Righthaven agrees to turn hard drives over to creditor

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Las Vegas copyright company Righthaven LLC appears eager to comply with the latest court order entered against it Tuesday, as noncompliance could cost its CEO a fine of $500 per day.

U.S. Magistrate Judge Peggy Leen in Las Vegas, ruling during a hearing, ordered Righthaven to turn over to a creditor hard drives from its computers so the creditor could determine if Righthaven has any assets that can be liquidated for the benefit of Righthaven’s creditors.

She gave Righthaven two weeks to surrender the drives or mirror images of them and said noncompliance would result in a daily sanction of $500 against the company and its CEO.

After the hearing, Righthaven CEO and Las Vegas attorney Steven Gibson fired off a letter to Righthaven’s attorney, Shawn Mangano, ordering him to comply with the directive.

“You are hereby instructed to follow without any departure whatsoever every aspect of the order made today in the case, just as you have been instructed to follow every previous order of every court,” Gibson wrote in the letter.

It appeared that Gibson sent the letter, with a copy to the judge, as an insurance policy, as Mangano had earlier told Leen he’d be happy to arrange the turnover of the drives to the creditor.

Tuesday’s action was the latest proceeding in a yearlong effort by the creditor, former federal prosecutor Thomas DiBiase, to recover $119,488 in legal fees he was awarded after he beat back the Righthaven suit against him. All told, Righthaven owes DiBiase and other creditors $318,000 for legal fees after Righthaven failed with its copyright lawsuits against them.

Righthaven is a company, not a law firm. It partnered with the Las Vegas Review-Journal and the Denver Post to file 275 no-warning copyright infringement lawsuits in 2010 and 2011 against parties that used content from those papers without authorization.

Federal judges in three states rejected the lawsuits because Righthaven lacked standing as the newspapers — not Righthaven — maintained control of the material Righthaven was suing over. Some defendants also were cleared by the fair use concept in copyright law allowing some uses of copyrighted material within limits.

In the aftermath of Righthaven’s legal debacle, the company shut down and claimed to be broke. Creditors in another case seized its website and trademark and auctioned them. They also seized the copyrights it sued over, but they didn’t sell.

Gibson, in the meantime, has been pursuing an appeal of one of Righthaven’s legal setbacks and believes if the 9th U.S. Circuit Court of Appeals finds Righthaven had standing to sue, the company could get back in the copyright lawsuit business.

Creditors, in the meantime, are continuing with their collection efforts that have included a still-unresolved effort to have Righthaven’s court-appointed asset receiver fire Gibson.

Gibson has countered that he did a good job as CEO and that as a Righthaven creditor he’s owed “months, if not years’’ of his six-figure salary that he voluntarily gave up in about July 2010 for the good of the company.

DiBiase, represented by the San Francisco-based digital rights group the Electronic Frontier Foundation (EFF) of San Francisco, until Tuesday had been frustrated in efforts to gain financial information from Righthaven to see if it has assets that could be sold to benefit him and other creditors.

The frustration related to Righthaven shutting down and putting its computers into storage, claims by Mangano earlier in the year that the company didn’t have certain records it could turn over to the EFF, and Mangano in February going missing from the case and not communicating with Gibson without explanation until he reappeared publicly this month.

Mangano has said he was missing from the Righthaven cases without formally withdrawing as its attorney because he was distracted by personal issues. He also claims to have been frustrated with criticism he received for representing Righthaven, which defense attorneys say was set up as a legal shakedown operation, and that he’s owed money for Righthaven legal services dating to 2011.

Mangano has now formally moved to withdraw from representing Righthaven, but Leen said she won’t allow that until the company complies with her order Tuesday on the hard drives.

Kurt Opsahl, an attorney for the EFF, has for months been urging Leen to hit Gibson with “coercive sanctions” for Righthaven’s failure to turn over information that will help the EFF find Righthaven assets.

The hard drives Leen ordered produced on Tuesday may include information on the company’s finances and assets, including special software Righthaven claimed to own that helped it detect alleged copyright infringements.

Mangano told Leen on Tuesday that Righthaven didn’t have any money to extract the hard drives from the computers sought by the EFF and go through them to remove any privileged information.

Opsahl agreed that should Righthaven turn over the drives without removing privileged information, he wouldn’t disclose it or use in the case. Leen ordered the drives turned over at Righthaven’s expense.

Opsahl complained to Leen on Tuesday that while Righthaven claims to be broke, it’s been able to pay expenses it wants to pay.

“After Righthaven claimed to be out of funds, it nevertheless continued to pay Mr. Mangano for several months and in April it hired a new attorney in a different case (in the appeals court). It seems to have funds when it wants to have funds,” Opsahl said. “We’ve had nothing but obstruction and delay.’’

“Steven Gibson is now going to have to show some responsibility,” Opsahl said. “The CEO of Righthaven remains responsible for taking care of the business of the company.”