Suits by so-called “copyright trolls” are of keen interest to operators of social media sites, given that user-generated content, or, as some call it, “user-uploaded content,” is a cornerstone of the social media experience. In the April 2011 issue of Socially Aware, we reported on a recent string of lawsuits filed by Righthaven, a company in the business of acquiring third-party copyrights for the purposes of identifying and bringing suit against possible infringers. In that article, we described several recent Righthaven claims against bloggers, forum posters, and other social media users based on their reposting and (re)use of online content. We also foreshadowed the possible demise of Righthaven’s legal strategy, noting that courts appeared to be concerned that Righthaven’s only interest in the copyrights at issue might be a financial one – a concern supported by an “assignment” of these copyrights to Righthaven that the Electronic Frontier Foundation (“EFF”) called “a sham.”
Recently, other courts presiding over Righthaven lawsuits have addressed the EFF’s allegations, specifically, regarding the nature and manner of the assignment to Righthaven of the allegedly infringed copyrights, and the implications of that assignment for Righthaven’s standing to sue.
Standing to sue for copyright infringement is described in the U.S. Copyright Act (the “Act”). Under Section 501(b) of the Act, only the legal or beneficial owner of an exclusive right in a copyright is entitled to sue for infringement. This requirement was included in the Act both to protect alleged infringers against a multiplicity of lawsuits and to ensure that copyright owners are made aware of, and given the opportunity to participate in, lawsuits affecting their legal interests. Although exclusive rights afforded to copyright owners under Section 106 of the Act are “divisible” and may each be assigned or transferred to third parties individually or collectively, the right to sue is not one of those enumerated exclusive rights. Therefore, an entity like Righthaven may only obtain the right to sue for infringement if a copyright owner also assigns one of its Section 106 exclusive rights in the copyright at issue (further, that entity may only obtain the right to sue for past infringement if the assignee expressly assigned such right).
Righthaven’s standing to sue under Section 501(b) was precisely the target of the EFF’s and Democratic Underground’s allegations in Righthaven v. Democratic Underground, one of the actions referenced above. Righthaven had brought suit alleging that a message-board user, by posting four paragraphs from a 34-paragraph story from the Las Vegas Review-Journal (“LVRJ”) on the Democratic Underground site, had infringed “Righthaven’s” copyright. Righthaven alleged that it had acquired, via an assignment from Stephens Media LLC (“Stephens Media”), publisher of the LVRJ and Righthaven’s original business partner, the rights in the underlying copyrights that were necessary for Righthaven to bring suit. (Righthaven has made the same or similar claims in most of the over 270 lawsuits that it has filed to date.)
In Democratic Underground, the court noted that the assignment purported to transfer to Righthaven all copyrights necessary for Righthaven to be recognized as the owner of the subject works for the purpose of being able to seek redress for infringement; however, the assignment did not assign to Righthaven a specific exclusive right. Further, in discovery, Righthaven disclosed to Democratic Underground a “Strategic Alliance Agreement” (“SAA”) that had been entered into between Righthaven and Stephens Media before the assignment at issue and which, by its terms, governed all subsequent assignments between those parties. Section 7.2 of the SAA stated that notwithstanding any assignment, Stephens Media retained the exclusive license to exploit each purportedly “assigned” copyright for any lawful purpose, and that “[Righthaven] shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the [assigned copyrights] other than the right to proceeds in association with a [recovery in an action for infringement].” The SAA also gave Stephens Media the right to terminate any such assignments in good faith on notice to Righthaven, and entitled Stephens Media to a 50% share of any awards received by Righthaven in lawsuits that Righthaven later filed based on the subject copyrights.
The court’s analysis of the assignment, viewed in light of the SAA, proved decisive in this case. Considering the nature of the rights held by Righthaven under the assignment and under the SAA, the court ruled that, given that the assignment did not assign to Righthaven the legal or beneficial ownership of any exclusive right in the subject copyright, Righthaven actually only possessed “the bare right to bring and profit from copyright infringement actions.” The plain and simple effect of the SAA, it added, was to prevent Righthaven from obtaining, having, or otherwise exercising any right other than the mere right to sue, given that Stephens Media retained (or was granted back by Righthaven) all other rights and did not itself assign any exclusive right in the applicable copyright to Righthaven.
These rulings, and the fact that Stephens Media could terminate the assignment at any time and effect a complete reversion of the ownership, exposed the assignment as insufficient for the purposes of supporting Righthaven’s standing to sue under the Act, as the EFF had sugguested originally. In an order dated June 14, 2011, the court dismissed with prejudice Righthaven’s suit for lack of standing. In addressing Righthaven’s claim that the SAA did not affect its rights under the assignment – an assertion the court called “disingenuous, if not outright deceitful” – the court ordered Righthaven to show cause why it should not be sanctioned for its failure to disclose Stephens Media as an interested party in this and other Righthaven lawsuits.
The decision in Democratic Underground has rippled through other suits brought by Righthaven, as both defendants and presiding judges have taken note of Democratic Underground’s and the EFF’s allegations regarding Righthaven’s standing to sue. One such case is Righthaven v. Wayne Hoehn, in which Righthaven sued Hoehn, a registered contributor to madjacksports.com, for copyright infringement based on allegations that he posted an LVRJ article to that site. Hoehn, like the Democratic Underground, challenged Righthaven’s standing to sue on the basis that Righthaven did not own any exclusive right in the article’s copyright. In defending against Hoehn’s assertion, Righthaven and Stephens Media sought to clarify the SAA by entering into evidence an amended version of that agreement, which they argued plainly showed that that the SAA was merely intended to secure Stephens Media’s ability to continue to exploit the subject copyrights following their assignment, and not to limit Righthaven’s right to sue for infringement. Finding Righthaven’s claim (and the amended SAA) unpersuasive, the court noted that the amendment did not change the jurisdictional facts as they existed at the time the suit was filed, adding that the original SAA unambiguously qualified later assignments with restrictions and reversionary rights (i.e., an obligation to sue within 60 days, and Stephens Media’s right to block any suit) such that, in the end, Righthaven did not actually own any exclusive rights.
The Hoehn court ultimately dismissed Righthaven’s suit for lack of standing, and Judge Philip Pro held that the amended SAA, even if relevant, had failed to correct Righthaven’s standing deficiencies because it still only gave Righthaven an “illusory right” to exploit the copyright. (He also ruled, almost as an aside, that Hoehn’s use of the article was protected as fair use regardless of Righthaven’s standing to sue.)
Various court orders in a more recent case show that Nevada’s appetite for Righthaven’s lawsuits may be waning. In Righthaven v. Pahrump Life, Righthaven sued a blog owner for allegedly reprinting LVRJ articles. In an order dated August 12, 2011, Judge Mahan reiterated concerns raised in Democratic Underground and Hoehn concerning Righthaven’s standing to sue, supplementing earlier arguments by noting that Righthaven had violated local court rules in failing to list Stephens Media as a party with “a direct, pecuniary interest in the outcome of the case,” despite the company’s entitlement under the SAA to 50% of Righthaven’s recovery. Addressing Righthaven’s previous attempts to amend the SAA (and denying Righthaven’s request to further amend that agreement), Judge Mahan commented that Righthaven’s actions were “merely an attempt . . . to impermissibly change the facts pleaded in the complaint to manufacture standing” and to supplement its complaint with additional facts not present when the case was filed – an impermissible purpose under the Supreme Court’s jurisprudence on standing. Although Judge Mahan requested further briefing on Righthaven’s standing to sue, the order made clear that Righthaven would face a steep climb to establish standing and the merits of its claims, and invited Pahrump Life to argue why the case should be dismissed with prejudice.
As more recently reported, Righthaven’s standing troubles are not limited to actions filed in Nevada. In an order entered on September 27, 2011 in Righthaven v. Leland Wolf, Colorado’s Judge John Kane reiterated the holdings of various Nevada courts, including those discussed above, in dismissing Righthaven’s copyright infringement suit against a defendant who had reprinted on his personal blog a Denver Post photo of a TSA agent performing a pat-down. In holding that Righthaven’s “bare right to sue” was insufficient to support its standing to bring suit, Judge Kane added in dicta that to allow such suits to proceed would run counter to the constitutional goal of furthering the progress of the arts and the sciences. Specifically, he noted that a party with the bare right to sue “derives its sole economic benefit by instituting claims of infringement, a course of action which necessarily limits public access to the copyrighted work … [which] prioritizes economic benefit over public access, in direct contradiction to the constitutionally mandated equilibrium upon which copyright law is based.” Some commentators have noted that this Colorado decision may have a domino effect on the other 58 or so cases Righthaven has filed in Colorado, considering that Judge Kane is presiding over all of them.
The fallout from these rulings, which appear to have considerably narrowed Righthaven’s room for legal maneuvering, has been dramatic and may signal an end to what some have called Righthaven’s “sue-first-ask-questions-later” legal campaign. For example, on August 15, Judge Pro in the Hoehn case ruled to award Hoehn over $34,000 in attorneys’ fees and costs, finding the award reasonable and supported by the defendant’s arguments. Wired later reported that at an early September hearing in which Righthaven indicated its intent to appeal Judge Pro’s order, Righthaven told Judge Pro that it might be forced to seek protection through bankruptcy if the order to pay attorneys’ fees was not stayed.
Righthaven has suffered a similar fate in several cases since then. First, following the Hoehn ruling, Judge Kane ordered Righthaven to pay the defendant’s legal fees. Second, on October 26, 2011, it was reported that Righthaven was ordered to pay $119,488 in attorneys’ fees and costs in the matter of Righthaven v. Thomas DiBiase (another Nevada case that was dismissed in light of Righthaven’s lack of standing to sue), representing “every dollar [DiBiase’s attorneys] asked for in [the defendant’s] fee request.” And Ars Technica recently reported that due to Righthaven’s inability to file its appeal on time or pay the over $34,000 that it was ordered to remit, Judge Pro authorized U.S. Marshals in Nevada to use “reasonable” force to seize nearly $64,000 in cash and assets from Righthaven, representing the original award plus further costs incurred since August 15, 2011. In the wake of all of these setbacks, it remains to be seen how long Righthaven’s litigation campaign will continue to survive.