In a resounding victory for victims and targets of copyright trolls everywhere, a Federal Court in Nevada has thrown out a lawsuit brought by Righthaven, Inc. To catch folks up who are not familiar with Righthaven, they are a company formed by a lawyer out west to sue bloggers, websites and others who use part of an article or a picture in their post. If a website quotes a line or two of a newspaper article, Righthaven acquires the right to sue for copyright infringement from the company that produces the newspaper (Stephens Media, which produces newspapers in Nevada and Colorado) and then sues the alleged offender. No cease and desist letter, no claim letter, no warning of any kind, just files a federal lawsuit directly against the alleged infringer. While there are a number of problems with the claim, one of the biggest is that Righthaven is not the copyright holder, they are just a company that was assigned the right to sue. This has been covered in previous posts by me here and on my copyright website www.extortionletterinfo.com.
Well now Judge Roger Hunt of the Federal Court in Nevada has lashed into Righthaven and thrown out its lawsuit against the website Democratic Underground. Here is the key language from the decision:
Pursuant to Section 501(b) of the 1976 Copyright Act… only the legal or beneficial owner of an exclusive right under copyright law is entitled, or has standing, to sue for infringement. . . .. Section 106 of the Act defines and limits the exclusive rights under copyright law…. While these exclusive rights may be transferred and owned separately, the assignment of a bare right to sue is ineffectual because it is not one of the exclusive rights…. Since the right to sue is not one of the exclusive rights, transfer solely of the right to sue does not confer standing on the assignee…. One can only obtain a right to sue on a copyright if the party also obtains one of the exclusive rights in the copyright… Further, to obtain a right to sue for past infringement, that right must be expressly stated in the assignment.
But His Honor did not stop there. He was very upset about the way Righthaven played fast and loose with the facts. In earlier decisions, Judge Hunt and other judges in the same courthouse ruled that Righthaven had the right to bring the suit, because in court papers Righthaven declared it was the actual copyright owner and it failed to disclose to the court that Stephens Media, the true owner of the copyright, was to receive 50% of any recovery:
Finally, Righthaven contends that multiple courts within this district have already determined that Righthaven has standing to bring claims for past infringement . . . based on the plain language of the copyright assignment. At best, this argument is disingenuous. As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. Righthaven did not disclose the true nature of the transaction by disclosing . . . Stephens Media’s pecuniary interests. As the [agreement between Righthaven and Stephens] makes abundantly clear, Stephens Media retained the exclusive rights, never actually transferring them to Righthaven regardless of Righthaven’s and Stephens Media’s current contentions. Further, Righthaven also failed to disclose Stephens Media in its certificates of interested parties, despite Stephens Media’s right to proceeds from these lawsuits…
This explains why Righthaven fought so hard in this case to not reveal the agreement between it and Stephens Media. It is hard to understand how any lawyer or company could think they would get away with this kind of direct fraud upon the court. The court ordered a sanctions hearing in a few weeks and I expect Righthaven to get hit hard with costs and legal fees. Once again, the mellifluous words of Judge Hunt:
As shown in the preceding pages, the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court. Here, however, the Court will only focus on the most factually brazen: Righthaven’s failure to disclose Stephens Media as an interested party in Righthaven’s Certificate of Interested Parties. (Dkt. #5.) Rule 7.1-1 of the Local Rules of Practice for the District of Nevada requires parties to disclose “all persons, associations of persons, firms, partnerships or corporations (including parent corporations) which have a direct, pecuniary interest in the outcome of the case.” This Local Rule requires greater disclosure than Federal Rule 7.1, which only requires non-governmental corporate parties to disclose parent corporations or corporations owning more than 10% of the party’s stock. Frankly, if receiving 50% of litigation proceeds minus costs (Dkt. #79, SAA Section 5) does not create a pecuniary interest under Local Rule 7.1-1, the Court isn’t sure what would.
Making this failure more egregious, not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District. Accordingly, the Court orders Righthaven to show cause, in writing, no later than two (2) weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the Court.
Righthaven filed 200 cases in Nevada alone. If the Judge hits them with sanctions and attorneys fees in all 200 cases, Righthaven could turn in to Gonehaven! This case is also a testament to why many copyright trolls do not pursue litigation -because in the end they may not have the proof they need to make out their claim. They really on fear and intimidation and hope that recipients of their claims and complaints will just send a check rather than investigate the merits of their claim.
Let this case be a cautionary tale to those who troll that courts are not going to look lightly at misrepresentation.