Defense attorneys say Righthaven missed deadline to pay legal fees

Defense attorneys on Friday stepped up the pressure on Las Vegas copyright lawsuit filer Righthaven LLC, asking a judge to appoint a receiver to run the company after it failed to pay their legal fees by the deadline.

The request was filed in U.S. District Court by Randazza Legal Group of Las Vegas, which also asked U.S. District Judge Philip Pro to find Righthaven in contempt and to sanction it.

A Righthaven attorney, however, called the Randazza filing “inflammatory fodder.”

At issue are $34,045 in fees Pro had ordered Righthaven to pay the Randazza law firm for its representation of Wayne Hoehn, who defeated Righthaven in one of its 275 no-warning copyright lawsuits.

Pro found Righthaven lacked standing to sue Hoehn and that Hoehn was protected by the fair use doctrine of copyright law when he posted, without authorization, an entire Las Vegas Review-Journal column on a sports betting website message board.

With the fees due to Randazza by Wednesday of this week, Righthaven last week asked Pro to stay his fee order while Righthaven appealed. Pro didn’t act on Righthaven’s request for a stay and the deadline passed with Randazza going unpaid.

Randazza asked Friday that a receiver be appointed, that Righthaven be found in contempt, that its principals personally appear at a hearing to determine any further sanctions and that Righthaven be required to post $148,118 in cash or a bond with the court.

That amount would cover Hoehn’s fees to date as well as his fees during the appeal.

“To ensure compliance with the court’s prior order and any contempt sanctions it issues, the court has discretion to appoint a receiver to manage Righthaven’s remaining assets and business,” Randazza’s filing said, noting Righthaven has already warned it may face bankruptcy if a judgment creditor tries to seize its assets.

“Righthaven, lacking a stay from this court, has defied its clear and unambiguous order. It is in contempt,” the filing said. “Since Righthaven has defied this court’s lawful order by refusing to pay Hoehn’s attorney’s fees, or take the remedial action of posting a bond with the court — to which defendant would readily stipulate — it must be brought to heel before this court and its orders.”

Shawn Mangano, a Las Vegas attorney representing Righthaven, suggested the Randazza filing was made to give the Randazza firm some extra talking points for a hearing next week in Denver on Righthaven defendant Leland Wolf’s motion that the Righthaven lawsuit against him be dismissed.

Wolf’s case will likely decide the fate of all 33 open Righthaven/Denver Post cases in Colorado.

“Given that the district court (Judge Pro) has not ruled on Righthaven’s application by the compliance date set forth in its order granting the defendant’s motion for attorney’s fees, Righthaven will be seeking a stay of the judgment from the 9th Circuit unless the district court grants such relief in the interim,” Mangano said Friday. “The defendant’s filing was fully anticipated and was likely done to provide opposing counsel with additional inflammatory fodder to present at the upcoming hearing concerning Leland Wolf’s motion to dismiss.

“Defendant’s (Hoehn’s) filing in no way changes the fact that Righthaven fully expects the judgment to be reversed on appeal by the 9th Circuit,” Mangano said.

Separately, Mangano and another outside attorney for Righthaven, Dale Cendali, on Friday appealed a key ruling against Righthaven in its lawsuit against the Democratic Underground.

U.S. District Judge Roger Hunt ruled that Righthaven lacked standing to sue the Democratic Underground and later refused to allow Righthaven back into the case after it was removed for lack of standing.

The latter ruling was appealed Friday, with the initial ruling finding Righthaven lacked standing being part of the appeal record.

That case remains active because the Democratic Underground is pursuing a counterclaim against Stephens Media LLC, owner of the R-J.

Friday’s appeal brings to five the number of cases in which Righthaven is asking the 9th U.S. Circuit Court of Appeals to overturn dismissals of its lawsuits based on fair use, lack of standing, or both.

This indicates the Righthaven litigation — at least in the appeals court — will last well into 2012 or later. That’s assuming Righthaven stays out of bankruptcy and continues to finance the appeals.

Righthaven launched its litigation campaign in March 2010 with claims the lawsuits are needed to deter rampant online infringement of newspaper content.

Critics, however, say Righthaven is merely trying to make money with a mass lawsuit model involving frivolous lawsuits, dubious legal claims and efforts to coerce defendants — generally naïve about copyright law — into settling.

Righthaven has seen the lawsuit campaign grind to a halt this summer while it waits for judges in Nevada, Colorado and South Carolina to rule on whether it has standing to sue.

Hunt, Pro and two other Nevada judges threw out Righthaven lawsuits based on the early version of Righthaven’s lawsuit contract with Stephens Media, finding the R-J remained in control of the material at issue despite Righthaven’s claim of ownership.

Copyright plaintiffs must actually control the material they sue for, the judges said. That way, defense attorneys say, copyrights aren’t bartered for Righthaven-style lawsuits.

Righthaven says it has amended the lawsuit contract with Stephens Media and now has an ironclad right to sue — a contention that Hunt and U.S. District Judge James Mahan have expressed skepticism about.

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