Righthaven asks appeals court to block dismantling of the company
10 October 2011
Despite its backing by billionaire Arkansas investment banker Warren Stephens, copyright lawsuit filer Righthaven LLC of Las Vegas said Sunday it has been unable to secure a $34,045 bond to guarantee payment of a defendant’s attorney’s fees.
In an "urgent motion" filed Sunday with the 9th U.S. Circuit Court of Appeals in San Francisco, Righthaven asked the court to strike a Nevada judge’s order that it post the bond to ensure attorneys for copyright lawsuit defendant Wayne Hoehn get paid, should Righthaven lose its appeal in the Hoehn case.
Righthaven since March 2010 has filed 275 no-warning lawsuits against website operators, bloggers and message board posters like Hoehn charging material from the Las Vegas Review-Journal and the Denver Post was posted online by the defendants without authorization.
The litigation campaign stalled this summer after Righthaven was hit with three court defeats finding defendants were protected by the fair use doctrine of copyright law in using R-J material.
Five federal judges in Nevada and Colorado, in the meantime, found Righthaven lacked standing to sue over R-J and Post content because it didn’t really control the newspaper copyrights it claimed to own.
While Righthaven appeals the fair use and standing decisions, it’s desperately trying to avoid paying the legal fees of defendants that defeat it in court.
Its most urgent problem involves Hoehn, whose attorneys defeated a Righthaven lawsuit over an entire R-J column posted without authorization on a sports betting website.
U.S. District Judge Philip Pro in Las Vegas rejected that suit on both standing and fair use grounds and ordered Righthaven to pay Hoehn’s $34,045 in legal fees.
When Righthaven said this fee award could bankrupt the company, Pro ordered Sept. 28 that Righthaven instead post a bond. Bonds usually can be obtained with cash for just a fraction of the face amount, along with other collateral.
But on Sunday, Righthaven said in its urgent motion that it’s having trouble obtaining such a bond and it asked the court to stay the fee award to Hoehn’s attorneys while it pursues its appeal.
"To date, Righthaven has been unable to secure a bond. The terms required by the bonding companies that Righthaven’s counsel has investigated and/or contacted are an impediment to meeting the district court’s stay requirement," said Righthaven’s filing by Las Vegas attorney Shawn Mangano. "The bonding companies are requiring what amounts to a full cash bond. In sum, the bonding companies ask for full cash payment, certain forms of collateral held by the company or irrevocable letters of credit be posted to obtain a bond in the amount requested. To date, Righthaven has been unable to satisfactorily meet these requirements in a manner acceptable to a bonding company. Due to the pending appeals and the stay of certain active litigation matters, Righthaven’s operating capital is being utilized to service its monthly operating expenses. As such, it is presently unable to allocate more than $34,000 toward the bond required by the district court to stay the judgment pending appeal."
Righthaven said if the appeals court doesn’t act by Oct. 28, the deadline for it to post a bond, Hoehn’s attorneys can resume efforts to seize Righthaven assets including the copyrights it claims to own and that are the basis for its lawsuits.
"Righthaven unquestionably faces an imminent threat of irreparable harm through Hoehn's judgment enforcement efforts. As set forth in the motion for writ of execution, Hoehn is clearly seeking to seize and liquidate Righthaven’s intangible intellectual property assets," Mangano’s filing said.
"Absent issuance of a stay pending appeal, Hoehn’s judgment enforcement efforts will seek to dismantle the company and end its ability to operate as a going concern. Hoehn’s counsel has given no indication of a willingness to accept any structured settlement payments toward satisfaction of the judgment," the filing said.
Righthaven is 50 percent owned by the family of Warren Stephens, whose wealth is estimated by Forbes at $2.8 billion. The Stephens family’s Stephens Media LLC also owns Righthaven’s initial lawsuit partner, the Las Vegas Review-Journal daily newspaper.
On top of watching Righthaven’s lawsuit campaign fall apart, Stephens Media has had to hire its own attorneys to defend against what could be expensive counterclaims against Stephens Media charging the Righthaven lawsuits were based on sham copyright assignments provided by Stephens Media.
Stephens Media has denied these assertions and its attorneys have said the Righthaven suits targeted a "parasitic business model" in which copyright infringers regularly steal newspaper content.
The other half of Righthaven is owned by its CEO, Las Vegas attorney Steven Gibson.
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