Nevada Court May Have Put an End to Righthaven’s Copyright Trolling

Published On June 17, 2011 | By ZwillGen | General
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The United States District Court for the District of Nevada issued a scathing order Tuesday in Righthaven LLC v. Democratic Underground LLC, 2:10-cv-01356, dismissing Righthaven LLC’s copyright infringement allegations and threatening to sanction the company for making “flagrant misrepresentations” to the Court. Righthaven, a somewhat notorious copyright holding company, sued Democratic Underground for copyright infringement in May 2010, after a user posted a comment containing an excerpt and link to a Las Vegas Review Journal article. Righthaven claimed that it had standing to bring the suit as it had purchased the copyrights to the work from Stephens Media, the owner of the Las Vegas Review Journal. However, in its decision, the District Court took issue with the Strategic Alliance Agreement (SAA) that purportedly assigned these rights to Righthaven.To have standing to sue for copyright infringement, Righthaven must be the legal or beneficial owner of one of the enumerated “exclusive rights” listed in 17 U.S.C. § 106. However, the Court pointed out that instead of conveying one of these exclusive rights, the SAA expressly denied Righthaven any rights “other than the bare right to bring and profit from copyright infringement actions,” which is not an exclusive right. Accordingly, the Court found that Righthaven had no standing, and it “actually left the transaction with nothing more than a fabrication since a copyright owner cannot assign a bare right to sue.”

The Court then addressed Righthaven’s argument that the Court should construe the contract as conveying the necessary rights because that was the intent of the parties. Under black letter contract law, a Court may not consider circumstantial evidence, such as the parties’ intent, when the language of the contract is not ambiguous. Thus, whereas here, the District Court found that the text of the SAA was unambiguous, therefore it could not construe the terms differently in light of the parties’ alleged intent.

The Court also dismissed Righthaven’s argument that it should be permitted to obtain standing by amending the terms of the SAA after the fact because “[t]he existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed.” This finding, in conjunction with the Court’s determination that the SAA did not convey sufficient rights, could have serious repercussions for Righthaven. The company, suing on behalf of Stephens Media, has filed hundreds of copyright lawsuits across the nation that are likely based on similar SAAs to the one rejected by the Nevada District Court. Thus, these suits all appear to be in danger of dismissal due to lack of standing.

Righthaven’s final attempt to save its suit was similarly futile. Righthaven argued that multiple courts in Nevada had already found that Righthaven had standing in similar cases. However, the Court was unconvinced and apparently slightly incensed by this argument:
“As the undersigned issued one of the orders Righthaven cites for this argument, the undersigned is well aware that Righthaven led the district judges of this district to believe that it was the true owner of the copyright in the relevant news articles. . . . Since those orders were tainted by Righthaven’s failure to disclose the SAA and Stephens Media’s true interest those decisions are not persuasive and do not support standing here.”

Accordingly, finding that Righthaven had no standing, the Court dismissed the suit. The Court also denied the Motion to Dismiss Democratic Underground’s declaratory judgment suit of non-infringement against Stephens Media and issued an Order to Show Cause, to allow Righthaven to explain why it should not be sanctioned for failing to disclose Stephens Media’s pecuniary interest in the suit in contravention of Rule 7.1, which requires the disclosure of all parties with a direct pecuniary interest in the outcome of a suit.

Specifically, the Court voiced its concerns:
“the Court believes that Righthaven has made multiple inaccurate and likely dishonest statements to the Court . . . Making this failure more egregious not only did Righthaven fail to identify Stephens Media as an interested party in this suit, the Court believes that Righthaven failed to disclose Stephens Media as an interested party in any of its approximately 200 cases filed in this District.”

The District Court’s harsh criticism of Righthaven’s practices amounts to an apparent outright rejection of its copyright trolling business model. This may mean that Righthaven’s other open cases are headed for a quick dismissal.