June 20, 2011 | By Kurt Opsahl

Troll Fail: Righthaven Smacked Down Again

Notorious copyright litigation company Righthaven got another smack down from the Federal bench today, in Righthaven v. Hoehn. In line with Judge Roger Hunt’s decision last week, Judge Phillip Pro held that Righthaven did not own the copyright at issue, and – even if it did – the use in question was protected by the fair use doctrine. Importantly, Judge Pro rejected Righthaven's last minute attempt to save its business model by revising its contract with Stephens Media (the publisher of the Las Vegas Review Journal).

Since the Strategic Alliance Agreement between Righthaven and Stephens Media was made public in April, Righthaven has been on the defensive. (See why the assignment is a sham). In an April interview with Wired News, Righthaven's CEO Steve Gibson claimed nothing was amiss: “We gave [Stephens Media] exclusive licenses ... But that does not give them title. We own the underlying copyright.” Wrong. There is no underlying copyright – copyright rights are a bundle of statutory rights, that one either has or does not have. And an exclusive license is a transfer of ownership., i.e. "title."

Eventually Righthaven hired Dale Cendali, an experienced copyright litigator from Kirkland & Ellis in New York City, to help solve its deep problems (Righthaven’s original outside counsel Shawn Mangano continues to represent the company). Shortly thereafter, on May 9, Righthaven revealed that the company and Stephens Media has signed a last-minute “Clarification and Amendment to Strategic Alliance Agreement.”

While labeled as simply a clarification of the original, the amendment changed the original in new ways. For example, the previous “exclusive license” was now labeled “non-exclusive.” While the amendment was a tacit concession that the original SAA language was fatally flawed, the “Clarification” did not change the substance of the transaction – Righthaven was purportedly given the right to sue, but Stephens Media retained all the benefits of ownership.

Last week, Judge Hunt ruled that the original SAA did not give Righthaven ownership over the Stephens Media copyright, and dismissed Righthaven’s claims. Noting that a plaintiff’s ability to sue is determined at the time the complaint is filed, Judge Hunt did not rule on the May 9, 2011 “Clarification,” though he “expresse[d] doubt that these seemingly cosmetic adjustments change the nature and practical effect of the SAA.” Judge Hunt also noted that the “Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court.”

Like a drowning man grasping a lifeline in a stormy sea, Righthaven clung to the hope that the “Clarification” would save its litigation business model. Putting on a brave face, CEO Gibson told Wired that “As of today, there should be no question whether Righthaven has standing,” due to the “Clarification.” Righthaven’s outside counsel Shawn Mangano echoed the company line, contending:

In what regard has Righthaven been dishonest and deceitful? By submitting a clarification to the SAA (Righthaven/Stephens Media copyright contract) that was not considered by the court? I, along with more than one of the top copyright lawyers in this country, believe the issues presented were not fully appreciated - particularly in view of the rather fundamental transactional structure of an assignment and (copyright) license back. As of today, Righthaven maintains that it, and not Stephens Media, holds ownership of all copyrighted works assigned to it.

Today, Judge Pro decimated that forlorn hope. First, Judge Pro agreed with Judge Hunt that “Righthaven is not left with ownership of any exclusive rights” under the original SAA. But Judge Pro went further: “Even assuming that the May 9, 2011 Clarification can change the jurisdictional facts as they existed at the time of the filing of the suit, it still does not correct the deficiencies with respect to lack of standing.” Judge Pro noted that the “May 9, 2011 Clarification provides Righthaven with only an illusory right to exploit or profit from the Work,” and concluded that “Righthaven does not have any exclusive rights in the Work and thus does not have standing to bring an infringement action.”

Judge Pro also put a stake through the heart of Righthaven's infringement claim. Examining the fair use factors, Judge Pro found that “there is no genuine issue of material fact that Hoehn’s use of the Work was fair and summary judgment is appropriate.” Thus, even if Righthaven somehow resurrected its claim by obtaining ownership of the Las Vegas Review Journal work at issue, it would be dead on arrival.

Yet another Righthaven case (Righthaven v. Pahrump Life) is coming up for a hearing in Las Vegas on June 30, this time before Judge James Mahan. On June 22, Righthaven will file a brief that will doubtless attempt to explain why Judge Mahan should not follow Judges Pro and Hunt. We look forward to their brief.

In Righthaven v. Hoehn, the victorious defendant was represented by Marc Randazza and J. Malcolm DeVoy of the Randazza Legal Group.


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