Righthaven asks appeals court to block dismantling of the company

Despite its backing by billionaire Arkansas investment banker Warren Stephens, copyright lawsuit filer Righthaven LLC of Las Vegas said Sunday it has been unable to secure a $34,045 bond to guarantee payment of a defendant’s attorney’s fees.

In an "urgent motion" filed Sunday with the 9th U.S. Circuit Court of Appeals in San Francisco, Righthaven asked the court to strike a Nevada judge’s order that it post the bond to ensure attorneys for copyright lawsuit defendant Wayne Hoehn get paid, should Righthaven lose its appeal in the Hoehn case.

Righthaven since March 2010 has filed 275 no-warning lawsuits against website operators, bloggers and message board posters like Hoehn charging material from the Las Vegas Review-Journal and the Denver Post was posted online by the defendants without authorization.

The litigation campaign stalled this summer after Righthaven was hit with three court defeats finding defendants were protected by the fair use doctrine of copyright law in using R-J material.

Five federal judges in Nevada and Colorado, in the meantime, found Righthaven lacked standing to sue over R-J and Post content because it didn’t really control the newspaper copyrights it claimed to own.

While Righthaven appeals the fair use and standing decisions, it’s desperately trying to avoid paying the legal fees of defendants that defeat it in court.

Its most urgent problem involves Hoehn, whose attorneys defeated a Righthaven lawsuit over an entire R-J column posted without authorization on a sports betting website.

U.S. District Judge Philip Pro in Las Vegas rejected that suit on both standing and fair use grounds and ordered Righthaven to pay Hoehn’s $34,045 in legal fees.

When Righthaven said this fee award could bankrupt the company, Pro ordered Sept. 28 that Righthaven instead post a bond. Bonds usually can be obtained with cash for just a fraction of the face amount, along with other collateral.

But on Sunday, Righthaven said in its urgent motion that it’s having trouble obtaining such a bond and it asked the court to stay the fee award to Hoehn’s attorneys while it pursues its appeal.

"To date, Righthaven has been unable to secure a bond. The terms required by the bonding companies that Righthaven’s counsel has investigated and/or contacted are an impediment to meeting the district court’s stay requirement," said Righthaven’s filing by Las Vegas attorney Shawn Mangano. "The bonding companies are requiring what amounts to a full cash bond. In sum, the bonding companies ask for full cash payment, certain forms of collateral held by the company or irrevocable letters of credit be posted to obtain a bond in the amount requested. To date, Righthaven has been unable to satisfactorily meet these requirements in a manner acceptable to a bonding company. Due to the pending appeals and the stay of certain active litigation matters, Righthaven’s operating capital is being utilized to service its monthly operating expenses. As such, it is presently unable to allocate more than $34,000 toward the bond required by the district court to stay the judgment pending appeal."

Righthaven said if the appeals court doesn’t act by Oct. 28, the deadline for it to post a bond, Hoehn’s attorneys can resume efforts to seize Righthaven assets including the copyrights it claims to own and that are the basis for its lawsuits.

"Righthaven unquestionably faces an imminent threat of irreparable harm through Hoehn's judgment enforcement efforts. As set forth in the motion for writ of execution, Hoehn is clearly seeking to seize and liquidate Righthaven’s intangible intellectual property assets," Mangano’s filing said.

"Absent issuance of a stay pending appeal, Hoehn’s judgment enforcement efforts will seek to dismantle the company and end its ability to operate as a going concern. Hoehn’s counsel has given no indication of a willingness to accept any structured settlement payments toward satisfaction of the judgment," the filing said.

Righthaven is 50 percent owned by the family of Warren Stephens, whose wealth is estimated by Forbes at $2.8 billion. The Stephens family’s Stephens Media LLC also owns Righthaven’s initial lawsuit partner, the Las Vegas Review-Journal daily newspaper.

On top of watching Righthaven’s lawsuit campaign fall apart, Stephens Media has had to hire its own attorneys to defend against what could be expensive counterclaims against Stephens Media charging the Righthaven lawsuits were based on sham copyright assignments provided by Stephens Media.

Stephens Media has denied these assertions and its attorneys have said the Righthaven suits targeted a "parasitic business model" in which copyright infringers regularly steal newspaper content.

The other half of Righthaven is owned by its CEO, Las Vegas attorney Steven Gibson.

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  1. How the mighty have fallen.

    Not to long ago they were scaring the bejeezus out of people with their BS law suits.

    Now they are having the BS scared out of them.

    In the words of Jackie Gleason: "How sweet it is!"

  2. Chunky says:

    He would love to see Mr. Gibson lose his home and other personal belongings in the demise of Righthaven. No amount of money, legal fees or court sanctions will ever compensate the victims of Righthaven's legal abuse for their mental anguish and stress.

    Gibson should lose his license to practice law as well.

    That's what Chunky thinks!

  3. Let us all hope that the 9th Circuit realizes Rightheave is just a company set up by lawyers to scam people out of money. Hopefully the court dismisses Righthavens appeal. Gibson most likely has plenty of money and should be held personally accountable.

  4. At this point I can only speculate that the owners of Righthaven have no choice but to continue to prop it up with content from Stephens Media if they wish to have any hope of having a couple of (in my opinion) very bad "fair use" rulings overturned.

    It should obvious by now that I am no fan of RH and its business model, but I am even more upset that it has provoked rulings that have greatly damaged copyright protection overall. As a content publisher myself, I can only hope that the "fair use" rulings regarding the use of an entire article are tossed out, while maintaining the rulings on standing. I think Judge Hunt wrote a masterful piece of reasoning for his rulings, and Judge Mahan and Judge Pro made serious mistakes in theirs.

    Let's hope that the 9th and 10th Circuits hearing the appeals do so in a timely fashion. Let's also hope they pierce the corporate veil surrounding the creation of Righthaven so we can all see for ourselves just why the Stephens family has put so much time and money into this disgusting operation.

  5. You reap what you sow.

  6. Apparently, no bonding company believed that Righthaven had enough cash and property to cover a $34, 045 obligation if the bonding company eventually had to lay out that much.
    .
    What happened to the members of the LLC that they cannot pony up the bond premium and stand collateral so that their enterprise can stay in business? Was this not a foreseeable outcome, or did Righthaven not understand the copyright laws -- particularly Section 505 of the Copyright Act which provides as follows: "In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." Was that risk omitted from the Righthaven offering materials? Is ignorance of the law an excuse for Righthaven?

    If the combination of poverty with ignorance of the law is a valid excuse of Righthaven, then the calendars of every US District Court can be clogged by massive speculative filings of meritless actions by impecunious enterprises hoping to win fame and fortune by using lawsuits to extort settlements -- then walking away unscathed under the cover of even more meritless and dilatory appeals.

  7. So.......the bully picks a fight with a little guy, gets his but kicked and now is crying unfair. Righthaven sickens me!