Righthaven is the extortion racket spun out by the Las Vegas Review-Journal: they received a license from the Review-Journal for its copyrights, then attempted to make the license pay by threatening any blogger who quoted the newspaper with expensive lawsuits and domain confiscation. They firehosed these legal threats around without regard for their legal merits (and attracted more desperate, unethical newspapers to their client roster in the process) and so it was inevitable that eventually they'd misfire at someone who got pissed off enough to do something about it.

That someone is Democratic Underground, a political site that contacted the Electronic Frontier Foundation for legal help. EFF's lawyers got a court to force Righthaven to reveal the terms of its license with the Las Vegas Review-Journal, and discovered that Righthaven's license only gives it the power to sue on the Review-Journal's behalf (that is, Righthaven doesn't actually control the Review-Journal's copyrights in any meaningful way). And that is illegal — a license to sue is not sufficient to have standing to use the courts for redress. Democratic Underground is now seeking recovery of legal fees, which the Review-Journal and other newspaper clients may be liable for. Joe Mullin writes:

So what began as a business deal in which there was no downside for Stephens Media now looks like a situation where the company could be on the hook for a serious chunk of change. It's worth noting that the contract actually has a specific clause (see Section 11) in which Righthaven indemnifies Stephens Media in the event that attorneys' fees need to be paid to an opponent. But could Righthaven really fulfill that obligation? What assets does Righthaven really haven? Likely not much; it's a company set up just to file lawsuits. One generous estimate is that the company has made a couple hundred thousand dollars of gross revenue in the single year it's been in business. That's surely been distributed to attorneys and staff. That means that a situation where newspaper companies ultimately end up on the hook for payments is a real possibility. Righthaven wanted to keep these documents sealed, but they utterly failed to convince the U.S. District Judge Roger Hunt to take their side. Other defendants, and the public at large, should have a right to view the contracts, as well as DU's arguments that they are a sham, which were sealed until Friday. "Because these cases have generated a great deal of public interest, particularly in the media and on the internet, that there is a right of the public to this information which overrides any claimed confidential commercial rights," Hunt wrote in his order. Hunt also shows how peeved he is at Righthaven's litigation behavior. (The company truly seems to have a knack for angering judges.) Judge Hunt criticizes how Righthaven has attacked opposing counsel, writing: "There is an old adage in the law that, if the facts are on your side, you pound on the facts. If the law is on your side, you pound on the law. If neither the facts nor the law is on your side, you pound on the table. It appears there is a lot of table pounding going on here."

Righthaven's Secret Contract Revealed: Will Its Strategy Collapse?

(via /.)