Judge rules Righthaven lacks standing to sue, threatens sanctions over misrepresentations

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A federal judge in Las Vegas today issued a potentially devastating ruling against copyright enforcer Righthaven LLC, finding it doesn't have standing to sue over Las Vegas Review-Journal stories, that it has misled the court and threatening to impose sanctions against Righthaven.

Because he found Righthaven doesn't have standing to sue, Chief U.S. District Judge for Nevada Roger Hunt dismissed Righthaven's copyright infringement lawsuit against the Democratic Underground.

But he's allowing the Democratic Underground to continue its counterclaim against Stephens Media LLC, owner of the Review-Journal. That could be expensive for Stephens Media as the Democratic Underground attorneys from the Electronic Frontier Foundation are asking to be awarded attorney's fees.

"The court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the court," Hunt wrote in his ruling, citing specifically Righthaven's failure to disclose Stephens Media as an interested party in the litigation as Stephens Media clearly had an interest in the outcome of the copyright lawsuits.

"Accordingly, the court orders Righthaven to show cause, in writing, no later than two weeks from the date of this order, why it should not be sanctioned for this flagrant misrepresentation to the court," Hunt wrote in his ruling.

As for Righthaven's lack of standing to sue over Review-Journal content, Hunt wrote the recently unsealed lawsuit contract between Righthaven and Stephens Media -- called the Strategic Alliance Agreement (SAA) -- clearly leaves Stephens Media in control of the copyrights and gives Righthaven only the right to sue.

In order to file lawsuits, copyright plaintiffs have to have actual control of the copyrights, not just the right to sue, Hunt found.

"Because the SAA (lawsuit contract) prevents Righthaven from obtaining any of the exclusive rights necessary to maintain standing in a copyright infringement action, the court finds that Righthaven lacks standing in this case," Hunt's ruling said.

If adopted by the other federal judges hearing Righthaven lawsuits in Nevada, Colorado and South Carolina, Hunt's ruling could shut down Righthaven's lawsuit campaign -- though it can always appeal or amend its lawsuit contracts with the newspapers. Righthaven has filed 274 lawsuits over Review-Journal and Denver Post material since March 2010, though many of those suits have been settled.

A request for comment was placed with Righthaven.

"To Righthaven and Stephens Media, the court has issued a stinging rebuke. The court even ordered Righthaven to show cause why it should not be sanctioned for `flagrant misrepresentations' to the court in concealing from the court that Stephens Media stood to recover 50 percent of any recovery in these lawsuits. But for those desiring to resist the bullying of claims brought by pseudo-claimants of copyright interests, the ruling today represents a decisive, and potentially far reaching, victory," said one of the Democratic Underground's attorneys, Laurence Pulgram of the law firm Fenwick & West LLP in San Francisco, who works with the Electronic Frontier Foundation.

Hunt’s ruling today came in a 2010 Righthaven lawsuit against the Democratic Underground, operator of a big political website.

This became one of Righthaven’s most-regretted lawsuits as a message-board poster had posted just four paragraphs of a 34-paragraph Review-Journal story about then-U.S. Senate candidate Sharron Angle. By crediting the Review-Journal and linking to the R-J story, this was essentially an invitation for Democratic Underground readers to click on the link and go to the R-J website.

And later fair-use rulings against Righthaven in two more cases virtually guaranteed the post on the Democratic Underground site was protected by the fair use doctrine of copyright law.

In their counterclaim, attorneys for the Electronic Frontier Foundation (EFF), a digital free speech group based in San Francisco, hit Righthaven and Stephens Media with allegations of barratry (the alleged improper incitement of litigation); and champerty (an allegedly improper relationship between one funding and one pursuing a lawsuit).

The EFF also accused Righthaven of "fraud upon the Copyright Office."

"We are pleased that the court saw through Righthaven's sham assignment of the copyright and dismissed its improper claim. Today's decision shows that Righthaven's copyright litigation business model is fatally flawed. We look forward to litigating the claim against Stephens Media, and showing that Democratic Underground did not infringe Stephens Media's copyright with a five sentence excerpt of a news article,’’ said Kurt Opsahl, an attorney for the EFF.

Las Vegas and San Diego attorney Marc John Randazza, who is litigating against Righthaven in Nevada and Colorado, praised Hunt’s ruling.

"It does not get much more clear or damning than this. It seems to me that Judge Hunt not only squashed Righthaven in this particular case, but has essentially ended all Righthaven's cases in Nevada. We have felt all along that Righthaven was being less than forthcoming. It seems that with the excellent work put forth by the EFF, the judges are starting to see it too,’’ he said.

Eric Goldman, an intellectual property law expert and Righthaven critic, noted Hunt was harsh in his criticism of Righthaven.

While Righthaven and Stephens Media have said their no-warning lawsuits were necessary to deter rampant online infringements of newspaper material, critics said the suits were bullying and unnecessary as simple take-down requests would be just as effective.

"This is another stinging defeat for Righthaven. The judge emphatically rejects both Righthaven's substantive arguments about the assignment as well as Righthaven's procedural conduct," Goldman said.

Goldman noted Hunt indicated that Righthaven can't amend the existing contract defect covering the existing litigation.

"This could lead to dismissal of all of the pending Review-Journal litigation and, depending on the exact wording of the MediaNews contract, possibly the Denver Post litigation as well," said Goldman, associate professor at California's Santa Clara University School of Law and director of its High Tech Law Institute.

"If Righthaven can't get this opinion reversed on appeal and other courts defer to this opinion (which I think is likely), Righthaven may be back at square one with its entire business," Goldman said.