Judge doubtful of Righthaven’s right to sue over R-J material

One of the judges most critical of newspaper copyright infringement lawsuit filer Righthaven LLC said in an order Thursday that Righthaven does not appear to have the right to sue over Las Vegas Review-Journal material.

U.S. District Judge James Mahan, who last week signed an order finding a Righthaven defendant from Oregon was protected by fair use in posting an entire Review-Journal story, on Thursday ordered Righthaven to show cause during a hearing next month on why another case against Pahrump website operator Michael Scaccia should not be dismissed.

The newly-unsealed Strategic Alliance Agreement between Righthaven and Review-Journal owner Stephens Media LLC "appears to support defendant Scaccia’s claim that Righthaven does not have standing to sue for copyright infringement," Mahan wrote in Thursday’s order.

Righthaven attorneys have insisted their Review-Journal lawsuits are on solid legal ground in that Stephens Media assigns ownership of copyrighted material to Righthaven and Righthaven then licenses that material back to Stephens Media for its use.

Several defense attorneys, however, have charged in court filings that this arrangement amounts to a sham copyright transfer and a fraud upon the federal court in Nevada hearing cases involving Righthaven and Stephens Media; and a fraud on the U.S. Copyright Office.

Mahan, in his order Thursday, wrote: "Stephens Media has not assigned to Righthaven one of the (Copyright Act’s) exclusive rights in the copyrights Righthaven purports to own, as would be required for Righthaven to validly allege an infringement claim on those copyrights."

Mahan’s order Thursday was significant in that it appeared to be the first time one of the Nevada federal judges hearing Righthaven copyright cases has weighed in on the dispute over whether the Strategic Alliance Agreement gives Righthaven the right to sue.

"This court believes that the issue should be addressed at the outset of Righthaven litigation, as it goes to the plaintiff’s standing to bring a copyright infringement claim at all. Thus, in the interest of judicial economy, the court issues this order to show cause why the case should not be dismissed for plaintiff’s lack of beneficial ownership of the copyright, and, therefore, lack of standing to sue," Mahan wrote.

It’s unknown whether Righthaven’s lawsuit contract with the Denver Post is similar to the contract with Stephens Media. If so, defendants in Denver Post-related cases in federal courts in Nevada, Colorado and South Carolina are likely to challenge Righthaven’s standing to sue the same way its right to sue over Review-Journal material is being challenged.

Mahan’s order came in the case of the Pahrump Life website, which was sued by Righthaven after a Review-Journal story about problems at a private prison in Arizona was posted there.

Scaccia, who runs the site, said in court papers the Pahrump Life website has been active in opposing a private prison in the Southern Nevada town.

Scaccia, who represents himself in the litigation, asserted a fair use defense. But Mahan on Thursday said Scaccia had failed to present authenticated evidence in support of that so his motion for summary judgment was denied.

Scaccia also contested Righthaven’s ownership of the disputed copyright – but that was before the Strategic Alliance Agreement was unsealed in another Righthaven case against the Democratic Underground.

This means Mahan, just as he did in the fair use ruling for the Oregon nonprofit, put the Strategic Alliance Agreement issue on the table on his own initiative.

"The Stephens Media assignment is sham. It is not surprising that Judge Mahan is also concerned about the validity of the assignments, now that he has seen the Strategic Alliance Agreement," said Kurt Opsahl, an attorney for the Electronic Frontier Foundation, which says it defends freedom in the digital age.

The EFF and attorneys allied with it represent the Democratic Underground and have been active in other Righthaven cases.

"Righthaven has a lot of explaining to do, and so far has utterly failed to provide a convincing explanation of the legitimacy of its arrangement. We look forward to reading Righthaven's response to this order to show cause, as well as its response to the judge's briefing order in Righthaven v. Democratic Underground," Opsahl said.

Attorney Marc Randazza, whose Randazza Legal Group is litigating against Righthaven in other cases, added, "Judge Mahan's curiosity about the Strategic Alliance Agreement is matched only by our own."

Eric Goldman at California’s Santa Clara University said the stakes are high for Righthaven in responding to Mahan’s order.

"If the Stephens Media/Righthaven copyright assignment is defective, it could wipe out all of Righthaven's currently pending litigation in Nevada (and perhaps across the country)," said Goldman, associate professor at the university’s law school and director of its High Tech Law Institute.

"In theory, Righthaven can fix the copyright assignment (at least for any new lawsuits) by renegotiating its deal with Stephens Media. What struck me most about the Strategic Alliance Agreement is that it appeared Stephens Media wanted the purported economic benefits of Righthaven's litigation campaign, but didn't want to give up any actual control over its copyrighted assets,'' Goldman said.

"It's possible that, under copyright law, Stephens Media simply can't have it both ways -- it can try to cash in via litigation or it can maintain editorial control over its newspaper articles, but it can't do both simultaneously. If so, it could prove tricky or even impossible for Righthaven to renegotiate its deal," Goldman said.

Shawn Mangano, a Las Vegas attorney representing Righthaven, said the company is eager to present its side of the standing-to-sue story, which so far it has not formally done.

He said the company is confident of prevailing "either at the District Court level or before a panel of the 9th U.S. Circuit Court of Appeals."

Righthaven is already appealing one fair use loss and plans to appeal the latest fair use ruling against it by Mahan.

At stake for Righthaven and Stephens Media are 83 pending lawsuits in Nevada’s federal court – and potentially more if defendants that have settled decide to reopen their cases based on the newly-discovered evidence.

Righthaven since March 2010 has filed 209 lawsuits in Nevada’s federal court over Review-Journal stories, columns, editorials, photos, graphics. Most have been settled, though a handful were dismissed after the defendants were not served.

A ruling by Mahan wouldn’t be a binding precedent on the other Nevada judges hearing Righthaven cases – but it would surely be noticed.

Roger Hunt, chief U.S. district judge for Nevada, ordered the Strategic Alliance Agreement unsealed and hasn’t indicated when he will rule on whether it gives Righthaven the right to sue.

But he did note in an order that Righthaven’s standing to sue and the Strategic Alliance Agreement go "to the very heart of this litigation."



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Discussion 9 comments

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  1. I just re-read that agreement, and am convinced its primary purpose is to shift costs around and allow a higher than normal fee to be collected. That would seem to be the sole reason that a copyright ownership is needed.

    Otherwise, Righthaven could offer its search service on a commissioned basis with the arrangement that SM would pay a portion of each recovery based upon information provided by RH. However, that now shows additional expense on SM's books, and also places any liability for counterclaims on SM as well.

    I think where Mahan is going with this is that RH has no benefit from ownership even after the transfer other than what it receives as a result of an settlement obtained from an infringement, which is what triggered the transfer in the first place.

    As spelled out in the agreement, RH exists for the sole purpose of initiating litigation and has no revenue stream other than by doing so. It's no wonder the bench is offended.

  2. "Goodbye, my LITTLE FRIEND"...

    Ha ha ha ha ha!!!

  3. "As spelled out in the agreement, RH exists for the sole purpose of initiating litigation and has no revenue stream other than by doing so. It's no wonder the bench is offended."

    & Thank you, boftx, for so succinctly summarizing the stinky situation suborned by Squirmy Shermy & his sidekick Stevie.
    Soooooooey!!! Sooooooey!!!
    That trough is AS DRY AS A BONE, BOYS!

  4. uht oh.

  5. I think the Southern District of Nevada, after dealing with this creep for several years, has just about had its fill of Mr. Gibson. One large serving of comeuppance please....ding ding.

  6. mred2 two words for you babe, "Air America!" BOOYAH

  7. I've asked the question here before: Is anyone posting here a defendant? No one's responded. I take the lack of response as either a "No," or that folks here are more interested in posting their opinions than responding to that question. That said, I was, as all know, a defendant. I was also a reporter for a long time -- as such, notwithstanding the "rulings" and "opinions" of the Judge, as Yogi Berra said, "It ain't over 'til it's over."

    Now I'm, of course, hoping ("not a strategy," as if often said) for rulings against Righthaven. However, at this point we just don't know and even the attorneys with whom I've spoken, won't "step out" and make a prognostication.

  8. Here is a discussion of champerty and patents from 2006. I think everyone will find it thought provoking: http://271patent.blogspot.com/2006/09/re...

  9. Many lawyers falsely believe that if they make the terms of a contract vague enough that it will leave a wide interpretation but in many cases like this it can cause problems because a judge does not have to follow Righthaven's and Stevens media interpretation of their own agreement and if it is not clear and concise the judge is completely free to follow their own and even the defendants interpretation.

    Righthaven says it is clear in the agreement that they own the copyright but the wording of the agreement is very vague. Righthaven and Stevens media are in real trouble.