Judge: Righthaven lacked standing, abused Copyright Act
27 September 2011
27 Sept. 2011 7:12 p.m.
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Righthaven LLC of Las Vegas lacked standing to file copyright infringement lawsuits in Colorado under its lawsuit contract with the Denver Post and abused the Copyright Act in doing so, a federal judge ruled Tuesday.
Senior U.S. District Judge John L. Kane in Denver granted summary judgment for Righthaven lawsuit defendant Leland Wolf and the It Makes Sense Blog against Righthaven.
"In light of the need to discourage the abuse of the statutory remedies for copyright infringement, I exercise my discretion under the Copyright Act and order that Righthaven shall reimburse Mr. Wolf's full costs in defending this action, including reasonable attorney's fees," Kane's order said.
A Las Vegas attorney representing Righthaven, Shawn Mangano, said the company would appeal. Righthaven seems to be pinning its hopes on the fact that copyright case law isn't well established in the 10th U.S. Circuit Court of Appeals, which includes Colorado, something Kane noted in his ruling.
As a test case, the Wolf case was the lone active Righthaven case in Colorado among 34 still open there. Kane's ruling indicates the other 33 will now be dismissed as well.
In total, Righthaven had filed 57 lawsuits over Denver Post material in Colorado since Jan. 20. These suits alleged websites, message board posters and bloggers had used a Post TSA pat-down photo without permission -- even though the photo had gone viral on the Internet, was distributed to news outlets by The Associated Press and many defendants said they had no idea it came from Denver or the Denver Post and was subject to copyright protection.
Twenty-three of the lawsuits had been closed prior to Kane's ruling after they were settled, voluntarily dismissed or otherwise closed under undisclosed terms.
The best known of the settling defendants in Colorado was white supremacist David Duke. He settled under undisclosed terms.
Kane's order Tuesday suggests Righthaven had lacked standing in those 23 cases as well.
Righthaven, which also sues over Las Vegas Review-Journal material, has filed 275 lawsuits alleging copyright infringement since March 2010. The lawsuit campaign stalled this summer over problems with its standing to sue in Nevada and charges its no-warning lawsuits were abusing the court system as they involved dubious legal claims, were filed without warning and generally were filed against defendants who had no idea they might be infringing on copyrights.
Righthaven, however, has insisted the suits are needed to crack down on extensive ongoing infringements of newspaper content.
"The issue presented in this case (is) whether a party with a bare right to sue has standing to institute an action for infringement under federal copyright law," Kane's ruling said. "I hold that the answer to that question is a forceful, yet qualified, 'no.'"
This is the same problem Righthaven had with its lawsuits over Review-Journal material -- while Righthaven claimed to own the material it was suing over, the Review-Journal and the Denver Post maintained control of the content and were the true owners, five judges have now ruled.
Four federal judges in Las Vegas have dismissed seven Righthaven lawsuits because, under precedent in the 9th U.S. Circuit Court of Appeals including Nevada, copyright infringement plaintiffs must have actual ownership of the material they sue over, not just the bare right to sue.
Defense attorneys say this legal concept recognizes that copyrights have a special place in the law encouraging and protecting creativity and fostering the arts and political discussion, and shouldn't be bartered for lawsuit purposes. Under the concept of fair use, which has doomed three Righthaven lawsuits so far, people can use the copyrighted works of others within limits.
Righthaven says it has corrected its standing problem for the Review-Journal lawsuits with a new lawsuit contract with R-J owner Stephens Media LLC, though two judges have expressed skepticism it currently has the right to sue and there have been no definitive rulings on the issue.
Righthaven has not amended its lawsuit contract with the Denver Post, whose owner has chosen not to renew the contract for Righthaven's copyright protection services.
In looking at the Copyright Act, Righthaven's copyright assignment agreement with MediaNews Group Inc., owner of the Denver Post, and their copyright assignments, Kane found language in the agreement about a "purported assignment of 'rights requisite'" is "meaningless."
"MediaNews Group retained all rights to exploit the work; no legal interest ever changed hands," Kane wrote in his ruling. "Thus, when read together, the assignment and the copyright assignment agreement reveal that MediaNews Group has assigned to Righthaven the bare right to sue for infringement – no more, no less. Although the assignment of the bare right to sue is permissible, it is ineffectual.
"Righthaven is neither a ‘legal owner’ or a ‘beneficial owner’ ... and it lacks standing to institute an action for copyright infringement," his ruling said.
Copyright law expert Eric Goldman, associate professor at the Santa Clara University School of Law and director of its High Tech Law Institute, said Kane "did a careful `first-principles' review of the law on copyright assignment" rather than simply relying on precedent in the 9th U.S. Circuit Court of Appeals -- precedent that has been used against Righthaven in its Nevada cases.
"This makes the opinion more likely to survive an appeal. In addition to completely rejecting Righthaven's assignment agreement, the opinion bristles with hostility towards Righthaven's basic business model. It's hard to imagine a more resounding judicial rejection of Righthaven's efforts," Goldman said.
Tuesday's ruling by Kane suggests that Righthaven also lacked standing to file four more lawsuits over Denver Post content in Nevada – including two that were settled under undisclosed terms against deep-pocketed defendants Matt Drudge and Citadel Broadcasting Corp. of Las Vegas.
Kane’s ruling also suggested Righthaven didn’t have standing to sue Tea Party activist Dana Eiser in federal court in South Carolina over a Denver Post column. His ruling is not binding on that court, and her dismissal motion is pending.
"This ruling (by Kane) was even worse for Righthaven than many of the earlier rulings. And every court that has issued a final ruling has ruled against Righthaven. At some point you have to wonder how much longer they will continue fighting," said Todd Kincannon, Eiser's attorney who also has been agitating against Righthaven in its Colorado and Nevada cases.
It hasn't been determined whether defendants that settled with Righthaven -- under its now-invalidated Denver Post lawsuit contract -- have any recourse against Righthaven or the Post.
Kane's order that Righthaven pay Wolf's legal fees could turn out to be expensive for Righthaven, especially if it's expanded to include other Colorado cases where defendants had hired attorneys to fight Righthaven.
In the Wolf case alone, his attorneys have already asked Kane for an injunction barring Righthaven from disgorging assets until they receive their legal fees for representing him.
They've demanded Righthaven put up a $25,000 bond to ensure they get paid, something Kane has not yet ruled on.
Wolf was represented by Randazza Legal Group of Las Vegas as well as Denver attorney Andrew John Contiguglia.
Also fighting Righthaven in the case were friends of the court the Electronic Frontier Foundation of San Francisco and Kincannon's group Citizens Against Litigation Abuse.
Two counterclaims had been filed against Righthaven in the Colorado cases. It's unclear whether they'll be able to proceed after Kane's ruling Tuesday.
One was filed by defendant BuzzFeed. That claim sought to represent all the Colorado defendants in a class-action charging Righthaven’s lawsuits there were part of an extortion litigation business model.
The other was filed by Freedom Force Communications in a lawsuit involving the TSA pat-down photo allegedly showing up on the Minot, N.D.-based sayanythingblog.com website. That counterclaim charged Righthaven didn’t have standing to assert the copyright infringement claims against Freedom Force and its codefendants.
Kane's ruling Tuesday affects the open Righthaven cases in Denver against Wolf along with suits against David Rozzell, Shaquan Shamar Brown, Tripso Inc., Glenn Church and Ron Eldridge.
Also, J.J.E.F. (Jackson, Johnson, Edwards & Fountain) Holdings, David Peterson, Death and Taxes Media LLC, William Sumner and Andy Hwang.
Also, Jason Chrystal, Green Celebrity Network, OSM Media LLC, Hans Vondergruen and Matzoball Entertainment Online LLC.
Also, Freedom Force Communications, Secure Dreams LLC, Baltic Enterprises LLC, Q Communications Inc. and Toronto Star Newspapers Ltd.
Also, Skyword Inc., Pantheon Promotions Inc., Donald Douglas, Fugly Media LLC and Trinity Vision Media LLC.
Also, Erin Breig, Christopher Mahon, Rachel Bjorklund, Alicia Luke and Neil Rosekrans.
Also, A Small Corner of Sanity, BuzzFeed Inc. and Iconix Brand Group Inc.
(This list includes just the first named defendant in each case. In several cases, there are multiple defendants).
In another Righthaven development Tuesday, Righthaven filed an "urgent motion" with the 9th U.S. Circuit Court of Appeals asking it to stay action in Righthaven's lawsuit against Kentucky message board poster Wayne Hoehn over a Review-Journal column.
After Hoehn prevailed in the suit with standing and fair use victories, U.S. District Judge Philip Pro through Tuesday had not acted on Righthaven's request that he stay his order that Righthaven pay Hoehn's $34,045 in legal fees while Righthaven appeals.
Attorneys for Hoehn, in the meantime, have asked that Pro find Righthaven in contempt for not paying, appoint a receiver over Righthaven and that Pro or the court clerk issue an order allowing the U.S. Marshals Service to seize its assets.
"These sweeping contempt and judgment enforcement efforts unquestionably subject Righthaven to the immediate threat of irreparable harm by seeking to appoint a receiver over its affairs, as well as to seize and liquidate its tangible and intangible assets, which include the company’s intellectual property rights in and to copyright protected content that is directly at issue in this case, as well as those at issue in several other appeals pending before this court along with content at issue numerous cases pending in the district of Nevada and the district of Colorado," Mangano argued in Tuesday's motion.
In a new legal argument, he said that staying the Hoehn case while it's appealed is in the "public interest."
"Resolution of these issues impacts not just Righthaven and Hoehn, but it impacts a vast array of businesses and individuals utilizing the Internet on a daily basis. For instance, Righthaven’s appeal implicates the parameters under which non-content generating copyright holders can enforce rights in and to assigned content. Assignment of copyright-protected content occurs throughout the country on a daily basis. The public would unquestionably benefit from additional case law that sets forth the requirements for properly conveying ownership in and to copyright protected content together with the right to sue for accrued infringement claims," Mangano wrote in his order. "Granting a stay ensures that these issues will be presented to this court for a decision.
"Denying stay relief, however, necessarily raises the possibility that Righthaven may be forced to file bankruptcy to protect is intellectual property and propriety assets from seizure and liquidation, which would have grave implications for the company’s ability to prosecute the appeal in this case as well as its appeal in other cases from the District of Nevada," Mangano wrote in his brief.
Righthaven has now twice threatened bankruptcy even though it's financially backed by Arkansas investment banking billionaire Warren Stephens and his family, who also own the Review-Journal.
The company's financial prospects appear to have dimmed with action on its lawsuits stalled this summer, meaning Righthaven hasn't collected much settlement revenue. And now, it appears its entire investment in the 34 open Colorado cases was wiped out by Tuesday's ruling by Kane.
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