago, even last year, when it first started.

  11. I'm guessing that Righthaven won't be asked to present any workshops on intellectual law/copyright enforcement at this year's newspaper/media conventions??

  12. Had ownership of the copyrights been truly transferred, standing would not be an issue and I can think of at least one strong argument to demonstrate harm to the market for the works.

    That said, I don't see any way that Righthaven can acquire actual ownership in a fashion that allows the original owners to retain control over the disposition of their works. It is clear that Stephens Media (and presumably MediaNews) feel that allowing others to have even licensed access to their works would be detrimental to the value of the works they have published and are unwilling to allow Righthaven to have any actual control of the works.

    There *is* however a way for Righthaven to acquire an exclusive license in a narrow area that would give it standing to sue over infringements of that particular license. I'll leave it as an exercise for the reader to deduce what that right would be.

  13. boftx

    This still does not solve Righthaven's deadly flaw and that is it cannot claim harm to itself in any way for any infringements. The Righthaven is set up is to actually benefit from infringements and therefor it is impossible for them to claim harm for even the most blatant of infringements. This fact has weighed heavily on all the cases that have produced rulings.

    4. The effect of the use upon the potential market for, or value of, the copyrighted work.

    This part of the copyright law is the death-nail to Righthaven's argument of damages. They cannot get past this and is the very reason they have hit a brick wall in the courts.

  14. Ken,

    Point 4 is just one factor, and all must be considered together. No single point is controlling by itself. I think Point 2 and Point 3 have been "loosely" applied, to put it kindly.

    I believe there are ways for RH to actually correct the legal defects in its business model, but they would also have to address the moral defects as well given the environment they have created on the bench.

    Yes, as the SAA stands now, amendments not withstanding, RH can not say with a straight face that it has true ownership or a market on its behalf. So it is still fatally flawed.

    But *if* they could in fact establish true ownership, then there is an argument that would show there could be harm to the market. But RH would have to change the basic structure of the relationship between it and its clients in order to establish the market.

    I doubt that RH and its clients would want to make the changes needed, though.