Righthaven, a copyright-troll law firm that failed in its attempt to make money for newspapers by suing readers for sharing stories online, was dealt a death blow Tuesday by a federal judge who ordered the Las Vegas company to forfeit "all of" its intellectual property and other "intangible property" to settle its debts.

The order is an ironic twist to a copyright trolling saga that began in 2010, when Righthaven was formed with the idea of suing blogs and websites that re-post newspaper articles or snippets of them without permission.

U.S. District Judge Philip M. Pro of Nevada ordered Righthaven to surrender for auction the 278 copyrighted news articles that were the subject of its lawsuits.

"The copyright registrations to more than 275 works are in Righthaven's name, can be transferred by this court, and can then be auctioned," the judge ruled. (.pdf)

The Righthaven.com domain was auctioned for $3,000 last year as well to help satisfy the legal bill Righthaven must pay to one of its defendants that prevailed in a copyright suit brought by Righthaven. The tab is more than $60,000 in the case before Judge Pro, and in total Righthaven owes about $200,000 to various defendants.

U.S. copyright law allows for massive damages – $150,000 per infringement – which leads many people to settle copyright cases, rather than risk a massive payout. But if someone does defend himself, the law allows the prevailing party in an infringement case to be awarded its legal fees and costs, even if it were the defendant.

Righthaven initially was winning and settling dozens of cases as defendants paid a few thousand dollars each to make the cases go away. But Righthaven, which has ceased filing new suits, has never prevailed in a case that was defended in court.

Ironically, Righthaven sought – as payment – the domain names owned by the people it was suing, and now it has lost its own domain name and any other available assets in the process. The company has threatened to file for bankruptcy protection.

The domain auction and the unscheduled auctioning of Righthaven's copyrights is to help pay Las Vegas lawyer Marc Randazza for successfully defending Vietnam veteran Wayne Hoehn against a Righthaven copyright lawsuit seeking large damages for posting the entirety of a Las Vegas Review-Journal editorial to a small online message board.

The lawsuit against Hoehn, one of hundreds of Righthaven's lawsuits, accused him of unlawfully posting all 19 paragraphs of a November 2010 editorial from the Las Vegas Review-Journal. Hoehn posted the article, and its headline, "Public Employee Pensions: We Can't Afford Them" on medjacksports.com to prompt discussion about the financial affairs of the nation.

Judge Pro ruled that the posting was fair use of the article, an issue that is on appeal. Whether Righthaven retains the financial wherewithal to litigate the appeal was not immediately known. Righthaven's chief executive, Steve Gibson, did not immediately respond for comment.

Righthaven's first client, Stephens Media of Las Vegas and operator of the Review-Journal, invested $500,000 into the Righthaven operation at its outset. With Judge Pro's ruling, the media concern is losing financial control of hundreds of articles and photos.

"The irony of this? Perhaps those who buy the copyrights could issue DMCA notices to the Review-Journal stopping them from redistributing them?" Randazza said via an e-mail, citing the Digital Millennium Copyright Act.

Stephens Media will indeed likely have to take them off its own website – or license them from the future owner – if it doesn't buy the rights back itself.

Other judges hearing Righthaven cases have ruled that Righthaven never had legal standing to bring infringement lawsuits, even though Stephens Media assigned the copyrights to Righthaven.

Contracts between Stephens Media and Righthaven disclosed in the Righthaven litigation show that Stephens Media granted Righthaven permission to sue over the newspaper chain's content in exchange for a 50 percent cut of all the settlements and jury awards. Most important, the agreement did not grant Righthaven license to use the content in any other way.

The Electronic Frontier Foundation called the arrangement a "sham," and judges hearing Righthaven cases agreed.

U.S. District Judge Robert Hunt ruled last year in a different case that a "copyright owner cannot assign a bare right to sue." Judge Hunt dismissed the case and ordered Righthaven to pay the defendant Democratic Underground blog $120,000 in defense costs, which it has not done.